AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LIFECODES CORPORATION
(the Purchaser)
AND
THOSE INDIVIDUALS LISTED IN EXHIBIT A
ANNEXED HERETO
(the Key Stockholders)
AND
GENESCREEN INC.
(the Company)
AND
SANDPIPER VENTURES LLC
(the Stockholders' Representative)
As of August 31, 1998
This Agreement and Plan of Merger ("Agreement") is made as of August
31, 1998, by and among Lifecodes Corporation, a Delaware corporation (the
"Purchaser"); those individuals listed in Exhibit A attached hereto
(collectively, the "Key Stockholders"), being the owners of a majority of the
outstanding capital stock of GeneScreen Inc., a Delaware corporation (the
"Company"); the Company; and Sandpiper Ventures LLC, in its capacity as the
representative of certain stockholders of the Company (the "Stockholders'
Representative").
W I T N E S S E T H
WHEREAS, the Purchaser desires to merge the Company with and into the
Purchaser, and the Company and the Key Stockholders desire to have the Company
merge with and into the Purchaser upon the terms and conditions set forth
herein and in accordance with the laws of the State of Delaware;
WHEREAS, this Agreement contemplates a tax-free merger of the Company
with and into the Purchaser in a reorganization pursuant to IRC Section
368(a)(1)(A);
WHEREAS, the Company and the Purchaser expect that the Merger will
further certain of their business objectives (including, without limitation,
expansion of the Purchaser's business and customer base, increase in revenues
and value of the enterprise);
NOW, THEREFORE, the Purchaser, Key Stockholders and Company adopt
this plan and agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the terms listed in Exhibit B
attached hereto shall have the meanings specified or referred to therein.
2. THE MERGER; CLOSING, CONVERSION OF SHARES.
2.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time the Company shall be merged with and into the Purchaser and
the separate corporate existence of the Company shall thereupon cease (the
"Merger"). The Purchaser shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Delaware, and the separate
corporate existence of the Purchaser with its corporate name, rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger.
2.2 CLOSING. The closing of the Merger, including conversion of the
GeneScreen Stock for Lifecodes Stock plus payment of the Cash Component, and
the other Contemplated Transactions (the "Closing") provided for in this
Agreement will take place at the offices of the Purchaser's counsel, Xxxxxx &
Xxxx, Three Stamford Plaza, 000 Xxxxxxx Xxxx., Xxxxxxxx, Xxxxxxxxxxx 00000, at
10:00 a.m. (local time) on the date of, and simultaneous with, the closing of
the Purchaser's IPO (i.e., after such time as the Securities and Exchange
Commission declares the Purchaser's IPO to be effective, is presently
anticipated to be on or about September 30,
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1998), provided that the Purchaser may, in its sole discretion, extend the
date of Closing until November 30, 1998 if the IPO has not closed, or at such
other time and place as the parties may agree in writing. Subject to the
provisions of Section 10, failure to consummate the transactions provided for
in this Agreement on the date and time and at the place determined pursuant to
this Section 2.2 will not result in the termination of this Agreement and will
not relieve any party of any obligation under this Agreement.
2.3 EFFECTIVE TIME. If all of the conditions to the Merger set forth
in Sections 7 and 8 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated in accordance with Section
10, the parties hereto shall promptly cause a Certificate of Merger meeting
the requirements of Section 251 of the Delaware General Corporation Law, in
the form attached hereto as Exhibit C, to be properly executed and filed on
the Closing Date. The Merger shall become effective at the time (the
"Effective Time") of the filing of the Certificate of Merger in accordance
with the Delaware General Corporation Law or at such later time as the parties
hereto shall have agreed upon and designated in such filing as the effective
time of the Merger.
2.4 MERGER CONSIDERATION. The aggregate amount of cash and securities
to be paid to the Stockholders upon the conversion of, and as consideration
for all of, the issued and outstanding shares of the GeneScreen Stock at the
Effective Time shall equal $12,500,000 (the "Merger Consideration") subject to
adjustment as described in Sections 2.9 and 2.11 below. The Merger
Consideration shall be comprised of (a) that number of shares of Lifecodes
Stock having an aggregate value of $7,500,000 based upon the gross price per
share of Lifecodes Stock to the public in Purchaser's "IPO" but not more than
$60 per share based on the Purchaser's capitalization on June 1, 1998 (the
"Equity Component"), plus (b) an aggregate of $5,000,000 (the "Cash
Component"). Notwithstanding the foregoing, $3,500,000 of the Cash Component
(the "Escrow Amount") shall be held in two separate and distinct escrows (the
"Escrows") with the Escrow Agent to satisfy the Stockholders' indemnity
obligations under Section 11.2 of this Agreement pursuant to the terms of an
escrow agreement substantially in the form attached hereto as Exhibit D (the
"Escrow Agreement"). The Escrow Amount shall be divided as follows: (i)
$2,500,000 of the Escrow Amount (the "General Escrow Amount") shall be held to
satisfy the Stockholders' indemnity obligations other than the Stockholders'
Tax Indemnity and any breach of any Tax Representation; and $1,000,000 of the
Escrow Amount (the "Tax Escrow Amount") shall be held to satisfy the
Stockholders' Tax Indemnity and any breach of any Tax Representation.
2.5 CLOSING OBLIGATIONS. At the Closing:
(a) The Company and each of the Key Stockholders will deliver to the
Purchaser:
(i) non-competition agreements for each of the individuals
listed on Exhibit E-1 substantially in the form attached hereto as Exhibit E-2
("Non-Competition Agreements");
(ii) a certificate of the Company representing and warranting
to the Purchaser that each of the representations and warranties in this
Agreement of the Company was accurate in all respects as of the date of this
Agreement and is accurate in all material respects as of the
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Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Letter that were delivered by the Company to the
Purchaser prior to the Closing Date in accordance with Section 5.5);
(iii) an opinion of Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx, L.L.P.,
counsel for the Company and the Key Stockholders, substantially in the form
attached hereto as Exhibit F;
(iv) lockup agreements from at least 90% in interest of the
Stockholders substantially in the form attached hereto as Exhibit G
(collectively, "Lockup Agreements"); and
(v) the Escrow Agreement.
(b) The Purchaser will deliver the Escrow Amount to the Escrow Agent
and the balance of the Merger Consideration to the Exchange Agent.
(c) The Purchaser will deliver to the Stockholders' Representative:
(i) a certificate executed by the Purchaser to the effect
that each of the Purchaser's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate
in all material respects as of the Closing Date as if made on the Closing
Date;
(ii) an opinion of Xxxxxx & Xxxx, counsel for the Purchaser,
substantially in the form attached hereto as Exhibit H; and
(iii) the Escrow Agreement.
2.6 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
the Purchaser in effect immediately prior to the Effective Time shall
thereafter continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance
with its terms or by law.
2.7 BY-LAWS. The By-Laws of the Purchaser in effect immediately prior
to the Effective Time shall be the By-Laws of the Surviving Corporation until
duly amended in accordance with their terms or by law.
2.8 MANNER OF CONVERSION. The manner of converting shares of the
Company in the Merger shall be as follows:
(a) At the Effective Time, each of the issued and outstanding shares
of GeneScreen Stock immediately prior to the Effective Time (the "GeneScreen
Shares") shall, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into (i) cash in an amount equal to the Cash
Component divided by the total number of GeneScreen Shares; and (ii) the
number of shares of Lifecodes Stock equal to the Equity Component divided by
the total number of GeneScreen Shares; provided that no fraction of a share of
Lifecodes Stock shall be issued; and provided, further, that each
Stockholder's entitlement to the Merger Consideration shall be determined in
accordance with the rights and preferences of each class and series of
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capital stock of the Company in accordance with the terms of its
Organizational Documents. Each holder of a certificate or certificates
representing GeneScreen Shares issued and outstanding at the Effective Time
who would otherwise be entitled to receive a fractional share of Lifecodes
Stock (after taking into account all GeneScreen Shares then held by such
holder) shall upon surrender of such certificate or certificates receive the
nearest whole number of shares of Lifecodes Stock (i.e., shall be rounded up
or rounded down to the nearest whole share, as the case may be).
(b) From and after the Closing, the Stockholders shall surrender to
the Exchange Agent certificates representing all of the shares of GeneScreen
Stock held by them or affidavits of lost certificates and indemnity agreements
in form and substance reasonably satisfactory to the Purchaser, the
Purchaser's counsel and the Exchange Agent. Upon surrender of such
certificates or other documents by the Exchange Agent to the Purchaser, the
Stockholder shall be entitled to receive in exchange therefor, as soon as
practicable after the adjustments (if any) contemplated by Section 2.11 hereof
have been made, the proportionate share of the Merger Consideration less the
Escrow Amount. Within ten (10) days of the Effective Date, the Surviving
Corporation shall mail to the holders of the Dissenters' Shares the notice
required under Section 262 of the Delaware General Corporation Law. Until so
surrendered in exchange, each certificate theretofore representing shares of
GeneScreen Stock shall represent solely (i) the right to receive a
proportionate share of the Merger Consideration, or (ii) in the case of
Dissenters' Shares, the right to seek appraisals pursuant to Section 262 of
the Delaware General Corporation Law.
(c) If any certificate evidencing shares of Lifecodes Stock is to be
registered in any name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of such registration
that the certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer, as reasonably determined by the Purchaser and the
Exchange Agent, and that the person requesting such exchange either pay to the
Purchaser any transfer or other Taxes required by reason of the issuance of a
certificate for shares of Lifecodes Stock in any name other than that of the
registered holder of the certificate surrendered or otherwise required to
establish to the satisfaction of the Purchaser that such Tax has been paid or
is not payable.
(d) The stock transfer books of the Company will be closed as of the
Effective Time and after the Effective Time there will be no transfers, or
registration thereof, on the stock transfer books of the Company or the
Surviving Corporation of the GeneScreen Shares which were issued and
outstanding immediately prior to the Effective Time. At the Effective Time,
all GeneScreen Shares, by virtue of the Merger and without any action on the
part of the holders thereof, shall no longer be outstanding and shall be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such GeneScreen Shares shall thereafter cease to
have any rights with respect to such GeneScreen Shares, except the right of
holders to receive a proportionate share of the Merger Consideration, upon the
surrender of such certificate in accordance with this Section 2.8, or in the
case of Dissenters' Shares, the right to seek appraisals pursuant to Section
262 of the Delaware General Corporation Law.
(e) All of the shares of Lifecodes Stock and rights to receive cash,
into which and for which GeneScreen Shares shall have been exchanged pursuant
to this Section 2.8 shall be
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deemed to have been issued in full satisfaction of all rights pertaining to
such exchanged GeneScreen Shares.
(f) Any portion of the Merger Consideration that remains
undistributed by the Exchange Agent to the Stockholders one year after the
Effective Time shall be delivered to the Purchaser, upon request, and any
Stockholders who have not theretofore complied with this Section 2.8 shall
thereafter look only to the Purchaser for the Merger Consideration and any
dividends or other distributions with respect to Lifecodes Stock to which they
are entitled pursuant to Section 2.10.
2.9 APPRAISAL RIGHTS
(a) Each of the GeneScreen Shares held by Stockholders who shall have
properly exercised appraisal rights with respect thereto under Section 262 of
the Delaware General Corporation Law ("Dissenters' Shares") (the holders of
all other outstanding shares of GeneScreen Stock shall be referred to herein
as the "Exchanging Stockholders") shall not be converted into the Merger
Consideration, but shall entitle the holder thereof to receive payment of the
appraised value of such shares in accordance with the provisions of the
Delaware General Corporation Law, except that any Dissenters' Shares held by a
Stockholder who shall thereafter fail to perfect or who, with the written
approval of the Surviving Corporation, withdraws his or her demand for
appraisal of such Shares shall then be deemed to have been converted, as of
the Effective Date, into the right to receive the amount of Merger
Consideration such Stockholder otherwise would have been entitled to receive.
(b) Each of the Key Stockholders hereby expressly waives any
dissenter's or appraisal rights he or she may have under Delaware corporate
law in respect of the Merger.
2.10 DIVIDENDS. No dividends or other distributions declared after
the Effective Time with respect to the Lifecodes Stock and payable to holders
of record thereof after the Effective Time shall be paid to the holder of any
unsurrendered certificate with respect to the GeneScreen Shares represented
thereby until the holder of record shall surrender such certificate to the
Exchange Agent. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a certificate, the holder thereof shall
be entitled to receive any such dividends or other distributions, without any
interest thereon, which theretofore became payable with respect to the
GeneScreen Shares represented by such certificate.
2.11 ADJUSTMENTS TO MERGER CONSIDERATION.
(a) The Merger Consideration is based in part on the premise that the
Net Worth (as defined in Section 2.11(b)(i) below) as reflected in the balance
sheet of the Company as of the close of business on the Closing Date will be
at least $109,099.70. Within ten (10) days after the Closing Date, the
Purchaser will prepare and deliver to the Stockholders' Representative a
balance sheet (the "Draft Closing Date Balance Sheet") of the Company as of
the close of business on the Closing Date and statements of operations and
cash flow for the period then ending (collectively, the "Closing Financial
Statements"). The Merger Consideration adjustment described below shall be
based upon changes from the balance sheet of the Company as of May
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31, 1998, which is set forth in Exhibit I and which reflects certain agreed
adjustments to such balance sheet (the "Agreed Latest Balance Sheet"). The
Closing Financial Statements shall be: (i) determined on a pro forma basis as
though the parties had not consummated the Contemplated Transactions, but as
if the fiscal year had then ended; (ii) prepared in accordance with GAAP
applied on a basis consistent with the preparation of the Agreed Latest
Balance Sheet; and (iii) reviewed by Deloitte & Touche LLP, the Purchaser's
and the Company's certified public accountants. Notwithstanding the foregoing,
the amount of any balance sheet reserves affecting the Closing Financial
Statements shall not be less than the amount of such reserves reflected in the
Agreed Latest Balance Sheet.
(b) The Purchaser also will prepare and deliver to the Stockholders'
Representative, along with the Draft Closing Date Balance Sheet, a draft
calculation of the adjustment to the Merger Consideration as determined below
(the "Draft Adjustment Calculation"). The Merger Consideration will be
adjusted as follows:
(i) The "Net Worth" shall mean (A) the total assets indicated
on the applicable balance sheet, less any amount reflected therein for amounts
owed to the Company by the Stockholders, less (B) the sum of the accounts
payable, accrued wages and related amounts and other accrued liabilities
indicated on such balance sheet. The Net Worth reflected in the Agreed Latest
Balance Sheet is $109,099.70. Notwithstanding the foregoing, the Merger
Consideration shall be reduced by the following amounts unless such amounts
have already been taken into account in determining Net Worth (1) by one-half
(1/2) of the present value amount (agreed to by the Company and the Purchaser)
or such other amount as may be required to fully liquidate and settle certain
bonus and severance commitments made by the Company (to the extent such
obligations have not been settled, paid and released prior to the Closing
Date), (2) for obligations for arms-length loans made to the Company after
March 31, 1998 but before Closing outstanding on the Closing Date, (3) for
liability for interim financing outstanding on the Closing Date and accounts
payable over 60 days, (4) for any advances or other financial accommodations
made to the Company or MTI by the Purchaser outstanding on the Closing Date,
(5) all professional fees (including without limitation, attorneys',
accountant's appraiser's and finder's fees and transaction bonuses incurred by
the Company or Stockholders in connection with the execution of this Agreement
and consummation of the Contemplated Transactions, and (6) any fees or costs
incurred in terminating any agreement or contracts provided for in this
Agreement.
(ii) To the extent the Net Worth calculated from the Draft
Closing Balance Sheet is less than $109,099.70, the Cash Component of the
Merger Consideration (other than the Cash Component being held pursuant to the
Escrow Agreement which shall be $3,500,000) shall be reduced by such amount to
the extent available and then, if necessary, the Equity Component shall be
reduced by the balance of such amount.
(iii) To the extent the Net Worth calculated from the Draft
Closing Balance Sheet is more than $109,099.70, the Cash Component of the
Merger Consideration shall be increased by such amount to the extent available
and then, if necessary, to the Equity Component shall be reduced by the
balance of such amount.
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(c) If the Stockholders' Representative has an objection to the Draft
Closing Date Balance Sheet or the Draft Adjustment Calculation, the
Stockholders' Representative will deliver to the Purchaser a detailed
statement describing its objections within fifteen (15) days after receiving
the Draft Closing Date Balance Sheet and the Draft Adjustment Calculation. The
Purchaser and the Stockholders' Representative will use reasonable efforts to
resolve between themselves their respective objections. If the Purchaser and
the Stockholders' Representative do not reach a final resolution within thirty
(30) days after the Purchaser has received the Stockholders' Representative's
statement of objections, such dispute shall be referred to the American
Arbitration Association ("AAA") in Wilmington, Delaware for resolution. The
resolution of the remaining objections by the AAA will be in writing and will
be conclusive and binding upon the parties. The Purchaser will revise the
Draft Closing Date Balance Sheet and the Draft Adjustment Calculation as
appropriate to reflect the resolutions of all objections thereto pursuant to
this Section 2.11(c). The "Closing Date Balance Sheet" and the "Adjustment
Calculation" shall mean, respectively, the Draft Closing Date Balance Sheet
and the Draft Adjustment Calculation, together with any revisions thereto
pursuant to this Section 2.11(c).
(d) The Purchaser will make the work papers and supporting materials
used in the Company's preparation of the Draft Closing Date Balance Sheet and
the Draft Adjustment Calculation, along with the books, records and personnel
of the Company, available to the Stockholders' Representative at reasonable
times and upon reasonable notice at any time during the Stockholders'
Representative's review of the Draft Closing Date Balance Sheet and the Draft
Adjustment Calculation and the resolution by the parties of any objections
thereto. The Stockholders' Representative shall make the work papers and
supporting materials used in the Stockholders' review of the Financial
Statements available to the Purchaser and its Representatives at reasonable
times and upon reasonable notice at any time during the Purchaser's
preparation of the Closing Financial Statements and the Draft Adjustment
Calculation and the resolution by the parties of any objections thereto.
(e) The Stockholders and the Purchaser each will pay one-half of the
fees and expenses of the AAA to which any unresolved objections are submitted
pursuant to the foregoing unless otherwise reasonably determined and directed
the AAA; provided, however, that the Stockholders' obligations to pay such
fees and expenses shall be limited to and payable only from funds available in
the Escrow.
(f) If the Merger Consideration as finally determined pursuant to
this Section 2.11 is greater than $12,500,000, the Purchaser shall, within
three (3) business days after the Merger Consideration is finally determined
pursuant to this Section 2.11 pay to the Exchange Agent for the benefit of the
Stockholders and as additional Merger Consideration an amount in U.S. Dollars
(by wire transfer of immediately available funds to the account specified by
the Exchange Agent) equal to the difference between the Merger Consideration
and $12,500,000, plus interest on such difference at the rate of 1% over One
Month LIBOR for the period from (and including) the Closing Date to (but
excluding) the date of such payment, such interest to be calculated on the
basis of actual days elapsed and a year of three hundred sixty (360) days. In
no event shall the Purchaser be required to pay more than $1,250,000 above
$12,500,000.
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(g) If the Merger Consideration is less than $12,500,000, within
three (3) business days after the Merger Consideration is finally determined
pursuant to this Section 2.11, the Stockholders' Representative shall cause
the Exchange Agent to pay to the Purchaser by wire transfer of immediately
available funds to the account specified by the Purchaser an amount in U.S.
Dollars equal to the amount of such adjustment plus interest on such amount at
the rate of 1% over One Month LIBOR for the period from (and including) the
Closing Date to (but excluding) the date of such payment, such interest to be
calculated on the basis of actual days elapsed and a year of three hundred
sixty (360) days.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchaser on behalf of
itself and MT Human (as hereinafter defined) as follows:.
3.1 ORGANIZATION AND GOOD STANDING.
(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware and the Company
has full corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to
own or use, and to perform all its obligations under Applicable Contracts.
Except as set forth in Part 3.1(a) of the Disclosure Letter, the Company is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) The Company has delivered to the Purchaser copies of the
Organizational Documents of the Company, as currently in effect.
(c) Except as set forth in Part 3.1(c) of the Disclosure Letter, the
Company has (i) no subsidiaries; (ii) no Related Persons; and (iii) not
contracted, nor is it otherwise under any obligation, to purchase or subscribe
for any interest in, advance or loan monies, or in any way make investments in
or incur obligations with respect to, any Person. Each of the entities listed
in Part 3.1(c) of the Disclosure Letter in respect to clause (i) above (the
"Affiliates") is duly organized, validly existing, and in good standing under
the laws of the jurisdiction set forth in Part 3.1(c) of the Disclosure
Schedule, and has full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations. Each of the
Affiliates is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification. Except
as set forth in Part 3.1(c) of the Disclosure Letter, the Company owns all of
the issued and outstanding capital stock of each of the Affiliates.
