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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 31, 1999
PREMIER RESEARCH WORLDWIDE, LTD.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 0-29100 22-3264604
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
30 S. 17th Street, Philadelphia, Pennsylvania 19103
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (215) 972-0420
<PAGE>
Item 2: Acquisition or Disposition of Assets.
The Registrant on December 31, 1999 sold the business and certain of
the assets of its trials management and clinical data management operations of
its contract research organization (the "Division"). The assets sold include the
Registrant's rights to the names "Premier Research Worldwide" and "Premier
Research" and the Division's plant and equipment, contracts, agreements and
leases, trade receivables, customer lists and goodwill.
The consideration for such sale is up to $18,000,000, of which
$1,000,000 was paid in cash on December 31, 1999 and $8,000,000 is to be paid in
cash at January 31, 2000, with the balance of the consideration payable over
time, subject to adjustment and earn-out. In addition, certain specific
liabilities of the Division were assumed as part of the transaction. Such
purchase price was arrived at by negotiations between the Registrant and the
purchaser of the Division, SCP Communications, Inc.
SCP Communications, Inc., the purchaser of the Division, has no
material relationship with the Registrant or any of its affiliates, directors or
officers, or any associate of any such director or officer.
Item 7: Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements of Business Acquired
Not Applicable.
(b) Pro Forma Financial Information
Premier Research Worldwide, Ltd. and Subsidiaries
Index to Unaudited Pro Forma Financial Statements
Basis of Presentation
Unaudited Pro Forma Consolidated Statement of
Operations for the nine months ended September
30, 1999
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Unaudited Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1998
Unaudited Pro Forma Consolidated Balance Sheet as of
September 30, 1999
Notes to Unaudited Pro Forma Financial Statements
(c) Exhibits
Exhibit 10.1 Asset Purchase Agreement dated
------------ December 15, 1999
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DATED: December 31, 1999
PREMIER RESEARCH WORLDWIDE, LTD.
By: s/ Joel Morganroth
--------------------
Joel Morganroth, M.D.,
Chairman and
Chief Executive Officer
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PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
INDEX TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Basis of Presentation
Unaudited Pro Forma Consolidated Statement of Operations for the nine months
ended September 30, 1999
Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1998
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1999
Notes to Unaudited Pro Forma Financial Statements
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PREMIER RESEARCH WORLDWIDE, LTD AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
BASIS OF PRESENTATION
On December 31, 1999, the Company sold the business and certain of the
assets of its domestic clinical trials management and clinical data management
operations (the "Division"). The consideration for such sale could total
$18,000,000, of which $1,000,000 was paid in cash on December 31, 1999 and
$8,000,000 will be paid on January 31, 2000, with the balance payable over time,
subject to adjustments and earn-outs. In addition, certain specific liabilities
of the Division were assumed as part of the transaction.
The Pro Forma Consolidated Statements of Operations for the nine months
ended September 30, 1999 and for the year ended December 31, 1998 present the
Company's results of operations, assuming that the divestiture of the Division
occurred as of the beginning of the periods presented. The Pro Forma
Consolidated Balance Sheet as of September 30, 1999 presents the Company's
financial position assuming that the divestiture had been completed as of that
date. The Pro Forma Financial Statements do not consider any adjustments for the
Company's international clinical trials management and clinical data management
operations, which were curtailed during 1999.
The Pro Forma Consolidated Statements of Operations do not include: (i)
the gain the Company will record on the transaction, as the gain is a
nonrecurring item and not indicative of ongoing operations and (ii) an
adjustment to interest income, as such adjustment is not factually supportable.
The Pro Forma Consolidated Balance Sheet does not assume the receipt of any
contingent consideration that could total $9,000,000, which is payable over time
and subject to adjustments and earn-out provisions.
The Pro Forma Financial Statements should be read in conjunction with
the historical financial statements and related notes included in the Company's
1998 Annual Report on Form 10-K and Quarterly Report filed on Form 10-Q for the
period ended September 30, 1999. The Pro Forma Financial Statements are
presented for informational purposes only and are not intended to be indicative
of the results of operations that would have occurred had the divestiture been
consummated as of the beginning of the periods presented, nor are they intended
to be indicative of future results of operations or financial position.
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PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(in thousands, except per share amounts)
(a)
Actual Divestiture Pro Forma
-------- ----------- ---------
Revenues $ 39,984 $ 20,303 $ 19,681
Less: Reimbursed costs (8,026) (7,935) (91)
-------- -------- --------
Net revenues 31,958 12,368 19,590
-------- -------- --------
Costs and expenses:
Direct costs 13,891 6,384 7,507
Selling, general and administrative 14,325 4,811 9,514
Depreciation and amortization 1,658 192 1,466
-------- -------- --------
Total costs and expenses 29,874 11,387 18,487
-------- -------- --------
Income from operations 2,084 981 1,103
Other income, net 383 -- 383
-------- -------- --------
Income before income taxes 2,467 981 1,486
Income tax provision 987 392 595
-------- -------- --------
Net income $ 1,480 $ 589 $ 891
======== ======== ========
Basic net income per share $ 0.21 $ 0.13
Diluted net income per share $ 0.21 $ 0.12
Weighted average shares
outstanding -- basic 7,057 7,057
Weighed average shares
outstanding -- diluted 7,150 7,150
See Notes to Unaudited Pro Forma Financial Statements
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PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(in thousands, except per share amounts)
(a)
Actual Divestiture Pro Forma
-------- ----------- ---------
Revenues $ 38,134 $ 17,392 $ 20,742
Less: Reimbursed costs (6,327) (6,146) (181)
-------- -------- --------
Net revenues 31,807 11,246 20,561
-------- -------- --------
Costs and expenses:
Direct costs 13,847 5,374 8,473
Selling, general and administrative 16,165 5,324 10,841
Depreciation and amortization 1,606 288 1,318
-------- -------- --------
Total costs and expenses 31,618 10,986 20,632
-------- -------- --------
Income (loss) from operations 189 260 (71)
Other income, net 1,012 -- 1,012
-------- -------- --------
Income before income taxes 1,201 260 941
Income tax provision 480 104 376
-------- -------- --------
Net income $ 721 $ 156 $ 565
======== ======== ========
Basic net income per share $ 0.10 $ 0.08
Diluted net income per share $ 0.10 $ 0.08
Weighted average shares
outstanding -- basic 7,102 7,102
Weighed average shares
outstanding -- diluted 7,204 7,204
See Notes to Unaudited Pro Forma Financial Statements
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PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(in thousands, except share amounts)
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<CAPTION>
(b) Other
ASSETS Actual Divestiture Adjustments Pro Forma
------------ ------------ ------------ ------------
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 12,893 $ -- 1,000 (c) $ 13,893
Short-term investments 4,604 -- -- 4,604
Accounts receivable, net 10,963 (6,232) -- 4,731
Notes receivable -- -- 8,000 (c) 8,000
Prepaid expenses and other 1,486 -- -- 1,486
Deferred income taxes 159 -- -- 159
------------ ------------ ------------ ------------
Total current assets $ 30,105 (6,232) 9,000 $ 32,873
Property and equipment, net 4,408 (1,700) -- 2,708
Goodwill, net 1,923 -- -- 1,923
Other assets 1,023 -- -- 1,023
Deferred income taxes 2,644 -- (1,068) (d) 1,577
------------ ------------ ------------ ------------
$ 40,103 $ (7,932) $ 7,932 $ 40,104
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,520 $ (400) $ -- $ 1,120
Accrued expenses 3,273 (200) 200 (e) 3,273
Deferred revenues 4,583 (1,200) -- 3,383
------------ ------------ ------------ ------------
Total current liabilities 9,376 (1,800) 200 7,776
------------ ------------ ------------ ------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock-$10 par value, 500,000
shares authorized, none issued and
outstanding -- -- -- --
Common stock-$.01 par value,
15,000,000 shares authorized,
7,322,530 shares issued 73 -- -- 73
Additional paid-in capital 37,298 -- -- 37,298
Treasury stock, 499,800 shares at cost (2,711) -- -- (2,711)
Accumulated deficit (3,933) -- 1,600 (f) (2,332)
------------ ------------ ------------ ------------
Total stockholders' equity 30,727 -- 1,600 (f) 32,328
------------ ------------ ------------ ------------
$ 40,103 $ (1,800) $ 1,800 $ 40,104
============ ============ ============ ============
</TABLE>
See Notes to Unaudited Pro Forma Financial Statements
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PREMIER RESEARCH WORLDWIDE, LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(a) Represents the results of operations directly attributable to the Division
and certain centralized selling, general and administrative costs
specifically identified with the Division totaling $2,200,000 for the nine
months ended September 30, 1999 and $2,500,000 for the year ended December
31, 1998, respectively, that were historically included in a corporate
allocation.
(b) Eliminates the net assets of the Division as if the divestiture had been
completed as of the balance sheet date.
(c) The Company received, at closing, cash of $1 million and an $8 million note
which is payable on or before January 31, 2000. The Company could receive
future payments of up to $9 million based upon the Buyer's realization of
specified levels of working capital, backlog and the Division's revenues
for the year ended December 31, 2000. The Company has not included the
receipt of any contingent consideration due to the uncertainty surrounding
the amounts.
(d) Represents the estimated deferred tax provision on the estimated gain on
the sale of the Division.
(e) Represents estimated transaction costs, primarily professional fees.
(f) Represents the estimated net gain on the sale of the Division, based on the
consideration discussed in (c), net of transaction costs and income tax
provision.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of December
15th, 1999, by and between SCP COMMUNICATIONS, INC., a Delaware corporation (the
"Buyer"), and PREMIER RESEARCH WORLDWIDE, LTD., a Delaware corporation (the
"Seller"). Capitalized terms shall have the meanings ascribed to them in Section
12 of this Agreement and all references herein to Sections shall, unless
otherwise indicated, be references to Sections of this Agreement.
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires
to purchase from the Seller certain of the assets, subject to certain
liabilities as provided in this Agreement, of the Seller's trials management and
clinical data management operations of its Contract Research Organization (the
"Division"), upon the terms and subject to the conditions contained in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
herein contained, and for other good and sufficient consideration, the adequacy
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale.
Subject to the terms and conditions set forth in this
Agreement, at the Closing referred to in Section 3 hereof, the Seller shall
sell, assign, transfer and deliver to the Buyer, and the Buyer shall purchase,
acquire and take assignment and delivery of, the following assets of the
Division (all of which assets are herein referred to collectively as the
"Acquired Assets"):
(a) Seller's rights to the name and associated trademarks
"Premier Research Worldwide" and "Premier Research" (the "Marks"); provided that
the Buyer grants the Seller a royalty-free license to use the Marks as its legal
corporate name and to differentiate itself from the Buyer as indicated below,
until such time as the Seller's Certificate of Incorporation is amended to
change its name to one not including the word "Premier". The Seller covenants to
use its best efforts to obtain approval of such amendment at its next annual
meeting of shareholders, which it covenants to hold as early as practicable in
the year 2000. Pending such time (and for a reasonable transition period
thereafter not to exceed thirty (30) days), both parties covenant to take such
action as may be necessary to avoid confusion between the Seller and the
business of the Division hereby purchased by the Buyer, including for example by
the Seller identifying its business as "'A' of Premier Research Worldwide, Ltd."
