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Exhibit 2.1
ACQUISITION OF ASSETS
OF
XXXXXX CLINICAL EVALUATIONS DIVISION
OF
XXXXXX INFORMATION, INC.
BY
COLLABORATIVE HOLDINGS, INC.
ASSET PURCHASE AGREEMENT
October 16, 1996
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TABLE OF CONTENTS
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PAGE
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ARTICLE I PURCHASE OF ASSETS.....................................................................................1
1.1 Definition Reference.................................................................................1
1.2 Purchased Assets.....................................................................................1
1.3 Retained Assets......................................................................................3
ARTICLE II ASSUMED/RETAINED LIABILITIES..........................................................................3
2.1 Retained Liabilities.................................................................................3
2.2 Assumed Liabilities..................................................................................4
2.3 Satisfaction of Liabilities by Seller................................................................4
ARTICLE III CONSIDERATION........................................................................................5
3.1 Cash Purchase Price..................................................................................5
3.2 Determination of Purchase Price......................................................................5
3.3 Seller Escrow........................................................................................7
3.4 Partial Refund of Closing Payment....................................................................7
3.5 Allocation of Purchase Price.........................................................................7
ARTICLE IV CLOSING...............................................................................................7
4.1 Closing..............................................................................................7
4.2 Joint Deliveries.....................................................................................7
4.3 Seller Closing Deliveries............................................................................8
4.4 Buyer Closing Deliveries.............................................................................8
4.5 Conditions Precedent to the Obligations of Seller....................................................9
4.6 Conditions Precedent to the Obligations of Buyer.....................................................9
4.7 Interdependence.....................................................................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................11
5.1 Organization........................................................................................11
5.1.1 In General...............................................................................11
5.1.2 Other Ventures...........................................................................11
5.1.3 Ownership of Seller......................................................................11
5.2 Status of Agreements................................................................................11
5.2.1 Seller and/or Stockholder Enforceability.................................................11
5.2.2 No Conflicts.............................................................................12
5.3 Financial...........................................................................................12
5.3.1 Financial Records........................................................................12
5.3.2 Liabilities..............................................................................12
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5.3.3 No Change................................................................................13
5.3.4 Taxes....................................................................................14
5.4 Legal...............................................................................................14
5.4.1 Compliance with Laws.....................................................................14
5.4.2 Service Liability........................................................................14
5.4.3 Litigation...............................................................................14
5.5 Business............................................................................................15
5.5.1 Employment...............................................................................15
5.5.2 Compliance with Contracts................................................................15
5.5.3 Suppliers and Customers..................................................................16
5.5.4 Conflicts of Interest....................................................................16
5.5.5 Confidentiality..........................................................................16
5.5.6 No Guaranties............................................................................16
5.5.7 Conduct of Business......................................................................17
5.5.8 Insurance................................................................................17
5.5.9 Environmental............................................................................17
5.5.10 Backlog.................................................................................18
5.6 Employee Benefits...................................................................................18
5.6.1 General..................................................................................18
5.6.2 Multiemployer Plans......................................................................19
5.6.3 Welfare Plans............................................................................19
5.6.4 Pension Plans............................................................................19
5.7 Status of Assets....................................................................................19
5.7.1 Title....................................................................................19
5.7.2 Condition................................................................................20
5.7.3 Receivables..............................................................................20
5.7.4 Proprietary Property.....................................................................20
5.7.5 Prepayments and Deposits.................................................................20
5.7.6 Real Property Leases.....................................................................20
5.7.7 Extent...................................................................................21
5.8 Miscellaneous.......................................................................................21
5.8.1 No Brokers...............................................................................21
5.8.2 Accuracy and Completeness................................................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................21
6.1 Organization and Power..............................................................................21
6.2 Status of Agreements................................................................................21
6.2.1 Enforceability...........................................................................21
6.2.2 Consents.................................................................................22
6.2.3 No Conflicts.............................................................................22
ARTICLE VII COVENANTS...........................................................................................22
7.1 Access..............................................................................................22
7.2 Conduct of Business Pending the Closing.............................................................22
7.2.1 Covenants of Standard Seller.............................................................22
7.3 Performance of Conditions to Closing................................................................23
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7.4 Confidentiality.....................................................................................23
7.5 Expenses; Transfer Taxes............................................................................24
7.6 Further Assurances..................................................................................24
7.7 Assignment of Contracts, Rights, Etc................................................................24
7.8 Receivables.........................................................................................25
7.9 Noncompetition......................................................................................25
7.9.1 By Seller and Stockholder................................................................25
7.9.2 Noninterference..........................................................................25
7.9.3 Equitable Relief.........................................................................25
7.9.4 Reformation..............................................................................25
7.10 No Assignment......................................................................................26
7.11 Employees..........................................................................................26
7.12 Employee Benefits..................................................................................26
7.13 No Solicitation....................................................................................26
7.14 No Public Announcement.............................................................................27
7.15 Xxxxxx Name........................................................................................27
7.16 Operation of Seller................................................................................27
7.17 Employee Bonus.....................................................................................27
ARTICLE VIII INDEMNIFICATION....................................................................................28
8.1 Survival of Representations and Warranties..........................................................28
8.2 Indemnification by Seller...........................................................................28
8.3 Indemnification by Buyer............................................................................28
8.4 Limitations on Indemnification of Buyer Indemnified Parties.........................................29
8.5 Limitations on Indemnification of Seller Indemnified Parties........................................29
8.6 Third Party Claims..................................................................................29
ARTICLE IX TERMINATION..........................................................................................30
9.1 Termination of Agreement............................................................................30
9.2 Effect of Termination...............................................................................31
ARTICLE X CONSTRUCTION..........................................................................................31
10.1 Definition........................................................................................31
10.2 Notices...........................................................................................34
10.3 Binding Effect....................................................................................35
10.4 Headings..........................................................................................35
10.5 Exhibits and Schedules............................................................................35
10.6 Counterparts......................................................................................36
10.7 Governing Law.....................................................................................36
10.8 Waivers...........................................................................................36
10.9 Pronouns..........................................................................................36
10.10 Time Periods......................................................................................36
10.11 No Strict Construction............................................................................36
10.12 Entire Agreement..................................................................................36
10.13 Modification......................................................................................36
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10.14 Third Parties.....................................................................................36
10.15 Survival of Covenants.............................................................................37
EXHIBITS
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Exhibit A Escrow Agreement
Exhibit B Assignment and Assumption Agreement
Exhibit C Transition Agreement
Exhibit D License Agreement
Exhibit E Xxxx of Sale
Exhibit F Seller Closing Certificate
Exhibit G Opinion of Seller's Counsel
Exhibit H Buyer Closing Certificate
Exhibit I Instrument of Assumption
Exhibit J Opinion of Buyer's Counsel
SCHEDULES
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Schedule 1.2 Purchased Assets
Schedule 1.3 Retained Assets
Schedule 2.2(d) Assigned Contracts
Schedule 2.2(f) Paid Time Off
Schedule 3.5 Purchase Price Allocation
Schedule 5.1.2 Other Ventures
Schedule 5.1.3 Capitalization
Schedule 5.3.1 Financial Statements
Schedule 5.3.2 Liabilities
Schedule 5.3.3 No Changes
Schedule 5.4.1 Permits
Schedule 5.4.2 Service Liability
Schedule 5.4.3 Litigation
Schedule 5.5.1 Employees
Schedule 5.5.2 Compliance With Contracts
Schedule 5.5.3 Customers
Schedule 5.5.4 Conflicts of Interests
Schedule 5.5.8 Insurance
Schedule 5.5.9 Environmental
Schedule 5.5.10 Backlog
Schedule 5.6 Employee Benefit Plans
Schedule 5.6.1 Change In Benefits
Schedule 5.6.3 Welfare Plans
Schedule 5.7.3 Receivables
Schedule 5.7.4 Proprietary Property
Schedule 5.7.5 Prepayments and Deposits
Schedule 5.7.7 Extent
Schedule 7.17 Bonus Pool
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into as of the 16th day of October 1996, by and among Collaborative
Holdings, Inc. ("Buyer"), an Ohio corporation, Xxxxxx Information Inc., an
Indiana corporation ("Seller"), and Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, Xxxx X.
Xxxxxx and Xxxxx X. Xxxxxx ("Stockholders").
RECITALS:
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A. Seller, through its Xxxxxx Clinical Evaluations Division
(the "Division"), is engaged in the business of providing contract research
clinical trials for pharmaceuticals, medical devices, food products and other
products which must undergo clinical trials prior to receiving certain
regulatory approvals of the Food and Drug Administration and other Governmental
Authorities (the "Business");
B. Buyer and its Affiliates are similarly engaged in the
business of providing and coordinating clinical trials;
C. The parties desire that Seller sell to Buyer and that Buyer
purchase from Seller substantially all of the assets of Seller primarily related
to or used in the operation of the Business, upon the terms hereinafter set
forth.
D. Stockholders own all of the capital stock of Seller and
will benefit from the sale of assets to Buyer.
E. Stockholders are parties to this Agreement solely with
respect to Article VII, IX and X hereof.
In consideration of and in reliance upon the representations,
warranties and obligations in this Agreement, the parties hereto agree as
follows:
ARTICLE I
PURCHASE OF ASSETS
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1.1 DEFINITION REFERENCE. Certain capitalized terms are
defined in SECTION 10.1.