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3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Company and the Key Stockholders, enforceable against the
Company and the Key Stockholders in accordance with its terms. Upon the
execution and delivery by the Company of the Escrow Agreement and the other
documents or instruments described herein (the "Company's Closing Documents"),
the Company's Closing Documents will constitute the legal, valid, and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms. Upon the execution and delivery by the Key
Stockholders of the Noncompetition Agreements (if applicable), the Lockup
Agreements, the Escrow Agreement and the other documents or instruments
described herein (the "Key Stockholders' Closing Documents"), the Key
Stockholders' Closing Documents will constitute the legal, valid, and binding
obligations of each of the Key Stockholders, enforceable against such Persons
in accordance with their respective terms. Each of the Company and the Key
Stockholders has the power, authority, and capacity to execute and deliver
this Agreement and the Company's Closing Documents or the Key Stockholders'
Closing Documents, as the case may be, and to perform their obligations under
this Agreement and the Company's Closing Documents or the Key Stockholders'
Closing Documents, as the case may be.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither
the execution nor delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of the Company, or (B) any
resolution adopted by the board of directors or the stockholders of the
Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which the Key Stockholders, the
Company, or any of the assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the Company;
(iv) cause the Purchaser or the Company to become subject to,
or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any Taxing Authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate
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the maturity or performance of, or to cancel, terminate, or modify, any
Material Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter, the Company
will not be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
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3.3 CAPITALIZATION. The authorized equity securities of the Company
consist of 5,000,000 shares of preferred stock, $0.05 par value per share, of
which 350,000 shares have been designated as Series A Preferred Stock and
700,000 shares have been designated as Series B Preferred Stock and 10,000,000
shares of common stock, $0.01 par value per share (collectively, the
"GeneScreen Stock"), of which 350,000 shares of Series A Preferred Stock,
691,723 shares of Series B Preferred Stock and 2,620,493 shares of Common
Stock are issued and outstanding. Except as set forth in Part 3.3 of the
Disclosure Letter, the Stockholders are and will be on the Closing Date the
record and beneficial owner and holder of all the number of shares set forth
opposite their names on Exhibit J, in each case, free and clear of all
Encumbrances. Except as set forth in Part 3.3 of the Disclosure Letter, there
are no: (i) shares of capital stock or other voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company, (iii) options, warrants,
exchange rights, subscription rights or other Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of
the Company or securities convertible into or exchangeable for equity
securities or other securities of the Company or (iv) any Contracts to grant,
or enter into any such option, warrant, call, right, commitment or agreement
(the items in clauses (i), (ii), (iii) and (iv) being referred to collectively
as the "Company Securities"). Except as set forth in Part 3.3 of the
Disclosure Letter, there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire, any Company Securities. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. None of the outstanding
equity securities or other securities of the Company was issued in violation
of the Securities Act or any other Legal Requirement. Except as set forth in
Part 3.3 of the Disclosure Letter, the Company does not own, or have any
Contract to acquire, any equity securities or other securities of any Person
or any direct or indirect equity or ownership interest in any other business.
The GeneScreen Stock being converted pursuant to the Merger hereunder
represents 100% of the capital stock of all classes of the Company. The
Company's MT Human ID, Inc. subsidiary ("MT Human") has no assets or
liabilities (contingent or otherwise), nor has it conducted any business,
except as set forth in Part 3.3 of the Disclosure Letter. There are no
stockholders in the Company other than the Stockholders. The Key Stockholders
own and hold a majority of the outstanding shares of GeneScreen Stock. At the
Effective Time there will be no Stockholders of the Company other than the
Stockholders and the holders of outstanding options to acquire capital stock
of the Company disclosed in Part 3.3 of the Disclosure Letter who exercise, or
are deemed to have exercised, such options at or prior to the Effective Time.
3.4 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser:
(a) audited balance sheets of the Company as at December 31 in each of the
years 1992 through 1996, and the related audited consolidated statements of
income, changes in stockholders' equity, and cash flow for each of the fiscal
years then ended, together with the report thereon of Deloitte & Touche LLP,
independent certified public accountants, (b) audited balance sheets of the
Company as at December 31, 1997 (including the notes thereto, the "Balance
Sheet"), and the related consolidated statements of income, changes in
stockholders' equity, and cash flow for the fiscal year then ended, together
with the report thereon of Deloitte & Touche LLP, independent certified public
accountants, and (c) reviewed balance sheet of the Company as at March 31,
1998 and June 30, 1998 (the "Interim Balance Sheet") and the related reviewed
consolidated
11
statements of income, changes in stockholders' equity, and cash flow for the
three and six months then ended, including in each case the notes thereto.
Such financial statements and notes fairly present, in all material respects,
the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of the Company as at the respective dates
of and for the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial statements, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those included in
the Balance Sheet); except as disclosed in such financial statements, the
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved. No
financial statements of any Person other than the Company and the subsidiaries
listed in Part 3.1(c) of the Disclosure Letter are required by GAAP to be
included in the consolidated financial statements of the Company.
3.5 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of the Company, all of which have been made
available to the Purchaser, are complete and correct in all material respects,
and reflect the maintenance of an adequate system of internal controls. The
minute book of the Company contains accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the Boards
of Directors, and committees of the Board of Directors of the Company, and no
meeting of any such stockholders, Board of Directors, or committee has been
held for which minutes have not been prepared and are not contained in such
minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the Disclosure
Letter contains a complete and accurate list of all real property, leaseholds,
or other interests therein owned by the Company. The Company owns (with good
and marketable title in the case of real property, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that it purports
to own, including all of the properties and assets reflected in the Balance
Sheet and the Interim Balance Sheet (except for assets held under capitalized
leases disclosed or not required to be disclosed in Part 3.6 of the Disclosure
Letter and personal property sold since the date of the Balance Sheet and the
Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise
acquired by the Company since the date of the Balance Sheet (except for
personal property acquired and sold since the date of the Balance Sheet in the
Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than inventory
and short-term investments) are listed in Part 3.6 of the Disclosure Letter.
All properties and assets reflected in the Balance Sheet and the Interim
Balance Sheet are free and clear of all Encumbrances and are not, in the case
of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security interests
shown on the Balance Sheet or the Interim Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or event that,
with notice or lapse of time or both, would constitute a default) exists, (b)
mortgages or security interests incurred in connection with the purchase of
property or assets after the date of the Interim Balance Sheet (such mortgages
and security interests being limited to the property or assets so acquired),
with respect to which no default (or event that, with notice or
12
lapse of time or both, would constitute a default) exists, and (c) liens for
current Taxes not yet due, (d) defects, irregularities and deficiencies in
title that do not impair the use of such property for the purposes for which
such property is held by the Company in any material respect, (e) Encumbrances
disclosed in Part 3.6 of the Disclosure Letter; and (f) Encumbrances that
individually or in the aggregate would not have a Material Adverse Effect on
the Company or any of its assets.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment of the Company are structurally sound, are in good
operating condition and repair in all material respects, and are adequate for
the uses to which they are being put, and none of such buildings, plants,
structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. The building, plants, structures, and equipment of the Company are
sufficient for the continued conduct of the Company's business after the
Closing in substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company that
are reflected on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary Course
of Business. Unless paid prior to the Closing Date, the Accounts Receivable
are or will be as of the Closing Date current and collectible net of the
respective reserves shown on the Balance Sheet or the Interim Balance Sheet or
on the accounting records of the Company as of the Closing Date (which
reserves are adequate and calculated consistent with past practice and, in the
case of the reserve as of the Closing Date, will not represent a greater
percentage of the Accounts Receivable as of the Closing Date than the reserve
reflected in the Interim Balance Sheet represented of the Accounts Receivable
reflected therein and will not represent an adverse change in the composition
of such Accounts Receivable in terms of aging). Subject to such reserves, each
of the Accounts Receivable either has been or will be collected in full,
without any set-off, within ninety days after the day on which it first
becomes due and payable or with respect to receivables from Governmental
Bodies or collected through insurance carriers, within 180 days after the day
on which it first becomes due and payable provided, however, that no
representation is made as to any Accounts Receivable owed by Purchaser. There
is no contest, claim, or right of set-off, other than returns in the Ordinary
Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Part 3.8 of the Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of the date of the Interim Balance Sheet, which list
sets forth the aging of such Accounts Receivable.
3.9 INVENTORY. All inventory of the Company, whether or not reflected
in the Balance Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business in all material
respects, except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable value in the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Company as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or market on a first in,
first out basis. The quantities of each item of inventory
13
(whether raw materials, work-in-process, or finished goods) are not excessive,
but are reasonable in the present circumstances of the Company.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth in Part 3.10 of
the Disclosure Letter, the Company has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet or the Interim Balance Sheet, current liabilities
incurred in the Ordinary Course of Business since the respective dates
thereof, and liabilities, which individually or in the aggregate would not
have a Material Adverse Effect
3.11 TAXES.
(a) The Company has filed or caused to be filed within the allowable
time periods all Tax Returns that are or were required to be filed by or with
respect to it pursuant to applicable Legal Requirements in all material
respects. The Company has delivered or made available to the Purchaser copies
of, and Part 3.11 of the Disclosure Letter contains a complete and accurate
list of, all such Tax Returns filed since January 1, 1993. The Company has
paid, or made provision for the payment of, all Taxes that have or may have
become due pursuant to those Tax Returns or otherwise, or pursuant to any
assessment received by the Company, except such Taxes, if any, as are listed
in Part 3.11 of the Disclosure Letter and are being contested in good faith
and as to which adequate reserves (determined in accordance with GAAP) have
been provided in the Balance Sheet and the Interim Balance Sheet.
(b) The United States Federal and state income Tax Returns of the
Company have not been audited by the IRS or relevant state Tax Authorities and
the Company has no tolling agreements with the IRS. Part 3.11 of the
Disclosure Letter contains a complete and accurate list of all audits of all
Tax Returns, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits
have been paid, reserved against, settled, or, as described in Part 3.11 of
the Disclosure Letter, are being contested in good faith by appropriate
proceedings. Part 3.11 of the Disclosure Letter describes all adjustments to
the United States Federal income Tax Returns filed by the Company for all
taxable years since 1993, and the resulting deficiencies proposed by the IRS.
Except as described in Part 3.11 of the Disclosure Letter, neither the
Stockholders nor the Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes
for which Stockholders or the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
books of the Company are adequate (determined in accordance with GAAP) and are
at least equal to the Company's liability for Taxes. There exists no proposed
tax assessment against the Company except as disclosed in the Balance Sheet or
in Part 3.11 of the Disclosure Letter. No consent to the application of IRC
Section 341(f)(2) has been filed with respect to any property or assets held,
acquired, or to be acquired by the Company. All Taxes that the Company is or
was required by Legal Requirements to withhold or collect have been duly
withheld or collected in all material respects and, to the extent required,
have been paid to the proper Governmental Body or other Person.
14
(d) All Tax Returns filed by (or that include on a consolidated
basis) the Company are true, correct, and complete in all material respects.
There is no tax sharing agreement that will require any payment by the Company
after the date of this Agreement. The Company is not and has never been a
"Subchapter S" corporation as defined in the IRC.
3.12 NO MATERIAL ADVERSE CHANGE. Except as disclosed in Part 3.12 of
the Disclosure Letter, since the date of the Balance Sheet, there has not been
any material adverse change in the business, operations, properties, assets,
or condition of the Company, and to the Company's Knowledge, no event has
occurred or circumstance exists that may result in such a material adverse
change.
3.13 EMPLOYEE BENEFITS.
(a) As used in this Section 3.13, the following terms have the
meanings set forth below:
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by the Company or an ERISA Affiliate of the
Company.
"Company Plan" means all Plans of which the Company or an ERISA
Affiliate of the Company is or, within five (5) years prior to the Closing,
was a Plan Sponsor, or to which the Company or an ERISA Affiliate of the
Company otherwise contributes or, within five (5) years prior to the closing,
has contributed, or in which the Company or, within five (5) years prior to
the Closing, an ERISA Affiliate of the Company otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the
Company or any ERISA Affiliate of the Company.
"ERISA Affiliate" means, with respect to the Company, any other
person that, together with the Company, would be treated as a single employer
under IRC Section 414.
"Multi-Employer Plan" has the meaning given in ERISA Section 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices to provide benefits, other than salary or fees paid in
cash, as compensation for services rendered, to present or former directors,
employees, or agents, other than obligations, arrangements, and practices that
are Plans. Other Benefit Obligations include consulting agreements under which
the compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, and fringe benefits within
the meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" has the meaning given in ERISA Section 3(2)(A).
"Plan" has the meaning given in ERISA Section 3(3).
"Plan Sponsor" has the meaning given in ERISA Section 3(16)(B).
15
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC Section 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
Section 501(c)(9).
"Welfare Plan" has the meaning given in ERISA Section 3(1).
(b) (i) Part 3.13(b)(i) of the Disclosure Letter contains a complete
and accurate list of all Company Plans, Company Other Benefit Obligations, and
Company VEBAs, and identifies as such all Company Plans that are (A) defined
benefit Pension Plans, (B) Qualified Plans, (C) Title IV Plans, or (D)
Multi-Employer Plans.
(ii) Part 3.13(b)(ii) of the Disclosure Letter contains a
complete and accurate list of (A) all ERISA Affiliates of the Company, and (B)
all Plans of which any such ERISA Affiliate is a Plan Sponsor, participates,
or has current or future benefit obligations.
(iii) The Company maintains no Welfare Plans which provide
for post-retirement benefits other than continuation coverage required
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"). The Company has not maintained or contributed to any VEBAs.
(iv) Part 3.13(b)(iv) of the Disclosure Letter sets forth the
financial cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation for any non-Qualified Plan.
(c) The Company has delivered to the Purchaser:
(i) all documents that set forth the terms of each Company
Plan, Company Other Benefit Obligation, or Company VEBA and of any related
trust, and all plan descriptions and summary plan descriptions of Company
Plans, Company Other Benefit Obligations, and Company VEBAs;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements to which the
Company and/or any of their ERISA Affiliates is/are a party;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all registration statements filed with respect to any
Company Plan;
(vi) all insurance policies purchased by or to provide
benefits under any Company Plan;
16
(vii) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(viii) all reports submitted within the four years preceding
the date of this Agreement by third party administrators, actuaries,
investment managers, consultants, or other independent contractors with
respect to any Company Plan, Company Other Benefit Obligation, or Company
VEBA;
(ix) the Form 5500 filed in each of the most recent three
plan years with respect to each Company Plan, including all schedules thereto
and the opinions of independent accountants;
(x) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plan relating to any Company Plan to
the IRS, the PBGC, or any participant or beneficiary, pursuant to statute,
within the four years preceding the date of this Agreement;
(xi) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or any
Company Plan relating to any Company Plan within the four years preceding the
date of this Agreement; and
(xii) with respect to Qualified Plans and VEBAs, the most
recent determination letter for each Plan of the Company that is a Qualified
Plan.
(d) Except as set forth in Part 3.13(d) of the Disclosure Letter:
(i) The Company has performed all of its obligations under
all Company Plans, Company Other Benefit Obligations, and Company VEBAs. The
Company has made appropriate entries in its financial records and statements
for all obligations and liabilities under such Plans, VEBAs, and Obligations
that have accrued but are not due.
(ii) No statement, either written or oral, has been made by
the Company to any Person with regard to any Plan or Other Benefit Obligation
that was not in accordance with the Plan or Other Benefit Obligation and that
could have an adverse economic consequence to the Company or to the Purchaser.
(iii) The Company, with respect to all Company Plans, Company
Other Benefit Obligations, and Company VEBAs, is, and each Company Plan,
Company Other Benefit Obligation, and Company VEBA is, in full compliance with
ERISA, the IRC, and other applicable Laws including the provisions of such
Laws expressly mentioned in this Section 3.13, and with any applicable
collective bargaining agreement.
(A) No transaction prohibited by ERISA Section 406
and no "prohibited transaction" under IRC Section 4975(c) have occurred with
respect to any Company Plan.
(B) The Company has no liability to the IRS with
respect to any Plan, including any liability imposed by Chapter 43 of the IRC.
17
(C) The Company has no liability to the PBGC with
respect to any Plan or has any liability under ERISA Section 502 or Section
4071.
(D) All filings required by ERISA and the IRC as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely provided.
(E) All contributions and payments made or accrued
with respect to all Company Plans, Company Other Benefit Obligations, and
Company VEBAs are deductible under IRC Section 162 or Section 404. No amount,
or any asset of any Company Plan or Company VEBA, is subject to tax as
unrelated business taxable income.
(iv) Except as set forth in Part 3.13(d)(iv) of the
Disclosure Letter, each Company Plan can be terminated within thirty days,
without payment of any additional contribution or amount and, except with
respect to Qualified Plans, without the vesting or acceleration of any
benefits promised by such Plan.
(v) To the Company's Knowledge, premium costs of the
Company's Welfare Plans are not expected to materially increase for the next
renewal period as the direct result of past claims experience.
(vi) Other than claims for benefits submitted by participants
or beneficiaries, no claim against, or legal proceeding involving, any Company
Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to the
Company's Knowledge, is Threatened.
(vii) Except as set forth in Part 3.13(d)(vii) of the
Disclosure Letter, no Company Plan is a stock bonus, pension, or
profit-sharing plan within the meaning of IRC Section 401(a).
(viii) Each Qualified Plan of the Company has received a
favorable determination letter as to the qualified status of such Plan under
IRC Section 401(a), including all Plan provisions and/or amendments which, under
current Internal Revenue Service guidelines are required to have been
incorporated or made and each such Plan has been operated in all material
respects in compliance with Plan provisions and all applicable legal
requirements; each trust for each such Plan is exempt from federal income tax
under IRC Section 501(a). To 'Company's knowledge no event has occurred or
circumstance exists that will or could give rise to disqualification or loss
of tax-exempt status of any such Plan.
(ix) No Company Plan is subject to Title IV of ERISA.
(x) Neither the Company nor any ERISA Affiliate of the
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Multi-Employer Plan.
(xi) Under the terms of the Company Plans, the Company has
the right to modify and terminate benefits to retirees (other than pensions)
with respect to both retired and active employees.
18
(xii) The Company has complied with the provisions of
ERISA Section 601 et seq. and IRC Section 4980B in all material respects.
(xiii) No payment that is owed or may become due to any
director, officer, employee, or agent of the Company under any current Company
Plan or Company Other Benefit Obligation will be non-deductible to the Company
or subject to tax under IRC Section 280G or Section 4999; nor will the Company
be required to "gross up" or otherwise compensate any such person because of the
imposition of any excise tax on a payment to such person.
(xiv) Except as set forth in Part 3.13(d)(xvi) of the
Disclosure Letter, the consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) The Company is, and at all times has been, in full
compliance with each Legal Requirement that is or was applicable to it or to
the conduct or operation of its business or the ownership or use of any of its
assets in all material respects;
(ii) No event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a
violation by the Company of, or a failure on the part of the Company to comply
with, any Legal Requirement in any material respect, or (B) may give rise to
any obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) The Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement in any material
respect, or (B) any actual, alleged, possible, or potential obligation on the
part of the Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or to any of the assets owned or
used by, the Company. Each Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) The Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.14 of the
Disclosure Letter;
(ii) No event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure
19
to comply with any term or requirement of any Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter, or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.14 of the Disclosure
Letter;
(iii) The Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible, or
potential revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Disclosure Letter have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required to have
been made with respect to such Governmental Authorizations have been duly made
on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the Governmental Authorizations
necessary to permit the Company to lawfully conduct and operate its business
in the manner it currently conducts and operates such business and to permit
the Company to own and use its assets in the manner in which it currently owns
and uses such assets.
3.15 LEGAL PROCEEDINGS; ORDERS. (a) Except as set forth in Part 3.15
of the Disclosure Letter, there is no pending Proceeding:
(i) that has been commenced by or against the Company or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of the Company, except as disclosed in Part 3.15 of
the Disclosure Letter, (1) no such Proceeding has been Threatened, and (2) no
event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. The Proceedings set forth
in Part 3.15 of the Disclosure Letter shall not result in Damages in the
aggregate exceeding the amount reserved therefor in the Agreed Latest Balance
Sheet (without giving effect to the $25,000 materiality standard). The Company
has delivered to the Purchaser copies of all pleadings, correspondence, and
other documents relating to each Proceeding listed in Part 3.15 of the
Disclosure Letter. The Proceedings listed in Part 3.15 of the Disclosure
Letter will not have a Material Adverse Effect.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) There is no Order to which the Company, or any of
the assets owned or used by the Company, is subject;
20
(ii) To the Knowledge of the Company, the Stockholders are
not subject to any Order that relates to the business of, or any of the assets
owned or used by, the Company; and
(iii) To the Knowledge of the Company, no officer, director,
agent, or employee of the Company is subject to any Order that prohibits such
officer, director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of the Company.
