Exhibit 10.1
ASSET PURCHASE AGREEMENT
among
PHARSIGHT CORPORATION
XXXXXXXX AND XXXXXXXX ASSOCIATES, INC.
XXXXXX E. L. XXXXXXXX
and
XXXXXX X. XXXXXXXX
Dated
May 27, 1998
TABLE OF CONTENTS
PAGE
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1. CERTAIN DEFINITIONS.....................................................1
1.1 "Acquired Assets".................................................1
1.2 "Ancillary Agreements"............................................3
1.3 "Assumed Agreements"..............................................3
1.4 "Assumed Liabilities".............................................3
1.5 "Co-Ownership Agreement"..........................................3
1.6 "Derivative Work".................................................3
1.7 "Disclosure Schedule".............................................3
1.8 "Excluded Assets".................................................3
1.9 "Golden Master"...................................................4
1.10 "Intellectual Property"...........................................4
1.12 "Legal Requirement"...............................................5
1.13 "Lien"............................................................5
1.14 "MGA Facility"....................................................5
1.15 "MGA Fields"......................................................5
1.16 "MGA Intellectual Property".......................................5
1.17 "MGA Products"....................................................5
1.18 "MGA Restricted Software".........................................5
1.19 "MGA Unrestricted Software".......................................5
1.21 "Pharsight Fields"................................................5
1.22 "Person"..........................................................5
1.24 "Used In Connection With".........................................6
2. SALE AND PURCHASE; ASSUMPTION OF LIABILITIES; PURCHASE PRICE; CLOSING...6
2.1 Sale and Purchase of the Acquired Assets..........................6
2.2 Assumed Agreements; Specified Contractual Liabilities.............6
2.3 Assumption of Liabilities.........................................6
2.4 Closing; Closing Deliverables.....................................7
2.5 Assignment of Contracts and Rights................................8
2.6 Complete Transfer.................................................8
2.7 Allocation........................................................8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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3. REPRESENTATIONS AND WARRANTIES OF SELLERS...............................8
3.1 Organization of MGA...............................................8
3.2 Authorization of Transaction......................................9
3.3 Non-Contravention.................................................9
3.4 Consents..........................................................9
3.5 Title to the Acquired Assets.....................................10
3.6 Assumed Agreements...............................................10
3.7 Intellectual Property............................................10
3.8 Ownership Transfer...............................................12
3.9 Litigation.......................................................12
3.10 Environmental Matters............................................12
3.11 Employment Matters...............................................13
3.12 Use Of Office Facilities.........................................13
3.13 Brokers' Fees....................................................13
3.14 Compliance with Bulk Sales Laws..................................13
3.15 Underlying Documents.............................................14
3.16 Investment Representation........................................14
3.17 Full Disclosure..................................................14
4. REPRESENTATIONS AND WARRANTIES OF PHARSIGHT............................14
4.1 Organization of Pharsight........................................14
4.2 Authorization of Transaction.....................................15
4.3 Non-Contravention................................................15
4.4 Brokers' Fees....................................................15
4.5 Acknowledgement..................................................15
5. POST-CLOSING COVENANTS AND AGREEMENTS..................................16
5.1 Cooperation; Further Assurances..................................16
5.2 Delivery; Removal of Excluded Assets.............................16
5.3 Notice of Developments...........................................16
5.4 Enforcement of Rights............................................16
5.5 Delivery of Notices..............................................16
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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5.6 Payment by Pharsight of Certain of Sellers' Costs................16
5.7 Reimbursement of Remaining Amounts...............................17
6. INDEMNIFICATION........................................................17
6.1 Indemnification and Reimbursement of Pharsight's Losses..........17
6.2 Indemnification and Reimbursement of Sellers's Losses............18
6.3 Payment..........................................................18
6.4 Notice of Claims.................................................18
6.5 Third Party Claims...............................................18
6.6 Disputed Claims..................................................19
6.7 Survival.........................................................19
6.8 Right of Setoff..................................................20
6.9 Sole Remedy; Co-Ownership Agreement Separate.....................20
7. MISCELLANEOUS..........................................................20
7.1 Further Assurances...............................................20
7.2 No Third Party Beneficiaries.....................................20
7.3 Entire Agreement.................................................21
7.4 Succession and Assignment........................................21
7.5 Counterparts.....................................................21
7.6 Headings.........................................................21
7.7 Notices..........................................................21
7.8 Governing Law....................................................22
7.9 Waiver...........................................................23
7.10 Amendments.......................................................23
7.11 Severability.....................................................23
7.12 Expenses.........................................................23
7.13 Transfer Taxes...................................................23
7.14 Confidentiality of Information...................................23
7.15 Construction.....................................................24
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is entered into on May
27, 1998, by and among PHARSIGHT CORPORATION, a California corporation
("Pharsight"), XXXXXXXX AND XXXXXXXX ASSOCIATES, INC., a Delaware corporation
("MGA"), Xxxxxx E. L. Xxxxxxxx ("Xxxxxxxx"), and Xxxxxx X. Xxxxxxxx ("Xxxxxxxx,"
and together with MGA and Xxxxxxxx, "Sellers").
RECITALS
This Agreement contemplates a transaction in which Pharsight shall
purchase certain assets (and assume certain future obligations) of MGA in return
for the consideration described herein.
AGREEMENT
The parties, intending to be legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms have
the meaning given to them below:
1.1 "Acquired Assets" means the following assets of MGA:
(a) all right, title and interest in and to the MGA Unrestricted
Software, including all software, Intellectual Property Rights and proprietary
assets owned by MGA and exclusively Used In Connection With the MGA Unrestricted
Software;
(b) an exclusive (other than to MGA), unrestricted, perpetual,
irrevocable, royalty-free, world-wide license to use, reproduce, create
Derivative Works of, distribute, sublicense (through multiple tiers of
sublicensees), perform, publicly display, make, manufacture, import and export
any Intellectual Property and other proprietary assets owned by MGA, Used In
Connection With the MGA Unrestricted Software and not included in (a) above;
(c) all of MGA's rights under all Assumed Agreements, including the
lease of the MGA Facility and all rights thereunder (including all security and
other deposits and pre-paid rent);
(d) an undivided one-half ownership interest in and to the MGA
Restricted Software, both in Source Code and Object Code, with no right of
accounting and with exclusive use in the Pharsight Fields (except as set forth
in Section 4.2(b) of the Co-Ownership Agreement), with exclusive use in the MGA
Fields (except as set forth in Section 4.2(a) of the Co-Ownership Agreement) to
remain with MGA, as further set forth in the Co-Ownership Agreement;
(e) an exclusive (even as to MGA), perpetual, irrevocable,
royalty-free, world-wide license to use, reproduce, create Derivative Works of,
distribute, sublicense (through multiple tiers of sublicensees), perform,
publicly display, make, manufacture, import and export any Intellectual Property
and other proprietary assets and all other assets not included in (d)
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above owned by MGA and Used In Connection With the MGA Restricted Software in
the Pharsight Fields, as further set forth in the Co-Ownership Agreement;
(f) a non-exclusive, perpetual, irrevocable, royalty-free,
world-wide license to use, reproduce, create Derivative Works of, distribute,
sublicense (through multiple tiers of sublicensees), perform, publicly display,
make, manufacture, import and export any Intellectual Property and other
proprietary assets and all other assets not included in (d) above owned by MGA
and Used In Connection With the MGA Restricted Software, in the MGA Fields,
provided that such Intellectual Property, other proprietary assets or Derivative
Works thereof, are incorporated or bundled with an additional Pharsight product
(including, without limitation, ACSL BioMed or ACSL Tox) such that the resultant
product is designed for use in the Pharsight Fields and represents an
enhancement and/or transformation of such Intellectual Property or proprietary
assets (with regard to both value and function), as further set forth in the
Co-Ownership Agreement;
(g) all machinery, equipment, furniture, leasehold improvements and
other fixed assets owned by MGA located at the MGA Facility, together with all
other assets located at the MGA Facility other than the Excluded Assets set
forth in Section 1.8(a);
(h) all business and financial records, books, files, plans,
documents, correspondence, lists, drawings, notebooks, specifications, creative
materials, advertising and promotional materials, marketing materials, studies
and reports of MGA, whether written or electronically stored or otherwise
recorded if, and only to the extent, that such foregoing items are exclusively
Used in Connection With the Acquired Assets (not including the items of this
subsection (h) for these purposes) or the Assumed Liabilities; provided,
however, if such foregoing items are Used in Connection With the Acquired Assets
(not including the items of this subsection (h) for these purposes) or the
Assumed Liabilities other than on an exclusive basis, copies thereof shall be
proved to Pharsight by MGA and Pharsight shall have the right to use such items
in connection with the exercise of its rights pursuant to this Agreement and the
Co-Ownership Agreement;
(i) all indemnity and contribution rights granted to MGA or owed by
third parties to MGA with respect to the Assumed Liabilities, and any and all
rights or assets arising from and related to the defense, release, compromise,
discharge, administration, management or satisfaction by MGA of the Assumed
Liabilities; and
(j) all of MGA's rights, claims, actions, causes of action, vendor,
supplier and similar claims, judgments and demands of whatever nature arising
out of or related to the Acquired Assets (for purposes hereof not including this
subsection (j)) including, without limitation, MGA's rights, claims, actions,
and causes of action arising out of or related to any employee confidentiality,
proprietary information, invention assignment or other such agreements;
provided, however, that if any of the foregoing items are not related
exclusively to the Acquired Assets (not including the items of this subsection
(j) for these purposes), Pharsight shall use its best efforts to afford MGA the
benefits of the foregoing items in proportion to the extent to which such items
do not relate exclusively to the Acquired Assets (not including the items of
this subsection (j) for these purposes), and MGA and Pharsight will use their
good faith best efforts to agree on such division of benefits.
