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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 15, 1996
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
Delaware 0-9767 94-2579751
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
9162 Eton Avenue, Chatsworth, California 91311
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (818) 709-1244
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ITEM 5. OTHER EVENTS.
On July 15, 1996, International Remote Imaging Systems, Inc. ("IRIS" or
the "Registrant") entered into a definitive agreement to acquire the digital
imaging business of Perceptive Scientific Instruments, Inc. ("PSI") for $9.3
million in cash, a $7.0 million subordinated debenture and a five-year
warrant to purchase 875,000 shares of IRIS common stock at $8.00 per share.
The Registrant intends to pursue bank financing for the cash portion of the
purchase price. Consummation of the acquisition is subject to customary
conditions for transactions of a comparable nature. Under the terms of the
acquisition agreement, the Registrant will appoint Edward Randall III,
principal owner of PSI, to its Board of Directors.
PSI, a privately held company based in Houston, is a recognized leader
in the development and supply of digital imaging systems for biological,
clinical and research applications. PSI's primary business is providing
genetic analysis instrumentation and related services through worldwide sales
of its proprietary PowerGene-TM- product line. The PowerGene product line,
based in part on image processing technology from NASA, is used in various
cytogenetic procedures, including chromosome karyotyping, DNA probe analysis
via fluorescent in-situ hybridization methods and comparative genomic
hybridization analysis. The PowerGene system is marketed nationally from
PSI's Houston headquarters and internationally through its U.K. subsidiary.
PSI had revenues of $7.23 million for the trailing twelve-months ended June
30, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS.
2 Asset Purchase Agreement dated as of July 15, 1996 by and
among International Remote Imaging Systems, Inc., Digital
Imaging Technologies, Inc., Perceptive Scientific
Instruments, Inc. and Perceptive Scientific Technologies, Inc.
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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.
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC.
Date: July 17, 1996 By: /s/ E. Eduardo Benmaor
-------------------------------
E. Eduardo Benmaor
Controller, Principal Accounting
Officer and Secretary
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EXHIBIT INDEX
No. Document
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2 Asset Purchase Agreement dated as of July 15, 1996 by
and among International Remote Imaging Systems, Inc.,
Digital Imaging Technologies, Inc., Perceptive
Scientific Instruments, Inc. and Perceptive
Scientific Technologies, Inc.
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ASSET PURCHASE AGREEMENT
by and among
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.,
a Delaware corporation,
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation,
PERCEPTIVE SCIENTIFIC INSTRUMENTS, INC.,
a Delaware corporation,
and
PERCEPTIVE SCIENTIFIC TECHNOLOGIES, INC.,
a Delaware corporation,
Dated as of July 15, 1996
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TABLE OF CONTENTS
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SECTION 1 AGREEMENT TO PURCHASE AND SELL................................ 1
1.1 ACQUISITION.............................................. 1
1.2 CLOSING; EFFECTIVE DATE.................................. 2
1.3 TRANSFER OF ASSETS....................................... 2
1.4 PURCHASE PRICE........................................... 2
1.4.1 AMOUNT............................................ 2
1.4.2 PAYMENT........................................... 3
1.4.3 POST-CLOSING ADJUSTMENT........................... 3
1.5 ASSUMPTION OF LIABILITIES................................ 3
1.6 SALES AND USE TAX........................................ 4
1.7 ALLOCATION OF PURCHASE PRICE............................. 4
SECTION 2 REPRESENTATIONS AND WARRANTIES OF SELLER...................... 4
2.1 EXISTENCE AND RIGHTS..................................... 4
2.2 AGREEMENTS AUTHORIZED.................................... 4
2.3 NO CONFLICT.............................................. 5
2.4 CAPITALIZATION........................................... 5
2.5 CONTINGENCIES............................................ 5
2.6 FINANCIAL CONDITION...................................... 6
2.7 NO SUBSEQUENT CHANGES.................................... 6
2.8 COMPLIANCE WITH LAWS..................................... 6
2.9 TITLE TO ASSETS.......................................... 7
2.10 INTELLECTUAL PROPERTY.................................... 7
2.11 SOFTWARE................................................. 7
2.12 INVENTORY................................................ 8
2.13 EQUIPMENT AND PERSONALTY................................. 8
2.14 FILES.................................................... 8
2.15 PRODUCT LIABILITY........................................ 8
2.16 INSURANCE................................................ 9
2.17 REAL PROPERTY............................................ 9
2.18 ENVIRONMENTAL MATTERS.................................... 9
2.19 MATERIAL ASSIGNED CONTRACTS.............................. 9
2.20 PURCHASE COMMITMENTS AND SALES COMMITMENTS............... 10
2.21 BUSINESS RELATIONS....................................... 10
2.22 AFFILIATE TRANSACTIONS................................... 11
2.23 BENEFIT PLANS............................................ 11
2.24 EMPLOYMENT MATTERS....................................... 11
2.25 ACCREDITED INVESTORS; INVESTMENT INTENT.................. 12
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2.26 COMMISSIONS.............................................. 12
2.27 TAXES.................................................... 13
2.28 ACCURACY OF INFORMATION FURNISHED........................ 13
SECTION 3 REPRESENTATIONS AND WARRANTIES OF IRIS........................ 13
3.1 EXISTENCE AND RIGHTS..................................... 13
3.2 AGREEMENTS AUTHORIZED.................................... 14
3.3 NO CONFLICT.............................................. 14
3.4 SEC FILINGS.............................................. 14
3.5 CAPITALIZATION........................................... 15
3.6 CONTINGENCIES............................................ 15
3.7 NO MATERIAL CHANGES...................................... 15
3.8 COMPLIANCE WITH LAWS..................................... 15
3.9 IRIS SECURITIES.......................................... 15
3.10 PURCHASING INVENTORY FOR RESALE.......................... 15
3.11 COMMISSIONS.............................................. 16
3.12 ACCURACY OF INFORMATION FURNISHED........................ 16
SECTION 4 COVENANTS OF SELLER........................................... 16
4.1 CONDUCT OF BUSINESS PRIOR TO CLOSING..................... 16
4.2 REPRESENTATIONS TRUE..................................... 17
4.3 ACCESS................................................... 17
4.4 SUPPLEMENTAL INFORMATION................................. 18
4.5 PERMITS.................................................. 18
4.6 SECURITY INTERESTS....................................... 18
4.7 CLOSING AGREEMENTS....................................... 18
4.8 LEGAL OPINION............................................ 18
SECTION 5 COVENANTS OF IRIS............................................. 18
5.1 REPRESENTATIONS TRUE..................................... 18
5.2 SUPPLEMENTAL INFORMATION................................. 18
5.3 PERMITS.................................................. 19
5.4 CLOSING AGREEMENTS....................................... 19
5.5 LEGAL OPINION............................................ 19
SECTION 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF IRIS................... 19
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES............... 19
6.2 COMPLIANCE WITH COVENANTS................................ 19
6.3 CONSENTS OBTAINED; FILINGS............................... 19
6.4 NO MATERIAL ADVERSE EFFECT............................... 19
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6.5 LEGAL ACTIONS OR PROCEEDINGS............................. 20
6.6 ALL PROCEEDINGS TO BE SATISFACTORY....................... 20
6.7 OPINION OF COUNSEL FOR SELLER............................ 20
6.8 CLOSING AGREEMENTS....................................... 20
6.9 TRANSFER DOCUMENTS....................................... 20
6.10 CLOSING DOCUMENTS........................................ 20
6.11 COMMISSIONS.............................................. 20
6.12 CAPITAL STOCK OF PSI..................................... 20
6.13 PENDING LAWSUIT.......................................... 20
SECTION 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER................. 21
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES............... 21
7.2 COMPLIANCE WITH COVENANTS................................ 21
7.3 CONSENTS OBTAINED; FILINGS............................... 21
7.4 NO MATERIAL ADVERSE EFFECT............................... 21
7.5 ALL PROCEEDINGS TO BE SATISFACTORY....................... 21
7.6 OPINION OF COUNSEL FOR IRIS.............................. 21
7.7 LEGAL ACTIONS OR PROCEEDINGS............................. 21
7.8 CLOSING AGREEMENTS....................................... 22
7.9 CLOSING DOCUMENTS........................................ 22
7.10 PURCHASE PRICE........................................... 22
SECTION 8 INDEMNIFICATION............................................... 22
8.1 RIGHT OF INDEMNIFICATION................................. 22
8.2 DEDUCTIBLE AMOUNT........................................ 22
8.3 SURVIVAL OF REPRESENTATIONS; EFFECT OF DISCLOSURES....... 22
8.4 TIME LIMIT............................................... 22
8.5 PROCEDURES FOR INDEMNIFICATION........................... 22
8.6 COOPERATION.............................................. 23
SECTION 9 TERMINATION................................................... 23
9.1 GROUNDS FOR TERMINATION.................................. 23
9.2 EFFECT OF TERMINATION.................................... 24
9.3 RIGHTS TO PROCEED........................................ 24
9.4 SPECIFIC PERFORMANCE..................................... 24
SECTION 10 OTHER COVENANTS.............................................. 25
10.1 CONFIDENTIALITY.......................................... 25
10.2 EMPLOYMENT OF CERTAIN PERSONNEL.......................... 25
10.3 CHANGE OF NAMES.......................................... 26
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10.4 COLLECTION OF ACCOUNTS RECEIVABLE........................ 26
10.5 NOTIFICATION OF SUPPLIERS AND DISTRIBUTORS............... 26
10.6 NON-COMPETITION.......................................... 26
10.7 NOMINEE TO IRIS BOARD OF DIRECTORS....................... 26
10.8 COOPERATION BY SELLER.................................... 27
10.8.1 CONSULTING SERVICES.............................. 27
10.8.2 ADDITIONAL ACTS.................................. 27
10.8.3 CONFIRMATION OF TITLE............................ 28
10.8.4 ANNOUNCEMENTS.................................... 28
10.9 COOPERATION BY BUYER..................................... 28
SECTION 11 DEFINITIONS.................................................. 28
SECTION 12 MISCELLANEOUS................................................ 35
12.1 ENTIRE AGREEMENT; MODIFICATIONS........................ 35
12.2 EXPENSES............................................... 36
12.3 WAIVERS................................................ 36
12.4 COOPERATION............................................ 36
12.5 THIRD-PARTY BENEFITS................................... 36
12.6 SUCCESSORS AND ASSIGNS................................. 36
12.7 REMEDIES NOT EXCLUSIVE................................. 36
12.8 NOTICES................................................ 37
12.9 GOVERNING LAW; CONSENT TO JURISDICTION................. 38
12.10 ATTORNEYS' FEES........................................ 38
12.11 HEADINGS............................................... 38
12.12 SEVERABILITY........................................... 38
12.13 ARBITRATION OF DISPUTES................................ 39
12.14 AGREEMENT NEGOTIATED................................... 39
12.15 COUNTERPARTS........................................... 39
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into as
of July 15, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation ("IRIS"), on the one hand, and DIGITAL IMAGING
TECHNOLOGIES, INC., a Delaware corporation ("DITI"), PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware corporation ("PSII"), and PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware corporation ("PSTI"), on the other hand, with
reference to the following facts:
A. PSII and PSTI are wholly-owned subsidiaries of DITI, and Perceptive
Scientific International Limited, a United Kingdom corporation ("PSIL"), is a
majority-owned subsidiary of PSII. (PSII, PSTI and PSIL are sometimes
hereinafter referred to collectively as the "OPERATING COMPANIES," and DITI,
PSII and PSTI are sometimes hereinafter referred to collectively as the
"SELLER.")
B. Seller is the owner of certain intellectual property and other assets
(as defined herein, the "ASSETS") used by the Operating Companies in the
business of developing, manufacturing and marketing digital image processing and
analysis products and services, including the proprietary PowerGene-TM- product
line of genetic analysis instruments.
C. IRIS desires to purchase the Assets from Seller, and Seller is willing
to sell the Assets to IRIS, on the terms and conditions set forth herein.
D. Concurrently with the purchase of the Assets, IRIS will grant to
Perceptive Scientific Imaging Systems, Inc., a Delaware corporation and wholly-
owned subsidiary of DITI ("PSISI"), a royalty-free, exclusive license to use all
the technology purchased from Seller on a worldwide basis solely for use in
connection with the Well Log Business.
E. Capitalized terms not otherwise defined in the Agreement have the
meanings set forth in Section 11 of the Agreement.
NOW, THEREFORE, based on the above premises and in consideration of the
mutual covenants and agreements contained herein, the parties agree as follows:
SECTION 1
AGREEMENT TO PURCHASE AND SELL
1.1 ACQUISITION. On the terms and subject to the conditions of this
Agreement, on the Closing Date, Seller agrees to sell to IRIS, and IRIS agrees
to purchase from Seller, the Assets in exchange for the payment of the Purchase
Price and the assumption of the Obligations.
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1.2 CLOSING; EFFECTIVE DATE. Assuming satisfaction or waiver of all
conditions set forth in Sections 6 and 7, the closing of the Transactions (the
"CLOSING") will take place at the offices of Irell & Manella, counsel to IRIS,
at 1800 Avenue of the Stars, Suite 900, Los Angeles, California as soon as
practicable after the date hereof, or at such other date, time and place as may
be mutually agreed upon in writing by the parties (the "CLOSING DATE").
Assuming the Closing occurs, the parties agree that the effective date shall be
July 1, 1996 (the "EFFECTIVE DATE").
1.3 TRANSFER OF ASSETS. At the Closing, Seller will transfer, assign and
deliver the Assets to IRIS free and clear of any liens, charges, options,
adverse claims or security interests except the Obligations. The parties intend
that IRIS have the benefit of, and Seller's transfer and assignment to IRIS of
the Assets include, all of Seller's existing rights and remedies pursuant to any
representations, warranties, indemnifications, covenants or agreements made by
any other party pursuant to any of the Assigned Contracts.
1.4 PURCHASE PRICE.
1.4.1 AMOUNT. The "PURCHASE PRICE" shall consist of the
following:
(i) an amount of cash equal to Nine Million Three Hundred Twenty-Eight
Thousand Eight Hundred Twenty-One Dollars ($9,328,821), PLUS PSII Year-to-Date
EBIT (or minus PSII Year-to-Date EBIT if negative), MINUS PSII Cash and MINUS
Net Cash Transfers to DITI (or plus Net Cash Transfers to DITI if negative);
(ii) an 8 1/2% Senior Subordinated Note due 2001 in the principal
amount of Seven Million Dollars ($7,000,000); and
(iii) an IRIS Warrant to purchase Eight Hundred Seventy-Five Thousand
(875,000) shares of IRIS Common Stock at an exercise price of Eight Dollars
($8.00) per share.
For purposes of determining the Purchase Price, "PSII YEAR-TO-DATE EBIT" shall
mean the consolidated net income (or loss) of the Operating Companies from
January 1, 1996 through the Effective Date BEFORE interest expense payable to
DITI and income taxes, all determined in accordance with GAAP, (i) including a
pro rata allocation of year-end reserves and accruals and (ii) including the
corporate management expenses of DITI properly allocable to the Operating
Companies (which percentage shall not be less than the percentage allocated to
the Operating Companies for the year ended December 31, 1995) (hereinafter
referred to as "CORPORATE MANAGEMENT EXPENSES"). "PSII CASH" shall mean the
cash and cash equivalents of the Operating Companies as of the close of business
on the Closing Date. "NET CASH TRANSFERS TO DITI" shall mean, for the period
from January 1, 1996 through the Closing Date, (a) the aggregate amount of cash
transferred from the Operating Companies to DITI, (b) PLUS the aggregate amount
of cash paid directly to any creditor of DITI, the Controlling Stockholder or
any Affiliate of the Controlling Stockholder (including, without limitation,
principal and interest
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payments to Southwest Bank of Texas), (c) MINUS the aggregate amount of cash
advanced by DITI to the Operating Companies and (d) MINUS payments from the
Operating Companies to DITI for Corporate Management Expenses. All of the
expenses of Seller related to the Transactions (including, without
limitation, commissions, legal fees, employee bonuses and the cost of
reacquiring the minority interest in PSIL) shall be incurred and paid solely
by DITI and not by any of the Operating Companies.
1.4.2 PAYMENT. On the Closing Date, IRIS shall (i) wire transfer
to an account designated in writing by DITI the Estimated Cash Portion of the
Purchase Price and (ii) execute and deliver to DITI the Senior Subordinated Note
and the IRIS Warrant. As far in advance of the Closing as is practicable, DITI
shall prepare and deliver to IRIS reasonably detailed estimates of PSII Year-to-
Date EBIT, PSII Cash and Net Cash Transfers to DITI. The "ESTIMATED CASH
PORTION OF THE PURCHASE PRICE" payable at Closing shall be Nine Million Three
Hundred Twenty-Eight Thousand Eight Hundred Twenty-One Dollars ($9,328,821) PLUS
estimated PSII Year-to-Date EBIT (or minus estimated PSII Year-to-Date EBIT if
negative), MINUS estimated PSII Cash and MINUS estimated Net Cash Transfers to
DITI (or plus estimated Net Cash Transfers to DITI if negative).
1.4.3 POST-CLOSING ADJUSTMENT. Not more than 60 days after the
Closing, DITI, with the full cooperation of IRIS employees and full access to
the Files, shall prepare and deliver to IRIS (i) a final determination of PSII
Year-to-Date EBIT, PSII Cash and Net Cash Transfers to DITI, (ii) audited
consolidated financial statements of PSII as of and for the 6-month period ended
on the Effective Date, together with an unqualified auditor's report thereon
from Buffington & Company, P.C., and (iii) unaudited consolidated financial
statements of PSII as of the Closing Date and for the period from the Effective
Date to the Closing Date. The cost of the auditor's report shall be borne
equally by each party. IRIS shall have up to 90 days thereafter to review and,
at its expense, cause Coopers & Lybrand, LLP to review the calculation of the
Purchase Price on its behalf to ensure that it has been calculated consistently
with Section 1.4.1. If IRIS believes that any material aspect of such
calculation has not been prepared appropriately, Coopers & Lybrand shall, not
later than the end of such 90-day period, contact Buffington & Company, acting
on behalf, and at the expense, of Seller to attempt to resolve the matter. If
they are unable to resolve the matter within 45 days from the date that
Buffington & Company is first contacted, Seller and IRIS shall request another
firm designated by the first two accounting firms to determine the matter
subject to disagreement, and the determination so made shall be final and
binding on all parties. The fees of the third firm shall be borne equally by
each party. Seller shall promptly refund to IRIS in cash the amount (if any) by
which the amount paid at Closing exceeds the Purchase Price, or IRIS shall
promptly pay to Seller cash in the amount (if any) by which the Purchase Price
exceeds the amount paid at Closing.
1.5 ASSUMPTION OF LIABILITIES. At the Closing, IRIS shall assume, and
thereafter will perform, pay or otherwise satisfy in accordance with their terms
as and when due, all of the Obligations. IRIS shall not assume nor be liable
for any other obligations, debts, contracts or liabilities of Seller. Seller
shall indemnify and hold
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harmless IRIS from and against the full amount of any Losses incurred by IRIS
with respect to claims based on any alleged obligations, debts, contracts or
liabilities of Seller not expressly assumed by IRIS under this Section 1.5.
1.6 SALES AND USE TAX. IRIS and Seller shall cooperate in preparing and
filing use and sales tax returns relating to, and Seller shall pay any sales or
use tax due with regard to, the Transactions.
1.7 ALLOCATION OF PURCHASE PRICE. The parties have negotiated an
allocation of the Purchase Price, including the portion of the Purchase Price
attributable to particular Assets, among the Assets and other matters as set
forth on SCHEDULE 1.7. Each of the parties agrees (i) to report the
Transactions for federal and state income tax purposes in accordance with this
allocation, (ii) to not take any position inconsistent with such allocation on
its tax returns without the consent of the other and (iii) to timely file
federal tax Form 8594 (Asset Acquisition Statement) with the applicable tax
return for the year of the Transactions. Each party shall provide the other
with a draft copy of its federal tax form 8594 at least fifteen (15) days prior
to filing it.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement for IRIS to enter into this Agreement, DITI, PSII and
PSTI, jointly and severally, represent and warrant to IRIS that each of the
following statements is true, correct and complete as of the date hereof:
2.1 EXISTENCE AND RIGHTS. Each of DITI, PSII and PSTI is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. PSIL is a corporation duly incorporated and validly existing
under the laws of the United Kingdom. DITI and each of the Operating Companies
(i) has the corporate power and authority, rights and franchises to own its
properties, to carry on its business as now conducted and to make and carry out
the Transactions and (ii) is duly qualified and in good standing in each
jurisdiction in which the character of its business makes such qualification
necessary.
2.2 AGREEMENTS AUTHORIZED. The execution, delivery and performance by
Seller of this Agreement and each Closing Agreement to which DITI or any
Operating Company is listed as a party have been duly authorized by all
necessary corporate action (including, without limitation, shareholder approval)
and, except as set forth on SCHEDULE 2.2, do not require notice to, or the
consent or approval of, any governmental body, regulatory authority or other
person. This Agreement has been duly executed and delivered by Seller and is a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and general principles of equity. Upon execution and delivery by DITI
or any
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Operating Company, each Closing Agreement to which such entity is listed as a
party will be a legal, valid and binding obligation of such entity
enforceable against such entity in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally and general principles
of equity.
2.3 NO CONFLICT. Subject to obtaining the consents in SCHEDULE 2.2, the
execution, delivery and performance by Seller of this Agreement and each Closing
Agreement to which DITI or any Operating Company is listed as a party will not
(i) breach or constitute grounds for the occurrence or declaration of a default
under or allow another party a right to terminate any Material Assigned Contract
or other material agreement, indenture, undertaking or other instrument to which
DITI or any Operating Company is a party or by which they or any of the Assets
are bound (including by virtue of any "key person" clause); (ii) violate any
provision of Law; (iii) violate any provision of the Articles of Incorporation
or Bylaws of DITI or any Operating Company; or (iv) result in the creation or
imposition of any lien, charge or encumbrance on, or security interest in, any
of the Assets. Seller is a "person" with total assets and annual net sales of
less than $100,000,000 as determined in accordance with the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended, and the regulations promulgated
thereunder.
2.4 CAPITALIZATION. The Controlling Stockholder is the beneficial and
record owner of a majority of the outstanding shares of capital stock of DITI,
and DITI is the beneficial and record owner of all of the outstanding shares of
capital stock of PSII, PSTI and PSISI. PSII and Tony Landells, an employee of
PSIL, are the beneficial and record owners of 75% and 25%, respectively, of the
outstanding ordinary shares of PSIL, and PSII is the beneficial and record owner
of all the outstanding preferred shares of PSIL. PSII will be the beneficial
and record owner of all the outstanding shares of capital stock of PSIL on or
before the Closing Date. Except as set forth on SCHEDULE 2.9, there are no
outstanding options, warrants, convertible debt securities or other rights to
purchase any shares of capital stock of DITI, PSISI or any Operating Company.
2.5 CONTINGENCIES. Except as set forth in the notes to the Financial
Statements or on SCHEDULE 2.5, (i) neither DITI nor any Operating Company is a
party to any express warranty or similar guarantee with respect to any Inventory
or other products previously sold or leased by it, (ii) there is no litigation,
arbitration, other proceedings, written audit requests or, to the knowledge of
Seller, investigations pending against DITI or any Operating Company, any of
their officers or directors (in their capacities as such) or the Assets, and
(iii) to the knowledge of Seller, there is no threat of, or a reasonable basis
for, any such litigation, arbitration, other proceedings or written audit
requests, the results of which could reasonably be expected to have a Material
Adverse Effect. Neither DITI nor any Operating Company is in default with
respect to any order, writ, injunction or decree of any court or other
governmental or regulatory authority.
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2.6 FINANCIAL CONDITION. The Financial Statements, correct and complete
copies of which are attached hereto as SCHEDULE 2.6, (i) are true and correct as
of the date thereof; (ii) fairly and accurately present the consolidated
financial condition of DITI and PSII as of the dates thereof and the
consolidated results of the operations of DITI and PSII for the periods covered
thereby; and (iii) have been prepared in accordance with GAAP. To the best
knowledge of Seller, except as set forth in the Financial Statements, the notes
thereto or SCHEDULE 2.5, DITI and the Operating Companies did not have more than
$30,000 in the aggregate of liabilities or guarantees, matured or unmatured,
contingent or otherwise, as of the date of the Financial Statements which were
not accurately reflected in the Financial Statements, and none have arisen since
that time except in the ordinary course of the Business. The Financial
Statements include adequate reserves for contracts, commitments, warranties and
contingent liabilities to the extent required by GAAP.
2.7 NO SUBSEQUENT CHANGES. Except as set forth on SCHEDULE 2.7, since
December 31, 1995, (i) there has not been any Material Adverse Effect, or any
occurrence or event which could reasonably be expected to have a Material
Adverse Effect; (ii) neither DITI or any Operating Company has entered into,
amended or terminated any commitments, contracts or transactions, or waived any
contractual rights, except in the ordinary course of business, none of which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect; and (iii) neither DITI nor any Operating Company has made any
change in its accounting methods or practices or any revaluations of any Assets
or any reserves or liabilities associated therewith. Since December 31, 1995,
neither DITI nor PSII has directly or indirectly paid, declared, or set aside
any dividends or distributions with respect to, nor repurchased, any of its
capital stock or securities of any class. Since December 31, 1995, neither DITI
nor any Operating Company has paid any interest on, or repaid any principal of,
any debt owed to the Controlling Stockholder or any of his Affiliates. Except
as set forth on SCHEDULE 2.7, there has been no acquisition, disposition or
transfer of Inventory, Equipment, Personalty or other Assets except in the
ordinary course of business since December 31, 1995. Without limiting the
foregoing, since December 31, 1995, there has been no transfer of cash or other
assets from any of the Operating Companies to, or for the behalf of, DITI, the
Controlling Stockholder or any Affiliate of the Controlling Stockholder OTHER
THAN transfers of cash includable in the definition of "Net Cash Transfers to
DITI" as a reduction to the Purchase Price.
2.8 COMPLIANCE WITH LAWS. The business and operations of DITI and the
Operating Companies are and have been in compliance with all Laws, except where
the failure to so comply could not reasonably be expected to have a Material
Adverse Effect. DITI and the Operating Companies have all permits, licenses,
orders, authorizations, registrations, approvals and other analogous instruments
(each of which is listed on SCHEDULE 2.8, is in full force and effect and,
except as disclosed on SCHEDULE 2.8, can be transferred without any consent or
filing), and they have made all filings and registrations and the like, which
are necessary or proper to conduct the Business, except where the failure to
maintain such permits and other instruments or to make such filings and
registrations could not reasonably be expected to have a Material Adverse
Effect.
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2.9 TITLE TO ASSETS. Except as disclosed on SCHEDULE 2.9, DITI and the
Operating Companies have good and marketable title to the Assets free and clear
of any liens, charges, options, adverse claims or security interests except the
Obligations. The Assets include all of the assets necessary or actually used to
conduct the Business.
2.10 INTELLECTUAL PROPERTY. Except as disclosed on SCHEDULE 2.10, DITI and
the Operating Companies are the exclusive owners of all the Intellectual
Property. SCHEDULE 2.10 correctly lists all the Patents, registered Copyrights
and registered Trademarks, the jurisdictions in which they were issued or
registered, the date of issuance or registration and the identification number
assigned thereto. The Patents, registered Copyrights and registered Trademarks
are valid and enforceable in the jurisdictions in which they were issued or
registered, as applicable. There are no options, licenses, royalty agreements
or encumbrances of any kind relating to the Intellectual Property other than as
set forth on SCHEDULE 2.10. The Operating Companies possess the right to use in
perpetuity (without royalty or other payment except as disclosed on SCHEDULE
2.10) all Intellectual Property necessary or actually used to conduct the
Business. Assuming execution of the New Employment Contracts, the failure of
present and former employees and consultants of DITI, the Operating Companies
and their respective predecessors to execute Employee Patent and Confidentiality
Agreements will not have a Material Adverse Effect. SCHEDULE 2.10 correctly
lists all past and present litigation, arbitration or other disputes involving
any of the Intellectual Property (and the outcome or present status thereof).