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) The Company is, and at all times has been, in full
compliance in all material respects with all of the terms and requirements of
each Order to which it, or any of the assets owned or used by it, is or has
been subject;
(ii) To the Knowledge of the Company, no event has occurred
or circumstance exists that may constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which the Company, or any of the assets owned or
used by the Company, is subject; and
(iii) The Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible, or potential violation
of, or failure to comply with, any term or requirement of any Order to which
the Company, or any of the assets owned or used by the Company, is or has been
subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Part 3.16 of the Disclosure Letter, since the date of the Balance Sheet, the
Company has conducted its business only in the Ordinary Course of Business and
there has not been any:
(a) change in the Company's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of the
Company; issuance of any security convertible into such capital stock;
purchase, redemption, retirement, or other acquisition by the Stockholders of
any shares of any such capital stock; or declaration or payment of any
dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
21
(e) damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance, that may have a Material Adverse
Effect;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to the Company of at least
$50,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or mortgage, pledge, or imposition of any Encumbrance on any material asset or
property of the Company, including the sale, lease, or other disposition of
any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
the Company in excess of $50,000;
(i) material change in the accounting methods used by the Company;
(j) sale or pledge, or agreement to sell or pledge, any capital stock
owned by the Company;
(k) split, combination or reclassification of the Company's
outstanding stock or issuance or authorization or proposed issuance of any
other securities with respect to, in lieu of or in substitution for the
GeneScreen Stock;
(l) incurrence of any indebtedness for borrowed money or capital
lease obligations outside the Ordinary Course of Business;
(m) guaranty of any indebtedness of another Person;
(n) acquisition by merger or consolidation with, or by purchasing a
substantial equity interest in, or by any other manner, any business or any
Person;
(o) acceleration, termination (other than end-of-term expirations),
modification, cancellation, declaration of a default under or indication of an
intent to terminate any Contract (or series of related Contracts) involving
more than $50,000 to which the Company is a party or by which it is bound;
(p) any capital expenditure (or series of related capital
expenditures) either involving more than $50,000 or outside the Ordinary
Course of Business;
(q) delay or postponement of the collection of accounts receivable or
the payment of accounts payable and other liabilities outside the Ordinary
Course of Business;
(r) loan to, or, except in Ordinary Course of Business, entry into
any other transaction with, any of its directors, officers and employees;
22
(s) entry into any transaction other than in the Ordinary Course of
Business; and
(t) agreement, whether oral or written, by the Company to do any of
the foregoing.
3.17 CONTRACTS; NO DEFAULTS. (a) Part 3.17(a) of the Disclosure
Letter contains a complete and accurate list, and the Company has delivered to
the Purchaser true and complete copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount or
value in excess of $50,000;
(ii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
the Company in excess of $50,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any assets of the Company (except personal property leases
and installment and conditional sales agreements having a value per item or
aggregate payments of less than $50,000 and with terms of less than one year);
(iv) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(v) each collective bargaining agreement and other Applicable
Contract with any labor union or other employee representative of a group of
employees;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(vii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or materially
limit the freedom of the Company to engage in any line of business or to
compete with any Person;
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods having a value in excess of $50,000;
(ix) each Applicable Contract for capital expenditures in
excess of $50,000;
(x) each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by the Company
other than in the Ordinary Course of Business;
23
(xi) each written complaint received by the Company from a
customer during the twelve (12) month period preceding the date hereof, the
net affect of which would be the likely cancellation or termination of a
Contract having a value in excess of $50,000; and
(xii) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
Part 3.17(a) of the Disclosure Letter sets forth reasonably complete
details concerning such Contracts, including the parties to the Contracts, the
amount of the remaining commitment of the Company under the Contracts.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter:
(i) none of the Key Stockholders nor, to the Knowledge of the
Company, any Related Person of the Key Stockholders has or may acquire any
rights under, and none of the Key Stockholders nor such Related Person has or
may become subject to any obligation or liability under, any Contract that
relates to the business of the Company, or any of the assets owned or used by,
the Company; and
(ii) no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or contractor
to (A) engage in or continue any conduct, activity, or practice relating to
the business of the Company, or (B) assign to the Company or to any other
Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter,
each Contract identified or required to be identified in Part 3.17(a) of the
Disclosure Letter is in force and effect and is valid and enforceable in
accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) the Company is and has been in compliance in all material
respects with all applicable terms and requirements of each Contract under
which the Company has or had any obligation or liability or by which the
Company or any of the assets owned or used by the Company is or was bound;
(ii) to the Company's Knowledge, each other Person that has
or had any obligation or liability under any Contract under which the Company
has or had any rights is, and at all times has been, in compliance in all
material respects with all applicable terms and requirements of such Contract;
(iii) to the Company's Knowledge, no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give the
other Person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Applicable Contract;
24
(iv) the Company has not given to or received from any other
Person any notice or other communication (whether oral or written) regarding
any actual, alleged, possible, or potential violation or breach of, or default
under, any Contract; and
(v) the Company is not aware of any state of facts that would
cause a reasonable person to believe that the Company's future sales will not
equal such sales for 1996 or 1997.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiations.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission
of any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any Legal
Requirement.
3.18 INSURANCE. (a) The Company has delivered to the Purchaser:
(i) true and complete copies of all policies of insurance to
which the Company is a party or under which the Company is or has been covered
at any time within the three years preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of the Company's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company; and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for
the current policy year and the three immediately preceding policy years:
(i) a summary of the loss experience under each policy;
25
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $5,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the
claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter:
(i) All policies to which the Company is a party or that
provide coverage to either the Company, or any director or officer of the
Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially
sound and reputable;
(C) taken together, provide adequate insurance
coverage for the assets and the operations of the Company for all risks normally
insured against by a Person carrying on the same business as the Company;
(D) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party or by which it is
bound;
(E) will continue in full force and effect
following the consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of the Company.
(ii) The Company has not received (A) any refusal of coverage
from the issuer of any insurance policy of the Company or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of
cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy
is not willing or able to perform its obligations thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its respective obligations, under each policy to
which the Company is a party or that provides coverage to the Company or a
director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
26
3.19 ENVIRONMENTAL MATTERS. Except as set forth in Part 3.19 of the
Disclosure Letter:
(a) The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. The Company has no Knowledge or any basis to expect, nor
has it or any other Person for whose conduct the Company is or may be held to
be responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen, or (ii) the
current or prior owner or operator of any Facilities, regarding any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or Threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which the Company has had an interest, or with respect to any
property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by the
Company or any other Person for whose conduct it is or may be held
responsible, or from which Hazardous Materials have migrated or been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of the Company,
Threatened Encumbrances resulting from any Environmental, Health, and Safety
Liabilities or arising under or pursuant to any Environmental Law, with
respect to or affecting any of the Facilities or any other properties and
assets (whether real, personal, or mixed) in which the Company has or had an
interest.
(c) The Company has no Knowledge or any basis to expect, nor has it
or any other Person for whose conduct the Company is or may be held
responsible, received any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the Company
had an interest, or with respect to any property or facility to which
Hazardous Materials generated, manufactured, refined, transferred, imported,
used, or processed by the Company or any other Person for whose conduct it is
or may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) Neither the Company nor any other Person for whose conduct the
Company is or may be held responsible, has any Environmental, Health, and
Safety Liabilities with respect to the Facilities or with respect to any other
properties and assets (whether real, personal, or mixed) in which the Company
(or any predecessor), has or had an interest.
(e) There are no Hazardous Materials present on or in the Environment
at the Facilities, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part
of the Facilities or such adjoining property, or incorporated into any
structure therein or thereon.
27
Neither the Key Stockholders, the Company nor any other Person for whose
conduct either of them is or may be held responsible, or any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which the Company has or had an interest except in full
compliance with all applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of the Company,
Threat of Release, of any Hazardous Materials at or from the Facilities or at
any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, processed,
treated, stored or disposed of, from or by the Facilities, or from or by any
other properties and assets (whether real, personal, or mixed) in which the
Company has or had an interest, or to the Knowledge of the Company any
geologically or hydrologically adjoining property, whether by the Company or
any other Person.
(g) The Company has delivered to the Purchaser true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Company or any Related Person pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the Facilities,
or concerning compliance by the Key Stockholders or the Company or any other
Person for whose conduct either of them is or may be held responsible, with
Environmental Laws.
3.20 EMPLOYEES.
(a) Part 3.20 of the Disclosure Letter contains a complete and
accurate list of the following information for each employee of the Company,
including each employee on leave of absence or layoff status: employer; name;
job title; current compensation paid or payable; and service credited for
purposes of vesting and eligibility to participate under any pension,
retirement, profit-sharing, thrift-savings, deferred compensation, stock
bonus, stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay, insurance,
medical, welfare, or vacation plan, other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan, or any other employee benefit plan or any
Director Plan. The Company does not accrue vacation.
(b) To the Company's Knowledge, no employee or director of the
Company is a party to, or is otherwise bound by, any agreement or arrangement,
including any confidentiality, non-competition, or proprietary rights
agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
adversely affect (i) the performance of his or her duties as an employee or
director of the Company, or (ii) the ability of the Company to conduct its
business, including any Proprietary Rights Agreement with the Company by any
such employee or director. To the Knowledge of the Company, no director,
officer, or other key employee of the Company intends to terminate his or her
employment with the Company.
(c) Part 3.20 of the Disclosure Letter also contains a complete and
accurate list of the following information for each retired employee or
director of the Company, or their dependents, receiving benefits or scheduled
to receive benefits in the future: name, pension benefit, pension
28
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 LABOR RELATIONS; COMPLIANCE. The Company has not been and is not
a party to any collective bargaining or other labor union contract. There has
not been, there is not presently pending or existing, and to the Knowledge of
the Company there is not Threatened, (a) any strike, slowdown, picketing, work
stoppage, or employee grievance process, (b) any Proceeding against or
affecting the Company relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any
comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting the Company or its premises, or (c)
any application for certification of a collective bargaining agent. To the
Company's Knowledge no event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. There is no
lockout of any employees by the Company, and no such action is contemplated by
the Company. The Company has complied in all material respects with all Legal
Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. The Company is not liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal
Requirements.
3.22 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets. The term "Intellectual Property
Assets" includes:
(i) the name "GeneScreen," all fictional business names,
trading names, registered and unregistered trademarks, service marks, and
applications held or used by the Company (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable held by the Company (collectively,
"Patents");
(iii) all copyrights in both published works and unpublished
works held by the Company (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints owned, used, or licensed by the Company
(collectively, "Trade Secrets").
(b) Agreements. Part 3.22(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any royalties
paid or received by the Company, of all Contracts relating to the Intellectual
Property Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than
29
$10,000 under which the Company is the licensee. There are no outstanding
and, to the Company's Knowledge, no Threatened disputes or disagreements with
respect to any such agreements.
(c) Know-How Necessary for the Business.
----------------------------------------
(i) The Intellectual Property Assets are all those necessary
for the operation of the Company's business as it is currently conducted. The
Company is the owner of all right, title, and interest in and to each of the
Intellectual Property Assets, free and clear of all material Encumbrances, and
has the right to use without payment to a third party, all of the Intellectual
Property Assets.
(ii) Except as set forth in Part 3.22(c) of the Disclosure
Letter, all former and current employees of the Company have executed written
Contracts with the Company that assign to the Company all rights to any
inventions, improvements, discoveries, or information relating to the business
of the Company. No employee of the Company has entered into any Contract that
restricts or limits in any way the scope or type of work in which the employee
may be engaged or requires the employee to transfer, assign, or disclose
information concerning his or her work to anyone other than the Company.
(d) Patents.
-------------
(i) Part 3.22(d) of the Disclosure Letter contains a complete
and accurate list and summary description of all Patents. Except as set forth
in Part 3.22(d) of the Disclosure Letter, the Company is the owner of all
right, title, and interest in and to each of the Patents, free and clear of
all Encumbrances.
(ii) All of the issued Patents are currently in compliance
with formal legal requirements (including payment of filing, examination, and
maintenance fees and proofs of working or use), are valid and enforceable, and
are not subject to any maintenance fees or Taxes or actions falling due within
ninety days after the Closing Date.
(iii) No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding. To the
Company's Knowledge, there is no potentially interfering patent or patent
application of any third party.
(iv) No Patent is infringed or, to the Company's Knowledge,
has been challenged or threatened in any way. None of the products
manufactured and sold, nor any process or know-how used, by the Company
infringes or is alleged to infringe any patent or other proprietary right of
any other Person.
(v) All products made, used, or sold under the Patents have
been marked with the proper patent notice.
(e) Trademarks.
----------------
30
(i) Part 3.22(e) of the Disclosure Letter contains a complete
and accurate list and summary description of all Marks. Except as set forth in
Part 3.22(e) of the Disclosure Letter, the Company is the owner of all right,
title, and interest in and to each of the Marks, free and clear of all
Encumbrances.
(ii) All Marks that have been registered are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any
maintenance fees or Taxes or actions falling due within ninety days after the
Closing Date.
(iii) No Xxxx has been or is now involved in any opposition,
invalidation, or cancellation and, to the Company's Knowledge, no such action
is Threatened with the respect to any of the Marks.
(iv) Except as set forth in Part 3.22(e)(iv) of the
Disclosure Letter, to the Company's Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) No Xxxx is infringed or, to the Company's Knowledge, has
been challenged or threatened in any way. To the Company's Knowledge, none of
the Marks used by the Company infringes or is alleged to infringe any trade
name, trademark, or service xxxx of any third party.
(f) Copyrights.
----------------
(i) Part 3.22(f) of the Disclosure Letter contains a complete
and accurate list and summary description of all Copyrights. Except as set
forth in Part 3.22(f) of the Disclosure Letter, the Company is the owner of
all right, title, and interest in and to each of the Copyrights, free and
clear of all Encumbrances.
(ii) All the Copyrights have been registered and are
currently in compliance with formal legal requirements, are valid and
enforceable, and are not subject to any maintenance fees or Taxes or actions
falling due within ninety days after the date of Closing.
(iii) No Copyright is infringed or, to the Company's
Knowledge, has been challenged or threatened in any way. None of the subject
matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(g) Trade Secrets.
-------------------
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail
and content to identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any individual.
(ii) The Company has taken all reasonable precautions to
protect the secrecy, confidentiality, and value of its Trade Secrets.
31
(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are
not part of the public knowledge or literature, and, to the Company's
Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person or to the detriment of the Company. No Trade Secret is
subject to any adverse claim or has been challenged or threatened in any way.
(h) Year 2000 Compliance. All mission critical software licensed to
or used by the Company prior to, during or after the calendar year 2000,
includes or shall include, at no material cost to the Purchaser, design and
performance functionality so the Purchaser shall not experience software
abnormally ending and/or incorrect results from use of any such software in
the operations of the Company due to the calendar year 2000. All software use
by the Company is designed to ensure year 2000 compatibility which shall
include, but not be limited to, date data century recognition, calculations
that accommodate same century and multicentury formulas and date values, and
date data interface values that reflect the century. The Company has and the
Purchaser shall have the absolute right to use, without payment of any
additional consideration to any Person (excluding customary support and
maintenance fees) all software and operating systems necessary to continue to
operate the Company's business without interruption or delay.
3.23 CERTAIN PAYMENTS. Neither the Company nor, to the Company's
Knowledge, any director, officer, agent, or employee of the Company, or any
other Person associated with or acting for or on behalf of the Company, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or
public, regardless of form, whether in money, property, or services (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the Company or any
Affiliate of the Company, or (iv) in violation of any Legal Requirement, (b)
established or maintained any fund or asset that has not been recorded in the
books and records of the Company.
3.24 DISCLOSURE.
(a) No representation or warranty of the Company or the Key
Stockholders in this Agreement and no statement in the Disclosure Letter omits
to state a material fact necessary to make the statements herein or therein,
in light of the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact known to the Company or the Key Stockholders
that has specific application to the Stockholders or the Company (other than
general economic or industry conditions) and that may have a Material Adverse
Effect that has not been set forth in this Agreement or the Disclosure Letter.
32
3.25 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in Part
3.25 of the Disclosure Letter, to the Company's Knowledge, none of the
Stockholders nor any Related Person of the Stockholders or the Company has, or
since the first day of the next to last completed fiscal year of the Company
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Company's
business. To the Company's Knowledge, none of the Stockholders nor any Related
Person of the Stockholders or the Company is, or since the first day of the
next to last completed fiscal year of the Company has owned (of record or as a
beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial
interest in any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or services of the
Company (a "Competing Business") in any market presently served by the Company
except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in
the over-the-counter market. Except as set forth in Part 3.25 of the
Disclosure Letter, to the Company's Knowledge, none of the Stockholders nor
any Related Person of the Stockholders or the Company is a party to any
Contract with, or has any claim against, the Company.
3.26 BROKERS OR FINDERS. The Company, the Stockholders and their
respective agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement other than to Xxxxxxxx Xxxx,
whose fees will be paid by the Company.
3.27 CONTINUITY OF BUSINESS ENTERPRISE. The Company operates at least
one significant historic business line, or owns at least a significant portion
of its historic business assets, in each case within the meaning of IRS Reg.
Section 1.368-1(d).
3.28 QUALIFICATION AS AN "A" MERGER. The Company is in the process of
selling MTI to Orchid Biocomputer Inc. and hereby represents and warrants that
the total consideration to be received in the MTI Transaction will not prevent
the Merger from being consummated as a tax-free reorganization pursuant to IRC
Section 368(a)(1)(A).
3A. REPRESENTATIONS AND WARRANTIES OF THE KEY SHAREHOLDERS.
Each of the Key Stockholders represents and warrants to the Purchaser
as follows (with the term "Related Person" as used in this Section excluding
the Company itself):
3A.1 (a) Upon the execution and delivery by such Key Stockholder of
this Agreement, a Noncompetition Agreement to which such Key Stockholder is a
party, a Lockup Agreement to which the Key Stockholder is a party, the Escrow
Agreement and each other document and instrument described herein to which
such Key Stockholder is a party (the "Key Stockholder Closing Documents"),
this Agreement and the Key Stockholder Closing Documents will constitute the
legal, valid and binding obligations of such Key Stockholder, enforceable
against such Key Stockholder in accordance with their respective terms. Such
Key Stockholder has the power, authority, and capacity to execute and deliver
this Agreement and the Key Stockholder Closing Documents to which such Key
Stockholder is a party, and to perform its obligations
33
under this Agreement and the Key Stockholder Closing Documents to which such
Key Stockholder is a party.
(b) Except as set forth in Part 3.2 of the Disclosure
Letter, neither the execution and delivery of this Agreement by such Key
Stockholder nor the consummation or performance of any of the Contemplated
Transactions by such Key Stockholder will, directly or indirectly (with or
without notice or lapse of time), contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which such Key
Stockholder may be subject.
3A.2 Except as set forth in Part 3.17(b) of the Disclosure Letter,
neither such Key Stockholder, nor to the Knowledge of such Key Stockholder,
any Related Person of such Key Stockholder has or may acquire any rights
under, and neither such Key Stockholder nor any of its Related Persons, has or
may become subject to any obligation or liability under any Contract that
relates to the business of the Company, or any assets owned or used by, the
Company.
3A.3 (a) No representation or warranty of such Key Stockholder in
this Agreement or in the Disclosure Letter that relates to such Key
Stockholder omits to state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which they were made, not
misleading.
(b) There is no fact of which such Key Stockholder has
Knowledge that is related to such Key Stockholder that may have a Material
Adverse Effect that has not been set forth in this Agreement or the Disclosure
Letter.
3A.4 Except as set forth in Part 3.25 of the Disclosure Letter, to
the Knowledge of such Key Stockholder, neither such Key Stockholder nor any
Related Person of such Key Stockholder has, or since the first day of the next
to last completed fiscal year of the Company has had, any interest in any
property (whether real, personal, or mixed and whether tangible or
intangible), used in or pertaining to the Company's business. To the Knowledge
of such Key Stockholder, neither such Key Stockholder nor any Related Person
or such Key Stockholder is, or since the first day of the next to last
completed fiscal year of the Company has owned (of record or as a beneficial
owner) an equity interest or any other financial or profit interest in, a
Person that has (i) had business dealings or a material financial interest in
any transaction with the Company, or (ii) engaged in competition with the
Company with respect to any line of products or services of the Company (a
"Competing Business") in any market presently served by the Company except for
less than one percent (1%) of the outstanding capital stock of any Competing
Business that is publicly traded on any recognized exchange or in the
over-the-counter market. Except as set forth in Part 3.25 of the Disclosure
Letter, neither such Key Stockholder nor any Related Person of such Key
Stockholder is a party to any Contract with, or has any claim against, the
Company.
34
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser represents
and warrants to the Stockholders as follows:
4.1 ORGANIZATION AND GOOD STANDING. The Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to conduct its
business as it is now being conducted. The Purchaser is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms. Upon the execution and delivery by the Purchaser of the Lockup
Agreements, the Escrow Agreement and the other documents or instruments
described herein (the "Purchaser's Closing Documents"), the Purchaser's
Closing Documents will constitute the legal, valid, and binding obligations of
the Purchaser, enforceable against the Purchaser in accordance with their
terms. The Purchaser has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Purchaser's Closing
Documents, as the case may be, and to perform their respective obligations
under this Agreement and the Purchaser's Closing Documents, as the case may
be.
(b) Neither the execution and delivery of this Agreement by the
Purchaser nor the consummation or performance of any of the Contemplated
Transactions by the Purchaser will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
(i) any provision of the Purchaser's Organizational
Documents;
(ii) any resolution adopted by the board of directors or
stockholders of the Purchaser, as the case may be;
(iii) any Legal Requirement or Order to which the Purchaser
may be subject; or
(iv) any Contract to which the Purchaser is a party or by
which the Purchaser may be bound.
Other than consent from its stockholders and its bank lender, which
consents will be obtained on or prior to the Closing Date, the Purchaser is
not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 CAPITALIZATION. The authorized equity securities of the Purchaser
consists of 1,500,000 shares of common stock, $.10 par value per share, of
which 773,175 were outstanding on July 15, 1998; and 500,000 shares of
preferred stock, $10.00 par value per share, of which 21,500 were outstanding
on July 15, 1998. All of the outstanding equity securities of the Purchaser
have been duly authorized and validly issued and are fully paid and
nonassessable.
35
None of the outstanding equity securities or other securities of the Purchaser
were issued in violation of the Securities Act or any other Legal Requirement.