1.2 PURCHASED ASSETS. Seller agrees to sell, transfer and
assign to Buyer free of all Liens, and Buyer agrees to purchase, all of the
assets of Seller primarily related to or used in the operation of the Business
(whether known or unknown, tangible or intangible, real, personal or mixed, and
wherever located) existing as of the Closing, except the assets listed in
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Section 1.3. The assets to be purchased and sold hereby are sometimes hereafter
collectively referred to as the "Purchased Assets." The Purchased Assets
include, but are not limited to, the assets described on SCHEDULE 1.2 and all of
the following assets of Seller primarily related to or used in the operation of
the Business:
(a) RECEIVABLES. Billed and unbilled accounts and notes
receivable;
(b) INVENTORY. Inventories of raw materials,
work-in-process and finished products, supplies, spare parts and shipping
containers and packaging materials;
(c) DEPOSITS. Prepaid expenses and deposits other than
bank deposits;
(d) CASH. Cash on hand or in bank accounts;
(e) TANGIBLE PERSONAL PROPERTY. All machinery, equipment,
leasehold improvements, computers and other items of personal property,
including, but not limited to, all of its tools, fixtures, parts, supplies,
furniture, furnishings and motor vehicles;
(f) REAL PROPERTY LEASE. Rights under the leases (the
"Real Property Leases") (i) dated March 27, 1996, for the real property located
at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx Xx. 000, Xxxxxxxxxxxx, Xxxxxxx, (ii) dated
September 20, 1995, for the real property located at Professional Towers, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, and (iii) for the real property located at
0000 Xxxxxxxxx Xxxxxxx Xxx, Xxxxx #000 and all leasehold interests of Seller
therein and all rights of Seller to leasehold improvements located thereon (the
"Leased Real Property");
(g) CONTRACT RIGHTS. Rights under all Contracts and rights
to refunds and adjustments of any kind;
(h) AUTHORIZATIONS. All permits, licenses, orders,
approvals, authorizations, concessions, certificates, franchises or other
evidence of authority issued by any Governmental Authority relating to or
utilized in connection with the Business or any part thereof or the Purchased
Assets;
(i) INTELLECTUAL PROPERTY RIGHTS. Trade names, trademarks
and service marks and all registrations and applications for any of the
foregoing, works of authorship and all copyrights related thereto and all
registrations and applications therefor, inventions, discoveries, designs,
industrial models and all United States and foreign patent rights covered by,
disclosed in or otherwise related thereto and all registrations and applications
therefor and all reissues, divisions, continuations-in-part, re-examinations and
extensions thereof (collectively hereafter referred to as "Intellectual Property
Rights"), together with the right to xxx for past infringement and improper,
unlawful or unfair use of any of the foregoing;
(j) UNDOCUMENTED INTELLECTUAL PROPERTY. Know-how, Trade
Secrets, processes, technology, discoveries, unpatented inventions and designs,
formulae and procedures and other intellectual property, including, but not
limited to, documentation relating to any of the foregoing, all shop rights and
the right to xxx for past infringement or
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improper, unlawful or unfair use or disclosure thereof and the right to apply
for patent, design or similar protection therefor anywhere in the world;
(k) ARTISTIC WORKS. Works of authorship, literary works,
pictorial, and graphic works, motion picture and other audiovisual works, sound
recordings, all copies of any of the foregoing and all copyrights therein;
(l) DOCUMENTATION. Technical documentation, including, but
not limited to, all materials which reproduce, patterns, plans, designs,
research data, drawings, models, blueprints, specifications, flow sheets,
equipment and parts lists and descriptions and related instructions, manuals,
data, records and procedures and art work;
(m) RECORDS. Records and databases (excluding the In
Person Respondent Database, as defined in Section 1.3), including, but not
limited to, property records, regulatory records, research records, purchasing
and sales records, credit records, personnel and payroll records, accounting
records, computer programs, customer and vendor lists and records and such other
research and accounting records as Buyer may reasonably require in its conduct
of the business subsequent to the Closing;
(n) LISTINGS AND MATERIALS. Interest in and to telephone
and telex numbers, post office boxes and all listings pertaining to Seller in
all telephone books and directories, stationery, forms, labels, shipping
material, catalogs, brochures, art work, photographs and advertising and
promotional materials;
(o) WARRANTY RIGHTS. Rights in, to and under third-party
warranties;
(p) CLAIMS. Claims as to which Seller is a judgment
creditor; and
(q) OTHER. All assets reflected on the Acquisition Balance
Sheet, whether or not referenced in any paragraph above.
1.3 RETAINED ASSETS. Seller shall not sell, transfer or
assign, and Buyer shall not purchase (a) the "Xxxxxx" name (or any derivative
thereof); (b) the In Person Respondent Database as described on Schedule 1.3
(the "In Person Respondent Database"); or (c) the assets of Seller described on
SCHEDULE 1.3.
ARTICLE II
ASSUMED/RETAINED LIABILITIES
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2.1 RETAINED LIABILITIES. Except as specifically assumed
pursuant to Section 2.2, Buyer does not agree to assume and will not become
responsible for any Liability of Seller, including, without limitation, any
Liability relating to or arising out of the operation of the Business or the
ownership of the Purchased Assets prior to the Closing; including, without
limitation, in connection with (i) any claim by Xxxxxx X. Small or Xxxxx
Xxxxxx, (ii) any bonus or severance payments Seller has committed or is
obligated to pay Xxxx Xxxxx in connection
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with the transactions contemplated hereby or otherwise, (iii) any bonus payments
to Persons employed by Seller in the operation of the Business, consistent with
past practice, for the period prior to the Closing ("Pre-Closing Bonus
Payments") and (iv) the Seller Bonus Payment, regardless of whether the
foregoing are reflected on the Acquisition Balance Sheet.
2.2 ASSUMED LIABILITIES. Buyer hereby agrees to assume only
the following Liabilities (the "Assumed Liabilities") of Seller relating to
the operation of the Business or the Purchased Assets, existing as of the
Closing Date:
(a) The Liabilities of Seller relating to the Purchased Assets
identified on the Acquisition Balance Sheet;
(b) The Liabilities of Seller incurred since the date of the
Acquisition Balance Sheet in the ordinary course of business consistent
with past practices and recorded on the books of the Business (other
than employee compensation for any period prior to the Closing);
(c) The trade accounts payable of Seller relating to the
Purchased Assets incurred in the ordinary course of the operation of
the Business to the extent Seller is not in default or delinquent with
respect thereto;
(d) Seller's obligations under the Contracts listed on
SCHEDULE 2.2(D) (the "Assigned Contracts) other than obligations (i)
under the Contracts which are not legally or equitably assigned
(pursuant to Section 7.7) to Buyer by Seller and (ii) for any action or
failure to act for any period prior to the Closing;
(e) The Buyer Bonus Payment; and
(f) Unused paid time off for those employees of Seller hired
by Buyer, as set forth on Schedule 2.2(f) ("Paid Time Off").
2.3 SATISFACTION OF LIABILITIES BY SELLER. To preserve for
Buyer the opportunity to maintain good relations with Seller's creditors and
preclude the assertion of claims for nonpayment against Buyer, Seller agrees
after the Closing to pay promptly in full as they become due all Liabilities
of Seller relating to the Business except the Assumed Liabilities and such
other Liabilities as are subject to good faith dispute by Seller.
ARTICLE III
CONSIDERATION
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3.1 CASH PURCHASE PRICE. In consideration of the Purchased
Assets, Buyer shall pay Seller the purchase price (the "Purchase Price") in
the amount equal to the greater of (A) Two Million Eight Hundred Thousand
Dollars ($2,800,000), plus the amount, if any, by which the working capital of
the Business as of the Closing (determined in the same manner as for purposes
of the Acquisition Balance Sheet) (the "Working Capital Value") exceeds Five
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Hundred Forty Thousand Dollars ($540,000) (the "Working Capital Surplus"), less
the amount, if any, by which Four Hundred Sixty-Five Thousand Dollars ($465,000)
exceeds the Working Capital Value (the "Working Capital Deficit"), and (B) the
lesser of (I) Four Million Two Hundred Thousand Dollars ($4,200,000), plus the
Working Capital Surplus, if any, less the Working Capital Deficit, if any, and
(II) 5.71 times the actual pre-tax net income of the Business, determined
without giving effect to the Buyer Bonus Payment and using GAAP consistently
applied, for the fiscal year ending December 31, 1996 (the "1996 Pre-Tax Net
Income), plus the Working Capital Surplus, if any, less the Working Capital
Deficit, if any, payable as follows:
(i) Two Million Eight Hundred Thousand Dollars
($2,800,000) (which is equal to 70% of the product of 5.71 and
Seller's estimate of the 1996 pre-tax net income of Seven
Hundred Thousand Dollars ($700,000) for the Business) (the
"Closing Payment"), by wire transfer to Seller at the Closing;
(ii) the amount, if any (the "Buyer Escrow Amount"),
equal to the lesser of (a) ten percent (10%) of the Purchase
Price as finally determined pursuant to the procedures in
Sections 3.1 and 3.2 and (b) the amount, if any, by which the
Purchase Price as finally determined pursuant to the
procedures in Sections 3.1 and 3.2 exceeds the Closing
Payment, by wire transfer deposited in the Escrow Account on
or before March 1, 1997 or within ten (10) days of such date
as the Purchase Price shall be finally determined pursuant to
the procedures in Sections 3.1 and 3.2; and
(iii) the amount, if any, by which the lesser of (A)
the Purchase Price as determined pursuant to the procedures in
Sections 3.1 and 3.2 and (B) Four Million Two Hundred Thousand
Dollars ($4,200,000), plus the Working Capital Surplus, if
any, less the Working Capital Deficit, if any, exceeds the sum
of (x) the Closing Payment, and (y) the Buyer Escrow Amount,
by wire transfer to Seller on or before March 1, 1997 or
within ten (10) days of such later date as the Purchase Price
shall be finally determined pursuant to the procedures in
Sections 3.1 and 3.2.
3.2 DETERMINATION OF PURCHASE PRICE. Promptly after December
31, 1996 Buyer shall calculate the Purchase Price and deliver notice thereof
and copies of Buyer's calculations and working papers with respect thereto
("Buyer's Notice") to Seller. If Seller does not deliver written notice to
Buyer setting forth Seller's detailed objections to the Purchase Price as
determined by Buyer, within fifteen (15) days of Seller's receipt of Buyer's
Notice, the Purchase Price shall be as set forth in Buyer's Notice. If Seller
delivers written objection to Buyer and the parties cannot agree upon the
Purchase Price within thirty (30) days of Buyer's receipt of Seller's written
objection, the dispute shall be submitted to Xxxxx & Xxxxx, XXX, Xxxxxxxxx
office ("Independent Accountant") which shall determine the Purchase Price
which shall be binding upon the parties. Buyer and Seller shall each pay one
half of the Independent Accountant's fees and expenses.
Buyer and Seller each acknowledge that the calculation and
determination of the Purchase Price are subject to potential disagreements and
abuses. As a result, Buyer covenants
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and agrees to comply with the following restrictions, provisions and agreements
until January 1, 1997 and Buyer and Seller agree that the following
restrictions, provisions and agreements shall be utilized by the Independent
Accountant in the event that a dispute related to the Purchase Price shall be
submitted to the Independent Accountant:
(a) The Purchased Assets shall be maintained and the Business
shall be operated by Buyer as a separate and independent accounting
entity. None of the Purchased Assets shall be sold, conveyed,
exchanged, transferred, liquidated or otherwise disposed of by Buyer
except in the ordinary course of business, nor shall the Purchased
Assets or the Business be consolidated or merged with any other assets
or operations of Buyer.
(b) All accounting decisions made by Buyer with respect to the
Purchased Assets and the Business, and all decisions and actions by
Buyer related to the determination of the Purchase Price or any items
of income, expense, deduction, loss, or gain which would have an effect
on the determination of the Purchase Price, shall be made in good
faith, with a view towards maximizing gross revenues, gross profit and
net income, in any case, consistent with strategic business
considerations of the Business (other than solely for the purpose of
minimizing the Purchase Price).