To the best knowledge of Seller, the operation of the Business, including, but
not limited to, the making, use, or sale of any Product by DITI or any Operating
Company, does not violate or infringe any U.S. or foreign patent, copyright,
trademark, service mark, trade secret or other proprietary interest of any other
person. Without limiting the foregoing, the operation of the Business by the
Operating Companies, including, but not limited to, the making, use, or sale of
any Product by DITI or any Operating Company, does not violate or infringe U.S.
Patent No. 5,447,841 (Methods for Chromosome-Specific Staining) or any foreign
counterpart thereof. Further, to the best knowledge of Seller, no person is
contesting Seller's rights in or to or violating or infringing any of the
Intellectual Property.
2.11 SOFTWARE. SCHEDULE 2.11 contains a complete and accurate list of the
Software. Except as set forth on SCHEDULE 2.10 OR 2.11, PSTI is the exclusive
owner of the Software (including the exclusive right to make, copy, sell,
exploit and provide to others the use of the Software and all derivative works
thereof) free and clear of any liens, options, licenses, royalty agreements or
encumbrances of any kind. PSTI is in actual and sole possession of, and the
Assets include, the complete source code of the Software and all related design
documentation. Except as set forth on SCHEDULE 2.11, each author of the
Software, and every other person who participated in the development of the
Software or any portion thereof or performed any work related thereto
(collectively, the "SOFTWARE AUTHORS"), made his contribution to the Software
within the scope of his employment by an Operating Company or one of their
predecessors as a "work for hire." Except as set forth on SCHEDULE 2.11, the
Software and every portion thereof is an original creation of an Operating
Company or one of their predecessors and
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does not contain any source code or portions of source code (including any
"canned program") created by any parties other than the Software Authors.
Any defects in the Software, and any errors in the related design
documentation, are not, in the aggregate, excessive in light of industry
standards. The Software has in all material respects the features described
in the design documentation or advertisements made available to customers
and, to the best knowledge of Seller, does not contain any "viruses" (as that
term is commonly used in the computer software industry). To the best
knowledge of Seller, the use and sale of the Software in the operation of the
Business does not violate or infringe any U.S. or foreign patent, copyright,
trademark, service mark, trade secret or other proprietary interest of any
other person. Further, to the best of knowledge of Seller, no person is
contesting Seller's rights in or to the Software or is violating or
infringing any of the Software.
2.12 INVENTORY. The Inventory reflected in the Financial Statements or
thereafter acquired by any Operating Company, consists of items of a quantity
and quality usable or salable in the ordinary course of the Business. Except as
disclosed on SCHEDULE 2.12, neither DITI nor any Operating Company is under any
liability or obligation with respect to the return of inventory or merchandise
in the possession of others. Seller has not received written or oral notice
that any Operating Company will experience in the foreseeable future any
material difficulty in obtaining, in the desired quantity and quality and at a
reasonable price and upon reasonable terms and conditions, the raw materials,
services, supplies or component products required for the Business. The values
at which inventories are carried on the Financial Statements reflect the
inventory valuation policy of DITI and the Operating Companies in accordance
with GAAP.
2.13 EQUIPMENT AND PERSONALTY. SCHEDULE 2.13 is a complete, accurate and
correct list of all Equipment not in possession of DITI or an Operating Company,
the location thereof, the party in possession thereof and any arrangements or
understandings regarding the possession thereof. The Equipment and Personalty
is in good operating condition, ordinary wear and tear excepted.
2.14 FILES. The Files include, among other things, (a) all Customer Lists
in the possession of DITI or an Operating Company and which were obtainable from
distributors after reasonable efforts, (b) all documentation relating to all
other Intellectual Property, (c) all documents relating to customer complaints
and (d) all documentation relating to quality assurance and quality control.
2.15 PRODUCT LIABILITY. There are no statements, citations or decisions by
any governmental or regulatory body that any product manufactured, marketed or
distributed at any time by DITI or any Operating Company (a "PRODUCT") is
defective or fails to meet in any material respect any standards promulgated by
any such governmental or regulatory body, including, but not limited to, the
FDA, and, to the best knowledge of Seller, no governmental or regulatory body,
including, but not limited to, the FDA, intends to notify Seller of any
violation of such promulgated standards, including, but not limited to, the
Federal Food, Drug and Cosmetics Act, the regulations promulgated
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thereunder or any comparable state or foreign law or regulation. There have
been no recalls ordered by any such governmental or regulatory body with
respect to any Product. There is no (a) fact relating to any Product that
imposes upon DITI or any Operating Company (or IRIS upon consummation of the
transactions contemplated hereby) a duty to recall any Product or a duty to
warn customers of a defect in any Product or (b), to the best knowledge of
Seller, latent or overt design, manufacturing or other defect in any Product.
To the extent required under applicable Law, each Product has been cleared
for marketing in the United States by the FDA and in every other country in
which such Product is currently marketed by a comparable governmental agency.
2.16 INSURANCE. The material properties and assets of DITI and each
Operating Company which are of an insurable character are insured against loss
or damage by fire and other customary risks, and DITI and the Operating
Companies have liability and worker's compensation insurance with independent
carriers, in each case to the extent and in the manner customary for companies
engaged in a similar business or owning similar assets. SCHEDULE 2.16 correctly
sets forth all policies of insurance maintained by DITI and the Operating
Companies, the amount and type of coverage and the expiration date of such
coverage.
2.17 REAL PROPERTY. SCHEDULE 2.17 correctly identifies all the real
property used in the Business, all of which is leased to an Operating Company.
The leases for such property are listed on SCHEDULE 2.19 as part of the Material
Assigned Contracts.
2.18 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 2.18, DITI and
each Operating Company has been, and is, in full compliance in all material
respects with all Laws relating to pollution or protection of the environment,
including Laws relating to (i) emissions, discharges, releases or threatened
releases or discharges of materials constituting Hazardous Materials into the
environment (including, without limitation, ambient air, surface water, land
surface or subsurface strata) or (ii) the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "ENVIRONMENTAL LAWS") and with all terms and conditions of, all
permits, licenses and other authorizations required for the operation of the
Business under any Environmental Law. There is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter under the Environmental Laws
pending, or, to the best knowledge of Seller, threatened against DITI or any
Operating Company. Seller has delivered to IRIS true and complete copies of all
environmental audits, reports and inspections in its possession or control
relating to any real property used in the Business. Notwithstanding anything to
the contrary contained in this Agreement, Seller makes no representations or
warranties with respect to Environmental Laws or other environmental matters
except as set forth in this Section 2.18.
2.19 MATERIAL ASSIGNED CONTRACTS. SCHEDULES 2.10 AND 2.19 collectively set
forth a correct and complete list of all the Material Assigned Contracts,
including all amendments, modifications and waivers thereto. Seller has
previously delivered to IRIS
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true and complete copies of all the Material Assigned Contracts (or, in the
case of oral Material Assigned Contracts, true and correct summaries
thereof). "MATERIAL ASSIGNED CONTRACTS" shall mean all Assigned Contracts
which are material to the Business, including, without limitation, all
Assigned Contracts (a) relating to Intellectual Property, (b) involving real
property, (c) relating to distributorships, (d) constituting capital leases,
(e) constituting operating leases with aggregate payments over the life of
the lease (assuming exercise of all options) in excess of $30,000, (f)
involving joint ventures, partnerships and similar arrangements or (g) having
a term (whether or not cancelable) of more than one year or potentially
involving the payment or receipt of more than $30,000 in any twelve-month
period. Except as disclosed on SCHEDULE 2.19, each of the Material Assigned
Contracts (including all amendments, modifications and waivers) (a) has been
duly authorized, executed and delivered by DITI, PSII, PSTI and/or PSIL, as
applicable, and, to the best knowledge of Seller, the other parties thereto,
(b) remains in full force and effect to the extent of its terms without any
amendment, modification or waiver not reflected in the copies thereof
previously delivered to IRIS, (c) is binding on the parties thereto in
accordance with and to the extent of its terms and applicable Laws, subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and general principles of
equity and (d) will not be breached by the assignment thereof to IRIS.
Seller has not received any letter or other written notice threatening or
declaring termination of any Material Assigned Contract and does not know of
any reasonable basis for any claim of default by it or any other party to any
Material Assigned Contract. Seller is not restricted by agreement from
carrying on the Business or any other line of business anywhere in the world,
and, to the best knowledge of Seller, none of the employees of DITI or any
Operating Company is bound by any contract or restriction which has or could
be reasonably expected to have a Material Adverse Effect.
2.20 PURCHASE COMMITMENTS AND SALES COMMITMENTS. SCHEDULE 2.20 is a true
and complete list of (i) all Purchase Commitments under which any Operating
Company is obligated, or will become obligated to, pay any particular vendor an
aggregate sum in excess of $30,000; (ii) all Sales Commitments under which any
Operating Company is obligated, or will become obligated to, deliver products
and/or perform services for an aggregate price to any particular customer in
excess of $30,000; and (iii) all bids or proposals (together with a brief
description of each of same) submitted by any Operating Company pursuant to
which it may become obligated to deliver products and/or services for an
aggregate price to any particular customer in excess of $30,000. Seller has
previously delivered to IRIS true and complete copies of all such Purchase
Commitments and Sales Commitments (or, in the case of oral Purchase Commitments
and Sales Commitments, true and correct summaries thereof).
2.21 BUSINESS RELATIONS. DITI and the Operating Companies have good
commercial working relationships with their customers, suppliers and
distributors. Seller has not received notice that any of its customers,
suppliers or distributors intends to terminate or alter its relationship with
DITI or any Operating Company except for terminations or alterations which would
not, in the aggregate, have a Material Adverse
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Effect. Seller has not received notice from customers, suppliers or
distributors that the Transactions will have a material adverse effect on the
Business after the Closing.
2.22 AFFILIATE TRANSACTIONS. Except as disclosed on SCHEDULE 2.22 or in
the notes to the Financial Statements, neither the Controlling Stockholder nor
any of his Affiliates (i) owns (other than ownership of less than one percent
(1%) of the stock of a publicly traded corporation), directly or indirectly,
individually or collectively, any interest in any corporation, partnership,
firm, association or sole proprietorship, which is either a competitor,
potential competitor, customer, supplier or distributor of DITI or any Operating
Company or has an existing contractual relationship with DITI or any Operating
Company; or (ii) owes any money to or is owed any money by DITI or any Operating
Company.
2.23 BENEFIT PLANS. SCHEDULE 2.23 accurately reflects all of the deferred
compensation plans and arrangements maintained by DITI or any of the Operating
Companies, including profit sharing, pension, savings, stock option, stock bonus
and defined contribution plans. Such SCHEDULE identifies all "employee benefit
plans" within the meaning of Section 3(2) of ERISA, all "multiemployer plans"
within the meaning of Section 3(37) of ERISA, all benefit plans maintained
outside the United States primarily for the benefit of non-resident aliens, in
each case with respect to which any material liability under ERISA or otherwise
may be incurred by DITI or any Operating Company (singularly, a "PLAN," and
collectively, the "PLANS"). Except for Plans which are multiemployer plans, no
Plan is a defined benefit plan within the meaning of Section 3(35) of ERISA.
Neither DITI nor any Operating Company is a "substantial employer" with regard
to any multiemployer plan. Each Plan is and has been operated and administered
in accordance with its provisions and applicable law, except where the failures
to do so, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and to the extent required, is "qualified"
within the meaning of 401(a) of the Code, and each related trust is exempt from
taxation under Section 501(a) of the Code, and Seller knows of no current matter
which might materially affect such statuses. As to facts existing on the date
hereof, with respect to any Plan which is not a multiemployer plan and, to the
best of Seller's knowledge with respect to any Plan which is a multiemployer
plan, there is not, and there are no reasonable grounds to expect, any
(i) present liability under ERISA or comparable foreign Laws which has been or
may be incurred by Seller or any Subsidiary; (ii) "reportable event" as within
the meaning of Section 406 of ERISA; or (iii) termination of any Title IV Plans
which liability, termination or reportable event, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. To
the best knowledge of Seller, no persons connected with any Plan have engaged in
non-exempt "prohibited transactions" within the meaning of Section 406 of ERISA
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Neither DITI nor any Operating Company has violated
any of the health care continuation coverage requirements of Section 4980B of
the Code.
2.24 EMPLOYMENT MATTERS. There is no pending or (to the best
knowledge of Seller) threatened litigation by any employees or consultants of
DITI or
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any Operating Company, and there are no pending or (to the best knowledge of
Seller) threatened administrative actions or claims with respect to the
relationship of DITI or any Operating Company to any employee or consultant,
including, without limitation, discrimination claims (whether for sex, age,
race, religion, national origin or any other reason). There are no
controversies regarding compensation or other terms of employment pending or,
to the knowledge of Seller, threatened with any employee(s) of DITI or any
Operating Company (nor have there been any such controversies during the past
three years) which could reasonably be expected to have a Material Adverse
Effect, and Seller does not know of any organizational efforts presently
being made involving any of such employees. No Key Employee has recently
terminated or, to the best knowledge of Seller, has any plans to terminate
his or her employment with DITI and the Operating Companies. SCHEDULE 2.24
lists all the employment agreements with employees of Operating Company and
the names and current compensation levels of each employee of any Operating
Company with a total annual compensation (including reasonably anticipated
bonus payments) over Sixty Thousand Dollars ($60,000), and all collective
bargaining agreements or other contracts or commitments to or with any labor
unions or other employee representatives or groups of employees (the
"EXISTING EMPLOYMENT CONTRACTS").
2.25 ACCREDITED INVESTORS; INVESTMENT INTENT. DITI is an "Accredited
Investor" as defined in Rule 501 of Regulation D promulgated pursuant to the
Securities Act. All of the stockholders of DITI are residents of the State of
Texas. DITI is acquiring the Senior Subordinated Note and the IRIS Warrant (and
if the IRIS Warrant is exercised, will acquire shares of IRIS Common Stock) for
its own account and not with a view to the resale or distribution of any or all
of such securities in violation of the Securities Act, or any applicable state
securities laws, and DITI will not dispose of such securities in violation of
the Securities Act or any applicable state securities laws. DITI acknowledges
that the Senior Subordinated Note, the IRIS Warrant and the shares of IRIS
Common Stock issuable upon exercise of the IRIS Warrant will not be registered
under the Securities Act or any state securities laws except to the extent
provided in the Registration Rights/Standstill Agreement. As a result, such
securities cannot be sold, and must be held indefinitely, unless subsequently
registered under the Securities Act and applicable state securities laws or
unless an exemption from such registration is available. Consequently, DITI
understands that any certificates representing such securities will contain a
legend setting forth restrictions on transfer under such securities laws and the
Registration Rights/Standstill Agreement. Further, DITI acknowledges and
understands that IRIS is and will be issuing such securities pursuant to, and in
reliance on, an exemption from the registration requirements of the Securities
Act and any applicable state securities laws which is, in part, dependent on the
representations and warranties made in this Section 2.25.
2.26 COMMISSIONS. Except as provided in SCHEDULE 2.26, neither Seller nor
any of its officers, directors, agents or employees has employed or incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to the Transactions, and Seller agrees
to hold IRIS harmless from and against any Losses incurred by reason of any
contrary assertions.
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2.27 TAXES. Except as disclosed on SCHEDULE 2.27, DITI and each Operating
Company has (i) timely filed all returns for Taxes required to be filed on or
before the date hereof or has obtained extensions (without penalty or interest)
of the deadline for filing; (ii) paid or adequately reserved on the balance
sheets contained in the Financial Statements for all Taxes owed on such date;
(iii) adequately reserved for deferred Taxes in accordance with GAAP; and
(iv) duly withheld, collected and paid over to the proper governmental
authorities all Taxes and assessments required to have been withheld or
collected and paid over by such entities, all as and to the extent prescribed by
law. Except as disclosed on SCHEDULE 2.27, neither DITI nor any Operating
Company has been advised of any deficiency claimed or proposed to be claimed
against or relating to any of them by any taxing authority which has not been
paid, settled or adequately reserved for in the Financial Statements, and there
are no matters under discussion with any taxing authority which might reasonably
result in the assessment of additional amounts against or relating to DITI or
any Operating Company. There are no liens for Taxes (other than for current
Taxes not yet due and payable) upon the Assets. PSIL is not a party to or bound
by any tax indemnity, tax sharing or tax allocation agreement. PSIL has never
been a member of an affiliated group of corporations within the meaning of
Section 1504 of the Code. PSIL has never been a party to any joint venture,
partnership, or other arrangement or contract which could be treated as a
partnership for federal or foreign income tax purposes.
2.28 ACCURACY OF INFORMATION FURNISHED. To the best knowledge of Seller,
no statement or information contained in any schedule, certificate or other
document or information furnished, or to be furnished, by or on behalf of Seller
(i) contains or will contain any untrue statement of a material fact, or
(ii) omits or will omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which it was
made, not misleading, except where such untrue statement or omission was
corrected in subsequent information delivered or made available to IRIS or its
representatives by Seller or its representatives.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF IRIS
As an inducement for DITI, PSII and PSTI to enter into this Agreement, IRIS
represents and warrants to DITI, PSII and PSTI that each of the following
statements is true, correct and complete as of the date hereof:
3.1 EXISTENCE AND RIGHTS. IRIS (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (ii) has the corporate power and authority to own its properties, to carry
on its business as now conducted and to make and carry out the Transactions. On
or prior to the Closing Date, IRIS will be duly qualified and in good standing
as a foreign corporation in the State of Texas.
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3.2 AGREEMENTS AUTHORIZED. The execution, delivery and performance by
IRIS of this Agreement and the Closing Agreements to which IRIS is listed as a
party have been duly authorized by all necessary corporate action and, except as
set forth on SCHEDULE 3.2, do not require notice to, or the consent or approval
from, any governmental body, regulatory authority or other person. This
Agreement has been duly executed and delivered by IRIS and is a legal, valid and
binding obligation of IRIS enforceable against IRIS in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to creditors' rights generally and general
principles of equity. Upon execution and delivery by IRIS, the Closing
Agreements will be legal, valid and binding obligations of IRIS enforceable in
accordance with their terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and general principles of equity.
3.3 NO CONFLICT. The execution, delivery and, subject to obtaining the
consents in SCHEDULE 3.2, performance by IRIS of this Agreement and each Closing
Agreement to which IRIS is listed as a party will not (i) breach or constitute
grounds for the occurrence or declaration of a default under, or allow another
party a right to terminate any agreement, indenture, undertaking or other
instrument to which IRIS is a party or by which it or any of its properties may
be bound or affected, (ii) violate any provision of Law, the violation of which
could have a Material Adverse Effect or (iii) violate any provision of the
Articles of Incorporation or Bylaws of IRIS.
3.4 SEC FILINGS. IRIS has previously furnished to Seller complete and
correct copies of the IRIS Annual Report on Form 10-K for the year ended
December 31, 1995, Proxy Statement dated April 29, 1996 and Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996 (collectively, the "IRIS SEC
DOCUMENTS"). The IRIS SEC Documents comply in all material respects with the
requirements of the Exchange Act and none of the IRIS SEC Documents contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except to the
extent modified or superseded by a document subsequently filed with the SEC.
Since December 31, 1995 through the date hereof, IRIS has not made any filings
with the Securities and Exchange Commission other than (i) the IRIS SEC
Documents, (ii) a Current Report on Form 8-K dated February 16, 1996 (reporting
the acquisition of StatSpin Technologies), (iii) a Registration Statement on
Form S-3 dated March 27, 1996 (relating to the resale of up to 466,311 shares of
IRIS Common Stock by selling securityholders issued or issuable in connection
with the acquisition of StatSpin Technologies) and (iv) a Current Report on Form
8-K dated May 9, 1996 (reporting the execution of the Letter of Intent). The
financial statements of IRIS, including the notes thereto, included in the IRIS
SEC Documents (the "IRIS FINANCIAL STATEMENTS") comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC), fairly
present the consolidated financial position of IRIS at the
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dates thereof and of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments) and are complete and correct in all material respects. The IRIS
Financial Statements include adequate reserves for contracts, commitments,
warranties and contingent liabilities to the extent required by GAAP.
3.5 CAPITALIZATION. Except for (i) items disclosed in the IRIS SEC
Documents, (ii) the issuance of additional stock options under the IRIS stock
option plans and (iii) the continuing right of employees to purchase shares of
IRIS Common Stock under the IRIS Key Employee Stock Purchase Plan, there are no
outstanding options, warrants, convertible debt securities or other rights to
purchase any shares of capital stock of IRIS. Since March 31, 1996, IRIS has
not issued or sold any shares of capital stock or any options, warrants,
convertible debt securities or other rights to purchase shares of capital stock
except for (i) stock options to purchase 44,200 shares of IRIS Common Stock
granted under the IRIS stock option plans and (ii) shares of IRIS Common Stock
issued pursuant to the exercise of outstanding warrants described in the SEC
Documents. During the period from March 31, 1996 through the date hereof, IRIS
did not sell any shares of IRIS Common Stock under the IRIS Key Employee Stock
Purchase Plan.
3.6 CONTINGENCIES. Except as disclosed in the IRIS SEC Documents, there
is no litigation, arbitration, other proceedings, written audit requests or, to
the knowledge of IRIS, investigations pending against IRIS or any of its
officers or directors (in their capacities as such) which could reasonably be
expected to have a Material Adverse Effect. IRIS is not in default with respect
to any order, writ, injunction or decree of any court or other governmental or
regulatory authority.
3.7 NO MATERIAL CHANGES. Since March 31, 1996, there has not been any
Material Adverse Effect, or any occurrence or event which could reasonably be
expected to have a Material Adverse Effect.
3.8 COMPLIANCE WITH LAWS. The business and operations of IRIS are and
have been in compliance with all Laws, except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect.
3.9 IRIS SECURITIES. The Senior Subordinated Note and IRIS Warrant, when
issued at the Closing, will be duly authorized and validly issued, and IRIS has
reserved for issuance upon the exercise of the IRIS Warrant the requisite number
of shares of IRIS Common Stock. The shares of IRIS Common Stock issuable upon
exercise of the IRIS Warrant, when issued in compliance therewith, will be duly
and validly issued, fully paid and non-assessable.
3.10 PURCHASING INVENTORY FOR RESALE. IRIS is purchasing the Inventory for
resale in the ordinary course of business.
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3.11 COMMISSIONS. Neither IRIS nor any of its officers, directors, agents
or employees has employed or incurred any liability to any broker, finder or
agent for any brokerage fees, finder's fees, commissions or similar amounts with
respect to the Transactions, and IRIS agrees to hold Seller harmless from and
against Losses incurred by reason of any contrary assertions.
3.12 ACCURACY OF INFORMATION FURNISHED. To the best knowledge of IRIS, no
statement or information contained in any schedule, certificate or other
document or information furnished, or to be furnished, by or on behalf of IRIS
(i) contains or will contain any untrue statement of a material fact, or (ii)
omits or will omit to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which it was
made, not misleading, except where such untrue statement or omission was
corrected in subsequent information delivered or made available by IRIS or its
representatives to Seller or its representatives.
SECTION 4
COVENANTS OF SELLER
4.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Seller agrees that until the
Closing Date, unless IRIS shall otherwise consent in writing in advance, the
Operating Companies will:
4.1.1 Conduct business only in the ordinary and usual course
consistent with past practice;
4.1.2 Use reasonable efforts to preserve the goodwill with their
customers, suppliers, distributors and others having business relations with
them;
4.1.3 Not transfer or encumber any of the Assets except for the sale
of Inventory in the ordinary course of business;
4.1.4 Maintain their books and records in accordance with past
practices and policies, except for such changes of which they will advise IRIS
as are required to comply with GAAP or applicable Law;
4.1.5 Preserve their business organization intact and use reasonable
efforts to keep available to IRIS the services of their present employees;
4.1.6 Continue to maintain all of the Equipment, Inventory and
Personalty in good repair, order and condition, reasonable wear and tear
excepted;
4.1.7 Not enter into or amend, waive any rights under, or exercise
any option to extend or renew, any Material Assigned Contract except in the
ordinary and usual course consistent with past practice;
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4.1.8 Use reasonable efforts to maintain in full force and effect all
policies of insurance with respect to the Business now in effect (or secure
comparable replacement policies in the event the insurer cancels or declines to
renew such policies) and give all notices and present all claims under all such
policies in a timely fashion;
4.1.9 Not (i) borrow or agree to borrow any funds, or incur, assume
or guarantee any obligation or liability (absolute or contingent), which is not
incurred in the ordinary course of business; or (ii) pay, discharge or satisfy
any Claim, liability or obligation (absolute, accrued, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business consistent with past practice of liabilities or obligations reflected,
or reserved against, in the Financial Statements or incurred after the dates of
the Financial Statements in the ordinary course of business consistent with past
practice;
4.1.10 Not effect any transaction or enter into any contract or
arrangement between any Operating Company, on the one hand, and DITI, the
Controlling Stockholder or any Affiliate of the Controlling Stockholder, on the
other hand, including, without limitation, PSISI, Terra Laboratories, Ltd. and
Terra Laboratories, Ltd. II;
4.1.11 Not advance any funds to, guarantee any indebtedness of, or
incur or pay any expenses or liabilities to or on behalf of, DITI, the
Controlling Stockholder or any Affiliate of the Controlling Stockholder,
including, without limitation, PSISI, Terra Laboratories, Ltd. and Terra
Laboratories, Ltd. II, OTHER THAN the payment of Corporate Management Expenses
to DITI in the ordinary course consistent with past practice;
4.1.12 Pay any interest on, or repay any principal of, any
indebtedness to or on behalf of DITI, the Controlling Stockholder or any
Affiliate of the Controlling Stockholder, including, without limitation, PSISI,
Terra Laboratories, Ltd. and Terra Laboratories, Ltd. II; and
4.1.13 Not declare, set aside or pay any dividend, make any other
distribution in respect of their stock or make any direct or indirect
redemption, purchase or other acquisition of their stock (except as contemplated
by Section 6.12).
4.2 REPRESENTATIONS TRUE. Until the Closing Date, Seller will perform
such reasonable acts as may be necessary or appropriate to make all of its
representations and warranties set forth in this Agreement true and correct on
and as of the Closing Date. Seller will inform IRIS promptly upon discovery
that any of its representations or warranties ceases to be true or correct.
4.3 ACCESS. From the date hereof through the earlier of the Closing or
termination of this Agreement, Seller will (i) permit IRIS and its authorized
representatives to have full access during normal business hours and under
reasonable conditions to any and all premises, properties, files, books,
records, documents and
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other information of Seller, (ii) provide IRIS and its authorized
representatives with all information which such parties reasonably request
concerning the Business, including without limitation, the financial
condition and results of operation of Seller, (iii) otherwise reasonably
cooperate with and assist IRIS and its authorized representatives in
connection with their investigation, (iv) upon the request of IRIS, deliver
to IRIS true and correct copies of any documents requested, and (v) permit
IRIS and its auditors to confer with Seller's auditors, Buffington & Company,
P.C. regarding their audits and reviews of the Financial Statements.
4.4 SUPPLEMENTAL INFORMATION. From the date hereof through the Closing
Date, Seller shall deliver to IRIS immediately upon Seller's discovery or access
thereto, any information (i) as may be reasonably required to update the
information set forth on the SCHEDULES hereto or (ii) that otherwise amends,
updates or conflicts with any of the matters discussed in the representations or
warranties set forth in Section 2.
4.5 PERMITS. Seller will make all filings with governmental bodies and
other regulatory authorities and obtain all other permits, approvals,
authorizations and consents of all third parties necessary for Seller to
consummate the Transactions, including those listed on SCHEDULE 2.2.
4.6 SECURITY INTERESTS. On or before the Closing Date, Seller shall
secure termination of any liens, charges, options, adverse claims or security
interests in or to the Assets except the Obligations.
4.7 CLOSING AGREEMENTS. Subject to the fulfillment by IRIS or waiver by
Seller of the conditions precedent contained in Section 7, Seller will, and will
cause all of its Affiliates which are listed as parties to the Closing
Agreements to, execute and deliver the Closing Agreements prior to or at the
Closing.
