<PAGE> 1
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report October 25, 1996
(Date of earliest event reported)
COLLABORATIVE CLINICAL RESEARCH, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio (000-20699) 34-1685364
- ------------------------------- --------------------- -------------------
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation) Identification No.)
20600 Chagrin Boulevard, Cleveland, Ohio 44122
- ------------------------------------------------------ ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 491-9930
------------------
Page 1 of 4 Pages
Exhibit Index Appears on Page 4
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
- ----------------------------------------------
Effective October 25, 1996, Collaborative Clinical Research, Inc.
("Collaborative"), through its wholly-owned subsidiary Collaborative Holdings,
Inc. ("CHI"), acquired substantially all of the assets of Walker Clinical
Evaluations, a division of Walker Information, Inc. Walker Clinical Evaluations
is a provider of contract research services on pharmaceuticals, medical devices,
foods and other products which must undergo clinical trials prior to receiving
certain regulatory approvals of the Food and Drug Administration and other
governmental authorities. The acquisition was accomplished pursuant to an Asset
Purchase Agreement dated October 16, 1996, by and between CHI and Walker
Information, Inc. A copy of the Asset Purchase Agreement is filed as an Exhibit
hereto.
The assets acquired by CHI consist of accounts receivable, tangible personal
property, rights under certain real property leases (which were assumed by CHI)
and contract rights. CHI also assumed certain liabilities related to employee
compensation and liabilities under any assigned contracts. The purchase price
for the acquired business will be equal to a multiple of Walker Clinical
Evaluation's 1996 calendar year performance, with a minimum price of $2.8
million and a maximum of $4.2 million, subject to adjustment based on the
working capital of Walker Clinical Evaluations as of October 25, 1996. An
initial payment of $2.8 million was made on October 28, 1996 with final
payment, if any, due in 1997. Collaborative will use part of the proceeds from
its initial public offering to pay for the purchase price of Walker Clinical
Evaluations. CHI also entered into a license agreement with Walker Clinical
Evaluations for the use of its database.
There are no material relationships between Walker Clinical Evaluations and
Collaborative or any of their affiliates, directors or officers.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
- ----------------------------------------------------------------------------
(a) Financial Statements of Business Acquired
Walker Clinical Evaluations Financial Statements
Report of Independent Auditors
Balance Sheets at December 31, 1995 and September 30, 1996
Statements of Operations and Division Equity for the year ended
December 31, 1995 and the nine-month period ended September 30, 1996
Statements of Cash Flows for the year ended December 31, 1995 and the
nine-month period ended September 30, 1996
Notes to Financial Statements
Page 2 of 4 Pages
<PAGE> 3
(b) Pro Forma Financial Information.
Collaborative Clinical Research, Inc. and subsidiaries, and Walker
Clinical Evaluations Pro Forma Consolidated Financial Statements
Pro Forma Consolidated Balance Sheet of Collaborative Clinical
Research, Inc. and subsidiaries, and Walker Clinical Evaluations at
September 30, 1996
Pro Forma Consolidated Statements of Operations of Collaborative
Clinical Research, Inc. and subsidiaries, and Walker Clinical
Evaluations for the year ended December 31, 1995 and the nine months
ended September 30, 1996
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index set forth elsewhere
herein.
Page 3 of 4 Pages
<PAGE> 4
SIGNATURE
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 thereunto duly authorized.
COLLABORATIVE CLINICAL RESEARCH, INC.
By: /s/ Terry C. Black
----------------------------------------------------
Terry C. Black
Vice President of Finance, Chief Financial
Officer, Treasurer, and Assistant Secretary
Date: November 7, 1996
<PAGE> 5
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<S> <C> <C>
2.1 Asset Purchase Agreement, dated October 16, 1996,
between Collaborative Holdings, Inc. and Walker
Information, Inc.*
10.1 License Agreement, dated October 16, 1996,
between Collaborative Holdings, Inc. and Walker
Information, Inc.*
99.1 Press Release Issued by the Company
on October 29, 1996.
<FN>
* The Registrant agrees by this filing to supplementally furnish a copy of the
schedules and exhibits to these Agreements to the Commission upon request.
</TABLE>
Page 4 of 4 Pages
<PAGE> 6
Financial Statements
Walker Clinical Evaluations
Year ended December 31, 1995 and nine months ended
September 30, 1996
with Report of Independent Auditors
<PAGE> 7
Walker Clinical Evaluations
Financial Statements
Year ended December 31, 1995 and nine months ended September 30, 1996
CONTENTS
Report of Independent Auditors........................................1
Audited Financial Statements
Balance Sheets........................................................2
Statements of Operations and Division Equity..........................3
Statements of Cash Flows..............................................4
Notes to Financial Statements.........................................5
<PAGE> 8
Report of Independent Auditors
To the Board of Directors and Shareholders
Collaborative Clinical Research, Inc.
We have audited the balance sheets of Walker Clinical Evaluations (a division of
Walker Information, Inc.) as of December 31, 1995 and September 30, 1996, and
the related statements of operations and division equity, and cash flows for the
year ended December 31, 1995 and the nine months ended September 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Walker Clinical Evaluations at
December 31, 1995 and September 30, 1996 and the results of its operations and
its cash flows for the year ended December 31, 1995 and the nine months ended
September 30, 1996 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Indianapolis, Indiana
October 9, 1996
1
<PAGE> 9
Walker Clinical Evaluations
Balance Sheets
December 31, 1995 and September 30, 1996
<TABLE>
<CAPTION>
1995 1996
--------------------------
ASSETS
Current assets:
<S> <C> <C>
Cash $ 6,400 $ 4,800
Accounts receivable:
Billed, less allowance of $2,200 522,363 342,690
Unbilled revenues 427,255 483,407
Prepaid expenses 11,340 8,721
--------------------------
Total current assets 967,358 839,618
Leasehold improvements and equipment, net 118,194 156,068
--------------------------
Total assets $ 1,085,552 $ 995,686
==========================
LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable $ 121,906 $ 142,624
Deferred revenue 297,467 125,987
Accrued liabilities 33,171 66,201
--------------------------
Total current liabilities 452,544 334,812
Division equity 633,008 660,874
--------------------------
Total liabilities and division equity $ 1,085,552 $ 995,686
==========================
</TABLE>
See accompanying notes.
2
<PAGE> 10
Walker Clinical Evaluations
Statements of Operations and Division Equity
Year Ended December 31, 1995 and
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
1995 1996
-------------------------------
<S> <C> <C>
Revenues $ 3,468,633 $ 2,376,263
Cost of revenues 2,265,573 1,191,067
-------------------------------
Gross margin 1,203,060 1,185,196
Selling, general and administrative expenses 1,235,504 868,789
Depreciation and amortization 67,000 30,319
Corporate overhead allocation 184,339 122,377
-------------------------------
1,486,843 1,021,485
-------------------------------
Net income (loss) (283,783) 163,711
Distributions from (to) Walker Information, Inc. 358,411 (135,845)
Division equity at the beginning of the period 558,380 633,008
-------------------------------
Division equity at the end of the period $ 633,008 $ 660,874
===============================
</TABLE>
See accompanying notes.
3
<PAGE> 11
Walker Clinical Evaluations
Statements of Cash Flows
Year Ended December 31, 1995 and
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
1995 1996
------------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ (283,783) $ 163,711
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 67,000 30,319
Loss on disposal of assets 2,793 18,540
Changes in operating assets and liabilities:
Accounts receivable (39,575) 123,521
Prepaid expenses (7,640) 2,619
Accounts payable (40,051) 20,718
Deferred revenue 23,085 (171,480)
Accrued liabilities (28,355) 33,030
------------------------------
Net cash provided (used) by operating activities (306,526) 220,978
INVESTING ACTIVITIES
Purchases of leasehold improvements and equipment (71,523) (86,733)
------------------------------
Net cash used by investing activities (71,523) (86,733)
FINANCING ACTIVITIES
Distributions from (to) Walker Information, Inc., net 358,411 (135,845)
------------------------------
Net cash provided (used) by financing activities 358,411 (135,845)
------------------------------
Net decrease in cash (19,638) (1,600)
Cash at beginning of period 26,038 6,400
------------------------------
Cash at end of period $ 6,400 $ 4,800
==============================
</TABLE>
See accompanying notes.
4
<PAGE> 12
Walker Clinical Evaluations
Notes to Financial Statements
December 31, 1995 and September 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Walker Clinical Evaluations (the "Company") is a division of Walker Information,
Inc. ("Walker"). The Company is in the business of managing and conducting Phase
III and IV clinical trials for pharmaceutical companies. The Company recruits
and enrolls patients in accordance with test protocols provided by the study
sponsors, administers the pharmaceuticals under controlled conditions, and
monitors and compiles test results regarding the safety and efficacy of the
tested pharmaceuticals. The results are used by the study sponsors in the drug
approval process. The Company operates two ambulatory research centers, one in
Indianapolis, Indiana and one in Louisville, Kentucky. The Company's customers
are primarily pharmaceutical and consumer products companies located in the
United States.
USE OF ESTIMATES
Preparation of the financial statements requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues are recognized at the time services are performed on a cost-to-cost
percentage-of-completion basis. Anticipated losses are recognized currently.
Invoices to customers are generated in accordance with the terms of the
applicable contract, which are not directly related to the performance of
services. Revenues which have been earned but not yet billed to customers
(unbilled revenues) are classified as a current asset. Billings to customers in
excess of revenue earned (deferred revenue) are classified as a current
liability. The Company grants short-term credit to customers and performs
periodic credit evaluations of its customers' financial condition. The Company
does not generally require collateral. Credit losses relating to customers have
been consistent with management's expectations.
For 1995 and the nine months ended September 30, 1996, two customers constituted
23% and 35% of revenues, respectively. Accounts receivable from these customers
were approximately $11,500 and $91,600 at December 31, 1995 and September 30,
1996, respectively. As of September 30, 1996, accounts receivable from one
customer was $149,000.
5
<PAGE> 13
Walker Clinical Evaluations
Notes to Financial Statements (Continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CORPORATE OVERHEAD ALLOCATION
Walker provides various administrative services to the Company including legal,
accounting, human resources, advertising and executive management services.