[where A refers to a name not including the word Premier] and the Buyer
identifying its business as "Premier Research of SCP."
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(b) The plants, fixtures, leasehold improvements, machinery,
installations, equipment, furniture, tools, spare parts, supplies, materials and
other personal property, described on Schedule 1(b) hereto, with such additions
thereto and deletions therefrom as may hereafter arise in the ordinary course of
business prior to the Closing (the "Equipment");
(c) All of the Seller's title to, interest in and rights under
the leases of personal property described on Schedule 1(c) hereto (the "Personal
Property Leases");
(d) All of the Division's trade receivables, whether billed or
unbilled on the Closing Date, prepaid expenses and, to the extent assignable,
rights under the purchase orders, contracts and agreements described on Schedule
1(d) hereto and under all other contracts, commitments and agreements of the
Division entered into in the ordinary course of business of the Division after
the date hereof and prior to the Closing and which are expressly accepted by the
Buyer at the Closing and listed on an amended Schedule 1(d) (the contracts and
agreements referred to in this paragraph (d) being referred to collectively as
the "Other Contracts");
(e) To the extent assignable, all of the Seller's rights under
the licenses and permits described on Schedule 1(e) hereto (the "Permits");
(f) The Division's customer list, its documentation pertaining
to current and past clinical studies in whatever form recorded, and the licenses
of software (the "Software Licenses") listed on Schedule 1(f) hereto; and
(g) The goodwill of the Division.
The Acquired Assets exclude any assets not specifically described above and
specifically exclude Seller's proprietary software.
2. Assumption of Certain Obligations.
At the Closing, the Buyer shall assume, and agree to pay,
perform, fulfill and discharge, the following liabilities and obligations of the
Seller relating to the Division (collectively, the "Assumed Obligations"): (a)
those obligations of the Seller which accrue after the Closing and which relate
to events which transpire subsequent to the Closing under (i) Software Licenses
and Personal Property Leases and (ii) the Other Contracts; (b) current
liabilities of the Division at Closing, to include accounts payable, accrued
expenses, and deferred revenue of the Division (collectively, the "Current
Liabilities"); and (c) all liability of the Seller for accrued bonus, vacation,
commissions and sick pay and severance relating to the Retained Employees but
only to the extent set forth on Schedule 2 hereto. Anything in this Agreement to
the contrary notwithstanding, the Buyer shall not assume, and shall not be
deemed to have assumed, any liability or obligation of the Seller other than as
specifically set forth in this Section 2. Without limiting the foregoing, it is
specifically agreed that the Buyer shall have no liability for (a) payroll,
payroll Taxes and other withholding obligations through the Closing Date, or (b)
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any Taxes relating to the Seller, the Division or the Acquired Assets which
accrue (whether or not due) prior to the Closing or any liability for the unpaid
Taxes of any person under Reg. ss.1.502-6 (or any similar provision of state,
local or foreign law), as transferee or successor, by contract, or otherwise.
3. Closing.
3.1 Time and Place. The closing of the sale and purchase of
the Acquired Assets (the "Closing") shall be held at the offices of Patterson,
Belknap, Webb & Tyler LLP, 1133 Avenue of the Americas, New York, New York, at
10:00 A.M. on or before December 31, 1999, or at such other place or time as the
Buyer and the Seller may agree, it being understood and agreed that time is of
the essence of this Agreement. The date on which the Closing is actually held
hereunder is sometimes referred to herein as the "Closing Date", provided that
in the event that the Closing occurs prior to midnight, December 31, 1999, the
Closing shall be deemed to be effective as of midnight, December 31, 1999 and
the Closing Date shall be deemed to be December 31, 1999.
3.2 Transactions at Closing. At the Closing, in addition to
any other instruments or documents referred to herein: (a) the Seller shall duly
execute and deliver to the Buyer or its nominee or nominees such bills of sale,
certificates of title and other instruments of assignment or transfer with
respect to the Acquired Assets as the Buyer may reasonably request, and as may
be necessary to vest in the Buyer good record and marketable title to all of the
Acquired Assets, in each case subject to no Liens, and (b) the Buyer shall
deliver, as the aggregate purchase price for the Acquired Assets (the "Purchase
Price") the following: (i) to Seller, cash in the amount of $1,000,000 and (ii)
a promissory note in form and substance satisfactory to Buyer and Seller,
payable to the order of Seller, in a principal amount of $8,000,000, which shall
bear interest at a rate of 7-1/2% per annum, and be payable as to principal and
interest on January 31, 2000; (iii) to a bank mutually selected by the Buyer and
the Seller, as Escrow Agent, to be held in two escrow accounts and distributed
as provided in the Escrow Agreements attached hereto as, respectively, Exhibit A
and Exhibit B (the "Escrow Agreements"), two promissory notes, both in form and
substance satisfactory to Buyer and Seller, both in the amount of $3,000,000,
payable to the order of the Escrow Agent and bearing interest at the rate of
7-1/2% per annum; the first such note shall be payable as to principal and
interest on January 31, 2000 and the second such note shall be payable on
December 31, 2000, with interest to be paid to Seller and principal to Escrow
Agent. The three foregoing notes are herein referred to as the "Notes". The
Notes will not be subject to offset. Buyer and Seller agree to allocate the
Purchase Price among the Acquired Assets in accordance with the provisions of
Section 1060 of the Internal Revenue code of 1986, as amended, and the
regulations issued thereunder. Such allocation shall be set forth on Schedule
3.2 hereto which shall be agreed to by the Buyer and the Seller no later than
January 31, 2000. If the parties are unable to agree upon such allocation by
January 31, 2000, either party may request KPMG Peat Marwick to make such
determination no later than February 15, 2000, which determination shall be
final and binding. The fees and expenses of KPMG Peat Marwick shall be paid
one-half by the Seller and
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one-half by the Buyer. Seller and Buyer agree that each will report this
transaction in accordance with Schedule 3.2 hereto or the determination of KPMG
Peat Marwick, as the case may be. In addition to the Purchase Price, Seller
shall also have the right, subject to the provisions of Section 3.4, to receive
the contingent earn-out specified in Section 3.4 below.
3.3 [RESERVED]
3.4 Contingent Earn-Out.
As soon as practicable after December 31, 2000, the
Buyer shall pay to the Seller an additional payment of $3,000,000, reduced by
$.50 for each $1.00 by which revenues recognized from current backlog, current
proposed contracts and identified opportunities listed on Schedules 3.4(a), (b)
and (c), respectively, are less than $18,300,000 for calendar year 2000. Such
payment shall be accompanied by a report in reasonable detail setting forth the
calculation of the amount due. Seller and its auditors shall have the right, at
Seller's expense, to audit Buyer's books and records to confirm the amount
payable hereunder.
3.5 Sublease of Leased Real Property.
At the Closing, the Seller shall sublet, pursuant to
a sublease in form and substance reasonably acceptable to the Buyer and the
Seller (the "Sublease"), to the Buyer approximately sixty-six percent (66%) of
the square footage of the premises (the "Leased Real Property") currently
occupied by the Seller at 30 South 17th Street, Philadelphia, Pennsylvania
pursuant to the lease more fully described on Schedule 3.5 (the "Real Estate
Lease").
4. Conduct of Business Pending Closing. The Seller covenants and agrees
that, from and after the date of this Agreement and until the Closing, except as
otherwise specifically consented to or approved by the Buyer in writing:
4.1 Full Access. The Seller shall afford to the Buyer and its
authorized representatives full access during normal business hours to all
properties, books, records, customers, contracts, backlog contracts and
documents of, or pertaining to the business of, the Division and a full
opportunity to make such investigations as they shall desire to make of the
Division or with respect to the Acquired Assets and the Assumed Obligations, and
the Seller shall furnish or cause to be furnished to the Buyer and its
authorized representatives all such information with respect to the affairs and
businesses of the Division and with respect to the Acquired Assets and the
Assumed Obligations as the Buyer may reasonably request.
4.2 Operation in Regular Course. The Seller shall maintain its
owned and leased properties relating to the Division in good operating condition
and repair, shall make all necessary renewals, additions and replacements
thereto, and shall carry on the Division's business diligently and substantially
in the same manner as heretofore and not make or institute any unusual or novel
methods of manufacture, purchase, sale, lease, marketing, contracting,
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management, accounting or operation. Without in any way limiting the foregoing,
the Seller shall not take any action (or omit to take any action) that would
cause any representation or warranty relating to the Seller contained in this
Agreement to be untrue or incomplete in any material respect at any time prior
to or as of the Closing.
4.3 No General Increases. Unless agreed to by Buyer, the
Seller shall not (a) grant any general or uniform increase in the rates of pay
of employees of the Division, (b) grant any general or uniform increase in the
benefits under any bonus, profit sharing or pension plan or under any other
benefit plan, program or arrangement or other contract or commitment made to,
for or with, or for the benefit of any officers, employees, agents or
independent contractors of the Division, (c) increase the compensation payable
or to become payable to officers, employees, agents or independent contractors
of the Division, or (d) increase, establish or adopt any bonus, insurance,
pension, profit sharing or other benefit plan, payment or arrangement made to,
for or with, or for the benefit of any officers, employees, agents or
independent contractors of the Division.
4.4 Contracts and Commitments. The Seller shall not enter into
or amend any contract or commitment relating to the Division not in the usual
and ordinary course of business and consistent with its normal business
practices.
4.5 Sale of Capital Assets. The Seller shall not sell or
otherwise dispose of any capital asset of the Division with a market value in
excess of $2,500, or of capital assets of market value aggregating with respect
to the Division taken as a whole in excess of $10,000, without the prior written
consent of the Buyer, and in no event shall the Seller sell or otherwise dispose
of any capital asset of the Division other than in the ordinary course of
business for like businesses.
4.6 Insurance. The Seller shall maintain its existing
insurance coverage.
4.7 Preservation of Organization. The Seller shall use its
best efforts to preserve the Seller's business organization intact, to keep
available to the Buyer the present key officers and employees of the Division
and to preserve for the Buyer the present relationships with suppliers and
customers and others having business relations with the Division.
4.8 No Default. The Seller shall not do any act or omit to do
any act, or permit any act or omission to act, which will cause a material
breach of any contract, commitment or obligation of the Seller relating to the
Division.
4.9 Compliance with Laws. The Seller shall duly comply with
all Applicable Laws.
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4.10 Advice of Change. The Seller shall promptly advise the
Buyer in writing of any adverse change in the business, condition, operations,
prospects or assets of the Division, which could reasonably be expected to have
a Materially Adverse Effect.