4.8 LEGAL OPINION. Seller shall use its best efforts to cause Andrews &
Kurth LLP, counsel to Seller, to render an opinion at the Closing, dated as of
the Closing Date, in substantially the form attached hereto as EXHIBIT C.
SECTION 5
COVENANTS OF IRIS
5.1 REPRESENTATIONS TRUE. Until the Closing Date, IRIS will perform such
reasonable acts as may be necessary or appropriate to make all of its
representations and warranties set forth in this Agreement true and correct on
and as of the Closing Date. IRIS will inform Seller promptly upon discovery
that any of its representations or warranties ceases to be true or correct.
5.2 SUPPLEMENTAL INFORMATION. From the date hereof through the Closing
Date, IRIS shall deliver to DITI immediately upon IRIS' discovery or access
thereto, any
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information that amends, updates or conflicts with any of the matters
discussed in the representations or warranties set forth in Section 3.
5.3 PERMITS. IRIS will make all filings with governmental bodies and
other regulatory authorities and obtain all permits, approvals, authorizations
and consents of all third parties, necessary for IRIS to consummate the
Transactions, including those listed on SCHEDULE 3.2.
5.4 CLOSING AGREEMENTS. Subject to the fulfillment by Seller or waiver by
IRIS of the conditions precedent contained in Section 6, IRIS will execute and
deliver the Closing Agreements prior to or at the Closing.
5.5 LEGAL OPINION. IRIS shall use reasonable efforts to cause Irell &
Manella LLP, counsel for IRIS, to render an opinion at the Closing, dated as of
the Closing Date, in substantially the form attached hereto as EXHIBIT D.
SECTION 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF IRIS
Subject to the proviso in clause (ii) of Section 9.1, the obligations of
IRIS to consummate this Agreement and the Transactions are subject to the
satisfaction, prior to or as of the Closing Date, of each of the following
conditions, each of which may be waived by IRIS in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement or in any certificate or
document delivered to IRIS pursuant hereto shall be true and correct on and as
of the Closing Date as though made at and as of that date (except where such
representation and warranty is made as of a date specifically set forth
therein), and Seller shall have delivered to IRIS a certificate to that effect.
6.2 COMPLIANCE WITH COVENANTS. Seller shall have in all material respects
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by them at the Closing Date, and
Seller shall have delivered to IRIS a certificate to that effect.
6.3 CONSENTS OBTAINED; FILINGS. Seller shall have obtained all consents
and approvals from, and shall have completed all declarations, filings and
registrations with, government agencies and private third parties that are
required for the execution, delivery and performance of this Agreement by
Seller.
6.4 NO MATERIAL ADVERSE EFFECT. There shall have been no Material Adverse
Effect, or any occurrence or event which could reasonably be expected to have a
Material Adverse Effect.
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6.5 LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall
have been instituted or overtly threatened by any governmental agency seeking
to restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions, and no legal action or proceeding shall have been instituted or
overtly threatened by any private party seeking material monetary awards from
IRIS in connection with the Transactions.
6.6 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Seller in connection with the Transactions and all
documents incident thereto shall be reasonably satisfactory in form and
substance to IRIS and its counsel, and IRIS and said counsel shall have
received all such certified or other copies of such documents as it may
reasonably request.
6.7 OPINION OF COUNSEL FOR SELLER. IRIS shall have received the
favorable opinion of Andrews & Kurth, counsel to Seller, dated the Closing
Date, in substantially the form attached as EXHIBIT C.
6.8 CLOSING AGREEMENTS. The Closing Agreements shall have been
executed and delivered by all parties thereto, unless the failure to do so is
a result of a breach by IRIS.
6.9 TRANSFER DOCUMENTS. Seller shall have executed and delivered the
Transfer Documents and thereby have delivered to IRIS good and marketable
title to the Assets free and clear of any liens, charges, options, adverse
claims or security interests except the Obligations.
6.10 CLOSING DOCUMENTS. IRIS shall have received, in form and substance
reasonably satisfactory to its counsel, each and every closing document
required to be delivered to it as set forth in this Agreement.
6.11 COMMISSIONS. Seller shall have paid all the commissions listed on
SCHEDULE 2.26.
6.12 CAPITAL STOCK OF PSI. PSII shall have acquired and delivered to
IRIS beneficial and record ownership of all the outstanding shares of capital
stock of PSIL, and Mr. Landells shall have waived any and all rights he may
have to acquire stock of PSIL, including, without limitation, through any
option or right of first refusal.
6.13 PENDING LAWSUIT. DITI shall have (i) paid all fees and expenses
owed to the law firm of Singleton & Cooksey with respect to the Stockholder
Lawsuit, (ii) secured from Singleton & Cooksey a written release of all
liability for such fees and expenses for any employees to whom IRIS offers
employment or (iii) agreed in writing to indemnify such employees against any
liability for such fees and expenses.
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SECTION 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Subject to the proviso in clause (iii) of Section 9.1, the obligations
of Seller to consummate this Agreement and the Transactions are subject to
the satisfaction, prior to or at the Closing, of the following conditions,
each of which may be waived by Seller in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of IRIS contained in this Agreement or in any certificate or
document delivered to Seller pursuant hereto shall be true and correct on and
as of the Closing Date as though made at and as of that date (except where
such representation and warranty is made as of a date specifically set forth
therein), and IRIS shall have delivered to Seller a certificate to such
effect.
7.2 COMPLIANCE WITH COVENANTS. IRIS shall in all material respects
have performed and complied with all terms, agreements, covenants and
conditions of this Agreement to be performed or complied with by it at the
Closing Date, and IRIS shall have delivered to Seller a certificate to that
effect.
7.3 CONSENTS OBTAINED; FILINGS. IRIS shall have obtained all consents
and approvals from, and shall have completed all declarations, filings and
registrations with, government agencies and private third parties that are
required for the execution, delivery and performance of this Agreement by
IRIS.
7.4 NO MATERIAL ADVERSE EFFECT. There shall have been no Material
Adverse Effect, and no occurrence or event which could reasonably be expected
to result in a Material Adverse Effect.
7.5 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by IRIS in connection with the Transactions and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller and its counsel, and Seller and said counsel shall have
received all such certified or other copies of such documents as they may
reasonably request.
7.6 OPINION OF COUNSEL FOR IRIS. Seller shall have received the
favorable opinion of Irell & Manella, counsel for IRIS, dated the Closing
Date, substantially in the form attached as EXHIBIT D.
7.7 LEGAL ACTIONS OR PROCEEDINGS. No legal action or proceeding shall
have been instituted or overtly threatened by any governmental agency seeking
to restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions, and no legal action or proceeding shall have been instituted or
overtly threatened by any private party seeking material monetary awards from
Seller in connection with the Transactions.
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7.8 CLOSING AGREEMENTS. The Closing Agreements shall have been
executed and delivered by all parties thereto, unless the failure to do so is
a result of a breach by Seller or a refusal by any of its Affiliates.
7.9 CLOSING DOCUMENTS. Seller shall have received, in form and
substance reasonably satisfactory to its counsel, each and every closing
document required to be delivered to it as set forth in this Agreement.
7.10 PURCHASE PRICE. Seller shall have received, as of the Closing
Date, the Purchase Price in the manner set forth in Section 1.4.
SECTION 8
INDEMNIFICATION
8.1 RIGHT OF INDEMNIFICATION. Subject to Section 8.4, IRIS and Seller
each agree to indemnify and hold the other (and the other's respective
officers, directors, employees and agents) harmless from and against the full
amount of all Losses arising out of or resulting from a breach of any
representation, warranty or covenant made by the Indemnifying Party in this
Agreement.
8.2 DEDUCTIBLE AMOUNT. Notwithstanding the foregoing, neither IRIS, on
the one hand, nor Seller, on the other hand, shall be required to indemnify
the other under the terms of this Agreement unless and until the aggregate
amount of the Losses of the other exceeds $50,000, in which case such
indemnification obligations shall apply to all Losses in excess of such
threshold. The foregoing threshold shall not apply against IRIS for failure
to make payments under the Senior Subordinated Note.
8.3 SURVIVAL OF REPRESENTATIONS; EFFECT OF DISCLOSURES. The
representations and warranties in this Agreement shall survive the Closing
and remain in full force and effect regardless of any disclosures made to or
investigations made by a party.
8.4 TIME LIMIT. Notwithstanding Section 8.3, neither party may seek
indemnity under this Section 8 or any other recovery or remedy for any Loss
under this Agreement at any time after two (2) years from the Closing Date;
PROVIDED, HOWEVER, that IRIS may seek indemnification hereunder for any Loss
based on (i) any obligations, debts, contracts and liabilities not expressly
assumed by IRIS (including, without limitation, as a result of a breach of
the representations and warranties concerning the obligations, debts,
contracts and liabilities of PSIL) until 30 days after the expiration of the
applicable statute of limitations for the relevant obligation, debt, contract
or liability or (ii) any covenant contained in Section 10 (Other Covenants)
until two (2) years from the date the covenant is breached.
8.5 PROCEDURES FOR INDEMNIFICATION. If any claim is asserted or any
action or proceeding is brought in respect of which indemnity may be sought,
the Indemnified
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Party will promptly notify the Indemnifying Party in writing of such asserted
claim or the institution of such action or proceeding; PROVIDED, HOWEVER,
that the Indemnified Party's failure to so notify the Indemnifying Party will
not relieve the Indemnifying Party from any liability it might otherwise have
on account of this indemnity, except to the extent that the Indemnifying
Party has been materially prejudiced by such failure to notify. If requested
by the Indemnified Party in the aforementioned notice, the Indemnifying Party
shall undertake full responsibility for the defense of any Third-Party Claim
which, if successful, would result in an obligation of indemnity under this
Agreement. The Indemnifying Party may contest or settle any such claim on
such terms as the Indemnifying Party may choose, PROVIDED that the
Indemnifying Party will not have the right, without the Indemnified Party's
prior written consent, to settle any such claim if such settlement (i) arises
from or is part of any criminal action, suit or proceeding, (ii) contains a
stipulation to, confession of judgement with respect to, or admission or
acknowledgement of, any liability or wrongdoing on the part of the
Indemnified Party, (iii) relates to any tax matters, (iv) provides for
injunctive relief, or other relief or finding other than money damages, which
is binding on the Indemnified Party, or (v) does not contain an unconditional
release of the Indemnified Party. Such defense will be conducted by
reputable attorneys retained by the Indemnifying Party at the Indemnifying
Party's cost and expense, but the Indemnified Party will have the right to
participate in such proceedings and to be separately represented by attorneys
of its own choosing. The Indemnified Party will be responsible for the costs
of such separate representation unless the Indemnified Party will have
reasonably concluded that the interests of the Indemnified Party and the
Indemnifying Party in the action conflict in such a manner and to such an
extent as to make advisable, consistent with applicable standards of
professional responsibility, the retention of separate counsel for the
Indemnified Party, in which case the Indemnifying Party will pay for one (but
not more than one) separate counsel chosen by the Indemnified Party.
8.6 COOPERATION. The Indemnifying Party and the Indemnified Party
shall cooperate in determining the validity of any Third-Party Claim for any
Loss for which a claim of indemnification may be made hereunder. Each party
shall also use all reasonable efforts to minimize all Losses.
SECTION 9
TERMINATION
9.1 GROUNDS FOR TERMINATION. Subject to Section 9.3, this Agreement
may be terminated: (i) at any time prior to the Closing by either IRIS or
Seller if there has been a breach of the representations, warranties or
covenants of the other party set forth herein which is reasonably expected to
have a Material Adverse Effect, but only if such breach remains uncured for a
period of ten (10) days after receipt of written notice of such breach from
the nonbreaching party; (ii) by IRIS if any condition stated in Section 6
cannot be or have not been satisfied by the Closing Date, PROVIDED, HOWEVER,
IRIS may not terminate this Agreement pursuant to this clause "ii" if IRIS
would be
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entitled to indemnification under this Agreement for the failure to satisfy
such condition, money damages would adequately compensate IRIS for any Losses
resulting therefrom and the Losses could not reasonably be expected to exceed
of $50,000; (iii) by Seller if any condition stated in Section 7 cannot be or
have not been satisfied by the Closing Date, PROVIDED, HOWEVER, Seller may
not terminate this Agreement pursuant to this clause "iii" if Seller would be
entitled to indemnification under this Agreement for the failure to satisfy
such condition, money damages would adequately compensate Seller for any
Losses resulting therefrom and the Losses could not reasonably be expected to
exceed of $50,000; (iv) by mutual agreement of Seller and IRIS; or (v) by
Seller or IRIS if the Closing shall not have occurred within forty-five (45)
days of the date hereof, provided that the right to terminate this Agreement
pursuant to this Section 9.1 shall not be available to a party who has
materially breached any representation, warranty or covenant of this
Agreement.
9.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in Section 9.1, all obligations of the parties hereunder will terminate
without liability of any party to any other party, except (i) that the
obligations set forth in Sections 2.26 and 3.11 (Commissions), 10.1
(Confidentiality), 12.2 (Expenses), 12.9 (Governing Law; Consent to
Jurisdiction), 12.10 (Attorneys' Fees) and 12.13 (Arbitration) will survive
any such termination and (ii) for liability for Losses caused by any prior
breach (which shall not include the mere failure of any condition precedent).
9.3 RIGHTS TO PROCEED. If any of the conditions specified in Section 6
have not been satisfied, IRIS will have the right to proceed with the
Transactions without waiving any of its rights hereunder to seek damages for
Losses related to any breach of a representation, warranty or covenant; and
if any of the conditions specified in Section 7 have not been satisfied,
Seller will have the right to proceed with the Transactions without waiving
any of its rights hereunder to seek damages for Losses related to any breach
of a representation, warranty or covenant. Either party may elect by written
notice to postpone the Closing Date, but not by more than fifteen (15) days,
if a condition to closing has not been met either because of circumstances
beyond its reasonable control or an unintentional breach of a representation,
warranty or covenant by it and such condition is reasonably expected to be
met or cured on or before the new Closing Date.
9.4 SPECIFIC PERFORMANCE. The Assets to be transferred under this
Agreement are uniquely suited for the purposes and needs of IRIS. If Seller
should default in its obligations under this Agreement, the parties each
acknowledge that the remedy at law would be inadequate to compensate IRIS.
Accordingly, IRIS, in addition to any other available rights or remedies, may
at its sole option sue in equity for specific performance, and Seller
expressly waives the defense that a remedy in damages will be adequate.
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SECTION 10
OTHER COVENANTS
10.1 CONFIDENTIALITY. Each party hereto shall strictly maintain the
confidential nature of, and not disclose to any third party or use for any
purpose other than in connection with the Transactions without prior written
consent, (a) any confidential information learned about the other in the course
of the Transactions or (b) the exact terms of this Agreement, or the Closing
Agreements or any other documents signed at the Closing, unless and to the
extent necessary to carry out the Transactions, PROVIDED THAT Seller will not
make any public announcements regarding the Transactions prior to Closing, and
IRIS will consult with Seller in preparing any public announcement, including
affording Seller an opportunity to review in advance any press releases
regarding the Transactions. Each party shall be responsible for any breach of
this Section 10.1 by its officers, employees, agents or advisors. Upon
termination of this Agreement pursuant to Section 9.1, Seller and IRIS each
agree to return or destroy any and all materials containing any confidential
information. These restrictions on use and obligations of confidentiality will
not apply to any information (i) to the extent the receiving party is required
to disclose such information by law or applicable regulation or under court or
governmental order, (ii) then in the public domain by acts not attributable to
such party, (iii) hereafter received by the receiving party from a third party
source on an unrestricted basis, (iv) known to the receiving party prior to the
date of disclosure hereunder except to the extent subject to a prior
confidentiality agreement, or (v) necessary to enforce this Agreement provided
that all reasonable steps are taken to limit the amount of disclosure. If the
Closing occurs, IRIS shall be released from any obligations under this Section
10.1 with regard to the Business or Assets. Seller shall not disclose or use
any confidential information about the Business or Assets before or after
Closing without the prior written consent of IRIS except (i) if this Agreement
is terminated pursuant to Section 9.1, (ii) before Closing in the ordinary
course of business or (iii) as provided in clauses (i), (ii), (iii) or (v) of
the fourth sentence of this Section 10.1.
10.2 EMPLOYMENT OF CERTAIN PERSONNEL. As far in advance of the Closing as
is practicable, IRIS shall provide Seller with a list of employees who will be
offered employment following the Closing (which shall constitute at least 75% of
the employees of the Operating Companies as of the date hereof) on an at-will
basis, subject to termination by IRIS or each employee for any reason or no
reason at any time, and Seller shall use reasonable efforts to assist IRIS in
hiring and retaining the employees of Seller on that basis. Any and all costs
of severance of Seller's employees not hired or retained by IRIS shall be for
the account of Seller, and IRIS shall not be deemed to have assumed any benefits
obligations of Seller to its employees. In accordance with Internal Revenue
Service Procedure 84-77, IRIS will include on the Wage and Tax Statement (Form
W-2) issued to each continuing employee for the year ending December 31, 1996,
all wages paid to, and taxes withheld from, such employee by Seller during such
period. Furthermore, Seller shall transfer to IRIS promptly after the Closing
the Employee Withholding Allowance Certificate (Form W-4) for each continuing
employee.
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10.3 CHANGE OF NAMES. Promptly following the Closing, DITI, PSII and PSTI
shall amend their Articles of Incorporation to change their names to names which
in the reasonable opinion of IRIS are not confusingly similar to the name
"Perceptive Scientific" or any of the Trademarks, and thereafter none of them
shall have any further rights to use such name or any of the Trademarks. DITI
shall cause PSISI to take comparable actions and cease using such names and
Trademarks within 180 days of the Closing Date.
10.4 COLLECTION OF ACCOUNTS RECEIVABLE. Seller covenants that in the event
it receives any payments with regard to any Asset, including the Accounts
Receivable, after the Closing, it will promptly pay the amount actually
collected directly to IRIS.
10.5 NOTIFICATION OF SUPPLIERS AND DISTRIBUTORS. After the Closing, if
requested by IRIS, Seller shall promptly notify all of its suppliers and
distributors that the Business has been transferred to IRIS.
10.6 NON-COMPETITION. For a period of five (5) years from the Closing
Date, DITI and each Operating Company agree that they will not, directly or
indirectly, engage in, own, manage, operate, join, control or participate in the
ownership, management, operation or control of any business engaged in
developing, manufacturing and/or marketing digital image processing or analysis
products or services in any city or county in the United States of America or
any comparable subdivision of any foreign country; PROVIDED, HOWEVER, that DITI
may own, manage and operate a business engaged in the Well Log Business. Seller
hereby represents and warrants to IRIS that Seller is currently engaged in
substantial activities related to the Business worldwide. The foregoing
covenant is a material part of the consideration for the purchase of the Assets,
and the Purchase Price includes consideration for such covenant. Furthermore,
without limiting the foregoing, neither DITI, PSISI nor any Operating Company
shall directly or indirectly, without the prior written consent of IRIS, (i)
hire any employee or consultant of IRIS for a period of two (2) years from the
Closing Date, (ii) induce or take any action intended to induce any employee or
consultant of IRIS to cease providing or otherwise alter the services provided
to IRIS for a period of five (5) years from the Closing Date or (iii) induce or
attempt to induce any customer of IRIS or any present customer of PSII, PSTI or
any of their subsidiaries to cease doing business with IRIS or to do business
with any of its then competitors or potential competitors for a period of five
(5) years from the Closing Date.
10.7 NOMINEE TO IRIS BOARD OF DIRECTORS. Promptly after the Closing Date,
IRIS shall appoint the Controlling Stockholder to the IRIS Board of Directors as
a Class 1 Director to serve until the next annual meeting of the IRIS
stockholders. During his tenure on the IRIS Board of Directors, the Controlling
Stockholder shall be entitled to cash compensation, reasonable expenses and
indemnification to the same extent as any other non-employee director. The
Controlling Stockholder may also invite one (1) advisor of his choosing, subject
to the reasonable approval of IRIS, to attend the IRIS Board meetings. DITI
shall be responsible for all compensation and expenses of the Controlling
Stockholder's advisor attending IRIS Board meetings. If, at the time of the
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next annual meeting of the IRIS stockholders, (i) the Senior Subordinated Note
remains outstanding or (ii) DITI continues to beneficially own at least 50% of
the Warrant Shares (including, for this purpose, any Warrant Shares issuable
upon exercise of the unexercised portion of IRIS Warrant then owned by DITI),
the Controlling Stockholder shall have the right to nominate a replacement
nominee for DITI, subject to approval of the other members of the IRIS Board of
Directors based on their past practice of qualifying nominees, and IRIS shall
use reasonable efforts to effect such nominee's election to the IRIS Board of
Directors at such annual meeting. In addition to cash compensation, reasonable
expenses and indemnification, the replacement nominee shall also be entitled to
stock option awards under the IRIS stock option plans to the same extent as any
other non-employee director. If, at any time, the Senior Subordinated Note has
been repaid in full and DITI no longer beneficially owns at least 50% of the
Warrant Shares (including, for this purpose, any Warrant Shares issuable upon
exercise of the unexercised portion of IRIS Warrant then owned by DITI), then,
upon the request of IRIS, DITI shall cause the Controlling Stockholder or his
replacement nominee, as applicable, to voluntarily resign from the IRIS Board of
Directors. DITI acknowledges and agrees that, until IRIS has the right to
request the resignation of DITI's nominee to the IRIS Board of Directors, IRIS
will consider DITI and the Controlling Stockholder to be "affiliates" of IRIS as
defined in Rule 144 promulgated pursuant to the Securities Act.
10.8 COOPERATION BY SELLER.
10.8.1 CONSULTING SERVICES. For a period of 90 (ninety) days from
the Closing Date, Seller shall from time to time consult with IRIS during normal
business hours to the extent reasonably requested by IRIS for the purpose of
transferring the operation of the Business from Seller to IRIS. Such services
may include, without limitation, (i) advising IRIS with respect to Seller's
procedures for manufacturing digital imaging processing and analysis
instruments, (ii) introducing IRIS to the suppliers and distributors for the
Business, (iii) responding to questions about the Business or the Assets and
(iv) providing accounting, insurance, administrative, information systems and
such other services as IRIS may reasonably request. IRIS shall reimburse Seller
at its cost for providing such services. Seller acknowledges and agrees that
title and full ownership rights to any modifications, changes, derivative works
and enhancements made to the Intellectual Property by Seller in the course of
providing such consulting services under this Agreement shall vest in and remain
the sole property of IRIS.
10.8.2 ADDITIONAL ACTS. Each party hereto agrees, both before and
after the Closing, to execute any and all further documents and writings and
perform such other reasonable actions which may be or become necessary or
expedient to effectuate and carry out the Transactions (which shall not include
any obligation to make payments). Moreover, if following the Closing, either
party shall discover any Material Assigned Contract which was not listed on
SCHEDULE 2.19, at the request and option of IRIS, Seller shall take all
reasonable steps necessary to assign such contract to IRIS except that Seller
shall not be required to pay money or other valuable consideration. Such
assignment shall not relieve Seller of responsibility for Losses of IRIS caused
by the failure to make the transfer on the Closing Date.
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10.8.3 CONFIRMATION OF TITLE. At and following the Closing, Seller
shall promptly from time to time execute and deliver any assignments or other
assurances or reports which IRIS shall reasonably advise Seller are necessary to
vest, perfect or confirm title to any Asset in IRIS.
10.8.4 ANNOUNCEMENTS. Seller will not make any public announcements
regarding the Transactions prior to Closing, and IRIS will consult with Seller
in preparing any public announcement, including affording Seller an opportunity
to review in advance any press releases regarding the Transactions.
10.9 COOPERATION BY BUYER. For a period of 90 (ninety) days from the
Closing Date, Buyer shall cooperate with Seller as reasonably requested for the
purposes of facilitating the separation of the Business from Seller's remaining
businesses and operations. Such cooperation shall consist of reasonable access
to the Files and office Equipment and consultations with IRIS employees during
normal business hours.
SECTION 11
DEFINITIONS
The following terms shall have the meanings set forth below:
"ACCOUNTS RECEIVABLE" shall mean all payments, rights to payment, accounts
receivable, revenues or other sums payable to PSII or PSTI (and those of DITI
which relate to the Business).
"AFFILIATE" shall mean any person which, directly or indirectly through one
or more intermediaries, controls, is controlled by, or is in common control
with, a specified person.
"ASSETS" shall mean all of the real and personal property, tangible and
intangible, of every kind, nature and description, and wherever located, owned
or leased by PSII or PSTI (and those owned or leased by DITI which relate to the
Business), including, without limitation, the Accounts Receivable, Assigned
Contracts, Equipment, Files, Intellectual Property, Inventory, Personalty, PSIL
Stock, Purchase Commitments, Sales Commitments and the goodwill associated with
the Business, EXCEPT the Retained Assets. For purposes of Section 2
(Representations and Warranties of Seller), Section 4 (Covenants of Seller) and
Section 6 (Conditions Precedent to Obligations of IRIS), the term Assets shall
also be deemed to include the Assets of PSIL.
"ASSIGNED CONTRACTS" shall mean all agreements, written and oral, to which
DITI, PSII or PSTI is a party and which relate to the Business, including,
without limitation, the Employee Patent and Confidentiality Agreements and those
agreements set forth on SCHEDULE 2.19, other than Existing Employment Contracts,
Purchase
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Commitments, Sales Commitments and agreements relating to indebtedness for
borrowed money.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 2.6.
"BUSINESS" shall mean the business of developing, manufacturing and/or
marketing digital image processing and analysis products and services
(including, without limitation, the proprietary PowerGene-TM- product line of
genetic analysis instruments) as presently conducted, as conducted in the past
12 months and as contemplated to be conducted in the Private Placement
Memorandum, by DITI and the Operating Companies; PROVIDED, HOWEVER, that the
Business shall not include the Well Log Business.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in
Section 1.2
"CLOSING AGREEMENTS" shall mean (i) the License Agreement, (ii) the
Termination and Release Agreements, (iii) the Senior Subordinated Note, (iv) the
IRIS Warrant, (v) the Registration Rights/Standstill Agreement, (vi) the
Stockholder Guaranty, (vii) the Stockholder Noncompetition Agreement and
(viii) the New Employment Contracts.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONTROLLING STOCKHOLDER" shall mean Edward Randall III, an individual and
the majority stockholder of DITI.
"COPYRIGHTS" shall mean all U.S. and foreign copyrights, whether or not
registered, together with any pending applications for the registration thereof,
owned by or licensed to DITI, PSII or PSTI, including, without limitation, those
listed on SCHEDULE 2.10.
"CORPORATE MANAGEMENT EXPENSES" shall have the meaning set forth in
Section 1.4.1.
"CUSTOMER LISTS" shall mean all lists of, and information concerning, the
end users of the Products, wherever located and regardless of the form in which
stored.
"DITI" shall mean Digital Imaging Technologies, Inc., a Delaware
corporation.
"EFFECTIVE DATE" shall have the meaning set forth in Section 1.2.
"EQUIPMENT" shall mean all equipment, tools, machinery, molds, tooling and
similar tangible assets owned by PSII or PSTI (and those owned by DITI which are
used in the Business), wherever located and whether in the possession of DITI,
any Operating Company or others.
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"EMPLOYEE PATENT AND CONFIDENTIALITY AGREEMENTS" shall mean any and all
agreements executed by any present or former employee or consultant of DITI,
PSII or PSTI or any of their respective predecessors for the purpose, in whole
or in part, of protecting rights to, or the confidentiality of, proprietary
technology or information. In the event that such agreements are contained in a
more general employment or consulting agreement, the term "Employee Patent and
Confidentiality Agreement" shall mean only the provisions of such agreement
relating to the protection of rights to, or the confidentiality of, proprietary
information or technology.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 2.18.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXISTING EMPLOYMENT CONTRACTS" shall have the meaning set forth in
Section 2.24.
"FDA" shall mean the U.S. Food & Drug Administration.
"FILES" shall mean all files, documents, papers and other records of PSII
or PSTI (and those of DITI which pertain to the Business or any of the Assets),
wherever located, whether in the possession of DITI, any Operating Company or
others and regardless of the form in which they are stored.