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Notwithstanding the foregoing, the Acquired Assets shall not include the
Excluded Assets.
1.2 "Ancillary Agreements" means each of the agreements referred to in
Section 2.4.
1.3 "Assumed Agreements" means each of the agreements set forth on Exhibit
A.
1.4 "Assumed Liabilities" means only those liabilities and obligations
arising after the Closing under each Assumed Agreement actually assigned to
Pharsight pursuant to this Agreement.
1.5 "Co-Ownership Agreement" means the Co-Ownership Agreement, dated as of
even date herewith, between MGA and Pharsight, pursuant to which, among other
things, MGA assigns to Pharsight a one-half ownership interest in and to the MGA
Restricted Software.
1.6 "Derivative Work" shall mean a work which is based on one or more
pre-existing works, such as a revision, enhancement, modification, translation,
abridgement, condensation, expansion, or any other form in which such software
may be recast, transformed, or adapted, and which, if prepared without
authorization of the owner of the copyright in the software, would constitute a
copyright infringement. For purposes hereof, Derivative Work shall also include
any compilation that incorporates any pre-existing work.
1.7 "Disclosure Schedule" shall mean the disclosure schedule separately
delivered by Sellers to Pharsight concurrently with this Agreement, which
schedule is initialed for identification by the parties.
1.8 "Excluded Assets" means the following assets:
(a) MGA's Unix hardware, disk duplicators, and web site hardware and
all manuals, articles, libraries and licenses Used In Connection With MGA's Unix
system, in each case as listed in Exhibit B hereto;
(b) an undivided one-half ownership interest in and to the MGA
Restricted Software, both in Source Code and Object Code, with no right of
accounting and with exclusive use in the MGA Fields (except as set forth in
Section 4.2(a) of the Co-Ownership Agreement), with exclusive use in the
Pharsight Fields (except as set forth in Section 4.2(b) of the Co-Ownership
Agreement) to remain with Pharsight, as further set forth in the Co-Ownership
Agreement;
(c) except for the Assumed Agreements, all of MGA's rights with
respect to any contracts, bids, subcontracts or other agreements for the
provision of MGA services that do not relate to the Pharsight Fields, together
with all related subcontracts, purchase orders and similar agreements (with such
contracts, bids, subcontracts and agreements and the purchase orders and similar
agreements relating thereto, together with all related change orders, extra work
orders and other amendments and modifications thereto being referred to herein
as the "Retained MGA Contracts");
(d) any capital stock or equity interest of MGA;
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(e) all foreign federal, state or local tax refunds, tax refund
claims and tax credits, deductions or other tax benefits of MGA;
(f) all indemnity and contribution rights granted to MGA or owed by
third parties to MGA with respect to any liability or obligations of any nature,
fixed or contingent or known or unknown, of MGA whatsoever other than as set
forth in Section 1.1(i) (herein "Retained Contribution Claims") and any and all
rights or assets arising from and related to the defense, release, compromise,
discharge, administration, management or satisfaction by MGA of the liabilities
in respect of the Retained Contribution Claims;
(g) all of MGA's rights, claims, actions, causes of action, vendor,
supplier and similar claims, judgments and demands of whatever nature arising
out of the Excluded Assets (for purposes hereof not including this subsection
(g));
(h) all of MGA's deferred charges, advance payments, prepaid items,
security and other deposits, claims for refunds, rights of offset, and credits
of all kinds, relating specifically to the Excluded Assets (for purposes hereof
not including this subsection (h));
(i) cash and other liquid assets and accounts receivable (other than
accounts receivable related to the Assumed Agreements for services rendered or
amounts accruing after the closing); and
(j) the rights of MGA under this Agreement.
1.9 "Golden Master" shall mean, with respect to a given software program,
program module, or documentation, a copy of such item that (i) is under source
code control, (ii) is complete and accurate, (iii) represents the producer's
best efforts to meet the applicable specifications, (iv) has passed all
applicable test procedures, and (v) complies with normal industry practices for
verification and duplication.
1.10 "Intellectual Property" means any or all of the following and all
statutory and/or common law rights throughout the world in, arising out of, or
associated therewith: (i) all patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or not),
invention disclosures and improvements, all trade secrets, proprietary
information, know-how and technology; (iii) all works of authorship, "moral
rights", copyrights (including Derivative Works thereof), mask works, copyright
and mask work registrations and applications; (iv) all industrial designs and
any registrations and applications therefor; (v) all trade names, logos,
trademarks and service marks, trademark and service xxxx registrations and
applications together with the good will of the business symbolized by the names
and the marks; (vi) all computer software and related documentation including
all Source Code, Object Code, firmware, installation programs, source code
control archives, development tools, test plans, test files, test data, build
scripts, file specifications, design and implementation documents, interface
specifications, requirements specifications, data bases, utilities, bug
databases, and all media on which any of the foregoing is recorded; (vii) any
similar, corresponding or equivalent rights to any of the foregoing; and (viii)
all goodwill associated with any of the foregoing.
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1.11 "Intellectual Property Rights" shall mean any interest or right
protectable under the law of any country as to any form of Intellectual
Property.
1.12 "Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, rule,
restriction, statute, or treaty.
1.13 "Lien" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer, conditional sale or other
title retention device or arrangement (including a capital lease), transfer for
the purpose of subjection to the payment of any indebtedness, or restriction on
the creation of any of the foregoing, whether relating to any property or right
or the income or profits therefrom.
1.14 "MGA Facility" means MGA's facility located at 000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxxx.
1.15 "MGA Fields" shall mean all fields other than the Pharsight Fields.
1.16 "MGA Intellectual Property" means Intellectual Property owned by MGA
that constitutes an Acquired Asset.
1.17 "MGA Products" means the MGA Restricted Software and the MGA
Unrestricted Software.
1.18 "MGA Restricted Software" means the "Software" as defined in the
Co-Ownership Agreement.
1.19 "MGA Unrestricted Software" means the following products of MGA and
any Derivative Work thereof, both in Source Code and Object Code: ACSL Biomed,
and ACSL Tox, including any upgrades, updates, works in progress, and all
associated documentation (existing as of the Effective Date) developed by or for
MGA and other components, programs or utilities required for the operation or
execution thereof, except as set forth in Exhibit D of the Co-Ownership
Agreement, but not including the MGA Restricted Software included therein.
1.20 "Object Code" shall mean a machine-executable object code form of the
software.
1.21 "Pharsight Fields" shall mean the biotechnology, pharmaceutical
(including over-the-counter), veterinary, medical devices, environmental and
healthcare fields.