(c) The accounting methods to be used by Buyer shall be
consistent with generally accepted accounting principles and with the
accounting principles used by Seller with respect to the Purchased
Assets and the Business prior to the consummation of the transactions
contemplated by this Agreement (to the extent such accounting
principles previously used by the Seller are in accordance with
generally accepted accounting principles), so as to not create any
extraordinary expenses or deductions which would lower gross profit,
net income or the Purchase Price.
(d) Buyer will provide Seller with reasonable access to its
financial information related to the Purchased Assets and the operation
of the Business so as to permit Seller to confirm the financial
information used to determine the Purchase Price.
(e) Any transactions or activities between the Buyer or any of
its Affiliates and the separate and independent accounting entity
established to maintain the Purchased Assets and operate the Business
shall be undertaken in good faith at arm's length and at fair and
competitive pricing.
(f) Buyer shall not take any action or fail to take any action
which would result in an unreasonable delay with respect to the
implementation or performance of contracts entered into in connection
with the Business or the realization of revenues therefrom or from any
other source which would have the effect of reducing gross revenues,
gross profit and net income, in any case, consistent with strategic
business considerations of the Business (other than solely for the
purpose of minimizing the Purchase Price).
3.3 SELLER ESCROW. Seller shall deposit the amount, if any,
by which ten percent (10%) of the Purchase Price exceeds the Buyer Escrow
Amount (the "Seller Escrow
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Amount"), by wire transfer in the Escrow Account on or before March 1, 1997 or
within ten (10) days of such later date as the Purchase Price shall be finally
determined pursuant to the procedures in Sections 3.1 and 3.2.
3.4 PARTIAL REFUND OF CLOSING PAYMENT. If the Closing
Payment exceeds the Purchase Price as finally determined pursuant to the
procedures in Sections 3.1 and 3.2, Seller shall pay Buyer the amount of such
excess by wire transfer on or before March 1, 1997 or within ten (10) days of
such later date as the Purchase Price shall be finally determined pursuant to
the procedures in Sections 3.1 and 3.2.
3.5 ALLOCATION OF PURCHASE PRICE. The fair market values of
the Purchased Assets and the allocation of the Purchase Price among the
Purchased Assets for purposes of Section 1060 of the Internal Revenue Code
shall be as set forth in SCHEDULE 3.5, and Buyer, Seller and Stockholder agree
to be bound by such allocation and to complete and attach IRS Form 8594 to
their respective tax returns accordingly.
ARTICLE IV
CLOSING
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4.1 CLOSING. The closing of the transaction contemplated
hereby will take place on October 25, 1996 at the offices of Xxxxxx, Halter &
Xxxxxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxx 00000, or such
other time and place as the parties mutually agree (the "Closing Date").
4.2 JOINT DELIVERIES. At the Closing, the parties shall
execute, and deliver to one another, the following:
(a) An Escrow Agreement substantially in the form of the
Escrow Agreement attached hereto as EXHIBIT A (the "Escrow Agreement");
(b) An Assignment and Assumption Agreement corresponding to
the form of Assignment and Assumption Agreement attached hereto as
EXHIBIT B;
(c) A Transition Agreement substantially in the form of the
Transition Agreement attached hereto as EXHIBIT C; and
(d) A License Agreement substantially in the form of the
License Agreement attached hereto as EXHIBIT D.
4.3 SELLER CLOSING DELIVERIES. At the Closing, Seller shall
deliver to Buyer the following:
(a) A Xxxx of Sale corresponding to the form of Xxxx of Sale
attached hereto as EXHIBIT E;
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(b) A Certificate of Seller corresponding to the form of
certificate attached hereto as EXHIBIT F certifying as to (i) the
continued accuracy as of the Closing Date of the representations and
warranties contained in Article V hereof, (ii) Seller's performance and
compliance with all obligations, covenants, and conditions required by
this Agreement to have been performed or complied with by Seller prior
to or on the Closing Date, (iii) the accuracy and efficacy of director
and stockholder resolutions of Seller, (iv) the Articles of
Incorporation and By-laws of Seller, and (v) the incumbency of the
officers executing documents and otherwise acting on behalf of Seller
in connection herewith;
(c) An Opinion of Seller's counsel corresponding to the form
of opinion attached hereto as EXHIBIT G;
(d) All third party consents required in connection with the
assignment and assumption of the Assigned Contracts; and
(e) A good standing certificate of the Secretaries of State of
the States of Indiana and Kentucky dated within ten (10) days of the
Closing Date certifying as to the good standing of Seller in the States
of Indiana and Kentucky.
4.4 BUYER CLOSING DELIVERIES. At the Closing, Buyer shall
deliver to Seller the following:
(a) The Closing Payment by wire transfer of funds;
(b) A Certificate of Buyer corresponding to the form of
certificate attached hereto as EXHIBIT H certifying as to (i) the
continued accuracy as of the Closing Date of the representations and
warranties contained in Article VI hereof, (ii) Buyer's performance and
compliance with all obligations, covenants and conditions required by
this Agreement to have been performed or complied with by Buyer prior
to or on the Closing Date, (iii) the accuracy and efficacy of director
resolutions of Buyer, (iv) the Articles of Incorporation and By-laws of
Buyer, and (v) the incumbency of the officers executing documents and
otherwise acting on behalf of Buyer in connection herewith;
(c) Good Standing Certificates of the Secretaries of State of
the States of Ohio, Indiana and Kentucky dated within ten (10) days of
the Closing Date, certifying as to the good standing of Buyer in such
states;
(d) an Instrument of Assumption corresponding to the form of
Instrument of Assumption attached hereto as EXHIBIT I;
(e) An opinion of Buyer's counsel corresponding to the form of
opinion attached hereto as EXHIBIT J.
4.5 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the Closing as provided in this Article IV
are, unless waived by Seller, subject to the fulfillment at or prior to the
Closing of each of the following conditions:
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(a) CLOSING DELIVERIES. Buyer shall have made all of the
deliveries required to be made by Buyer pursuant to Section 4.2 and 4.4
hereof;
(b) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer contained herein shall be true
in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties were made at and
as of such time; and Buyer shall have performed and complied with all
obligations, covenants, and conditions required by this Agreement to
have been performed or complied with by it prior to or on the Closing
Date;
(c) LITIGATION, ETC. On the Closing Date, no litigation or
administrative proceedings shall be pending or threatened, the purpose
or effect of which is to restrain or question the legality of the
transactions contemplated hereby; and
(d) AUTHORIZATION; CONSENTS. All corporate action necessary to
authorize the execution, delivery, and performance of this Agreement
shall have been duly and validly taken by Buyer; and all material
consents of third parties required in order for Buyer to consummate the
transactions contemplated by this Agreement shall have been obtained by
Buyer and copies thereof delivered to Seller.
4.6 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The
obligations of Buyer to consummate the Closing as provided in this Article IV
are, unless waived by Buyer, subject to the fulfillment at or prior to the
Closing of each of the following conditions precedent:
(a) CLOSING DELIVERIES. Seller shall have made all of the
deliveries required to be made by Seller pursuant to Section 4.2 and
4.3 hereof;
(b) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller contained herein shall be true
in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties were made at and
as of such time; and Seller shall have performed and complied with all
obligations, covenants, and conditions required by this Agreement to
have been performed or complied with by them prior to or on the Closing
Date;
(c) LITIGATION, ETC. On the Closing Date, no litigation or
administrative proceedings shall be pending or threatened, the purpose
or effect of which is to restrain or to question the legality of the
transactions contemplated hereby;
(d) AUTHORIZATION; CONSENTS. All corporate action necessary to
authorize the execution, delivery, and performance of this Agreement
shall have been duly and validly taken by the Seller; and all consents
of third parties required in order for Seller to comply with this
Agreement and to consummate the transactions contemplated by
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this Agreement, or for the Purchased Assets to be sold to Buyer free
and clear of all Liens shall have been obtained by the Seller and
copies thereof delivered to Buyer;
(e) ABSENCE OF CERTAIN EVENTS. Buyer shall not have learned of
any fact or condition which in Buyer's judgment could materially and
adversely affect the condition of Seller's or the Business's assets,
businesses, operations or relationships with any of its employees (or
former employees) or any of the Business's customers or vendors;
(f) DUE DILIGENCE. Buyer shall be satisfied with the results
of its due diligence review of Seller, the Division and the Business
pursuant to Section 7.1; and
(g) MATERIAL ADVERSE CHANGES. There shall have been no
material adverse change since the date of the Acquisition Balance Sheet
in the financial condition, business or affairs of the Seller, the
Division or the Business.
4.7 INTERDEPENDENCE. The transfers and deliveries
described in this Article IV shall be mutually interdependent and regarded as
occurring simultaneously as of the Closing Date; and, unless waived by both the
transferor and transferee, no such transfer or delivery shall become effective
unless and until all the other transfers and deliveries provided for in this
Article IV have also been consummated.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION
5.1.1 IN GENERAL. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana.
Seller is qualified to do business and in good standing as a foreign corporation
in the State of Kentucky. Seller is not, and is not required to be, qualified to
do business or otherwise licensed in any state other than the States of Indiana
and Kentucky by reason of the operations or assets of the Business. Seller has
full corporate power to: (a) own, lease and operate the Purchased Assets and
carry on the Business as and where the Purchased Assets are now owned or leased
and as the Business is presently being conducted; and (b) execute, deliver and
perform this Agreement and all other agreements and documents to be executed and
delivered by it in connection herewith.
5.1.2 OTHER VENTURES. Except as set forth on SCHEDULE
5.1.2, Seller has no ownership interest in any other business entity, is not a
member of any partnership or joint venture, and has never operated as a
subsidiary or division of any other business entity.
5.1.3 OWNERSHIP OF SELLER. All of the issued and
outstanding shares of the capital stock of Seller is owned of record and
beneficially by Stockholders free and clear of Liens as set forth on SCHEDULE
5.1.3. Except as will not affect Seller's ability to convey the
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Purchase Assets to Buyer as contemplated hereby, or Buyer's rights in and to the
Purchase Assets, there are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, conversion rights or other agreements,
arrangements or rights of any character or nature whatever under which Seller
is, or may be, obligated to issue any shares of any class of its capital stock,
there are no commitments of Seller to issue or grant any such subscription,
option, warrant, call, contract, demand, commitment, conversion right or other
agreement, arrangement or right and no holder of any security of Seller is
entitled to any preemptive or similar rights to purchase any securities of
Seller.
5.2 STATUS OF AGREEMENTS.
5.2.1 SELLER AND/OR STOCKHOLDERS ENFORCEABILITY. All
requisite corporate action to approve, execute, deliver and perform this
Agreement and each other agreement and document delivered by or on behalf of
Seller in connection herewith has been taken by Seller. This Agreement and each
other agreement and document executed and delivered by or on behalf of Seller
and/or Stockholders in connection herewith has been duly executed and delivered
by Seller and/or Stockholders (only with respect to the covenants in Section 7.9
in the case of Stockholders) and constitutes the binding obligation of Seller
and/or Stockholders (only with respect to the covenants in Section 7.9 in the
case of Stockholders) enforceable in accordance with its respective terms.