"FINANCIAL STATEMENTS" shall mean (i) the audited consolidated financial
statements of DITI for the years ended December 31, 1995 and 1994, together with
the related notes and schedules and the independent auditor's report thereon,
(ii) the unaudited consolidated financial statements of DITI for the three-month
period ended March 31, 1996, (iii) the unaudited consolidated financial
statements of PSII for the twelve-month period ended December 31, 1995 and (iv)
the unaudited consolidated financial statements of PSII for the three-month
period ended March 31, 1996.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"HAZARDOUS MATERIALS" shall mean (i) any substance defined as "hazardous"
under any Environmental Law, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA");
(ii) any substance or matter which results in liability to any person or entity
from discharge of or exposure to such substance or matter under any statutory,
regulatory or common law theory; (iii) any substance or matter which becomes
subject to a federal, state, local or foreign agency order or requirement for
removal, treatment or remediation; (iv) crude oil or any fraction thereof, and
(v) any material defined as "hazardous" under Texas or United Kingdom law.
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"INDEMNIFIED PARTY" shall mean, with respect to any Loss or alleged Loss,
the party seeking indemnity hereunder.
"INDEMNIFYING PARTY" shall mean, with respect to any Loss or alleged Loss,
the party from whom indemnity is being sought hereunder.
"INTELLECTUAL PROPERTY" shall mean the Software, Patents, Copyrights,
Trademarks, Customer Lists and other Proprietary Information.
"INVENTORY" shall mean all tangible goods held for future sale in the
Business, including, without limitation, raw materials and work in progress,
wherever located and whether in the possession of DITI, any Operating Company or
others.
"IRIS" shall mean International Remote Imaging Systems, Inc., a Delaware
corporation.
"IRIS COMMON STOCK" shall mean shares of common stock, $.01 par value per
share, of IRIS.
"IRIS WARRANT" shall mean a warrant, in substantially the form of EXHIBIT B
attached hereto, to purchase 875,000 shares of IRIS common stock at an exercise
price of $8.00 per share from the Closing Date until the Fifth Anniversary of
the Closing Date.
"KEY EMPLOYEES" shall mean the following employees of the Operating
Companies: (i) Mr. Tony Landells, President of PSIL, (ii) Dr. Ken Castleman,
Vice President of Research of PSII, (iii) Mr. Don Winkler, Vice President of
Business Development of PSII, (iv) Mr. Paul Douglas, Vice President of Sales of
PSIL, (v) Mr. Dindy Ramkisson, North American Sales Manager of PSII, (vi) Steve
Clarner, Senior Software Engineer for PSII, and (vii) Steve Rosser, Software
Engineer for PSII.
"KNOWLEDGE" shall mean (i) in the case of Seller, the actual knowledge of
the Controlling Stockholder or any director or senior officer of DITI or any
Operating Company and (ii) in the case of IRIS, any director or senior officer
of IRIS. "BEST KNOWLEDGE" shall mean the "knowledge" of such persons after
reasonable inquiry to the extent prudent under the circumstances, and "SENIOR
OFFICER" shall mean any officer with a title at least equal to vice president.
"LAW" shall mean all foreign, federal, state and local laws, ordinances,
regulations, judgments, orders, decrees or rules of any court, arbitrator or
governmental, regulatory or administrative agency or entity.
"LETTER OF INTENT" shall mean that certain letter dated May 3, 1996 from
IRIS to DITI confirming the parties' mutual intention that IRIS acquire the
Business.
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"LICENSE AGREEMENT" shall mean a license agreement between IRIS and PSISI,
dated as of the Closing Date, in substantially the form of EXHIBIT F attached
hereto.
"LOSS" shall mean any and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and court costs incident to
any suit, action, investigation or other proceedings), damages and losses, net
of any insurance proceeds received with respect thereto.
"MATERIAL ADVERSE EFFECT" shall mean (i) with respect to any representation
or warranty made by Seller or any condition to the obligations of IRIS, a
material adverse effect on the Transactions, the Assets, the Obligations, the
Business or the prospects for the Business and (ii) with respect to any
representation or warranty made by IRIS or any condition to the obligations of
Seller, a material adverse effect on the Transactions or on the business or
financial condition of IRIS and its subsidiaries taken as a whole. For purposes
of this definition, the terms Assets and Obligations shall include the Assets
and Obligations of PSIL.
"MATERIAL ASSIGNED CONTRACTS" shall have the meaning set forth in
Section 2.19.
"NET CASH TRANSFERS TO DITI" shall have the meaning set forth in
Section 1.4.1.
"NEW EMPLOYMENT CONTRACTS" shall mean written employment agreements
satisfactory in form and substance to IRIS, effective as of the Closing Date,
between IRIS and each of the Key Employees for a term of not less than two (2)
years.
"OBLIGATIONS" shall mean the obligations of PSII and/or PSTI under (i) the
Assigned Contracts, (ii) the Payables, (iii) the Purchase Commitments and
(iv) the Sales Commitments. Without expanding the foregoing definition, the
Obligations shall not include (i) liabilities or expenses relating to the
negotiation or performance of this Agreement (including, without limitation,
commissions, legal fees, employee bonuses and the cost of reacquiring the
minority interest in PSIL) which shall be incurred and paid solely by DITI and
not by any of the Operating Companies, (ii) liabilities associated with property
or assets not transferred or delivered to IRIS as part of the Assets,
(iii) accrued vacation, (iv) federal or state income or franchise taxes,
(v) liabilities to, or incurred on behalf of, PSISI, (vi) liabilities to, or
incurred on behalf of, the Controlling Stockholder or any of his Affiliates
(including, without limitation, Terra Laboratories, Ltd. or Terra Laboratories,
Ltd. II), (vii) liabilities or expenses relating to the Stockholder Lawsuit,
including, without limitation, legal fees and expenses payable to the firm of
Singleton & Cooksey, (viii) any liabilities or obligations for borrowed money
(except PSIL's line of credit with National Westminster Bank which shall remain
in effect under which there shall be no amounts outstanding on the Closing Date)
or (ix) any liabilities or obligations to DITI. For purposes of Section 2
(Representations and Warranties of Seller), Section 4 (Covenants of Seller) and
Section 6 (Conditions Precedent to Obligations of IRIS), the term Obligations
shall also be deemed to include the Obligations of PSIL.
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"OPERATING COMPANIES" shall mean PSII, PSTI and PSIL.
"PATENTS" shall mean all U.S. and foreign patents and pending patents,
together with any enhancements or improvements thereto, owned by or licensed to
DITI, PSII or PSTI, including, without limitation, those listed on
SCHEDULE 2.10.
"PAYABLES" shall mean all of the outstanding accounts payable to trade
creditors, accrued payroll, accrued and withheld payroll taxes and accrued and
withheld sales taxes reflected on PSII's consolidated balance sheet dated as of
December 31, 1995 or incurred subsequent to the date thereof in the ordinary
course of the Business consistent with past practice and reflected on books and
records of PSII or PSTI on the Closing Date.
"PERSONALTY" shall mean all tangible personal property owned by PSII or
PSTI (and any owned by DITI which is used in the Business) except (i) the
Inventory, (ii) the Equipment and (iii) any tangible personal included in the
Retained Assets.
"PRIVATE PLACEMENT MEMORANDUM" shall mean DITI's Private Placement
Memorandum dated December 1995.
"PRODUCTS" shall have the meaning set forth in Section 2.15.
"PROPRIETARY INFORMATION" shall mean all trade secrets, data, methods, test
results, procedures, processes, techniques, systems, inventions, apparatus,
information, manufacturing and engineering drawings and prints, artwork for
circuit boards, artwork for labels, regulatory and manufacturing documentation
and design specifications, know-how and other proprietary information owned by
or licensed to DITI, PSII or PSTI.
"PSII" shall mean Perceptive Scientific Instruments, Inc., a Delaware
corporation and wholly-owned subsidiary of DITI.
"PSII CASH" shall have the meaning set forth in Section 1.4.1.
"PSII YEAR-TO-DATE EBIT" shall have the meaning set forth in Section 1.4.1.
"PSIL" shall mean Perceptive Scientific International, Ltd., a United
Kingdom corporation and majority-owned subsidiary of PSII.
"PSIL STOCK" shall mean all the outstanding capital stock of PSIL.
"PSISI" shall mean Perceptive Scientific Imaging Systems, Inc., a Delaware
corporation and wholly-owned subsidiary of DITI.
"PSTI" shall mean Perceptive Scientific Technologies, Inc., a Delaware
corporation and wholly-owned subsidiary of DITI.
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"PURCHASE PRICE" shall have the meaning set forth in Section 1.4.1.
"PURCHASE COMMITMENTS" shall mean the outstanding obligations of PSII and
PSTI to purchase Equipment or Inventory after the Closing Date incurred in the
ordinary course of the Business consistent with past practice.
"REGISTRATION RIGHTS/STANDSTILL AGREEMENT" shall mean a Registration
Rights/Standstill Agreement between IRIS and DITI, dated as of the Closing Date,
in substantially the form of EXHIBIT G attached hereto.
"RETAINED ASSETS" shall mean (i) the PSII Cash and the cash and cash
equivalents of DITI, (ii) the capital stock of PSII, PSTI and PSISI, (iii) the
Personalty listed on SCHEDULE 0, (iv) the accounts receivable by DITI which are
NOT related to the Business, (v) all notes and other accounts receivable by DITI
or any of the Operating Companies from the Controlling Stockholder or any of his
Affiliates, (vi) any refunds due to Seller for tax liabilities previously
overpaid by DITI or any of the Operating Companies and (vii) all equipment and
furniture used exclusively by PSISI.
"SALES COMMITMENTS" shall mean the outstanding obligations of PSII or PSTI
to sell Inventory or provide related services after the Closing Date incurred in
the ordinary course of the Business consistent with past practice.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER" shall mean DITI, PSII and PSTI.
"SENIOR SUBORDINATED NOTE" shall mean a $7,000,000 principal amount 8 1/2%
Senior Subordinated Note due 2001, dated as of the Closing Date, in
substantially the form of EXHIBIT A attached hereto.
"SOFTWARE" shall mean all software products (including, without limitation,
both source code and object code) owned by DITI, PSII or PSTI, including all
enhancements, versions, releases and updates of such products, and any other
software products in development regardless of its stage of development.
"STOCKHOLDER GUARANTY" shall mean a Guaranty Agreement between IRIS and the
Controlling Stockholder in substantially the form of EXHIBIT L attached hereto.
"STOCKHOLDER LAWSUIT" shall mean the lawsuit referred to in Note 12 (Prior
Contingency) to the Financial Statements for the year ended December 31, 1995
relating to the purchase of certain assets.
"STOCKHOLDER NONCOMPETITION AGREEMENT" shall mean a Noncompetition
Agreement between IRIS and the Controlling Stockholder in substantially the form
of EXHIBIT M attached hereto.
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"TAX OR TAXES" shall mean any and all federal, state, local, foreign and
other net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profits, customs, duties or other taxes, fees, assessments or charges
of any kind whatever, together with any interest and any penalties, additions to
tax or additional amounts with respect thereto.
"TERMINATION AND RELEASE AGREEMENTS" shall mean terminations of loan
agreements and/or releases of security interests in the Assets, dated as of the
Closing Date, in substantially the form of EXHIBIT E attached hereto, from all
third parties whose release is required for Seller to consummate the
Transactions and deliver good and marketable title to the Assets free and clear
of any liens, charges, options, adverse claims or security interests except the
Obligations.
"THIRD-PARTY CLAIM" shall mean a claim brought by a third party for which
indemnification is sought pursuant to this Agreement.
"TRADEMARKS" shall mean all U.S. and foreign trade names (including, but
not limited to, the trade names "Perceptive Scientific Instruments", "Perceptive
Scientific Technologies", "Perceptive Scientific International", "Perceptive
Scientific Microscopy" and "Perceptive Scientific Imaging Systems") trademarks
and service marks (together with any pending applications for any of the
foregoing) owned by or licensed to DITI, PSII or PSTI, including, without
limitation, those listed on SCHEDULE 2.10.
"TRANSACTIONS" shall mean the transactions contemplated by this Agreement.
"TRANSFER DOCUMENTS" shall mean (i) the Bill of Sale attached hereto as
EXHIBIT H, (ii) the Assumption Agreement attached hereto as EXHIBIT I, (iii) the
Patent Assignment attached hereto as EXHIBIT J, (iv) the Trademark Assignment
attached hereto as EXHIBIT K and (v) such other documents as IRIS may reasonably
request for the purpose of transferring ownership of the Assets to IRIS.
"WARRANT SHARES" shall mean the shares of IRIS Common Stock issuable upon
exercise of the IRIS Warrant.
"WELL LOG BUSINESS" shall mean the business of developing, manufacturing,
marketing and selling digital image processing and analysis products and
services for use solely in the oil and gas industry.
SECTION 12
MISCELLANEOUS
12.1 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and any documents
referred to herein or executed contemporaneously herewith constitute the
parties' entire
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agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof; PROVIDED, HOWEVER, that the paragraphs of the Letter of Intent which
are expressly designated as binding shall remain in full force and effect.
This Agreement may not be amended, altered or modified except by a writing
signed by the parties.
12.2 EXPENSES. Except as set forth in Section 1.6 (Sales and Use Tax) or
12.10 (Attorneys' Fees), whether or not the Transactions are consummated, none
of the parties hereto shall have any obligation to pay any of the fees and
expenses of any other party incident to the negotiation, preparation and
execution of this Agreement or any related agreements, including the fees and
expenses of counsel, accountants, investment bankers and other experts.
12.3 WAIVERS. Seller may by written notice to IRIS, or IRIS may, by
written notice to the Seller, (a) extend the time for the performance of any of
the obligations or other actions of the other parties under this Agreement;
(b) waive any inaccuracies in the representations or warranties of the other
parties contained in this Agreement or in any document delivered pursuant to
this Agreement; (c) waive compliance with any of the conditions or covenants of
the other parties contained in this Agreement; or (d) waive performance of any
of the obligations of the other parties under this Agreement. With regard to
any power, remedy or right provided herein or otherwise available to any party
hereunder, (i) no waiver or extension of time will be effective unless expressly
contained in a writing signed by the waiving party or its representative, and
(ii) no alteration, modification or impairment will be implied by reason of any
previous waiver, extension of time, delay or omission in exercise or other
indulgence.
12.4 COOPERATION. Each party hereto agrees, both before and after the
Closing Date, to execute any and all further documents and writings and to
perform such other actions which may be or become necessary or expedient to
effectuate and carry out this Agreement.
12.5 THIRD-PARTY BENEFITS. None of the provisions of this Agreement will
be for the benefit of, or enforceable by, any third-party beneficiary.
12.6 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. At any time prior to the Closing Date, IRIS may assign its
rights and obligations hereunder to a wholly-owned subsidiary of IRIS; however,
such assignment will not release IRIS from any obligations hereunder to Seller.
Except for such right of IRIS, none of the parties may assign any of its rights
under this Agreement without the prior written consent of the others.
12.7 REMEDIES NOT EXCLUSIVE. Subject to Section 12.13 (Arbitration of
Disputes), no remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy will be
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cumulative and will be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise.
The election of any one or more remedies will not constitute a waiver of the
right to pursue other available remedies.
12.8 NOTICES. All notices under this Agreement will be in writing and will
be delivered by personal service or facsimile or certified mail (or, if
certified mail is not available, then by first class mail), postage prepaid, to
such address as may be designated from time to time by the relevant party, and
which will initially be as set forth below. Any notice sent by certified mail
will be deemed to have been given three (3) days after the date on which it is
mailed. All other notices will be deemed given when received. No objection may
be made to the manner of delivery of any notice actually received in writing by
an authorized agent of a party. Notices will be addressed as follows or to such
other address as the party to whom the same is directed will have specified in
conformity with the foregoing:
(a) If to IRIS:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Fred H. Deindoerfer
Chairman of the Board and President
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attn: Theodore E. Guth, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
(b) If to Seller
Digital Imaging Technologies, Inc.
2950 North West Loop, Suite #1050
Houston, Texas 77092
Attn: James L. Hurn
Chief Executive Officer
Telephone: (713) 956-2165
Facsimile: (713) 956-2185
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With a copy to:
Andrews & Kurth LLP
Texas Commerce Tower
600 Travis, Suite 4200
Houston, Texas 77002
Attn: Robert V. Jewell, Esq.
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
12.9 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without regard to the conflict of laws rules of the State of
Delaware or any other jurisdiction that would call for the application of the
laws of any jurisdiction other than the State of Delaware. Each party hereto
hereby irrevocably consents, for itself and its legal representatives, partners,
successors and assigns, to the exclusive jurisdiction of the Courts of the State
of Delaware for all purposes in connection with any action or proceeding that
arises from or relates to this Agreement, and further agrees that, subject to
Section 12.13 (Arbitration of Disputes), any action arising from or relating to
this Agreement shall be instituted and prosecuted only in the courts of the
State of Delaware, and hereby waives any rights it may have to personal service
of summons, complaint, or other process in connection therewith, and agrees that
service may be made by registered or certified mail to such party at the address
set forth in Section 12.8 (Notices).
12.10 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation or arbitration.
12.11 HEADINGS. The Section headings in this Agreement are inserted only as
a matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular Section.
12.12 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect. To the extent permitted by applicable law, the
parties hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect. Further, if the period of time, the
extent of the geographic area, or the scope of the proscribed activities covered
by Section 10.6 (Non-Competition) should be deemed unenforceable, then
Section 10.6 shall be construed to cover the maximum period of time, geographic
area and scope of proscribed activities (not to exceed the maximum time,
geographic area or scope set forth herein) as may be valid under applicable law.
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12.13 ARBITRATION OF DISPUTES. Except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Agreement, including, but not limited
to, its validity, interpretation, enforceability or breach, or (ii) the
relationship between the parties (including its commencement and termination)
which are not settled by agreement between the parties, shall be settled by
arbitration conducted exclusively in Wilmington, Delaware before a board of
three arbitrators, one selected by each party, and the third by the two
persons so selected, all in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA") then in effect. The notice
of intent to arbitrate shall name one arbitrator, and the party(ies)
receiving the notice shall name the second arbitrator within 15 days or the
moving party may select the second arbitrator from a list supplied by the
AAA. In the event that these two arbitrators cannot agree upon a third
arbitrator within 15 days, then the third arbitrator shall be selected from
the list provided by the AAA with the parties striking names in order with
the party striking first to be determined by the flip of a coin. The parties
hereby consent to the in personam jurisdiction of the courts of the State of
Delaware for purposes of confirming any such award and entering judgment
thereon. In any arbitration proceedings hereunder, (a) all testimony of
witnesses shall be taken under oath; (b) discovery will be allowed to the
same extent as available under the rules then applicable to civil actions
under Delaware law; (c) upon conclusion of any arbitration, the arbitrators
shall render findings of fact and conclusions of law in a written opinion
setting forth the basis and reasons for any decision reached and deliver such
documents to each party to this Agreement along with a signed copy of the
award; and (d) the rules of evidence as then applicable to civil actions
under Delaware law shall be applied in the arbitration. Each party agrees
that the arbitration provisions of this Agreement are its exclusive damage
remedy and expressly waives any right to seek redress in another forum. Each
party shall bear the fees of the arbitrator appointed by it, and the fees of
the neutral arbitrators shall be borne equally by each party during the
arbitration, but the fees of all arbitrators shall be borne by the losing
party.
12.14 AGREEMENT NEGOTIATED. The parties hereto are sophisticated and
have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of any
statutory or common law rule relating to the interpretation of contracts
against the drafter of any particular clause should be applied in this case
and therefore waive its effects.
12.15 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By: /s/ Fred H. Deindoerfer
----------------------------------
Name: Fred H. Deindoerfer
--------------------------------
Title: President
-------------------------------
"DITI"
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ James L. Hurn
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Name: James L. Hurn
--------------------------------
Title: Chief Executive Officer
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"PSII"
PERCEPTIVE SCIENTIFIC INSTRUMENTS,
INC., a Delaware corporation
By: /s/ James L. Hurn
----------------------------------
Name: James L. Hurn
--------------------------------
Title: Chief Executive Officer
-------------------------------
"PSTI"
PERCEPTIVE SCIENTIFIC TECHNOLOGIES,
INC., a Delaware corporation
By: /s/ James L. Hurn
----------------------------------
Name: James L. Hurn
--------------------------------
Title: Chief Executive Officer
-------------------------------
The undersigned hereby represents and warrants to IRIS that (i) he has
consented to the Transactions in his capacity as the sole stockholder of
DITI, (ii) he will not revoke such consent and (iii), subject to the
satisfaction or waiver by Seller of the conditions precedent to the
obligations of Seller, he will execute and deliver to IRIS on or before the
Closing Date all the Closing Agreements to which he is listed as a party.
"CONTROLLING STOCKHOLDER"
By: /s/ Edward Randall III
----------------------------------
Edward Randall III
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INDEX
SCHEDULES
0 Retained Assets
1.7 Allocation of Purchase Price
2.2 Consents, Notices and Approvals (Seller)
2.5 Contingencies of Seller
2.6 Financial Statements
2.7 Subsequent Changes
2.8 Permits
2.9 Title to Assets
2.10 Intellectual Property
2.11 Software
2.12 Inventory
2.13 Equipment and Personalty
2.16 Insurance
2.17 Real Property
2.18 Environmental Matters
2.19 Material Assigned Contracts
2.20 Purchase and Sales Commitments
2.22 Affiliate Transactions
2.23 Benefit Plans
2.24 Employment Matters
2.26 Commissions (Seller)
2.27 Taxes
3.2 Consents, Notices and Approvals (IRIS)
EXHIBITS
A Senior Subordinated Note
B IRIS Warrant
C Legal Opinion of Andrews & Kurth LLP, counsel to Seller
D Legal Opinion of Irell & Manella LLP, Counsel to IRIS
E Termination and Release
F License Agreement
G Registration Rights/Standstill Agreement
H Bill of Sale
I Assignment and Assumption Agreement
J Patent Assignment
K Trademark Assignment
L Stockholder Guaranty
M Stockholder Noncompetition Agreement
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER THE SECURITIES
LAWS OR "BLUE SKY" LAWS OF ANY STATE AND HAS NOT BEEN
QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED.
AS A RESULT, SUCH SECURITY MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR "BLUE
SKY" LAWS OR APPLICABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS THEREOF. ANY SALE OR TRANSFER OF THIS SECURITY,
OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IS
SUBJECT TO THE PRIOR DELIVERY TO THE ISSUER OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE
ISSUER THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
8 1/2% SENIOR SUBORDINATED NOTE DUE 2001
$7,000,000 July ___, 1996
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a Delaware corporation
("IRIS"), for value received, hereby promises to pay to DIGITAL IMAGING
TECHNOLOGIES, INC., a Delaware corporation ("DITI"), the principal sum of
Seven Million Dollars ($7,000,000), together with all accrued and unpaid
interest, on or before July ___, 2001 ("DUE DATE"). This 8 1/2% Senior
Subordinated Note due 2001 (the "NOTE") is being issued pursuant to the terms
of that certain Asset Purchase Agreement dated as of July ___, 1996 by and
among IRIS, DITI and certain other parties (the "ASSET PURCHASE AGREEMENT")
and in reliance on certain representations made therein to IRIS.
1. INTEREST. (a) IRIS promises to pay interest on the unpaid
principal amount of this Note at the rate of Eight and One-Half Percent (8
1/2%) per annum (computed on the basis of a 365-day year) from the date this
Note is issued until maturity. Subject to Section 4 (Subordination), IRIS
will pay interest quarterly on February 1, May 1, August 1 and November 1 of
each year, commencing _________ ___, 1996, or if any such day is not a
business day, on the next succeeding business day;
(b) All past due principal and interest on this Note
shall bear interest from maturity of such principal or interest (in whatever
manner same may be brought about) at the lower of (i) the rate borne by this
Note plus two percent (2%) per annum or (ii) the maximum legal nonusurious
rate of interest permitted by applicable law ("MAXIMUM RATE").
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2. PREPAYMENT. Subject to Section 4 (Subordination), IRIS may prepay
all or any part of the outstanding principal balance due under this Note at
any time without premium or penalty. Upon subsequent issuance by IRIS of
equity securities generating net proceeds in excess of $14,500,000, IRIS
shall immediately upon receipt of such net proceeds apply fifty percent (50%)
of the excess to the prepayment of this Note. All prepayments shall be
applied first against accrued but unpaid interest to the date of payment and
the balance of such payment shall be applied against the principal hereof.
3. METHOD OF PAYMENT. Principal and interest are payable in lawful
money of the United States of America in immediately available funds to DITI
at its office located at 2950 North Loop West, Suite 1050, Houston, Texas
77092 or at such other address as designated in writing to IRIS.
4. SUBORDINATION.
4.1 SUBORDINATION TO SENIOR DEBT. The payment of principal and
interest on this Note is subordinated in right of payment, to the extent and
in the manner provided in this Section 4, to the prior payment in full of all
Senior Debt. This subordination is for the benefit of and enforceable by the
holder of the Senior Debt, and DITI shall hold any payments received by DITI
in violation of this Section 4 in trust for the benefit of the holder of the
Senior Debt.
4.2 PREPAYMENTS OF PRINCIPAL. No prepayment of principal shall be
made on account of this Note (i) unless and until all principal and interest
shall have been paid in full with respect to that portion of the Senior Debt
used to pay the cash portion of the purchase price under the Asset Purchase
Agreement or (ii) if, immediately after the payment thereof, IRIS would be in
default with respect to any financial covenant contained in the Senior Credit
Agreement.
4.3 PRINCIPAL AND INTEREST. No payment of principal or interest
shall be made on account of this Note (i) upon the maturity of any part or
all of the Senior Debt, by lapse of time, acceleration or otherwise, unless
and until all matured principal and interest thereon shall have been paid in
full, (ii) upon a default in the payment of principal or interest on any
Senior Debt when the same becomes due and payable, unless and until such
default shall have been cured or waived, or (iii) upon the receipt by IRIS
from the holder of Senior Debt of notice of any other default with respect to
the Senior Debt contractually permitting the holder of the Senior Debt to
accelerate the maturity thereof immediately without further notice or the
expiration of any applicable grace periods, unless and until such other
default shall have been cured or waived.
4.4 SENIOR DEBT. For purposes of this Note, "SENIOR DEBT" shall
mean all principal (not to exceed $11,500,000), interest, fees and other sums
payable from time to time under or with respect to the Credit and Security
Agreement dated as of ________ ___, 1996 between IRIS and City National Bank,
as amended, restated, extended or otherwise modified from time to time (the
"SENIOR CREDIT AGREEMENT"); provided that the Senior Debt shall not include
any extensions or renewals of the Senior
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Credit Agreement beyond the Due Date. Senior Debt shall also include any
indebtedness the proceeds of which are used to refinance, renew or replace
Senior Debt in a principal amount which may exceed the principal amount of
the Senior Debt so refinanced, renewed or replaced but in any event may not
exceed $11,500,000 in principal amount; provided that the such refinancing,
renewal or replacement shall not include any extensions or renewals beyond
the Due Date.
4.5 GOVERNING LAW; CONSENT TO JURISDICTION. Notwithstanding Section 10
(Governing Law; Consent to Jurisdiction), the provisions of this Section 4
shall be governed by, and construed and enforced in accordance with, the laws
of the State of California without regard to the conflict of laws rules of
the State of California or any other jurisdiction that would call for the
application of the laws of any jurisdiction other than the State of
California. Each party hereto hereby irrevocably consents, for itself and its
legal representatives, partners, successors and assigns, to the exclusive
jurisdiction of the Courts of the State of California for the limited purpose
of any action or proceeding to interpret or enforce the provisions this
Section 4, and further agrees that any action arising solely from or relating
solely to this Section 4 shall be instituted and prosecuted only in the
courts of the State of California located in the County of Los Angeles, and
hereby waives any rights it may have to personal service of summons,
complaint, or other process in connection therewith, and agrees that service
may be made by registered or certified mail to such party at its principal
headquarters.
5. DEFAULT. Upon the occurrence of an Event of Default (as
hereinafter defined), DITI may declare the entirety of this Note, principal
and interest, to be immediately due and payable without any notice, and
failure to exercise said option shall not constitute a waiver on the part of
DITI of the right to exercise the same or any other remedy at any other time.