Subject to Stockholder approval, the Purchaser intends to increase its
authorized capital stock to 15,000,000 shares of common stock, $.10 par value
per share, and 1,000,000 shares of preferred stock, $10.00 par value per
share, to allow the Purchaser to implement a 3.65-for-1 stock split and to
allow the board of directors of Purchaser to issue additional shares in
connection with acquisitions and capital raising transactions and for other
purposes deemed by the board of directors to be in the best interest of the
Purchaser. If the authorized capital stock of Purchaser is increased and the
stock split is consummated as presently contemplated and set forth herein, no
more than 8,000,000 shares of common stock shall be outstanding at the
Effective Time, including the shares to be issued in connection with this
Agreement.
4.4 INVESTMENT INTENT. The Purchaser is acquiring the GeneScreen
Stock for its own account and not with a view to distribution within the
meaning of Section 2(11) of the Securities Act.
4.5 CERTAIN PROCEEDINGS. There is no pending Proceeding that has been
commenced against the Purchaser and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions. To the Purchaser's Knowledge, no such
Proceeding has been Threatened.
4.6 BROKERS OR FINDERS. The Purchaser and its officers and agents
have incurred no obligation or liability, contingent or otherwise, for
brokerage or finders' fees or agents' commissions or other similar payment in
connection with this Agreement and will indemnify and hold the Stockholders
harmless from any such payment alleged to be due by or through the Purchaser
as a result of the action of the Purchaser or its officers or agents.
4.7 SEC REPRESENTATION. The Registration Statement has been filed
with the Securities and Exchange Commission for the registration under the
Securities Act of the offer and sale of Lifecodes Stock (i) pursuant to the
IPO and (ii) to the Stockholders at the Effective Time pursuant to the Merger.
The Purchaser has delivered to the Company a true and complete copy of the
Registration Statement, including all exhibits and amendments thereto. The
Registration Statement, as filed, fully complied, and on the Closing Date will
comply, in all material respects with the applicable provisions of the
Securities Act and the applicable rules and regulations of the Securities and
Exchange Commission promulgated thereunder. On the Closing Date, the
Registration Statement will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. On the Closing Date, any and all
required filings, notifications, registrations and qualifications under the
Securities Act and the securities or blue sky laws of each applicable state or
other jurisdiction in which a Stockholder is resident (as identified on
Exhibit J) shall have been made, given and effective, so that the Lifecodes
Stock issuable to the Stockholders pursuant to this Agreement shall be freely
tradable by the holders thereof under the Securities Act and such laws,
subject only to the terms of the Lockup Agreements.
4.8 CONTINUITY OF BUSINESS ENTERPRISE. It is the present intention of
the Purchaser to continue at least one significant historic business line of
the Company, or to use at
36
least a significant portion of the Company's historic business assets, in each
case within the meaning of IRS Reg. Section 1.368-1(d).
4.9 NO MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the business of the Purchaser since the date of the Registration
Statement.
5. COVENANTS OF THE COMPANY PRIOR TO CLOSING DATE.
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement and
the Closing Date, the Company will, and will cause its Representatives to, (a)
afford the Purchaser and its Representatives and lenders and their
Representatives (collectively, the "Purchaser's Advisors") full and free
access to the Company's personnel, properties, contracts, books and records,
and other documents and data, (b) furnish the Purchaser and the Purchaser's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as the Purchaser may reasonably request, and (c)
furnish the Purchaser and the Purchaser's Advisors with such additional
financial, operating, and other data and information as the Purchaser may
reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY. Between the date of
this Agreement and the Closing Date, the Company will:
(a) conduct the business of the Company, other than engaging in the
MTI Transaction, only in the Ordinary Course of Business;
(b) use its best efforts to preserve intact the current business
organization of the Company, keep available the services of the current
officers, employees, and agents of the Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with the Company, in each case, other
than MTI;
(c) confer with the Purchaser concerning operational matters of a
material nature; and
(d) otherwise report periodically to the Purchaser concerning the
status of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date, the
Company will not, without the prior consent of the Purchaser, take any
affirmative action, or fail to take any reasonable action within its control,
as a result of which any of the changes or events listed in Section 3.16 is
likely to occur.
5.4 REQUIRED APPROVALS. As promptly as practicable after the date of
this Agreement, the Company will make all filings required by Legal
Requirements to be made by it in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, the
Company will cooperate with the Purchaser with respect to all filings that the
Purchaser elects to make or is required by Legal Requirements to make in
connection with
37
the Contemplated Transactions and cooperate with the Purchaser in obtaining
all required consents.
5.5 NOTIFICATION. Between the date of this Agreement and the Closing
Date, the Company will promptly notify the Purchaser in writing if the Company
becomes aware of any fact or condition that causes or constitutes a Breach of
any of representations and warranties of the Key Stockholders or the Company
as of the date of this Agreement, or if the Company becomes aware of the
occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute
a Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the
occurrence or discovery of any such fact or condition, the Company will
promptly deliver to the Purchaser a supplement to the Disclosure Letter
specifying such change. During the same period, the Company will promptly
notify the Purchaser of the occurrence of any Breach of any covenant in this
Section 5 or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
5.6 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 10, the Key Stockholders and the Company will
not, and each will cause its Representatives not to, directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the merits
of any unsolicited inquiries or proposals from, any Person (other than the
Purchaser) relating to any transaction involving the sale of the business or
assets (other than in the Ordinary Course of Business) of the Company, or any
of the capital stock of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company other than the MTI
Transaction.
5.7 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, the Company and the Key Stockholders will use their Best Efforts to
cause the conditions in Sections 7 and 8 to be satisfied.
5.8 STOCKHOLDER MEETING. The Company shall take all action necessary
in accordance with applicable law to convene a meeting of the Stockholders to
be held no later than September 25,1998 (the "Meeting"), for the purpose of
approving this Agreement. On or before September 4, 1998 the Company shall
mail to each Stockholder who was a stockholder on the record date for
determining stockholders entitled to notice of the Meeting, (i) a notice of
special meeting (which notice may be included in the Information Statement (as
defined herein)), (ii) an information statement and letter of transmittal (the
"Information Statement") with respect to the matters to be submitted for
stockholder approval at the Meeting, in which its board of directors shall
recommend to its stockholders the approval of this Agreement; and (iii) a
notice that appraisal rights are available for the shares of GeneScreen Stock
held by each such Stockholder of the Company, together with a statement of
rights of objecting Stockholders, in satisfaction of the Company's obligations
under Section 262 of the Delaware General Corporation Law. Each of the Key
Stockholders hereby agrees to vote its GeneScreen Shares in favor of the
Merger. The Company shall use its best efforts to obtain all votes and
approvals of its stockholders necessary
38
for the approval of this Agreement under the Delaware General Corporation Law
and its Certificate of Incorporation and Bylaws.
6. COVENANT OF THE PURCHASER PRIOR TO CLOSING DATE.
6.1 BEST EFFORTS. Between the date of this Agreement and the Closing
Date, the Purchaser will use its Best Efforts to cause the conditions in
Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER TO CLOSE.
The obligations of the Purchaser to take the actions required to be
taken by the Purchaser at the Closing are subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by the Purchaser, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS.
(a) All of the representations and warranties of the Company and the
Key Stockholders in this Agreement (considered collectively), and each of
these representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement, and must
be accurate in all material respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure
Letter.
(b) Each of the representations and warranties in Sections 3.3, 3.4,
3.12 and 3.24 must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Letter.
7.2 PERFORMANCE BY THE COMPANY AND THE KEY STOCKHOLDERS.
(a) All of the covenants and obligations that the Company or the Key
Stockholders are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects.
(b) Each document required to be delivered pursuant to Section 2.5
must have been delivered, and each of the other covenants and obligations in
Section 5.4 must have been performed and complied with in all respects.
7.3 ADDITIONAL DOCUMENTS. Each of the following documents
must have been delivered to the Purchaser:
(a) an opinion of the Company's counsel, dated the Closing Date, in
the form of Exhibit F; and
(b) such other documents as the Purchaser may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion referred to in
Section 8.4(a), (ii) evidencing the accuracy of any of the Company's or the
Key Stockholders' representations and warranties, (iii)
39
evidencing the performance by the Company or the Key Stockholders of, or the
compliance by the Company or the Key Stockholders with, any covenant or
obligation required to be performed or complied with by the Company or the Key
Stockholders, (iv) evidencing the satisfaction of any condition referred to in
this Section 7, or (v) otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.4 NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced, or to the Purchaser's Knowledge, Threatened against the
Purchaser, or against any Person affiliated with the Purchaser, any Proceeding
(a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
7.5 NO CLAIM REGARDING SHARE OWNERSHIP OR SALE PROCEEDS. There must
not have been made or Threatened by any Person any claim asserting that such
Person (a) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any of the GeneScreen Stock or
any other voting, equity or ownership interest in the Company, or (b) is
entitled to all or any portion of the Lifecodes Stock.
7.6 NO PROHIBITION. Neither the consummation nor the performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, or cause the Purchaser or any Person
affiliated with the Purchaser to suffer any material adverse consequence
under, (a) any applicable Legal Requirement or Order, or (b) any Legal
Requirement or Order that has been published, introduced, or otherwise
formally proposed by or before any Governmental Body.
7.7 DUE DILIGENCE. The Purchaser shall have completed its due
diligence of the Company and its business to the Purchaser's satisfaction.
7.8 REGISTRATION OF SHARES. The offer and sale of all of the shares
of Lifecodes Stock constituting the Merger Consideration shall be the subject
of an effective registration statement under the Securities Act.
7.9 CLOSING OF THE MOLECULAR TOOL, INC. TRANSACTION. The Company
shall have: (i) closed the sale of its Molecular Tool, Inc. subsidiary ("MTI")
and distributed all or a portion of the net proceeds thereof to the
Stockholders; or (ii) distributed the shares of MTI to the Stockholders (in
either case, the "MTI Transaction"). If the MTI Transaction is consummated in
the form of an asset sale (versus a stock sale) the Company will ensure that
any and all Liabilities of MTI and MT Human that are not specifically taken
into account in the Latest Agreed Upon Balance Sheet (including but not
limited to Tax Liabilities) have been satisfied in full at or prior to the
Closing.
7.10 TECHNOLOGY LICENSE. Company shall have caused MTI to grant to
the Company on or prior to the Closing a royalty-free, fully paid-up,
perpetual, transferable, worldwide license to patented GBA methods owned or
licensed by MTI (the "Technology License"), subject only to MT Human's
existing license with Lab Corporation of America (f/k/a
40
Roche Biomedical Laboratories) ("Lab Corp") in the field of human identity
testing for paternity analysis in the United States (the "Lab Corp License")
and MTI's existing License Agreement dated June 11, 1997 with Orion
Corporation, Ltd., together with ownership of MT Human (subject to the
retention of all Liabilities of MTI and MT Human as provided in Section 7.9
above) or an assignment to the Company of all royalty and other payments paid
or payable by Lab Corp to MT Human pursuant to the terms of the Lab Corp
License. The Technology License shall be exclusive for service testing and
product sales in the fields of human and animal identity testing,
transplantation and diagnostic services and co-exclusive with MTI and the
purchaser of MTI or its assets for services in the fields of human, animal and
plant pharmacogenetics (i.e., exclusive, subject only to the retained,
non-transferable, right of MTI or the purchaser of MTI or its assets to
provide services in such fields) and shall be substantially in the form of
Exhibit K, with such changes or modifications as Purchaser and the Company may
mutually agree upon, consistent with this Section 7.10 and the letter of
intent referred to in Section 13.8 below.
7.11 DISTRIBUTION OF STOCK OF MT HUMAN ID, INC. The Company shall
have caused MTI to transfer to the Company, for nominal consideration, all of
the issued and outstanding capital stock of its indirect subsidiary, MT Human.
7.12 RESIGNATIONS. All officers and directors of the Company shall
have delivered their written resignations as such.
7.13 RELEASES. The Company shall have delivered general releases from
each of the Key Stockholders listed in Exhibit A of all claims against the
Company in a form reasonably acceptable to the Purchaser.
7.14 APPROVAL BY THE STOCKHOLDERS OF GENESCREEN. The holders of a
majority in interest of the issued and outstanding shares of GeneScreen Stock
shall have approved, in accordance with the laws of the State of Delaware and
the Certificate of Incorporation and By-Laws of GeneScreen, this Agreement and
the Contemplated Transactions, provided that not more than 5% in interest of
the Stockholders shall have exercised their appraisal rights described in
Section 2.9 above.
7.15 OPTIONS; WARRANTS. The Company will amend its existing 1991
Stock Option Plan so that all options outstanding thereunder immediately prior
to the Effective Time shall be deemed to have been exercised at the Effective
Time so that at the Effective Time there will be no outstanding options,
warrants or other rights to purchase or acquire shares of common or preferred
stock from the Company at the Effective Time.
7.16 TERMINATION OF AGREEMENTS.
The Company and Stockholders will terminate: (i) all stockholders agreements
(buy-sell agreements) and (ii) the Scientific Consulting Agreement between the
Company and Xxxxxx Xxxxxx dated March 1, 1996 at or prior to Closing.
41
8. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATION TO CLOSE.
The obligation of the Company to take the actions required to be
taken by the Company at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be
waived by the Company, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS. All of the Purchaser's
representations and warranties in this Agreement (considered collectively),
and each of these representations and warranties (considered individually),
must have been accurate in all material respects as of the date of this
Agreement and must be accurate in all material respects as of the Closing Date
as if made on the Closing Date.
8.2 THE PURCHASER'S PERFORMANCE.
(a) All of the covenants and obligations that the Purchaser is
required to perform or to comply with pursuant to this Agreement at or prior
to the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
(b) The Purchaser must have delivered each of the documents required
to be delivered by the Purchaser pursuant to Section 2.5.
8.3 CONSENTS. Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be in full force and
effect.
8.4 ADDITIONAL DOCUMENTS. The Purchaser must have caused the
following documents to be delivered to the Stockholders' Representative:
(a) an opinion of Xxxxxx & Xxxx, dated the Closing Date, in the form
of Exhibit H; and
(b) such other documents as the Stockholders' Representative may
reasonably request for the purpose of (i) enabling its counsel to provide the
opinion referred to in Section 7.4(a), (ii) evidencing the accuracy of any
representation or warranty of the Purchaser, (iii) evidencing the performance
by the Purchaser of, or the compliance by the Purchaser with, any covenant or
obligation required to be performed or complied with by the Purchaser, (iv)
evidencing the satisfaction of any condition referred to in this Section 8, or
(v) otherwise facilitating the consummation of any of the Contemplated
Transactions.
42
8.5 NO INJUNCTION. There must not be in effect any Legal Requirement
or any injunction or other Order that (a) prohibits the exchange of the
GeneScreen Stock for the Lifecodes Stock and Cash Component, or (b) has been
adopted or issued, or has otherwise become effective, since the date of this
Agreement.
8.6 CLOSING OF THE MTI TRANSACTION. The Company shall have closed or
consummated the MTI Transaction.
8.7 STOCKHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the required vote
of the stockholders of Purchaser.
8.8 REGISTRATION OF SHARES. The offer and sale of all of the shares
of Lifecodes Stock constituting the Merger Consideration shall be the subject
of an effective Registration Statement under the Securities Act.
9. TAX MATTERS.
9.1 ALLOCATION OF LIABILITY FOR TAXES.
(a) Subject to Section 11.2, the Stockholders will be liable for, and
will indemnify and hold harmless the Purchaser and the Company from and
against, any and all Taxes based on net income, net worth or capital stock,
however defined, imposed on or with respect to the Company or its assets,
operations, ownership or activities for any Pre-Closing Period (the
"Stockholders' Tax Indemnity").
(b) Subject to Section 11.3, the Purchaser will be liable for, and
will indemnify and hold harmless the Stockholders from and against, any and
all Taxes imposed on or with respect to the Company or its assets, operations,
ownership or activities for any Post-Closing Period (the "Purchaser's Tax
Indemnity").
9.2 PRORATION OF TAXES.
(a) Tax items shall be apportioned between the Pre-Closing Period and
the Post-Closing Period based on a closing of the books and records of the
Company as of the Closing Date (provided that any Tax item incurred by reason
of the transactions occurring on or before the Closing Date as contemplated by
this Agreement shall be treated as occurring in a Pre-Closing Period ).
(b) The Stockholders and the Purchaser will not exercise any option
or election (including any election to ratably allocate a Tax year's items
under U.S. Treasury Regulation Section 1.1502-76(b)(2)(ii) or otherwise) to
allocate Tax items in a manner inconsistent with this Section 9.
43
9.3 AMENDED RETURNS; CARRYOVERS.
(a) Any amended Tax Return or claim for Tax refund for any
Pre-Closing Period shall be filed, or caused to be filed, only by the
Stockholders. The Stockholders shall not, without the prior written consent of
the Purchaser (which consent shall not be unreasonably withheld or delayed),
make or cause to be made any such filing, to the extent such filing, if
accepted, reasonably might change the Tax liability of the Purchaser or the
Company for any Tax Period.
(b) An amended Tax Return or claim for Tax refund shall be filed by
the party responsible for filing the original Tax Return hereunder if either
the Purchaser or the Stockholders so request, except that such filing shall
not be done without the consent (which shall not be unreasonably withheld or
delayed) of the Purchaser (if the request is made by the Stockholders'
Representative) or of the Stockholders (if the request is made by the
Purchaser).
(c) Any amended Tax Return or claim for Tax refund for any
Post-Closing Period shall be filed, or caused to be filed, only by the
Purchaser. The Purchaser shall not, without the prior written consent of the
Stockholders' Representative (which consent shall not be unreasonably withheld
or delayed), file, or cause to be filed, any amended Tax Return or claim for
Tax refund for any Post-Closing Period to the extent that such filing, if
accepted, reasonably might change the Tax liability of the Stockholders for
any Pre-Closing Period.
(d) If any Tax loss or credit with respect to the Company arising in
a Post-Closing Period may be carried back and included in any Tax Return filed
or caused to be filed by the Stockholders with respect to the Company for any
Pre-Closing Period, the Purchaser may elect (at its expense) to carry back
such Tax items (subject to the Stockholders' Representative's consent, which
consent shall not be unreasonably withheld or delayed), in which case the
Stockholders shall pay to the Purchaser an amount equal to the Tax Benefit
resulting from such carryback of Tax loss or credit, provided that the
Stockholders shall not be required to file any carryback claim unless the
Purchaser so requests in writing and agrees to pay the reasonable expenses
related to the claim for refund.
9.4 PREPARATION AND FILING OF TAX RETURNS.
(a) The Stockholders shall have the right and obligation to timely
prepare and file, and cause to be timely prepared and filed, when due any Tax
Return that is required to include the assets, operations or activities of the
Company for Tax Periods ending on or before the Closing Date.
(b) The Purchaser shall have the right and obligation to timely
prepare and file, and cause to be timely prepared and filed, when due all Tax
Returns that are required to include the assets, operations or activities of
the Company for any Tax Periods ending after the Closing Date.
(i) The Stockholders' Representative shall prepare and
provide to the Purchaser such Tax information as is reasonably requested by
the Purchaser with respect to the assets, operations or activities of the
Company for the Pre-Closing Period to the extent such
44
information is relevant to any Tax Return which the Purchaser has the right
and obligation hereunder to file.
(ii) The Stockholders shall, on the one hand, or the
Purchaser shall, on the other hand, with respect to any Tax Return which such
party is responsible hereunder for preparing and filing, or causing to be
prepared and filed, make such Tax Return and related work papers available for
review by the other party at least twenty (20) days in advance of the filing
of the Return if the Tax Return (x) is with respect to Taxes for which the
other party or one of its Affiliates may be liable hereunder or under
applicable tax law, or (y) claims Tax Benefits which the other party or one of
its Affiliates is entitled to receive hereunder. The filing party shall use
its reasonable best efforts to make Tax Returns available for review as
required under this Section 9.4(c) sufficiently in advance of the due date for
filing such Tax Returns to provide the non-filing party with a meaningful
opportunity to analyze and comment on such Tax Returns and have such Tax
Returns modified before filing, accepting the position of the filing party
unless such position is contrary to the provisions of Section 9.4(d) hereof.
(c) Any Tax Return which includes or is based on the assets,
operation or activities of the Company for any Pre-Closing Period, and any Tax
Return which includes or is based on the assets, operations or activities of
the Company for any Post-Closing Period to the extent the items reported on
such Tax Return might reasonably increase any Tax liability of the
Stockholders for any Pre-Closing Period shall be prepared in accordance with
past Tax accounting methods used with respect to the Tax Returns in question
(unless such past methods are no longer permissible under the applicable Tax
Law), and to the extent any items are not covered by past methods (or in the
event such past methods are no longer permissible under the applicable Tax
Law), in accordance with reasonable Tax accounting methods selected by the
filing party with respect to such Tax Return under this Agreement with the
consent (not to be unreasonably withheld or delayed) of the non-filing party.