1.22 "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.23 "Source Code" shall mean a human-readable source code version of the
software and all related program documentation such that a programmer reasonably
skilled in the programming language could read, understand and modify the
software.
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1.24 "Used In Connection With" means with respect to any asset, tangible
or intangible, currently used in connection with, has ever been used in
connection with, is or was intended for use in connection with, is necessary for
use in connection with, or is reasonably desirable for use in connection with,
such assets.
2. SALE AND PURCHASE; ASSUMPTION OF LIABILITIES; PURCHASE PRICE; CLOSING.
2.1 Sale and Purchase of the Acquired Assets. At the Closing (as defined
below), on the terms and subject to the conditions of this Agreement and the
Co-Ownership Agreement, MGA shall sell and Pharsight shall purchase all of the
Acquired Assets for the following consideration:
(a) $2,000,000, to be paid at the Closing by check;
(b) $1,750,000, to be paid at the Closing in the form of a
promissory note (the "Promissory Note") in such principal amount, bearing simple
interest at a rate of 8.0% per annum and which shall be payable (i) one year
from the date of issuance in the principal amount of $875,000 together with
interest accrued on such principal amount paid, and (ii) two years from the date
of issuance in the principal amount of $875,000 together with interest accrued
on such principal amount paid;
(c) 246,250 shares of Pharsight Common Stock, to be issued, at the
direction of the Sellers, to the following persons as follows:
(i) 140,000 shares to Xxxxxxxx;
(ii) 60,000 shares to Xxxxxxxx;
(iii) 25,000 shares to Xxxx Xxxxxxxx;
(iv) 10,000 shares to Xxxx Xxxxxx;
(v) 5,000 shares to Xxxx Sale;
(vi) 2,500 shares to Sining Fang;
(vii) 2,500 shares to Xxxxxxx Xxxxxxx; and
(viii) 1,250 shares to Xxxxxx Xxxxxxx;
(d) The obligations of Pharsight under Sections 5.6 and 5.7 hereof;
and
(e) The assumption of the Assumed Liabilities.
2.2 Assumed Agreements; Specified Contractual Liabilities. From and after
the Closing, Pharsight shall be entitled to the benefit of all of the Assumed
Agreements. Sellers shall give such assistance to Pharsight as Pharsight shall
reasonably request to enable Pharsight to enjoy the benefit of the Assumed
Agreements.
2.3 Assumption of Liabilities. At the Closing, on the terms and subject to
the conditions of this Agreement, Pharsight agrees to assume and become
responsible for all of the Assumed Liabilities. Pharsight shall not assume or
have any responsibility, however, with respect to any other obligation or
liability of MGA that is not an Assumed Liability. Without limiting the
foregoing, Pharsight shall not assume or be responsible for (i) any liabilities
relating to events arising or occurring prior to the Closing, regardless of when
payable, or (ii) any and all
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sales taxes, use taxes, transfer taxes, filing fees and similar taxes, fees,
charges and expenses required to be paid in connection with the transactions
contemplated by this Agreement, and all such liabilities shall be for the
account of MGA.
2.4 Closing; Closing Deliverables. The closing shall occur in the offices
of Xxxxxx Godward LLP, Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx, Xxxx Xxxx, XX
00000-0000, upon the execution and delivery of this Agreement by the parties
hereto ("Closing"). At the Closing the parties will deliver the following
documents, and such additional documents as the parties may agree to transfer
ownership of the Acquired Assets to Pharsight (which shall be in form
satisfactory to both parties) :
(a) Sellers shall deliver to Pharsight:
(i) A xxxx of sale and assignment, executed by MGA, for the
Acquired Assets;
(ii) An assignment and assumption agreement (the "Assignment
and Assumption Agreement"), executed by MGA, assigning the Assumed Agreements;
(iii) The Co-Ownership Agreement, executed by Sellers;
(iv) Copyright assignments as set forth in Exhibit C and the
Co-Ownership Agreement;
(v) Noncompetition Agreements, executed by each of Xxxxxxxx
and Xxxxxxxx;
(vi) An Estoppel Certificate, executed by the lessor under the
lease of the MGA Facility;
(vii) A Quitclaim by Xxxx Sale as to any right, title and
interest he may have in and to the MGA Products;
(viii) Evidence that notice of termination of each of the
distribution agreements listed on Exhibit D has been given with respect to (A)
the MGA Unrestricted Software covered thereby and (B) the MGA Restricted
Software covered thereby in the Pharsight Fields; and
(ix) The Disclosure Schedule (as defined below).
(b) Pharsight shall deliver the following documents:
(i) The cash portion of the purchase price as set forth in
Section 2.1(a);
(ii) The Promissory Note, as set forth in Section 2.1(b);
(iii) The Noncompetition Agreements, executed by Pharsight;
and
(iv) The Assignment and Assumption Agreement, executed by
Pharsight, pursuant to which Pharsight is assuming the Assumed Liabilities.
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2.5 Assignment of Contracts and Rights. Anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor the consummation of the
transactions contemplated hereby shall constitute an assignment, or an agreement
to assign, any Acquired Asset or any claim or right or any benefit arising
thereunder or resulting therefrom (a "Consent-Required Asset") if an attempted
assignment of such Consent-Required Asset, without consent of one or more third
parties, would constitute a breach or other contravention thereof or would in
any way adversely affect the rights of Pharsight or MGA thereunder; provided,
however, that once all such consents are obtained, this Agreement shall
automatically effect an immediate assignment of such Consent-Required Asset
without further action by either party hereto. Pharsight and MGA will use their
commercially reasonable efforts (which shall not be deemed to require any
payment of money or other value by Pharsight or MGA) to obtain the consent of
the other parties to any such Consent-Required Asset for the assignment thereof
to Pharsight as Pharsight may reasonably request. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of MGA thereunder so that Pharsight would not in
fact receive all such rights, Sellers and Pharsight will cooperate in a mutually
agreeable arrangement under which Pharsight would obtain the benefits and assume
the obligations thereunder in accordance with this Agreement, including
sub-contracting or sub-licensing to Pharsight, or under which Sellers would
enforce for the benefit of Pharsight, with Pharsight assuming MGA's obligations,
any and all rights of MGA against a third party thereto. Sellers will promptly
pay or assign to Pharsight when received all monies received by Sellers with
respect to any Consent-Required Asset and any claim or right or any benefit
arising thereunder, except to the extent the same represents an Excluded Asset.
Nothing in this Section 2.5 shall be construed to diminish the representations,
warranties and covenants of Sellers respecting such consents.
2.6 Complete Transfer. Sellers expressly agree that the sale of the
Acquired Assets constitutes a transfer of all of MGA's rights with respect to
the Acquired Assets and that Sellers reserve no rights to market or otherwise
transfer the Acquired Assets (other than the MGA Restricted Software in fields
other than the Pharsight Fields).
2.7 Allocation. Pharsight and MGA shall use their best efforts to mutually
agree, within forty-five (45) days after the Closing, upon the manner in which
the consideration referred to in Section 2.1 is to be allocated among the
Acquired Assets. If Pharsight and MGA shall not agree upon such allocation, at
the end of such 45 day period the parties shall proceed as required by the
Internal Revenue Code. Pharsight and Sellers shall not file any tax return or
other document with, or make any statement or declaration to, any governmental
body that is inconsistent with the allocation determined in accordance with this
Section 2.7.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers, jointly and severally,
represent and warrant to Pharsight that the statements contained in this Section
3 are correct and complete as of the Closing, except as set forth in the
Disclosure Schedule:
3.1 Organization of MGA. MGA is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. MGA has
all requisite corporate power and authority to own and operate its properties
and assets, and to carry on its business as
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presently conducted and as presently proposed to be conducted. MGA is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary,
except for those jurisdictions in which failure to do so would not have a
material adverse effect on the Acquired Assets or Assumed Liabilities.
3.2 Authorization of Transaction. Each Seller has full power and authority
to execute and deliver this Agreement, and the Ancillary Agreements to which it
is a party, and to perform its obligations hereunder and thereunder. Without
limiting the generality of the foregoing, MGA has taken all corporate and other
action required for the execution, delivery and performance of this Agreement,
and the Ancillary Agreements to which it is a party, including the sale of the
Acquired Assets as provided herein. This Agreement constitutes the valid and
legally binding obligation of each of the Sellers, and each of the Ancillary
Agreements constitutes the valid and legally binding obligation of each of the
Sellers a party thereto, in each case enforceable in accordance with its terms.