Each of the following conditions or events shall constitute an "Event of
Default":
(a) default by IRIS in the payment of any installment of principal
when due hereunder or interest within five (5) days when due hereunder;
(b) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging IRIS a bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, readjustment,
arrangement, composition or similar relief for IRIS under the federal
bankruptcy laws or any other similar applicable federal or state law, and
such decree or order shall have continued undischarged and unstayed for a
period of sixty (60) days; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of IRIS or a substantial
part of the property of IRIS, or for the winding up or liquidation of its
affairs, shall have been entered, and such decree or order shall have
remained in force undischarged and unstayed for a period of sixty (60) days;
or any substantial part of the property of IRIS shall be sequestered or
attached and shall not be returned to the possession of IRIS or released from
such attachment within sixty (60) days thereafter;
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(c) IRIS shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy proceeding against
it, shall file a petition or answer or consent seeking reorganization,
readjustment, arrangement, composition or similar relief under the federal
bankruptcy laws, or any other similar applicable federal or state law, or
shall consent to the filing of any such petition, or shall consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy
or insolvency of it or of a substantial part of its property, or shall make
an assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or corporate action
shall be taken by IRIS in furtherance of any of the aforesaid purposes; or
(d) default by IRIS in the payment of principal of, premium (if any)
or interest on or any other payment of money due under, under any obligation
for borrowed money beyond any period of grace provided with respect thereto,
or in the performance of any other agreement, term or condition contained in
any agreement under which any such obligation is created if (i) the principal
amount of such obligation exceeds $500,000 and (ii) either (x) the default
involves the failure to pay principal when due or (y) the holder(s) of such
obligation (or a trustee on behalf of such holder or holders) accelerates its
stated maturity and such default is not waived or cured.
6. USURY. It is the intention of IRIS and DITI to conform strictly to
all applicable usury laws. It is therefore agreed that (i) in the event that
the maturity hereof is accelerated by reason of an election by DITI, or if
same is prepaid prior to maturity, all unearned interest shall be canceled
automatically or, if theretofore paid, shall either be refunded to IRIS or
credited on the unpaid principal amount of this Note, whichever remedy is
chosen by DITI, (ii) the aggregate of all interest and other charges
constituting interest under applicable law and contracted for, chargeable or
receivable under this Note or otherwise in connection with the transaction
for which this Note is given shall never exceed the maximum amount of
interest, nor produce a rate in excess of the Maximum Rate, and (iii) if any
excess interest is provided for, it shall be deemed a mistake and the same
shall either be refunded to IRIS or credited on the unpaid principal amount
hereof and this Note shall be automatically deemed reformed so as to permit
only the collection of the Maximum Rate and amount of interest. All sums
paid or agreed to be paid to the holder of this Note for the use, forbearance
or detention of the indebtedness evidenced hereby to the full extent allowed
by applicable law, shall be amortized, prorated, allocated and spread through
the full term of this Note.
7. WAIVERS. (a) Except as otherwise provided in this Note to the
contrary, IRIS and each surety, endorser or guarantor, if any, waives grace,
notice, demand, presentment for payment, notice of nonpayment, protest,
notice of protest, notice of intention to accelerate, notice of acceleration
of the indebtedness due hereunder and all other notice, filing of suit and
diligence in collecting this Note, and the enforcing of any of the rights of
DITI, and consents and agrees that the time of payment hereof may be extended
without notice at any time and from time to time, and for periods of
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time whether or not for a term or terms in excess of the original term
hereof, without notice or consideration to, or consent from IRIS or any
surety, endorser or guarantor.
(b) With regard to any power, remedy or right provided
herein or otherwise available to any party hereunder, (i) no waiver or
extension of time will be effective unless expressly contained in a writing
signed by the waiving party or its representative, and (ii) no alteration,
modification or impairment will be implied by reason of any previous waiver,
extension of time, delay or omission in exercise or other indulgence.
8. COOPERATION. Each party hereto agrees to execute any and all
further documents and writings and to perform such other actions which may be
or become necessary or expedient to effectuate and carry out this Note.
9. SUCCESSORS AND ASSIGNS. This Note shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. IRIS may not assign this Note without the prior written
consent of DITI. DITI may not assign this Note except (i) to Ed Randall III,
an individual and stockholder of DITI, at any time or (ii) to any third party
after two years from the date hereof.
10. GOVERNING LAW; CONSENT TO JURISDICTION. Subject to Section 4.5
(Subordination--Governing Law; Consent to Jurisdiction), this Note shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without regard to the conflict of laws rules of the State
of Delaware or any other jurisdiction that would call for the application of
the laws of any jurisdiction other than the State of Delaware. Each party
hereto hereby irrevocably consents, for itself and its legal representatives,
partners, successors and assigns, to the exclusive jurisdiction of the Courts
of the State of Delaware for all purposes in connection with any action or
proceeding that arises from or relates to this Note, and further agrees that
any action arising from or relating to this Agreement shall be instituted and
prosecuted only in the courts of the State of Delaware, and hereby waives any
rights it may have to personal service of summons, complaint, or other
process in connection therewith, and agrees that service may be made by
registered or certified mail to such party at its principal headquarters.
11. ATTORNEYS' FEES. DITI shall be entitled to recover any and all
attorneys' fees and court costs required to collect this Note.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO SENIOR SUBORDINATED NOTE
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly
executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By:__________________________________
Name:________________________________
Title:_______________________________
"DITI"
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By:__________________________________
Name:________________________________
Title:_______________________________
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EXHIBIT B
THESE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON THEIR EXERCISE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), NOR UNDER THE SECURITIES LAWS OR "BLUE SKY" LAWS OF ANY
STATE. AS A RESULT, SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR APPLICABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS THEREOF. ANY SALE OR TRANSFER OF SUCH SECURITIES,
OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IS SUBJECT TO THE
PRIOR DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN
FORM AND SUBSTANCE TO THE ISSUER THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
WARRANT CERTIFICATE
Series "F" No. 1 875,000 Warrants
WARRANTS TO PURCHASE SHARES OF
COMMON STOCK OF
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
VOID AFTER JULY __, 2001
This certifies that, for value received, DIGITAL IMAGING TECHNOLOGIES,
INC., a Delaware corporation ("DITI"), is the registered holder of the number of
Warrants (the "WARRANTS") set forth above. Each Warrant entitles DITI, or its
permitted successors and assigns ("HOLDERS"), to purchase from INTERNATIONAL
REMOTE IMAGING SYSTEMS, INC., a Delaware corporation (the "COMPANY"), subject to
the terms and conditions set forth hereinafter, one fully paid and nonassessable
share (a "WARRANT SHARE") of common stock, $.01 par value per share, of the
Company for Eight Dollars ($8.00). The Warrants may be exercised at any time or
from time to time on or after the date hereof and will expire at 5:00 p.m., Los
Angeles time, on _______ ___, 2001, or if such date shall be a holiday or a day
on which banks are authorized to close, then the next following date which is
neither a holiday or a day on which banks are authorized to close (the
"EXPIRATION DATE"). Upon the Expiration Date,
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all rights evidenced by the Warrants shall cease and the Warrants shall
become void. Exercise of a Warrant Share shall be made by surrender of this
Warrant Certificate to the Company at its principal office located at 9162
Eton Avenue, Chatsworth, California 91311 with the form of election to
purchase appearing at the end of this Warrant Certificate duly completed and
signed, and accompanied by payment of the Exercise Price in cash or by
certified or official bank check payable to the order of the Company.
1. DEFINITIONS. As used in this Warrant Certificate, the following terms
shall have the following meanings:
1.1 "CLOSING PRICE" shall mean the closing price per share of the
Common Stock on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or traded on any such
exchange, on the NASDAQ National Market System or, if not listed or traded on
any such exchange or system, the mean of the closing bid and asked prices per
share on NASDAQ or, if such quotations are not available, the fair market value
as reasonably determined by the Board of Directors of the Company or any
committee of such Board.
1.2 "COMMON STOCK" means (i) the class of stock designated as the
common stock, $.01 par value per share, of the Company on the date hereof or
(ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value. Unless the
context requires otherwise, all references to Common Stock and Warrant Shares in
this Warrant Certificate shall, in the event of an adjustment pursuant to
Section 11 hereof, be deemed to refer also to any other securities or property
then issuable upon exercise of the Warrants as a result of such adjustment.
1.3 "EXERCISE PERIOD" shall mean the period from the date hereof to
5:00 p.m., Los Angeles time on the Expiration Date.
1.4 "EXERCISE PRICE" means Eight Dollars ($8.00) per share of Common
Stock, as adjusted from time to time pursuant to Section 11.
1.5 "EXPIRATION DATE" means ________ ___, 2001, or if such date shall
be a holiday or a day on which banks are authorized to close, then the next
following date which is neither a holiday or a day on which banks are authorized
to close.
1.6 "REGISTRATION RIGHTS AND STANDSTILL AGREEMENT" means the
Registration Rights and Standstill Agreement dated as of even date herewith
between the Company and DITI.
2. EXERCISE. Each Warrant shall entitle the Holder to purchase one
Warrant Share (or such number of Warrant Shares as may result from adjustments
made from time to time as provided herein) upon the exercise thereof during the
Exercise Period at the Exercise Price; PROVIDED, HOWEVER, that the Warrants are
exercisable only for whole shares and cash will be paid in lieu of fractional
shares in accordance with Section 4.3.
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3. FORM OF WARRANT CERTIFICATE. All certificates representing the
Warrants ("WARRANT CERTIFICATES"), which may hereinafter be issued and the
forms of election to purchase shares to accompany such Warrant Certificates
shall be substantially in the form of this Warrant Certificate and may have such
letters, numbers or other marks of identification or designation and such
legends (including, without limitation, a legend referring to restrictions on
resale by statutory underwriters), summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Warrant Certificate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the NASDAQ National Market System or any stock exchange on which the
Warrants may from time to time be listed. All Warrant Certificates shall be
executed on behalf of the Company by its President or any Vice President.
Warrants shall be dated as of the date of issuance either upon their initial
issuance or transfer by the Company.
4. DURATION AND EXERCISE OF WARRANTS.
4.1 (a) EXERCISE PERIOD. The Warrants may be exercised at any time
or from time to time during the Exercise Period. Upon the Expiration Date, all
rights evidenced by the Warrants shall cease and the Warrants shall become void.
(b) MANNER OF EXERCISE. Subject to the provisions of this
Warrant Certificate, the Holder shall have the right to purchase from the
Company (and the Company shall issue and sell to the Holder) the number of fully
paid and nonassessable Warrant Shares set forth on this Warrant Certificate (or
such number of Warrant Shares as may result from adjustments made from time to
time as provided in this Warrant Certificate), at the Exercise Price, upon
(i) surrender of the Warrant Certificate to the Company at its principal office
located at 9162 Eton Avenue, Chatsworth, California 91311 with the exercise form
attached hereto duly completed and signed by the Holder or by a duly appointed
legal representative thereof or by a duly authorized attorney and (ii) payment
in cash or in certified or official bank check payable to the order of the
Company of the Exercise Price for the Warrant Share or Warrant Shares in respect
of which such Warrant is then exercised. Upon surrender of a Warrant
Certificate, and payment of the Exercise Price, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written order
of the Holder and in such name or names as Holder may designate, a certificate
or certificates for the number of Warrant Shares so purchased upon the exercise
of such Warrant, together with cash in respect of any fraction of a Warrant
Share issuable upon such surrender.
4.2 UNEXERCISED PORTION. In the event that less than all of the
Warrants represented by this Warrant Certificate are exercised before 5:00 p.m.,
Los Angeles time, on the Expiration Date, a new Warrant Certificate, duly
executed by the Company, will be issued for the remaining number of Warrants
exercisable pursuant to the Warrant Certificate so surrendered.
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4.3 NO FRACTIONAL SHARES. Warrants may not be exercised for a
fraction of a share. In lieu of issuing fractional shares, the Company will pay
an amount in cash equal to that fractional interest of the then current Closing
Price per share of Common Stock.
4.4 ADJUSTMENTS. The number of Warrant Shares to be received upon
the exercise of a Warrant is subject to adjustment from time to time as
hereinafter set forth.
5. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the original issuance of the Warrants and of the shares of
Common Stock issuable upon the exercise of Warrants; PROVIDED, HOWEVER, that the
Company shall not be required to (a) pay any tax which may be payable in respect
to any transfer involved in the transfer and delivery of Warrant Certificates or
the issuance or delivery of certificates for Warrant Shares in a name other than
that of the Holder upon the exercise of a Warrant or (b) issue or deliver any
certificate for Warrant Shares upon the exercise of any Warrants until any such
tax required to be paid under clause (a) shall have been paid, all such tax
being payable by the Holder at the time of surrender.
6. MUTILATED OR MISSING WARRANTS. In case any Warrant Certificate shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of a substitution for the lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate of like tenor and evidencing the
number of Warrant Shares purchasable upon exercise of the Warrant Certificate so
mutilated, lost, stolen or destroyed, but only upon receipt of evidence
satisfactory to Company of such loss, theft or destruction of such Warrant
Certificate and indemnity, if requested, also satisfactory to it. Applicants
for such substitute Warrant Certificate shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
7. RESERVATION OF WARRANT SHARES; STOCK CERTIFICATES. The Company shall
at all times reserve for issuance and delivery upon exercise of the Warrants,
such number of Warrant Shares or other shares of capital stock of the Company
from time to time issuable upon exercise of the Warrants. All such shares shall
be duly authorized and, when issued upon such exercise, shall be validly issued,
fully paid and nonassessable, free and clear of all liens, security interests,
charges and other encumbrances or restrictions on sale and free and clear of all
preemptive rights.
8. REGISTRATION OF WARRANTS AND WARRANT SHARES.
8.1 UNREGISTERED STATUS OF WARRANTS AND WARRANT SHARES. Neither the
Warrants nor the Warrant Shares have been registered under the Securities Act of
1933, as amended (the "SECURITIES ACT"), or qualified under applicable state
securities laws and may not be transferred, sold, assigned, pledged or otherwise
disposed of unless (i) a
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registration statement under the Securities Act shall have become effective
with respect thereto and all applicable qualifications under state securities
laws shall have been obtained with respect thereto or (ii) a written opinion
from counsel for the Holder reasonably satisfactory to the Company has been
obtained stating that no such registration or qualification is required.
8.2 REGISTRATION RIGHTS. The Holder is entitled to certain
registration rights from the Company as set forth in the Registration Rights and
Standstill Agreement.
9. EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT. Warrants may not be
transferred, sold, assigned, pledged or otherwise disposed of unless and until
IRIS receives from the transferee, buyer, assignee, pledgee or other recipient
(and from such person's spouse, if applicable) a written consent to be bound by
all of the terms and conditions of the Registration Rights and Standstill
Agreement. Subject to the preceding sentence and Section 8.1, Warrants may be
assigned or transferred, at the option of the Holder, upon surrender of Warrant
Certificates to the Company, accompanied (if so required by the Company) by a
written instrument or instruments of transfer in form satisfactory to the
Company, duly executed by the registered Holder or by a duly authorized
representative or attorney. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee and the surrendered
Warrant Certificate shall be canceled by the Company. Any new Warrant or
Warrants issued pursuant to this Section 9 shall be dated as of the date of
issuance by the Company.
10. RIGHTS OF WARRANT CERTIFICATE HOLDER. The Holder shall not, by virtue
of being the holder of any Warrant Certificate or Warrants, be entitled to any
rights of a stockholder of the Company, either at law or in equity, and the
rights of the Holder are limited to those expressed in this Warrant Certificate.
11. ANTIDILUTION PROVISIONS. The Exercise Price, the number of Warrant
Shares that may be purchased upon the exercise of a Warrant and the number of
Warrants outstanding will be subject to change or adjustment as follows:
11.1 STOCK DIVIDENDS AND STOCK SPLITS. If at any time after the date
of the issuance of the Warrants and before 5:00 p.m., Los Angeles, time, on the
Expiration Date, (i) the Company shall fix a record date for the issuance of any
stock dividend payable in shares of Common Stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of shares of
Common Stock, then, on the record date fixed for the determination of holders of
Common Stock entitled to receive such dividend or immediately after the
effective date of such subdivision or split-up, as the case may be, the number
of shares to be delivered upon exercise of any Warrant will be appropriately
increased so that the Holder thereafter will be entitled to receive the number
of shares of Common Stock that the Holder would have owned immediately following
such action had the Warrant been exercised immediately prior thereto, and the
Exercise Price will be appropriately adjusted. The time of occurrence of an
event giving rise to an adjustment made pursuant to this Section 11.1 shall, in
the
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<PAGE>
case of a subdivision, combination or reclassification, be the effective date
thereof and shall, in the case of a dividend or distribution, be the record
date thereof.
11.2 COMBINATION OF STOCK. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of the Warrants and
before 5:00 p.m., Los Angeles time, on the Expiration Date shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number of shares
of Common Stock to be delivered upon exercise of any Warrant will be
appropriately decreased so that the Holder thereafter will be entitled to
receive the number of shares of Common Stock that the Holder would have owned
immediately following such action had the Warrant been exercised immediately
prior thereto, and the Exercise Price will be appropriately adjusted.
11.3 REORGANIZATION. If any capital reorganization of the Company, or
any reclassification of the Common Stock, or any consolidation of the Company
with or merger of the Company with or into any other corporation or any sale,
lease or other transfer of all or substantially all of the assets of the Company
to any other person (including any individual, partnership, joint venture,
corporation, trust or group thereof), shall be effected in such a way that the
holders of the Common Stock shall be entitled to receive stock, securities or
assets with respect to or in exchange for Common Stock, then, upon exercise of
the Warrant Certificate, the Holder shall have the right to receive the kind and
amount of stock, securities or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer by a
holder of the number of shares of Common Stock that the Holder would have been
entitled to receive upon exercise of the Warrants had the Warrants been
exercised immediately before such reorganization, reclassification,
consolidation, merger or sale, lease or other transfer, subject to adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 11.
11.4 RECORD DATE ADJUSTMENTS. In any case in which this Section 11
requires that a downward adjustment of the Exercise Price shall become effective
immediately after a record date for an event, the Company may defer until the
occurrence of such event (A) issuing to the Holder exercised after such record
date and before the occurrence of such event the additional Warrant Shares
issuable upon such exercise by reason of the adjustment required by such event
over and above the Warrant Shares issuable upon such exercise before giving
effect to such adjustment and (B) paying to the Holder any amount in cash in
lieu of a fractional share pursuant to Section 4.3 hereof.
11.5 NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price and/or the number of Warrant
Shares that may be issued, then and in each such case the Company shall give
notice thereof to the Holder, which notice shall state the Exercise Price and
number of shares purchasable after giving effect to such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculated is based.
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11.6 SPECIAL DIVIDENDS. If (other than in a dissolution or
liquidation) securities of the Company (other than shares of Common Stock or
securities issued pursuant to a shareholder rights plan or any similar plan) or
assets (other than cash dividends payable out of retained earnings or out of any
amount legally available for dividends under the laws of the State of Delaware)
are issued by way of a dividend on outstanding shares of Common Stock, then the
Exercise Price shall be adjusted so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the close of
business on the record date for the determination of the stockholders entitled
to receive such dividend by a fraction, the numerator of which shall be the
Closing Price on such record date less the then fair market value as determined
by the Board of Directors of the Company, whose determination shall be
conclusive, of the portion of the securities or assets distributed applicable to
one share of Common Stock and the denominator of which shall be such Closing
Price. Such adjustment shall become effective immediately prior to the opening
of business on the day following such record date.
11.7 NO ADJUSTMENTS TO EXERCISE PRICE. No adjustments in the Exercise
Price in accordance with the provisions of this Section 11 need be made if such
adjustment would amount to a change in the Exercise Price of less than $.01;
PROVIDED, HOWEVER, that the amount by which any adjustment is not made by reason
of the provision of this Section shall be carried forward and taken into account
at the time of any subsequent adjustment in the Exercise Price.
11.8 READJUSTMENTS, ETC. If an adjustment is made pursuant to this
Section 11, and the event to which the adjustment relates does not occur, then
any adjustments in the Exercise Price or number of Warrant Shares that were made
in accordance with such paragraphs shall be adjusted back to the Exercise Price
and the number of Warrant Shares that were in effect immediately prior to the
record date for such event. In any case in which an adjustment is required
pursuant to this Section 11 as of the record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to the
holder of any Warrant exercised after such record date the shares of Common
Stock and other securities, if any, issuable upon such exercise over and above
the shares of Common Stock and other securities, if any, issuable upon such
exercise on the basis of the Exercise Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
12. OFFICER'S CERTIFICATE. Whenever the number of Warrant Shares that may
be purchased upon exercise of the Warrants or the Exercise Price is adjusted as
required by the provisions of this Warrant Certificate, the Company will
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office an officer's certificate showing the adjusted number of Warrant
Shares that may be purchased upon exercise of the Warrants and the adjusted
Exercise Price, determined as herein provided, setting forth in reasonable
detail the facts requiring such adjustment and the manner of computing such
adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by any registered holder of a Warrant
Certificate. The
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<PAGE>
Company shall, forthwith after such adjustment, cause a copy of such
certificate to be mailed to each registered holder of a Warrant Certificate
at the time of such mailing. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any action referred to
in Section 11 hereof.
13. NOTICE OF CERTAIN EVENTS.
13.1 At any time during the Exercise Period, in the event:
13.1.1 the Company authorizes the distribution to all holders
of the Common Stock of evidences of its indebtedness or assets (other than cash
dividends payable out of retained earnings or out of amounts legally available
for distribution under the laws of the State of Delaware or stock dividends or
securities issued pursuant to a shareholders rights plan or any similar plan);
or
13.1.2 of any capital reorganization or reclassification of the
Common Stock (other than a subdivision or combination of the outstanding Common
Stock and other than a change in par value of the Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required (other than a consolidation or
merger in which the Company is the continuing corporation and that does not
result in any reclassification or change in the outstanding Common Stock) or of
the sale, lease or other transfer of all or substantially all of the assets of
the Company; or
13.1.3 of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then the Company will cause to be mailed to the Holder, at least 20 days before
the applicable record or effective date hereinafter specified, a notice stating
(A) the date as of which the holders of Common Stock of record entitled to
receive any such rights, warrants or distributions are to be determined or (B)
the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record will be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up.
14. TERMINATION. This Warrant Certificate shall terminate at 5:00 p.m.,
Los Angeles time, on the earlier of (i) the Expiration Date or (ii) the date
upon which all Warrants have been exercised.
15. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Warrant Certificate without the approval of the Holder
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company
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may deem necessary or desirable and which shall not adversely affect the
interests of the Holder.
The Company shall mail notice to the Holder, in accordance with Section 16
hereof, of any supplement or amendment affecting the rights of the Holder
effected pursuant to this Section 15, within 60 days of any such supplement or
amendment.
16. NOTICES. Any notice pursuant to this Warrant Certificate to be given
by the Holder to the Company shall be sufficiently given if sent by facsimile or
first-class mail, postage prepaid, addressed (until another address is
designated in writing by the Company) as follows:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attention: Dr. Fred H. Deindoerfer
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
Notices or demands authorized by this Warrant Certificate to be given or
made by the Company to the Holder shall be sufficiently given or made if sent by
facsimile or first-class mail, postage prepaid, addressed (until another address
is designated in writing by the Holder) as follows:
Digital Imaging Technologies, Inc.
2950 North Loop West, Suite 1050
Houston, Texas 77092
Attention: James L. Hurn
Telephone: (713) 956-2165
Facsimile: (713) 956-2185
Notices or demands authorized by this Warrant Certificate to be given or
made by the Company only need be given to any subsequent Holder(s) if the
Company has received written notice of the transfer of part or all the Warrants
to such subsequent Holder(s) in accordance with the terms of this Warrant
Certificate and shall be sufficiently given or made if sent by facsimile or
first-class mail, postage prepaid, addressed to the most recent address of such
subsequent Holder(s) as reflected on the Company's books (until another address
is designated in writing by such subsequent Holder(s)).
17. BENEFITS OF THIS WARRANT CERTIFICATE. Nothing in this Warrant
Certificate shall be construed to give to any person or corporation, other than
the Company and the Holder, any legal or equitable right, remedy or claim under
this Warrant Certificate; but this Warrant Certificate shall be for the sole and
exclusive benefit of the Company and the Holder.
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<PAGE>
18. GOVERNING LAW. This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
19. SUCCESSORS. All covenants and provisions of this Warrant Certificate
by or for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors and permitted assigns.
20. HEADINGS. The headings in this Warrant Certificate are inserted only
as a matter of convenience, and in no way define, limit, or extend or interpret
the scope of this Warrant Certificate or of any particular provision.
***[NEXT PAGE IS SIGNATURE PAGE]***
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<PAGE>
SIGNATURE PAGE TO WARRANT CERTIFICATE
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed by its duly authorized officer.
"COMPANY"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
Date: _________________________________
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SUBSCRIPTION FORM
(To be executed if Holder desires
to exercise the Warrant Certificate)
The undersigned hereby irrevocably exercises this Warrant to purchase
____________ shares of Common Stock and herewith makes payment of $___________
in payment of the Exercise Price thereof on the terms and conditions specified
in this Warrant Certificate, surrenders this Warrant Certificate and all right,
title and interest herein to the Company and directs that the Warrant Shares
deliverable upon the exercise of such Warrants be registered in the name and at
the address specified below and delivered thereto.
Name_________________________________________________
(Please Print or Type)
Address______________________________________________
City, State and Zip Code_____________________________
Taxpayer Identification
or Social Security Number__________________________
Dated:________________ _________________________________
Signature of Registered Holder
NOTICE
The signature to the foregoing Subscription Form must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
WARRANT ASSIGNMENT FORM
(To be executed by the Holder if such
Holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
to:
Name_________________________________________________
(Please Print)
Address______________________________________________
City, State and Zip Code_____________________________
Taxpayer Identification
or Social Security Number__________________________
the right to purchase up to ____________________ Warrant Shares represented by
this Warrant Certificate and does hereby irrevocably constitute and appoint
______________________________________________________________ to transfer said
Warrant on behalf of the Company, with full power of substitution in the
premises.
Dated:________________ _________________________________
Signature of Registered Holder
NOTICE
The signature to the foregoing Warrant Assignment Form must correspond to
the name as written upon the face of this Warrant Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT C
DESCRIPTION OF OPINION OF ANDREWS & KURTH LLP
The opinion of Andrews & Kurth LLP, counsel to the Seller, which is
required by Section 6.7 of the Asset Purchase Agreement, shall be dated the
Closing Date and addressed to IRIS, shall be satisfactory in form and scope to
IRIS and shall be to the effect that:
1. Each of DITI, PSII, PSTI and PSISI is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
2. Each of DITI, PSII and PSTI has all requisite corporate power and
authority to own its properties, to carry on its business as now conducted and
to make and carry out the Transactions.
3. The execution, delivery and performance by DITI, PSII and PSTI of the
Asset Purchase Agreement and each Closing Agreement and Transfer Document to
which it is a party have been duly authorized by all necessary corporate action,
and except as set forth on Schedule 2.2 to the Asset Purchase Agreement, do not
require notice to, or the consent or approval of, any governmental body or
regulatory authority. The execution, delivery and performance by PSISI of the
License Agreement has been duly authorized by all necessary corporate action.
4. The Asset Purchase Agreement, Senior Subordinated Note, Registration
Rights/Standstill Agreement, Bill of Sale, Assignment and Assumption Agreement,
Patent Assignment and Trademark Assignment are legal, valid and binding
obligations of DITI, PSII and PSTI, as applicable, enforceable against such
entity in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors' rights generally and general principles of equity.
5. The Stockholder Guaranty is a legal, valid and binding obligation of
the Controlling Stockholder enforceable against the Controlling Stockholder in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors' rights
generally and general principles of equity.
6. The License Agreement is a legal, valid and binding obligation of
PSISI enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally and general principles of
equity.