Expenses related to these services are allocated to the Company, first on the
basis of direct usage when identifiable, with the remainder allocated on the
basis of the Company's revenue in relation to Walker's combined revenue. In the
opinion of management, this method of allocation is reasonable.
CASH
The Company maintains an imprest cash account used primarily for sundry study
supplies. Cash generated from, or used in, operations is continuously
distributed to or from Walker.
LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment are carried at cost. Depreciation is
computed using the straight-line method. Depreciable lives are generally as
follows:
Leasehold improvements 5 years
Computer equipment 3 to 5 years
Furniture, fixtures and equipment 3 to 5 years
INCOME TAX STATUS
As a division of Walker, the Company has no direct responsibility for federal or
state income taxes. The shareholders of Walker have elected under Subchapter S
of the Internal Revenue Code to include Walker's income in their own income for
income tax purposes. Accordingly, Walker is not subject to federal and state
income taxes and no allocation of income taxes has been made to the Company.
INTERIM FINANCIAL DATA
The results for the nine months ended September 30, 1996 may not be indicative
of operating results for the full year.
6
<PAGE> 14
Walker Clinical Evaluations
Notes to Financial Statements (Continued)
2. LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Leasehold improvements and equipment consist of the following at December 31,
1995 and September 30, 1996:
<TABLE>
<CAPTION>
1995 1996
--------------------------------
<S> <C> <C>
Leasehold improvements $ 55,870 $ 74,382
Computer equipment 75,780 49,416
Furniture, fixtures and equipment 259,001 234,805
--------------------------------
390,651 358,603
Less accumulated depreciation and amortization 272,457 202,535
--------------------------------
$ 118,194 $ 156,068
================================
</TABLE>
3. OPERATING LEASE COMMITMENTS
Walker has two noncancelable operating leases for clinical research facilities
expiring on October 31, 2000 and May 31, 2003. One lease includes a provision
for contingent rentals (based on excess operating costs) beginning in May 1997.
A third lease expired in 1996 and was replaced with one of the aforementioned
leases.
Total rent expense was $212,061 and $157,267 for 1995 and the nine months ended
September 30, 1996, respectively.
Future minimum rental commitments for these operating leases are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
------------------------
<S> <C> <C>
1996 $ 140,923
1997 146,537
1998 148,494
1999 151,120
2000 137,726
Thereafter 165,097
-----------------
$ 889,897
=================
</TABLE>
7
<PAGE> 15
Walker Clinical Evaluations
Notes to Financial Statements (Continued)
4. EMPLOYEE BENEFIT PLANS
Walker has a defined contribution plan which includes a cash or deferral
(Section 401(k)) arrangement. The plan covers those employees, including
employees of the Company, who meet certain eligibility requirements and elect to
be participants in the plan. Employee contributions are limited to the lesser of
15% of annual compensation or the annual limitation established by government
regulations. The plan allows Walker to match a percentage of employee
contributions. The matching percentage is determined annually by Walker's
management. Walker's matching contributions attributable to employees of the
Company were approximately $7,200 and $7,100 for 1995 and the nine months ended
September 30, 1996, respectively.
A Voluntary Employees Beneficiary Association Trust (VEBA) provides health
benefits to its members, including employees of the Company. Employees must meet
certain eligibility requirements to be considered a member of the VEBA. The net
charge to operations for the VEBA attributable to employees of the Company was
approximately $28,900 and $25,200 for 1995 and the nine months ended September
30, 1996, respectively.
5. CONTINGENCIES
A test subject that participated in a 1995 clinical trial has threatened
litigation against Walker due to alleged negative side effects from
participation in the trial. In management's opinion, any loss experienced by
Walker would be covered by general liability insurance coverage, therefore, no
provision for loss has been made in the accompanying financial statements.
Management is not able to predict the outcome of this situation at this time,
however, it is not expected to have a material impact on the financial position
of the Company.
An individual has alleged that her working conditions at the Company created
significant health-related problems. No claim against the Company has been
asserted and management believes that any claim arising from this situation is
without basis. Management is not able to predict the outcome of this situation
at this time, however, it is not expected to have a material impact on the
financial position of the Company.
6. PLANNED TRANSACTIONS
Walker has signed a non-binding letter of intent documenting an initial
agreement to sell substantially all of the assets of the Company to an unrelated
third party pursuant to an asset purchase agreement. The purchase price will be
determined based on a multiple of 1996 pretax net income. Management anticipates
the execution of the asset purchase agreement and closure of the transaction in
October 1996.
8
<PAGE> 16
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited Pro Forma Consolidated Balance Sheet as of
September 30, 1996 and Consolidated Statements of Operations for the year ended
December 31, 1995 and for the nine months ended September 30, 1996, are based
on the historical financial statements of the Company. The Pro Forma
Consolidated Balance Sheet is adjusted to give effect to the acquisition of
Walker Clinical Evaluations as if such acquisition had occurred on September
30, 1996. The Pro Forma Consolidated Statements of Operations are adjusted to
give effect to the acquisitions completed subsequent to December 31, 1995, and
the sale by the Company in June and July of 1996 of 3,400,000 Common Shares and
the application of the net proceeds therefrom as if these events had occurred
as of January 1, 1995. The Pro Forma Consolidated Statements of Operations
combine the historical operations of the Company with the historical operations
of the acquired companies prior to the dates the Company made such
acquisitions, using the purchase method of accounting. The pro forma operating
results are not necessarily indicative of the operating results that would have
been achieved had the acquisitions actually occurred at January 1, 1995. These
Pro Forma Consolidated Financial Statements are based on the assumptions set
forth in the notes to such statements.
<PAGE> 17
COLLABORATIVE CLINICAL RESEARCH, INC. AND WALKER CLINICAL EVALUATIONS
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical Walker
CCR Clinical Pro Forma Pro Forma
and Subs. Evaluations Adjustments Eliminations As Adjusted
--------- ----------- ----------- ------------ -----------
(Note A) (Note B)
<S> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 6,561 $ 5 ($3,000) $ - $ 3,566
Short-term investments 32,991 32,991
Accounts receivable, net 6,234 826 7,060
Prepaid Expenses 483 9 492
-------- ------- ------- ------- --------
Total current assets 46,269 840 (3,000) 44,109
Property and equipment, net 1,390 156 1,546
Goodwill and other assets, net 5,901 3,000 (661) 8,240
-------- ------- ------- ------- --------
Total assets $ 53,560 $ 996 $ - $ (661) $ 53,895
======== ======= ======= ======= ========
Current Liabilities:
Trade accounts payable $ 2,775 $ 143 $ - $ - $ 2,918
Accrued expenses and other 1,054 66 1,120
Deferred revenue 938 126 1,064
-------- ------- ------- ------- --------
Total current liabilities 4,767 335 5,102
Shareholder's equity:
Common shares, without
par value per share 49,351 49,351
Retained earnings (deficit) (558) 661 (661) (558)
-------- ------- ------- ------- --------
Total shareholder's equity 48,793 661 (661) 48,793
Total liabilities and -------- ------- ------- ------- --------
shareholder's equity $ 53,560 $ 996 $ - ($ 661) $ 53,895
======== ======= ======= ======= ========
</TABLE>
See accompanying Notes to Pro Forma Consolidated Financial Statements
<PAGE> 18
COLLABORATIVE CLINICAL RESEARCH, INC. AND WALKER CLINICAL EVALUATIONS
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical
---------------------------------------------
Collaborative GFI Walker
Clinical Pharmaceutical Clinical Pro Forma Pro Forma
Research Services (C) Evaluations(C) Adjustments As Adjusted
-------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenue $ 10,453 $ 5,986 $ 3,469 $ 19,908
Direct costs 8,491 3,796 2,266 14,553
-------- ------- ------- ------- --------
Gross profit 1,962 2,190 1,203 0 5,355
Selling, general and
administrative expenses 2,770 1,742 1,420 5,932
Depreciation and Amortization 62 148 67 403 (D) 680
-------- ------- ------- ------- --------
Operating income (loss) (870) 300 (284) (403) (1,257)
Interest income 222 (222)(E) 0
Interest Expense (52) 52 (E) 0
Equity loss in HRI (105) (105)
======== ======= ======= ======= ========
Net income (loss) ($ 753) $ 248 ($ 284) ($ 573) ($ 1,362)
======== ======= ======= ======= ========
Net income (loss) per share ($ 0.24) ($ 0.37)
======== ========
Shares used in computation 3,102 3,686
======== ========
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical
------------------------------------------------
Collaborative GFI Walker
Clinical Pharmaceutical Clinical Pro Forma Pro Forma
Research Services (C) Evaluations(C) Adjustments As Adjusted
------------- -------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue $ 19,321 $ 516 $2,376 $ 22,213
Direct costs 13,725 369 1,191 15,285
-------- ------- ------ -------- ------
Gross profit 5,596 147 1,185 0 6,928
Selling, general and
administrative expenses 4,335 187 991 5,513
Depreciation and Amortization 405 15 30 111 (D) 561
-------- ------- ------ -------- ------
Operating income (loss) 856 (55) 164 (111) 854
Interest income 643 (176)(E) 467
Interest Expense (93) (8) 101 (E) 0
Equity loss in HRI (2) (2)
-------- ------- ------ -------- ------
Income (loss) before income taxes 1,404 (63) 164 (186) 1,319
Income tax expense (benefit) 351 (21) 330
-------- ------- ------ -------- ------
Net income (loss) $ 1,053 ($ 63) $ 164 ($ 165) $ 989
======== ======= ====== ======== ======
Net income (loss) per share $ 0.23 $ 0.15
======== ======
Shares used in computation 4,519 6,669
======== ======
</TABLE>
See accompanying Notes to Pro Forma consolidated Financial Statements.
<PAGE> 19
COLLABORATIVE CLINICAL RESEARCH, INC. AND WALKER CLINICAL EVALUATIONS
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) Reflects the payment of $3,000,000 (the estimated purchase price as of
October 25,1996) for the acquisition of Walker Clinical Evaluations
("WCE"), accounted for under the purchase method of accounting resulting in
an excess purchase price over fair value of $2,339,126 all of which was
allocated to goodwill.