5.2.2 NO CONFLICTS. No action taken by or on behalf of
Seller or Stockholders in connection herewith, including, but not limited to,
the execution, delivery and performance of this Agreement, and each other
agreement and document delivered by all or any of them in connection herewith:
(a) conflicts with or violates: (i) any Law; (ii) Seller's Articles of
Incorporation or By-Laws; (iii) any Contract to which either Seller or
Stockholders are a party or by which any of them is bound; (iv) any order,
arbitration award, judgment, injunction, decree, permit or other similar
restriction to which either Seller or Stockholders are subject; or (b)
constitutes an event which, after notice or lapse of time or both, could result
in any of the foregoing.
5.3 FINANCIAL.
5.3.1 FINANCIAL RECORDS. SCHEDULE 5.3.1 consists of: (a)
the balance sheets of the Business as of December 31, 1994 and 1993 and related
statements of income and cash flows for the twelve month periods then ended
prepared by Seller; (b) the balance sheet of the Business as of December 31,
1995 and related statements of income and cash flows for the twelve months then
ended, audited by Ernst & Young, L.L.P.; (c) the balance sheet of the Business
as of September 30, 1996 (the "Acquisition Balance Sheet"), and related
statements of income and cash flows for the nine months then ended, audited by
Ernst & Young, L.L.P.; and (d) the balance sheet of Seller as of September 30,
1996. All such financial statements were prepared from Seller's books of account
in accordance with GAAP, consistently applied, are materially correct and
complete. The financial statements described in Subsections (a), (b) and (c)
present fairly the financial position, results of operations and cash flows of
the Business at the dates and for the periods indicated, except for the absence
of footnote disclosure and customary year-end audit adjustments of a normal
recurring type which would not be material in the aggregate in the financial
statements described in Subsection (a) above
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and the Acquisition Balance Sheet and related income statement. The books of
account of Seller fairly reflect all items of income and expense (including, but
not limited to, accruals) and all assets and liabilities of the Business in
accordance with normal GAAP, subject to customary year-end audit adjustments of
a normal, recurring type which would not be material in the aggregate.
5.3.2 LIABILITIES. Seller has no Liabilities relating to
the operation of the Business or the ownership of the Purchased Assets except:
(a) to the extent provided for or reserved against on the Acquisition Balance
Sheet; (b) current liabilities which have arisen in the ordinary course of
business consistent with past practice since the date of the Acquisition Balance
Sheet (all of which have been recorded on the books of the Business); or (c) as
listed on SCHEDULE 5.3.2. Since the date of the most recent fiscal year end
balance sheet in SCHEDULE 5.3.1, there has not been any incurrence (whether
discharged or not) of any Liability by Seller relating to the operation of the
Business or the ownership of the Purchased Assets other than current liabilities
incurred, and obligations entered into, in the ordinary course of business
consistent with past practice.
5.3.3 NO CHANGE. Except as set forth on SCHEDULE 5.3.3,
since December 31, 1995 there has not been any material adverse change or
development in the business, assets, liabilities, operations, earnings,
financial condition, prospects or business relationships of the Business or the
Division, and no fact exists, or to the Knowledge of Seller, is contemplated or
threatened, that might cause such a change in the future. Without limiting the
generality of the foregoing, except as disclosed on SCHEDULE 5.3.3, since
December 31, 1995, with respect to the Business, Seller has not, other than in
the ordinary course of business consistent with past practice:
(a) changed any accounting method;
(b) agreed to any (i) increase in the compensation payable or
to become payable by it to any of Seller's officers, directors or
employees engaged in the operation of the Business, or (ii) amended any
Employee Benefit Plan;
(c) entered into any agreement which provides for the deferred
compensation of any officer, director or employee engaged in the
operation of the Business;
(d) incurred any indebtedness for borrowed money, made any
commitment to borrow money, or been delinquent in the payment of any
installment of principal and/or interest as the same became due in
connection with any indebtedness of Seller;
(e) sold, transferred or assigned or subjected to any Lien,
any asset material to the operation of the Business;
(f) modified, amended or terminated any material Contract or
similar arrangement relating to the operation of the Business or the
ownership of the Purchased Assets, whether written or oral which could
reasonably be expected to have a material adverse effect on the
Business;
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(g) incurred any loss or damage to any asset material to the
operation of the Business;
(h) accelerated any payment due any officer, director or
employee of the Business;
(i) suffered any material adverse change in the Business'
business operations, assets or prospects;
(j) entered into any transaction other than an ordinary course
of business consistent with past practice; or
(k) authorized, approved or agreed to any of the foregoing.
5.3.4 TAXES. All Tax returns, reports and declarations
(hereinafter collectively, "Tax Returns") required by any Governmental Authority
to be filed in connection with the properties, business, income, expenses, net
worth and franchises of Seller have been timely filed, and such returns are
correct and complete. All Tax due in connection with the properties, business,
income, expenses, net worth and franchises of Seller has been paid, other than
Tax which is not yet due or which, if due, is not yet delinquent or is being
contested in good faith, and for which in all cases reserves have been
established in the Acquisition Balance Sheet which are sufficient to cover the
payment of all such Tax. There are no Tax claims, audits or proceedings pending
in connection with the properties, business, income, expenses, net worth and
franchises of Seller, and, to the Knowledge of Seller, there are no such
threatened claims, audits or proceedings. Neither the Division nor Seller has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations. The Division has no liability for any Taxes of any other Person.
Neither Seller nor the Division has waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
5.4 LEGAL.
5.4.1 COMPLIANCE WITH LAWS. To Seller's Knowledge, Seller
is not, in connection with the operation of the Business or the ownership of the
Purchased Assets, in violation of any Law, including, but not limited to, any
anti-discrimination, hazardous and toxic substance, wage, hour, working
conditions, payroll withholding, pension, building, zoning and Tax Law, or any
outstanding arbitration award, judgment, order, injunction, decree, or permit,
nor have there been any allegations of or inquiries concerning any such
violations. There have been no allegations of or inquiries concerning any
violations of Law by Seller, the violation of which could have a material
adverse effect on the operations or financial condition of the Business. Except
for those listed on SCHEDULE 5.4.1, no permits, licenses, orders, approvals,
authorizations, concessions, certificates, franchises or other evidence of
authority issued by any Governmental Authority ("Permits") are required to
conduct the Business. Seller has all such Permits and all such Permits are in
full force and effect, and no proceeding is pending to revoke or limit any of
them and there is no state of facts or event which could reasonably be expected
to form the basis for any such revocation or
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limitation. There have been no claims, notices, orders or directives issued by
any Governmental Authority with respect to Business or any of the Purchased
Assets.
5.4.2 SERVICE LIABILITY. Except as and to the extent
listed on SCHEDULE 5.4.2, no product liability or other tort claims have been
made or threatened against Seller relating to services performed by Seller in
the operation of the Business.
5.4.3 LITIGATION. Except as and to the extent listed on
SCHEDULE 5.4.2 or 5.4.3, no claim, litigation, action, investigation or
proceeding is pending or, to Seller's Knowledge, threatened, and no
arbitration award, judgment, order, injunction or decree is outstanding,
against or relating to the Purchased Assets or the Business, and there is no
state of facts or event which could reasonably be expected to form the basis for
such a claim, litigation, action, investigation or proceeding.
5.5 BUSINESS.
5.5.1 EMPLOYMENT. With respect to the employees engaged in
the operation of the Business:
(a) Seller has (i) paid in full to all
employees all wages, commissions, bonuses and other
direct compensation for all services performed by
them or (ii) properly accrued for such wages,
commissions, bonuses and other direct compensation
as of the Closing Date.
(b) There are no controversies, grievances
or claims by any of the employees, former employees
or beneficiaries of employees of Seller pending with
respect to their employment or benefits incident
thereto, including, but not limited to, sexual
harassment and discrimination claims and claims
arising under workers' compensation laws, and there
is no state of facts or event which could reasonably
be expected to form the basis for any such
controversies, grievances or claims.
(c) Seller has complied with all applicable
federal, state, and local laws, rules, and
regulations relating to the employment of labor,
including the provisions thereof relating to wages,
hours, working conditions, Employee Benefit Plans,
equal employment, fair employment practices,
entitlements, prohibited discrimination and the
payment of withholding and social security taxes,
and is not liable for any arrears of compensation or
any taxes or penalties for failure to comply with
any of the foregoing, and has received no notice to
the contrary from any Governmental Authority.
(d) Seller has complied with all federal,
state, and local labor laws, rules, and regulations
in connection with the transactions contemplated by
this Agreement.
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(e) SCHEDULE 5.5.1 lists the name, address,
social security number and current annual
compensation rates and other compensation
arrangements of each employee of Seller.
5.5.2 COMPLIANCE WITH CONTRACTS. SCHEDULE 2.2(d) contains
an accurate and complete list of all Contracts, including a description of the
material terms of all oral Contracts, to which Seller is a party with respect to
the operation of the Business or the ownership of the Purchased Assets. Seller
has delivered to Buyer a true, complete and accurate copy of each Assigned
Contract, including all amendments thereto. Except as set forth on SCHEDULE
5.5.2, with respect to the Assigned Contracts, (i) each Assigned Contract is
legal, valid, binding and enforceable and in full force and effect; (ii) each
Assigned Contract is assignable by Seller to Buyer without the consent or
approval of any party and will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing; and (iii)
the enforceability of any Assigned Contract will not be effected in any manner
by the execution, delivery and performance of this Agreement; and (iv) no party
is in breach or default, and no event has occurred which, with notice or lapse
of time, or both, would constitute a breach or default or permit termination,
modification or acceleration under such Assigned Contract. There have been no
discussions or correspondence concerning breach by Seller or termination of any
of the Assigned Contracts. All activities conducted by Seller pursuant to the
Assigned Contracts have been performed in compliance with the Assigned
Contracts.
5.5.3 CUSTOMERS. SCHEDULE 5.5.3 sets a correct and
complete list of all customers of the Business whose relationships with Seller
have during the current fiscal year or any of the three most recent fiscal years
of Seller generated two percent (2%) or more of the Business's income. No such
customer and no other customer material to the Business has terminated, or
threatened to terminate, its relationship with Seller or has during the past
year decreased or delayed materially, or threatened to decrease or delay
materially, its usage of Seller's services, and there is no state of facts or
event which could reasonably be expected to form the basis for such a decrease
or delay. To Seller's Knowledge, the transactions contemplated in this Agreement
will not adversely affect the relationship of the Business with any such
customer. Seller is not required, in the ordinary course of the Business, to
provide any bonding or any other financial security arrangements in connection
with any transactions with any customers.