7. Subject to obtaining the consents noted in Schedule 2.2 to the Asset
Purchase Agreement, the execution, delivery and performance by DITI, PSII
and PSTI
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of the Asset Purchase Agreement and each Closing Agreement and Transfer
Document to which DITI, PSII and/or PSTI is a party will not (i) violate any
provision of the Articles of Incorporation or Bylaws of DITI, PSII or PSTI,
(ii) violate, to such counsel's knowledge, any judgments, orders or decrees
of any court, arbitrator or governmental, regulatory or administrative agency
or entity or (iii) breach or constitute grounds for the occurrence or
declaration of a default under, or allow another party a right to terminate,
any Material Assigned Contract listed on Schedule 2.19 to the Asset Purchase
Agreement.
In addition, the opinion shall state that, to such counsel's knowledge,
there are no actions or proceedings against any DITI, PSII, PSTI or PSIL,
pending or threatened, before any court, governmental agency or arbitrator
seeking to restrain, prohibit, invalidate or otherwise affect the consummation
of the Transactions or seeking any monetary awards in connection with the
Transactions.
In lieu of having its counsel render an opinion regarding the corporate
status of PSIL, Seller shall deliver to Buyer documentation from the appropriate
officials of the United Kingdom reasonably satisfactory in form and substance to
Buyer to support the conclusion that PSIL is a corporation validly existing
under the laws of the United Kingdom.
With respect to paragraph 3, the opinion may exclude matters arising under
the Federal Food, Drug and Cosmetics Act and the related rules and regulations
promulgated by the Food and Drug Administration.
With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and corporate officers, copies of which shall be attached to the
opinion. Furthermore, Andrews & Kurth LLP may render its opinion as if Texas
law applied to the Asset Purchase Agreement, the Closing Agreements and the
Transfer Documents; PROVIDED, HOWEVER, that the opinion must conclude that a
Texas court should recognize and give effect to the choice of law provisions of
each such agreement.
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EXHIBIT D
DESCRIPTION OF OPINION OF IRELL & MANELLA LLP
The opinion of Irell & Manella LLP, counsel to IRIS, which is required by
Section 7.6 of the Asset Purchase Agreement, shall be dated the Closing Date and
addressed to the Seller, shall be satisfactory in form and scope to the Seller
and shall be to the effect that:
1. IRIS is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. IRIS is duly qualified and in
good standing as a foreign corporation in the State of Texas.
2. IRIS has all requisite corporate power and authority to own its
properties, to carry on its business as now conducted and to make and carry out
the Transactions.
3. The execution, delivery and performance by IRIS of the Asset Purchase
Agreement, License Agreement, Senior Subordinated Note, IRIS Warrant,
Registration Rights/Standstill Agreement and Assignment and Assumption Agreement
have been duly authorized by all necessary corporate action and, except as set
forth on Schedule 3.2 to the Asset Purchase Agreement, do not require notice to,
or the consent or approval from, any governmental body or regulatory authority.
4. The Asset Purchase Agreement, License Agreement, Senior Subordinated
Note, IRIS Warrant, Registration Rights/Standstill Agreement and Assignment and
Assumption Agreement are a legal, valid and binding obligations of IRIS
enforceable against IRIS in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors' rights generally and general principles of equity.
5. The Senior Subordinated Note and IRIS Warrant are duly authorized and
validly issued. The shares of IRIS Common Stock issuable upon exercise of the
IRIS Warrant, when issued in compliance therewith, will be duly and validly
issued, fully paid and non-assessable.
6. Subject to obtaining the consents in Schedule 3.2 of the Asset
Purchase Agreement, the execution, delivery and performance by IRIS of the Asset
Purchase Agreement and each Closing Agreement and Transfer Document to which
IRIS is listed as a party will not (i) violate any provision of the Articles of
Incorporation or Bylaws of IRIS, (i) violate, to such counsel's knowledge, any
judgments, orders or decrees of any court, arbitrator or governmental,
regulatory or administrative agency or entity or (iii) breach or constitute
grounds for the occurrence or declaration of a default under, or allow another
party a right to terminate, any contract filed as an exhibit to the SEC
Documents.
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<PAGE>
In addition, the opinion shall state that, to such counsel's knowledge,
there are no actions or proceedings against IRIS, pending or threatened, before
any court, governmental agency or arbitrator seeking to restrain, prohibit,
invalidate or otherwise affect the consummation of the Transactions or seeking
any monetary awards in connection with the Transactions.
With respect to matters of fact on which such opinion is based, such
counsel shall be entitled to rely on appropriate certificates of public
officials and corporate officers, copies of which shall be attached to the
opinion. Furthermore, Irell & Manella LLP may render its opinion as if
California law applied to the Asset Purchase Agreement, the Closing Agreements
and the Transfer Documents; PROVIDED, HOWEVER, that the opinion must conclude
that a California court should recognize and give effect to the choice of law
provisions of each such agreement.
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<PAGE>
EXHIBIT E
TERMINATION AND RELEASE
This TERMINATION AND RELEASE (the "AGREEMENT") is made and entered into as
of ______ ___, 1996, by ______________________________ ("BANK") in favor of
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a Delaware corporation ("BUYER"),
and DIGITAL IMAGING TECHNOLOGIES, INC., a Delaware corporation ("DITI"),
PERCEPTIVE SCIENTIFIC INSTRUMENTS, INC., a Delaware corporation ("PSII"), and
PERCEPTIVE SCIENTIFIC TECHNOLOGIES, INC., a Delaware corporation ("PSTI") (DITI,
PSII and PSTI collectively, "SELLER"), with reference to the following facts:
A. Pursuant to an Asset Purchase Agreement dated as of July ___, 1996 by
and among Buyer and Seller (the "ASSET PURCHASE AGREEMENT"), Buyer is purchasing
substantially all of the assets used by Seller in the business of developing,
manufacturing and marketing digital image processing and analysis products and
services (the "ASSETS").
B. Pursuant to a [CREDIT] Agreement dated as of _____________________
(the "LOAN AGREEMENT"), Bank made a loan to Seller. As security for its
obligations under the Loan Agreement, Seller executed that certain [SECURITY]
Agreement dated as of __________ ___, 19___ granting Bank a security interest in
certain of the Assets.
NOW, THEREFORE, based on the above premises and with the knowledge that
Buyer and Seller intend to rely on this Agreement to consummate the Asset
Purchase Agreement, the parties hereby agree as follows:
1. TERMINATION AND RELEASE. Bank and Seller hereby terminate the Loan
Agreement and the Security Agreement, and Bank hereby releases all of its liens,
security interests and other encumbrances, whether pursuant to the Loan
Agreement, Security Agreement or otherwise, on or in the Assets.
2. TERMINATION OF UCC-1 FINANCING STATEMENT. Concurrently with the
execution and delivery of this Agreement, Bank is delivering to Buyer a duly
executed Termination Statement (Form UCC-3) terminating the effectiveness of any
Financing Statement (Form UCC-1) previously filed by Bank with respect to any of
the Assets.
3. COOPERATION. Bank agrees to execute any and all further documents and
writings which may be or become necessary or expedient to release any interest
it may have in the Assets.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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<PAGE>
SIGNATURE PAGE TO TERMINATION AND RELEASE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[BANK]
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
"DITI"
DIGITAL IMAGING TECHNOLOGIES,
INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
"PSII"
PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware
corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-1
<PAGE>
"PSTI"
PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware
corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-2
<PAGE>
EXHIBIT F
TECHNOLOGY LICENSE AGREEMENT
This TECHNOLOGY LICENSE AGREEMENT (the "AGREEMENT") is made and entered
into as of ______ ___, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS,
INC., a Delaware corporation ("IRIS"), and PERCEPTIVE SCIENTIFIC IMAGING
SYSTEMS, INC., a Delaware corporation ("PSISI") and wholly-owned subsidiary of
DIGITAL IMAGING TECHNOLOGIES, INC., a Delaware corporation ("DITI"), with
reference to the following facts:
A. DITI owns all of the capital stock of Perceptive Scientific
Instruments, Inc., a Delaware corporation ("PSII"), and Perceptive Scientific
Technologies, Inc., a Delaware corporation ("PSTI"). (DITI, PSII and PSTI are
sometimes hereinafter referred to collectively as the "SELLER.")
B. Seller is the owner of certain intellectual property and other assets
used in the business of developing, manufacturing and marketing digital image
processing and analysis products and services, including the proprietary
PowerGene-TM- product line of genetic analysis instruments.
C. Pursuant to an Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT") dated as of July ___, 1996, by and among IRIS and Seller, IRIS is
purchasing substantially all of the assets of Seller.
D. IRIS desires to consummate the acquisition of such assets, and Seller
is willing to do so provided that certain conditions are met, including the
execution of this Agreement by IRIS.
NOW, THEREFORE, based upon the above premises and in consideration of the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. DEFINITIONS.
The following terms shall have the meanings set forth below:
"CONFIDENTIAL INFORMATION" shall mean all information relating to the
Intellectual Property (defined in Section 2.1), except information that is, or
becomes, part of the public domain through no fault of PSISI.
"COPYRIGHTS" shall mean all U.S. and foreign copyrights, whether or not
registered, acquired by IRIS from Seller pursuant to the Asset Purchase
Agreement.
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<PAGE>
"LOSS" shall mean any and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and court costs incident to
any suit, action, investigation or other proceedings), damages and losses, net
of any insurance proceeds received with respect thereto.
"PATENTS" shall mean all U.S. and foreign patents acquired by IRIS from
Seller pursuant to the Asset Purchase Agreement.
"PROPRIETARY INFORMATION" shall mean all trade secrets, data, methods, test
results, procedures, processes, techniques, systems, inventions, apparatus,
information, manufacturing and engineering drawings and prints, artwork for
circuit boards, artwork for labels, regulatory and manufacturing documentation
and design specifications, know-how and other proprietary information acquired
by IRIS from Seller pursuant to the Asset Purchase Agreement.
"SOFTWARE" shall mean all software products, including both source code and
object code, acquired by IRIS from Seller pursuant to the Asset Purchase
Agreement.
"THIRD PARTY CLAIM" shall mean a claim brought by a third party for which
indemnification is sought pursuant to this Agreement.
"WELL LOG BUSINESS" shall mean the business of developing, manufacturing,
marketing and selling digital image processing and analysis products and
services for use solely in the oil and gas industry.
2. GRANT OF LICENSE TO PSISI.
2.1 GRANT OF LICENSE. Subject to the other provisions of this
Section 2, IRIS hereby grants to PSISI a worldwide, royalty-free, exclusive (as
against IRIS and all other persons) license to use the Patents, Copyrights,
Software and Proprietary Information (collectively, the "INTELLECTUAL PROPERTY")
solely for use in connection with the Well Log Business. IRIS shall retain the
exclusive (as against PSISI) right to use, and sublicense others to use, the
Intellectual Property for all purposes other than the Well Log Business. IRIS
may not terminate the foregoing license UNLESS PSISI fails to cure a material
breach of the terms of this Agreement within thirty (30) days after written
notice of such breach from IRIS or, if such breach cannot reasonably be cured
within such thirty-day period, PSISI fails to promptly commence reasonable
efforts to cure such breach and thereafter diligently pursue such cure to
completion.
2.2 NO TRANSFERS. PSISI shall not have the right to sublicense,
encumber, sell, assign or otherwise transfer any rights to the Intellectual
Property without the prior written consent of IRIS, which shall not be
unreasonably withheld; PROVIDED, HOWEVER, that, pursuant to Section 7.4, PSISI
may assign its rights under this Agreement in connection with a merger,
consolidation or sale of substantially all of the assets of PSISI if the
successor entity agrees in writing prior to the assignment to be bound by all
the terms and conditions of
F-2
<PAGE>
this Agreement. Any attempted transfer of such rights in violation of this
Section 2.2 shall be null and void.
3. CONFIDENTIALITY.
3.1 CONFIDENTIALITY OBLIGATIONS. PSISI hereby acknowledges and
agrees that the Intellectual Property contains valuable confidential information
and trade secrets developed or acquired by Seller through the expenditure of
significant amounts of time and money and purchased from Seller by IRIS at
significant expense. Accordingly, PSISI shall maintain the confidential nature
of, and not disclose to any third party, any Confidential Information.
3.2 PERMITTED DISCLOSURES. The obligations of confidentiality
contained in this Agreement shall not apply to the disclosure of any
Confidential Information if, and to the extent:
3.2.1 reasonably necessary to market products, including,
without limitation, by making disclosures to prospective customers as will
adequately explain the nature and operation of the product;
3.2.2 reasonably necessary to develop new products,
including, without limitation, by making disclosures to consultants,
contractors, partners or collaborators as will adequately explain the nature and
operation of the proposed product, PROVIDED that any parties to whom
Confidential Information is disclosed under this Section 3.2.2 shall have
previously agreed in writing to be bound by the confidentiality obligations of
this Section 3;
3.2.3 reasonably necessary to secure governmental or
regulatory approvals or clearances; or
3.2.4 the disclosure is required by a judicial order or
decree of governmental law or regulation, provided that PSISI promptly notifies
IRIS of such requirement and reasonable opportunity is allowed for IRIS to
obtain a protective order or otherwise proceed under applicable law to protect
its interests.
3.3 INJUNCTIONS; PROOF WAIVED. PSISI agrees that, due to the unique
and proprietary nature of the Confidential Information, the remedies at law for
a breach by PSISI of its obligations under this Section 3 will be inadequate and
that, in the event of such breach, IRIS shall be entitled to equitable relief
(including without limitation injunctive relief and specific performance) in
addition to all other remedies provided under this Agreement or available at
law. PSISI acknowledges the secret nature and quality of the Intellectual
Property as legally protectable proprietary information and intellectual
property and agrees to waive proof of such fact in any litigation or arbitration
between the parties.
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4. DISCLAIMER OF WARRANTY. IRIS disclaims any and all representations
and warranties, express or implied, concerning the Intellectual Property,
including without limitation (i) the performance, utility, reliability,
suitability for any particular purpose or accuracy of the Intellectual Property,
(ii) whether the use of the Intellectual Property licensed hereunder will
infringe any patent or other proprietary rights of any third party, and
(iii) whether any of the Intellectual Property is entitled to protection under
patent, copyright or other proprietary laws.
5. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS. If PSISI has actual
notice of infringement by any person of any Intellectual Property, PSISI shall
promptly inform IRIS. IRIS shall have the right, but not the obligation, at its
own expense, to take appropriate action to enforce such Intellectual Property
rights; PROVIDED, HOWEVER, that, if IRIS elects to enforce such Intellectual
Property rights and the infringement involves the Well Log Business, PSISI shall
have the right to participate by agreeing to bear a percentage of the costs of
such enforcement in such amount as the parties shall reasonably determine. All
amounts recovered in any action to enforce Intellectual Property undertaken by
IRIS and PSISI, whether by judgment or settlement, shall be (i) applied first to
the repayment of expenses of enforcement, including legal and other fees and
expenses, pro rata according to the respective percentage of expenses borne by
each party and (ii) applied second to payment of compensation for damages
suffered as a result of such infringement pro rata according to the actual
damages suffered by each party. If, within one (1) month after notice of the
infringement of Intellectual Property rights involving the Well Log Business,
IRIS has not commenced action to enforce such Intellectual Property rights or
thereafter ceases to diligently pursue such action, PSISI shall have the right,
at its expense, to take appropriate action to enforce such Intellectual Property
rights as its sole remedy hereunder. All amounts received in any action to
enforce Intellectual Property rights involving the Well Log Business undertaken
solely by PSISI at its expense, whether by judgment or settlement, shall be
retained by PSISI. IRIS and PSISI shall fully cooperate with each other in the
planning and execution of any action to enforce Intellectual Property rights
with respect to the Well Log Business. Neither IRIS nor PSISI shall enter into
any settlement that includes the grant of a license under, agreement not to
enforce, or any statement prejudicial to the validity or enforceability of any
Intellectual Property rights with respect to the Well Log Business without the
consent of the other, which consent shall not be unreasonably withheld.
6. INDEMNIFICATION.
6.1 RIGHT OF INDEMNIFICATION. PSISI agrees to indemnify and hold
IRIS (and IRIS's respective officers, directors, employees and agents) harmless
from and against the full amount of all Losses arising out of (a) any use of the
Intellectual Property by PSISI or (b) any breach of this Agreement by PSISI.
6.2 PROCEDURES FOR INDEMNIFICATION. If any claim is asserted or any
action or proceeding is brought in respect of which indemnity may be sought,
IRIS will promptly notify PSISI in writing of such asserted claim or the
institution of such action or proceeding; PROVIDED, HOWEVER, that the IRIS's
failure to so notify PSISI will not relieve
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PSISI from any liability it might otherwise have on account of this
indemnity, except to the extent that PSISI has been materially prejudiced by
such failure to notify. If requested by IRIS in the aforementioned notice,
PSISI shall undertake full responsibility for the defense of any Third-Party
Claim which, if successful, would result in an obligation of indemnity under
this Agreement. PSISI may contest or settle any such claim on such terms as
PSISI may choose, PROVIDED that PSISI will not have the right, without IRIS's
prior written consent, to settle any such claim if such settlement (i) arises
from or is part of any criminal action, suit or proceeding, (ii) contains a
stipulation to, confession of judgement with respect to, or admission or
acknowledgement of, any liability or wrongdoing on the part of IRIS, (iii)
relates to any tax matters, (iv) provides for injunctive relief, or other
relief or finding other than money damages, which is binding on IRIS, or (v)
does not contain an unconditional release of IRIS. Such defense will be
conducted by reputable attorneys retained by PSISI at the PSISI's cost and
expense, but IRIS will have the right to participate in such proceedings and
to be separately represented by attorneys of its own choosing. IRIS will be
responsible for the costs of such separate representation unless IRIS will
have reasonably concluded that the interests of IRIS and PSISI in the action
conflict in such a manner and to such an extent as to make advisable,
consistent with applicable standards of professional responsibility, the
retention of separate counsel for IRIS, in which case PSISI will pay for one
(but not more than one) separate counsel chosen by IRIS.
6.3 COOPERATION. PSISI and IRIS shall cooperate in determining the
validity of any Third-Party Claim for any Loss for which a claim of
indemnification may be made hereunder. Each party shall also use all reasonable
efforts to minimize all Losses.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and any
documents referred to herein or executed contemporaneously herewith constitute
the parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
7.2 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
7.3 THIRD-PARTY BENEFITS. None of the provisions of this Agreement
will be for the benefit of, or enforceable by, any third-party beneficiary.
7.4 SUCCESSORS AND ASSIGNS. Except as provided herein to the
contrary, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their
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respective successors and permitted assigns. PSISI may not assign any of its
rights or delegate any of its obligations under this Agreement, in whole or
in part without the prior written consent of IRIS, which shall not be
unreasonably withheld; PROVIDED, HOWEVER, that PSISI may assign its rights
under this Agreement in connection with a merger, consolidation or sale of
substantially all of the assets of PSISI if the successor entity agrees in
writing prior to the assignment to be bound by all the terms and conditions
of this Agreement. Any attempt by PSISI to assign or delegate any portion of
this Agreement in violation of this Section 7.4 shall be null and void.
7.5 REMEDIES NOT EXCLUSIVE. Subject to Section 7.11 (Arbitration of
Disputes), no remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy, and each and every
remedy will be cumulative and will be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies will not constitute a
waiver of the right to pursue other available remedies.
7.6 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service or facsimile or certified mail (or, if
certified mail is not available, then by first class mail), postage prepaid, to
such address as may be designated from time to time by the relevant party, and
which will initially be as set forth below. Any notice sent by certified mail
will be deemed to have been given three (3) days after the date on which it is
mailed. All other notices will be deemed given when received. No objection may
be made to the manner of delivery of any notice actually received in writing by
an authorized agent of a party. Notices will be addressed as follows or to such
other address as the party to whom the same is directed will have specified in
conformity with the foregoing:
(a) If to IRIS:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Fred H. Deindoerfer
Chairman of the Board and President
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attn: Theodore E. Guth, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
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(b) If to PSISI:
Perceptive Scientific Imaging Systems. Inc.
2950 North Loop West, #1050
Houston, Texas 77092
Attn: James L. Hurn
Chief Executive Officer
Telephone: (713) 956-2165
Facsimile: (713) 956-2185
With a copy to:
Andrews & Kurth LLP
Texas Commerce Tower
600 Travis, Suite 4200
Houston, Texas 77002
Attn: Robert V. Jewell, Esq.
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
7.7 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without regard to the conflict of laws rules of the State of
Delaware or any other jurisdiction that would call for the application of the
laws of any jurisdiction other than the State of Delaware. Each party hereto
hereby irrevocably consents, for itself and its legal representatives, partners,
successors and assigns, to the exclusive jurisdiction of the Courts of the State
of Delaware for all purposes in connection with any action or proceeding that
arises from or relates to this Agreement, and further agrees that, subject to
Section 7.11 (Arbitration of Disputes), any action arising from or relating to
this Agreement shall be instituted and prosecuted only in the courts of the
State of Delaware, and hereby waives any rights it may have to personal service
of summons, complaint, or other process in connection therewith, and agrees that
service may be made by registered or certified mail to such party at the address
set forth in Section 7.6 (Notices).
7.8 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation or arbitration.
7.9 HEADINGS. The Section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, or extend or interpret
the scope of this Agreement or of any particular Section.
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7.10 SEVERABILITY. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. To the extent permitted by applicable law, the
parties hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
7.11 ARBITRATION OF DISPUTES. Except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Agreement, including, but not limited to,
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including its commencement and termination) which are not
settled by agreement between the parties, shall be settled by arbitration
conducted exclusively in Wilmington, Delaware before a board of three
arbitrators, one selected by each party, and the third by the two persons so
selected, all in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then in effect. The notice of intent
to arbitrate shall name one arbitrator, and the party receiving the notice shall
name the second arbitrator within 15 days or the moving party may select the
second arbitrator from a list supplied by the AAA. In the event that these two
arbitrators cannot agree upon a third arbitrator within 15 days, then the third
arbitrator shall be selected from the list provided by the AAA with the parties
striking names in order with the party striking first to be determined by the
flip of a coin. The parties hereby consent to the in personam jurisdiction of
the courts of the State of Delaware for purposes of confirming any such award
and entering judgment thereon. In any arbitration proceedings hereunder,
(a) all testimony of witnesses shall be taken under oath; (b) discovery will be
allowed to the same extent as available under the rules then applicable to civil
actions under Delaware law; (c) upon conclusion of any arbitration, the
arbitrators shall render findings of fact and conclusions of law in a written
opinion setting forth the basis and reasons for any decision reached and deliver
such documents to each party to this Agreement along with a signed copy of the
award; and (d) the rules of evidence as then applicable to civil actions under
Delaware law shall be applied in the arbitration. Each party agrees that the
arbitration provisions of this Agreement are its exclusive damage remedy and
expressly waives any right to seek redress in another forum. Each party shall
bear the fees of the arbitrator appointed by it, and the fees of the neutral
arbitrators shall be borne equally by each party during the arbitration, but the
fees of all arbitrators shall be borne by the losing party.
7.12 AGREEMENT NEGOTIATED. The parties hereto are sophisticated and
have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of any statutory
or common law rule relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
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7.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO TECHNOLOGY LICENSE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
"PSISI"
PERCEPTIVE SCIENTIFIC IMAGING SYSTEMS,
INC., a Delaware corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
<PAGE>
EXHIBIT G
REGISTRATION RIGHTS AND STANDSTILL AGREEMENT
This REGISTRATION RIGHTS AND STANDSTILL AGREEMENT (the "AGREEMENT") is made
and entered into as of _______ ___, 1996, by and between INTERNATIONAL REMOTE
IMAGING SYSTEMS, INC., a Delaware corporation ("IRIS"), and DIGITAL IMAGING
TECHNOLOGIES, INC., a Delaware corporation ("DITI"), with reference to the
following facts:
A. Pursuant to an Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT") dated as of July ___, 1996, by and among IRIS, on the one hand, and
DITI and certain of its subsidiaries, on the other hand, IRIS is purchasing
substantially all of the assets of DITI and such subsidiaries.
B. IRIS and DITI desire that the consideration for the assets include a
warrant to purchase shares of IRIS Common Stock. IRIS is willing to issue the
warrant subject to the standstill provisions set forth herein, and DITI is
willing to accept the warrant with the registration rights set forth herein.
NOW, THEREFORE, based on the above premises and in consideration of the
mutual covenants and agreements contained herein, the parties agree as follows:
1. CERTAIN DEFINITIONS. The following terms shall have the respective
meanings set forth below:
1.1 "AFFILIATE" shall mean any person which, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is in common
control with, a specified person.
1.2 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
1.3 "HOLDER" shall mean any person who at a given time is the
permitted holder of record of any Registrable Securities (or securities
convertible into Registrable Securities) and has agreed in writing to be bound
by the provisions of this Agreement.
1.4 "IRIS COMMON STOCK" shall mean the common stock, $.01 par value
per share, of IRIS, and any securities issued in exchange therefore or in
replacement thereof in connection with any reorganization, restructuring,
merger, consolidation or similar transaction.
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1.5 "IRIS WARRANT" shall mean the warrant to purchase 875,000 shares
of IRIS Common Stock at an exercise price of $8.00 per share exercisable for a
period of five years from the date hereof issued in connection with the
consummation of the transactions contemplated by the Asset Purchase Agreement.
1.6 "REGISTRATION PERIOD" shall mean the period of time beginning on
the first (1st) anniversary of the date hereof and ending on (and including) the
fifth (5th) anniversary of such date; PROVIDED, HOWEVER, that the Registration
Period shall be extended as required under (i) the last sentence of Section 9
(Exception as to Timing) if IRIS elects to exercise its right to postpone a
demand registration and (ii) the last sentence of Section 4.6 (Prospectus
Delivery) if IRIS suspends the sale Registrable Securities as permitted
thereunder.
1.7 "REGISTRABLE SECURITIES" shall mean those shares of IRIS Common
Stock issued upon exercise of the IRIS Warrant, or as a dividend or other
distribution with respect to, or in exchange or replacement of, such shares of
IRIS Common Stock.
1.8 "REGISTRATION STATEMENT" shall mean any registration statement or
comparable document under the Securities Act through which a public sale or
disposition of the IRIS Common Stock may be registered or exempted from
registration (except a form exclusively for the sale or distribution of
securities by IRIS to employees of IRIS or its subsidiaries or for use
exclusively in connection with a business combination).
1.9 "SELLING HOLDER" shall mean, with respect to any Registration
Statement, any Holder whose securities are included therein.
1.10 "SELLER'S UNDERWRITER" shall mean, with respect to any
Registration Statement, the underwriter, if any, designated in writing by the
Selling Holders as underwriting the Registrable Securities involved and
reasonably acceptable to IRIS.
1.11 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
1.12 "SIGNIFICANT HOLDERS" shall mean, at any time, Holders together
holding more than 50% of the then outstanding Registrable Securities held by the
Holders (treating securities convertible into Registrable Securities as if they
had been converted and were outstanding).
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1.13 "TRANSFER" shall mean sell, transfer, assign, hypothecate,
encumber or otherwise dispose, whether voluntarily or involuntarily, whether by
gift, bequest or otherwise.
1.14 "WARRANT SHARES" shall mean shares of IRIS Common Stock issuable
upon exercise of the IRIS Warrant, or as a dividend or other distribution with
respect to, or in exchange or replacement of, such shares of IRIS Common Stock.
2. DEMAND REGISTRATION.
2.1 NOTICE OF DEMAND. At any time during the Registration Period,
the Significant Holders may by written notice request that IRIS register
Registrable Securities under the Securities Act. The maximum number of such
demands shall be one (1). The notice of demand shall set forth (i) the number
of shares to be included, (ii) the names of the Selling Holders and the amounts
to be sold by each, and (iii) the proposed manner of sale. Within ten (10) days
after receipt of such notice, IRIS shall notify all other Holders and offer to
them the opportunity to include their Registrable Securities in such
registration. Each of the other Holders shall have twenty (20) days from the
mailing of such notice to notify IRIS of the number of Registrable Securities
such Holder desires be included in the Registration Statement, but IRIS shall
have no obligation to include the Registrable Securities of any such Holder in
the Registration Statement if IRIS does not receive the required notice within
such 20-day period.