The persons who have executed this Agreement, and the Ancillary Agreements to
which MGA is a party, on behalf of MGA have been duly authorized to do so.
3.3 Non-Contravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby or thereby, shall (i) violate any (A) statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which any Seller
is subject or (B) any provision of the charter or bylaws of MGA or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require a notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, security interest, or other arrangement to
which any Seller is a party or by which it is bound or to which any of its
assets is subject, except where the violations, conflicts, breaches, defaults,
accelerations, terminations, modifications, cancellations or failures to give
notice, individually or in the aggregate, would not have a material adverse
effect on the Acquired Assets, the Assumed Liabilities or the ability of the
parties to consummate the transactions contemplated by this Agreement and the
Ancillary Agreements (a "Material Adverse Effect"). Sellers need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate the transactions contemplated by this Agreement and the Ancillary
Agreements, except where the failure to do so, individually or in the aggregate,
would not have a Material Adverse Effect.
3.4 Consents. No approvals, waivers or consents of or assignments by any
Person (including any federal, state or local governmental or administrative
authorities) are necessary in connection with the execution, delivery or
performance of this Agreement or the Ancillary Agreements. All notices, consents
or waivers to the transfer or assignment of the Acquired Assets, including but
not limited to the Assumed Agreements, required from third Persons have been
given or obtained prior to the date hereof.
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3.5 Title to the Acquired Assets. MGA has good and marketable title, free
and clear of all Liens, to the Acquired Assets. When transferred to Pharsight at
the Closing, Pharsight will acquire the Acquired Assets free and clear of all
Liens.
3.6 Assumed Agreements.
(a) True, correct and complete copies of the Assumed Agreements have
been delivered to Pharsight. MGA has performed in all material respects all
obligations required to be performed by MGA under the Assumed Agreements. To
Sellers' knowledge, each of the other parties to the Assumed Agreements has
performed in all material respects all the obligations required to be performed
by them thereunder to date. Each Assumed Agreement (i) is valid, binding and
enforceable against the parties thereto in accordance with its terms, (ii) is in
full force and effect with no default or dispute existing or, to Sellers'
knowledge, threatened with respect thereto, and no notice of termination has
been provided to MGA, or to Sellers' knowledge threatened, thereunder, and (iii)
shall not be terminated or otherwise affected by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby. No
consent of any third party is required for the assignment of any Assumed
Agreement to Pharsight, other than such consents as have been obtained prior to
the date hereof. Sellers have provided Pharsight with a complete and accurate
list of payments paid to MGA by each licensee under the Assumed Agreements,
indicating the licensee and the month paid, from January 31, 1996 to present.
MGA has not received any advanced payments (including prepayments of royalties,
or other payments by reason of which a licensee is entitled to reduce its
current or future royalty or payment obligations) under the Assumed Agreements
which have not been earned by MGA.
(b) The Assumed Agreements include (i) all supply agreements,
customer agreements, license agreements, maintenance agreements, service
agreements and other contracts to which MGA is a party relating to the MGA
Unrestricted Software, and (ii) all supply agreements, customer agreements,
license agreements, maintenance agreements, service agreements and other
contracts to which MGA is a party relating to the MGA Restricted Software and
that relate to the Pharsight Fields.
3.7 Intellectual Property.
(a) The MGA Intellectual Property constitutes all the Intellectual
Property Used in Connection With the conduct of MGA's business in the Pharsight
Fields as currently being or proposed to be conducted by MGA.
(b) MGA owns no Intellectual Property Rights not included in the
Acquired Assets that are competitive with or are otherwise applicable to the
Intellectual Property Used in Connection With the conduct of MGA's business in
the Pharsight Fields as currently being or proposed to be conducted by MGA.
(c) None of the MGA Intellectual Property is subject to any
proceeding or outstanding decree, order, judgment, agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by MGA or may
affect the validity, use or enforceability of such MGA Intellectual Property.
10
(d) With respect to the transfer of MGA Unrestricted Software under
this Agreement, Pharsight will be subject to no limitations, obligations or
restrictions with regard to the sale, license, distribution or other transfer or
exploitation of the MGA Unrestricted Software, whether in the form transferred
to Pharsight or after modification, including, but not limited to, any of the
foregoing arising out of any distribution, license or other agreements
previously entered into by MGA or any of its affiliates.
(e) With respect to the transfer of rights in the MGA Restricted
Software under this Agreement and the Co-Ownership Agreement, Pharsight will be
subject, except as otherwise provided herein or therein, to no limitations,
obligations or restrictions with regard to the sale, license, distribution or
other transfer or exploitation of the MGA Restricted Software in the Pharsight
Fields, whether in the form transferred to Pharsight or after modification,
including, but not limited to, any limitations, obligations or restrictions
arising out of any distribution, license or other agreements previously entered
into by MGA or any of its affiliates.
(f) The Acquired Assets contain all components, programs or
utilities required for the operation or execution of the MGA Products.
(g) MGA has not transferred ownership of or granted any license of
or right to use or authorized the retention of any rights to use any MGA
Intellectual Property to any other Person other than pursuant to the terms of
the Assumed Agreements set forth on Exhibit A hereto.
(h) MGA is not, and following the Closing Pharsight will not be,
required to make or accrue any royalty payment to any third party in connection
with the sale, distribution, license, transfer or other disposition or
exploitation of any of the Acquired Assets.
(i) There are no contracts, licenses or agreements between MGA and
any other Person with respect to MGA Intellectual Property under which there is,
to Sellers' knowledge, any dispute or any threatened dispute regarding the scope
of such agreement, or performance under such agreement including with respect to
any payments to be made or received by MGA thereunder.
(j) Neither the MGA Products nor the use of the MGA Intellectual
Property (A) infringes upon or misappropriates the Intellectual Property of any
Person, (B) violates the rights of any Person (including rights to privacy or
publicity), or (C) constitutes unfair competition or trade practices under the
laws of any jurisdiction. There are no pending or, to Sellers' knowledge,
threatened claims against Sellers alleging any of the foregoing nor are Sellers
aware of any reasonable basis upon which any party might allege any of the
foregoing.
(k) Each software developer or other Person who has performed
services for MGA or otherwise assisted in the development of the MGA Products
has assigned to MGA any right, title and interest he or she may have in and to
the MGA Products and the use thereof.
(l) MGA and, to Sellers' knowledge, each prior owner of the MGA
Intellectual Property have taken and will take all reasonable security measures
to protect the secrecy, confidentiality and value of all Intellectual Property
Rights transferred in accordance with this Agreement and with the Co-Ownership
Assignment Agreement.
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(m) The Acquired Assets include all assets, properties and rights
necessary for compliance by Pharsight with all obligations relating to the
Assumed Liabilities.
(n) Except as set forth on Part 3.7(n) of the Disclosure Schedule,
(i) the MGA Restricted Software is an original work of MGA, and any third
parties with rights thereto have executed binding assignments of rights in favor
or MGA in or to the MGA Restricted Software; (ii) neither the MGA Restricted
Software nor, to Sellers' knowledge, the Trademarks (as defined in Section 4.3
of the Co-Ownership Agreement), nor any element thereof infringes the
Intellectual Property Rights of any third party; (iii) neither the MGA
Restricted Software nor any element thereof is subject to any restrictions or to
any mortgages, liens, pledges, security interests, encumbrances or
encroachments; (iv) the MGA Restricted Software and related documentation
delivered pursuant to Section 3 of the Co-Ownership Agreement is complete,
accurate and current as of the date hereof; (v) to the knowledge of Sellers, the
Trademarks (as defined in Section 4.3 of the Co-Ownership Agreement) licensed
pursuant to Section 4.3 of the Co-Ownership Agreement do not infringe the
Intellectual Property Rights of any third party; and (vi) MGA has not granted,
directly or indirectly, any rights or interest in the MGA Restricted Software to
third parties that are inconsistent with the rights assigned to Pharsight herein
and under the Co-Ownership Agreement.