(B) Adjustments to consolidate WCE with Collaborative.
(C) The historical statement of operations data for GFI Pharmaceutical Services
Inc. ("GFI") and WCE for the year ended December 31, 1995 represent the
results of operations of such companies from January 1, 1995 to the earlier
of their respective dates of acquisition or December 31, 1995. The
historical statement of operations data for GFI and WCE for the nine months
ended September 30, 1996 represent the results of operations for such
companies from January 1, 1996 to their respective dates of acquisition.
Each of the acquisitions has been accounted for as a purchase. Accordingly,
the the results of the operations of each acquired company are included in
the Company's results of operations from the date of acquisition.
(D) The adjustment to depreciation and amortization expense reflects the
amortization of goodwill over a 20-year period arising from the excess cost
over fair market value of the net assets of the acquired companies, as if
they were acquired as of January 1, 1995.
(E) The adjustments reflect the reduction in interest expense and the reduction
of interest income, had the entire net proceeds of approximately $42.7
million from the Company's initial public offering in June 1996 been used
to reduce certain outstanding indebtedness and to fund the acquisitions, as
if such offering had occurred on January 1, 1995.
<PAGE> 1
Exhibit 2.1
ACQUISITION OF ASSETS
OF
WALKER CLINICAL EVALUATIONS DIVISION
OF
WALKER INFORMATION, INC.
BY
COLLABORATIVE HOLDINGS, INC.
ASSET PURCHASE AGREEMENT
October 16, 1996
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I PURCHASE OF ASSETS.....................................................................................1
1.1 Definition Reference.................................................................................1
1.2 Purchased Assets.....................................................................................1
1.3 Retained Assets......................................................................................3
ARTICLE II ASSUMED/RETAINED LIABILITIES..........................................................................3
2.1 Retained Liabilities.................................................................................3
2.2 Assumed Liabilities..................................................................................4
2.3 Satisfaction of Liabilities by Seller................................................................4
ARTICLE III CONSIDERATION........................................................................................5
3.1 Cash Purchase Price..................................................................................5
3.2 Determination of Purchase Price......................................................................5
3.3 Seller Escrow........................................................................................7
3.4 Partial Refund of Closing Payment....................................................................7
3.5 Allocation of Purchase Price.........................................................................7
ARTICLE IV CLOSING...............................................................................................7
4.1 Closing..............................................................................................7
4.2 Joint Deliveries.....................................................................................7
4.3 Seller Closing Deliveries............................................................................8
4.4 Buyer Closing Deliveries.............................................................................8
4.5 Conditions Precedent to the Obligations of Seller....................................................9
4.6 Conditions Precedent to the Obligations of Buyer.....................................................9
4.7 Interdependence.....................................................................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................11
5.1 Organization........................................................................................11
5.1.1 In General...............................................................................11
5.1.2 Other Ventures...........................................................................11
5.1.3 Ownership of Seller......................................................................11
5.2 Status of Agreements................................................................................11
5.2.1 Seller and/or Stockholder Enforceability.................................................11
5.2.2 No Conflicts.............................................................................12
5.3 Financial...........................................................................................12
5.3.1 Financial Records........................................................................12
5.3.2 Liabilities..............................................................................12
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
5.3.3 No Change................................................................................13
5.3.4 Taxes....................................................................................14
5.4 Legal...............................................................................................14
5.4.1 Compliance with Laws.....................................................................14
5.4.2 Service Liability........................................................................14
5.4.3 Litigation...............................................................................14
5.5 Business............................................................................................15
5.5.1 Employment...............................................................................15
5.5.2 Compliance with Contracts................................................................15
5.5.3 Suppliers and Customers..................................................................16
5.5.4 Conflicts of Interest....................................................................16
5.5.5 Confidentiality..........................................................................16
5.5.6 No Guaranties............................................................................16
5.5.7 Conduct of Business......................................................................17
5.5.8 Insurance................................................................................17
5.5.9 Environmental............................................................................17
5.5.10 Backlog.................................................................................18
5.6 Employee Benefits...................................................................................18
5.6.1 General..................................................................................18
5.6.2 Multiemployer Plans......................................................................19
5.6.3 Welfare Plans............................................................................19
5.6.4 Pension Plans............................................................................19
5.7 Status of Assets....................................................................................19
5.7.1 Title....................................................................................19
5.7.2 Condition................................................................................20
5.7.3 Receivables..............................................................................20
5.7.4 Proprietary Property.....................................................................20
5.7.5 Prepayments and Deposits.................................................................20
5.7.6 Real Property Leases.....................................................................20
5.7.7 Extent...................................................................................21
5.8 Miscellaneous.......................................................................................21
5.8.1 No Brokers...............................................................................21
5.8.2 Accuracy and Completeness................................................................21
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................21
6.1 Organization and Power..............................................................................21
6.2 Status of Agreements................................................................................21
6.2.1 Enforceability...........................................................................21
6.2.2 Consents.................................................................................22
6.2.3 No Conflicts.............................................................................22
ARTICLE VII COVENANTS...........................................................................................22
7.1 Access..............................................................................................22
7.2 Conduct of Business Pending the Closing.............................................................22
7.2.1 Covenants of Standard Seller.............................................................22
7.3 Performance of Conditions to Closing................................................................23
</TABLE>
ii
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<TABLE>
<CAPTION>
<S> <C>
7.4 Confidentiality.....................................................................................23
7.5 Expenses; Transfer Taxes............................................................................24
7.6 Further Assurances..................................................................................24
7.7 Assignment of Contracts, Rights, Etc................................................................24
7.8 Receivables.........................................................................................25
7.9 Noncompetition......................................................................................25
7.9.1 By Seller and Stockholder................................................................25
7.9.2 Noninterference..........................................................................25
7.9.3 Equitable Relief.........................................................................25
7.9.4 Reformation..............................................................................25
7.10 No Assignment......................................................................................26
7.11 Employees..........................................................................................26
7.12 Employee Benefits..................................................................................26
7.13 No Solicitation....................................................................................26
7.14 No Public Announcement.............................................................................27
7.15 Walker Name........................................................................................27
7.16 Operation of Seller................................................................................27
7.17 Employee Bonus.....................................................................................27
ARTICLE VIII INDEMNIFICATION....................................................................................28
8.1 Survival of Representations and Warranties..........................................................28
8.2 Indemnification by Seller...........................................................................28
8.3 Indemnification by Buyer............................................................................28
8.4 Limitations on Indemnification of Buyer Indemnified Parties.........................................29
8.5 Limitations on Indemnification of Seller Indemnified Parties........................................29
8.6 Third Party Claims..................................................................................29
ARTICLE IX TERMINATION..........................................................................................30
9.1 Termination of Agreement............................................................................30
9.2 Effect of Termination...............................................................................31
ARTICLE X CONSTRUCTION..........................................................................................31
10.1 Definition........................................................................................31
10.2 Notices...........................................................................................34
10.3 Binding Effect....................................................................................35
10.4 Headings..........................................................................................35
10.5 Exhibits and Schedules............................................................................35
10.6 Counterparts......................................................................................36
10.7 Governing Law.....................................................................................36
10.8 Waivers...........................................................................................36
10.9 Pronouns..........................................................................................36
10.10 Time Periods......................................................................................36
10.11 No Strict Construction............................................................................36
10.12 Entire Agreement..................................................................................36
10.13 Modification......................................................................................36
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
10.14 Third Parties.....................................................................................36
10.15 Survival of Covenants.............................................................................37
</TABLE>
EXHIBITS
- --------
Exhibit A Escrow Agreement
Exhibit B Assignment and Assumption Agreement
Exhibit C Transition Agreement
Exhibit D License Agreement
Exhibit E Bill of Sale
Exhibit F Seller Closing Certificate
Exhibit G Opinion of Seller's Counsel
Exhibit H Buyer Closing Certificate
Exhibit I Instrument of Assumption
Exhibit J Opinion of Buyer's Counsel
SCHEDULES
- ---------
Schedule 1.2 Purchased Assets
Schedule 1.3 Retained Assets
Schedule 2.2(d) Assigned Contracts
Schedule 2.2(f) Paid Time Off
Schedule 3.5 Purchase Price Allocation
Schedule 5.1.2 Other Ventures
Schedule 5.1.3 Capitalization
Schedule 5.3.1 Financial Statements
Schedule 5.3.2 Liabilities
Schedule 5.3.3 No Changes
Schedule 5.4.1 Permits
Schedule 5.4.2 Service Liability
Schedule 5.4.3 Litigation
Schedule 5.5.1 Employees
Schedule 5.5.2 Compliance With Contracts
Schedule 5.5.3 Customers
Schedule 5.5.4 Conflicts of Interests
Schedule 5.5.8 Insurance
Schedule 5.5.9 Environmental
Schedule 5.5.10 Backlog
Schedule 5.6 Employee Benefit Plans
Schedule 5.6.1 Change In Benefits
Schedule 5.6.3 Welfare Plans
Schedule 5.7.3 Receivables
Schedule 5.7.4 Proprietary Property
Schedule 5.7.5 Prepayments and Deposits
Schedule 5.7.7 Extent
Schedule 7.17 Bonus Pool
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and
entered into as of the 16th day of October 1996, by and among Collaborative
Holdings, Inc. ("Buyer"), an Ohio corporation, Walker Information Inc., an
Indiana corporation ("Seller"), and Steven F. Walker, Frank D. Walker, Leah R.
Walker and James E. Sammer ("Stockholders").
RECITALS:
---------
A. Seller, through its Walker Clinical Evaluations Division
(the "Division"), is engaged in the business of providing contract research
clinical trials for pharmaceuticals, medical devices, food products and other
products which must undergo clinical trials prior to receiving certain
regulatory approvals of the Food and Drug Administration and other Governmental
Authorities (the "Business");
B. Buyer and its Affiliates are similarly engaged in the
business of providing and coordinating clinical trials;
C. The parties desire that Seller sell to Buyer and that Buyer
purchase from Seller substantially all of the assets of Seller primarily related
to or used in the operation of the Business, upon the terms hereinafter set
forth.