5.5.4 CONFLICTS OF INTEREST. Except as set forth on
SCHEDULE 5.5.4, neither Stockholders, nor any director, employee or Affiliate of
Seller, nor any relative of any Stockholder: (a) owns, directly or indirectly,
any interest in (other than less than a one percent interest in the capital
stock of a publicly traded company), or is an employee or agent of, any entity
which is a competitor, lessor, lessee, customer or supplier of the Business; (b)
owns, directly or indirectly, any interest in, any tangible or intangible
property, asset, or right used in the Business; (c) has any cause of action or
claim against, owes any amount to, or is owed any amount by Seller in connection
with the Business; (d) is a party to any Contract with Seller relating to the
Business; or (e) received a loan, gift or advance from Seller in connection with
the Business in the three year period preceding the Closing Date.
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5.5.5 CONFIDENTIALITY. Seller has taken all reasonable
steps necessary to preserve the confidential nature of all confidential
information (including, without limitation, any proprietary information) with
respect to the Business.
5.5.6 NO GUARANTIES. None of the obligations or
liabilities of the Business or the Seller incurred in connection with the
operation of the Business or the ownership of the Purchased Assets is guaranteed
by or subject to a similar contingent obligation of any other Person. Seller has
not guaranteed or become subject to a similar contingent obligation in respect
of the obligations or liabilities of any other Person in connection with the
Business. There are no outstanding letters of credit, surety bonds or similar
instruments of Seller, any Stockholder or any of their respective Affiliates in
connection with the Business or the Purchased Assets.
5.5.7 CONDUCT OF BUSINESS. Seller has operated the
Business, including its clinical testing activities and institutional review
board functions and activities, in accordance with accepted industry guidelines
and standards. Seller has complied with all contractual and regulatory
requirements, regulations and guidelines, including, without limitation, with
respect to (i) selecting investigators; (ii) obtaining documentation from
investigators, (iii) verifying that patient informed consent is obtained, (iv)
monitoring the validity and accuracy of data; and (v) verifying drug
accountability and instructing investigators to maintain records and reports.
5.5.8 INSURANCE. SCHEDULE 5.5.8 lists all insurance
policies maintained by Seller with respect to the Business or the Purchased
Assets and identifies for each such policy the following: underwriter, policy
number, coverage type, premium, expiration date, coverage amount and deductible.
Such insurance policies are of the type and in amounts customarily carried by
persons or entities conducting similar businesses or operating similar assets
for similar purposes in the localities of Seller's businesses and assets. All
such policies are in full force and effect and all premiums have been paid.
Except for amounts deductible under policies of insurance described on SCHEDULE
5.5.8 or as otherwise set forth in such Schedule, Seller is not, and has not
been at any time, subject to Liability as a self-insurer. There is no dispute
pending, and to Seller's Knowledge, no state of facts or event which could
reasonably be expected to form the basis for a dispute, with any underwriter of
Seller's insurance. In the past three years, Seller has not received notice from
any insurer threatening to cancel any insurance coverage or requiring any
changes or corrective work which has not been satisfied.
5.5.9 ENVIRONMENTAL. Except as set forth on SCHEDULE 5.5.9
hereto: (i) Seller has at all times complied with all applicable environmental
Laws, except for any non-compliance which could not reasonably be expected to
have, either singly or in the aggregate, a material adverse effect on the assets
or results of operations of Seller; (ii) all past on-site generation, treatment,
storage and disposal of Waste, including Hazardous Waste, by Seller has been
done in compliance with then currently applicable Environmental Laws; and (iii)
all past off-site treatment, storage and disposal of Waste, including Hazardous
Waste, generated by Seller has been done in compliance with then currently
applicable Environmental Laws. The current or former facilities of Seller do not
contain any material environmental contamination that could require any removal
or clean-up or result in any exposure of Buyer to
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costs associated with such a removal or clean-up. As used in this Section 5.5.9,
the terms (i) "Environmental Law" means any federal, state or local law,
statute, charter or ordinance, any rule or regulation issued pursuant to any of
the foregoing and any permit, order, court order or consent decree applicable to
Seller issued pursuant to any of the foregoing, which pertains to, governs or
otherwise regulates any of the following activities: (a) the emission,
discharge, release or spilling of any substance into the air, surface water,
groundwater, soil or substrata; or (b) the manufacturing, processing, sale,
generation, treatment, storage, disposal, labeling or other management of any
Waste, Hazardous Substance or Hazardous Waste, and (ii) "Waste," "Hazardous
Substance," and "Hazardous Waste" include any substance defined as such by any
applicable Environmental Law.
5.5.10 BACKLOG. SCHEDULE 5.5.10 sets forth an accurate and
complete description of the backlog of the Business, including all commitments
for services to be rendered by the Business. All such commitments were entered
into in the ordinary course of business, consistent with past practice. To
Seller's Knowledge, there is no fact or circumstance from which Seller could
have reason to believe that such commitments will not be expected to be
performed by the Business as set forth on SCHEDULE 5.5.10.
5.6 EMPLOYEE BENEFITS.
5.6.1 GENERAL.
(a) Except as otherwise set forth on SCHEDULE 5.6,
Seller neither maintains nor is required to contribute to any Employee Benefit
Plan or Other Plan covering Persons employed in the Business. Seller has
delivered to Buyer accurate and complete copies of each such written Employee
Benefit Plan and Other Plan, and an accurate and complete written description of
each such oral Employee Benefit Plan and Other Plan, in each case with all
modifications and amendments thereto.
(b) Each Employee Benefit Plan and Other Plan
maintained by Seller covering Persons employed in the Business has been operated
in accordance with its terms and applicable Law.
(c) No Employee Benefit Plan or Other Plan provides
benefits for persons who are not active employees or directors of Seller.
(d) Seller has not, and to the Seller's Knowledge no
other person has, engaged in any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code, excluding any
transactions which are exempt under Section 408 of ERISA or Section 4975 of the
Internal Revenue Code) with respect to any Employee Benefit Plan covering
Persons employed in the Business which Seller maintains, or to which Seller
contributes, which could subject Seller or any such other person to any
Liability. No event has occurred and no condition exists that would subject
Seller to any Tax under Internal Revenue Code Sections 4971, 4972, 4977 or 4979,
or to a fine under ERISA Sections 502(c) or 502(l).
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(e) Seller has the right to amend or terminate,
without the consent of any other person or entity, any Employee Benefit Plan or
Other Plan covering Persons employed in the Business which it maintains, except
as prohibited by Law.
(f) Except the Pre-Closing Bonus Payments, the
Seller Bonus Payment and any payments to Xxxx Xxxxx as more fully described in
Section 2.1 (with respect to which Xx. Xxxxx is the only eligible employee of
Seller), Seller does not maintain any Employee Benefit Plan or Other Plan
covering Persons employed in the Business under which it would be obligated to
pay benefits because of the consummation of the transaction contemplated by this
Agreement.
(g) Except as described on SCHEDULE 5.6.1, since the
date of the most recent fiscal year end balance sheet in SCHEDULE 5.3.1, there
has not been any increase made or promised in the benefits payable under any
Employee Benefit Plan or Other Plan of Seller covering Persons employed in the
Business.
(h) Each trust forming a part of any Pension Plan
maintained by Seller meets, and for all prior periods has met, all requirements
for qualification under Sections 401 and 501 of the Internal Revenue Code, and
all applicable related rules and final regulations, except that no
representation is made as to the satisfaction of any such formal qualification
requirements with respect to which the remedial amendment period set forth in
Section 401(b) of the Internal Revenue Code, and any regulations, rulings or
other Internal Revenue Service releases, thereunder, has not expired. Seller has
timely made all contributions (including periodic installments) required by law
or contract to be made to any Pension Plan or Welfare Plan or Other Plan
covering Persons employed in the Business maintained by Seller.
5.6.2 MULTIEMPLOYER PLANS. Seller is not required,
nor has it ever been required, to contribute with respect to any Multiemployer
Plan covering Persons employed in the Business.
5.6.3 WELFARE PLANS.
(a) Except as set forth on SCHEDULE 5.6.3, no
Welfare Plan covering Persons employed in the Business maintained by Seller is
funded by a trust.
(b) Each Welfare Plan covering Persons
employed in the Business maintained by Seller intended to meet the requirements
for tax-favored treatment under subchapter B of Chapter 1 of the Internal
Revenue Code meets such requirements.
(c) With respect to any Welfare Plan covering
Persons employed in the Business maintained by Seller there is no disqualified
benefit, as such is defined in Internal Revenue Code Section 4976(b), which
would subject Seller to a Tax under Internal Revenue Code Section 4976(a).
5.6.4 PENSION PLANS. Seller has never sponsored, nor
been required to contribute to, any Defined Benefit Plan covering Persons
employed in the Business.
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5.7 STATUS OF ASSETS.
5.7.1 TITLE. The Purchased Assets are free and clear
of all Liens. All of the Assigned Contracts are valid, in full force and effect
and enforceable in accordance with their terms by Seller.
5.7.2 CONDITION. All of the fixed assets included in
the Purchased Assets are in good operating condition, normal wear and tear
excepted, neither require nor are reasonably expected to require any special or
extraordinary expenditures to remain in such condition beyond maintenance and
repairs necessary in the ordinary course of operations, and are capable of being
used for their intended purpose in the ordinary course of business consistent
with past practice.
5.7.3 RECEIVABLES. The billed and unbilled accounts
receivable included among the Purchased Assets are valid and genuine; have
arisen solely out of the bona fide performance of services in the ordinary
course of business; and are not subject to any set-off or counterclaim. SCHEDULE
5.7.3 sets forth a 30/60/90 day aging summary of those accounts receivable
included among the Purchased Assets as of the prior month end which have been
billed to customers or clients. The billed and unbilled accounts receivable as
described on the Acquisition Balance Sheet are collectible except as expressly
provided in any reserve or in notes to such balance sheet.
5.7.4 PROPRIETARY PROPERTY. To Seller's Knowledge,
Seller has not infringed, misappropriated or misused any patent, trademark,
trade name, copyright (or application for any of the foregoing), trade secret,
know-how or confidential information or data of another. Seller has the complete
and unrestricted right to use, own and has good title to, and the exclusive
right to assign the entire right, title and interest in and to all of its trade
secrets, know-how, patents, trademarks, service marks, trade names, copyrights
and applications for any of the foregoing, each of such items is in full force
and effect and such items are the only proprietary property used or necessary in
connection with the Business as presently conducted. SCHEDULE 5.7.4 lists all of
Seller's patents, trademarks, service marks, trade names and copyrights and all
applications for any of the foregoing relating to the Business. There has been
no infringement, misappropriation or misuse of any of Seller's proprietary
information.
5.7.5 PREPAYMENTS AND DEPOSITS. Except as described
on SCHEDULE 5.7.5, Seller has not received any prepayments or deposits from
customers for services to be performed, in the future.