3.8 Ownership Transfer. Ownership of and all rights to all versions of the
Acquired Assets (other than the one-half ownership interest of MGA in and to the
MGA Restricted Software) will be transferred from MGA to Pharsight at the
Closing; all copies of the MGA Unrestricted Software in the possession of
Sellers or under their control will be transferred to Pharsight at the Closing;
and neither Sellers nor any third party under any Seller's control will have
retained any copies of the MGA Unrestricted Software. Co-ownership of and
certain rights to the MGA Restricted Software all as more fully set forth in the
Co-Ownership Agreement, will be transferred from MGA to Pharsight at the
Closing.
3.9 Litigation. There is no claim, dispute, action, proceeding (including
arbitration), suit or appeal, or investigation, at law or in equity, pending
(other than those, if any, with respect to which service of process or similar
notice has not yet been made and which are not within Sellers' knowledge) or, to
Sellers' knowledge, threatened against any Seller or involving any of the
Acquired Assets before any court, agency, authority, arbitration panel or other
tribunal that would have a Material Adverse Effect. There is no outstanding
order, writ, injunction or decree of any court, agency, authority, arbitration
panel or other tribunal, and MGA is not in default with respect to any notice,
order, writ, injunction, or decree, in each case relating to, or affecting the
Acquired Assets or the Assumed Liabilities.
3.10 Environmental Matters. To Sellers' knowledge, MGA has at all times
been in compliance with, and is not currently in violation of, any Legal
Requirement relating to the environment or occupational health and safety, and
to Sellers' knowledge, no material expenditures are or will be required in order
to comply with any such existing Legal Requirement. Sellers have no basis to
expect, nor has any of them or any other Person for whose conduct they are or
may be held to be responsible received, any actual or threatened order, notice,
or other communication from (i) any governmental body, private citizen acting in
the public interest or any other Person, or (ii) the current or prior owner or
operator of MGA's properties, of any actual or potential violation or failure to
comply with any Legal Requirement
12
relating to the environment or occupational health and safety, 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 properties of MGA
(whether real, personal, or mixed) in which any of Sellers has had an interest,
or with respect to any property at or to which hazardous materials were
generated, manufactured, refined, transferred, imported, used, or processed by
Sellers or any other Person for whose conduct they are or may be held
responsible, or from which hazardous materials have been transported, treated,
stored, handled, transferred, disposed, recycled or received. Sellers have made
all filings with governmental bodies or agencies, voluntary or involuntary,
relating to the environment which may be necessary or appropriate to mitigate
any exposure to liabilities arising from activities related to the environment
or under Legal Requirements related to the environment. Sellers have delivered
to Pharsight true and complete copies and results of any reports, studies,
analyses, tests, or monitoring possessed or initiated by Sellers pertaining to
hazardous materials or hazardous activities in, on, or under the properties of
MGA, or concerning compliance by Sellers or any other Person for whose conduct
they are or may be held responsible, with any Legal Requirement relating to the
environment.
3.11 Employment Matters. Pharsight will not become liable to any employee
of MGA, as a result of the transactions contemplated by this Agreement, for any
obligations under any employment contracts, any pension, bonus, profit-sharing,
stock option or other arrangement providing for employee remuneration or
benefits of MGA, or, to the knowledge of Sellers, under the Employee Retirement
Income Security Act of 1974, other than pursuant to contracts entered into
separately and directly between Pharsight and any such employees, if any.
Sellers and, to the knowledge of Sellers, MGA's officers and directors have (i)
used their best efforts to support Pharsight's offers of employment to MGA
employees who Pharsight desires to employ and to secure for Pharsight the
employment of such MGA employees, and (ii) have taken no actions which would
discourage such MGA employees from accepting such employment or otherwise have
the effect of impeding the efforts of Pharsight to secure employment of such MGA
employees.
3.12 Use Of Office Facilities. MGA has maintained the MGA Facility in
material compliance with MGA's lease of the MGA Facility. The MGA Facility is in
good condition and fit for the purposes for which MGA uses the MGA Facility,
ordinary wear and tear excepted. MGA has obtained all necessary permits and
approvals required for the use of the MGA Facility as is currently being used,
and the transactions contemplated by this Agreement will not cause any such
permit to be canceled or otherwise affected so that Pharsight will not have the
full benefit of such permits or approvals. Since March 12, 1998, MGA has not
removed or allowed the removal of any of the items or materials identified in
Section 1.1(f) from the MGA Facility, other than in the normal course of
business operations.
3.13 Brokers' Fees. No Seller has agreed or become obligated to pay, or
has taken any action that might result in any party claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the transactions contemplated by this Agreement.
3.14 Compliance with Bulk Sales Laws. Sellers have taken all actions
necessary for the sale, transfer and assignment of the Acquired Assets by MGA to
Pharsight hereunder and for
13
the consummation of the other transactions contemplated hereby to comply with
the bulk sales laws of all applicable jurisdictions.
3.15 Underlying Documents. Copies of all documents listed or described in
the Disclosure Schedule and the Exhibits hereto have been furnished to
Pharsight. All such documents are true, correct and complete copies, and there
are no amendments or modifications thereto.
3.16 Investment Representation. MGA with respect to the Promissory Note
referenced in Section 2.1(b), and each of Xxxxxxxx and Xxxxxxxx with respect to
the shares of Pharsight Common Stock referenced in Section 2.1(c) (collectively,
the "Securities"):
(a) taking into account the personnel and resources such Seller can
practically bring to bear on the acquisition of such Securities, either alone or
together with the advice of such Seller's purchaser representative, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in shares presenting an investment
decision like that involved in the acquisition of such Securities, and has
requested, received, reviewed and considered, either alone or with such Seller's
purchaser representative, all information such Seller deems relevant in making
an informed decision to acquire such Securities;
(b) is acquiring such Securities for such Seller's own account for
investment only and with no present intention of distributing any of such
Securities or any arrangement or understanding with any other persons regarding
the distribution of such Securities except in compliance with Section 3.16(c).
(c) will not, directly or indirectly, offer, sell, pledge, transfer
or otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of such Securities acquired hereunder except in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
applicable blue sky laws, and the rules and regulations promulgated thereunder.
3.17 Full Disclosure. Neither this Agreement, the Ancillary Agreements,
the Disclosure Schedule or the Exhibits hereto, nor, to Sellers' knowledge, any
other documents delivered by Sellers in connection with this Agreement contains
any untrue statement of a material fact or omits a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they were made, not misleading, and, to Sellers' knowledge, there is no
fact that has not been disclosed to Pharsight that materially and adversely
affects or could reasonably be anticipated to materially and adversely affect
the Acquired Assets, or the operation of the Acquired Assets by Pharsight as
currently conducted by MGA.
4. REPRESENTATIONS AND WARRANTIES OF PHARSIGHT. Pharsight represents and
warrants to Sellers that the statements contained in this Section 4 are correct
and complete as of the Closing.
4.1 Organization of Pharsight. Pharsight is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California. Pharsight has all requisite corporate power and authority to own and
operate its properties and assets, and to carry
14
on its business as presently conducted and as presently proposed to be
conducted. Pharsight is duly qualified and is authorized to do business and is
in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the business of Pharsight.
4.2 Authorization of Transaction. Pharsight has full power and authority
to execute and deliver this Agreement and the Ancillary Agreements to which it
is a party and to perform its obligations hereunder and thereunder. Without
limiting the generality of the foregoing, Pharsight has taken all corporate and
other action required for the execution, delivery and performance of this
Agreement and the Ancillary Agreements to which it is a party. This Agreement
and each of the Ancillary Agreements to which it is a party constitutes the
valid and legally binding obligation of Pharsight, in each case enforceable in
accordance with its terms. The persons who have executed this Agreement and the
Ancillary Agreements to which Pharsight is a party on behalf of Pharsight have
been duly authorized to do so.