9.5 TAX CONTROVERSIES; ASSISTANCE AND COOPERATION.
(a) Notice. In the event any Tax Authority informs the Stockholders,
on the one hand, or the Purchaser or Company, on the other hand, of any notice
of proposed audit, claim, assessment or other dispute concerning an amount of
Taxes with respect to which the other party may incur liability hereunder, the
party so informed shall promptly notify the other party of such matter. Such
notice shall contain factual information (to the extent known) describing any
asserted Tax liability in reasonable detail and shall be accompanied by copies
of any notice or other documents received from any Tax authority with respect
to such matter. If an Indemnified Party has Knowledge of an asserted Tax
liability with respect to a matter for which it is to be indemnified hereunder
and such party fails to provide prompt notice to the Indemnifying Party of
such asserted Tax liability, then (i) if the Indemnifying Party is precluded
from contesting the asserted Tax liability in any forum as a result of the
failure to give prompt notice, the Indemnifying Party shall have no obligation
to indemnify the Indemnified Party for Taxes arising out of such asserted Tax
liability, and (ii) if the Indemnifying Party is not precluded from contesting
the asserted Tax liability in any forum, but such failure to provide prompt
notice results in a monetary detriment to the Indemnifying Party, then any
amount which the
45
Indemnifying Party is otherwise required to pay the Indemnified Party pursuant
to this Agreement shall be reduced by the amount of such detriment.
(b) Control Rights. The filing party under this Section 9 shall
control any audits, disputes, administrative, judicial or other proceedings
related to Taxes with respect to which either party may incur liability
hereunder. Subject to the preceding sentence, in the event an adverse
determination may result in each party having responsibility for any amount of
Taxes under this Section 9, each party shall be entitled to fully participate
in that portion of the proceedings relating to the Taxes with respect to which
it may incur liability hereunder. For purposes of this Section 9.5(b), the
term "participation" shall include (i) participation in conferences, meetings
or proceedings with any Tax Authority, the subject matter of which includes an
item for which such party may have liability hereunder, (ii) participation in
appearances before any court or tribunal, the subject matter of which includes
an item for which a party may have liability hereunder, and (iii) with respect
to the matters described in the preceding clauses (i) and (ii), participation
in the submission and determination of the content of the documentation,
protests, memorandum of fact and law, briefs, and the conduct of oral
arguments and presentations.
(c) Consent to Settlement. The Purchaser and the Stockholders shall
not agree to settle any Tax liability or compromise any claim with respect to
Taxes, which settlement or compromise may affect the liability for Taxes
hereunder (or right to tax benefit) of the other party, without such other
party's consent (which consent shall not be unreasonably withheld or delayed).
(d) Expenses. The Purchaser and the Stockholders shall bear their own
expenses incurred in connection with audits and other administrative judicial
proceedings relating to Taxes for which such party and its Affiliates are
liable under this Section 9.
(e) Assistance and Cooperation. The Stockholders, on the one hand,
and the Purchaser and Company, on the other hand, shall cooperate (and cause
their Affiliates to cooperate) with each other and with each other's agents,
including accounting firms and legal counsel, in connection with Tax matters
relating to the Company, including (i) preparation and filing of Tax Returns,
(ii) determining the liability and amount of any Taxes due or the right to and
amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any
administrative or judicial proceeding in respect of Taxes assessed or proposed
to be assessed. Such cooperation shall include each party making all
information and documents in its possession relating to the Company available
to the other party. The parties shall retain all Tax Returns, schedules and
work papers, and all material records and other documents relating thereto,
until the expiration of the applicable statute of limitations (including, to
the extent notified by any party, any extension thereof) of the Tax Period to
which such Tax Returns and other documents and information relate. Each of the
parties also shall make available to the other party, as reasonably requested
and available, personnel (including officers, directors, employees and agents)
responsible for preparing, maintaining and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.
46
(f) Termination of Tax Allocation Agreements. As of the Closing Date,
the Stockholders shall cause all Tax allocation, Tax sharing, Tax
reimbursement and similar agreements or arrangements between the Stockholders
and its Affiliates, on the one hand, and the Company, on the other hand, to be
extinguished and terminated with respect to the Company and any rights or
obligations existing under any such agreement or arrangement to be no longer
enforceable.
10. TERMINATION.
10.1 TERMINATION EVENTS. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) by either the Purchaser or the Company if a material Breach of
any provision of this Agreement has been committed by the other party and such
Breach has not been waived;
(b) (i) by the Purchaser if any of the conditions in Section 7 has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of the
Purchaser to comply with its obligations under this Agreement) and the
Purchaser has not waived such condition on or before the Closing Date; or (ii)
by the Company, if any of the conditions in Section 8 has not been satisfied
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of the Company or the Key
Stockholders to comply with its obligations under this Agreement) and the
Company has not waived such condition on or before the Closing Date;
(c) by mutual consent of the Purchaser and the Company; or
(d) by either the Purchaser or the Company if the Closing has not
occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on
or before [November 30, 1998], or such later date as the parties may agree
upon.
10.2 EFFECT OF TERMINATION. Each party's right of termination under
Section 10.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
10.1, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 13.1 and 13.3 will survive;
provided, however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
11. INDEMNIFICATION; REMEDIES.
11.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE.
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter and any other
certificate or document delivered pursuant to this Agreement will survive the
Closing. The right to
47
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected
by any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) before or after the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. Except to the extent expressly agreed in
writing by the parties, the waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with
any covenant or obligation, will not affect the right to indemnification,
payment of Damages, or other remedy based on such representations, warranties,
covenants, and obligations.
11.2 INDEMNIFICATION AND PAYMENT OF DAMAGES FROM ESCROW. By their
approval of this Agreement, the Stockholders hereby jointly and severally
agree to indemnify and hold harmless the Purchaser and its Representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any Breach of any representation or warranty made by the Company
or the Key Stockholders in this Agreement (without giving effect to any
supplement to the Disclosure Letter), the Disclosure Letter, the supplements
to the Disclosure Letter, or any other certificate or document delivered by
the Company, the Key Stockholders or the Stockholders' Representative pursuant
to this Agreement;
(b) any Breach of any representation or warranty made by the Company
or the Key Stockholders in this Agreement as if such representation or
warranty were made on and as of the Closing Date, other than any such Breach
that is disclosed in a supplement to the Disclosure Letter accepted by
Purchaser;
(c) any Breach by Company, the Key Stockholders or the Stockholders'
Representative of any covenant or obligation of such Person in this Agreement;
(d) any product shipped or manufactured by, or any services provided
by, the Company prior to the Closing Date;
(e) the MTI Transaction;
(f) the Stockholders' Tax Indemnity; and
(g) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with the Stockholders or the
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions, in each case, to the extent Damages (from whatever
source derived) exceed $25,000 in the aggregate; provided, however, that the
sole and exclusive source of payment for the foregoing indemnification
obligation of the
48
Stockholders shall be the Escrow and no Indemnified Person shall have any
right to payment directly from any Stockholder or from any source other than
the Escrow.
The remedies provided in this Section 11.2 will be exclusive and
limit any other remedies that may be available to the Purchaser or the other
Indemnified Persons.
11.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE PURCHASER. The
Purchaser will indemnify and hold harmless the Stockholders, and will pay to
the Stockholders the amount of any Damages arising, directly or indirectly,
from or in connection with:
(a) any Breach of any representation or warranty made by the
Purchaser in this Agreement or in any certificate delivered by the Purchaser
pursuant to this Agreement;
(b) any Breach by the Purchaser of any covenant or obligation of the
Purchaser in this Agreement;
(c) the Purchaser's Tax Indemnity; or
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with the Purchaser (or any Person
acting on its behalf) in connection with any of the Contemplated Transactions,
in each case, to the extent Damages (from whatever source derived) exceed
$25,000, in the aggregate, provided that in no event shall Purchaser's
liability under this Agreement regardless of the nature thereof, exceed
$1,000,000.
11.4 TIME LIMITATIONS. If the Closing occurs, the Stockholders will
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in Sections 3.3,
3.11, 3.13, 3.19 and 9, unless on or before September 1, 2000 the Purchaser
notifies the Stockholders' Representative of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by the
Purchaser; a claim with respect to Section 3.3, 3.11, 3.13, 3.19 or 9, or a
claim for indemnification or reimbursement not based upon any representation
or warranty or any covenant or obligation to be performed and complied with
prior to the Closing Date, may be made at any time. If the Closing occurs, the
Purchaser will have no liability (for indemnification or otherwise) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, unless on or before
September 1, 2000 the Stockholders' Representative notifies the Purchaser of a
claim specifying the factual basis of that claim in reasonable detail to the
extent then known by the Stockholders Representative.]
11.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section 11.2
or 11.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement
of such claim, but the failure to notify the indemnifying party will not
relieve
49
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to
give such notice.
(b) If any Proceeding referred to in Section 11.5(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to
the extent that it wishes (unless (i) the indemnifying party is also a party
to such Proceeding and the indemnified party determines in good faith that
joint representation would be inappropriate, or (ii) the indemnifying party
fails to provide reasonable assurance to the indemnified party of its
financial capacity to defend such Proceeding and provide indemnification with
respect to such Proceeding), to assume the defense of such Proceeding with
counsel satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under
this Section 11 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently incurred
by the indemnified party in connection with the defense of such Proceeding,
other than reasonable costs of investigation. If the indemnifying party
assumes the defense of a Proceeding, (i) it will be conclusively established
for purposes of this Agreement that the claims made in that Proceeding are
within the scope of and subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the indemnifying party without
the indemnified party's consent unless (A) there is no finding or admission of
any violation of Legal Requirements or any violation of the rights of any
Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (iii) the indemnified party
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an indemnifying
party of the commencement of any Proceeding and the indemnifying party does
not, within ten days after the indemnified party's notice is given, give
notice to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will be bound by any determination made in
such Proceeding or any compromise or settlement effected by the indemnified
party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) Each party hereby consents to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on such party with respect to such a claim anywhere in
the world.
50
11.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be
asserted by written notice to the party from whom indemnification is sought.
11.7 ESCROW. The Purchaser shall be entitled to obtain the funds in
Escrow to satisfy its claims for indemnification or Damages as provided in the
Escrow Agreement. On the date that is twelve (12) months from the Closing
Date, the Stockholders shall be entitled to receive $1,800,000 of the General
Escrow Amount; on the date that is twenty-four (24) months from the Closing
Date, the Stockholders shall be entitled to receive an additional $700,000 of
the General Escrow Amount, and on the date that is thirty-six (36) months from
the date that the Company files all Tax Returns for all Tax Periods ending on
or before the Closing (or such later date as may be required due to the
extension of any applicable statute of limitation relating to any Tax matter),
the Stockholders shall be entitled to receive the Tax Escrow Amount, except to
the extent, in each case, that there is, at any time that either Tax or
General Escrow Amounts are to be distributed from Escrow, a claim by Purchaser
for Damages with respect to such Escrow Amount, in which event an amount
sufficient to reimburse Purchaser for such Damages shall be retained in the
Escrow pending resolution of the claim for Damages as provided in the Escrow
Agreement.
12. STOCKHOLDERS' REPRESENTATIVE.
12.1 APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVE. Approval of this
Agreement of Merger pursuant to Section 251 of the Delaware General
Corporation Law shall be deemed to also constitute the irrevocable appointment
of Sandpiper Ventures LLC, a Texas limited liability company, as the true and
lawful representative, agent and attorney-in-fact of the Stockholders with the
following authority:
(a) at the Closing, to execute and deliver the Escrow Agreement (and
any actions or transactions contemplated thereunder) on behalf of the
Stockholders;
(b) to review the Company's determination of the adjustment to the
Merger Consideration as provided in Section 2.11; to agree or object thereto
in the manner he determines; and to perform any and all other acts in
connection with the Section 2.11 adjustment to the Merger Consideration,
including without limitation, the acts required pursuant to Section 2.11(g),
if applicable;
(c) subsequent to the Closing, to accept and acknowledge receipt from
the Purchaser, the Exchange Agent or the Escrow Agent, for the account of each
Exchanging Stockholders, any payment made pursuant to Section 2.11(f) or under
the Escrow Agreement and to deliver the appropriate payment to each such
Stockholder;
(d) to resolve with the Purchaser any disputes relating to claims for
indemnification, commence and carry out any Proceeding and to otherwise settle
any claim asserted by the Indemnified Parties pursuant to this Agreement or
the Escrow Agreement;
51
(e) to determine, in his sole and absolute discretion, the time or
times when, the purposes for, and the manner in which, any power herein
conferred shall be exercised and the provisions of any instrument or document
that may be executed by him pursuant hereto; and
(f) to employ such attorneys, accountants and agents as he shall deem
appropriate in connection with his duties hereunder, and he shall not be
liable under any circumstance for action taken pursuant to the written advice
of such attorneys, accountants and agents. This power of attorney is coupled
with an interest and is irrevocable.
12.2 LIMIT OF LIABILITY. Except for willful misconduct, the
Stockholders' Representative shall not be liable to any of the Stockholders
for any act, omission, loss, damage or expense arising from the performance of
his duties hereunder. In no event shall the Purchaser or the Surviving
Corporation have any liability to any of the Stockholders for any act or
omission of the Stockholders' Representative, including without limitation,
negligence and willful misconduct.
12.3 INDEMNITY OF STOCKHOLDERS' REPRESENTATIVE. The Stockholders
shall indemnify, defend and hold the Stockholders' Representative harmless
from and against any and all loss, damage, Tax, liability and expense that may
be incurred by the Stockholders' Representative arising out of or in
connection with its acceptance of the appointment as Stockholders'
Representative hereunder, except as caused by its gross negligence or willful
misconduct, including the legal costs and expenses of defending itself against
any claim or liability in connection with its performance hereunder, in equal
shares of any such loss, damage, Tax, liability, legal cost and expense.
12.4 SUCCESSOR REPRESENTATIVE. In the event that Sandpiper Ventures
LLC, or any successor Stockholders' Representative appointed in accordance
with this Section 12.4, shall cease to serve as Stockholders' Representative
for any reason, then the holders of a majority of the shares of GeneScreen
Stock as of the Effective Time shall appoint a successor Stockholders'
Representative.
13. GENERAL PROVISIONS.
13.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of
this Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel, and accountants. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
13.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as the Purchaser
determines. Unless consented to by the Purchaser in advance or required by
Legal Requirements, prior to the Closing the Company shall, and shall cause
its directors, officers, employees, agents, advisors and Stockholders to, keep
this Agreement strictly confidential and may not make any disclosure of this
Agreement to any
52
Person. The Company and the Purchaser will consult with each other concerning
the means by which the Company's employees, customers, and suppliers and
others having dealings with the Company will be informed of the Contemplated
Transactions, and the Purchaser will have the right to be present for any such
communication.
13.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, the Purchaser and the Company will maintain in confidence, and
will cause the directors, officers, employees, agents, and advisors (and in
the case of the Company, the Stockholders) of the Purchaser and the Company to
maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party
in connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing
or use of such information is required by or necessary or appropriate in
connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. If the Closing takes place, the Stockholders waive any
cause of action, right, or claim arising out of the access of the Purchaser or
its representatives to any trade secrets or other confidential information
except for the intentional competitive misuse by the Purchaser of such trade
secrets or confidential information.
13.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand, (b) sent by telecopier,
provided that a copy is mailed by overnight courier service, or (c) when
received by the addressee, if sent by a nationally recognized overnight
delivery service, in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as
a party may designate by notice to the other parties):
Key Stockholders or Company: c/o Stockholders'- Representative
Sandpiper Ventures LLC
c/o Xxxxx X. Xxxxxxxxxx
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
And
GeneScreen, Inc.
Attn: Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
53
with a copy to: Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx, L.L.P.
Energy Plaza
1601 Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
The Purchaser: Lifecodes Corporation
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000 Attention: President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxx
Three Stamford Plaza
000 Xxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
13.5 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the courts of the
State of Connecticut, County of Fairfield, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of
Connecticut, and each of the parties consents to the non-exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
13.6 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
13.7 WAIVER. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of
54
such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
13.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including that certain letter of intent between the Company and the Purchaser
dated July 13, 1998) and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment. The boards of directors of the Company
and the Purchaser may amend this Agreement at any time prior to the Effective
Time, provided that if such amendment is made subsequent to the approval of
this Agreement by the stockholders of the Company such amendment shall not:
(i) alter or change the Merger Consideration, (ii) alter or change any term of
the certificate of incorporation of the Surviving Corporation or (iii) alter
or change any term or condition of the Agreement if such alteration or change
would adversely affect the Stockholders.
13.9 DISCLOSURE LETTER.
(a) The disclosures in the Disclosure Letter, and those in any
Supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any
other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
13.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party
may assign any of its rights under this Agreement without the prior consent of
the other parties, except that the Purchaser may assign any of its rights
under this Agreement to any of its affiliates. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
13.11 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
13.12 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or
55
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13.13 GOVERNING LAW. This Agreement will be governed by the laws of
the State of Connecticut without regard to conflicts of laws principles.
13.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Signature pages follow]
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
(THE PURCHASER)
LIFECODES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: President and Chief Executive Officer
THE KEY STOCKHOLDERS
[Counterpart signature pages attached]
Southwest Enterprise Associates, Limited Partnership
By: /s/ X.X. Xxxxxxx
------------------------------------------------
Name: X.X. Xxxxxxx
Title: General Partner
New Enterprise Associates IV, Limited Partnership
By: NEA Partners IV, Limited Partnership,
General Partner
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: General Partner
/s/ Xxxxxxx X. Xxxx
----------------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxxxxxx
----------------------------------------------------
Xxxxx X. Xxxxxxxxxx
DB Liquidation, LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Manager
57
Blue Doctor, LLC
By: /s/
------------------------------------------------
Name:
Title:
/s/ Xxxxx X. Xxxxx
----------------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------------------
Xxxxxxx X. Xxxxxx
(COMPANY)
GENESCREEN INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
SANDPIPER VENTURES LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Manager
as STOCKHOLDERS' REPRESENTATIVE
58
Exhibit A
Key Stockholders*
Name Total Shares*
Southwest Enterprise Associates, Limited Partnership 357,055
New Enterprise Associates IV, Limited Partnership 350,278
Xxxxxxx X. Xxxx 7,641
Xxxxx X. Xxxxxxxxxx 3,000
DB Liquidation, LLC 191,463
Blue Doctor, LLC 1,074,561
Xxxxx X. Xxxxx 56,575
Xxxxxxx X. Xxxxxx 24,475
----------------- ------
Total 2,065,048
===== =========
-------------------------
*Assumes one-for-one conversion of all preferred shares.
Exhibit B
Definitions
"Adverse Consequences"--all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys'
fees and expenses.
"Applicable Contract"--any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any of
the assets owned or used by it is or may become bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"Breach"--a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is
or was inconsistent with such representation, warranty, covenant, obligation,
or other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Cash Component"--an aggregate of $5,000,000.
"Closing"--as defined in Section 2.2.
"Closing Date"--the date and time as of which the Closing actually
takes place.
"Company"--as defined in the first paragraph of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the Merger;
(b) the conversion of the GeneScreen Stock into Lifecodes Stock
and cash at the Effective Time;
(c) the registration under the Securities Act of the Lifecodes
Stock issuable to the Stockholders at the Effective Time pursuant to the Merger;
(d) the execution, delivery, and performance of the Lockup
Agreements, the Noncompetition Agreements and the other documents and
instruments referred to herein; and
(e) the performance by the Purchaser, on the one hand, and the
Company and the Key Stockholders, on the other hand, of their respective
covenants and obligations under this Agreement.
"Contract"--any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Damages"--as defined in Section 11.2.
"Dissenters' Shares"--as defined in Section 2.9(a).
"Disclosure Letter"--the disclosure letter delivered by the Company
to the Purchaser concurrently with the execution and delivery of this
Agreement.
"Effective Time"--as defined in Section 2.3.
"Encumbrance"--any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Environment"--soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and removal
response, investigative, remedial, cleanup, corrective action, containment or
inspection costs and expenses arising under Environmental Law or Occupational
Safety and Health Law;
2
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health
Law.
The terms "removal," "remedial," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
(b) preventing or reducing to authorized levels the Release of
Hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the Release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting natural resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"Equity Component"--as defined in Section 2.4.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
3
"Escrow"--as defined in Section 2.4.
"Escrow Agent"--First Union National Bank.
"Escrow Amount"--as defined in Section 2.4.
"Escrow Agreement"--as defined in Section 2.4.
"Exchange Agent"--Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx, L.L.P.
"Exchanging Stockholders"--as defined in Section 2.9(a).
"Facilities"--any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the Company.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and
the other financial statements referred to in Section 3.4(b) were prepared.
"General Escrow Amount"--as defined in Section 2.4.
"GeneScreen Shares"--as defined in Section 2.8(a).
"GeneScreen Stock"--as defined in Section 3.3.
"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or Taxing Authority or
power of any nature.
"Hazardous Activity"--the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials
4
in, on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, business, operation, or thing that increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or
property on or off the Facilities, or that may affect the value of the
Facilities or the Company.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Indemnified Losses"--items (a) through (g) of Section 11.2.
"Indemnified Persons"--as defined in Section 11.2.
"Intellectual Property Assets"--as defined in Section 3.22.
"Interim Balance Sheet"--as defined in Section 3.4.
"IPO"--as defined in Section 2.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Key Stockholders"--as defined in the first paragraph of this
Agreement.
"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) a prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact
or other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at
any time had, Knowledge of such fact or other matter.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, law, ordinance,
principle of common law, regulation, statute, treaty or Order.
5
"Lifecodes Stock"--common stock of the Purchaser, $.10 par value per
share.
"material" or "materially" -unless the context otherwise requires, as
used in Section 3, a qualification of:
(a) an asset with value of at least $25,000 individually or in the
aggregate of $25,000, or
(b) an act, omission, occurrence or event likely to result in Adverse
Consequences individually or in the aggregate of a least $25,000;
provided that, in either case, if such qualifications in the aggregate result
in Adverse Consequences to the Company or the Purchaser in excess of $25,000,
the Purchaser shall be entitled to seek indemnification for the total amount
of such Adverse Consequences or reductions in value pursuant to the
indemnification procedures set forth in Section 11.