4.11 Consents of Third Parties. The Seller and Buyer shall use
their respective best efforts to secure consents for the Sublease and for the
assignment of any other contracts which by their terms require consent in
connection with the consummation of the transactions contemplated by this
Agreement; however, Seller's inability to secure such consents shall not prevent
the Closing; provided, that if the Buyer determines that the failure to obtain
such consent may have a Materially Adverse Effect, and the Buyer determines that
there is a reasonable risk that such consent will not be obtained, the Buyer
shall not be required to close. In the event Seller is unable to secure any such
consent, Buyer shall have the right to set-off against amounts due to the Seller
under Section 3.4, or deduct from escrow any amounts escrowed pursuant to
Section 3.2, any damage that Buyer incurs as a direct result of the absence of
such consent without regard to whether the $100,000 deductible set forth in
Section 9 has been met.
4.12 Satisfaction of Conditions Precedent. The Seller and
Buyer shall each use its best efforts to cause the satisfaction of the
conditions precedent contained in this Agreement which are its responsibility.
4.13 Standstill. Neither the Seller nor any of its Affiliates
shall, directly or indirectly, solicit, encourage or initiate any discussions
with, or negotiate or otherwise deal with, or provide information to, any Person
other than the Buyer concerning any merger, sale of a majority of the capital
stock of the Seller, or any of the assets and properties of the Division or its
business or any similar transaction involving or respecting the Seller unless in
the case of an unsolicited proposed merger or stock sale the Seller's Board of
Directors determines in good faith that such action is necessary for the Board
to act in a manner consistent with its fiduciary duties under applicable law;
provided, that if the Board determines that its fiduciary duties require it to
accept any such proposal, the Seller shall, upon such acceptance, pay the Buyer
a break-up fee of $1,500,000. The Seller shall immediately notify the Buyer in
writing if any other Person proposes, discusses or otherwise raises or suggests
(orally or in writing) any of the transactions discussed in the preceding
sentence.
4.14 Disclosure Supplements. From time to time prior to the
Closing, and in any event immediately prior to the Closing, the Seller shall
advise the Buyer in writing of any matter hereafter arising or becoming known to
it or any of its Affiliates that, if existing, occurring, or known at the date
of this Agreement, would have been required to be set forth or described in one
or more of the Schedules to this Agreement or that is necessary to correct any
information in any such Schedules that is or has become inaccurate. No such
disclosure shall affect the Seller's liability for breaches of representations
and warranties made on the date hereof.
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5. Representations and Warranties of the Seller. The Seller represents and
warrants to the Buyer as of the date hereof and as of the Closing Date (except
as otherwise expressly provided herein) as follows:
5.1 Incorporation; Authority; Corporate Approval; Binding
Effect. The Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own or lease and operate its properties and to carry on
its business as now conducted. The Seller has delivered to the Buyer complete
and correct copies of its Certificate of Incorporation and By-Laws and all
amendments thereto. The Seller has obtained all necessary authorizations and
approvals from its Board of Directors and shareholders, if any, required for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and constitutes the legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its terms.
Except for any required consents under the contracts assigned hereunder, the
execution, delivery and performance by the Seller of this Agreement, the
consummation of the transactions contemplated hereby and compliance by the
Seller with the terms hereof will not violate, conflict with, cause an event of
default under, give rise to a right of termination, cancellation or acceleration
of any right or obligation of the Division under, or result in the creation or
imposition of a Lien on any Acquired Asset under any agreement, instrument,
license, franchise, judgment, order, law, rule or regulation by which the Seller
or the Division is bound or to which the Acquired Asset is subject.
5.2 Qualification. The Seller is duly qualified and in good
standing as a foreign corporation in all jurisdictions in which the character of
the properties owned or leased or the nature of the activities conducted by it
makes such qualification necessary or appropriate, except where the failure to
be so qualified would not have a Materially Adverse Effect. All such
jurisdictions are listed on Schedule 5.2 hereto.
5.3 Financial Statements. As of the date hereof, the Seller
has furnished to the Buyer copies of the unaudited internally prepared balance
sheets of the Division as of September 30 for each of 1998 and 1999, and the
related statements of income and changes in financial position of the Division
for the nine months ended on September 30, 1998 and 1999, certified, in each
case, by the chief financial officer of the Seller. As of the Closing Date, the
Buyer shall have received copies of the unaudited internally prepared balance
sheet of the Division as of November 30, 1999 and the related statement, of
income and changes in financial position of the Division for the eleven months
then ended (and any supporting schedules reasonably requested by the Buyer), the
unaudited internally prepared balance sheet of the Division as of the Closing
Date, and the related statements of income and changes in financial position of
the Division for the period commencing on January 1, 1999 ended on such date, as
estimated in good faith and certified by the chief financial officer of the
Seller. Each of such financial statements has been prepared in accordance with
Generally Accepted Accounting Principles ("GAAP") consistently applied (except
for the absence of footnotes and except that they are subject to normal
immaterial year-end adjustments) and is true and correct in all material
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respects; each of such balance sheets accurately presents in all material
respects the financial condition of the Division as of its respective date; and
each of such statements of income and changes in financial position accurately
presents in all material respects the results of operations and changes in
financial position for the period covered thereby.
5.4 Absence of Certain Changes. Except as set forth on
Schedule 5.4 hereto, since September 30, 1999, there has not been: (a) any
change in the assets, liabilities, sales, income or business of the Division or
in its relationships with suppliers, customers or lessors, other than changes
which were both in the ordinary course of business and would not have a
Materially Adverse Effect; (b) any acquisition or disposition by the Division of
any material asset or property; (c) any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting, either in any case
or in the aggregate, the property or business of the Division; (d) any change in
the officers, directors or key employees of the Division; (e) any increase in
the compensation, pension or other benefits payable or to become payable by the
Division to any of its officers or employees, or any bonus payments or
arrangements made to or with any of them except in the ordinary course of
business consistent with past practices; (f) any forgiveness or cancellation of
any debt or claim by the Seller or any waiver of any right of material value
other than compromises of accounts receivable in the ordinary course of
business; (g) any entry by the Division into any transaction other than in the
ordinary course of business; (h) any incurrence by the Division of any
obligations or liabilities, whether absolute, accrued, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others), other than obligations and liabilities
incurred in the ordinary course of business; (i) any mortgage, pledge, lien,
lease, security interest or other charge or encumbrance on any of the assets,
tangible or intangible, of the Division; (j) any discharge or satisfaction by
the Seller of any lien or encumbrance or payment by the Seller of any obligation
or liability (fixed or contingent) other than (i) current liabilities included
in the Division's balance sheet as of September 30, 1999 and (ii) current
liabilities incurred since September 30, 1999 in the ordinary course of
business; (k) any change in the financial or tax accounting principles,
practices, or methods of the Seller; or (l) any agreement, understanding, or
commitment by or on behalf of the Seller, whether in writing or otherwise, to do
or permit any of the things referred to in this Section 5.4.
5.5 Title to Property, Leases, Etc. (a) Title to Properties;
Condition of Personal Properties. The Seller has (i) good and marketable title,
free and clear of all Liens other than Permitted Liens and Liens, if any, which
will be fully discharged prior to Closing, to, and has full right to sell,
convey, transfer, assign and deliver, all of the Acquired Assets (excluding any
assets and properties sold or otherwise disposed of in the ordinary course of
business since the date of such balance sheet) and will have good and marketable
title, free and clear of all Liens, to, and, subject to Section 4.11, will have
full right to sell, convey, transfer, assign and deliver, all of the Acquired
Assets free and clear of all Liens as of the Closing Date, and (ii) full right
to hold and use the Acquired Assets. Upon the Closing, the Buyer will receive
good and marketable title to the Acquired Assets, free and clear of all Liens
other than Permitted Liens. All of the Acquired Assets are in good condition and
repair, reasonable wear and tear
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excepted, and are sufficiently operable to carry on the Division's businesses as
presently conducted. All of the Division's data records and research materials
are and at the Closing will be maintained in such detail and condition and at
such levels of quality as are customary for a business of the type of the
Seller's.
(b) Real Property. The Seller does not own, have any
option to acquire or, except as contemplated by the following sentence, have any
other interest in any real property. The Leased Real Property constitutes all of
the real properties leased as lessee by the Seller.
(i) No Required Consents, Permits, Etc. The
Seller is not aware of any outstanding notices, suits, orders, decrees, or
judgments or required consents or permits that have not been obtained relating
to zoning, building use and occupancy, fire, health, sanitation, or other
violations affecting, against, or with respect to the Leased Real Property or
any part thereof.
(ii) Insurance. The Seller has not received any
notices from any insurer or its agent requiring performance of any work with
respect to any of the Leased Real Property or canceling or threatening to cancel
any policy of insurance.
(iii) Taxes; Special Assessments. There are no
unpaid or outstanding real estate or other taxes or assessments on or with
respect to any of the Leased Real Property or any part thereof (except only real
estate taxes not yet due and payable) for which Seller is responsible and all
Philadelphia payroll taxes have been paid through December 31, 1999.
(iv) Eminent Domain. Seller is not aware of any
pending or threatened eminent domain proceedings against any of the Leased Real
Property or any part thereof.
(v) Construction Work. Except as otherwise
disclosed on Schedule 5.5(b) hereto, all contractors, subcontractors and other
persons or entities furnishing work, labor, materials, or supplies for
construction of or additions to any of the Leased Real Property, for which
Seller is responsible, or for tenant improvements, have been paid in full or
provided for in a manner satisfactory to the Buyer, and to the best of the
Seller's knowledge, there are no claims against the Seller or any of the Leased
Real Property in connection therewith.
(c) Leases of Real or Personal Property. Schedules
3.5 and 1(c) hereto sets forth a complete list of all leases of real or personal
property, respectively, under which the Seller is lessor or lessee relating to
the Division, other than personal property leases calling for an annual rent of
less than $1,000 or total remaining rental payments of less than $1,000. Each
such lease is valid and subsisting and in full force and effect, and no event or
condition exists that constitutes, or after notice or lapse of time or both
would constitute, a
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default thereunder by the Seller or, to the best of the Seller's knowledge, the
other party thereto. The Seller's leasehold interests are subject to no Lien,
and the Seller is in quiet possession of the properties covered by such leases.
Except as indicated on the Schedules attached hereto, none of such leases
contains any term or condition under which any of the transactions contemplated
hereby would constitute a default, or would terminate, accelerate, vest, or
otherwise modify any rights or obligations of the Seller or any other party
thereto, or would permit cancellation or termination by any other party of any
such lease, license, or agreement, or which restricts the Seller's right to
remove at the end of the applicable lease term any machinery, equipment, or
leasehold improvements.
5.6 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in the Division's balance sheet as of September
30, 1999 or incurred in the ordinary course of business after that date or
described in any Schedule hereto, the Seller has no liabilities or obligations
of any nature relating to the Division, whether accrued, absolute, contingent or
otherwise (including, without limitation, liabilities as guarantor or otherwise
with respect to obligations of others) and whether due or to become due,
including, without limitation, any liabilities for Taxes due or to become due.