D. Stockholders own all of the capital stock of Seller and
will benefit from the sale of assets to Buyer.
E. Stockholders are parties to this Agreement solely with
respect to Article VII, IX and X hereof.
In consideration of and in reliance upon the representations,
warranties and obligations in this Agreement, the parties hereto agree as
follows:
ARTICLE I
PURCHASE OF ASSETS
------------------
1.1 DEFINITION REFERENCE. Certain capitalized terms are
defined in SECTION 10.1.
1.2 PURCHASED ASSETS. Seller agrees to sell, transfer and
assign to Buyer free of all Liens, and Buyer agrees to purchase, all of the
assets of Seller primarily related to or used in the operation of the Business
(whether known or unknown, tangible or intangible, real, personal or mixed, and
wherever located) existing as of the Closing, except the assets listed in
<PAGE> 7
Section 1.3. The assets to be purchased and sold hereby are sometimes hereafter
collectively referred to as the "Purchased Assets." The Purchased Assets
include, but are not limited to, the assets described on SCHEDULE 1.2 and all of
the following assets of Seller primarily related to or used in the operation of
the Business:
(a) RECEIVABLES. Billed and unbilled accounts and notes
receivable;
(b) INVENTORY. Inventories of raw materials,
work-in-process and finished products, supplies, spare parts and shipping
containers and packaging materials;
(c) DEPOSITS. Prepaid expenses and deposits other than
bank deposits;
(d) CASH. Cash on hand or in bank accounts;
(e) TANGIBLE PERSONAL PROPERTY. All machinery, equipment,
leasehold improvements, computers and other items of personal property,
including, but not limited to, all of its tools, fixtures, parts, supplies,
furniture, furnishings and motor vehicles;
(f) REAL PROPERTY LEASE. Rights under the leases (the
"Real Property Leases") (i) dated March 27, 1996, for the real property located
at 6963 Hillsdale Court, Building No. 371, Indianapolis, Indiana, (ii) dated
September 20, 1995, for the real property located at Professional Towers, 4010
Dupont Circle, Louisville, Kentucky, and (iii) for the real property located at
7351 Shadeland Station Way, Suite #150 and all leasehold interests of Seller
therein and all rights of Seller to leasehold improvements located thereon (the
"Leased Real Property");
(g) CONTRACT RIGHTS. Rights under all Contracts and rights
to refunds and adjustments of any kind;
(h) AUTHORIZATIONS. All permits, licenses, orders,
approvals, authorizations, concessions, certificates, franchises or other
evidence of authority issued by any Governmental Authority relating to or
utilized in connection with the Business or any part thereof or the Purchased
Assets;
(i) INTELLECTUAL PROPERTY RIGHTS. Trade names, trademarks
and service marks and all registrations and applications for any of the
foregoing, works of authorship and all copyrights related thereto and all
registrations and applications therefor, inventions, discoveries, designs,
industrial models and all United States and foreign patent rights covered by,
disclosed in or otherwise related thereto and all registrations and applications
therefor and all reissues, divisions, continuations-in-part, re-examinations and
extensions thereof (collectively hereafter referred to as "Intellectual Property
Rights"), together with the right to sue for past infringement and improper,
unlawful or unfair use of any of the foregoing;
(j) UNDOCUMENTED INTELLECTUAL PROPERTY. Know-how, Trade
Secrets, processes, technology, discoveries, unpatented inventions and designs,
formulae and procedures and other intellectual property, including, but not
limited to, documentation relating to any of the foregoing, all shop rights and
the right to sue for past infringement or
2
<PAGE> 8
improper, unlawful or unfair use or disclosure thereof and the right to apply
for patent, design or similar protection therefor anywhere in the world;
(k) ARTISTIC WORKS. Works of authorship, literary works,
pictorial, and graphic works, motion picture and other audiovisual works, sound
recordings, all copies of any of the foregoing and all copyrights therein;
(l) DOCUMENTATION. Technical documentation, including, but
not limited to, all materials which reproduce, patterns, plans, designs,
research data, drawings, models, blueprints, specifications, flow sheets,
equipment and parts lists and descriptions and related instructions, manuals,
data, records and procedures and art work;
(m) RECORDS. Records and databases (excluding the In
Person Respondent Database, as defined in Section 1.3), including, but not
limited to, property records, regulatory records, research records, purchasing
and sales records, credit records, personnel and payroll records, accounting
records, computer programs, customer and vendor lists and records and such other
research and accounting records as Buyer may reasonably require in its conduct
of the business subsequent to the Closing;
(n) LISTINGS AND MATERIALS. Interest in and to telephone
and telex numbers, post office boxes and all listings pertaining to Seller in
all telephone books and directories, stationery, forms, labels, shipping
material, catalogs, brochures, art work, photographs and advertising and
promotional materials;
(o) WARRANTY RIGHTS. Rights in, to and under third-party
warranties;
(p) CLAIMS. Claims as to which Seller is a judgment
creditor; and
(q) OTHER. All assets reflected on the Acquisition Balance
Sheet, whether or not referenced in any paragraph above.
1.3 RETAINED ASSETS. Seller shall not sell, transfer or
assign, and Buyer shall not purchase (a) the "Walker" name (or any derivative
thereof); (b) the In Person Respondent Database as described on Schedule 1.3
(the "In Person Respondent Database"); or (c) the assets of Seller described on
SCHEDULE 1.3.
ARTICLE II
ASSUMED/RETAINED LIABILITIES
----------------------------
2.1 RETAINED LIABILITIES. Except as specifically assumed
pursuant to Section 2.2, Buyer does not agree to assume and will not become
responsible for any Liability of Seller, including, without limitation, any
Liability relating to or arising out of the operation of the Business or the
ownership of the Purchased Assets prior to the Closing; including, without
limitation, in connection with (i) any claim by Arthur M. Small or Carla
Ernest, (ii) any bonus or severance payments Seller has committed or is
obligated to pay Wade Lange in connection
3
<PAGE> 9
with the transactions contemplated hereby or otherwise, (iii) any bonus payments
to Persons employed by Seller in the operation of the Business, consistent with
past practice, for the period prior to the Closing ("Pre-Closing Bonus
Payments") and (iv) the Seller Bonus Payment, regardless of whether the
foregoing are reflected on the Acquisition Balance Sheet.
2.2 ASSUMED LIABILITIES. Buyer hereby agrees to assume only
the following Liabilities (the "Assumed Liabilities") of Seller relating to
the operation of the Business or the Purchased Assets, existing as of the
Closing Date:
(a) The Liabilities of Seller relating to the Purchased Assets
identified on the Acquisition Balance Sheet;
(b) The Liabilities of Seller incurred since the date of the
Acquisition Balance Sheet in the ordinary course of business consistent
with past practices and recorded on the books of the Business (other
than employee compensation for any period prior to the Closing);
(c) The trade accounts payable of Seller relating to the
Purchased Assets incurred in the ordinary course of the operation of
the Business to the extent Seller is not in default or delinquent with
respect thereto;
(d) Seller's obligations under the Contracts listed on
SCHEDULE 2.2(D) (the "Assigned Contracts) other than obligations (i)
under the Contracts which are not legally or equitably assigned
(pursuant to Section 7.7) to Buyer by Seller and (ii) for any action or
failure to act for any period prior to the Closing;
(e) The Buyer Bonus Payment; and
(f) Unused paid time off for those employees of Seller hired
by Buyer, as set forth on Schedule 2.2(f) ("Paid Time Off").
2.3 SATISFACTION OF LIABILITIES BY SELLER. To preserve for
Buyer the opportunity to maintain good relations with Seller's creditors and
preclude the assertion of claims for nonpayment against Buyer, Seller agrees
after the Closing to pay promptly in full as they become due all Liabilities
of Seller relating to the Business except the Assumed Liabilities and such
other Liabilities as are subject to good faith dispute by Seller.
ARTICLE III
CONSIDERATION
-------------
3.1 CASH PURCHASE PRICE. In consideration of the Purchased
Assets, Buyer shall pay Seller the purchase price (the "Purchase Price") in
the amount equal to the greater of (A) Two Million Eight Hundred Thousand
Dollars ($2,800,000), plus the amount, if any, by which the working capital of
the Business as of the Closing (determined in the same manner as for purposes
of the Acquisition Balance Sheet) (the "Working Capital Value") exceeds Five
4
<PAGE> 10
Hundred Forty Thousand Dollars ($540,000) (the "Working Capital Surplus"), less
the amount, if any, by which Four Hundred Sixty-Five Thousand Dollars ($465,000)
exceeds the Working Capital Value (the "Working Capital Deficit"), and (B) the
lesser of (I) Four Million Two Hundred Thousand Dollars ($4,200,000), plus the
Working Capital Surplus, if any, less the Working Capital Deficit, if any, and
(II) 5.71 times the actual pre-tax net income of the Business, determined
without giving effect to the Buyer Bonus Payment and using GAAP consistently
applied, for the fiscal year ending December 31, 1996 (the "1996 Pre-Tax Net
Income), plus the Working Capital Surplus, if any, less the Working Capital
Deficit, if any, payable as follows:
(i) Two Million Eight Hundred Thousand Dollars
($2,800,000) (which is equal to 70% of the product of 5.71 and
Seller's estimate of the 1996 pre-tax net income of Seven
Hundred Thousand Dollars ($700,000) for the Business) (the
"Closing Payment"), by wire transfer to Seller at the Closing;
(ii) the amount, if any (the "Buyer Escrow Amount"),
equal to the lesser of (a) ten percent (10%) of the Purchase
Price as finally determined pursuant to the procedures in
Sections 3.1 and 3.2 and (b) the amount, if any, by which the
Purchase Price as finally determined pursuant to the
procedures in Sections 3.1 and 3.2 exceeds the Closing
Payment, by wire transfer deposited in the Escrow Account on
or before March 1, 1997 or within ten (10) days of such date
as the Purchase Price shall be finally determined pursuant to
the procedures in Sections 3.1 and 3.2; and
(iii) the amount, if any, by which the lesser of (A)
the Purchase Price as determined pursuant to the procedures in
Sections 3.1 and 3.2 and (B) Four Million Two Hundred Thousand
Dollars ($4,200,000), plus the Working Capital Surplus, if
any, less the Working Capital Deficit, if any, exceeds the sum
of (x) the Closing Payment, and (y) the Buyer Escrow Amount,
by wire transfer to Seller on or before March 1, 1997 or
within ten (10) days of such later date as the Purchase Price
shall be finally determined pursuant to the procedures in
Sections 3.1 and 3.2.