4.3 Non-Contravention. Neither the execution and the delivery of this
Agreement or the Ancillary Agreements, nor the consummation of the transactions
contemplated hereby or thereby, shall (i) violate any (A) statute, regulation,
rule, judgment, order, decree, stipulation, injunction, charge, or other
restriction of any government, governmental agency, or court to which Pharsight
is subject or (B) any provision of the articles of incorporation or bylaws of
Pharsight or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require a notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest, or other arrangement to which Pharsight is a party or by which it is
bound or to which any of its assets is subject, except where the violations,
conflicts, breaches, defaults, accelerations, terminations, modifications,
cancellations or failures to give notice, individually or in the aggregate,
would not have a material adverse effect on the business of Pharsight. Pharsight
need not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
parties to consummate the transactions contemplated by this Agreement, except
where the failure to do so, individually or in the aggregate, would not have a
material adverse effect on the business of Pharsight.
4.4 Brokers' Fees. Pharsight has not agreed or become obligated to pay, or
has taken any action that might result in any party claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with any of the transactions contemplated by this Agreement.
4.5 Acknowledgement. Pharsight understands that MGA may in the future
desire to sell, transfer, assign or license any and all rights, including
Intellectual Property Rights, to the MGA Restricted Software to a third party
for use in the MGA Fields. This acknowledgement does not constitute a consent by
Pharsight to any such action or act in any way restrict or diminish Pharsight's
rights under this Agreement, the Co-Ownership Agreement or any other agreement
contemplated hereby.
15
5. POST-CLOSING COVENANTS AND AGREEMENTS.
5.1 Cooperation; Further Assurances. Each party hereto shall, at all times
following the Closing, not take any action inconsistent with the satisfaction of
its obligations hereunder, and shall promptly take any further action necessary
or desirable to carry out the purposes of this Agreement and the Ancillary
Agreements (including the execution and delivery of such further instruments and
documents) as the other party may reasonably request.
5.2 Delivery; Removal of Excluded Assets.
(a) Upon execution of this Agreement, MGA shall provide to Pharsight
five (5) Golden Masters of the Object Code of the MGA Products, two (2)
electronic copies of the Source Code corresponding to the Golden Master Object
Code of the MGA Products, and five (5) Golden Masters and two (2) printed copies
of any end-user documentation for the MGA Products. Without limiting the
foregoing, MGA's delivery shall include everything Pharsight needs to recreate
the most current released version, and every supported prior version, of each of
the MGA Products for all currently supported platforms, including copies of all
firmware, installation programs, source code control archives, development
tools, test plans, test files, test data, build scripts, file specifications,
design and implementation documents, interface specifications, requirements
specifications, data bases, utilities, and bug databases.
(b) Sellers shall promptly put all of the Excluded Assets in the
subleased portion of the MGA Facility.
5.3 Notice of Developments. Each party shall give prompt written notice to
the other parties of any material development that could have a Material Adverse
Effect. Each party shall give prompt written notice to the other parties of any
material development affecting the ability of the parties to perform their
post-Closing obligations under this Agreement.
5.4 Enforcement of Rights. In connection with the enforcement of its
rights of ownership of the Acquired Assets and the enjoyment thereof, Pharsight
may bring actions in the name of Sellers, or cause Sellers to join any such
action as a party, as reasonably necessary, provided that Pharsight shall
indemnify Sellers with respect thereto unless and to the extent such actions are
based upon facts constituting a material breach of a representation, warranty or
covenant of any of Sellers hereunder or under any of the Ancillary Agreements.
5.5 Delivery of Notices. After the Closing, each of Sellers shall promptly
forward to Pharsight any and all notices and correspondence which it may receive
pertaining to the Acquired Assets, and MGA shall remain responsible for the
maintenance of all Consent-Required Assets retained by MGA pursuant to Section
2.5 as a consequence of the failure to obtain a required consent of a third
party until such time as the applicable consent is obtained.
5.6 Payment by Pharsight of Certain of Sellers' Costs. Pharsight shall pay
directly or reimburse Sellers for, up to an aggregate of $250,000, reasonable,
documented out-of-pocket legal, accounting and severance costs incurred by
Sellers and tendered to Pharsight for payment prior to or in the twelve months
following the Closing, in connection with the sale of the Acquired Assets
hereunder and the termination of employment of employees of MGA to whom
Pharsight determines not to offer employment; provided, however, that Pharsight
shall not be
16
obligated to pay any amount in connection with the termination of any MGA
employee hereunder unless (i) Sellers shall have obtained from such employee and
delivered to Pharsight a general release of liability, in form and substance
reasonably satisfactory to Pharsight, executed by and enforceable against such
terminated employee releasing Pharsight from any liabilities Pharsight may have
to such employee, and (ii) Sellers shall have complied with all Legal
Requirements in connection with the termination of such MGA employee, including
with respect to obtaining such general release. Following such twelve-month
period Pharsight shall have no further obligations under this Section 5.6.
5.7 Reimbursement of Remaining Amounts. Pharsight will pay to MGA, on the
date twelve months following the Closing, the sum of $250,000 less all amounts
paid by Pharsight under Section 5.6 (the "Remaining Amount); provided, however,
that Pharsight shall have no obligation to pay the Remaining Amount if, on such
date, (i) Pharsight shall not have received a general release from Xxxxxxx
Xxxxxxxx, if terminated on or prior to such date, in form and substance as
referred to in the proviso of Section 5.6, and (ii) Pharsight shall not have
received a general release from Xxxx Sale, if terminated on or prior to such
date, in form and substance as referred to in the proviso of Section 5.6;
provided further, that if the provisions of the previous proviso have been
complied with, Pharsight shall only be obligated to pay the proportion of the
Remaining Amount as equals the Remaining Amount multiplied by the Release
Termination Ratio. The "Release Termination Ratio" shall be (i) the total number
of MGA employees on the date hereof that are terminated by MGA on or prior to
one year from the date hereof and from which Pharsight has received a general
release in form and substance as referred to in the proviso of Section 5.6,
divided by(ii) the total number of MGA employees on the date hereof that are
terminated by MGA on or prior to one year from the date hereof.
6. INDEMNIFICATION.
6.1 Indemnification and Reimbursement of Pharsight's Losses. Sellers,
jointly and severally, shall indemnify Pharsight and its affiliates, together
with their respective officers, directors and employees (each a "Sellers'
Indemnitee") against Losses (as defined below) as set forth in this Section 6.
If a Sellers's Indemnitee shall have suffered a Loss by reason of (i) the breach
of any of the representations or warranties made by Sellers herein, (ii) any
liabilities under the Assumed Agreements arising prior to the Closing, whether
or not disclosed to Pharsight prior to the Closing, (iii) any liability of
Sellers that is not an Assumed Liability, including any successor liability to
MGA employees or former MGA employees not hired by Pharsight to which Pharsight
may become subject as a result of the purchase of the Acquired Assets, or (iv)
any breach of a covenant of Sellers hereunder, Sellers's Indemnitee shall be
reimbursed for such Loss by Sellers as set forth in this Section 6. For purposes
hereof, "Loss" shall mean any losses, liabilities, claims, damages and expenses
incurred or reasonably expected to be incurred, including penalties, fines,
interest, amounts paid in settlement and reasonable fees and disbursements of
counsel, and expenses incurred in connection with any investigation, action,
suit or proceeding instituted against an indemnified party, including in
connection with any action taken to enforce such indemnified party's rights
under this Agreement or the Ancillary Agreements. Notwithstanding the foregoing,
Sellers shall have no obligation to indemnify Sellers's Indemnitees for Losses
which, cumulatively, total less than $50,000;
17
provided, however, that if cumulative Losses equal or exceed said $50,000, then
Sellers shall indemnify Sellers's Indemnitees for all of such Losses, including
such $50,000. The total of all Liquidated Claims (as defined below) actually
paid by Xxxxxxxx and/or Xxxxxxxx (but not MGA) under this Section 6, other than
Claims or Third Party Claims based upon fraud or willful misconduct by Xxxxxxxx
or Xxxxxxxx, shall be limited to an aggregate of $4.5 million, including any
payments contemplated under Section 6.8 of this Agreement withheld or set off by
Pharsight.