5.7 Tax Returns. The Seller has timely filed all Tax Returns
required to be filed by it, each such Tax Return has been prepared in compliance
with all Applicable Laws, and all Taxes shown to be due thereon have been paid.
All Taxes due and payable by the Seller have been paid or properly accrued, and
the Seller shall not be liable for any additional Taxes in respect of any
taxable period ending on or before the Closing Date in an amount that exceeds
the corresponding reserve therefor, if any, reflected in Seller's consolidated
financial statements included in its Report on Form 10-Q for the period ended
September 30, 1999.
5.8 Litigation, Etc., Permits. Except as set forth on Schedule
5.8 hereto, no action, suit, proceeding or investigation (whether conducted by
any judicial or regulatory body or other person) is currently pending or was
pending at any time after January 1, 1995, to the best knowledge of the Seller,
threatened against the Seller. The Permits constitute all governmental licenses,
permits, approvals, franchises, registrations and other authorizations of any
Governmental Authority which are required to conduct the business of the
Division as such business is presently being conducted. All of the Permits are
in full force and effect, except where the failure to be in full force and
effect would not result in a Materially Adverse Effect, and no proceeding is
pending or, to the knowledge of the Seller, threatened seeking the revocation or
limitation of any such Permit.
5.9 Safety and Zoning; Environmental Matters.
(a) Neither the plants, offices or properties in or
on which the Seller carries on the Division's business nor the activities
carried on therein are in violation of any zoning, health, environmental or
safety law or regulation, including, without limitation, the Occupational Safety
and Health Act of 1970, as amended.
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(b) Neither the Seller nor, to the best of Seller's
knowledge, any operator of its properties is, or has been, in violation of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
other federl or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter "Environmental
Laws").
(c) The Seller has not received notice from any third
party, including without limitation any federal, state or local governmental
authority, (A) that the Seller or any predecessor in interest has been
identified by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site or a facility;
(B) that any hazardous waste, pollutant or contaminant, toxic substance, oil or
hazardous materials or other chemicals or substances regulated by any
Environmental Laws, any substance regulated under the Emergency Planning and
Community Right to Know Act (including, without limitation, any extremely
hazardous substances listed at 40 C.F.R. Part 355 and any toxic chemical listed
at 40 C.F.R. Part 372), any material subject to regulation by the Nuclear
Regulatory Commission, and any other material, gas, petroleum or any fraction
thereof, or substance known or suspected to be toxic or hazardous (including,
without limitation, any radioactive substance, medical waste, methane gas,
volatile hydrocarbon, industrial solvent and asbestos) or which could cause a
material detriment to, or materially impair the beneficial use of, any of the
Leased Real Properties (or any other location used by the Seller or any of its
employees, consultants or agents), or constitute a health, safety or
environmental risk to any person exposed thereto or in contact therewith
(collectively, "Hazardous Substances") which any one of them has generated,
handled, stored, transported or disposed of has been found at any facility or
site at which a federal, state or local agency or other third party has
conducted or has ordered that the Seller or any predecessor in interest conduct
a remedial investigation, removal or other response action pursuant to any
Environmental Law; or (C) that any of them is or shall be a named party to any
claim, action, cause of action, complaint or legal or administrative proceeding
arising out of any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever (contingent or otherwise) in connection with the
release of Hazardous Substances.
(d) Except as set forth on Schedule 5.9 hereto: (A)
no portion of the Division's property has been used for the handling,
manufacturing, processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and Seller is not aware of any
underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (B) in the course of any activities
conducted by the Seller, no Hazardous Substances have been generated or are
being used on such properties except in accordance with applicable Environmental
Laws; (C) to Seller's knowledge, there have been no releases (i.e., any past or
present releasing, spilling, leaking, pumping, pouring, emitting,
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emptying, discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from the properties of the
Seller; (D) to the Seller's knowledge there have been no releases on, upon, from
or into any real property in the vicinity of the real properties of the Seller
which, through soil or groundwater contamination, may have come to be located
on; and (E) in addition, any Hazardous Substances that have been generated on
the properties of the Seller relating to the Division have been transported
offsite only by carriers having an identification number issued by the EPA or by
such state or local authority having jurisdiction over such activities and
treated or disposed of only by treatment or disposal facilities maintaining
valid permits as required under applicable Environmental Laws.
(e) None of the properties of the Seller relating to
the Division are or shall be subject to any Environmental laws, applicable
environmental clean up responsibility law or environmental restrictive transfer
law or regulation, by virtue of the transactions set forth herein and
contemplated hereby.
5.10 Labor Relations. The Seller is and has at all times been
in compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
nondiscrimination in employment, and is not and has not at any time engaged in
any unfair labor practice and is not liable for any arrearages of wages or any
penalties for any past failures to comply with any of the foregoing laws. There
is no charge pending or, to the best knowledge of the Seller, threatened against
the Seller alleging unlawful discrimination in employment practices before any
court or agency and there is no charge of or proceeding with regard to any
unfair labor practice against the Seller pending before the National Labor
Relations Board. There is no labor strike, dispute, slow-down or work stoppage
actually pending or threatened against or involving the Seller. No
representation question exists respecting any of the employees of the Seller. No
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is pending against the Seller and no claim therefor has
been asserted. Except for employees covered by the collective bargaining
agreements listed on Schedule 5.10 hereto, none of the employees of the Seller
is unionized or covered by any collective bargaining agreement, and no
collective bargaining agreement is currently being negotiated by the Seller.
Except as fully described on Schedule 5.10 hereto, the Seller has not
experienced any work stoppage or other material labor difficulty during the last
five years. Except as fully described on Schedule 5.10 hereto, all individuals
working for the Division are engaged as employees and not as independent
contractors.
5.11 Contracts.
(a) Except as specifically set forth in Schedule
5.11(a) hereto, the Seller is not a party or subject to, whether oral or
written, any of the following relating to the business of the Division:
(i) any contracts, commitments or agreements,
which have a term in excess of one year or call for payments exceeding $25,000
in the aggregate or the
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consummation or performance of which would, either individually or in the
aggregate, have a Materially Adverse Effect;
(ii) any contract or commitment relating to the
Division that is outside of the normal, ordinary and usual requirements of its
business;
(iii) any employment contract or arrangement
relating to the Division which is not terminable by the Seller within fourteen
(14) days without payment of any amount for any reason whatsoever, or for any
continuing payment of any type or nature, including, without limitation, any
bonuses and vested commissions;
(iv) any plan, guideline or other arrangement
providing for life insurance, disability insurance, medical insurance, dental
insurance, pensions, stock rights, distributions, options, deferred
compensation, retirement payments, profit sharing, medical reimbursements or
other benefits for officers or other employees;
(v) any contract, agreement, understanding or
arrangement restricting it from carrying on its business anywhere in the world;
(vi) any instrument or arrangement evidencing or
related to indebtedness for money borrowed or to be borrowed, whether directly
or indirectly, by way of purchase money obligation, guaranty, subordination,
conditional sale, lease-purchase, or otherwise;
(vii) any contract with any labor organization;
(viii) any policy of life, fire, liability,
medical or other form of insurance;
(ix) any order, decree or written approval of
any federal, state or local court or regulatory agency that is required to
conduct, or is related to, its business;
(x) any contract or commitment which requires
services to be provided or performed by the Seller or which authorizes others to
perform services for, through or on behalf of the Seller and which is not
cancelable by Seller without penalty;
(xi) any contract or commitment providing for
payments based in any manner upon the sales, purchases, receipts, income or
profits of the Seller; or
(xii) any contract for which the total of the
cost to complete the agreed-upon services plus the Seller's customary profit
margin, exceeds the payments that remain due under such contract.
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(b) There are no Government Contracts except as
listed on Schedule 5.11.
(c) All of the contracts listed on Schedules 5.11(a)
and elsewhere referred to in this Agreement are in full force and effect, and
the Seller is not in default under any of them, nor to its knowledge is any
other party to any such contract in default thereunder.
(d) The Seller has caused to be delivered to the
Buyer true, correct and complete copies of all contracts, together with all
modifications and supplements thereto.
5.12 Employee Benefit Plans.
(a) Except as set forth on Schedule 5.12 hereto, the
Seller does not maintain, have any obligation to make contributions to or have
any liability with respect to, any employee benefit plan (an "ERISA Plan")
within the meaning of Section 3(3) of the United States Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any other retirement,
profit sharing, stock option, stock bonus, stock purchase, restricted stock,
deferred compensation, bonus, welfare or other benefit plan, program or
arrangement (a "Non-ERISA Plan"). The Seller has heretofore delivered to the
Buyer true, correct and complete copies of each ERISA plan and each Non-ERISA
Plan. All ERISA Plans and Non-ERISA Plans comply both in form and in operation
in all material respects with all federal, state and local laws applicable to
such plans, and with the terms and conditions of the respective plan documents.
Each ERISA Plan which is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service within the five (5) year period preceding the date hereof, and the
Seller is not aware of any circumstances reasonably likely to result in the
revocation or denial of any such favorable determination letter. There is no
pending or, to the Seller's knowledge, threatened litigation or governmental
audit, examination or investigation relating to any ERISA Plan or Non-ERISA
Plan.
(b) The Seller has not engaged in any transaction in
connection with which it could be subject to either a civil penalty assessed
pursuant to Section 502(i) of ERISA, or a tax imposed by Section 4975 of the
Code, or any tax or penalty under any federal, state or local laws applicable to
any Non-ERISA Plan. Except as otherwise noted in Schedule 5.12 hereto, no ERISA
Plan or Non-ERISA Plan or any trust created under any ERISA Plan or Non- ERISA
Plan has been terminated during the six (6) year period preceding the Closing
Date, and any termination so noted in Schedule 5.12 hereto was accomplished in
accordance with applicable federal, state and local law. No liability to the
United States Pension Benefit Guaranty Corporation ("PBGC"), or to any
multi-employer pension plan within the meaning of Section 3(37) of ERISA, or to
any other governmental authority, pension or retirement board, or other agency,
or to any other person under any federal, state or local law, has been or is
expected to be incurred by the Seller or any entity that is or was at any time
treated as a single employer with the Seller within the meaning of Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate") with respect to any
ERISA Plan or Non-ERISA Plan, or any ongoing, frozen
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or terminated benefit plan ever maintained or contributed to by an ERISA
Affiliate (an "ERISA Affiliate Plan"). There has been no "reportable event"
within the meaning of Section 4043(c) of ERISA with respect to any ERISA Plan or
ERISA Affiliate Plan, and no event or condition has occurred or is expected to
occur that presents a material risk of termination of any ERISA Plan or ERISA
Affiliate Plan by the PBGC.