3.2 DETERMINATION OF PURCHASE PRICE. Promptly after December
31, 1996 Buyer shall calculate the Purchase Price and deliver notice thereof
and copies of Buyer's calculations and working papers with respect thereto
("Buyer's Notice") to Seller. If Seller does not deliver written notice to
Buyer setting forth Seller's detailed objections to the Purchase Price as
determined by Buyer, within fifteen (15) days of Seller's receipt of Buyer's
Notice, the Purchase Price shall be as set forth in Buyer's Notice. If Seller
delivers written objection to Buyer and the parties cannot agree upon the
Purchase Price within thirty (30) days of Buyer's receipt of Seller's written
objection, the dispute shall be submitted to Ernst & Young, LLP, Cleveland
office ("Independent Accountant") which shall determine the Purchase Price
which shall be binding upon the parties. Buyer and Seller shall each pay one
half of the Independent Accountant's fees and expenses.
Buyer and Seller each acknowledge that the calculation and
determination of the Purchase Price are subject to potential disagreements and
abuses. As a result, Buyer covenants
5
<PAGE> 11
and agrees to comply with the following restrictions, provisions and agreements
until January 1, 1997 and Buyer and Seller agree that the following
restrictions, provisions and agreements shall be utilized by the Independent
Accountant in the event that a dispute related to the Purchase Price shall be
submitted to the Independent Accountant:
(a) The Purchased Assets shall be maintained and the Business
shall be operated by Buyer as a separate and independent accounting
entity. None of the Purchased Assets shall be sold, conveyed,
exchanged, transferred, liquidated or otherwise disposed of by Buyer
except in the ordinary course of business, nor shall the Purchased
Assets or the Business be consolidated or merged with any other assets
or operations of Buyer.
(b) All accounting decisions made by Buyer with respect to the
Purchased Assets and the Business, and all decisions and actions by
Buyer related to the determination of the Purchase Price or any items
of income, expense, deduction, loss, or gain which would have an effect
on the determination of the Purchase Price, shall be made in good
faith, with a view towards maximizing gross revenues, gross profit and
net income, in any case, consistent with strategic business
considerations of the Business (other than solely for the purpose of
minimizing the Purchase Price).
(c) The accounting methods to be used by Buyer shall be
consistent with generally accepted accounting principles and with the
accounting principles used by Seller with respect to the Purchased
Assets and the Business prior to the consummation of the transactions
contemplated by this Agreement (to the extent such accounting
principles previously used by the Seller are in accordance with
generally accepted accounting principles), so as to not create any
extraordinary expenses or deductions which would lower gross profit,
net income or the Purchase Price.
(d) Buyer will provide Seller with reasonable access to its
financial information related to the Purchased Assets and the operation
of the Business so as to permit Seller to confirm the financial
information used to determine the Purchase Price.
(e) Any transactions or activities between the Buyer or any of
its Affiliates and the separate and independent accounting entity
established to maintain the Purchased Assets and operate the Business
shall be undertaken in good faith at arm's length and at fair and
competitive pricing.
(f) Buyer shall not take any action or fail to take any action
which would result in an unreasonable delay with respect to the
implementation or performance of contracts entered into in connection
with the Business or the realization of revenues therefrom or from any
other source which would have the effect of reducing gross revenues,
gross profit and net income, in any case, consistent with strategic
business considerations of the Business (other than solely for the
purpose of minimizing the Purchase Price).
3.3 SELLER ESCROW. Seller shall deposit the amount, if any,
by which ten percent (10%) of the Purchase Price exceeds the Buyer Escrow
Amount (the "Seller Escrow
6
<PAGE> 12
Amount"), by wire transfer in the Escrow Account on or before March 1, 1997 or
within ten (10) days of such later date as the Purchase Price shall be finally
determined pursuant to the procedures in Sections 3.1 and 3.2.
3.4 PARTIAL REFUND OF CLOSING PAYMENT. If the Closing
Payment exceeds the Purchase Price as finally determined pursuant to the
procedures in Sections 3.1 and 3.2, Seller shall pay Buyer the amount of such
excess by wire transfer on or before March 1, 1997 or within ten (10) days of
such later date as the Purchase Price shall be finally determined pursuant to
the procedures in Sections 3.1 and 3.2.
3.5 ALLOCATION OF PURCHASE PRICE. The fair market values of
the Purchased Assets and the allocation of the Purchase Price among the
Purchased Assets for purposes of Section 1060 of the Internal Revenue Code
shall be as set forth in SCHEDULE 3.5, and Buyer, Seller and Stockholder agree
to be bound by such allocation and to complete and attach IRS Form 8594 to
their respective tax returns accordingly.
ARTICLE IV
CLOSING
-------
4.1 CLOSING. The closing of the transaction contemplated
hereby will take place on October 25, 1996 at the offices of Calfee, Halter &
Griswold, 800 Superior Avenue, Suite 1400, Cleveland, Ohio 44114, or such
other time and place as the parties mutually agree (the "Closing Date").
4.2 JOINT DELIVERIES. At the Closing, the parties shall
execute, and deliver to one another, the following:
(a) An Escrow Agreement substantially in the form of the
Escrow Agreement attached hereto as EXHIBIT A (the "Escrow Agreement");
(b) An Assignment and Assumption Agreement corresponding to
the form of Assignment and Assumption Agreement attached hereto as
EXHIBIT B;
(c) A Transition Agreement substantially in the form of the
Transition Agreement attached hereto as EXHIBIT C; and
(d) A License Agreement substantially in the form of the
License Agreement attached hereto as EXHIBIT D.
4.3 SELLER CLOSING DELIVERIES. At the Closing, Seller shall
deliver to Buyer the following:
(a) A Bill of Sale corresponding to the form of Bill of Sale
attached hereto as EXHIBIT E;
7
<PAGE> 13
(b) A Certificate of Seller corresponding to the form of
certificate attached hereto as EXHIBIT F certifying as to (i) the
continued accuracy as of the Closing Date of the representations and
warranties contained in Article V hereof, (ii) Seller's performance and
compliance with all obligations, covenants, and conditions required by
this Agreement to have been performed or complied with by Seller prior
to or on the Closing Date, (iii) the accuracy and efficacy of director
and stockholder resolutions of Seller, (iv) the Articles of
Incorporation and By-laws of Seller, and (v) the incumbency of the
officers executing documents and otherwise acting on behalf of Seller
in connection herewith;
(c) An Opinion of Seller's counsel corresponding to the form
of opinion attached hereto as EXHIBIT G;
(d) All third party consents required in connection with the
assignment and assumption of the Assigned Contracts; and
(e) A good standing certificate of the Secretaries of State of
the States of Indiana and Kentucky dated within ten (10) days of the
Closing Date certifying as to the good standing of Seller in the States
of Indiana and Kentucky.
4.4 BUYER CLOSING DELIVERIES. At the Closing, Buyer shall
deliver to Seller the following:
(a) The Closing Payment by wire transfer of funds;
(b) A Certificate of Buyer corresponding to the form of
certificate attached hereto as EXHIBIT H certifying as to (i) the
continued accuracy as of the Closing Date of the representations and
warranties contained in Article VI hereof, (ii) Buyer's performance and
compliance with all obligations, covenants and conditions required by
this Agreement to have been performed or complied with by Buyer prior
to or on the Closing Date, (iii) the accuracy and efficacy of director
resolutions of Buyer, (iv) the Articles of Incorporation and By-laws of
Buyer, and (v) the incumbency of the officers executing documents and
otherwise acting on behalf of Buyer in connection herewith;
(c) Good Standing Certificates of the Secretaries of State of
the States of Ohio, Indiana and Kentucky dated within ten (10) days of
the Closing Date, certifying as to the good standing of Buyer in such
states;
(d) an Instrument of Assumption corresponding to the form of
Instrument of Assumption attached hereto as EXHIBIT I;
(e) An opinion of Buyer's counsel corresponding to the form of
opinion attached hereto as EXHIBIT J.
4.5 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The
obligations of Seller to consummate the Closing as provided in this Article IV
are, unless waived by Seller, subject to the fulfillment at or prior to the
Closing of each of the following conditions:
8
<PAGE> 14
(a) CLOSING DELIVERIES. Buyer shall have made all of the
deliveries required to be made by Buyer pursuant to Section 4.2 and 4.4
hereof;
(b) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer contained herein shall be true
in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties were made at and
as of such time; and Buyer shall have performed and complied with all
obligations, covenants, and conditions required by this Agreement to
have been performed or complied with by it prior to or on the Closing
Date;
(c) LITIGATION, ETC. On the Closing Date, no litigation or
administrative proceedings shall be pending or threatened, the purpose
or effect of which is to restrain or question the legality of the
transactions contemplated hereby; and
(d) AUTHORIZATION; CONSENTS. All corporate action necessary to
authorize the execution, delivery, and performance of this Agreement
shall have been duly and validly taken by Buyer; and all material
consents of third parties required in order for Buyer to consummate the
transactions contemplated by this Agreement shall have been obtained by
Buyer and copies thereof delivered to Seller.