"Material Adverse Effect"--with respect to any party or business or
assets, an effect that would be materially (as defined above) adverse to the
properties, business, financial condition or results of operations of such
party, or to such business or assets.
"Material Applicable Contract"--any of the Applicable Contracts
described in clauses (i) through (xiii) of Section 3.17(a).
"Merger"--as defined in Section 2.1.
"MTI"--as defined in Section 7.9.
"MTI Transaction"--as defined in Section 7.9.
"Occupational Safety and Health Law"--any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
6
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the
same line of business as such Person.
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other
entity or Governmental Body.
"Plan"--as defined in Section 3.13.
"Post-Closing Period" means with respect to the Company any Tax
Period commencing after the Closing Date.
"Pre-Closing Period" means with respect to the Company any Tax Period
ending on or before the Closing Date.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative)
commenced, brought, conducted, or heard by or before, or otherwise involving,
any Governmental Body or arbitrator.
"Purchaser"--as defined in the first paragraph of this Agreement.
"Purchaser's Tax Indemnity"--as defined in Section 9.1(b).
"Registration Statement"--The Purchaser's Registration Statement on
Form S-1 (File No. 333-59271) as filed with the Securities and Exchange
Commission.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material
Interest; and
7
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as
a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse and former spouses,
(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural
person who resides with such individual, and (b) "Material Interest" means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other voting
interests representing at least 10% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least
10% of the outstanding equity securities or equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping into the Environment, whether intentional or
unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Stockholders"--the holders of all of the issued and outstanding
shares of GeneScreen Stock immediately prior to the Effective Date and listed
on Exhibit J.
"Stockholders' Representative"--as defined in the first paragraph of
this Agreement.
"Stockholders' Tax Indemnity"--as defined in Section 9.1(a).
8
"Surviving Corporation"--as defined in Section 2.1.
"Tax"--any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine, penalty, interest,
or addition to tax), imposed, assessed, or collected by or under the authority
of any Governmental Body or payable pursuant to any tax-sharing agreement or
any other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Authority" means, with respect to any Tax, the Governmental Body
that imposes or collects such Tax, including any Governmental Body that
imposes, or is charged with collecting, social security or similar charges or
premiums.
"Tax Benefit" means the value of any refund, credit or reduction in
otherwise required Tax payments including any interest payable thereon
actually realized by a Person, which value shall be computed as of the Closing
Date or the first date on which such refund, credit or other Tax reduction
arises or otherwise becomes available to be utilized, whichever is later,
using the Tax rate applicable to the highest level of income with respect to
such Tax under the applicable Tax Law on such date. Any Tax Benefit shall be
computed net of any related Tax cost (which shall be computed in the same
manner in which Tax Benefits are otherwise computed pursuant to this
definition).
"Tax Escrow Amount"--as defined in Section 2.4.
"Tax Period" means with respect to any Tax the period for which the
Tax is reported as provided under applicable Legal Requirements.
"Tax Representation"--any representation or warranty made by the
Company or the Key Stockholders in Section 3.11 of this Agreement (without
giving effect to any supplement to the Disclosure Letter), the Disclosure
Letter, the Supplements to the Disclosure Letter, or any other certificate or
document delivered by the Company, the Key Stockholders or the Stockholders'
Representative pursuant to this Agreement.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
"Technology License"--as defined in Section 7.11.
"Threat of Release"--a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
9
"Threatened"--a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
10
Exhibit C
Form of Certificate of Merger
-----------------------------
CERTIFICATE OF MERGER
OF
GENESCREEN INC.
INTO
LIFECODES CORPORATION
It is hereby certified that:
1. The name and state of incorporation of each of the constituent
corporations of the merger are:
a) GeneScreen Inc., a Delaware corporation; and
b) Lifecodes Corporation, a Delaware corporation.
2. An Agreement and Plan of Merger between the constituent
corporations has been approved, adopted, certified, executed, and acknowledged
by each of the constituent corporations in accordance with the provisions of
subsection (c) of 251 of the General Corporation Law of the State of Delaware.
3. The name of the surviving corporation in the merger is Lifecodes
Corporation.
4. The Certificate of Incorporation of Lifecodes Corporation, as now
in force and effect, shall continue to be the Certificate of Incorporation of
the surviving corporation until amended and changed pursuant to the provisions
of the General Corporation Law of the State of Delaware.
5. The executed Agreement and Plan of Merger is on file at the
principal place of business of Lifecodes Corporation at 000 Xxxx Xxx.,
Xxxxxxxx, Xxxxxxxxxxx 00000.
6. A copy of the aforesaid Agreement and Plan of Merger will be
furnished by Lifecodes Corporation, on request, and without cost, to any
stockholder of either of the constituent corporations.
11
7. The merger shall become effective the date of the filing of this
Certificate of Merger.
Dated: , 1998
LIFECODES CORPORATION
By: ____________________________
Xxxxxx X. Xxxxxxxxxx
President
GENESCREEN INC.
By: ______________________________
Xxxxx X. Xxxxx
President and Chief Executive Officer
12
Exhibit D
Form of Escrow Agreement
THIS ESCROW AGREEMENT ("Agreement"), dated as of ______, 1998, by and
among LIFECODES CORPORATION ("Lifecodes"), a Delaware corporation, having its
principal place of business in Stamford, Connecticut; SANDPIPER VENTURES LLC,
a Texas limited liability company, acting for itself and in its capacity as
representative for each of the individuals listed on Appendix A hereto (the
"Stockholders' Representative"); and _________________, a _____________ with
offices located in ______________, ________ (the "Escrow Agent").
WHEREAS, GeneScreen Inc., a Delaware corporation ("GeneScreen"),
Lifecodes and certain principal stockholders of GeneScreen (the "Key
Stockholders") entered into an Agreement and Plan of Merger for the merger of
GeneScreen into Lifecodes, dated as of August 31, 1998 (the "Merger
Agreement") (all capitalized terms used herein without definition have the
same meanings assigned thereto in the Merger Agreement);
WHEREAS, immediately prior to the Merger, all of the outstanding
shares of capital stock of GeneScreen were owned solely by the individuals
listed on Appendix A (the "Stockholders");
WHEREAS, pursuant to Section 11 of the Merger Agreement, each of the
Stockholders (the "Stockholders") shall indemnify and hold harmless Lifecodes
and its Representatives, stockholders, controlling persons and affiliates
(collectively, the Indemnified Persons") for Damages arising, directly or
indirectly, from or in connection with Indemnified Losses;
WHEREAS, pursuant to Section 12 of the Merger Agreement, the
Stockholders (other than holders of Dissenters' Shares) have appointed
Sandpiper Ventures LLC as the Stockholders' Representative;
NOW, THEREFORE, the parties hereto agree as follows:
1. Deposit of Funds. On the date hereof, Lifecodes shall deposit or
cause to be deposited in escrow with the Escrow Agent cash in an amount equal
to $3,500,000.00 (the "Escrow Amount"). The Escrow Amount shall be divided as
follows: (i) $2,500,000.00 of the Escrow Amount (the "General Escrow Amount")
shall be held as the sole source to satisfy the Stockholders' indemnity
obligations other than those relating to the Stockholders' Tax Indemnity or
any breach of any Tax Representation (the "General Indemnified Losses"); and
(ii) $1,000,000.00 of the Escrow Amount (the "Tax Escrow Amount") shall be
held as the sole source to satisfy indemnity obligations relating to the
Stockholders' Tax Indemnity and any breach of any Tax Representation (the "Tax
Indemnified Losses"). In the event Lifecodes recovers from a third party
(e.g., a tax refund or late payment of a receivable), at any time prior to the
Tax Distribution Date, an amount that had previously been the subject of a
withdrawal from the Escrow Amount pursuant to a General Indemnified Claim or a
Tax Indemnified Claim, it will
promptly deposit with the Escrow Agent an amount in cash equal to the lesser
of (i) the amount recovered or (ii) the amount of the Indemnified Claim.
2. Administration of Escrow Fund. Upon receipt by the Escrow Agent of
the Escrow Amount, the Escrow Agent shall invest the Escrow Amount and any and
all interest earned thereon in United States government securities or
securities of governmental agencies covered by bank repurchase agreements or
securities guaranteed by the United States government or bankers' acceptances
or certificates of deposit not subject to a penalty upon its premature
withdrawal in banks having undivided capital and surplus of not less than
$100,000,000.00 or money market funds having assets of not less than
$100,000,000.00, including money market funds that may be sold (without regard
to maturity date) by the Escrow Agent whenever necessary to make any
disbursement required under this Agreement. Interest and dividends earned on
the Escrow Amount shall accrue to Lifecodes and be distributed monthly.
3. Resolution of General Indemnified Claims.
(a) Notice. If Lifecodes elects to assert a claim for a General
Indemnified Loss (a "General Indemnified Claim"), it shall simultaneously
furnish to the Escrow Agent and the Stockholders' Representative a written
claim notice (the "Claim Notice") that shall contain a brief description of
its claim, reference to the relevant provisions of the Merger Agreement and
its good faith estimate of the General Indemnified Losses expected to result
therefrom; provided that a general description of the claim and the amount
thereof shall be sufficient for claims asserted by third parties. Lifecodes
may amend each Claim Notice from time to time to the extent its estimate of
the General Indemnified Losses changes by giving written notice to the Escrow
Agent and the Stockholders' Representative. On or prior to ____________, 2000,
Lifecodes shall submit a written statement to the Stockholders' Representative
that shall set forth a list of all General Indemnified Claims submitted by
______________, 2000. Except as otherwise permitted pursuant to Section 11.4
of the Merger Agreement, Lifecodes shall not be permitted to assert any
General Indemnified Claim after ______________, 2000; provided, that Lifecodes
thereafter may amend the estimated amount of the General Indemnified Losses.
(b) No Objection by the Stockholders' Representative. If the
Escrow Agent does not receive a written objection from the Stockholders'
Representative within thirty (30) days after the Escrow Agent's receipt of a
Claim Notice or any amendment thereof, it shall pay Lifecodes, as soon as
practicable, an amount equal to the total General Indemnified Claims set forth
in the Claim Notice, as amended.
(c) Objection by the Stockholders' Representative. If the Escrow
Agent receives a written objection from the Stockholders' Representative
within such thirty (30) days, it shall retain the amount of such General
Indemnified Claims. It shall thereafter pay such amount to Lifecodes only upon
receipt of either (i) a written statement signed by both Lifecodes and the
Stockholders' Representative stating the agreed amount of the General Escrow
Amount to be paid to Lifecodes; or (ii) a certified copy of an order of a
court or a written arbitration award, accompanied by an opinion of independent
counsel to the effect that such order or award is final and not subject to
appeal or that no appeal has been taken within the time prescribed. If
2
Lifecodes and the Stockholders' Representative agree on the amount of any
General Indemnified Claim, each agrees to execute the statement referred to in
clause (i) above.
(d) Mutual Resolution. If the Stockholders' Representative so
objects to a General Indemnified Claim, Lifecodes and the Stockholders'
Representative shall use their best efforts to attempt in good faith to
resolve such General Indemnified Claim in an expedited manner. Each such party
shall cooperate in furnishing, or providing access to, all available documents
or other evidence relevant to such General Indemnified Claim, except any
privileged evidence or materials specially prepared to support such General
Indemnified Claim against the Stockholders or to support the Stockholders'
defense in respect of such General Indemnified Claim against Lifecodes, as the
case may be. To the extent the amount of such General Indemnified Claim is not
finally resolved within thirty (30) days after such objection, the disputed
portion of such General Indemnified Claim shall be submitted for to
arbitration for final settlement pursuant to Section 6 below. To the extent
the amount of a General Indemnified Claim is finally resolved, Lifecodes and
the Stockholders' Representative shall sign a written statement setting forth
such amount, if any, and submit such statement to the Escrow Agent. Lifecodes
shall then be entitled to receive payment of such amount, if any, from the
General Escrow Amount. The difference between the amount set forth in the
applicable Claim Notice and the amount set forth in such statement shall be
retained by the Escrow Agent for distribution pursuant to Section 5(b) below.
(e) Unliquidated Claims. If a General Indemnified Loss arises
out of a claim asserted by a third party, the parties shall not be required to
resolve the amount of such General Indemnified Loss until the final resolution
of such third party claim. To the extent the amount of any General Indemnified
Claims not withdrawn by Lifecodes (including such third party claims) are not
resolved pursuant to this Section 3 on the Second General Distribution Date,
the Escrow Agent shall retain the amount of the General Indemnified Claims
that are claimed by Lifecodes in the applicable Claim Notices.
4. Resolution of Tax Indemnified Claims.
(a) Notice. If Lifecodes elects to assert a claim for a Tax
Indemnified Loss (a "Tax Indemnified Claim"), it shall simultaneously furnish
to the Escrow Agent and the Stockholders' Representative a written claim
notice (the "Claim Notice") that shall contain a brief description of its
claim, reference to the relevant provisions of the Merger Agreement and its
good faith estimate of the Tax Indemnified Losses expected to result
therefrom; provided that a general description of the claim and the amount
thereof shall be sufficient for claims asserted by third parties. Lifecodes
may amend each Claim Notice from time to time to the extent its estimate of
the Tax Indemnified Losses changes by giving written notice to the Escrow
Agent and the Stockholders' Representative. On or prior to the date that is
thirty-six (36) months from the date that [the Stockholders' Representative]
files all Tax Returns for all Tax Periods ending on or before the Closing
Date, or such later date as may be required due to the extension of any
applicable statute of limitations relating to any Tax matter (the "Final Tax
Claim Date"), Lifecodes shall submit a written statement to the Stockholders'
Representative that shall set forth a list of all Tax Indemnified Claims
submitted by the Final Tax Claim Date. Except as otherwise permitted pursuant
to Section 11.4 of the Merger Agreement, Lifecodes shall not be permitted to
3
assert any Tax Indemnified Claim after the Final Tax Claim Date; provided,
that Lifecodes thereafter may amend the estimated amount of the Tax
Indemnified Losses.
(b) No Objection by the Stockholders' Representative. If the
Escrow Agent does not receive a written objection from the Stockholders'
Representative within thirty (30) days after the Escrow Agent's receipt of a
Claim Notice or any amendment thereof, it shall pay Lifecodes, as soon as
practicable, an amount equal to the total Tax Indemnified Claims set forth in
the Claim Notice, as amended.
(c) Objection by the Stockholders' Representative. If the Escrow
Agent receives a written objection from the Stockholders' Representative
within such thirty (30) days, it shall retain the amount of such Tax
Indemnified Claims. It shall thereafter pay such amount to Lifecodes only upon
receipt of either (i) a written statement signed by both Lifecodes and the
Stockholders' Representative stating the agreed amount of the Tax Escrow
Amount to be paid to Lifecodes; or (ii) a certified copy of an order of a
court or a written arbitration award, accompanied by an opinion of independent
counsel to the effect that such order or award is final and not subject to
appeal or that no appeal has been taken within the time prescribed. If
Lifecodes and the Stockholders' Representative agree on the amount of any Tax
Indemnified Claim, each agrees to execute the statement referred to in clause
(i) above.
(d) Mutual Resolution. If the Stockholders' Representative so
objects to a Tax Indemnified Claim, Lifecodes and the Stockholders'
Representative shall use their best efforts to attempt in good faith to
resolve such Tax Indemnified Claim in an expedited manner. Each such party
shall cooperate in furnishing, or providing access to, all available documents
or other evidence relevant to such Tax Indemnified Claim, except any
privileged evidence or materials specially prepared to support such Tax
Indemnified Claim against the Stockholders or to support the Stockholders'
defense in respect of such Tax Indemnified Claim against Lifecodes, as the
case may be. To the extent the amount of such Tax Indemnified Claim is not
finally resolved within thirty (30) days after such objection, the disputed
portion of such Tax Indemnified Claim shall be submitted to arbitration for
final settlement pursuant to Section 6 below. To the extent the amount of a
Tax Indemnified Claim is finally resolved, Lifecodes and the Stockholders'
Representative shall sign a written statement setting forth such amount and
submit such statement to the Escrow Agent. Lifecodes shall then be entitled to
receive payment of such amount from the Tax Escrow Amount. The difference
between the amount set forth in the applicable Claim Notice and the amount set
forth in such statement shall be retained by the Escrow Agent for distribution
pursuant to Section 5(b) below.
(e) Unliquidated Claims. If a Tax Indemnified Loss arises out of
a claim asserted by a third party, the parties shall not be required to
resolve the amount of such Tax Indemnified Loss until the final resolution of
such third party claim. To the extent the amount of any Tax Indemnified Claims
not withdrawn by Lifecodes (including such third party claims) are not
resolved pursuant to this Section 4 on the Tax Distribution Date, the Escrow
Agent shall retain the amount of the Tax Indemnified Claims that are claimed
by Lifecodes in the applicable Claim Notices.
4
5. Distribution of Escrow Amount.
(a) Claims for Indemnified Losses. The Escrow Agent shall
promptly pay to Lifecodes the amount of all General and Tax Indemnified Claims
(the "Indemnified Claims") to the extent such amounts are payable to Lifecodes
pursuant to Section 3(b), (c) or (d) or 4(b), (c) or (d) above.
(b) Distribution. The balance of the Escrow Amount shall be
distributed as follows:
(i) Subject to clause (iv) below, within ten (10) days
after _______, 1999 (the "First General Distribution Date"),
$1,800,000.00 of the General Escrow Amount shall be distributed
by wire transfer to the Stockholders' Representative, or
otherwise as the Stockholders' Representative shall direct;
(ii) Subject to clause (iv) below, within ten (10) days
after ________, 2000 (the "Second General Distribution Date"),
the balance of the General Escrow Amount shall be distributed by
wire transfer to the Stockholders' Representative, or otherwise
as the Stockholders' Representative shall direct;
(iii) Subject to clause (iv) below, within ten (10) days
after the Final Tax Claim Date (the "Tax Distribution Date"),
the balance of the Tax Escrow Amount shall be distributed by
wire transfer to the Stockholders' Representative, or otherwise
as the Stockholders' Representative shall direct; and
(iv) To the extent Indemnified Claims are not finally
resolved on each of the First or Second General Distribution
Date or the Tax Distribution Date, (A) the Escrow Agent shall
retain the amount of each such Claims as determined pursuant to
Section 3(e) or 4(e) above, as the case may be, and (B) within
ten (10) days after each such Claim is finally resolved in the
manner provided in Section 3 or 4 above, the Escrow Agent shall
pay such final amount, if any, to Lifecodes and the balance, if
any, of the amount asserted in the related Claim Notice to the
Stockholders' Representative to the extent such amount was to be
paid on a General or Tax Distribution Date pursuant to Section
5(b)(i), (ii) or (iii) but was retained pursuant to this Section
5(b)(iv).
6. Arbitration. In the event the Stockholders' Representative and
Lifecodes have not resolved any disputed Indemnified Claim pursuant to Section
3(d) or 4(d) above, either party may commence an arbitration proceeding by
submitting the disputed Indemnified Claim to arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"). Any such arbitration shall be before an arbitral tribunal composed of
three arbitrators; one selected by the Stockholders' Representative, one
selected by Lifecodes and one selected by mutual agreement of the
Stockholders' Representative and Lifecodes. If the Stockholders'
Representative and Lifecodes are unable to agree on such third arbitrator, the
arbitrator shall be selected by the AAA. The venue for the arbitration shall
be Stamford, Connecticut or such other venue mutually agreed to by the
Stockholders' Representative and
5
Lifecodes. The arbitration award or order shall be final and binding on the
Stockholders, the Stockholders' Representative and Lifecodes and all costs of
such proceeding shall be borne as specified in the award or order.
7. Escrow Fees. The Escrow Agent shall be entitled to the fees set
forth on Appendix B attached hereto at the times indicated therein. The
responsibility for such fees shall be shared equally by Lifecodes and the
Stockholders with the fees payable by the Stockholders payable solely from the
General Escrow Fund.
8. Obligations of the Escrow Agent. It is agreed that the duties and
obligations of the Escrow Agent are those specifically provided herein and no
other. The Escrow Agent shall have no liability under, or duty to inquire into
or construe the terms and provisions of, the Merger Agreement or any other
contract or instrument entered into by the parties hereto in connection
herewith. The Escrow Agent's duties are purely ministerial in nature and so
long as it has acted in good faith, the Escrow Agent shall incur no liability
whatsoever for actions taken pursuant to the terms of this Agreement except
for its willful misconduct or gross negligence. The Escrow Agent shall not be
bound by any modification, amendment, termination, cancellation, rescission or
supercession of this Agreement unless it shall have given prior written
consent thereto. In the event that the Escrow Agent (a) shall be uncertain as
to its duties or rights hereunder or (b) shall receive conflicting
instructions, claims or demands from Lifecodes or the Stockholders'
Representative, it shall be entitled to refrain from taking any action other
than to keep safely all property held in Escrow until (i) it shall be directed
otherwise in writing by the Stockholders' Representative and Lifecodes or (ii)
until it shall be directed by an arbitration award or court order. The Escrow
Agent shall have no liability for following the instructions contained herein
or written instructions given by Lifecodes and the Stockholders'
Representative. The Escrow Agent shall have no responsibility for the
genuineness or validity of any document or other item deposited with it and
shall have no liability for acting in accordance with any written instructions
or certificates given to it hereunder and reasonably believed by it to be
signed by the proper parties. The Escrow Agent shall not be required to
institute legal proceedings of any kind and shall not be required to defend
any legal proceedings which may be instituted against it with respect to the
subject matter of these instructions unless requested to do so and indemnified
to its satisfaction against the cost and expense of such defense.