(c) Full payment has been made of all amounts that
the Seller is required under the terms of each ERISA Plan and Non-ERISA Plan, or
pursuant to applicable federal, state or local law, to have paid as
contributions or premiums to such ERISA Plan or Non-ERISA Plan as of the date
hereof, and no accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, exists with respect
to any ERISA Plan. There are no unfunded benefit liabilities, within the meaning
of Section 4001 of ERISA, under any of the ERISA Plans of the Seller as of the
last day of the most recent plan year of each such plan. Neither the Seller nor
any ERISA Affiliate has provided, or is required to provide, security to, and
there are no circumstances requiring, or which can be expected to require, the
imposition of a lien on the assets of the Seller with respect to, any ERISA
Plan, Non-ERISA Plan or ERISA Affiliate Plan pursuant to ERISA or the Code. The
Seller has no obligations under any ERISA Plan or Non-ERISA Plan to provide
benefits, including death or medical benefits, with respect to employees or
independent contractors (or their spouses, beneficiaries or dependents) of the
Seller beyond the retirement or other termination of service of any such
employee or independent contractor other than (A) coverage mandated by Part 6 of
Title I of ERISA or Section 4980B of the Code, (B) retirement or death benefits
under any employee pension benefit plan (as defined under Section 3(2) of
ERISA), (C) disability benefits under any employee welfare plan that have been
fully provided for by insurance or otherwise, or (D) benefits in the nature of
severance pay.
5.13 Information Technology; Data. All Software that is
licensed to the Seller pursuant to the Software Licenses has been licensed
pursuant to valid license agreements and all royalties, license or other fees
due and payable thereunder have been paid or adequate provision therefor has
been made and accrued on the books of the Seller. Except as set forth on
Schedule 5.13, the Division has, and upon the Closing the Buyer will have, the
unrestricted right to use all software associated with the Division's databases
subject to the limitations of the license from the Seller to the Buyer referred
to in Section 7.9 hereof (the "DLB License"). All of the hardware, software and
firmware used in connection with the business of the Division is and will be
able to accurately process date data (including without limitation calculating,
comparing and sequencing) from, into and between the years 1999 and 2000 and
thereafter including leap year transactions. Except as set forth on Schedule
5.13, the Division has, and upon the Closing, the Buyer will have, the
unrestricted right to use all of the data which comprises all of its databases,
including data taken directly from any and all external sources as well as
derived data subject to the limitations of the DLB License.
5.14 Accounts Receivable. Except as specifically set forth in
Schedule 5.14 hereto, all accounts and notes receivable, whether billed or
unbilled on the Closing Date, relating
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to the Division reflected on the Division's balance sheet as of September 30,
1999, and all accounts and notes receivable, whether billed or unbilled on the
Closing Date, relating to the Division arising subsequent to such date, have
arisen in the ordinary course of business, represent valid obligations to the
Seller and, subject only to consistently recorded reserves for bad debts, have
been collected or are collectible in the aggregate recorded amounts thereof in
accordance with their terms. The reserves for bad debts reflected on the
Division's balance sheet as of September 30, 1999 attributable to such accounts
receivable are adequate to cover the uncollectible portion of such accounts
receivable and since September 30, 1999 there has occurred no event or
circumstance which would require any increase in such reserves.
5.15 Insurance. Schedule 5.15 hereto lists all policies of
theft, fire, liability, workmen's compensation, life, property and casualty and
other insurance owned or held by the Seller with respect to the Division. All
such policies are in full force and effect; are sufficient for compliance by the
Seller with all requirements of law and of all agreements to which the Seller is
a party; are valid, outstanding and enforceable policies and provide that they
will remain in full force and effect through the Closing Date; and, prior to the
Closing Date, will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement.
5.16 Governmental Consent, Non-Contravention, Etc. No consent,
approval or authorization of or registration, designation, declaration or filing
with any governmental authority, federal or other, on the part of the Seller, is
required in connection with the sale or delivery of the Acquired Assets pursuant
to this Agreement or the consummation of any other transaction contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not violate (a) any provision of the
charter or by-laws of the Seller or (b) any order, judgment, injunction, award
or decree of any court or state or federal governmental or regulatory body
applicable to the Seller.
5.17 Suppliers and Customers. Schedule 5.17 hereto sets forth
the ten (10) largest suppliers and ten (10) largest customers of the Division as
of the date hereof. The relationships of the Seller with the Division's
suppliers and customers are good commercial working relationships and, except as
set forth on Schedule 5.17, no supplier or customer of material importance to
the Division has made a material complaint to or claims against the Seller,
canceled or otherwise terminated, or threatened in writing to cancel or
otherwise to terminate, its relationship with the Seller or has during the last
twelve (12) months decreased materially, or threatened to decrease or limit
materially, its services, supplies or materials to the Division or its usage or
purchase of the services or products of the Division except for normal cyclical
changes related to customers' businesses. To the best knowledge of the Seller,
no such supplier or customer of the Division intends to cancel or otherwise
substantially modify its relationship with the Seller or to decrease materially
or limit its services, supplies or materials to it, or its usage or purchase of
its services or products.
5.18 Compensation of and Contracts with Employees. Schedule
5.18 contains a true, correct and complete list of the name of each individual
who is employed by the
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Division on the date hereof along with his or her current job title, base
compensation, eligibility for bonus compensation or any other compensation, date
of hire, last date and amount of increase in compensation, any employee benefit
which is not generally available to employees of the Division and employment
address. Schedule 5.18 contains a true, correct and complete list of persons
currently rendering services to the Division, or who have rendered services to
the Division since January 1, 1998 for which the Division is obligated to issue
a Form 1099, as consultants or independent contractors, along with information
regarding compensation and reimbursement levels for each such person during all
such periods, and each such person who was classified as a consultant or an
independent contractor was properly so classified under applicable laws and
regulations and no federal, state or local taxes should have been withheld from
any payment made to any such person which were not withheld.
5.19 Minute Books. The minute books of the Seller made
available to the Buyer for inspection accurately record therein all actions
taken by the Seller's Board of Directors and shareholders.
5.20 Brokers. No finder, broker, agent or other intermediary
has acted for or on behalf of the Seller in connection with the negotiation or
consummation of the transactions contemplated hereby.
5.21 Compliance with Other Instruments, Laws, Etc. The Seller,
with respect to the conduct of the business of the Division, has complied with,
and is in compliance with, (a) Applicable Laws, (b) all unwaived material terms
and provisions of all material contracts, agreements and indentures to which the
Seller, with respect to the conduct of the business of the Division, is a party,
or by which the Seller, with respect to the conduct of the business of the
Division, or any of its properties is subject, and (c) its charter and by-laws,
each as amended to date. Except as set forth in Schedule 5.21 hereto, the Seller
has not, been charged with, or been under investigation with respect to any
violation by the Seller of any provision of any Applicable Law. The Seller has
and maintains and Schedule 5.21 hereto sets forth a complete and correct list
of, all such licenses, permits and other authorizations from all such
governmental authorities as are necessary or desirable for the conduct of the
Division's business or in connection with the ownership or use of its
properties, including, without limitation, those relating to Environmental Laws
and FDA and other health care related matters, all of which except as expressly
designated on Schedule 5.21 are in full force and effect, and true and complete
copies of all of which have previously been delivered to the Buyer.
5.22 FDA Matters.
(a) Except as set forth in Schedule 5.22(a), the
Seller has not been and does not use the services of any Person who has been
debarred, under 21 U.S.C. Sec. 335(a) or (b), in any capacity for conduct
relating to the development or approval of any drug product.
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(b) Except as set forth in Schedule 5.22(b), no
director, officer or, to Seller's knowledge, employee of the Seller has ever
been convicted of a felony under any Applicable Law for conduct relating to the
development, testing or approval of any drug product, new drug application
("NDA") or abbreviated new drug application.
(c) Except as set forth in Schedule 5.22(c), all
Institutional Review Board ("IRB") approvals of clinical trials applicable to
the Seller have been consistently obtained and maintained, including for changes
to a clinical trial protocol.
(d) Except as set forth in Schedule 5.22(d), the
Seller has not ever been involved in disputes with IRB's concerning the conduct
of clinical investigations supervised or conducted by the Seller.
(e) Except as set forth in Schedule 5.22(e), all
clinical trials undertaken by the Seller have been conducted in full compliance
with Applicable Laws, including, but not limited to, the requirements of FDA
regulations 21 C.F.R. Part 312 and 21 C.F.R. Part 50.
(f) Except as set forth in Schedule 5.22(f), the
Seller has not received any deficiency letters from the FDA relating to
investigational new drug applications, NDA's and/or product license applications
or biologics license applications prepared on the basis of studies undertaken or
supervised by the Seller.
(g) Except as set forth in Schedule 5.22(g), the
Seller has not ever had its clinical records audited by the FDA.
(h) Except as set forth in Schedule 5.22(h), the
Seller has not ever been the subject of a warning letter, or any type of
correspondence in which FDA stated or suggested that the Seller violated laws or
policies.
(i) Except as set forth in Schedule 5.22(i), no study
conducted or supervised by the Division has ever been, as the result of any
deficiencies in the conduct, supervision or monitoring of such studies by the
Division, (i) rejected by an FDA drug advisory review committee, or (ii) found
to be insufficient by such FDA drug advisory review committee.
(j) Except as set forth in Schedule 5.22(j), the
Seller has not ever been investigated by the FDA, Department of Justice or other
Governmental Authority for data fraud.
5.23 Certain Payments. Except as set forth on Schedule 5.23,
neither the Seller nor any officer, to its knowledge, employee, agent or
Affiliate of the Seller, has, directly or indirectly, offered, given or agreed
to give any gift, rebate or similar benefit to any customer, supplier,
governmental employee, official or candidate for government office or other
Person
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which (a) would subject the Seller to any losses in any civil, criminal or
governmental litigation or proceeding, or (b) if not continued in the future
would have a Materially Adverse Effect.
5.24 WARN. The Seller has not implemented, and will not
implement on or prior to the Closing Date, any mass lay-off, plant closing, or
other covered employment loss within the meaning of the Worker Adjustment and
Retraining Notification Act, 229 U.S.C. ss.ss. 2101-2109 ("WARN").
5.25 Sufficiency of Acquired Assets. The Acquired Assets
comprise all of the assets which are necessary for the conduct of the business
of the Division (it being understood that Seller is retaining title to various
assets which heretofore have been commingled with Seller's other businesses,
Seller confirming that the lack of such assets will not prevent conduct of the
business of the Division as heretofore conducted.
5.26 Intellectual Property.
(a) Schedule 5.26 sets forth a true, correct and
complete list or description of all trademarks, trademark registrations, service
marks, service mark registrations, trade names, company names, patents, design
patents, copyright registrations and copyrights and pending applications
therefor, in each case which are required for the business of the Division as
currently being conducted (collectively, the "Intellectual Property Rights").