4.6 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER. The
obligations of Buyer to consummate the Closing as provided in this Article IV
are, unless waived by Buyer, subject to the fulfillment at or prior to the
Closing of each of the following conditions precedent:
(a) CLOSING DELIVERIES. Seller shall have made all of the
deliveries required to be made by Seller pursuant to Section 4.2 and
4.3 hereof;
(b) CONTINUED ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller contained herein shall be true
in all material respects at and as of the Closing Date with the same
effect as though such representations and warranties were made at and
as of such time; and Seller shall have performed and complied with all
obligations, covenants, and conditions required by this Agreement to
have been performed or complied with by them prior to or on the Closing
Date;
(c) LITIGATION, ETC. On the Closing Date, no litigation or
administrative proceedings shall be pending or threatened, the purpose
or effect of which is to restrain or to question the legality of the
transactions contemplated hereby;
(d) AUTHORIZATION; CONSENTS. All corporate action necessary to
authorize the execution, delivery, and performance of this Agreement
shall have been duly and validly taken by the Seller; and all consents
of third parties required in order for Seller to comply with this
Agreement and to consummate the transactions contemplated by
9
<PAGE> 15
this Agreement, or for the Purchased Assets to be sold to Buyer free
and clear of all Liens shall have been obtained by the Seller and
copies thereof delivered to Buyer;
(e) ABSENCE OF CERTAIN EVENTS. Buyer shall not have learned of
any fact or condition which in Buyer's judgment could materially and
adversely affect the condition of Seller's or the Business's assets,
businesses, operations or relationships with any of its employees (or
former employees) or any of the Business's customers or vendors;
(f) DUE DILIGENCE. Buyer shall be satisfied with the results
of its due diligence review of Seller, the Division and the Business
pursuant to Section 7.1; and
(g) MATERIAL ADVERSE CHANGES. There shall have been no
material adverse change since the date of the Acquisition Balance Sheet
in the financial condition, business or affairs of the Seller, the
Division or the Business.
4.7 INTERDEPENDENCE. The transfers and deliveries
described in this Article IV shall be mutually interdependent and regarded as
occurring simultaneously as of the Closing Date; and, unless waived by both the
transferor and transferee, no such transfer or delivery shall become effective
unless and until all the other transfers and deliveries provided for in this
Article IV have also been consummated.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION
5.1.1 IN GENERAL. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Indiana.
Seller is qualified to do business and in good standing as a foreign corporation
in the State of Kentucky. Seller is not, and is not required to be, qualified to
do business or otherwise licensed in any state other than the States of Indiana
and Kentucky by reason of the operations or assets of the Business. Seller has
full corporate power to: (a) own, lease and operate the Purchased Assets and
carry on the Business as and where the Purchased Assets are now owned or leased
and as the Business is presently being conducted; and (b) execute, deliver and
perform this Agreement and all other agreements and documents to be executed and
delivered by it in connection herewith.
5.1.2 OTHER VENTURES. Except as set forth on SCHEDULE
5.1.2, Seller has no ownership interest in any other business entity, is not a
member of any partnership or joint venture, and has never operated as a
subsidiary or division of any other business entity.
5.1.3 OWNERSHIP OF SELLER. All of the issued and
outstanding shares of the capital stock of Seller is owned of record and
beneficially by Stockholders free and clear of Liens as set forth on SCHEDULE
5.1.3. Except as will not affect Seller's ability to convey the
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Purchase Assets to Buyer as contemplated hereby, or Buyer's rights in and to the
Purchase Assets, there are no outstanding subscriptions, options, warrants,
calls, contracts, demands, commitments, conversion rights or other agreements,
arrangements or rights of any character or nature whatever under which Seller
is, or may be, obligated to issue any shares of any class of its capital stock,
there are no commitments of Seller to issue or grant any such subscription,
option, warrant, call, contract, demand, commitment, conversion right or other
agreement, arrangement or right and no holder of any security of Seller is
entitled to any preemptive or similar rights to purchase any securities of
Seller.
5.2 STATUS OF AGREEMENTS.
5.2.1 SELLER AND/OR STOCKHOLDERS ENFORCEABILITY. All
requisite corporate action to approve, execute, deliver and perform this
Agreement and each other agreement and document delivered by or on behalf of
Seller in connection herewith has been taken by Seller. This Agreement and each
other agreement and document executed and delivered by or on behalf of Seller
and/or Stockholders in connection herewith has been duly executed and delivered
by Seller and/or Stockholders (only with respect to the covenants in Section 7.9
in the case of Stockholders) and constitutes the binding obligation of Seller
and/or Stockholders (only with respect to the covenants in Section 7.9 in the
case of Stockholders) enforceable in accordance with its respective terms.
5.2.2 NO CONFLICTS. No action taken by or on behalf of
Seller or Stockholders in connection herewith, including, but not limited to,
the execution, delivery and performance of this Agreement, and each other
agreement and document delivered by all or any of them in connection herewith:
(a) conflicts with or violates: (i) any Law; (ii) Seller's Articles of
Incorporation or By-Laws; (iii) any Contract to which either Seller or
Stockholders are a party or by which any of them is bound; (iv) any order,
arbitration award, judgment, injunction, decree, permit or other similar
restriction to which either Seller or Stockholders are subject; or (b)
constitutes an event which, after notice or lapse of time or both, could result
in any of the foregoing.
5.3 FINANCIAL.
5.3.1 FINANCIAL RECORDS. SCHEDULE 5.3.1 consists of: (a)
the balance sheets of the Business as of December 31, 1994 and 1993 and related
statements of income and cash flows for the twelve month periods then ended
prepared by Seller; (b) the balance sheet of the Business as of December 31,
1995 and related statements of income and cash flows for the twelve months then
ended, audited by Ernst & Young, L.L.P.; (c) the balance sheet of the Business
as of September 30, 1996 (the "Acquisition Balance Sheet"), and related
statements of income and cash flows for the nine months then ended, audited by
Ernst & Young, L.L.P.; and (d) the balance sheet of Seller as of September 30,
1996. All such financial statements were prepared from Seller's books of account
in accordance with GAAP, consistently applied, are materially correct and
complete. The financial statements described in Subsections (a), (b) and (c)
present fairly the financial position, results of operations and cash flows of
the Business at the dates and for the periods indicated, except for the absence
of footnote disclosure and customary year-end audit adjustments of a normal
recurring type which would not be material in the aggregate in the financial
statements described in Subsection (a) above
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and the Acquisition Balance Sheet and related income statement. The books of
account of Seller fairly reflect all items of income and expense (including, but
not limited to, accruals) and all assets and liabilities of the Business in
accordance with normal GAAP, subject to customary year-end audit adjustments of
a normal, recurring type which would not be material in the aggregate.
5.3.2 LIABILITIES. Seller has no Liabilities relating to
the operation of the Business or the ownership of the Purchased Assets except:
(a) to the extent provided for or reserved against on the Acquisition Balance
Sheet; (b) current liabilities which have arisen in the ordinary course of
business consistent with past practice since the date of the Acquisition Balance
Sheet (all of which have been recorded on the books of the Business); or (c) as
listed on SCHEDULE 5.3.2. Since the date of the most recent fiscal year end
balance sheet in SCHEDULE 5.3.1, there has not been any incurrence (whether
discharged or not) of any Liability by Seller relating to the operation of the
Business or the ownership of the Purchased Assets other than current liabilities
incurred, and obligations entered into, in the ordinary course of business
consistent with past practice.
5.3.3 NO CHANGE. Except as set forth on SCHEDULE 5.3.3,
since December 31, 1995 there has not been any material adverse change or
development in the business, assets, liabilities, operations, earnings,
financial condition, prospects or business relationships of the Business or the
Division, and no fact exists, or to the Knowledge of Seller, is contemplated or
threatened, that might cause such a change in the future. Without limiting the
generality of the foregoing, except as disclosed on SCHEDULE 5.3.3, since
December 31, 1995, with respect to the Business, Seller has not, other than in
the ordinary course of business consistent with past practice:
(a) changed any accounting method;
(b) agreed to any (i) increase in the compensation payable or
to become payable by it to any of Seller's officers, directors or
employees engaged in the operation of the Business, or (ii) amended any
Employee Benefit Plan;
(c) entered into any agreement which provides for the deferred
compensation of any officer, director or employee engaged in the
operation of the Business;
(d) incurred any indebtedness for borrowed money, made any
commitment to borrow money, or been delinquent in the payment of any
installment of principal and/or interest as the same became due in
connection with any indebtedness of Seller;
(e) sold, transferred or assigned or subjected to any Lien,
any asset material to the operation of the Business;
(f) modified, amended or terminated any material Contract or
similar arrangement relating to the operation of the Business or the
ownership of the Purchased Assets, whether written or oral which could
reasonably be expected to have a material adverse effect on the
Business;
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(g) incurred any loss or damage to any asset material to the
operation of the Business;
(h) accelerated any payment due any officer, director or
employee of the Business;
(i) suffered any material adverse change in the Business'
business operations, assets or prospects;
(j) entered into any transaction other than an ordinary course
of business consistent with past practice; or
(k) authorized, approved or agreed to any of the foregoing.
5.3.4 TAXES. All Tax returns, reports and declarations
(hereinafter collectively, "Tax Returns") required by any Governmental Authority
to be filed in connection with the properties, business, income, expenses, net
worth and franchises of Seller have been timely filed, and such returns are
correct and complete. All Tax due in connection with the properties, business,
income, expenses, net worth and franchises of Seller has been paid, other than
Tax which is not yet due or which, if due, is not yet delinquent or is being
contested in good faith, and for which in all cases reserves have been
established in the Acquisition Balance Sheet which are sufficient to cover the
payment of all such Tax. There are no Tax claims, audits or proceedings pending
in connection with the properties, business, income, expenses, net worth and
franchises of Seller, and, to the Knowledge of Seller, there are no such
threatened claims, audits or proceedings. Neither the Division nor Seller has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations. The Division has no liability for any Taxes of any other Person.
Neither Seller nor the Division has waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
5.4 LEGAL.
5.4.1 COMPLIANCE WITH LAWS. To Seller's Knowledge, Seller
is not, in connection with the operation of the Business or the ownership of the
Purchased Assets, in violation of any Law, including, but not limited to, any
anti-discrimination, hazardous and toxic substance, wage, hour, working
conditions, payroll withholding, pension, building, zoning and Tax Law, or any
outstanding arbitration award, judgment, order, injunction, decree, or permit,
nor have there been any allegations of or inquiries concerning any such
violations. There have been no allegations of or inquiries concerning any
violations of Law by Seller, the violation of which could have a material
adverse effect on the operations or financial condition of the Business. Except
for those listed on SCHEDULE 5.4.1, no permits, licenses, orders, approvals,
authorizations, concessions, certificates, franchises or other evidence of
authority issued by any Governmental Authority ("Permits") are required to
conduct the Business. Seller has all such Permits and all such Permits are in
full force and effect, and no proceeding is pending to revoke or limit any of
them and there is no state of facts or event which could reasonably be expected
to form the basis for any such revocation or
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limitation. There have been no claims, notices, orders or directives issued by
any Governmental Authority with respect to Business or any of the Purchased
Assets.