2.2 REGISTRATION. Promptly, but in any event within 60 days, after
receipt of any demand pursuant to Section 2.1, IRIS shall prepare and file with
the Securities and Exchange Commission (the "SEC"), a Registration Statement on
any applicable form, with respect to all the Registrable Securities specified in
a notice received in a timely manner pursuant to Section 2.1, and thereafter use
its best efforts to cause such Registration Statement to become effective. IRIS
shall use its best efforts to keep such Registration Statement continuously
effective for two (2) years; PROVIDED, HOWEVER, that IRIS may, at any time
temporarily suspend the effectiveness of the Registration Statement in
accordance with the provisions of Section 9. During such suspension, Selling
Holders shall discontinue sales or other dispositions of Registrable Securities
pursuant to the Registration Statement.
2.3 LISTING OF SHARES. Promptly, but in any event within 60 days,
after receipt of any demand pursuant to Section 2.1, IRIS shall prepare and file
with the principal securities exchange on which the IRIS Common Stock is then
traded an additional listing application with respect to all the Registrable
Securities specified in a notice received in a timely manner pursuant to
Section 2.1, and use its best efforts to cause such Registrable Securities to be
approved for listing on such exchange upon official notice of issuance.
3. INCIDENTAL REGISTRATION. Whenever during the Registration Period IRIS
proposes to file a Registration Statement for the sale by it of shares of IRIS
Common
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Stock, except in connection with a demand under Section 2, IRIS shall take
the following steps:
3.1 NOTICE. Mail a written notice to each Holder at the address
shown on the books and records of IRIS at least forty-five (45) days prior to
the effective date of any such Registration Statement.
3.2 REGISTRATION. Include in such Registration Statement any and all
Registrable Securities specified in a notice by the Holder which is received by
IRIS not less than thirty (30) days following the mailing of the notice
specified in Section 3.1. In connection with any such registration, the Selling
Holder must: (i) sell such Registrable Securities in the manner and on the
terms adopted by or through the underwriter(s) acting on behalf of IRIS in
connection with such registration, if such underwriter(s) so requests; and
(ii) accept a reduction (including a total elimination) in the number of shares
to be included in such registration on a pro rata basis (based on the number of
securities held by each) with any other selling securityholders holding
contractual PARI PASSU registration rights if the underwriter(s) reasonably deem
that without such reduction (or elimination) IRIS might be substantially
hindered in the terms or number of securities which it could sell in such
registration.
3.3 LISTING OF SHARES. Promptly, but in any event within 60 days,
after a notice received in a timely manner pursuant to Section 3.2, IRIS shall
prepare and file with the principal securities exchange on which the IRIS Common
Stock is then traded an additional listing application with respect to all the
Registrable Securities specified in such notice, and use its best efforts to
cause such Registrable Securities to be approved for listing on such exchange
upon official notice of issuance.
4. REGISTRATION PROCEDURES. Whenever IRIS shall register any securities
pursuant to this Agreement, the parties agree as follows:
4.1 SELLING STOCKHOLDER INFORMATION. Selling Holders shall provide
IRIS with such information about Selling Holders and their intended manner of
distributing the Registrable Securities, and shall otherwise cooperate with IRIS
and any underwriter(s) as may be needed or helpful in the reasonable opinion of
IRIS to complete any obligation of IRIS hereunder. Failure to comply with this
requirement shall excuse IRIS from any further obligation to Selling Holders to
file a Registration Statement on their behalf or include their Registrable
Securities in a Registration Statement.
4.2 CONSULTATION. IRIS shall supply copies of any Registration
Statement, any amendment thereto and any communications with the SEC related
thereto to Selling Holders and to the Seller's Underwriter prior to filing such
document with the SEC, and shall reasonably consult with such persons and their
counsel with respect to the form and content of such filing. IRIS will
immediately amend such Registration Statement to include such reasonable changes
as Selling Holders and the Seller's Underwriter reasonably agree should be
included therein.
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4.3 PROVISION OF PROSPECTUSES. IRIS shall furnish to Selling Holders
and any Underwriter such number of copies of a summary prospectus or other
prospectus (including any amendments and supplements thereto and a preliminary
prospectus in conformity with the requirements of the Securities Act) and such
other documents as the Selling Holders may reasonably request in order to
facilitate the public sale or other disposition of such securities.
4.4 BLUE SKY COMPLIANCE. IRIS shall use its best efforts to register
or qualify the securities covered by such Registration Statement under the
securities or "blue sky" laws of such jurisdictions as the Selling Holders shall
reasonably request (PROVIDED, HOWEVER, that IRIS shall not be required (i) to
consent to, or take any action which would subject it to, general service of
process for all purposes or (ii) to qualify to do business in any jurisdiction
where it is not then subject or qualified) and do any and all other acts or
things which may be reasonably necessary or advisable to enable the Selling
Holders to consummate the public sale or other disposition of such securities in
such jurisdictions.
4.5 AMENDMENTS. IRIS shall use its best efforts to prepare and file
promptly with the SEC such amendments and supplements to the Registration
Statement filed with the SEC in connection with such registration, and the
prospectus used in connection therewith, as may be necessary to keep such
Registration Statement continuously effective and in compliance with the
Securities Act for two (2) years, or until all Registrable Securities registered
in that Registration Statement are sold, whichever is earlier; PROVIDED,
HOWEVER, that IRIS may, at any time temporarily suspend the effectiveness of the
Registration Statement in accordance with the provisions of Section 9.
4.6 PROSPECTUS DELIVERY. At any time when a sale or other public
disposition pursuant to a Registration Statement is subject to a prospectus
delivery requirement, IRIS shall immediately notify the Selling Holders and the
Seller's Underwriter, if any, of the occurrence of any event as a result of
which the prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and IRIS shall
thereafter diligently proceed to amend the prospectus as necessary to correct
such untrue statement or omission of a material fact and provide updates
thereto. Upon receipt of such a notice, the Selling Holders shall immediately
discontinue sales or other dispositions of Registrable Securities pursuant to
the Registration Statement. Selling Holders may resume sales only upon receipt
of amended prospectuses or after Selling Holders have been advised by IRIS that
the use of the previous prospectus may be legally resumed. The length of the
Registration Period (as defined in Section 1.6) shall be increased by the length
of any postponement taken by IRIS hereunder.
4.7 OPINIONS. At the request of Selling Holders, IRIS shall use its
best efforts to furnish on the date that the Registrable Securities are
delivered to the
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Seller's Underwriter for sale in connection with a registration pursuant to
this Agreement (i) an opinion of the counsel representing IRIS for the
purposes of such registration, and (ii) a letter from the independent
certified public accountants of IRIS, each dated such date and in form and
substance as is customarily given by counsel and independent certified public
accountants to underwriters in an underwritten public offering, addressed to
the Seller's Underwriter and to Selling Holders.
4.8 STOP-ORDERS. IRIS agrees to immediately notify Selling Holders
(i) of the issuance by the SEC of any stop order or order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose, or (ii) of the receipt by IRIS of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction, or the initiation of any proceedings for such purpose.
IRIS, with the reasonable cooperation of Selling Holders, shall make every
reasonable effort to contest any such proceedings and to obtain the withdrawal
of any such order at the earliest possible moment.
4.9 REVIEW OF RECORDS. IRIS shall make available all financial and
other records, pertinent corporate documents and properties of IRIS for
inspection by the Seller's Underwriter, and its counsel and accountants, and
shall cause IRIS's officers, directors and employees to supply all information
reasonably requested by any such person in connection with any Registration
Statement filed or to be filed hereunder so long as such person agrees to keep
confidential any records, information or documents provided by IRIS.
4.10 EARNINGS STATEMENTS. IRIS shall, upon the request of Selling
Holders, make earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder generally available to its security
holders as soon as reasonably practicable, but in no event later than 45 days,
after the end of any 12-month period commencing at the end of any fiscal quarter
in which Registrable Securities are sold.
4.11 COMPLIANCE WITH LAWS. In all actions taken under this Agreement,
IRIS and Selling Holders agree to use their best efforts to comply with all
provisions of the Securities Act, the Exchange Act and any other law applicable
to them.
5. FILING OF OTHER REGISTRATION STATEMENTS. Holders acknowledge and
understand that IRIS has granted demand registration rights with respect to
shares of IRIS Common Stock to other holders of its securities which could be
exercised concurrently with an exercise of the rights granted hereunder to
Holders.
6. DELAY OF REGISTRATION. Holders shall not have any right to take any
action to restrain, enjoin or otherwise delay the filing or effectiveness of any
Registration Statement on the basis of any controversy which might arise with
respect to the interpretation or implementation of this Agreement.
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7. INDEMNIFICATION AND CONTRIBUTION.
7.1 IRIS INDEMNITY. IRIS agrees that it will indemnify each Selling
Holder and Seller's Underwriter (and any of the officers, directors and persons
who control any of the foregoing within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) against all claims, losses,
damages, liabilities and expenses (including those relating to settlements
approved by IRIS, which consent shall not be unreasonably withheld) resulting
from any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or in any other document incident to
that registration) or from any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been contained in
(i) information furnished in writing to IRIS by such Selling Holder or the
Seller's Underwriter expressly for use therein, or (ii) the circumstances set
forth in Section 7.2(y) below.
7.2 SELLING HOLDER'S INDEMNITY. Each Selling Holder will indemnify
IRIS, any underwriter, and any other person selling under the applicable
Registration Statement (and any of the officers and directors and persons who
control any of the foregoing within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) against all claims, losses, damages,
liabilities and expenses (including those relating to settlements approved by
the Selling Holder, which consent shall not be unreasonably withheld) resulting
from (x) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement (or in any other document incident to
that registration) or from any omission or alleged omission to state a material
fact required to be stated or necessary to make the information therein not
misleading, but only to the extent contained in any information furnished in
writing to IRIS by such Selling Holder expressly for inclusion in that
Registration Statement (or such other document incidental to that registration),
or (y) any untrue statement or alleged untrue statement of a material fact
contained in, or any omission or alleged omission of a material fact from, a
prospectus if (i) a later prospectus corrected the untrue statement or alleged
untrue statement, or omission or alleged omission, (ii) the Selling Holder had
notice of the later prospectus prior to confirmation of the sale to the
aggrieved purchaser, and (iii) there would have been no such liability but for
the failure of the Selling Holder to deliver such later prospectus to such
purchaser; PROVIDED, HOWEVER, that no Selling Holder shall be liable for any
claims hereunder in excess of the amount of net proceeds received by such
Selling Holder from the sale of Registrable Securities pursuant to such
Registration Statement.
7.3 CONTRIBUTION. If the indemnification provided for in this
Section 7 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein as a result of a judicial determination that such
indemnification may not be enforced in such case notwithstanding this Agreement,
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such
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proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expense, as
well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty or such fraudulent misrepresentation.
8. EXPENSES OF REGISTRATION. IRIS shall bear all expenses (other than
brokerage or underwriting fees, expenses or commissions) incurred in connection
with any Registration Statement, including, without limitation, all registration
and filing fees (including all expenses incident to filing with the American
Stock Exchange), fees and expenses of complying with securities and blue sky
laws, printing expenses and fees and disbursements of the independent certified
public accountants and counsel to IRIS. Selling Holders shall bear any
brokerage or underwriting fees, expenses or commissions and the cost of any
lawyers, accountants, experts and other consultants retained by them.
9. EXCEPTION AS TO TIMING. Notwithstanding any other section of this
Agreement, IRIS may at any time postpone or suspend for a reasonable period of
time (not to exceed 180 days) the filing or effectiveness of any Registration
Statement demanded under Section 2, if (a) IRIS is conducting or is about to
conduct a primary offering of other securities of IRIS and is advised by its
investment banker in writing that such offering would be materially adversely
affected by such demanded registration or (b) the board of directors of IRIS
shall in good faith determine that such demand registration would materially
adversely affect any financing, merger, sale of assets, acquisition,
recapitalization or other material transaction involving IRIS, which, in each
case, is either pending or under active and continuing negotiation. The length
of the Registration Period (as defined in Section 1.6) shall be increased by the
length of any postponement taken by IRIS hereunder. If IRIS suspends the
effectiveness of a Registration Statement, Selling Holder shall immediately
discontinue sales or other dispositions of Registrable Securities pursuant to
the Registration Statement during the period of such postponement, and the
length of time IRIS is required to keep such Registration Statement effective
under Sections 2.2 and 4.5 shall be increased by the length of the postponement.
IRIS may suspend the effectiveness of a Registration Statement by giving written
notice of the suspension to Selling Holders and shall not be required to make
any filings with the Securities Exchange Agreement relating to such suspension
other than those required by law.
10. TERMINATION. Holders shall have no further rights under Sections 2
or 3 at any time after the Registration Period.
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11. STANDSTILL AGREEMENT. Until the IRIS Warrant has been fully exercised
or expires, and so long thereafter as the Holders and their Affiliates
collectively own 50% or more of the Warrant Shares, none of the Holders nor any
of their Affiliates will in any manner, directly or indirectly: (a) effect or
seek, offer or propose (whether publicly or otherwise) to effect, or cause or
participate in or in any way assist any other person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (i) any
acquisition of any securities (or beneficial ownership thereof) or assets of
IRIS (EXCEPT that the officers of DITI may, in their individual capacities,
acquire additional shares of IRIS Common Stock on the principal exchange where
the IRIS Common Stock is traded provided that (a) such officers collectively do
not at any time own beneficially more than one percent (1%) of outstanding
shares of IRIS Common Stock and (b) such acquisitions are not made while in
possession of material, non-public information regarding IRIS or the assets or
business purchased from DITI), (ii) any tender or exchange offer, merger or
other business combination involving IRIS, (iii) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to IRIS or (iv) any "solicitation" of "proxies" (as such terms are used
in the proxy rules of the Securities and Exchange Commission) or consents to
vote any voting securities of IRIS; (b) form, join or in any way participate in
a "group" (as defined under the Exchange Act) with respect to the securities of
IRIS; (c) otherwise act, alone or in concert with others, to seek to control or
influence the management, Board of Directors or policies of IRIS (other than, in
the case of DITI, through the nomination and service of one (1) director as
provided in the Asset Purchase Agreement); (d) take any action which might force
IRIS to make a public announcement regarding any of the types of matters set
forth in (a) above; or (e) enter into any discussions or arrangements with any
third party with respect to any of the foregoing. Holders also agree not to
request IRIS (or its directors, officers, employees or agents), directly or
indirectly, to amend or waive any provision of this Section 11 (including this
sentence).
12. "LOCK-UP" AGREEMENT. In addition to the other resale restrictions
contained herein, if IRIS proposes to sell any securities to the public (a
"PUBLIC OFFERING") during the Registration Period, no Holder will during the
Lock-Up Period (as hereinafter defined), directly or indirectly, offer, sell,
contract to sell, or otherwise Transfer any shares of IRIS Common Stock.
Furthermore, each Holder shall execute and deliver to any underwriter(s) acting
on behalf of IRIS in connection with such Public Offering the form of "lock-up
agreement" customarily used by such underwriter(s) evidencing the restrictions
contained in this Section 12. For purposes of this Agreement, the term "LOCK-UP
PERIOD" shall mean the period beginning on the initial filing of a Registration
Statement for a Public Offering and ending 180 days after the actual
consummation of the Public Offering.
13. TRANSFER LIMITATIONS. Notwithstanding anything to the contrary
herein, no Holder may Transfer the IRIS Warrant, or any part thereof, except (i)
to an Affiliate who has executed and delivered to IRIS a written agreement to be
bound by the terms of this Agreement as a Holder and (ii) in accordance with the
terms of the Warrant Certificate for the IRIS Warrant.
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14. VOLUME LIMITATION ON SALES. Notwithstanding anything to the contrary
herein, the Holders shall not, individually or collectively, Transfer more than
One Hundred Nine Thousand Three Hundred Seventy-Five (109,375) Warrant Shares
(as adjusted for any subsequent stock splits) during any ninety-day period;
PROVIDED, HOWEVER that such volume limitation shall not apply to any Transfer to
an Affiliate or a member of the Transferring Holder's immediate family made
without consideration if such Affiliate or family member has executed and
delivered to IRIS a written agreement to be bound by the terms of this Agreement
as a Holder. In order to ensure compliance with the foregoing volume
limitation, each Holder shall provide IRIS and any other Holders with written
notice of such proposed Transfer of Warrant Shares at least 10 days (but not
more than 30 days) prior to such Transfer and of the consummation thereof within
10 days thereafter.
15. MISCELLANEOUS.
15.1 COMPLETE AGREEMENT. This Agreement and any documents referred to
herein or executed contemporaneously herewith constitute the parties' entire
agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
15.2 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and subsequent
Holders of Registrable Securities. Except as expressly provided otherwise in
this Agreement, none of the parties may assign or otherwise Transfer any of its
rights or obligations under this Agreement.
15.3 COOPERATION. Each party hereto agrees to execute any and all
further documents and writings and to perform such other actions which may be or
become necessary or expedient to effectuate and carry out this Agreement.
15.4 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
15.5 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
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15.6 NOTICES. All notices under this Agreement will be in writing and
will be delivered by personal service or facsimile or certified mail (or, if
certified mail is not available, then by first class mail), postage prepaid, to
such address as may be designated from time to time by the relevant party, and
which will initially be as set forth below. Any notice sent by certified mail
will be deemed to have been given three (3) days after the date on which it is
mailed. All other notices will be deemed given when received. No objection may
be made to the manner of delivery of any notice actually received in writing by
an authorized agent of a party. Notices will be addressed as follows or to such
other address as the party to whom the same is directed will have specified in
conformity with the foregoing:
(a) If to IRIS:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Fred H. Deindoerfer
Chairman of the Board and President
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attn: Theodore E. Guth, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
(b) If to DITI:
Digital Imaging Technologies, Inc.
2950 North Loop West, Suite #1050
Houston, Texas 77092
Attn: James L. Hurn
Chief Executive Officer
Telephone: (713) 956-2165
Facsimile: (713) 956-2185
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With a copy to:
Andrews & Kurth LLP
Texas Commerce Tower
600 Travis, Suite 4200
Houston, Texas 77002
Attn: Robert V. Jewell, Esq.
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
(c) If to any other Holder:
To the Holder's last address listed on the Company's books and
records.
15.7 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware without
regard to the conflict of laws rules of the State of Delaware or any other
jurisdiction that would call for the application of the laws of any jurisdiction
other than the State of Delaware. Each party hereto hereby irrevocably
consents, for itself and its legal representatives, partners, successors and
assigns, to the exclusive jurisdiction of the Courts of the State of Delaware
for all purposes in connection with any action or proceeding that arises from or
relates to this Agreement, and further agrees that, subject to Section 15.9
(Arbitration of Disputes), any action arising from or relating to this Agreement
shall be instituted and prosecuted only in the courts of the State of Delaware,
and hereby waives any rights it may have to personal service of summons,
complaint, or other process in connection therewith, and agrees that service may
be made by registered or certified mail to such party at the address set forth
for notice in the Asset Purchase Agreement.
15.8 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Agreement or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding shall be entitled, in addition to such other relief as may be
granted, to the reasonable attorneys' fees and court costs incurred by reason of
such litigation or arbitration.
15.9 ARBITRATION OF DISPUTES. Except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Agreement, including, but not limited to,
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including its commencement and termination) which are not
settled by agreement between the parties, shall be settled by arbitration
conducted exclusively in Wilmington, Delaware in accordance with the arbitration
provisions of the Asset Purchase Agreement. The parties hereby consent to the
in personam jurisdiction of the courts of the State of
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Delaware for purposes of confirming any such award and entering judgment
thereon. Each party agrees that the arbitration is its exclusive damage
remedy and expressly waives any right to seek redress in another forum.
15.10 AGREEMENT NEGOTIATED. The parties hereto are sophisticated
and have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of any statutory
or common law rule relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
15.11 HEADINGS. The Section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, or extend or
interpret the scope of this Agreement or of any particular Section.
15.12 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO REGISTRATION RIGHTS AND STANDSTILL AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Note to be duly
executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
"DITI"
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
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EXHIBIT H
BILL OF SALE
Pursuant and subject to the terms, conditions, and definitions of that
certain Asset Purchase Agreement (the "ASSET PURCHASE AGREEMENT") dated as of
July ___, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation ("BUYER"), on the one hand, and DIGITAL IMAGING
TECHNOLOGIES, INC., a Delaware corporation ("DITI"), PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware corporation ("PSII"), and PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware corporation ("PSTI"), (DITI, PSII and PSTI
collectively, "SELLER") on the other hand, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller hereby transfers, assigns and delivers to Buyer, free and clear of any
liens, encumbrances, adverse claims or security interests other than the
Obligations, to hold the same with rights thereto unto Buyer, its successors and
assigns forever to its and their own use, all of Seller's right, title and
interest in and to all of the tangible Assets, including, without limitation,
the Equipment, Files, Inventory and Personalty. Buyer represents that it is
purchasing the Inventory for resale in the ordinary course of business.
Seller does hereby constitute and appoint Buyer, its successors and assigns
the true and lawful attorney-in-fact of Seller with full power of substitution
for it and in its name, place and stead or otherwise by or on behalf of Seller,
its successors and assigns and for the benefit of Buyer, its successors and
assigns, (i) to demand and receive from time to time any and all moneys,
property and assets, real, personal and mixed, tangible and intangible, hereby
conveyed and assigned or intended so to be, (ii) to make, execute, acknowledge,
swear to and file in the name of Seller and its successors and assigns any
deeds, assignments, notices, filings, applications, registrations and other
instruments of further assurance and transfer and registration of same, (iii) to
give receipts and releases in respect of the same, (iv) from time to time to
institute and prosecute in the name of Buyer, or Seller for the benefit of
Buyer, any and all proceedings at law, in equity or otherwise which Buyer, its
successors and assigns may deem proper in order to collect, assert, perfect,
improve or enforce any claims, rights, interest or title of any kind in and to
the Assets, (v) to defend and compromise any and all actions, suits or
proceedings in respect of any of the Assets and (vi) to do any and all such acts
and things in furtherance of the purposes of this Bill of Sale as Buyer, its
successors or assigns shall deem advisable. Seller hereby declares that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are and shall be irrevocable and perpetual and shall not be
terminated by any act of Seller or its successors or assigns, by the bankruptcy,
insolvency or dissolution of Seller or any successor thereto or assign thereof
or otherwise by operation of law.
From time to time after the date of this Bill of Sale, Seller shall,
without further consideration, execute and deliver to Buyer such other
instruments (in recordable form
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<PAGE>
or otherwise reasonably required) and take such other action as Buyer may
reasonably request to carry out the terms and provisions of this Bill of Sale.
This Bill of Sale is subject to the terms and conditions of the Asset
Purchase Agreement. All capitalized terms not defined herein shall have the
meanings given them in the Asset Purchase Agreement. Whenever the terms hereof
and the terms of the Asset Purchase Agreement conflict, the terms of the Asset
Purchase Agreement shall control.
This Bill of Sale may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. None of the provisions
of this Bill of Sale will be for the benefit of, or enforceable by, any
third-party beneficiary.
* * * [NEXT PAGE IS SIGNATURE PAGE] * * *
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SIGNATURE PAGE TO BILL OF SALE
IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale to be
duly executed, as of this ____ day of __________, 1996 by their respective duly
authorized officers.
"BUYER"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
"SELLER"
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
PERCEPTIVE SCIENTIFIC INSTRUMENTS,
INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-1
<PAGE>
PERCEPTIVE SCIENTIFIC TECHNOLOGIES,
INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-2
<PAGE>
EXHIBIT I
ASSIGNMENT AND ASSUMPTION AGREEMENT
Pursuant and subject to the terms, conditions, and definitions of that
certain Asset Purchase Agreement (the "ASSET PURCHASE AGREEMENT") dated as of
July ___, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation ("BUYER"), on the one hand, and DIGITAL IMAGING
TECHNOLOGIES, INC., a Delaware corporation ("DITI"), PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware corporation ("PSII"), and PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware corporation ("PSTI"), (DITI, PSII and PSTI
collectively, "SELLER") on the other hand, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller hereby transfers, assigns and delivers to Buyer, free and clear of any
liens, encumbrances, adverse claims or security interests other than the
Obligations, to hold the same with rights thereto unto Buyer, its successors and
assigns forever to its and their own use, all of Seller's right, title and
interest in and to all of the intangible Assets, including, without limitation,
the Accounts Receivable, the Assigned Contracts, the Intellectual Property, the
PSIL Stock, the Purchase Commitments, the Sales Commitments and the goodwill
associated with the Business. Buyer shall have the benefit of, and Seller's
transfer and assignment to Buyer of the Assets include, all of Seller's existing
rights and remedies pursuant to any representations, warranties,
indemnifications, covenants or agreements made by any other party pursuant to
the Assigned Contracts.
Buyer hereby agrees to pay and perform the Obligations as and when they
become due or payable. Buyer has not assumed, nor shall Buyer be liable for,
any obligations, debts, contracts or liabilities of Seller except the
Obligations. The Obligations consist of the obligations of Seller under the
Assigned Contracts, the Payables, the Purchase Commitments and the Sales
Commitments.
In the event that the assignment attempted to be made hereunder of any
right, title or interest in, to or under any Assigned Contract which requires
the consent to assignment of a party to such contract other than Seller (a
"CONSENT CONTRACT") would be ineffective as between Seller and Buyer without the
consent of such party, or would serve as a cause for modifying, terminating or
invalidating such Consent Contract, or would cause or serve as a cause for the
loss, or the modification of the terms, of ownership thereof or the right, title
or interest therein, then, such Consent Contract shall be temporarily excluded
from the aforesaid conveyance and assignment; PROVIDED, HOWEVER, that, in any
such event, Seller shall, to the greatest extent permitted under the Consent
Contract, hold such right, title or interest for the exclusive use and benefit
of Buyer and its successors and assigns until such consent has been obtained or
until, following the exhaustion of all challenges and appeals, it is finally
determined that no such consent will be obtained, at which time such right,
title or interest shall automatically and with no further action or
consideration in respect thereof be excluded from this Agreement; AND PROVIDED
FURTHER, that, without further consideration therefor, Seller shall execute such
other documents, and shall take such other actions, as shall be
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<PAGE>
reasonably necessary to transfer to Buyer the benefits of such excluded
Consent Contract. Such exclusion of a Consent Contract shall not relieve
Seller from any liability for Losses to Buyer caused as a result of the
exclusion. Upon obtaining such consent or written notice from Buyer to
Seller so electing, no further conveyance or assignment shall be required,
but such right, title or interest shall automatically and with no further
action or consideration therefor become fully and completely vested in Buyer
by virtue of this Agreement.
Seller does hereby constitute and appoint Buyer, its successors and assigns
the true and lawful attorney-in-fact of Seller with full power of substitution
for it and in its name, place and stead or otherwise by or on behalf of Seller,
its successors and assigns and for the benefit of Buyer, its successors and
assigns, (i) to demand and receive from time to time any and all moneys,
property and assets, real, personal and mixed, tangible and intangible, hereby
conveyed and assigned or intended so to be, (ii) to make, execute, acknowledge,
swear to and file in the name of Seller and its successors and assigns any
deeds, assignments, notices, filings, applications, registrations and other
instruments of further assurance and transfer and registration of same, (iii) to
give receipts and releases in respect of the same, (iv) from time to time to
institute and prosecute in the name of Buyer, or Seller for the benefit of
Buyer, any and all proceedings at law, in equity or otherwise which Buyer, its
successors and assigns may deem proper in order to collect, assert, perfect,
improve or enforce any claims, rights, interest or title of any kind in and to
the Assets, (v) to defend and compromise any and all actions, suits or
proceedings in respect of any of the Assets and (vi) to do any and all such acts
and things in furtherance of the purposes of this Agreement as Buyer, its
successors or assigns shall deem advisable. Seller hereby declares that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are and shall be irrevocable and perpetual and shall not be
terminated by any act of Seller or its successors or assigns, by the bankruptcy,
insolvency or dissolution of Seller or any successor thereto or assign thereof
or otherwise by operation of law.
From time to time after the date of this Agreement, Seller shall, without
further consideration, execute and deliver to Buyer such other instruments (in
recordable form or otherwise reasonably required) and take such other action as
Buyer may reasonably request to carry out the terms and provisions of this
Agreement.