Except as disclosed on Schedule 5.26, the Seller is, and upon the Closing the
Buyer will be, the sole and exclusive owner of, with all right, title and
interest in and to (free and clear of any Lien) the Intellectual Property Rights
described on Schedule 5.26 and with sole and exclusive rights, without being
contractually obligated to pay any compensation to any third party in respect
thereof, to the use thereof or the material covered thereby. Except as set forth
on Schedule 5.26, the Seller has not granted any licenses or other rights to the
Intellectual Property Rights to any other person and no other person has granted
to the Seller any licenses or other rights to the Intellectual Property Rights.
Each such license granted to the Seller is valid and binding on the Seller, and
to the knowledge of the Seller, the other parties thereto, and the intellectual
property used by the Division pursuant to such license will be available to the
Buyer on terms and conditions after the Closing which are identical to the terms
and conditions in force prior to the Closing. Except as set forth on Schedule
5.26, there are no interferences, oppositions, cancellations or other contested
proceedings pending, or to the knowledge of the Seller threatened, in the United
States Copyright Office, the United States Patent and Trademark Office or any
Federal, state or local court or before any Governmental Entity, relating to any
registration, grant, license or pending application with respect to any
Intellectual Property Rights and the Seller has no knowledge of any facts that
could reasonably be expected to give rise to any such interferences,
oppositions, cancellations or other contested proceeding.
(b) Except as set forth on Schedule 5.26, (i) neither
the Seller nor the Division has sued or charged or been a defendant in any
claim, suit, action or proceeding which involves a claim of infringement of any
Intellectual Property Rights, (ii) to the knowledge of the
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Seller, there are no other claims that the Seller or the Division is infringing
any existing patent, trademark or copyright or any basis for any such claim,
without regard to whether any such patent, trademark or copyright is ultimately
found to be valid, (iii) to the knowledge of the Seller, there are no continuing
infringements by any other person or persons of the Intellectual Property Rights
and (iv) to the knowledge of the Seller, the use of the Intellectual Property
Rights in connection with the business of the Division, as currently being
conducted, does not infringe the patent, trademark, copyright or any other right
of any third party.
5.27. Employee Benefit Matters. Except to the extent
specifically set forth in Section 2 hereof, the Seller shall be solely
responsible for the payment of all benefits to all Retained Employees (or their
beneficiaries or dependents) under any benefit plan of the Seller; the Buyer
shall not at any time assume any liability under the Seller's benefit plans for
the benefits of any active or terminated participants (or their beneficiaries or
dependents) under such plans; the Buyer shall have no obligation for the payment
of any compensation to the Retained Employees with respect to any period prior
to the Closing Date; the Seller shall retain sole responsibility for the payment
of all medical, dental, health and disability claims incurred by a Retained
Employee and/or his or her spouse or dependents at or prior to the Closing Date,
and the Buyer shall not assume any liability with respect to such claims. The
Seller shall be solely responsible for providing any Retained Employes whose
"qualifying event," within the meaning of Section 4980B(f) of the Code, occurs
at or prior to the Closing Date (and such Retained Employee's "qualified
beneficiaries," within the meaning of Section 4980B(g) of the Code) with the
opportunity to elect continuation of group health coverage required by Section
4980B(f) of the Code under the terms of the health plan maintained by the
Seller, and the Buyer shall not assume any liability or obligation with respect
to such continuation coverage. The Seller agrees that it shall retain all
liability and obligation for the payment of compensation or benefits (including,
without limitation, the liability and obligation for all wages, salary, vacation
pay, and unemployment, medical, dental, health and disability benefits) to or
with respect to those former employees or independent contractors (or their
beneficiaries, spouses or dependents) of the Division who retired or terminated
service at or prior to the Closing Date or who otherwise do not become Retained
Employees.
5.28 Disclosure. No representation or warranty by the Seller
in this Agreement or in any exhibit, schedule, written statement, certificate or
other document delivered or to be delivered to Buyer pursuant hereto or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not false or misleading.
6. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller as follows:
6.1 Organization and Standing of Buyer. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The
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Buyer has full power and authority to execute and deliver this Agreement and the
Notes and to consummate all transactions contemplated hereby under its
Certificate of Incorporation and By- Laws and applicable laws.
6.2 Corporate Approval; Binding Effect. The Buyer has obtained
all necessary authorizations and approvals required for the execution and
delivery of this Agreement and the Notes and the consummation of the
transactions contemplated hereby (other than any approvals required to be
obtained by Buyer from its bank or other lending institution). This Agreement
has been duly executed and delivered by the Buyer and constitutes, and the Notes
when executed and delivered will constitute, the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms.
6.3 Non-Contravention. The execution, delivery and performance
by the Buyer of this Agreement and the Notes will not result in any violation of
or be in conflict with its Certificate of Incorporation or By-Laws, or of any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to it, or be in conflict with or constitute a default
under any of the foregoing (except with respect to the approval of the Buyer's
bank referred to in the preceding representation).
6.4 Government Consent, Etc. No consent, approval or
authorization of or registration, designation, declaration or filing with any
governmental authority, federal or other, on the part of the Buyer is required
in connection with the purchase of the Acquired Assets pursuant to this
Agreement or the consummation of any other transaction contemplated hereby.
6.5 Brokers. The Buyer has not retained, utilized or been
represented by any broker or finder, in connection with the negotiation or
consummation of this Agreement or the transactions contemplated hereby for which
the Seller has any payment responsibility.
6.6 Financial Condition. The Buyer has adequate financial
resources to pay the principal and interest on the Notes when due.
7. Conditions Precedent to Buyer's Obligations. The obligation of the
Buyer to consummate the Closing is subject to fulfillment to its satisfaction
prior to or at the Closing of each of the following conditions (to the extent
noncompliance is not waived in writing by the Buyer):
7.1 Delivery of Bills of Sale, Etc. The Seller shall deliver
to the Buyer or its nominee or nominees such bills of sale and other instruments
referred to in Section 3.2 hereof with respect to the Acquired Assets as the
Buyer may reasonably request, and as may be necessary to vest in the Buyer good
record and marketable title to all of the Acquired Assets, in each case subject
to no Liens. The Seller shall deliver to the Buyer the executed Sublease with
all required consents thereto and all required consents under contracts
constituting the Acquired Assets which the Seller is able to obtain after using
its best efforts so to do.
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7.2 Representations and Warranties. The representations and
warranties made by the Seller in or pursuant to this Agreement and in any
statement, certificate or other instrument delivered to the Buyer pursuant
hereto or in connection with the transactions contemplated hereby shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects at and as of the Closing.
7.3 Compliance with Agreement. The Seller has performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing.
7.4 No Restraining Order. No restraining order or injunction
shall prevent the transactions contemplated by this Agreement.
7.5 No Material Change. There shall not have been or
threatened to be, any material damage to or material loss or destruction of any
of the Acquired Assets (whether or not covered by insurance) or any material
adverse change in the condition (financial or otherwise), operations, business,
prospects or assets of the Division or imposition of any laws, rules or
regulations that would have a Materially Adverse Effect.
7.6 Closing Certificate. The Seller shall have executed and
delivered to the Buyer at and as of the Closing certificates, in form and
substance satisfactory to the Buyer and the Buyer's counsel, certifying that the
conditions specified in each of Sections 7.2, 7.3 and 7.5 have been satisfied.
7.7 Opinion of Counsel. Archer & Greiner, P.C., counsel to the
Seller, shall have delivered to the Buyer a written opinion addressed to the
Buyer and dated the Closing Date, in form and substance reasonably acceptable to
the Buyer covering the items set forth on Schedule 7.7 hereto.
7.8 Certified Copy of Certificate of Incorporation; Good
Standing Certificates. The Buyer shall have received from the Seller a copy,
certified by a duly authorized officer of the Seller to be true and complete on
the Closing Date, of each of (a) its Certificate of Incorporation as in effect
on the Closing Date and as certified as of a recent date by the secretary of
state (or comparable authority) of the State of Delaware, and (b) its by-laws or
other applicable governing documents, if any, as in effect on the Closing Date.
Each of such documents shall be in full force and effect and in form and
substance reasonably satisfactory to the Buyer. In addition, the Buyer shall
have received with respect to the Seller certificates of corporate good standing
and of foreign qualification dated as of recent date issued by the secretary of
state (or comparable authority) of Delaware and each of the jurisdictions listed
on Schedule 5.2 hereto.
7.9 DLB License. The Seller shall have granted to the Buyer a
limited use royalty-free license, in form and substance reasonably satisfactory
to Buyer and Seller, to use the
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Seller's software together with any customary ancillary agreements for all
projects in current backlog that require such software and current proposed
contracts that require such software, all of which are listed on Schedule 7.9
hereto, and a maintenance license, in form and substance satisfactory to the
Buyer, to support the use of the software for such current backlog and current
proposed contracts.
7.10 Key Employees. The employees of the Seller listed on
Schedule 7.10 hereto shall have agreed to employment with the Buyer under the
same employment contracts currently in force with the Seller. The Seller and the
Buyer shall have entered into a mutually satisfactory agreement pursuant to
which the part-time services of John Bauer will be made available to the Buyer
through March 31, 2000.
7.11 Common Area Services Agreement. The Seller and the Buyer
shall have entered into a services agreement pursuant to which the Buyer will
have access to the common areas at the Leased Real Property and will share the
services of the receptionist.
8. Conditions Precedent to Seller's Obligations. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction at, or
prior to the Closing of each of the following conditions (to the extent
noncompliance is not waived in writing by the Seller):
8.1 Delivery of Purchase Price. The Buyer shall (a) deliver to
the Seller, in cash, by wire transfer, $1,000,000, and the Note in the amount of
$8,000,000 and (b) deliver to the Escrow Agent, the two notes each in the amount
of $3,000,000, all as required by Section 3.2.
8.2 Representations and Warranties. The representations and
warranties made by the Buyer in this Agreement and in any statement, certificate
or other instrument delivered to the Seller pursuant hereto or in connection
with the transactions contemplated hereby shall have been correct in all
material respects when made and shall be correct in all material respects at and
as of the Closing.
8.3 Compliance with Agreement. The Buyer shall have performed
and complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing.
8.4 Closing Certificate. The Buyer shall have executed and
delivered to the Seller at and as of the Closing a certificate, in form and
substance satisfactory to the Seller and the Seller's counsel, to the effect
that the conditions in each of Sections 8.2 and 8.3 have been satisfied.
8.5 Information Technology Services Agreement. The Buyer shall
have executed and delivered an information technology services agreement, in
form and substance reasonably acceptable to the Buyer and the Seller, pursuant
to which the Buyer shall provide
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agreed-upon information technology services (consisting of computer, network,
e-mail, telecommunication, internet and intranet and related support and
services) to the Seller.
8.6 Opinion of Counsel. Patterson, Belknap, Webb & Tyler LLP,
counsel to the Buyer, shall have delivered to Seller a written opinion addressed
to the Seller and dated the Closing Date, in form and substance reasonably
acceptable to the Seller, with respect to the due authorization and binding
effect of the Agreement, the Notes and the Escrow Agreements.