6.2 Indemnification and Reimbursement of Sellers's Losses. Pharsight shall
indemnify Sellers, together with MGA's affiliates, directors and employees (each
a "Pharsight's Indemnitee") against Losses as set forth in this Section 6. If a
Pharsight's Indemnitee shall have suffered a Loss by reason of (i) the breach of
any of the representations or warranties made by Pharsight herein, (ii) any
Assumed Liability, provided such Assumed Liability is not related to or arising
from any breach of a covenant, representation or warranty of Sellers or any act
or omission by Sellers involving willful misconduct, fraud or bad faith, or
(iii) any breach of a covenant of Pharsight hereunder, Pharsight's Indemnitee
shall be reimbursed for such Loss by Pharsight as set forth in this Section 6.
Notwithstanding the foregoing, Pharsight shall have no obligation to indemnify
Pharsight's Indemnitees for Losses which, cumulatively, total less than $50,000,
provided however that if cumulative Losses equal or exceed said $50,000, then
Pharsight shall indemnify Pharsight's Indemnitees for all of such Losses,
including such $50,000.
6.3 Payment. At such time as the reimbursable amount of a Claim (as
defined below) or a Third Party Claim (as defined below) has been determined in
accordance with this Section 6 (a "Liquidated Claim"), the indemnifying party
shall immediately pay the Person to be indemnified hereunder (an "Indemnitee")
the amount of the Liquidated Claim. No forbearance of an Indemnitee in demanding
payment from the indemnifying party shall act as a waiver of any right of an
Indemnitee to receive payment from the indemnifying party, nor shall it relieve
the indemnifying party of any obligation to an Indemnitee under this Agreement.
6.4 Notice of Claims. In the event an Indemnitee has any claim for
indemnification under Section 6.1 or Section 6.2 (a "Claim"), it shall give
prompt written notice thereof to the indemnifying party, including in such
notice a brief description of the facts upon which such claim is based and the
amount thereof.
6.5 Third Party Claims.
(a) If any third party shall notify an Indemnitee with respect to
any matter (a "Third Party Claim") that may give rise to a claim for
indemnification against a party hereto (the "Indemnifying Party") under this
Section 6, then the Indemnitee shall promptly notify the Indemnifying Party
thereof in writing; provided, however, that no delay on the part of the
Indemnitee in notifying the Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder, unless (and then solely to the extent that)
the Indemnifying Party is prejudiced.
(b) The Indemnifying Party shall have the right to defend the
Indemnitee against the Third Party Claim with counsel of the Indemnifying
Party's choice reasonably
18
satisfactory to the Indemnitee so long as: (A) the Indemnifying Party notifies
the Indemnitee within 15 days after the Indemnitee has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnitee as
required by (and subject to the limitations of) this Section 6 for Losses
arising out of, relating to, in the nature of, or caused by the Third Party
Claim; (B) the Indemnifying Party provides the Indemnitee with evidence
reasonably acceptable to the Indemnitee that the Indemnifying Party will have
the financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder; (C) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief; and (D)
the Indemnifying Party conducts the defense of the Third Party Claim actively
and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 6.5(b) above: (A) the
Indemnitee may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (B) the Indemnitee shall
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably); and (C) the Indemnifying
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnitee (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 6.5(b) above is or
becomes unsatisfied; (A) the Indemnitee may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim in any manner it reasonably may deem appropriate (and the Indemnitee
need not consult with or obtain any consent from, any Indemnifying Party in
connection therewith); (B) the Indemnifying Party shall reimburse the Indemnitee
promptly and periodically for the reasonable costs of defending against the
Third Party Claim (including attorneys' fees and expenses), and (C) the
Indemnifying Party shall remain responsible for any Losses the Indemnitee may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section 6.
6.6 Disputed Claims. If the Indemnifying Party objects to any Claim, it
shall give written notice of such objection and brief statement of the grounds
of such objection to Indemnitee within 20 business days after notice is
received. If no such objection is given, such Claim, as the case may be, shall
be a Liquidated Claim. If such objection is made, Indemnitee and the
Indemnifying Party shall meet and use their best efforts to settle the dispute
in writing that when resolved shall be a Liquidated Claim.
6.7 Survival. The provisions of this Section 6 shall survive the Closing.
Notwithstanding anything to the contrary in this Agreement, no Claim or Third
Party Claim may be asserted by a Sellers's Indemnitee under this Section 6: (i)
with respect to Losses arising in connection with the obligation to pay taxes,
following the date of the expiration of the applicable statute of limitations
for such obligation; (ii) with respect to a Loss arising out of or in connection
with an Assumed Agreement, following the termination of such Assumed Agreement
in accordance with its terms; (iii) with respect to a Loss arising out of or in
connection with a breach of a representation or warranty (A) set forth in
Section 3.7(n) hereof or (B) relating specifically to a claim that distribution
of the MGA Unrestricted Software relating to ACSL
19
Biomed infringes upon the Intellectual Property Rights held or formerly held by
Georgetown University, following five years from the date of this Agreement; and
(iv) with respect to all other Losses, following two years from the date of this
Agreement. No Claim or Third Party Claim may be asserted by a Pharsight's
Indemnitee under this Section 6, other than Losses arising with respect to the
Assumed Liabilities, following two years from the date of this Agreement. Any
Claim or Third Party Claim asserted within the appropriate time periods
specified above shall be indemnifiable hereunder regardless of whether such
claims or Third Party Claims are reduced to Liquidated Claims within such time
periods. Notwithstanding the foregoing provisions of this Section 6.7, an
Indemnitee may assert a Claim or Third Party Claim under this Section 6 with
respect to Losses that are the result of fraud or willful misconduct by the
Indemnifying Party at any time within the applicable statute of limitations for
such Claim or Third Party Claim.
6.8 Right of Setoff. Pharsight shall be entitled to set off any amount
payable by Pharsight under the Promissory Note or the Noncompetition Agreements
referred to in Section 2.4(b), or the amounts payable under Sections 5.6 and 5.7
hereof, in satisfaction, partially or fully as the case may be, of Liquidated
Claims hereunder, and to withhold any such amounts with respect to Claims or
Third Party Claims not reduced to Liquidated Claims; provided, however, that any
and all such amounts so retained by Pharsight as a set off pursuant to this
Section 6.8 shall reduce the indemnification obligation of the Sellers hereunder
by such amount.
6.9 Sole Remedy; Co-Ownership Agreement Separate. The right of each party
hereto to assert Claims and receive indemnification payments pursuant to this
Section 6 shall be the sole and exclusive right and remedy exercisable by such
party with respect to any breach by the other party hereto of any representation
or warranty under this Agreement or failure to perform any covenant required to
be performed by such other party under this Agreement; provided, however, that
the above shall not prevent a party hereto from seeking specific performance of
a covenant which another party hereto has failed to perform under this
Agreement. The rights and remedies of the parties to the Co-Ownership Agreement
are as set forth in the Co-Ownership Agreement and are not governed by, and are
separate from, this Section 6; provided, however, that no party shall be
entitled to indemnification for the same Loss under both this Agreement and the
Co-Ownership Agreement except and only to the extent that such entitlement would
provide coverage for the full amount of the Loss suffered.
7. MISCELLANEOUS.
7.1 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (at or
after the Closing) for the purpose of carrying out or evidencing any of the
transactions contemplated by this Agreement.
7.2 No Third Party Beneficiaries. Except as otherwise specified herein,
this Agreement shall not confer any rights or remedies upon any person other
than the parties and their respective successors and permitted assigns.
20
7.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the parties and supersedes any
prior understandings, agreements, or representations by or between the parties,
written or oral, that may have related in any way to the subject matter hereof.
7.4 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. Sellers shall not assign any of their rights, interests
or obligations hereunder without the prior written consent of Pharsight, which
consent shall not be unreasonably withheld. Pharsight shall not assign any of
its rights, interests or obligations hereunder without the prior written consent
of MGA, which consent shall not be unreasonably withheld.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.7 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received (i) when delivered by hand, (ii)
five days after deposit in the United States mail if by certified mail, (iii) on
the next business day if sent by courier or express delivery service that
guarantees next business day delivery, or (iv) upon confirmation if sent by
facsimile, to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
parties hereto):
If to Sellers:
XXXXXXXX AND XXXXXXXX ASSOCIATES, INC.