This Agreement is subject to the terms and conditions of the Asset Purchase
Agreement. All capitalized terms not defined herein shall have the meanings
given them in the Asset Purchase Agreement. Whenever the terms hereof and the
terms of the Asset Purchase Agreement conflict, the terms of the Asset Purchase
Agreement shall control.
This Agreement may be executed simultaneously in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one
and the same instrument. None of the provisions of this Agreement will be for
the benefit of, or enforceable by, any third-party beneficiary.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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<PAGE>
SIGNATURE PAGE TO ASSIGNMENT AND ASSUMPTION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of this ____ day of __________, 1996 by their respective duly
authorized officers.
"BUYER"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
"SELLER"
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
PERCEPTIVE SCIENTIFIC INSTRUMENTS,
INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-1
<PAGE>
PERCEPTIVE SCIENTIFIC TECHNOLOGIES,
INC., a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
S-2
<PAGE>
EXHIBIT J
PATENT ASSIGNMENT
This PATENT ASSIGNMENT (this "ASSIGNMENT") is entered into by DIGITAL
IMAGING TECHNOLOGIES, INC., a Delaware corporation, PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware corporation, and PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware corporation (collectively, "ASSIGNOR"), each
of whose mailing address is 2525 South Shore Blvd. #100, League City, Texas
77573, as assignor, in favor of International Remote Imaging Systems, Inc., a
Delaware corporation, with offices located at 9162 Eton Avenue, Chatsworth,
California 91311 ("ASSIGNEE"), as assignee, with reference to the following
facts and circumstances:
A. Assignor is the sole and exclusive owner of the following Letters
Patent(s) and application(s) (hereinafter, the "PATENTS"):
Issue Date/
PatentNo./Application No. Title Filing Date
- ------------------------- ----- -----------
_________________________ _________________________________ _______________
_________________________ _________________________________ _______________
B. Pursuant to an Asset Purchase Agreement dated as of even date
herewith (the "ASSET PURCHASE AGREEMENT"), Assignee is acquiring certain
assets from Assignor, including, but not limited to, Assignor's right, title
and interest in, to and under the Patents and the inventions covered thereby.
NOW, THEREFORE, to all whom it may concern, be it known that based on
the above premises and for good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, Assignor has sold, assigned,
transferred and set over, and does hereby sell, assign, transfer and set over
to Assignee the Patents and the inventions covered thereby, together with any
reissue or reissues of the Patents enjoyed by Assignor, for Assignee's own
use and enjoyment, and for the use and enjoyment of Assignee's successors and
assigns or their legal representatives, to the end of the term or terms for
which the Patents are granted or may be reissued as fully and entirely as the
same would have been held and enjoyed by Assignor if this assignment and sale
had not been made; together with all claims for damages by reason of past
infringement of the Patents, with the right to sue for, and collect the same
for Assignee's own use and benefit and for the use and benefit of Assignee's
successors, assigns or other legal representatives.
Assignor does hereby expressly authorize and request the Commissioner of
Patents and Trademarks of the United States and the comparable entities in
all foreign countries to issue any Letters Patent granted for said
inventions, whether on said applications or on any subsequently filed
division, continuation, continuation-in-part or
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reissue application, to Assignee, its successors and assigns, as the assignee
of the entire interest in said inventions.
Assignor further warrants that it has not executed, and will not
execute, any agreements in conflict with or inconsistent with this
assignment, including, but not limited to, licenses, royalty agreements or
encumbrances of any kind relating to the Patents, other than as set forth on
Schedule 2.10 to the Asset Purchase Agreement.
Assignor further assures Assignee that it shall from time to time
execute and deliver any and all further documents and writings and perform
such other reasonable actions which may be or become necessary or expedient
to effectuate and carry out the Assignment of the Patents, or to vest,
perfect or confirm title to the Patents in Assignee.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PERCEPTIVE SCIENTIFIC INSTRUMENTS,
INC., a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PERCEPTIVE SCIENTIFIC TECHNOLOGIES,
INC., a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT K
TRADEMARK ASSIGNMENT
This TRADEMARK ASSIGNMENT (this "ASSIGNMENT") is entered into by DIGITAL
IMAGING TECHNOLOGIES, INC., a Delaware corporation, PERCEPTIVE SCIENTIFIC
INSTRUMENTS, INC., a Delaware corporation, and PERCEPTIVE SCIENTIFIC
TECHNOLOGIES, INC., a Delaware corporation (collectively, "ASSIGNOR"), each of
whose mailing address is 2525 South Shore Blvd. #100, League City, Texas 77573,
as assignor, in favor of International Remote Imaging Systems, Inc., a Delaware
corporation, with offices located at 9162 Eton Avenue, Chatsworth, California
91311 ("ASSIGNEE"), as assignee, with reference to the following facts and
circumstances:
A. Assignor is the proprietor of the following issued Trademark
registration(s) and trade name(s) and application(s) (hereinafter, the
"TRADEMARKS"):
Issue Date/
Trademark No./Application No. Registration No. Filing Date
- ----------------------------- ---------------- -----------
- ---------------------------- ---------------------- ---------------
- ---------------------------- ---------------------- ---------------
B. Pursuant to an Asset Purchase Agreement dated as of even date herewith
(the "ASSET PURCHASE AGREEMENT"), Assignee is acquiring certain assets from
Assignor, including, but not limited to, Assignor's right, title and interest in
and to any and all Trademarks, Service Marks, trade names, registered and/or
unregistered, which are owned by or used by the Assignor, in whole or in part,
in conducting its business (including without limitation the Trademarks
specifically identified above), and including all rights with respect thereto
and all Federal, State, and foreign registrations of same heretofore granted or
applied for, any and all common law rights to Trademarks, Service Marks, trade
names in the United States, any state thereof, and in foreign countries, and any
and all rights or interest in various intangible assets, including Trademarks,
Service Marks, designs, logotypes, indicia, trade names, corporate names,
company names, business names, fictitious business names, trade styles or other
source or business identifiers pertaining thereto; provided, however, that
Assignee is not acquiring the Well Log Trade Names (defined below).
NOW, THEREFORE, to all whom it may concern, be it known that based on the
above premises and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignor has sold, assigned,
transferred and set over, and does hereby sell, assign, transfer and set over to
Assignee all right, title and interest of Assignor in and to any and all of its
marks, including without limitation the Trademark registration(s) and
application(s) set forth above, together with the goodwill of the business
symbolized by the various marks, trade names, designs, logotypes,
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indicia, corporate names, company names, business names, fictitious business
names, trade styles, or other source or business identifiers as well as its
entire right, title and interest in and to any and all claims and demands it
may have either at law or in equity arising out of any past infringements.
Notwithstanding anything herein to the contrary, the parties hereto
expressly acknowledge and agree that Assignor is not assigning to Assignee
hereunder any right, title or interest to (i) the "Well Information Network
Delivery Systems" or "WINDS" Trademark, (ii) the "Well Log Digitizing Systems"
or "WLDS" trade name or (iii) the "petro.info.com" home page name on the
internet (collectively, the "Well Log Trade Names").
Assignor does hereby expressly agree that procedures be taken with the
United States Patent and Trademark Office and with the comparable entities in
foreign countries singly by Assignee to record the transfer of the Trademarks to
Assignee, its successors and assigns, as the assignee of the entire interest in
said Trademarks.
Assignor further warrants that it has not executed, and will not execute,
any agreements in conflict with or inconsistent with this assignment, including,
but not limited to, licenses, royalty agreements or encumbrances of any kind
relating to the Trademarks, other than as set forth on Schedule 2.10 to the
Asset Purchase Agreement.
Assignor further assures Assignee that it shall from time to time execute
and deliver any and all further documents and writings and perform such other
reasonable actions which may be or become necessary or expedient to effectuate
and carry out the Assignment of the Trademarks, or to vest, perfect or confirm
title to the Trademarks in Assignee.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
DIGITAL IMAGING TECHNOLOGIES, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PERCEPTIVE SCIENTIFIC INSTRUMENTS, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
PERCEPTIVE SCIENTIFIC TECHNOLOGIES, INC.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT L
STOCKHOLDER GUARANTY
This STOCKHOLDER GUARANTY (the "GUARANTY") is made and entered into as of
_______ ___, 1996, by and among INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation ("IRIS"), and Edward Randall III, an individual
("GUARANTOR"), with reference to the following facts:
A. Guarantor owns all of the capital stock of Digital Imaging
Technologies, Inc., a Delaware corporation ("DITI"). DITI owns all of the
capital stock of Perceptive Scientific Instruments, Inc., a Delaware corporation
("PSII"), and Perceptive Scientific Technologies, Inc., a Delaware corporation
("PSTI"). (DITI, PSII and PSTI are sometimes hereinafter referred to
collectively as the "SELLER.")
B. Pursuant to an Asset Purchase Agreement dated as of ______ ___, 1996
(the "ASSET PURCHASE AGREEMENT") by and among IRIS and Seller, IRIS is
purchasing substantially all of the assets of Seller.
C. The Guarantor desires that IRIS consummate the acquisition of such
assets, and IRIS is willing to do so provided that certain conditions are met,
including the execution of this Guaranty by the Guarantor.
NOW, THEREFORE, based on the above premises and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. GUARANTY. Guarantor fully, irrevocably and unconditionally guarantees
and promises to cause each and every one Seller's obligations and liabilities
under the Asset Purchase Agreement when and as such obligations and liabilities
shall become due (collectively, the "OBLIGATIONS"), to be paid, performed,
satisfied or discharged strictly in accordance with the terms of the Asset
Purchase Agreement, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of
Seller with respect thereto.
2. LIMIT OF LIABILITY. Guarantor's liability under this Guaranty shall
not exceed in aggregate an amount equal to Sixteen Million Three Hundred Twenty-
Eight Thousand Dollars ($16,328,000).
3. GUARANTOR'S OBLIGATIONS UNCONDITIONAL. The obligations of Guarantor
hereunder are independent of the Obligations, and separate action or actions may
be brought or prosecuted against Guarantor whether action is brought against
Seller or Seller is joined in any such action or actions. Guarantor agrees that
this is a guarantee of payment and not of collection and that his obligations
hereunder shall be unconditional, absolute and irrevocable and, without limiting
the generality of the foregoing, shall not be released, discharged or otherwise
affected by:
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(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any Obligation, by operation of law or
otherwise;
(ii) any modification, waiver or amendment of any
provision of, or supplement or consent to, the Asset Purchase Agreement or any
act or omission to act hereunder or thereunder;
(iii) any change in the corporate existence, structure or
ownership of Seller (whether or not consented to by IRIS), or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting Seller or any
of their assets or any resulting release or discharge of any obligation of
Seller;
(iv) the validity, regularity or enforceability of the
Asset Purchase Agreement as against Seller (except for IRIS's failure to bring a
claim for indemnity or any other remedy or recovery within the time limit
expressly imposed by the terms of the Asset Purchase Agreement), or the absence
of any action to enforce the same, or any provision of applicable law or
regulation purporting to prohibit the discharge by Seller of any Obligation;
(v) the obtaining of any judgment against Seller or any
action to enforce the same; or
(vi) any other act or omission to act or delay of any
kind by any other person or entity or any other circumstance whatsoever which
might, but for the provisions of this Section 3, constitute a legal or equitable
discharge of Guarantor's obligations hereunder (except for IRIS's failure to
bring a claim for indemnity or any other remedy or recovery within the time
limit expressly imposed by the Asset Purchase Agreement).
4. WAIVERS OF GUARANTOR. Guarantor hereby waives:
(i) notice of acceptance of this Guaranty or (except for
notices expressly required under the Obligations) of the nonpayment or
nonperformance by Seller, diligence, promptness, presentment, protest, dishonor,
demand for payment and notice of nonpayment or failure to perform on the part of
Seller, filing of claims with a court in the event of insolvency or bankruptcy
of Seller, and all other notices whatsoever;
(ii) any right or requirement that IRIS or any other
person or entity proceed first against, or exhaust any right or take any action
against, any other person or entities;
(iii) any defense arising by reason of any claim or
defense based upon an election of remedies by IRIS or any other person or entity
which in any manner impairs, reduces, releases or otherwise adversely affects
its subrogation or reimbursement rights or other rights to proceed against
Seller;
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(iv) any defense arising by reason of the cessation of
the obligations, either in whole or in part, of Seller in a bankruptcy
proceeding;
(v) any duty on the part of IRIS or any other person or
entity to disclose to Guarantor any matter, fact or thing relating to the
business, operations or condition of Seller, any of its assets, or any matter
contemplated by the Asset Purchase Agreement now known or hereafter known by any
other person or entity.
5. DISCHARGE ONLY UPON SATISFACTION IN FULL; REINSTATEMENT
IN CERTAIN CIRCUMSTANCES. Guarantor's obligations hereunder shall remain in
full force and effect until all Obligations shall have been paid, performed,
discharged and satisfied in full. If, at any time, whether before or after the
discharge of all Obligations, any payment of any amount paid or payable by
Seller under the Asset Purchase Agreement is rescinded or must be otherwise
restored or returned, upon the insolvency, bankruptcy or reorganization of
Seller, or otherwise, Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been due but not made at
such time.
6. FINANCIAL CONDITION OF SELLER. Guarantor represents to
IRIS that he is now and will be completely familiar with the business,
operations and condition (financial and otherwise) of Seller.
7. MISCELLANEOUS.
7.1 ENTIRE AGREEMENT; MODIFICATIONS. This Guaranty and
any documents referred to herein or executed contemporaneously herewith
constitute the parties' entire agreement with respect to the subject matter
hereof and supersede all agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Guaranty may not be amended, altered or modified
except by a writing signed by the parties.
7.2 WAIVERS. With regard to any power, remedy or right
provided herein or otherwise available to any party hereunder (i) no waiver or
extension of time will be effective unless expressly contained in a writing
signed by the waiving party, and (ii) no alteration, modification or impairment
will be implied by reason of any previous waiver, extension of time, delay or
omission in exercise, or other indulgence.
7.3 COOPERATION. Each party hereto agrees to execute
any and all further documents and writings and perform such other reasonable
actions which may be or become necessary or expedient to effectuate and carry
out this Guaranty.
7.4 SUCCESSOR AND ASSIGNS. This Guaranty shall be
binding upon and inure to the benefit of the parties, their respective
successors and permitted assigns.
7.5 REMEDIES NOT EXCLUSIVE. Subject to Section 7.12
(Arbitration), no remedy conferred by any of the specific provisions of this
Guaranty is intended to be
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exclusive of any other remedy, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies will not constitute a waiver of the
right to pursue other available remedies.
7.6 NOTICES. All notices under this Guaranty will be in
writing and will be delivered by personal service or facsimile or certified mail
(or, if certified mail is not available, then by first class mail), postage
prepaid, to such address as may be designated from time to time by the relevant
party, and which will initially be as set forth below. Any notice sent by
certified mail will be deemed to have been given three (3) days after the date
on which it is mailed. All other notices will be deemed given when received.
No objection may be made to the manner of delivery of any notice actually
received in writing by an authorized agent of a party. Notices will be
addressed as follows or to such other address as the party to whom the same is
directed will have specified in conformity with the foregoing:
(a) If to IRIS:
International Remote Imaging Systems, Inc.
9162 Eton Avenue
Chatsworth, California 91311
Attn: Fred H. Deindoerfer
Chairman of the Board and President
Telephone: (818) 709-1244
Facsimile: (818) 700-9661
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Attn: Theodore E. Guth, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
(b) If to Guarantor:
Edward Randall III
5851 San Felipe
Suite 850
Houston, Texas 77057
Telephone: (713) 952-6262
Facsimile: (713) 974-0671
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With a copy to:
Andrews & Kurth LLP
Texas Commerce Tower
600 Travis, Suite 4200
Houston, Texas 77002
Attn: Robert V. Jewell, Esq.
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
7.7 GOVERNING LAW; CONSENT TO JURISDICTION. This Guaranty shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware without regard to the conflict of laws rules of the State of
Delaware or any other jurisdiction that would call for the application of the
laws of any jurisdiction other than the State of Delaware. Each party hereto
hereby irrevocably consents, for itself and its legal representatives, partners,
successors and assigns, to the exclusive jurisdiction of the Courts of the State
of Delaware for all purposes in connection with any action or proceeding that
arises from or relates to this Guaranty, and further agrees that, subject to
Section 7.12 (Arbitration of Disputes), any action arising from or relating to
this Guaranty shall be instituted and prosecuted only in the courts of the State
of Delaware, and hereby waives any rights it may have to personal service of
summons, complaint, or other process in connection therewith, and agrees that
service may be made by registered or certified mail to such party at the address
set forth in Section 7.6 (Notices). IF, NOTWITHSTANDING THE FOREGOING, THE LAW
OF THE STATE OF CALIFORNIA IS APPLIED TO THIS GUARANTY, GUARANTOR, IN ADDITION
TO ANY OTHER WAIVERS CONTAINED HEREIN, HEREBY EXPRESSLY WAIVES ANY AND ALL
BENEFITS UNDER CALIFORNIA CIVIL CODE SECTIONS 2809, 2810, 2819, 2845, 2847,
2848, 2849 AND 2850.
7.8 ATTORNEYS' FEES. Should any litigation or arbitration be commenced
(including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Guaranty or the rights
and duties of any person or entity hereunder, the party or parties prevailing in
such proceeding will be entitled to the reasonable attorneys' fees and expenses
of counsel and court costs incurred by reason of such litigation or arbitration.
7.9 CONSTRUCTION. No term or provision of this Guaranty shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Guaranty and any
present or future statute, law, ordinance, or regulation contrary to which the
parties have no legal right to contract, the latter shall prevail, but in such
event the provision of this Guaranty so affected shall be curtailed and limited
only to the extent necessary to bring it within the requirements of the law.
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7.10 HEADINGS. The Section headings in this Guaranty are inserted only
as a matter of convenience, and in no way define, limit, or extend or interpret
the scope of this Guaranty or of any particular Section.
7.11 SEVERABILITY. The validity, legality or enforceability of the
remainder of this Guaranty shall not be affected even if one or more of the
provisions of this Guaranty shall be held to be invalid, illegal or
unenforceable in any respect. To the extent permitted by applicable law, the
parties hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
7.12 ARBITRATION OF DISPUTES. Except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Guaranty, including, but not limited to,
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including its commencement and termination) which are not
settled by agreement between the parties, shall be settled by arbitration
conducted exclusively in Wilmington, Delaware before a board of three
arbitrators, one selected by each party, and the third by the two persons so
selected, all in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then in effect. The notice of intent
to arbitrate shall name one arbitrator, and the party(ies) receiving the notice
shall name the second arbitrator within 15 days or the moving party may select
the second arbitrator from a list supplied by the AAA. In the event that these
two arbitrators cannot agree upon a third arbitrator within 15 days, then the
third arbitrator shall be selected from the list provided by the AAA with the
parties striking names in order with the party striking first to be determined
by the flip of a coin. The parties hereby consent to the in personam
jurisdiction of the courts of the State of Delaware for purposes of confirming
any such award and entering judgment thereon. In any arbitration proceedings
hereunder, (a) all testimony of witnesses shall be taken under oath;
(b) discovery will be allowed to the same extent as available under the rules
then applicable to civil actions under Delaware law; (c) upon conclusion of any
arbitration, the arbitrators shall render findings of fact and conclusions of
law in a written opinion setting forth the basis and reasons for any decision
reached and deliver such documents to each party to this Agreement along with a
signed copy of the award; and (d) the rules of evidence as then applicable to
civil actions under Delaware law shall be applied in the arbitration. Each
party agrees that the arbitration provisions of this Agreement are its exclusive
damage remedy and expressly waives any right to seek redress in another forum.
Each party shall bear the fees of the arbitrator appointed by it, and the fees
of the neutral arbitrators shall be borne equally by each party during the
arbitration, but the fees of all arbitrators shall be borne by the losing party.
7.13 AGREEMENT NEGOTIATED. The parties hereto are sophisticated and
have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of any statutory
or common law rule relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
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7.14 COUNTERPARTS. This Guaranty may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
*** [NEXT PAGE IS SIGNATURE PAGE] ***
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SIGNATURE PAGE TO STOCKHOLDER GUARANTY
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed, as of the day and year first above written.
"IRIS"
INTERNATIONAL REMOTE IMAGING
SYSTEMS, INC., a Delaware corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
"GUARANTOR"
--------------------------------------
Edward Randall III
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EXHIBIT M
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "AGREEMENT") is made and entered into
as of July __, 1996, by and between EDWARD RANDALL III, an individual (the
"CONTROLLING STOCKHOLDER"), and INTERNATIONAL REMOTE IMAGING SYSTEMS, INC., a
Delaware corporation ("IRIS"), with reference to the following facts:
A. The Controlling Stockholder owns all of the capital stock of Digital
Imaging Technologies, Inc., a Delaware corporation ("DITI"). DITI owns all of
the capital stock of Perceptive Scientific Instruments, Inc., a Delaware
corporation ("PSII"), and Perceptive Scientific Technologies, Inc., a Delaware
corporation ("PSTI"). (DITI, PSII and PSTI are sometimes hereinafter referred
to collectively as the "SELLER.")
B. Seller is the owner of certain intellectual property and other assets
used in the business of developing, manufacturing and marketing digital image
processing and analysis products and services, including the proprietary
PowerGene-TM- product line of genetic analysis instruments.
C. Pursuant to an Asset Purchase Agreement (the "ASSET PURCHASE
AGREEMENT") dated as of July ___, 1996, by and among IRIS and Seller, IRIS is
purchasing substantially all of the assets of Seller.
D. The Controlling Stockholder desires that IRIS consummate the
acquisition of such assets, and IRIS is willing to do so provided that certain
conditions are met, including the execution of this Agreement by the Controlling
Stockholder.
E. This Agreement is a material part of the consideration for the
consummation of the Asset Purchase Agreement by IRIS, and the purchase price
paid thereunder includes consideration for the covenants contained in this
Agreement.
NOW, THEREFORE, based on the above premises and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. AGREEMENT NOT TO COMPETE. For a period of five (5) years from the
date hereof (the "TERM"), the Controlling Stockholder will not, directly or
indirectly, engage in, own (other than as a holder of less than 5% of the
outstanding capital stock of a publicly traded corporation), manage, operate,
join, control or participate in the ownership, management, operation or control
of any business engaged in developing, manufacturing and/or marketing digital
image processing or analysis products or services in any city or county in the
United States of America or any comparable subdivision of any foreign country;
PROVIDED, HOWEVER, that the Controlling Stockholder may own,
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manage and operate a business engaged in the Well Log Business. The
Controlling Stockholder acknowledges that Seller is currently engaged in
substantial activities related to such business worldwide. For purposes of
this Agreement, "WELL LOG BUSINESS" shall mean the business of developing,
manufacturing and/or marketing digital image processing and analysis products
and services for use solely in the oil and gas exploration industry.
2. SOLICITATION OF EMPLOYEES. The Controlling Stockholder shall not
directly or indirectly, without the prior written consent of IRIS, (i) hire any
employee or consultant of IRIS for a period of two (2) years from the date
hereof or (ii) induce or take any action intended to induce any employee or
consultant of IRIS to cease providing or otherwise alter the services provided
to IRIS until the expiration of the Term.
3. SOLICITATION OF CUSTOMERS. Until the expiration of the Term, the
Controlling Stockholder shall not directly or indirectly induce or attempt to
induce any customer of IRIS or any present customer of PSII, PSTI or any of
their subsidiaries to cease doing business with IRIS or to do business with any
of its then competitors or potential competitors.
4. USE OF NAME. Except as temporarily permitted under the Asset Purchase
Agreement in connection with the operation of the Well Log Business, the
Controlling Stockholder shall not use any names which in the reasonable opinion
of IRIS are confusingly similar to the name "Perceptive Scientific" or any of
the trademarks purchased under the Asset Purchase Agreement.
5. EQUITABLE RELIEF. The Controlling Stockholder acknowledges that the
covenants contained in Sections 1, 2, 3, and 4 hereof are reasonable and
necessary to protect the legitimate interests of IRIS, including, without
limitation, the goodwill acquired by IRIS under the Asset Purchase Agreement,
that IRIS would not have consummated the Asset Purchase Agreement in the absence
of such covenants, that any breach or threatened breach of such covenants will
result in irreparable injury to IRIS and that the remedy at law for such breach
or threatened breach would be inadequate. Accordingly, the Controlling
Stockholder agrees that IRIS shall, in addition to any other rights or remedies
which it may have, be entitled to seek such equitable and injunctive relief as
may be available from any court of competent jurisdiction to restrain the
Controlling Stockholder from any breach or threatened breach of such covenants.
6. MISCELLANEOUS.
6.1 COMPLETE AGREEMENT. This Agreement and any documents referred to
herein or executed contemporaneously herewith constitute the parties' entire
agreement with respect to the subject matter hereof and supersede all
agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be amended, altered or modified except by a
writing signed by the parties.
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6.2 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. None of the parties may assign any of his or its rights or obligations
under this Agreement without the prior written consent of the other; PROVIDED,
HOWEVER, that IRIS may assign its rights under this Agreement to a subsidiary of
IRIS or in connection with a merger, consolidation or sale of substantially all
of the assets of IRIS.
6.3 WAIVERS STRICTLY CONSTRUED. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (a) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (b) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
6.4 SEVERABILITY. In case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. Further, if the period of time, the
extent of the geographic area, or the scope of the proscribed activities covered
by this Agreement should be deemed unenforceable, then this Agreement shall be
construed to cover the maximum period of time, geographic area and scope of
proscribed activities (not to exceed the maximum time, geographic area or scope
set forth herein) as may be valid under applicable law.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
without regard to the conflict of laws rules of the State of Delaware or any
other jurisdiction that would call for the application of the laws of any
jurisdiction other than the State of Delaware. Each party hereto hereby
irrevocably consents, for itself and its legal representatives, partners,
successors and assigns, to the exclusive jurisdiction of the Courts of the State
of Delaware for all purposes in connection with any action or proceeding that
arises from or relates to this Agreement, and further agrees that, subject to
Section 6.7 (Arbitration of Disputes), any action arising from or relating to
this Agreement shall be instituted and prosecuted only in the courts of the
State of Delaware, and hereby waives any rights it may have to personal service
of summons, complaint, or other process in connection therewith, and agrees that
service may be made by registered or certified mail to such party at the address
set forth for notice in the Asset Purchase Agreement.
6.6 ATTORNEYS' FEES. Should any litigation or arbitration be
commenced (including any proceedings in a bankruptcy court) between the parties
hereto or their representatives concerning any provision of this Agreement or
the rights and duties of any person or entity hereunder, the party or parties
prevailing in such proceeding shall be entitled, in addition to such other
relief as may be granted, to the reasonable attorneys' fees and court costs
incurred by reason of such litigation or arbitration.
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6.7 ARBITRATION OF DISPUTES. Except for actions seeking injunctive
relief, which may be brought before any court having jurisdiction, any claim
arising out of or relating to (i) this Agreement, including, but not limited to,
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including its commencement and termination) which are not
settled by agreement between the parties, shall be settled by arbitration
conducted exclusively in Wilmington, Delaware in accordance with the arbitration
provisions of the Asset Purchase Agreement. The parties hereby consent to the
in personam jurisdiction of the courts of the State of Delaware for purposes of
confirming any such award and entering judgment thereon. Each party agrees that
the arbitration is its exclusive damage remedy and expressly waives any right to
seek redress in another forum.
6.8 AGREEMENT NEGOTIATED. The parties hereto are sophisticated and
have consulted legal counsel with respect to this transaction. As a
consequence, the parties do not believe that the presumptions of any statutory
or common law rule relating to the interpretation of contracts against the
drafter of any particular clause should be applied in this case and therefore
waive its effects.
6.9 HEADINGS. The Section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, or extend or
interpret the scope of this Agreement or of any particular Section.
6.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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SIGNATURE PAGE TO NON-COMPETITION AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
"THE CONTROLLING STOCKHOLDER"
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Edward Randall III
"IRIS"
INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.,
a Delaware corporation
By:
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Name:
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Title:
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