8.7 Accounts Receivable Escrow. The Buyer, the Seller and
Escrow Agent shall have entered into an Escrow Agreement, in form and substance
reasonably satisfactory to the Buyer and the Seller, providing that pending
payment in full of the $8,000,000 Note and the $3,000,000 Note due January 31,
2000, all collections of the accounts receivable assigned hereunder in excess of
the amount of account payables and accrued expenses assumed hereunder shall be
placed into escrow thereunder, to be distributed (a) to the Seller if and to the
extent there is a default under such Notes or (b) to the Buyer upon payment in
full of such Notes.
9. Indemnification.
(a) Subject to the limitations contained herein, the Seller
agrees to indemnify and hold the Buyer (and its Affiliates and their respective
directors, officers and employees) (collectively, the "Buyer Indemnified
Parties") harmless from and with respect to any and all claims, liabilities,
losses, damages, costs and expenses (including without limitation the reasonable
fees and disbursements of counsel but excluding consequential damages) related
to or arising, directly or indirectly, out of the following, except to the
extent any of the following constitutes an Assumed Obligation:
(i) any breach by the Seller of any representation or
warranty, covenant, obligation or undertaking made by it in this Agreement, any
Schedule or Exhibit hereto, or any other written statement, certificate or other
instrument delivered pursuant hereto;
(ii) any liability for the cleanup or removal of, or
for death or injury to person or property (to the extent not covered by
insurance) as a result of the release, emission or discharge of, any Hazardous
Substance or other chemical by-products by Seller, which liability arises out of
any matter that occurred or existed on or before the Closing Date;
(iii) any suit, claim, action, proceeding,
arbitration or investigation, pending or threatened, or which may arise, be
asserted or be filed in the future, and any and all costs, liabilities, expenses
or other obligations created thereby (of any type or kind) that arises from, is
or is asserted to be due to or in connection with, or in any way, directly or
indirectly, relates to or arises out of the Acquired Assets or the business,
assets or operations of the Seller or its officers, directors, employees,
investigators, agents, representatives or Affiliates with regard to any and all
actions, inactions, events, circumstances or matters arising or alleged to have
arisen on or prior to the Closing Date (including, without limitation, events,
circumstances or
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conditions, that occurred or existed prior to that time, even though they may
not yet give rise to liability or be the subject of a claim) or whether any such
matter constitutes a breach of a representation or warranty hereunder,
specifically including, without limitation, any actual or alleged liability for
death or injury to any Person or property, whether or not covered by insurance,
as a result of, or in any way in connection with, any actual or alleged defect
in any product sold, manufactured, combined or otherwise provided, any means or
method of administration, any dosage administered, any record-keeping or failure
with respect thereto, or any good, product or service provided by the Seller on
or prior to the Closing Date;
(iv) any claim or liability arising under the bulk
sales or bulk transfer laws of any jurisdiction in connection with transactions
contemplated by this Agreement (in view of such indemnification obligation the
Buyer hereby waives the Seller's compliance with any such bulk sales or bulk
transfer laws as a condition to the Closing hereunder);
(v) any claims, liability or obligation with respect
to any employee or independent contractor of the Seller in connection with his
or her employment or service or termination of employment or service, including,
without limitation, any such claims, liabilities or obligations arising under
any ERISA Plan or Non-ERISA Plan, except for such claims, liabilities or
obligations arising and attributable to periods of employment with the Buyer,
and relating to actions taken by the Buyer, after the Closing Date or otherwise
assumed by the Buyer pursuant to Section 2(c), with respect to the employees of
the Division listed on Schedule 9 hereto to be retained by, and who accept
employment with and are actually employed by, the Buyer (collectively, the
"Retained Employees"); or
(vi) any claim under Section 4.11 hereof.
Except for claims under Section 4.11 hereof, but notwithstanding any other
provisions of this Agreement, including this subsection (a), the Buyer
Indemnified Parties shall be entitled to indemnification from the Seller
hereunder: (i) only in the event a claim is asserted in writing during the
period ending with the second anniversary of the Closing Date; (ii) only in the
event that all claims exceed $100,000, in which event the Buyer Indemnified
Parties shall be indemnified only for the excess of the claims over $100,000;
and (iii) only up to an aggregate amount equal to $5,000,000. Subject to the
foregoing provisions and the provisions of the Escrow Agreement, the Buyer may
at its option receive payment out of amounts escrowed under the Escrow Agreement
attached as Exhibit A.
(b) The Buyer agrees to indemnify and hold the Seller (and its
directors, officers, employees and Affiliates) (collectively, the "Seller
Indemnified Parties") harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses (including without limitation
the reasonable fees and disbursements of counsel) related to or arising from,
directly or indirectly, out of:
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(i) any breach by the Buyer of any representation or
warranty, covenant, obligation or undertaking made by it in this Agreement, any
Schedule or Exhibit hereto, or any other statement, certificate or other
instrument delivered pursuant hereto;
(ii) any suit, claim, action, proceeding, arbitration
or investigation, pending or threatened, or which may arise, be asserted or be
filed in the future, and any and all costs, liabilities, expenses or other
obligations created thereby (of any type or kind) that arises from, is or is
asserted to be due to or in connection with, or in any way, directly or
indirectly, relates to or arises out of the Acquired Assets or the related
business, assets or operations of the Buyer or its officers, directors,
employees, investigators, agents, representatives or Affiliates with regard to
any and all actions, inactions, events, circumstances or matters arising or
alleged to have arisen after the Closing Date (but specifically excluding
events, circumstances or conditions, that occurred or existed prior to that
time, even though they may not yet give rise to liability or be the subject of a
claim on or before the Closing Date), specifically including, without
limitation, any actual or alleged liability for death or injury to any Person or
property, whether or not covered by insurance, as a result of, or in any way in
connection with, any actual or alleged defect in any product sold, manufactured,
combined or otherwise provided, any means or method of administration, any
dosage administered, any record-keeping or failure with respect thereto, or any
good, product or service relating to the Division provided by the Buyer after
the Closing Date;
(iii) any Assumed Obligation (except to the extent
that the liability arises out of or gives rise to a claim for a related breach
of representation, warranty or covenant of the Seller with respect thereto); or
(iv) any claims, liability or obligation with respect
to any Retained Employee in connection with his or her employment or termination
of employment by the Buyer.
(c) In the event that any party hereto (an "indemnified
party") desires to make a claim against another party hereto (the "indemnifying
party", which term shall include all indemnifying parties if there be more than
one) in connection with any action, suit, proceeding or demand at any time
instituted against or made upon it for which it may seek indemnification
hereunder (a "Claim"), the indemnified party shall notify the indemnifying party
of such Claim and of its claims of indemnification with respect thereto,
provided that failure to give such notice shall not relieve the indemnifying
party of its obligations under this Section 9 except to the extent, if at all,
that the indemnifying party shall have been prejudiced thereby. Upon receipt of
such notice from the indemnified party, the indemnifying party shall be entitled
to participate in the defense of such Claim, and if and only if the indemnifying
party confirms in writing that it is obligated hereunder to indemnify the
indemnified party with respect to such Claim, the indemnifying party may assume
the defense of such Claim. Any indemnifying party which has assumed the defense
of a Claim may settle such Claim defended by it without the written consent of
the indemnified party provided that such settlement is limited to payment of
monetary
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damages which are payable in full by the indemnifying party and the indemnified
party is fully discharged at the time of the settlement from any liability with
respect to the claim, action or proceeding. The indemnifying party may not enter
into any settlement that is not limited to payment of monetary damages without
the indemnified party's prior written consent which will not be unreasonably
withheld. Each of the Seller and the Buyer covenant to use all reasonable
efforts to cooperate fully with respect to the defense of any claim, action or
proceeding covered by this Section 9.
The indemnified party shall retain the right to employ its own counsel
and to participate in the defense of any Claim, the defense of which has been
assumed by an indemnifying party pursuant hereto, but the claimant shall bear
and shall be solely responsible for its own costs and expenses in connection
with such participation.
(d) In the event of any claims under this Section 9, the
claimant shall advise the party or parties who are required to provide
indemnification therefor in writing of the amount and circumstances surrounding
such claim. With respect to liquidated claims, if within thirty days the other
party has not contested such claim in writing, the other party will pay the full
amount thereof within ten days after the expiration of such period.
10. Termination. This Agreement constitutes the binding and irrevocable
agreement of the parties to consummate the transactions contemplated hereby, the
consideration for which is the covenants contained herein and expenditures and
obligations incurred and to be incurred by the Buyer and the Seller in respect
of this Agreement, and this Agreement may be terminated or abandoned only as
follows:
(a) By the mutual consent of the Buyer and the Seller;
(b) By the Buyer on or after January 31, 2000, if any of the
conditions set forth in Section 7 hereof, to which the Buyer's obligations are
subject, have not been fulfilled or waived, unless such fulfillment has been
frustrated or made impossible by any act or failure to act of the Buyer; or
(c) By Seller on or after January 31, 2000, if any of the
conditions set forth in Section 8 hereof, to which the obligations of Seller are
subject, have not been fulfilled or waived, unless such fulfillment has been
frustrated or made impossible by any act or failure to act of the Seller.
11. Post-Closing Covenants.
11.1 Maintenance of Documentation. Included within the
Acquired Assets is all documentation pertaining to current and past clinical
studies of the Division. Buyer shall maintain such documentation, together with
any other documents or files of the Seller to which Buyer obtains possession
hereunder, as required by law and its own policies, will respond to any
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inquiries with respect thereto, and will make the same available to Seller for
any reasonable purpose of Seller. At reasonable times and upon reasonable
notice, Seller shall make available for inspection by Buyer, for any reasonable
purpose, all other books and records of Seller relating to the Division which
Seller retains.
11.2 No Solicitation, Non-Interference. (a) From and after the
Closing and until the fifth anniversary thereof, without the prior written
consent of the Buyer, the Seller shall not, nor shall it authorize or permit any
of its Affiliates to, solicit the employment or retention of any Retained
Employee, nor shall the Seller employ or retain as an employee or a consultant
any Retained Employee who was an employee or consultant to the Buyer within the
immediately preceding twelve months. From and after Closing, the Seller shall
refrain from taking, and shall cause its Affiliates to refrain from taking, any
action which might interfere with the conduct of the business of the Division or
the Buyer.
(b) From and after the Closing, and until the fifth
anniversary thereof, without the prior written consent of the Seller, the Buyer
shall not, nor shall it authorize or permit any of its Affiliates to, solicit
the employment or retention of any employees of Seller.
11.3 Transfer Taxes. The Seller shall be solely liable for any
obligation or liability for Taxes attributable to, arising from or associated
with the sale or transfer from the Seller to the Buyer of the\ Acquired Assets.