5.4.2 SERVICE LIABILITY. Except as and to the extent
listed on SCHEDULE 5.4.2, no product liability or other tort claims have been
made or threatened against Seller relating to services performed by Seller in
the operation of the Business.
5.4.3 LITIGATION. Except as and to the extent listed on
SCHEDULE 5.4.2 or 5.4.3, no claim, litigation, action, investigation or
proceeding is pending or, to Seller's Knowledge, threatened, and no
arbitration award, judgment, order, injunction or decree is outstanding,
against or relating to the Purchased Assets or the Business, and there is no
state of facts or event which could reasonably be expected to form the basis for
such a claim, litigation, action, investigation or proceeding.
5.5 BUSINESS.
5.5.1 EMPLOYMENT. With respect to the employees engaged in
the operation of the Business:
(a) Seller has (i) paid in full to all
employees all wages, commissions, bonuses and other
direct compensation for all services performed by
them or (ii) properly accrued for such wages,
commissions, bonuses and other direct compensation
as of the Closing Date.
(b) There are no controversies, grievances
or claims by any of the employees, former employees
or beneficiaries of employees of Seller pending with
respect to their employment or benefits incident
thereto, including, but not limited to, sexual
harassment and discrimination claims and claims
arising under workers' compensation laws, and there
is no state of facts or event which could reasonably
be expected to form the basis for any such
controversies, grievances or claims.
(c) Seller has complied with all applicable
federal, state, and local laws, rules, and
regulations relating to the employment of labor,
including the provisions thereof relating to wages,
hours, working conditions, Employee Benefit Plans,
equal employment, fair employment practices,
entitlements, prohibited discrimination and the
payment of withholding and social security taxes,
and is not liable for any arrears of compensation or
any taxes or penalties for failure to comply with
any of the foregoing, and has received no notice to
the contrary from any Governmental Authority.
(d) Seller has complied with all federal,
state, and local labor laws, rules, and regulations
in connection with the transactions contemplated by
this Agreement.
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(e) SCHEDULE 5.5.1 lists the name, address,
social security number and current annual
compensation rates and other compensation
arrangements of each employee of Seller.
5.5.2 COMPLIANCE WITH CONTRACTS. SCHEDULE 2.2(d) contains
an accurate and complete list of all Contracts, including a description of the
material terms of all oral Contracts, to which Seller is a party with respect to
the operation of the Business or the ownership of the Purchased Assets. Seller
has delivered to Buyer a true, complete and accurate copy of each Assigned
Contract, including all amendments thereto. Except as set forth on SCHEDULE
5.5.2, with respect to the Assigned Contracts, (i) each Assigned Contract is
legal, valid, binding and enforceable and in full force and effect; (ii) each
Assigned Contract is assignable by Seller to Buyer without the consent or
approval of any party and will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect prior to the Closing; and (iii)
the enforceability of any Assigned Contract will not be effected in any manner
by the execution, delivery and performance of this Agreement; and (iv) no party
is in breach or default, and no event has occurred which, with notice or lapse
of time, or both, would constitute a breach or default or permit termination,
modification or acceleration under such Assigned Contract. There have been no
discussions or correspondence concerning breach by Seller or termination of any
of the Assigned Contracts. All activities conducted by Seller pursuant to the
Assigned Contracts have been performed in compliance with the Assigned
Contracts.
5.5.3 CUSTOMERS. SCHEDULE 5.5.3 sets a correct and
complete list of all customers of the Business whose relationships with Seller
have during the current fiscal year or any of the three most recent fiscal years
of Seller generated two percent (2%) or more of the Business's income. No such
customer and no other customer material to the Business has terminated, or
threatened to terminate, its relationship with Seller or has during the past
year decreased or delayed materially, or threatened to decrease or delay
materially, its usage of Seller's services, and there is no state of facts or
event which could reasonably be expected to form the basis for such a decrease
or delay. To Seller's Knowledge, the transactions contemplated in this Agreement
will not adversely affect the relationship of the Business with any such
customer. Seller is not required, in the ordinary course of the Business, to
provide any bonding or any other financial security arrangements in connection
with any transactions with any customers.
5.5.4 CONFLICTS OF INTEREST. Except as set forth on
SCHEDULE 5.5.4, neither Stockholders, nor any director, employee or Affiliate of
Seller, nor any relative of any Stockholder: (a) owns, directly or indirectly,
any interest in (other than less than a one percent interest in the capital
stock of a publicly traded company), or is an employee or agent of, any entity
which is a competitor, lessor, lessee, customer or supplier of the Business; (b)
owns, directly or indirectly, any interest in, any tangible or intangible
property, asset, or right used in the Business; (c) has any cause of action or
claim against, owes any amount to, or is owed any amount by Seller in connection
with the Business; (d) is a party to any Contract with Seller relating to the
Business; or (e) received a loan, gift or advance from Seller in connection with
the Business in the three year period preceding the Closing Date.
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5.5.5 CONFIDENTIALITY. Seller has taken all reasonable
steps necessary to preserve the confidential nature of all confidential
information (including, without limitation, any proprietary information) with
respect to the Business.
5.5.6 NO GUARANTIES. None of the obligations or
liabilities of the Business or the Seller incurred in connection with the
operation of the Business or the ownership of the Purchased Assets is guaranteed
by or subject to a similar contingent obligation of any other Person. Seller has
not guaranteed or become subject to a similar contingent obligation in respect
of the obligations or liabilities of any other Person in connection with the
Business. There are no outstanding letters of credit, surety bonds or similar
instruments of Seller, any Stockholder or any of their respective Affiliates in
connection with the Business or the Purchased Assets.
5.5.7 CONDUCT OF BUSINESS. Seller has operated the
Business, including its clinical testing activities and institutional review
board functions and activities, in accordance with accepted industry guidelines
and standards. Seller has complied with all contractual and regulatory
requirements, regulations and guidelines, including, without limitation, with
respect to (i) selecting investigators; (ii) obtaining documentation from
investigators, (iii) verifying that patient informed consent is obtained, (iv)
monitoring the validity and accuracy of data; and (v) verifying drug
accountability and instructing investigators to maintain records and reports.
5.5.8 INSURANCE. SCHEDULE 5.5.8 lists all insurance
policies maintained by Seller with respect to the Business or the Purchased
Assets and identifies for each such policy the following: underwriter, policy
number, coverage type, premium, expiration date, coverage amount and deductible.
Such insurance policies are of the type and in amounts customarily carried by
persons or entities conducting similar businesses or operating similar assets
for similar purposes in the localities of Seller's businesses and assets. All
such policies are in full force and effect and all premiums have been paid.
Except for amounts deductible under policies of insurance described on SCHEDULE
5.5.8 or as otherwise set forth in such Schedule, Seller is not, and has not
been at any time, subject to Liability as a self-insurer. There is no dispute
pending, and to Seller's Knowledge, no state of facts or event which could
reasonably be expected to form the basis for a dispute, with any underwriter of
Seller's insurance. In the past three years, Seller has not received notice from
any insurer threatening to cancel any insurance coverage or requiring any
changes or corrective work which has not been satisfied.
5.5.9 ENVIRONMENTAL. Except as set forth on SCHEDULE 5.5.9
hereto: (i) Seller has at all times complied with all applicable environmental
Laws, except for any non-compliance which could not reasonably be expected to
have, either singly or in the aggregate, a material adverse effect on the assets
or results of operations of Seller; (ii) all past on-site generation, treatment,
storage and disposal of Waste, including Hazardous Waste, by Seller has been
done in compliance with then currently applicable Environmental Laws; and (iii)
all past off-site treatment, storage and disposal of Waste, including Hazardous
Waste, generated by Seller has been done in compliance with then currently
applicable Environmental Laws. The current or former facilities of Seller do not
contain any material environmental contamination that could require any removal
or clean-up or result in any exposure of Buyer to
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costs associated with such a removal or clean-up. As used in this Section 5.5.9,
the terms (i) "Environmental Law" means any federal, state or local law,
statute, charter or ordinance, any rule or regulation issued pursuant to any of
the foregoing and any permit, order, court order or consent decree applicable to
Seller issued pursuant to any of the foregoing, which pertains to, governs or
otherwise regulates any of the following activities: (a) the emission,
discharge, release or spilling of any substance into the air, surface water,
groundwater, soil or substrata; or (b) the manufacturing, processing, sale,
generation, treatment, storage, disposal, labeling or other management of any
Waste, Hazardous Substance or Hazardous Waste, and (ii) "Waste," "Hazardous
Substance," and "Hazardous Waste" include any substance defined as such by any
applicable Environmental Law.
5.5.10 BACKLOG. SCHEDULE 5.5.10 sets forth an accurate and
complete description of the backlog of the Business, including all commitments
for services to be rendered by the Business. All such commitments were entered
into in the ordinary course of business, consistent with past practice. To
Seller's Knowledge, there is no fact or circumstance from which Seller could
have reason to believe that such commitments will not be expected to be
performed by the Business as set forth on SCHEDULE 5.5.10.
5.6 EMPLOYEE BENEFITS.
5.6.1 GENERAL.
(a) Except as otherwise set forth on SCHEDULE 5.6,
Seller neither maintains nor is required to contribute to any Employee Benefit
Plan or Other Plan covering Persons employed in the Business. Seller has
delivered to Buyer accurate and complete copies of each such written Employee
Benefit Plan and Other Plan, and an accurate and complete written description of
each such oral Employee Benefit Plan and Other Plan, in each case with all
modifications and amendments thereto.
(b) Each Employee Benefit Plan and Other Plan
maintained by Seller covering Persons employed in the Business has been operated
in accordance with its terms and applicable Law.
(c) No Employee Benefit Plan or Other Plan provides
benefits for persons who are not active employees or directors of Seller.