9. Release of Escrow Agent. The Escrow Agent may resign at any time
by giving written notice of its resignation to the Stockholders'
Representative and Lifecodes at their respective addresses set forth below, at
least thirty (30) days prior to the date specified for such resignation to
take effect, and upon the effective date of such resignation, all property
then held by the Escrow Agent hereunder shall be delivered by it to such
person as may be designated mutually by the Stockholders' Representative and
Lifecodes, whereupon all of the Escrow Agent's obligations hereunder shall
cease and terminate. The Escrow Agent's sole responsibility thereafter shall
be to keep safely all property then held by it and to deliver the same to the
persons designated by the parties hereto or in accordance with the directions
of a final order or judgment of a court of competent jurisdiction or
arbitration award.
6
10. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand, (b) sent by telecopier, provided that a copy
is mailed by overnight courier service, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service, in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may designate by notice to
the other parties):
To Lifecodes:
Lifecodes Corporation
000 Xxxx Xxx.
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxx
Three Stamford Plaza
000 Xxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(a) To Stockholders' Representative
Sandpiper Ventures LLC
Attn: Xxxxx X. Xxxxxxxxxx
00000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
(b) To Escrow Agent:
With a copy to:
7
11. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, and may
not be modified or amended except by written instrument executed by the
parties.
(b) Binding Effect. This Agreement shall be binding upon the
Stockholders' Representative, Lifecodes and the Escrow Agent, their respective
successors and assigns, and shall inure to the benefit of each of the parties,
their respective heirs, legal representatives, successors and assigns.
(c) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut, without
regard for its conflicts of law principles.
(d) Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against any of the parties in the courts of the
State of Connecticut, County of Fairfield, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of
Connecticut, and each of the parties consents to the non-exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may
be served on any party anywhere in the world.
(e) Counterparts. This Agreement may be executed simultaneously
in any number of counterparts, each of which shall be deemed an original and
all of which, when taken together, shall be deemed to constitute one and the
same agreement.
(f) Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
(g) Section Headings. The headings of Sections in this Agreement
are provided for convenience only and will not affect its construction or
interpretation.
(h) Successor Representative. In the event that Sandpiper
Ventures LLC shall cease to serve as Stockholders' Representative for any
reason then such person as shall be designated in writing in accordance with
the Merger Agreement.
8
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as
of the date and year first above written.
LIFECODES CORPORATION
By: _______________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: President
STOCKHOLDERS' REPRESENTATIVE
___________________________________
Name: Xxxxx X. Xxxxxxxxxx
KEY STOCKHOLDERS
Southwest Enterprise Associates, Limited
Partnership
By:___________________________________
Name:
New Enterprise Associates IV, Limited
Partnership
By:___________________________________
Name:
______________________________________
Name: Xxxxxxx X. Xxxx
______________________________________
Name: Xxxxx X. Xxxxxxxxxx
DB Liquidation, LLC
By:____________________________________
9
Name:
Blue Doctor, LLC
By:___________________________________
Name:
_______________________________________
Name: Xxxxx X. Xxxxx
_______________________________________
Name: Xxxxxxx X. Xxxxxx
10
APPENDIX A
STOCKHOLDERS
00
XXXXXXXX X
ESCROW FEES
12
Exhibit E-1
Individuals Executing Non-Competition Agreements
Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxx Xxxxxxxxx
Xxxxxx Xxxx
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx
Exhibit E-2
Form of Non-Competition Agreement
This Non-Competition Agreement (this "Agreement") is made as of
______________, 1998, by and between Lifecodes Corporation, a Delaware
corporation (the "Purchaser"), on the one hand, and ___________, an individual
residing in ______________, for himself and his Related Persons (the
"Employee"), on the other hand.
WITNESSETH
WHEREAS, concurrently with the execution and delivery of this
Agreement, GeneScreen Inc., a Delaware corporation (the "Company") is merging
with and into Purchaser pursuant to the terms and conditions of an Agreement
and Plan of Merger made as of _______________, 1998 (the "Merger Agreement");
WHEREAS, pursuant to the terms of the Merger Agreement, the Employee, an
employee of the Company, to induce the Purchaser to enter into the Merger
Agreement and to consummate the transactions contemplated thereby, has agreed
to execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
Capitalized terms not expressly defined in this Agreement shall have
the meanings ascribed to them in the Merger Agreement.
2. ACKNOWLEDGEMENTS BY EMPLOYEE
Employee acknowledges that (a) Employee may have, in the course of its
relationship with the Company, become familiar with some or all of the
following, any and all of which constitute confidential information of the
Company, (collectively the "Confidential Information"): (i) trade secrets
concerning business and affairs of the Company, product specifications, data,
know-how, formulae, compositions, processes, designs, sketches, photographs,
graphs, drawings, samples, inventions and ideas, past, current and planned
research and development, current and planned testing, manufacturing and
distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, marketing information,
customer surveys, business plans, discoveries, concepts, designs, methods and
information, of the Company and any other information, however documented, of
the Company that is a trade secret within the meaning of the Uniform Trade
Secrets Act, C.G.S.A. ss.35-50 et seq.; (ii) information concerning the
business and affairs of the Company (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key
personnel, personnel training and
2
techniques and materials), however documented; and (iii) notes, analysis,
compilations, studies, summaries, and other material prepared by or for the
Company containing or based, in whole or in part, on any information included in
the foregoing, (b) the business of the Company is international in scope, (c)
its products and services are marketed throughout the world; (d) Purchaser has
required that Employee make the covenants set forth in Sections 3 and 4 of this
Agreement as a condition to the Merger; (e) the provisions of Sections 3 and 4
of this Agreement are reasonable and necessary to protect and preserve
Purchaser; and (f) Purchaser would be irreparably damaged if Employee were to
breach the covenants set forth in Sections 3 and 4 of this Agreement.
3. CONFIDENTIAL INFORMATION
Employee agrees that Employee will not, at any time, disclose to any
unauthorized Persons, or use for its own account for the purpose of competing
against Purchaser or its Affiliates, or use for the benefit of any third party
any Confidential Information, whether Employee has such information in his
memory or embodied in writing or other physical form, without Purchaser's
written consent, unless and to the extent that the Confidential Information is
or becomes generally known to and available for use by the public other than
as a result of Employee's fault or the fault of any other Person bound by a
duty of confidentiality to Purchaser or the Company.
4. NON-COMPETITION
As an inducement for Purchaser to enter into the Merger Agreement and
as additional consideration for the consideration to be provided to Employee
under the Merger Agreement, Employee agrees that:
(a) For a period of five (5) years after the Closing:
(i) Employee will not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be retained by,
associated with, lend credit to, or render services or advice to, any business
whose products or activities materially compete with the services, products or
activities of Purchaser or its Affiliates, in any states in which the Company
presently does, or presently intends to do business, or any states contiguous
to such states; provided, however, that Employee may purchase or otherwise
acquire up to (but not more than) one percent of any class of securities of
any enterprise (but without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or regional
securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934. Employee agrees that this covenant is
reasonable with respect to its duration, geographical area, and scope.
(ii) Employee will not directly or indirectly, (A) induce or
attempt to induce any employee of or consultant to Purchaser or its Affiliates
to leave the employ of Purchaser or its Affiliates, (B) in any way interfere
with any relationship between Purchaser or its Affiliates and any employee of
Purchaser or its Affiliates, (C) employ, or otherwise engage as an employee,
3
independent contractor, or otherwise, any employee of Purchaser or its
Affiliates, or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of the Company to cease doing business with
Purchaser or its Affiliates, or in anyway interfere with the relationship
between any customer, supplier, licensee, or business relation of Purchaser or
its Affiliates;
(b) In the event of a breach by Employee of any covenant set forth in
Subsection 4(a) of this Agreement, the term of such covenant will be extended
by the period of the duration of such breach; and
(c) Employee will not, at any time during or after the five (5) year
period, knowingly disparage Purchaser or its Affiliates, or any of its
Representatives.
5. REMEDIES
If Employee breaches the covenants set forth in Sections 3 or 4 of this
Agreement, Purchaser will be entitled to the following remedies:
(a) Damages from Employee; and
(b) In addition to its rights to Damages and any other rights it may
have, to obtain injunctive or other equitable relief to restrain any breach or
threatened breach or otherwise to specifically enforce the provisions of
Sections 3 and 4 of this Agreement, it being agreed that money damages alone
would be inadequate to compensate Purchaser and would be an inadequate remedy
for such breach.
The rights and remedies of the parties of this Agreement are cumulative and
not alternative.
6. SUCCESSORS AND ASSIGNS
This Agreement will be binding upon Purchaser and Employee and will
inure to the benefit of Purchaser and its Related Persons, successors and
assigns. Employee may not assign this Agreement.
7. WAIVER
Neither the failure nor any delay by any party in exercising any
right, power or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement.
4
8. GOVERNING LAW
This Agreement will be governed by the laws of the State of
Connecticut without regard to conflicts of law principles.
9. JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or
based on any right arising out of, this Agreement may be brought against any
of the parties in the courts of the State of Connecticut, County of Fairfield,
or, if it has or can acquire jurisdiction, in the United States District Court
for the District of Connecticut, and each of the parties consents to the
non-exclusive jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world in accordance with
applicable law.
10. SEVERABILITY
Whenever possible each provision and term of this Agreement will be
interpreted in a manner to be effective and valid but if any provision or term
of this Agreement is held to be prohibited by or invalid, then such provision
or term will be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement. If any of the covenants set forth in Section 4 of this
Agreement are held to be unreasonable, arbitrary, or against public policy,
such covenants will be considered divisible with respect to scope, time and
geographic area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against Employee.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
12. SECTION HEADINGS; CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
13. NOTICES
5
All notices, consents, waivers and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):
Employee:
Attention:
Facsimile No.:
with a copy to:
Attention:
Facsimile No.:
Purchaser: Lifecodes Corporation
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, President
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxx & Xxxx
Three Stamford Plaza
000 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
14. ENTIRE AGREEMENT
This Agreement and the Merger Agreement constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior written or oral agreements and
understandings between Purchaser and Employee with respect to the subject
matter of this Agreement. This Agreement may not be amended except by a
written agreement executed by each party hereto.
6
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
Employee:
--------------------------------------------
[ ]
-------------------------------------------
LIFECODES CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
7
Exhibit F
Form of Opinion Letter from WF&W
As of ____, 1998
Lifecodes Corporation
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Re: Merger of GeneScreen Inc. and Lifecodes Corporation
Gentlemen:
We have acted as special counsel to GeneScreen Inc., a Delaware corporation
("GeneScreen") in connection with the merger of GeneScreen with and into
Lifecodes Corporation, a Delaware corporation ("Lifecodes"), pursuant to the
terms and conditions contained in the Agreement and Plan of Merger, dated
______, 1998, by and among Lifecodes, certain stockholders of GeneScreen (the
"Key Stockholders"), Sandpiper Ventures LLC, acting in its capacity as
representative for each of the stockholders of GeneScreen (the "Stockholders'
Representative") and GeneScreen (the "Merger Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned
to such terms in the Merger Agreement.
This opinion is rendered to you pursuant to Section 7.4(a) of the Merger
Agreement. In connection with the Merger and for the purposes of this opinion,
we have made such investigations of fact and considered such questions of law
as we have deemed necessary for the purpose of this opinion. In that regard,
we have reviewed originals or copies of the following documents:
(a) The executed or execution copy of the Merger Agreement;
(b) The executed or execution copy of the Escrow Agreement among
Lifecodes, the Stockholders' Representative and First Union
(the "Escrow Agreement" and together with the Merger
Agreement, the "Transaction Documents"); and
(c) Such other corporate documents, instruments and records of
GeneScreen and public authorities as we have considered
necessary for the purposes of this opinion.
In rendering this opinion, we have assumed, without having made any
independent investigation of the facts, the following:
(i) Lifecodes is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(ii) Lifecodes and First Union (in the case of the Escrow Agreement),
each has full power and authority to enter into each of the Transaction
Documents to which it is a party and perform its obligations thereunder; each
of the Transaction Documents executed by Lifecodes and First Union in
connection with the Merger has been duly authorized, executed and delivered by
each such person; and each of the Transaction Documents is the valid and
binding obligation of Lifecodes and First Union, as the case may be,
enforceable against each of them in accordance with its terms;
(iii) the authenticity of all documents, certificates and instruments
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons, the truthfulness of all statements of fact
contained therein and the conformity to the authentic and complete originals
of all documents, certificates and instruments submitted to us as copies; and
(iv) that the drafts of the Transaction Documents are substantially
the same as the execution copies.
We note, however, that no information has come to our attention which would
give us any reason to believe that any of the assumptions set forth above is
untrue or inaccurate in any material respect.
Based upon the foregoing, and subject to the qualifications set forth herein,
it is our opinion that:
1. GeneScreen is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and GeneScreen is
duly qualified and in good standing as a foreign corporation in the States of
Texas, Ohio, Illinois, California, North Carolina and Mississippi and in each
other jurisdiction where the properties owned, leased or operated, or the
business conducted, by it requires such qualification and where failure to so
qualify would in the aggregate have a material adverse effect on the financial
condition, properties, businesses or results of operations of GeneScreen.
2. The authorized capital stock of GeneScreen consists of 5,000,000
shares of preferred stock, $.05 par value per share, of which 350,000 shares
have been designated as Series A Preferred Stock and 700,000 shares have been
designated as Series B Preferred Stock and 10,000,000 shares of common stock,
$0.01 par value per share, of which _________ shares of Series A Preferred
Stock, _________ shares of Series B Preferred Stock and __________ shares of
Common Stock are issued and outstanding. All such issued and outstanding
shares are validly issued, fully paid, non-assessable and free of preemptive
rights. There are not at the date hereof any options, warrants, calls,
subscriptions, convertible securities or other rights for other agreements or
commitments which either (i) obligate GeneScreen to issue, transfer or sell
any shares of capital stock of GeneScreen or (ii) restrict the transfer or
voting of the Shares.
2
3. GeneScreen has taken all required corporate and stockholder action
to approve and adopt the Merger, and authorize the execution and delivery of
the Transaction Documents, and the Transaction Documents constitute valid and
binding agreements of GeneScreen, enforceable against GeneScreen in accordance
with their terms, subject as to enforcement to bankruptcy, insolvency, and
other rules of general applicability relating to or affecting creditors'
rights and to general equity principles.
4. Except as set forth in the Disclosure Letter the execution,
delivery and performance of the Transaction Documents by GeneScreen will not:
(i) constitute a breach or violation of, or a default under, the Certificate
of Incorporation or Bylaws of GeneScreen, (ii) to the best of our knowledge,
constitute a breach or violation of, or a default under, any law, rule or
regulation, or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of GeneScreen or to which GeneScreen is
subject, which breach, violation or default would have a material adverse
effect on the financial condition, properties, businesses or results of
operations of GeneScreen, (iii) to our knowledge, result in the creation or
imposition of any material lien, charge, pledge, security interest or other
encumbrance upon any property of GeneScreen, or (iv) to our knowledge, require
the consent of any party to any agreement or commitment to which GeneScreen is
a party or by which GeneScreen is bound, the failure to obtain which
reasonably could, individually or in the aggregate with all other failures to
obtain required consents, have a material adverse effect on the financial
condition or prospects of GeneScreen.
5. Other than filing the Certificate of Merger pursuant to the
Delaware General Corporation Law, as necessary, except as obtained and in
effect at the effective time of the Transaction Documents, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental authority is required in connection with the execution
and delivery of the Merger by GeneScreen or the consummation by GeneScreen of
the transactions contemplated thereby in accordance with the terms thereof.
6. To our knowledge, there is no action, suit, proceeding,
investigation or audit, pending or threatened, before any court or any
governmental or regulatory authority by, against or involving GeneScreen or
challenging the Agreement or the Contemplated Transactions, except as
reflected in the Disclosure Letter. To our knowledge, no order, writ,
injunction, decree or judgment has been issued by or request of any court or
governmental or regulatory authority that might result in a material adverse
change in the business, property or assets or in the condition, financial or
otherwise, of GeneScreen or that might materially adversely affect the
Contemplated Transactions.
The opinions set forth above are qualified as stated herein and are further
qualified as follows:
A. The enforceability of the Transaction Documents are qualified to
the extent that enforcement may be limited by: (i) bankruptcy, insolvency,
fraudulent conveyance, receivership, reorganization, moratorium, or other laws
of general application relating to or affecting the enforcement of the rights
of creditors or for the relief of debtors; (ii) the exercise of judicial
discretion in accordance with general equitable principles; and/or (iii) by
the possible
3
application by a court of an implied covenant of good faith and fair dealing and
a finding by such court that the performance or enforcement of a creditor's
rights and remedies would violate such implied covenant.
B. The availability of the remedy of specific performance or of any
injunctive relief or of any other equitable remedy is subject to general
principles of equity and the discretion of the court before which any
proceedings therefor may be brought, whether in a court of law or a court of
equity.
C. We have not undertaken any independent investigation to determine
the existence or absence of such facts which would be contrary to the opinions
expressed herein, and no inference as to the knowledge of the existence of
such facts should be drawn from the fact of our representation of GeneScreen.
Reference to the phrase "to our knowledge" or a phrase having equivalent
wording means the conscious awareness of the attorney who signs this opinion
letter and any attorney in the law firm who has active involvement in the
preparation of this opinion letter or is primarily responsible for providing
the response concerning a particular issue or information regarding factual
matters.
D. We are licensed to practice law in the State of Texas.
Accordingly, the foregoing opinion applies only with respect to the laws of
the State of Texas, the General Corporation Law of the State of Delaware and
the Federal laws of the United States of America, and we express no opinion
with respect to the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of Lifecodes. This opinion may
not be relied upon by any other person or entity, nor may copies be delivered
or furnished to any other person or entity (except for counsel to Lifecodes),
nor may all or portions of this opinion be quoted, circulated, or referred to
in any other document without our prior written consent.
Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx, LLP
By:
------------------------------------
4
Exhibit G
Form of Lock-Up Agreement
Xxxxx Xxxxx Xxxxxx & Company, LLC
Vector Securities International, Inc.
Advest, Inc.
as Representatives of the
Several Underwriters
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned is a holder of securities of Lifecodes Corporation, a Delaware
corporation (the "Company"), and wishes to facilitate the public offering of
shares of the Company's Common Stock (the "Offering"). The undersigned
recognizes that such Offering and the public market for shares of the
Company's Common Stock created thereby will be of benefit to the undersigned.
In consideration of the foregoing and in order to induce you to act as
underwriters in connection with the Offering, the undersigned hereby
irrevocably agrees that he, she or it will not, without the prior written
approval of Xxxxx Xxxxx Xxxxxx & Company, offer, sell, contract to sell, make
any short sale (including, but not limited to, a "short against the box"),
pledge, or otherwise dispose of directly or indirectly, any shares of Common
Stock (except for shares included in the Offering), options to acquire shares
of Common Stock or securities exchangeable or exercisable for or convertible
into shares of, or any other rights to purchase or acquire, Common Stock of
the Company (the "Securities") which he, she or it may own directly or
indirectly or beneficially (as defined by the Securities Exchange Act of 1934
and the rules and regulations thereunder) for a period beginning on the date
hereof and ending one hundred eighty (180) days (the "Lock-Up Period")
following the day on which the Form S-1 Registration Statement filed on behalf
of the Company in connection with the Offering (the "Registration Statement")
shall become effective by order of the Securities and Exchange Commission. The
foregoing restriction is expressly agreed to preclude the holder of Securities
from engaging in any hedging or other transaction that is designed to or
reasonably expected to lead to, or result in, a disposition of Securities
during the Lock-Up Period even if such Securities would be disposed of by the
undersigned subsequent to the Lock-Up Period or by someone other than the
undersigned.
Notwithstanding the foregoing, any transfer of Securities which either (i)
will not result in any change in beneficial ownership, including, but not
limited to, pro rata distributions by partnerships, limited liability
companies or other entities and transfers into trusts for the benefit of the
original holder, or (ii) constitute bona fide gifts of such shares will not
require your consent; provided, that the transferee enters into a lock-up
agreement in substantially the form hereof covering the remainder of the
Lock-Up Period under this Agreement.
The undersigned confirms that he, she or it understands that the underwriters
and the Company will rely upon the representations set forth in this Agreement
in proceeding with the Offering. The undersigned understands that this
Agreement is irrevocable and shall be binding on the undersigned and his, her
or its respective successors, heirs, personal representatives and assigns. The
undersigned agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of Securities of the
Company held by the undersigned except in compliance with this Agreement.
-----------------------------------
(Security holder's name)
-----------------------------------
(Signature)
-----------------------------------
(Name of person signing)
-----------------------------------
(Title)
-----------------------------------
(Date)
Exhibit H
Form of Xxxxxx & Xxxx Opinion Letter
As of ____, 1998
GeneScreen Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Re: Merger of GeneScreen Inc. and Lifecodes Corporation
Gentlemen:
We have acted as special counsel to Lifecodes Corporation, a Delaware
corporation ("Lifecodes"), in connection with the merger (the "Merger") of
GeneScreen Inc., a Delaware corporation ("GeneScreen"), with and into
Lifecodes, pursuant to the terms and conditions contained in the Agreement and
Plan of Merger, dated ______, 1998, by and among Lifecodes, certain
stockholders of GeneScreen (the "Key Stockholders"), Xxxxx X. Xxxxxxxxxx,
acting for himself and in his capacity for each of the stockholders of
GeneScreen (the "Stockholders' Representative") and GeneScreen (the "Merger
Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Merger Agreement.