11.4 Covenant Not to Compete. The Seller agrees that
commencing on the Closing and continuing until the fifth anniversary thereof,
neither it nor any of its Affiliates, shall, directly or indirectly in any
manner whatsoever, compete with the Buyer with respect to the business
heretofore conducted by the Division by establishing, maintaining, investing in,
or otherwise having any investment or managerial interest in, any Contract
Research Organization conducting trials management and/or clinical data
management operations. Notwithstanding the foregoing, (a) the Seller shall not
be prohibited from assisting companies conducting clinical research by providing
research technology and research processes or consulting services relating to
such technology; or (b) investing in equity securities representing not more
than 1% of the equity capital of any company. The parties hereto hereby agree
that, if any provision of this Section 11.4 as presently written shall be
construed to be illegal, invalid or unenforceable by a court of competent
jurisdiction, said illegal, invalid or unenforceable provision shall be deemed
to be amended and shall be construed by such court to have the broadest type,
scope and duration permissible under applicable law, and if no validating
construction is possible, shall be severable from the rest of this Agreement,
and the validity, legality or enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby. In addition to
such other rights and remedies as the Buyer may have at equity or in law with
respect to any breach of this Agreement, if the Seller commits a material breach
of any of the provisions of this Section 11.4, the Buyer shall have the right
and remedy to have such provisions specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such
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breach or threatened breach will cause irreparable injury to the Buyer and that
money damages will not provide an adequate remedy to the Buyer.
12. Certain Definitions. As used herein the following terms not
otherwise defined have the following respective meanings:
"Acquired Assets": As defined in Section 1.
"Affiliate": With respect to any Person, at the time of
application, any other Person (a) that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with
such Person or (b) who is a family member (i.e., a lineal ancestor or
descendant, sibling, aunt, uncle, niece, nephew, or spouse) of any Person
described in the preceding clause (a).
"Agreement": This Asset Purchase Agreement.
"Applicable Laws": All foreign, domestic, federal, state and
local laws, rules, regulations, statutes, ordinances, treaties, orders,
judgments or decrees of any Governmental Authority.
"Assumed Obligations": As defined in Section 2.
"business day(s)": Any day on which banking institutions in
the Commonwealth of Pennsylvania are open for the transaction of all aspects of
banking business.
"Buyer": As defined in the preamble.
"Buyer Affiliates": Collectively, the Buyer and its
Subsidiaries and Affiliates.
"Claim": As defined in Section 9.
"Closing": As defined in Section 3.1.
"Closing Date": As defined in Section 3.1.
"Code": The Internal Revenue Code of 1986, as amended.
"Current Liabilities": As defined in Section 2.
"Division": As defined in the preamble.
"Environmental Laws": As defined in Section 5.9.
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"Equipment": As defined in Section 1.
"ERISA": As defined in Section 5.12.
"ERISA Plan": As defined in Section 5.12.
"Escrow Agreements": As defined in Section 3.2.
"Governmental Authority": Any governmental or political
subdivision or department thereof, any governmental or regulatory body,
commission, board, bureau, agency or instrumentality, or any court or tribunal,
in each case whether domestic or foreign, federal, state or local.
"Government Contract": All contracts, options, agreements,
commitments or sales or purchase orders of the Seller relating to the Division
with any foreign government or the United States Government or any department or
agency thereof, including, without limitation, any contract, option, agreement,
commitment or sales or purchase order of the Seller with any other party in
connection with a contract between a third party and any foreign government or
the United States Government or any department or agency thereof. Such term also
includes all bids, quotations and proposals, that, if accepted, would result in
a Government Contract.
"indemnified party": As defined in Section 9.
"indemnifying party": As defined in Section 9.
"Intellectual Property Rights": As defined in Section 5.26.
"knowledge": As it relates to the Seller, includes the actual
knowledge of any executive officer of the Seller.
"Leased Real Property": As defined in Section 3.5.
"Liens": All liens, encumbrances, security interests, claims,
charges, options, forfeitures, rights of seizure, rights of tenants or other
encumbrances.
"Marks": As defined in Section 1(a).
"Materially Adverse Effect." An actual materially adverse
effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Division or its businesses or assets
taken as a whole.
"Non-ERISA Plan": As defined in Section 5.12.
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"Notes": As defined in Section 3.2
"Other Contracts": As defined in Section 1.
"PBGC": As defined in Section 5.12.
"Permits": As defined in Section 1.
"Permitted Liens": Collectively, Liens disclosed on Schedule
12.1 hereto.
"Person": A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
"Personal Property Leases": As defined in Section 1.
"Retained Employees": As defined in Section 9.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": As defined in the preamble.
"Sublease": As defined in Section 3.5.
"Software": Collectively, (a) any and all computer programs
consisting of sets of statements or instructions to be used, directly or
indirectly, in computer software and firmware, including, without limitation all
versions thereof, all screen displays and designs therefor, and all component
modules of source code or object code or natural language code therefor, and
whether recorded on paper, magnetic media or other electronic or non-electronic
device, (b) all descriptions, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, and (c) all documentation,
including without limitation user manuals and training materials, relating to
any of the foregoing.
"State": Any state or commonwealth of the United States of
America; the District of Columbia; the Commonwealth of Puerto Rico; and any
other dependency, possession or territory of the United States of America.
"Subsidiary": With respect to any Person, any corporation a
majority (by number of votes) of the outstanding shares of any class or classes
of which shall at the time be owned by such Person or by a Subsidiary of such
Person, if the holders of the shares of such class or classes (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of the
issuer thereof, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
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performing similar functions) of the issuer thereof, whether or not the right so
to vote exists by reason of the happening of a contingency.
"Tax" or "Taxes": Any federal, state, local, or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit, profits,
environmental, customs, duties, real property, personal property, capital stock,
intangibles, social security (or similar), unemployment, disability, payroll,
withholding, license, employee, or other tax or levy, of any kind whatsoever,
including any interest, penalties, or additions to tax, whether disputed or not,
in respect of the foregoing.
"Tax Return": Any return, declaration, report, claim for
refund, information return, or other document (including any related or
supporting estimates, elections, schedules, statements, or information) filed or
required to be filed in connection with the determination, assessment, or
collection of any Tax or the administration of any laws, regulations, or
administrative requirements relating to any Tax.
13. General.
13.1 Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
or otherwise made in writing in connection with the transactions contemplated
hereby (in each case except as affected by the transactions contemplated by this
Agreement) shall be deemed material and, notwithstanding any investigation by
the Buyer, shall be deemed to have been relied on by the Buyer and shall survive
the Closing, and the consummation of the transactions contemplated hereby for a
period of two years, except the representations and warranties set forth in
Section 5.5(a) (Title), Section 5.7 (Tax Returns), Section 5.9 (Safety and
Environmental) and Section 5.12 (Employee Benefit Plans), which shall survive
until the expiration of the applicable statutes of limitation.
13.2 [Intentionally Omitted].
13.3 Expenses. Each party shall pay its own expenses and costs
incidental to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.
13.4 Assignment. This Agreement is nonassignable by the Buyer
except that the Buyer's rights, duties and obligations under this Agreement may
be assigned (a) to any of its respective Subsidiaries or Affiliates or (b) to
its or any of such Subsidiary's or Affiliate's acquirer in the event the Buyer
is merged, acquired, sells substantially all of the assets of its business or
operations or transfers its business or operations to any other entity, provided
the Buyer remains responsible hereunder. This Agreement is non-assignable by the
Seller except that the Seller's rights, duties and obligations under this
Agreement may be assigned to Seller's acquirer in the event the Seller is
merged, acquired, sells substantially all of the assets of its business or
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operations, or transfers its business or operations to any other entity,
provided the Seller remains responsible hereunder.
13.5 Entire Agreement, Etc. This Agreement, together with the
Escrow Agreements and all Exhibits and Schedules hereto and thereto, contain the
entire understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and thereof and shall not
be amended except by a written instrument hereafter signed by all of the parties
hereto.
13.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws (and not the
choice-of-law rules) of the State of New York. Any legal action or proceeding
with respect to this Agreement or any transaction related hereto shall be
brought in the courts of the State of New York or of the United States District
Court for the Southern District of New York, and, by the execution and delivery
of this Agreement, each of the parties hereto hereby consents for itself and in
respect of its property to the exclusive jurisdiction of the aforesaid courts
and agrees that service of process in any legal action or proceeding with
respect to this Agreement or any transaction related hereto may be made on such
party by delivery of such process by certified mail, return receipt requested,
to such party at its address for notice pursuant to Section 13.7 of this
Agreement with the same effect as if such process were personally served on such
party within the State of New York. Each of the parties hereto hereby
irrevocably waives, to the extent permitted by applicable law, any objection,
including, but not limited to, any objection to the laying of venue or based on
the ground of forum non conveniens, which it or he may now or hereafter have to
the bringing of any action or proceeding in such jurisdictions in respect of
this Agreement or any transaction related hereto. Nothing contained herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law.
13.7 Notices. All notices, requests, payments, instructions or
other documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Seller, to: Premier Research Worldwide, Ltd.
30 South 17th Street
Philadelphia, PA 19103
Attention: Dr. Joel Morganroth
with a copy sent
contemporaneously to: James H. Carll
Archer & Greiner, P.C.
1 Centennial Square
Haddonfield, NJ 08037
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If to the Buyer, to: SCP Communications, Inc.
134 West 29th Street
New York, NY 10001
Attention: Nancy McKinstry,
Chief Executive Officer
with a copy sent
contemporaneously to: Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036
Attention: John P. Schmitt, Esq.
13.8 Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
13.9 Section Headings. All enumerated subdivisions of this
Agreement are herein referred to as "Section " or "subsection." The headings of
sections or subsections are for reference only and shall not limit or control
the meaning thereof.
13.10 Public Statements or Releases. Subject to applicable law
and stock exchange rules, the parties hereto each agree that no party to this
Agreement shall make, issue or release any public announcement, statement or
acknowledgment of the existence of, or reveal the status of, this Agreement or
the transactions provided for herein, without first obtaining the consent of the
other parties hereto, provided that the Buyer may disclose information regarding
the transactions contemplated hereby to prospective underwriters for a possible
initial public offering and to other Persons that the Buyer reasonably believes
might be acquired (or whose assets might be acquired) by the Buyer. Nothing
contained in this Section 13.10 shall prevent any party from making such public
announcements as such party may consider necessary in order to satisfy such
party's legal or contractual obligations.
13.11 Binding Effect; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective permitted heirs, legal representatives, executors,
administrators, successors and permitted assigns. No other Persons not a party
hereto, including, without limitation, employees of the Seller shall not be
deemed to be parties to or third party beneficiaries of this Agreement.
13.12 Location of Schedules. Each Schedule hereto is
incorporated in a separate volume which shall be initialed by each of the
parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
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SCP COMMUNICATIONS, INC.
By: s/ Nancy McKinstry
---------------------------------
Name: Nancy McKinstry
Title: Chief Executive Officer
PREMIER RESEARCH WORLDWIDE, LTD.
By: s/ John Bauer
---------------------------------
Name: John Bauer
Title: Chief Financial Officer
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