5.7.6 REAL PROPERTY LEASES. Seller has delivered to
Buyer correct and complete copies of the Real Property Leases, together with all
amendments thereto. Each Real Property Lease is legal, valid, binding,
enforceable, and in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors
generally. Neither Seller nor any other party is in default, violation or breach
in any respect under any Real Property Lease, and no event has occurred and is a
continuing that constitutes or, with notice or the passage of time or both,
would constitute a default, violation or breach in
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any respect under any Real Property Lease. Each Real Property Lease grants the
tenant under the Real Property Lease the exclusive right to use and occupy the
demised premises thereunder. The Seller has good and valid title to the
leasehold estate under each Real Property Lease free and clear of all Liens.
Seller enjoys peaceful and undisturbed possession under the Real Property
Leases. The real property leased to Seller pursuant to the Real Property Leases
constitutes all the fee and leasehold interests in real property held for use in
connection with, necessary for the conduct of, or otherwise material to, the
Business.
5.7.7 EXTENT. Except as set forth on SCHEDULE 5.7.7, the
Purchased Assets and the assets to be leased or licensed to Buyer pursuant to
the assignment of an Assigned Contract hereunder, include all those which have
been used to operate the Business in the ordinary course as presently conducted.
The Purchased Assets include all assets reflected on the Acquisition Balance
Sheet and all assets acquired by Seller after the date of the Acquisition
Balance Sheet, except those assets of Seller relating to the Business which have
been disposed of with the prior written consent of Buyer. Since the date of the
Acquisition Balance Sheet, there has not been any damage to or disposition
(except for the sale of inventory in the ordinary course of business consistent
with past practice) or loss of (whether or not covered by insurance) any
material asset of the Business.
5.8 MISCELLANEOUS.
5.8.1 NO BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Seller, Stockholders and their Affiliates in such manner as not to give rise
to any valid claim against them or Buyer for a brokerage commission or
finder's fee.
5.8.2 ACCURACY AND COMPLETENESS. No statement of fact made
by Seller or any Stockholder in this Agreement or in any Exhibit or Schedule
hereto or in any certificate delivered pursuant to this Agreement is false or
inaccurate in any material respect or omits to state any material fact necessary
in order to make the statement made herein or therein not misleading.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
6.1 ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has full corporate power to execute, deliver and perform this
Agreement and all other agreements and documents to be executed and delivered by
it in connection herewith.
6.2 STATUS OF AGREEMENTS.
6.2.1 ENFORCEABILITY. All requisite corporate action to
approve, execute, deliver and perform this Agreement and each other agreement
and document delivered by or on behalf of Buyer in connection herewith has been
taken by Buyer. This Agreement and each other agreement and document executed
and delivered by or on behalf of Buyer in connection herewith has been duly
executed and delivered by Buyer and constitute the binding obligations of Buyer
enforceable in accordance with their respective terms.
6.2.2 CONSENTS. No approval or consent of, or filing with,
any Person or Governmental Authority is required in connection with the
transactions contemplated hereby or the execution, delivery or performance by
Buyer of this Agreement or any other agreement or document delivered by or on
behalf of Buyer in connection herewith.
6.2.3 NO CONFLICTS. No action taken by or on behalf of
Buyer in connection herewith, including, but not limited to, the execution,
delivery and performance of this Agreement, and each other agreement and
document delivered by it in connection herewith, conflicts with or violates: (a)
any Law applicable to Buyer; (b) Buyer's Articles of Incorporation or Code of
Regulations; or (c) any agreement to which Buyer is a party or by which Buyer is
bound; or constitutes an event which, after notice or lapse of time or both,
could result in any of the foregoing.
ARTICLE VII
COVENANTS
---------
7.1 ACCESS. During the period from the date hereof through the
Closing Date, Seller shall give Buyer and its counsel, accountants, and other
representatives full access to the property, books, Contracts, agreements,
records, working papers, reports, commitments and all other data (financial or
otherwise) of the Business during normal business hours, and Seller shall
furnish to Buyer copies of all such documents and all such information relating
to the Business as Buyer may from time to time or at any time reasonably
request. In addition, Seller will permit Buyer, Buyer's accountants, counsel,
consultant, employees and agents, reasonable access to such personnel of Seller
employed in the operation of the Business during
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normal business hours as may be necessary or useful to Buyer in its review of
the properties, assets and business affairs of the Division and the Business and
the above-mentioned documents, records and information. Seller will keep Buyer
generally informed as to the affairs of the Business. No review, examination, or
investigation by Buyer and its representatives, hereunder or otherwise, shall
affect the continuing validity or effect of Seller's or representations and
warranties contained in this Agreement and the schedules hereto.
7.2 CONDUCT OF BUSINESS PENDING THE CLOSING
7.2.1 COVENANTS OF SELLER. From the date hereof to the
Closing Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the Buyer in writing, Seller will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore
conducted, and use all reasonable efforts to preserve intact
its present business organization, maintain its properties in
good operating condition and repair, keep available the
services of its present officers and significant employees
(other than Xxxxxxx X. Xxxxxxxx), and preserve its
relationship with customers, suppliers and others having
business dealings with it, to the end that its goodwill and
going business shall be unimpaired following the Closing;
(b) except for matters disputed in good faith, pay
accounts payable and other obligations of the Business when
they become due and payable in the ordinary course of business
consistent with prior practice;
(c) perform all of its obligations under all Contracts and
other agreements and instruments relating to or affecting the
Business or the Purchased Assets, and comply with all Laws
applicable to it, the Purchased Assets or the Business;
(d) not enter into or assume any material Contract
relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect
thereof;
(e) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of
any employee engaged in the operation of the Business or
institute, adopt or amend (or commit to institute, adopt or
amend) any compensation or benefit plan, policy, program or
arrangement applicable to any such employee;
(f) not take any action or omit to take any action, which
action or omission would result in a breach of any of the
representations and warranties set forth in Article V.
7.3 PERFORMANCE OF CONDITIONS TO CLOSING. Seller,
Stockholders and Buyer agree to use their best efforts to refrain from taking
any action (or omitting to take any
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necessary action) the result or potential result of which would be to cause the
nonfulfillment of any condition to any party's obligation to close the
transactions contemplated hereunder, and they agree to otherwise cooperate with
each other in taking such actions as may reasonably be required to effect the
Closing as contemplated hereunder.
7.4 CONFIDENTIALITY. Buyer, Stockholders and Seller agree that
any information contained in any Schedule or Exhibit to this Agreement or
otherwise provided to Buyer, Stockholders or Seller pursuant to this Agreement
shall be held by Buyer, Stockholders or Seller in strictest confidence and
Buyer, Stockholders and Seller shall not use such information except for the
purpose of evaluating the transaction contemplated hereby; provided, however,
this Section 7.4 shall not apply to any information which (A) is or becomes
generally known to the public other than by the disclosure or use thereof by
Buyer, Stockholders or Seller, or (B) is obtained by Buyer, Stockholders or
Seller from a third party who is lawfully in possession of such information and
is not subject to any obligation to refrain from disclosing such information to
Buyer, Stockholders or Seller.
7.5 EXPENSES; TRANSFER TAXES. Except to the extent otherwise
specifically provided herein, Buyer shall pay all of the expenses incident to
the transactions contemplated by this Agreement which are incurred by Buyer or
its representatives, and Seller shall bear and pay all of the expenses incident
to the transactions contemplated by this Agreement which are incurred by Seller,
Stockholder or their representatives. Notwithstanding the foregoing, Buyer shall
pay the third party accounting fees and expenses incurred in connection with the
audit of the December 31, 1995 and September 30, 1996 financial statements of
the Business described in Section 5.3.1. Seller and Buyer agree to share equally
in the payment of all sales or other transfer taxes, if any, which may be
payable in connection with the transactions contemplated by this Agreement.
7.6 FURTHER ASSURANCES. Seller agrees that, at any time and
from time to time after the date hereof, it will, upon the request of Buyer and
at Seller's expense, do all such further reasonable acts as may be required to
further transfer, assign and confirm to Buyer, or to aid and assist in the
collection or gaining of possession by Buyer of, any of the Purchased Assets, or
to vest in Buyer good and marketable title to the Purchased Assets.
7.7 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. To the extent that
any Assigned Contract is not capable of being assigned or transferred by Seller
(or if Buyer's purchase is deemed a prohibited transfer or assignment because of
change in control to the extent that an Assigned Contract would or may not
remain in effect on its existing terms upon such purchase) without the consent,
release or waiver of any third party (a "Non-Assignable Contract"), or if the
assignment or transfer or attempted assignment or transfer without such consent,
release or waiver would breach the Non-Assignable Contract (or result in the
third party having the right to terminate the Non-Assignable Contract), Seller
shall use its best efforts to obtain such consent, release or waiver and the
Non-Assignable Contract need not be assigned or transferred by Seller to Buyer
unless and until any such required consent, release or waiver has been obtained.
If at the Closing Date, any Non-Assignable Contract shall not have been assigned
or transferred to Buyer (or if Buyer's purchase continues to be deemed a
prohibited transfer or assignment as aforesaid), Seller shall make an equitable
assignment to Buyer of the rights, benefits, and interest in each Non-Assignable
Contract which can be enjoyed indirectly
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by Buyer. Where necessary or appropriate as permitted, Seller may designate
Buyer an "affiliate" (as such term may be defined in a Non-Assignable Contract)
and Seller shall, on behalf of Buyer, complete, fulfill and discharge all of the
rights and obligations arising after the Closing with respect to each
Non-Assignable Contract. Seller shall use its best efforts to provide Buyer with
the benefit of each Non-Assignable Contract, including but not limited to (a)
enforcing any rights arising with respect to the Non-Assignable Contract
(including without limitation the right to terminate in accordance with the
terms thereof upon the advice of Buyer) and (b) permitting, assisting, and
acting in the direction of, Buyer to enforce any rights arising with respect to
each Non-Assignable Contract. Except as specifically provided herein, nothing in
this Section 7.7 shall (x) limit or expand any representation or warranty of
Seller under this Agreement or (y) require Seller to breach any provision of any
contract that is a Purchased Asset or to modify any course of dealing respecting
any Contract that is a Purchased Asset. Seller shall use its best efforts to
ensure that any successor agreement relating to a Non-Assignable Contract
complies with the reasonable needs of Buyer to service the Business.
7.8 RECEIVABLES. Buyer shall use all reasonable efforts to
collect the accounts receivable included in the Purchased Assets, but Buyer
shall not be required to take or threaten legal action to collect any of such
receivables. Seller shall, at the option of Buyer, repurchase from Buyer, for an
amount equal to the unpaid balance thereof, all or any part of the accounts
receivable included in the Purchased Assets which have not been paid in full by
the first anniversary of the Closing Date, it being understood that Buyer may
exercise such option until the end of the 18th month after the Closing Date
without waiving any rights hereunder. Seller shall have the right to verify the
existence of the unpaid balance of any receivables. Seller shall, as may be
reasonably requested by Buyer, assist Buyer in the collection of all accounts
receivable included among the Purchased Assets. Seller shall promptly remit to
Buyer any amounts received by Seller in respect of the accounts receivable
included among the Purchased Assets.