000 X Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
Copy to:
Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Pharsight:
PHARSIGHT CORPORATION
000 Xxxxxxxxxx Xxx.
00
Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
Copy to:
Cooley Godward LLP
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
7.8 Governing Law.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
(b) Any dispute, claim or controversy of any nature arising out of
or relating to this Agreement, including without limitation any action or claim
based on tort, contract, statute, or for any other cause of action, and which
relates in any way to the interpretation, effect, termination, validity,
enforcement, performance and/or breach of this Agreement, shall be resolved by
final binding arbitration administered by the American Arbitration Association
("AAA"). The arbitration shall be conducted before a panel of three arbitrators
under the commercial arbitration rules of the AAA and shall be held at an AAA
facility (i) in Boston, Massachusetts, if brought by Pharsight, and (ii) in
Santa Xxxxx County, California, if brought by Sellers. The parties hereto agree
that all arbitrators serving on such panel must be available to serve on the
panel in accordance with the timetable of the arbitration.
(c) Not for the adjudication of any matters (other than judicial
review for fraud or undisclosed bias), but for the enforcement of an arbitration
award (which shall be brought in California if Pharsight is enforcing the
arbitration award or in Massachusetts if one or more Sellers are enforcing the
arbitration award) or the granting of injunctive relief (which shall be brought
in Massachusetts if Pharsight is seeking injunctive relief or in California if
one or more Sellers are seeking injunctive relief), the parties hereto
irrevocably elect as the sole two judicial forums for the adjudication of any
matters arising under or in connection with this Agreement, and consent to the
jurisdiction of, the courts of the State of California and the Commonwealth of
Massachusetts.
22
7.9 Waiver.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
7.10 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
7.11 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
7.12 Expenses. Subject only to Sections 5.6 and 5.7, each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that are incurred by such party
in connection with the transactions contemplated by this Agreement, including
all fees, costs and expenses incurred by such party in connection with or by
virtue of (a) the investigation and review conducted by Pharsight and its
representatives with respect to the Acquired Assets, (b) the negotiation,
preparation and review of this Agreement (including the Disclosure Schedule) and
all agreements, certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the transactions contemplated by
this Agreement, and (c) the preparation and submission of any filing or notice
required to be made or given in connection with any of the transactions
contemplated by this Agreement, and the obtaining of any consent required to be
obtained in connection with any of such transactions.
7.13 Transfer Taxes. Any and all sales taxes, use taxes, transfer taxes,
filing fees and similar taxes, fees, charges and expenses required to be paid in
connection with the transactions contemplated by this Agreement shall be paid by
Sellers.
7.14 Confidentiality of Information. All information given to a party by
the other party in connection with this Agreement ("Confidential Information")
shall be used only for purposes related to the consummation of the transactions
contemplated herein, and shall be disclosed to the receiving party's employees
and representatives only on a "need to know" basis
23
in connection with such purposes. If the Closing does not occur for any reason,
each party shall maintain in confidence all Confidential Information of the
other party, shall return to the disclosing party or destroy all tangible
embodiments (and all copies) of such Confidential Information and shall not use
such Confidential Information for any purpose; provided, however, that the
forgoing restrictions shall not apply to: (i) information that is or becomes a
matter of public knowledge through no act or failure to act of the receiving
party, its representatives or employees, (ii) information that becomes available
to the receiving party from a source not under an obligation of confidentiality
to the disclosing party, or (iii) information that was known to receiving party
prior to its disclosure to the receiving party by the disclosing party.
7.15 Construction. The language used in this Agreement shall be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Except as otherwise specified, references in this Agreement
to Sections are to Sections of this Agreement. Except where the context clearly
requires to the contrary, "including" shall mean "including, without
limitation."
24
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement on the date first written above.
PHARSIGHT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------
Title: President
--------------------------------
XXXXXXXX AND XXXXXXXX ASSOCIATES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxxx
---------------------------------
Title: illegible
--------------------------------
/s/ Xxxxxx E. L. Xxxxxxxx
--------------------------------------
Xxxxxx E. L. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx
25
EXHIBIT A
ASSUMED AGREEMENTS
1. Lease, dated November 9, 1990, between Concord Office Realty Trust and MGA,
relating to the MGA Facility.
2. The following Customer Agreements, which are all shrink-wrap licenses, a form
of which has been provided to Pharsight:
Customer Product Units Sold By Date
Pharmacia & Upjohn Biomed 3 MGA Nov-96
US/FDA Biomed 1 MGA Nov-96
U Degli St. Udine Biomed 1 MGA Dec-96
Xxxxxxx XxXxxxx Biomed 1 MGA Jun-97
Pfizer Biomed 1 MGA Aug-97
Glaxo-Wellome Biomed 1 RDL Sep-97
GloboMax Biomed 3 MGA Dec-97
Sanofi Biomed 2 MGA Jan-98
Rohm & Xxxx Xxx 0 XXX Xxx-00
Xxxxx Xxxxxxx Biomed 0 XXX Xxx-00
Xxxxx, Xxxxxxx Model 7 RDL
CIIT ACSL 3 MGA
CIIT Optimize 3 MGA
Xxx Xxxxx ACSL 1 MGA
Glaxo ACSL 1 MGA
Globomax Optimize 3 MGA
ICF Xxxxxx Model 9 MGA
Mantech Env Tech ACSL 6 MGA
Mantech Env Tech Model 5 MGA
Monsanto Model 9 MGA
Monsanto Optimize 9 MGA
Rhone Poulenc ACSL 5 RDL
Rhone Poulenc Optimize 1 MGA
EPA ACSL 4 MGA
FDA ACSL 4 MGA
26
EXHIBIT B
EXCLUDED ASSETS
1 Silicon Graphics O2 (xxxxx.xxx.xxx)
32Mb of memory
internal 2 GB disk
CDROM player
17" color monitor
running Irix 6.3
2. DEC Alphastation 200 4/166 (xxxxx.xxx.xxx)
64Mb of memory
2 internal 1GB disks
CDROM Player
17" color monitor
running Digital Unix 4.0c & Open VMS 6.2
3. Sun IPX (xxxxxx.xxx.xxx)
64MB of memory
internal 1 GB disk
17" color monitor
running SunOS 4.1.3
4. HP 710 (9000 Series) (xxxxxx.xxx.xxx)
32 MB of memory
internal 2 GB disk
external CDROM Player
19" BW monitor
running HPUX 10.20
5. VaxStation 4000 (xxx.xxx.xxx)
16MB memory
1 GB internal disk
vt100 monitor
running VMS 6.2
6. PC running Linux used as Web Server
P-120 (xxx.xxx.xxx)
32MB of memory
2 GB internal disk
CDROM player
14" color monitor
running Linux (kernel 2.30)
27
CD Writer and the PC it is attached to.
Floppy Disk Duplicator the PC it is attached to.
Sharp P-120 laptop
Filing cabinets holding MGA customer files and simulation library articles (16
file cabinets)
Shelving holding documentation in shipping department.
28
EXHIBIT C
ASSIGNMENT OF COPYRIGHT
For good and valuable consideration which has been received, the
undersigned sells, assigns and transfers to Pharsight, a California corporation,
and its successors and assigns, all right, title and interest in the copyright
in and to the following work, which was created by the following indicated
author(s):
Title:____________________________________
Author(s):________________________________
________________________________
Copyright Office Identification No. (if any):_______________________________
and all of the right, title and interest of the undersigned, vested and
contingent, therein and thereto.
Executed this ________________ day of _______________ , 1998.
Signature:_______________________________________
Printed Name:____________________________________
1
EXHIBIT D
TERMINATED DISTRIBUTION AGREEMENTS
1. Distribution Agreement with Xxxxx International Supply, dated July 2,
1991.
2. Distribution Agreement with JTT Corporation, dated June 10, 1993
3. Distribution Agreement with Vanguard Information Company, dated November
1, 1992.
4. Distribution Agreement with Inpol Company Ltd., dated April 17, 1992.
5. Distribution Agreement with Industrial and Offshore Computer Services Pte
Ltd., dated July 13, 1992.
6. Distribution Agreement with Xxxxxx Scientific Software Pty Ltd., dated
January 10, 1995.
7. Distribution Agreement with Xxxxx Advanced Technology, Inc., dated
November 11, 1990.
8. Distribution Agreement with Xxxxxx X. Pekelman and/or Omikron Delta, dated
November 5, 1985.
2