This opinion is rendered to you pursuant to Section 8.4(a) of the Merger
Agreement. In connection with the Merger and for the purposes of this opinion,
we have made such investigations of fact and considered such questions of law
as we have deemed necessary for the purpose of this opinion. In that regard,
we have reviewed originals or copies of the following documents:
(a) The executed or execution copy of the Merger Agreement;
(b) The executed or execution copy of the Escrow Agreement among
Lifecodes, the Stockholders' Representative and First Union
(the "Escrow Agreement, " and together with the Merger
Agreement, and the Non-Competition Agreements, the
"Transaction Documents"); and
(c) Such other corporate documents, instruments and records of
Lifecodes and public authorities as we have considered
necessary for the purposes of this opinion.
In rendering this opinion, we have assumed, without having made any
independent investigation of the facts, the following:
(i) GeneScreen is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware;
(ii) GeneScreen, each of the Key Stockholders, the Stockholders'
Representative and First Union has full power and authority to enter into each
of the Transaction Documents to which it is a party and perform its
obligations thereunder; each of the Transaction Documents executed by
GeneScreen, the Key Stockholders, the Stockholders' Representative and First
Union in connection with the Merger has been duly authorized, executed and
delivered by each such person; and each of the Transaction Documents is the
valid and binding obligation of GeneScreen, the Key Stockholders, the
Stockholders Representative and First Union, as the case may be, enforceable
against each of them in accordance with its terms;
(iii) the authenticity of all documents, certificates and instruments
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons, the truthfulness of all statements of fact
contained therein and the conformity to the authentic and complete originals
of all documents, certificates and instruments submitted to us as copies; and
(iv) that the drafts of the Transaction Documents are substantially
the same as the execution copies.
We note, however, that no information has come to our attention which would
give us any reason to believe that any of the assumptions set forth above is
untrue or inaccurate in any material respect.
Based upon the foregoing and subject to the qualifications set forth below, it
is our opinion that:
1. Lifecodes is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Lifecodes is duly
qualified as a foreign corporation and in good standing under the laws of the
State of Texas.
2. The authorized capital stock of Lifecodes consists of 15,000,000
shares of common stock $.10 par value per share (the "Common Stock"), of which
774,675 were issued and outstanding on July 15, 1998; and 1,000,000 shares of
Preferred Stock, $10.00 par value per share, of which 21,500 were issued and
outstanding on July 15, 1998. The shares of Common Stock to be issued and
delivered to the stockholders of GeneScreen in connection with the
consummation of the transactions contemplated by the Merger Agreement, when
issued and delivered in accordance with the terms of the Merger Agreement,
will be duly authorized, validly issued, fully paid and non-assessable.
3. Lifecodes has taken all required corporate and stockholder action
to approve and adopt the Merger and to authorize the execution and delivery of
the Transaction Documents, and the Transaction Documents constitute valid and
binding agreements of Lifecodes enforceable against it in accordance with
their terms, subject as to enforcement to bankruptcy, insolvency, and other
laws of general applicability relating to or affecting creditors' rights and
to general equity principles.
2
4. The execution, delivery and performance of the Transaction
Documents by Lifecodes will not: (i) constitute a breach or violation of, or a
default under, the Certificate of Incorporation or Bylaws of Lifecodes, (ii)
to the best of our knowledge, constitute a breach or violation of, or a
default under, any law, rule or regulation, or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of
Lifecodes or to which Lifecodes is subject, which breach, violation or default
would have a material adverse effect on the financial condition, properties,
businesses or results of operations of Lifecodes, (iii) to the best of our
knowledge, result in the creation or imposition of any material lien, charge,
pledge, security interest or other encumbrance upon any property of Lifecodes,
or (iv) to the best of our knowledge, require the consent of any party to any
agreement or commitment to which Lifecodes is a party or by which Lifecodes is
bound, the failure to obtain which reasonably could, individually or in the
aggregate with all other failures to obtain required consents, have a material
adverse effect on the financial condition or prospects of Lifecodes.
5. Other than (a) filing the Certificate of Merger pursuant to the
Delaware General Corporation Law, and (b) making post-effective filings under
state securities or "Blue Sky" laws, except as obtained and in effect at the
Effective Time, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of the Merger Agreement
by Lifecodes or the consummation by Lifecodes of the transactions contemplated
thereby in accordance with the terms thereof.
6. The Registration Statement on Form S-1 covering the registration
of Lifecodes shares filed with the Securities and Exchange Commission has
become effective under the Securities Act of 1933 and, to our knowledge, no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose are pending before or contemplated
by the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) had been made in accordance with Rule 424(b).
7. To the best of our knowledge, there is no action, suit,
proceeding, investigation or audit, pending or threatened, before any court or
any governmental or regulatory authority by, against or involving Lifecodes
that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the Contemplated Transactions.
The opinions set forth above are qualified as stated herein and are further
qualified as follows:
A. The enforceability of the Transaction Documents are qualified to
the extent that enforcement may be limited by: (i) bankruptcy, insolvency,
fraudulent conveyance, receivership, reorganization, moratorium, or other laws
of general application relating to or affecting the enforcement of the rights
of creditors or for the relief of debtors; (ii) the exercise of judicial
discretion in accordance with general equitable principles; and/or (iii) by
the possible application by a court of an implied covenant of good faith and
fair dealing and a finding by such court that the performance or enforcement
of a creditor's rights and remedies would violate such implied covenant.
3
B. The availability of the remedy of specific performance or of any
injunctive relief or of any other equitable remedy is subject to general
principles of equity and the discretion of the court before which any
proceedings therefor may be brought, whether in a court of law or a court of
equity.
C. As to questions of fact material to this opinion, we have relied
solely (without independent investigation) upon the representations and
warranties of Lifecodes contained in the Merger Agreement and upon
certificates and oral statements of Lifecodes or their officers, and nothing
has come to our attention leading us to question the accuracy of such
information. We have not undertaken any independent investigation to determine
the existence or absence of such facts that would be contrary to the opinions
expressed herein, and no inference as to the knowledge of the existence of
such facts should be drawn from the fact of our representation of Lifecodes.
Reference to the phrase "to our knowledge" or a phrase having equivalent
wording means the conscious awareness of the attorney who signs this opinion
letter and any attorney in the law firm who has active involvement in the
preparation of this opinion letter or is primarily responsible for providing
the response concerning a particular issue or information regarding factual
matters.
D. We are licensed to practice law only in the State of Connecticut.
Accordingly, the foregoing opinion applies only with respect to the laws of
the State of Connecticut, the General Corporation Law of the State of Delaware
and the Federal laws of the United States of America, and we express no
opinion with respect to the laws of any other jurisdiction.
This opinion is rendered solely for the benefit of GeneScreen. This opinion
may not be relied upon by any other person or entity, nor may copies be
delivered or furnished to any other person or entity (except for counsel to
GeneScreen), nor may all or portions of this opinion be quoted, circulated, or
referred to in any other document without our prior written consent.
Very truly yours,
XXXXXX & XXXX
4
Exhibit I
Agreed Latest Balance Sheet
GeneScreen - Consolidated
Aug 31, 1998
Consolidated Lab Services
As of May 31, 1998
ASSETS
Current Assets
Operating Cash $175,384.49
Xxxxx Cash 675.00
Accounts Receivable-Accrued 765,000.00
Accounts Receivable-Trade 1,651,965.61
Accounts Receivable-Accr WIP 383,199.00
Allowance For Work In Progress (31,760.00)
Allowance Doubtful Accts (62,727.26)
Employee Advances 4,253.64
Prepaid Deposits 6,311.22
Prepaid Miscellaneous 28,171.48
Inventory-Lab Supplies 334,630.33
Inventory-Products 62,200.00
-------------
Total Current Assets $3,317,303.51
Fixed Assets
Equipment $1,431,665.98
Furniture & Fixtures 183,148.89
Computers/Software 312,324.41
Accumulated Depr - Equipment (960,106.43)
Accumulated Depr-Furn & Fix (110,542.68)
Accumulated Dept-Computers (224,901.28)
Leasehold Improvements 151,954.29
Accumulated Dept - L.I (51,279.04)
-------------
Total Fixed Assets $732,264.14
Other Assets
Patents $15,000.00
Development Costs 88,578.87
Accum Amort - Development (56,022.00)
Technology License 200,000.00
Accum Amort-Technology License (198,333.71)
Goodwill 106,988.00
Investment In Subsidiary 1,728,484.60
-------------
Total Other Assets $1,884,695.76
-------------
Total Assets $5,934,263.41
=============
GeneScreen - Consolidated
Aug 31, 1998
Consolidated Lab Services
As of May 31, 1998
LIABILITIES
Current Liabilities
Deferred Revenue $66,982.50
Allow For WIP - Deferred Rev 23,078.00
Allow For Billed Partials 16,896.00
Royalty Payable 34,700.00
Accounts Payable - Trade 1,583,531.11
Accounts Payable - Prebilled (17,174.62)
Note Payable - Stockholders 823,526.00
Comerica - Credit Line 720,000.00
Bonuses Payable 160,720.92
Flex-125 Fund 669.25
401K Fund 18,658.92
State Tax - Payable 759.43
Taxes Payable 34,100.00
Miscellaneous Payable 294,482.04
Accrued Litigation Reserve 171,287.99
-------------
Total Current Liabilities $3,932,217.54
Lon-Term Liabilities
Accrued Rent - Long Term $8,250.37
-------------
Total Long-Term Liabilities $8,250.37
-------------
Total Liabilities $3,940,467.91
EQUITY
Series A Stock $875,000.00
Series B Stock 2,254,052.88
Common Stock 4,644,615.87
Notes Receivable (85,317.34)
Retained Earnings (4,692,340.05)
Inter-Company Transfer (632,094.19)
Net Profit / (Loss) (370,121.67)
-------------
Total Equity $1,993,795.50
-------------
Total Liabilities and Equity $5,934,263.41
=============
Exhibit J
GENESCREEN PREFERRED & COMMON STOCKHOLDERS
Name and Address Shares Owned
Mr. Xxxxx Xxxxxxxx Common: 30,000
Rutger University
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Bankers Trust Co. Common: 2,319
Trustee for Xxxxxx Aircraft Co.
X.X. Xxx 0000
Xxx Xxxx, XX 00000
Bank One M-Venture
Attn: Mr. J. Xxxxx Xxxxxxx Common: 3,333
Banc One Capital Corporation
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Xx. Xxxx Xxxxxx Common: 20
0000 XxxxxxXxxxx Xxxxx
Xxxxxxxxx, XX 00000
Ms. Xxxxxx Xxxxxx Common: 3,498
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Mr. Xxxxxxx Xxxxxx Common: 24,475
0000-000 Xxxxx Xxx
Xxxxxxxxxx, XX 00000
Blue Doctor, LLC Common: 800,171
Attn: Xxxx Xxxxxxxxx Series B: 274,390
000 Xxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Xx. Xxxxx X. Xxxxxx, Xx. Common: 1,561
c/o New Enterprise Associates IV L.P.
0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Name and Address Shares Owned
Booth & Co. Common: 3,333
Fox Management Trust
c/o Northern Trust Company of New York
Attn: Xxxxxxxx Xxxx
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xx. Xxxxxx Xxxxx Common: 7
0000 Xxxxxxxxxx Xxx #000
Xxxxxxxxx, XX 00000
Xx. Xxxx X. Xxxxx Series A: 34,000
000 0xx Xxxxxx X.X., #000 Series B: 16,000
Xxxxxxx xx Xxxxxxx, XX
XXXXXX X0X 0X0
Mr. Xxxxx Xxxxx Common: 22,075
0000 Xxxxxxxx Xxxxx Series A: 20,000
Xxxxxx, XX 00000 Series B: 14,500
Xx. Xxxx Xxxxxxxx Common: 77,777
c/x Xxxxxxxx Offices Series A: 16,000
8080 N. Central Expressway Series B: 21,000
Xxxxx 0000, XX 00
Xxxxxx, XX 00000-0000
Xx. Xxxxxxx X. Xxxxxx Common: 333
0000 Xxxxxxxxxx Xxxxx
Xxxxx X 000 XX #000
Xxxxxx, XX 00000
Xxxxxx Children's Trust Common: 333
c/o Xx. Xxxxxxx X. Xxxxxxxx, Trustee
Inwood National Bank
X.X. Xxx 000000
Xxxxxx, XX 00000
Xxxxxx Corporation Common: 333
Attn: Xxxxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxx X 000, XX #000
Xxxxxx, XX 00000
2
Name and Address Shares Owned
J. Xxxxxx Xxxxx, M.D. Common: 18,750
000 X.X. 00xx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Xx. Xxxxxxx Xxxxxxx Common: 1,332
c/o Ludwig Institute for Cancer Research
0000 Xxxxxx Xxxxx
Xx Xxxxx, XX 00000-0000
Xx. Xxxx Xxxxxxx Common: 51
0000 Xxxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Ms. Xxxxxx (Xxxxxx) Xxxxxxxx Common: 10
0000 Xxxxxx X. Xxxx Xxxx. #000
Xxxxxx, XX 00000
Crossroads Capital Limited Partnership Common: 198,518
Attn: Xx. Xxxxx Xxxxxxxx Series A: 40,000
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
DB Liquidation LLC Common: 99,999
c/o H. Xxxxxx Xxxxxx Series B: 91,464
00000 Xxxxxx Xxxx, #000-00
Xxxxxx, XX 00000
Xx. Xxxxxx Xxxxx Common: 30
000 Xxxx Xxxxx Xx.
Xxxxxxxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxx Common: 1,332
c/o Children's Hospital
Division of Human Genetics
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xx. Xxxxxx Xxxxxxx Common: 20
0 X. Xxxxxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Xx. Xxxxxx Xxxxx Common: 104
0000 Xxxxxxx
3
Name and Address Shares Owned
Xxxxx, XX 00000
Xx. Xxxxxx X. Xxxx Common: 4,166
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxxx X. Xxxx Common: 104
0000 Xxxx Xxxx Xxx.
Xxxxxx, XX 00000
Xx. Xxxxxx X. Xxxxxxxxx Common: 1,332
c/o University of Michigan Medical School
Department of Human Genetics
Xxx 0000
Xxx Xxxxx, XX 00000-0000
GFI Company Common: 243,518
Attn: Xxxxx X. Xxxxxxxxxx Series A: 80,000
10111 N. Central Expressway Series B: 67,100
Xxxxxx, XX 00000
Xxxxx Xxxxxxxxx Common: 8,333
000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Mr. Xxxxxx Xxxxx Common: 8,333
00000 Xxxxxxx Xxxxx
Xxxxxxx Xxxxxx, XX 00000
Xx. Xxxxx Xxxxxxxxx Common: 500
0000 Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
Achile Guest Common: 7,378
000 X. 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
Xx. Xxxx Xxxxxxxxx Common: 175
290 Limrick
Xxxxxxx, XX 00000
X.X. Xxxxxxxxx Common: 18,355
000 Xxxxxxx
Xxxxxxx, XX 00000
4
Name and Address Shares Owned
Xxxxxxx & Xxxx Xxxxxxxxx Common: 874
000 Xxxxxxx
Xxxxxxx, XX 00000
Xxxxxx X. Xxxx, M.D. Common: 1,332
c/o B.C. Children's Hospital
Department of Pediatrics
0000 Xxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0 XXXXXX
The Xxxx X. Hartford Foundation Common: 141,666
Attn: Xxxxxx Xxxxxx, Controller
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xx. Xxxxx Xxxxxxx Common: 8
0000 Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Xx. Xxxxx X. Xxx Common: 333
X.X Xxx 000000
Xxxxxx, XX 00000-0000
Mr. S. Xxxxx Xxxxxxx Common: 36,666
0000 Xxxxxxx Xxxx Xx.
Xxxxxx, XX 00000
Xx. Xxxxxxxxx Xxxxxx Common: 972
0000 Xxxxx
Xxxxx Xxxxxxx, XX 00000
Mr. Xxxxxxx Xxxxxxxx Common: 50
00000 Xxxx Xxxxxxxxx
#0000
Xxxxxx, XX 00000
The Jockey Club Common: 64,052
Attn: Xx. Xxxx Xxxxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
5
Name and Address Shares Owned
Ms. Xxxxxx Xxxxxxx Common: 60
0000 00xx Xxxxxx
Xxxxxxx, XX 00000
Xxxx & Co. Common: 1,681
c/o Chase Manhattan Bank, N.A.
X.X. Xxx 0000, Xxxxxx Xxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Xx. Xxxxx Xxxx Common: 77
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Ms. Xxxx Xxxxxxx Common: 90
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000
Casomira Xxxx Common: 30
2715 Iroquois
Xxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxx Common: 2,592
c/x Xxxxxxx, Xxxxxxxx & Xxxxxxxxxx, L.L.P. Series A: 2,000
1601 Bryan, Ste. 3000 Series B: 3,049
Xxxxxx, XX 00000
Mr. & Mrs. Xxx Xxxxx Common: 27,148
X.X. Xxx 000
Xxxxxx, XX 00000
Xx. Xxxx XxXxxxxxx Common: 50
0000 Xxxxxxxxxx Xx.
Xxxxxxx, XX 00000
Xx. Xxxxx XxXxxx Common: 350
c/o Xxxxxx XxXxxx Xxxxxx & Xxxxxx
1700 One Dayton Center
0 X. Xxxx Xx.
Xxxxxx, XX 00000
6
Name and Address Shares Owned
Merifin N.V. Common: 51,296
c/o Merifin Capital Group Series A: 14,000
Attn: Xxxxxxx Xx Xxxxx Series B: 76,219
Avenue Xxxxx Xxxxxx 6, Boite 8
X-0000 Xxxxxxxx
Xxxxxxx
Xx. Xxx Xxxxxxx Common: 11
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Xx. Xxxxxx Xxxxxx Common: 25
00000 Xxxx, #000
Xxxxxx, XX 00000
Mr. Xxxx Xxxxxxxx Common: 35
0000 Xxxxxxxxx Xx.
Xxxxxx, XX 00000
Xx. Xxxxxxxx Xxxxxx Common: 6
00 X. Xxxxxxxxx
Xxxxx Xxxxxxx, XX 00000
NationsBank Capital Investors
c/o Xx. Xxxxxxx X. Xxxxxxx Common: 16,666
TX1-492-22-05
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,XX 00000
New Enterprise Associates IV L.P. Common: 194,814
Attn: Mr. C. Xxxxxxx Xxxxxxxx Series A: 64,000
Managing General Partner Series B: 91,464
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xx. Xxxxx X'Xxxxxxx, Xx. Common: 99,259
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Xx. Xxxxx X. Xxxxxxx Common: 808
0000 Xxxxxxx Xx.
Xxx Xxxxxx, XX 00000
7
Name and Address Shares Owned
Xxxxxxx X. Xxxxx Common: 3,122
x/x Xxxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxx. at 00xx Xx.
Xxx Xxxx, XX 00000
Xx. Xxxxxxx X. Xxxxxxx Common: 49,629
0000 Xxxxxxxxxx Xxxx, #000
Xxxxxxx Xxxxx, XX 00000
Xx. Xxxxx Xxxxxx Common: 75
0000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxx Xxxx, XX 00000
Xx. Xxxxxxxx X. Xxxxxxxx Common: 1,120
0000 Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Dr. C. Xxx Xxxxxxxx Common: 3,083
Baylor College of Medicine
C/O Institute of Molecular Biology
Xxx Xxxxxx Xxxxx, X000
Xxxxxxx, XX 00000
Xx. Xxxxxxx Xxxx Common: 175
0000 00xx Xx. XX
Xxxxxx, XX 00000
Ms. R. Xxxx Xxxxxxx Common: 30
0000-0 Xxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xx. Xxxxx Xxxxxxxxx Common: 20
0000 Xxxxxxx #0
Xxxxxx, XX 00000
Xx. Xxxxxxx X. Xxxxx Common: 1,748
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Xx. Xxxxxxx Xxxxxxx Common: 30,111
c/o Austin Industries, Inc.
X.X. Xxx 0000
Xxxxxx, XX 00000
8
Name and Address Shares Owned
Southwest Enterprise Associates, L.P. Common: 243,518
Attn: Mr. H. Xxxxxx Xxxxxx Series A: 80,000
00000 Xxxxxx #101-44 Series B: 33,537
Xxxxxx, XX 00000-0000
Xx. Xxxxx X. Xxxxxxxxxx Series B: 3,000
c/o Oklahoma Publishing Company
00000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxx, Ph.D. Common: 18,750
c/o U.T. at Austin, Dept. of Microbiology
ESB 000-X
00xx Xxxxxx & Xxxxxxxx
Xxxxxx, XX 00000-0000
UT Southwestern Medical Center Common: 45,833
Attn: Xx. Xxxxxxx X. Xxxxxx
Xxxx of Medical School
0000 Xxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Ms. Xxxxxxx Xxxxxxxx Common: 70
0000 Xxxxxxx Xxxxx XX
Xxxxxxxxxx, XX 00000
Xx. Xxxxxxx Xxxx Common: 350
0000 Xxxxx Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
9
Exhibit K
Form of Technology License