7.9 NONCOMPETITION.
7.9.1 BY SELLER AND STOCKHOLDERS. To protect the value of
Seller's goodwill included among the Purchased Assets, until the fifth
anniversary of the Closing Date, neither Seller, Stockholders, nor any Affiliate
of any of them shall, in the continental United States, without prior written
consent of Buyer: (a) perform clinical research services or provide broker or
manager services in connection therewith; or (b) perform any advisory or
consulting services for, invest in (other than less than a one percent interest
in the capital stock of a publicly traded company) or otherwise become
associated with in any capacity, any Person which performs clinical research
services or provides broker or manager services in connection therewith.
7.9.2 NONINTERFERENCE. Neither Seller, Stockholders nor
any Affiliate of either of them shall induce, attempt to induce, or assist
others in inducing or attempting to induce any employee or agent of Buyer or any
other Person affiliated or doing business with Buyer to terminate his
relationship with Buyer or in any other manner to interfere with the
relationship between Buyer and any such Person or the relationship between Buyer
and any of its suppliers or customers.
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7.9.3 EQUITABLE RELIEF. Money damages alone will not be a
sufficient remedy for any breach of the provisions of this Section 7.9 by any
party, and in addition to all other remedies the parties shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any such breach, and they waive the securing or posting of any bond in
connection with such remedy.
7.9.4 REFORMATION. If any of the covenants contained in
this Section 7.9 is found by a court of competent jurisdiction to be invalid or
unenforceable as against public policy or for any other reason, such court is
directed to exercise its discretion to reform such covenant to the end that the
parties shall be subject to noncompetition and noninterference covenants that
are reasonable under the circumstances and are enforceable.
7.10 NO ASSIGNMENT. No party may assign all or any part of
this Agreement or all or any part of its rights and obligations hereunder
without the prior written consent of the others. Any assignment made without
such consent will be void. Notwithstanding the foregoing, Buyer may assign this
Agreement to any Affiliate of Buyer.
7.11 EMPLOYEES. On or prior to the Closing Date, and effective
as of and conditioned on the occurrence of the Closing, Buyer shall offer
positions of employment with Buyer, on an "at will" basis, to those employees of
Seller whose names are set forth on SCHEDULE 5.5.1, in each case, on
substantially similar terms of employment (solely with respect to salary) as the
employee enjoyed with Seller on the business day immediately preceding the
Closing Date.
7.12 EMPLOYEE BENEFITS. Pending the Closing, Seller shall use
its best efforts to retain the services of Seller's employees employed in the
Business and encourage them to continue their employment with Buyer after the
Closing. Buyer shall offer employment, on such terms and conditions as shall be
determined by Buyer in its sole discretion, to those employees of Seller
employed in the Business as Buyer shall determine in its sole discretion, but
Buyer shall not be required to offer employment to any or all of Seller's
employees. The employment by Buyer of any employee of Seller who accepts the
terms of employment offered by Buyer will commence at the Closing. Seller agrees
in this regard to cooperate with Buyer by permitting Buyer throughout the period
prior to the Closing to meet with Seller's employees employed in the Business at
such reasonable times as shall be approved by a representative of Seller and to
distribute to Seller's employees employed in the Business such forms and other
documents relating to employment by Buyer after the Closing as Buyer shall
reasonably request. Except Paid Time Off and the Buyer Bonus Payment, Seller
shall pay the cost of any compensation, severance or other benefits which may be
payable to Seller's employees as a result of the consummation of the
transactions contemplated hereby, including, without limitation, with respect to
employees to whom Buyer does not offer employment or to such other persons as
shall claim compensation, severance or other benefits in connection with the
consummation of the transactions contemplated by this Agreement. Nothing in this
Section 7.12 shall be deemed to require Buyer to retain any of the employees it
hires for any period of time or at any particular compensation rate or in any
particular position.
7.13 NO SOLICITATION. During the term of this Agreement,
neither Seller, the Stockholders nor any of their Affiliates or any Person
acting on their behalf shall (a) offer for
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sale the Purchased Assets (or any material portion thereof) or any ownership
interest in any entity owning any of the Purchased Assets, (b) solicit offers to
buy all or any material portion of the Purchased Assets or any ownership
interest in any entity owning any of the Purchased Assets, (c) hold discussions
with any party (other than Buyer) looking toward such an offer or solicitation
or looking toward a merger or consolidation of any entity owning any of the
Purchased Assets, or (d) enter into any agreement with any party (other than
Buyer) with respect to the sale or other disposition of the Purchased Assets (or
any material portion thereof) or any ownership interest in any entity owning any
of the Purchased Assets or with respect to any merger, consolidation, or similar
transactions involving any entity owning any of the Purchased Assets. Seller
will promptly communicate to Buyer the substance of any serious inquiry or
proposal concerning any such transaction.
7.14 NO PUBLIC ANNOUNCEMENT. Neither Buyer, Seller nor any
Stockholder will announce to the public, customers, vendors, or Seller's
employees, the terms and conditions of this Agreement or the transactions
contemplated hereby without the prior approval of the other party, which will
not be unreasonably withheld, unless such announcement is required by law and in
such a case, the announcing party will notify the other party and provide it in
advance with a copy of the public disclosure.
7.15 XXXXXX NAME. Seller hereby grants Buyer the
non-exclusive, royalty free license to use the name "Xxxxxx Clinical
Evaluations" in connection with the operation of the Business from existing
facilities within the Louisville, Kentucky and Indianapolis, Indiana greater
metropolitan areas for a period of one year commencing on the Closing Date.
Nothing herein shall be construed to prohibit the use of the name or words
"Clinical Evaluations" (or any derivation thereof) by Buyer at any time after
the one year anniversary of the Closing Date.
7.16 OPERATION OF SELLER. During the two year period following
the Closing, or for such longer period as there shall be an unresolved claim by
Buyer against Seller under Article VIII hereof, Seller shall not, without the
prior written consent of Buyer, (a) merge or consolidate with or into any other
entity, cause any entity to be merged or consolidated with or into Seller, or
dividend, distribute, convey, transfer or lease all or substantially all of its
assets to any other entity unless the surviving entity, distributee, purchaser,
transferee or lessee expressly assumes all the obligations of Seller hereunder,
including, without limitation, pursuant to Article VIII; or (b) make any payment
or distribution to any Stockholder or Affiliate of Seller or any Stockholder
except (i) dividends from net income for any fiscal year during which Seller is
an "S corporation" as defined in the Internal Revenue Code in an aggregate
amount designed to reimburse the Stockholders for taxes imposed on the earnings
attributable to them by virtue of their status as S corporation Stockholders;
(ii) scheduled payments on Seller's indebtedness in the approximate amount of
$2,200,000 owed to one or more Affiliates of Seller existing prior to the
execution hereof; and (iii) ordinary and reasonable compensation for services
rendered, consistent with past practice. Buyer will not withhold its consent to
any action described in (b) above if such action is undertaken in connection
with an initial public offering of Seller or other transaction which
significantly enhances the financial position of Seller such that Seller's
equity value (assets less liabilities) exceeds Four Million Dollars
($4,000,000), notwithstanding the action described in (b) above.
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7.17 EMPLOYEE BONUS. On January 31, 1997 or such later date as
the Purchase Price is finally determined pursuant to Sections 3.1 and 3.2, Buyer
and Seller shall each distribute, as Buyer shall determine, among the former
employees of Seller employed by Buyer as of December 31, 1996, one half of the
aggregate amount of the bonus pool corresponding to the appropriate 1996 Pre-Tax
Net Income set forth on SCHEDULE 7.17. (The amount payable by Buyer shall be
deemed the "Buyer Bonus Payment." The amount payable by Seller shall be deemed
the "Seller Bonus Payment.")
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or in any agreement
or document delivered in connection herewith shall survive the Closing and
continue to be binding regardless of any investigation made at any time by any
party.
8.2 INDEMNIFICATION BY SELLER. Seller shall indemnify Buyer
and its Affiliates and the shareholders, directors, employees and agents of
Buyer and its Affiliates ("Buyer Indemnified Parties") against and hold them
harmless from:
(a) All Liability, loss, damage or deficiency resulting from
or arising out of any inaccuracy in or breach of any representation or
warranty by Seller herein or in any other agreement or document
delivered by or on behalf of Seller in connection herewith;
(b) All Liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Seller herein or in any other agreement
or document delivered by or on behalf of Seller in connection herewith;
(c) Any imposition (including, but not limited to, imposition
by operation of any bulk transfer or other Law) or attempted imposition
by a third-party upon any of the Buyer Indemnified Parties of any
Liability of Seller which Buyer has not specifically agreed to assume
under Section 2.2 of this Agreement;
(d) All Liability, loss, damage or deficiency resulting from
or arising out of the claims of any broker, finder, or other Person
acting in a similar capacity on behalf of Seller or Stockholders in
connection with the transactions herein contemplated; and
(e) Any and all costs and expenses (including legal and
accounting fees) related to any of the foregoing.
8.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify Seller
and its Affiliates and the stockholders, directors, employees and agents of
Seller and its Affiliates (the "Seller Indemnified Parties") against and hold
them harmless from:
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(a) All Liability, loss, damage or deficiency resulting from
or arising out of any inaccuracy in or breach of any representation or
warranty by Buyer herein or in any other agreement or document
delivered by or on behalf of Buyer in connection herewith;
(b) All Liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Buyer herein or in any other agreement
or document delivered by or on behalf of Buyer in connection herewith;
(c) Any imposition (including, but not limited to, by
operation of Law) or attempted imposition by a third-party upon any of
the Seller Indemnified Parties of any Assumed Liability;
(d) All Liability, loss, damage or deficiency resulting from
or arising out the claims of any broker, finder or other Person acting
in a similar capacity on behalf of Buyer in connection with the
transactions herein contemplated; and
(e) Any and all costs and expenses (including legal and
accounting fees) related to any of the foregoing.
8.4 LIMITATIONS ON INDEMNIFICATION OF BUYER INDEMNIFIED
PARTIES. Any claim for indemnification under paragraph (a) of Section 8.2 by the
Buyer Indemnified Parties shall be made by the second anniversary of the Closing
Date except that there shall be no limits on the time for making a claim for
indemnification relating to the representations and warranties contained in
Subsections 5.2.1 (Seller Enforceability) and 5.7.1 (Title) and except that a
claim for such indemnification relating to the representations and warranties
contained in Subsection 5.3.4 (Taxes), may be made until ninety (90) days after
the expiration of the applicable statute of limitations for either the
assessment or collection of Taxes for the periods referred to therein.
8.5 LIMITATIONS ON INDEMNIFICATION OF SELLER INDEMNIFIED
PARTIES. Any claim for indemnification under paragraph (a) of Section 8.3 by the
Seller Indemnified Parties shall be made by the second anniversary of the
Closing Date except that there shall be no limits on the time for making a claim
for indemnification relating to the representations and warranties contained in
Subsection 6.2.1 (Buyer Enforceability).
8.6 THIRD PARTY CLAIMS. If any legal proceedings shall be
instituted or any claim or demand is asserted by any third party in respect of
which Seller on the one hand, or Buyer on the other hand, may have an obligation
to indemnify the other, the party asserting such right to indemnity shall give
the party from whom indemnity is sought written notice thereof and the notified
party shall have the right, at its option and expense, to participate in the
defense of such proceedings, claim or demand, but not to control the defense,
negotiation or settlement thereof, which control shall at all times rest with
the party asserting such right to indemnity, unless the action is for money
damages only and the party from whom indemnity may be sought:
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(a) irrevocably acknowledges in writing complete
responsibility for and agrees to indemnify the party asserting such
right to indemnity, and
(b) furnishes reasonably satisfactory evidence of the
financial ability to indemnify the party asserting such right to
indemnity,
in which case such indemnifying party may assume such control through counsel of
its choice and at its expense, but the indemnified party shall continue to have
the right to be represented, at its own expense, by counsel of its choice in
connection with the defense of such proceedings, claim or demand. If the party
from whom indemnity is sought does not assume control of the defense of such a
proceeding or claim, the entire defense of the proceeding or claim by the party
asserting such right to indemnity, any settlement made by the party asserting
such right to indemnity, and any judgment entered in the proceeding or claim
shall be deemed to have been consented to by, and shall be binding on, the party
from whom indemnity is sought as fully as though it alone had assumed the
defense thereof and a judgment had been entered in the proceeding or claim in
the amount of such settlement or judgment, except that the right of the party
from whom indemnity is sought to contest the right of the other to
indemnification under this Agreement with respect to the proceeding or claim
shall not be extinguished. If the party from whom indemnity is sought does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
ARTICLE IX
TERMINATION
-----------
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual agreement of Seller, Stockholders and Buyer;
(b) by Buyer, if there has been a material violation or breach
by Seller of any of the representations or warranties contained in this
Agreement, or if there has been any violation, breach, or failure to
perform by Seller or Stockholders of any of the agreements, covenants,
or conditions to Closing contained in this Agreement, unless Seller or
Stockholders have informed Buyer that such violation, breach, or
failure to perform will be cured on or before the Closing Date;
(c) by Seller or Stockholders, if (i) there has been a
material violation or breach by Buyer of any of the representations or
warranties contained in this Agreement, or if there has been any
violation, breach, or failure to perform by Buyer of any of the
agreements, covenants, or conditions to Closing contained in this
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Agreement, unless Buyer has informed Seller and Stockholders that such
violation, breach, or failure to perform will be cured on or before the
Closing Date; or (ii) the Closing has not occurred by November 1, 1996.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by Buyer, Seller or Stockholder as provided in Section 9.1 above, this
Agreement shall forthwith be of no further force and effect (except that the
provisions of Sections 7.4, 7.5, 7.14, and 10.14 shall continue in full force
and effect) and there shall be no liability on the part of Buyer, Seller and
Stockholder, except based upon: (i) a material and willful breach by a party of
any of its obligations under this Agreement, or (ii) the obligations set forth
in Sections 7.4, 7.5, or 7.14.
ARTICLE X
CONSTRUCTION
------------
10.1 DEFINITION. When used in this Agreement, the following
terms in all of their tenses and cases shall have the meanings assigned to them
below or elsewhere in this Agreement as indicated below:
"Acquisition Balance Sheet" is defined in Section 5.3.1.
"Affiliate" of any Person means any person directly or
indirectly controlling, controlled by, or under common control with, any such
Person and any officer, director or controlling person of such Person.
"Assigned Contracts" is defined in Section 2.2(d).
"Assumed Liabilities" is defined in Section 2.2.
"Books and Records" means all books and records of Seller
relating to the Business and properties, including, without limitation, (i) all
books and records relating to the purchase of materials and supplies, sales of
products, dealings with customers, invoices, suppliers' lists and personnel
records, (ii) all contracts, reports, opinions, maps and other documents
affecting the title to or the value of the properties of Seller, (iii) tax
returns, and (iv) all financial and operating data, files and other information
with respect to Seller's business and properties.
"Business" is defined in the Recitals.
"Buyer Bonus Payment" is defined in Section 7.17.
"Buyer Escrow Amount" is defined in Section 3.1.
"Buyer's Notice" is defined in Section 3.2.
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"Closing" means the commencement of business on the Closing
Date.
"Closing Date" is defined in Section 4.1.
"Closing Payment" is defined in Section 3.1.
"Contract" means any bid, commitment, understanding,
instrument, lease, pledge, mortgage, indenture, note, license, agreement,
purchase or sale order, contract, promise, or similar arrangement evidencing or
creating any obligation, whether written or oral.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan.
"Environmental Law" is defined in Section 5.5.10.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"Escrow Account" means the escrow account established pursuant
to the Escrow Agreement.
"Escrow Agreement" is defined in Section 4.2(a).
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any foreign, federal, state,
regional or local authority, agency, body, court or instrumentality, regulatory
or otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Substance" is defined in Section 5.5.10.
"Hazardous Waste" is defined in Section 5.5.10.
"In Person-Respondent Database" is defined in Section 1.3.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
"Law" means any common law and any federal, state, regional,
local or foreign law, rule, statute, ordinance or regulation, including, without
limitation, any law, rule, statute, ordinance or regulation relating to
discrimination, Hazardous Substances, wage, hour, working condition, payroll
withholding, pension, building, zoning and taxes.
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"Liabilities" means responsibilities, obligations, duties,
commitments, claims and liabilities of any and every kind, whether known or
unknown, accrued, absolute, contingent or otherwise.
"Lien" means any lien, charge, covenant, condition, easement,
adverse claim, demand, encumbrance, security interest, option, pledge or any
other title defect or restriction of any kind.
"Maximum Purchase Price" is defined in Section 3.3.
"Minimum Purchase Price" is defined in Section 3.3.
"Multiemployer Plan" means any multiemployer plan within the
meaning of Section 3(37) of ERISA.
"Other Plan" means any employment, noncompetition, management,
agency or consulting arrangement, bonus, profit sharing, deferred compensation,
incentive, stock, option, stock ownership or stock purchase plan, or other
similar plan, policy, or arrangement, whether or not in written form, which does
not constitute an Employee Benefit Plan and which is not listed on SCHEDULE
2.2(D).
"Paid Time Off" is defined in Section 2.2.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan.
"Permits" is defined in Section 5.4.1.
"Person" means any individual, corporation, partnership,
association or any other entity or organization.
"Purchase Price" is defined in Section 3.1.
"Seller Bonus Payment" is defined in Section 7.17.
"Seller Escrow Amount" is defined in Section 3.3.
"Tax" means any charge or assessment by, or liability to, any
Governmental Authority, including, but not limited to, any deficiency, interest
or penalty.
"Tax Returns" is defined in Section 5.3.4.
"To the Knowledge of Seller" or "to Seller's Knowledge" means
the actual knowledge of any director or officer of Seller, and also means the
knowledge such a Person would have had after making diligent inquiry of the
Seller's personnel and diligent investigation and review of the Books and
Records and other relevant documentation.
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"Trade Secret" means any information which if known to a
competitor of the owner of the information could be harmful to the owner of the
information.
"Waste" is defined in Section 5.5.10.
"Welfare Plan" means any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA, other than a Multiemployer Plan.
"Working Capital Deficit" is defined in Section 3.1
"Working Capital Surplus" is defined in Section 3.1.
"Working Capital Value" is defined in Section 3.1.
"1996 Pre-Tax Net Income" is defined in Section 3.1.
10.2 NOTICES. All notices shall be in writing delivered as
follows:
(a) If to Buyer, to:
Collaborative Holdings, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxx, President
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxxx & Xxxxxxxx
0000 XxXxxxxx Xxxxxxxxxx Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. XxXxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Seller or Stockholders, to:
Xxxxxx Information, Inc.
0000 Xxxxxxxx Xxx Xxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxxxx,
President and Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Ice, Xxxxxx, Xxxxxxx & Xxxx
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00
Xxx Xxxxxxxx Xxxxxx
Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as may have been designated in a prior notice. Notices
may be sent via registered or certified mail, nationally recognized overnight
courier or facsimile. Notices sent by registered or certified mail, return
receipt requested, shall be deemed to have been given two business days after
the day of registration or the date of certification, as the case may be, and
otherwise notices shall be deemed to have been given when received by the Person
to whom the notice is addressed or any other Person with apparent authority to
accept notices on behalf of the Person to whom the notice is addressed.
10.3 BINDING EFFECT. Except as may be otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
10.4 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
10.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be a part of this Agreement.
10.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
10.7 GOVERNING LAW. This Agreement shall be governed by and
construed under Ohio law, without regard to conflict of laws principles.
10.8 WAIVERS. Compliance with the provisions of this Agreement
may be waived only by a written instrument specifically referring to this
Agreement and signed by the party waiving compliance. No course of dealing, nor
any failure or delay in exercising any right, shall be construed as a waiver. In
addition, no single or partial exercise of a right shall preclude any other or
further exercise of that or any other right.
10.9 PRONOUNS. The use of a particular pronoun herein shall
not be restrictive as to gender or number but shall be interpreted in all cases
as the context may require.
10.10 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days shall be taken within that number of CALENDAR
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
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10.11 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against either party.
10.12 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement among the parties concerning the subject matter
hereof. All negotiations among the parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings or
agreements, oral or otherwise, in relation thereto among the parties other than
those incorporated herein and to be delivered hereunder.
10.13 MODIFICATION. No supplement, modification or amendment
of this Agreement shall be binding unless made in a written instrument which is
signed by all of the parties and which specifically refers to this Agreement.
10.14 THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties hereto, any rights or remedies by reason of this
Agreement.
10.15 SURVIVAL OF COVENANTS. The covenants contained in
Article XII (other than Sections 7.1, 7.2 and 7.3) shall survive the Closing.
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INTENDING TO BE LEGALLY BOUND, the parties have signed this
Agreement as of the date first above written.
XXXXXX INFORMATION, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Its: President/CEO
---------------------------------
("Seller")
COLLABORATIVE HOLDINGS, INC.
By: /s/ Xxxxxxx X Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx, President
("Buyer")
The following are signatories solely with respect to Articles
VII, IX and X:
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
("Stockholders")
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