(d) Seller has not, and to the Seller's Knowledge no
other person has, engaged in any prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Internal Revenue Code, excluding any
transactions which are exempt under Section 408 of ERISA or Section 4975 of the
Internal Revenue Code) with respect to any Employee Benefit Plan covering
Persons employed in the Business which Seller maintains, or to which Seller
contributes, which could subject Seller or any such other person to any
Liability. No event has occurred and no condition exists that would subject
Seller to any Tax under Internal Revenue Code Sections 4971, 4972, 4977 or 4979,
or to a fine under ERISA Sections 502(c) or 502(l).
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(e) Seller has the right to amend or terminate,
without the consent of any other person or entity, any Employee Benefit Plan or
Other Plan covering Persons employed in the Business which it maintains, except
as prohibited by Law.
(f) Except the Pre-Closing Bonus Payments, the
Seller Bonus Payment and any payments to Wade Lange as more fully described in
Section 2.1 (with respect to which Mr. Lange is the only eligible employee of
Seller), Seller does not maintain any Employee Benefit Plan or Other Plan
covering Persons employed in the Business under which it would be obligated to
pay benefits because of the consummation of the transaction contemplated by this
Agreement.
(g) Except as described on SCHEDULE 5.6.1, since the
date of the most recent fiscal year end balance sheet in SCHEDULE 5.3.1, there
has not been any increase made or promised in the benefits payable under any
Employee Benefit Plan or Other Plan of Seller covering Persons employed in the
Business.
(h) Each trust forming a part of any Pension Plan
maintained by Seller meets, and for all prior periods has met, all requirements
for qualification under Sections 401 and 501 of the Internal Revenue Code, and
all applicable related rules and final regulations, except that no
representation is made as to the satisfaction of any such formal qualification
requirements with respect to which the remedial amendment period set forth in
Section 401(b) of the Internal Revenue Code, and any regulations, rulings or
other Internal Revenue Service releases, thereunder, has not expired. Seller has
timely made all contributions (including periodic installments) required by law
or contract to be made to any Pension Plan or Welfare Plan or Other Plan
covering Persons employed in the Business maintained by Seller.
5.6.2 MULTIEMPLOYER PLANS. Seller is not required,
nor has it ever been required, to contribute with respect to any Multiemployer
Plan covering Persons employed in the Business.
5.6.3 WELFARE PLANS.
(a) Except as set forth on SCHEDULE 5.6.3, no
Welfare Plan covering Persons employed in the Business maintained by Seller is
funded by a trust.
(b) Each Welfare Plan covering Persons
employed in the Business maintained by Seller intended to meet the requirements
for tax-favored treatment under subchapter B of Chapter 1 of the Internal
Revenue Code meets such requirements.
(c) With respect to any Welfare Plan covering
Persons employed in the Business maintained by Seller there is no disqualified
benefit, as such is defined in Internal Revenue Code Section 4976(b), which
would subject Seller to a Tax under Internal Revenue Code Section 4976(a).
5.6.4 PENSION PLANS. Seller has never sponsored, nor
been required to contribute to, any Defined Benefit Plan covering Persons
employed in the Business.
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5.7 STATUS OF ASSETS.
5.7.1 TITLE. The Purchased Assets are free and clear
of all Liens. All of the Assigned Contracts are valid, in full force and effect
and enforceable in accordance with their terms by Seller.
5.7.2 CONDITION. All of the fixed assets included in
the Purchased Assets are in good operating condition, normal wear and tear
excepted, neither require nor are reasonably expected to require any special or
extraordinary expenditures to remain in such condition beyond maintenance and
repairs necessary in the ordinary course of operations, and are capable of being
used for their intended purpose in the ordinary course of business consistent
with past practice.
5.7.3 RECEIVABLES. The billed and unbilled accounts
receivable included among the Purchased Assets are valid and genuine; have
arisen solely out of the bona fide performance of services in the ordinary
course of business; and are not subject to any set-off or counterclaim. SCHEDULE
5.7.3 sets forth a 30/60/90 day aging summary of those accounts receivable
included among the Purchased Assets as of the prior month end which have been
billed to customers or clients. The billed and unbilled accounts receivable as
described on the Acquisition Balance Sheet are collectible except as expressly
provided in any reserve or in notes to such balance sheet.
5.7.4 PROPRIETARY PROPERTY. To Seller's Knowledge,
Seller has not infringed, misappropriated or misused any patent, trademark,
trade name, copyright (or application for any of the foregoing), trade secret,
know-how or confidential information or data of another. Seller has the complete
and unrestricted right to use, own and has good title to, and the exclusive
right to assign the entire right, title and interest in and to all of its trade
secrets, know-how, patents, trademarks, service marks, trade names, copyrights
and applications for any of the foregoing, each of such items is in full force
and effect and such items are the only proprietary property used or necessary in
connection with the Business as presently conducted. SCHEDULE 5.7.4 lists all of
Seller's patents, trademarks, service marks, trade names and copyrights and all
applications for any of the foregoing relating to the Business. There has been
no infringement, misappropriation or misuse of any of Seller's proprietary
information.
5.7.5 PREPAYMENTS AND DEPOSITS. Except as described
on SCHEDULE 5.7.5, Seller has not received any prepayments or deposits from
customers for services to be performed, in the future.
5.7.6 REAL PROPERTY LEASES. Seller has delivered to
Buyer correct and complete copies of the Real Property Leases, together with all
amendments thereto. Each Real Property Lease is legal, valid, binding,
enforceable, and in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors
generally. Neither Seller nor any other party is in default, violation or breach
in any respect under any Real Property Lease, and no event has occurred and is a
continuing that constitutes or, with notice or the passage of time or both,
would constitute a default, violation or breach in
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any respect under any Real Property Lease. Each Real Property Lease grants the
tenant under the Real Property Lease the exclusive right to use and occupy the
demised premises thereunder. The Seller has good and valid title to the
leasehold estate under each Real Property Lease free and clear of all Liens.
Seller enjoys peaceful and undisturbed possession under the Real Property
Leases. The real property leased to Seller pursuant to the Real Property Leases
constitutes all the fee and leasehold interests in real property held for use in
connection with, necessary for the conduct of, or otherwise material to, the
Business.
5.7.7 EXTENT. Except as set forth on SCHEDULE 5.7.7, the
Purchased Assets and the assets to be leased or licensed to Buyer pursuant to
the assignment of an Assigned Contract hereunder, include all those which have
been used to operate the Business in the ordinary course as presently conducted.
The Purchased Assets include all assets reflected on the Acquisition Balance
Sheet and all assets acquired by Seller after the date of the Acquisition
Balance Sheet, except those assets of Seller relating to the Business which have
been disposed of with the prior written consent of Buyer. Since the date of the
Acquisition Balance Sheet, there has not been any damage to or disposition
(except for the sale of inventory in the ordinary course of business consistent
with past practice) or loss of (whether or not covered by insurance) any
material asset of the Business.
5.8 MISCELLANEOUS.
5.8.1 NO BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Seller, Stockholders and their Affiliates in such manner as not to give rise
to any valid claim against them or Buyer for a brokerage commission or
finder's fee.
5.8.2 ACCURACY AND COMPLETENESS. No statement of fact made
by Seller or any Stockholder in this Agreement or in any Exhibit or Schedule
hereto or in any certificate delivered pursuant to this Agreement is false or
inaccurate in any material respect or omits to state any material fact necessary
in order to make the statement made herein or therein not misleading.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
6.1 ORGANIZATION AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has full corporate power to execute, deliver and perform this
Agreement and all other agreements and documents to be executed and delivered by
it in connection herewith.
6.2 STATUS OF AGREEMENTS.
6.2.1 ENFORCEABILITY. All requisite corporate action to
approve, execute, deliver and perform this Agreement and each other agreement
and document delivered by or on behalf of Buyer in connection herewith has been
taken by Buyer. This Agreement and each other agreement and document executed
and delivered by or on behalf of Buyer in connection herewith has been duly
executed and delivered by Buyer and constitute the binding obligations of Buyer
enforceable in accordance with their respective terms.
6.2.2 CONSENTS. No approval or consent of, or filing with,
any Person or Governmental Authority is required in connection with the
transactions contemplated hereby or the execution, delivery or performance by
Buyer of this Agreement or any other agreement or document delivered by or on
behalf of Buyer in connection herewith.
6.2.3 NO CONFLICTS. No action taken by or on behalf of
Buyer in connection herewith, including, but not limited to, the execution,
delivery and performance of this Agreement, and each other agreement and
document delivered by it in connection herewith, conflicts with or violates: (a)
any Law applicable to Buyer; (b) Buyer's Articles of Incorporation or Code of
Regulations; or (c) any agreement to which Buyer is a party or by which Buyer is
bound; or constitutes an event which, after notice or lapse of time or both,
could result in any of the foregoing.
ARTICLE VII
COVENANTS
---------
7.1 ACCESS. During the period from the date hereof through the
Closing Date, Seller shall give Buyer and its counsel, accountants, and other
representatives full access to the property, books, Contracts, agreements,
records, working papers, reports, commitments and all other data (financial or
otherwise) of the Business during normal business hours, and Seller shall
furnish to Buyer copies of all such documents and all such information relating
to the Business as Buyer may from time to time or at any time reasonably
request. In addition, Seller will permit Buyer, Buyer's accountants, counsel,
consultant, employees and agents, reasonable access to such personnel of Seller
employed in the operation of the Business during
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normal business hours as may be necessary or useful to Buyer in its review of
the properties, assets and business affairs of the Division and the Business and
the above-mentioned documents, records and information. Seller will keep Buyer
generally informed as to the affairs of the Business. No review, examination, or
investigation by Buyer and its representatives, hereunder or otherwise, shall
affect the continuing validity or effect of Seller's or representations and
warranties contained in this Agreement and the schedules hereto.
7.2 CONDUCT OF BUSINESS PENDING THE CLOSING
7.2.1 COVENANTS OF SELLER. From the date hereof to the
Closing Date, except as expressly permitted or required by this Agreement or as
otherwise consented to by the Buyer in writing, Seller will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore
conducted, and use all reasonable efforts to preserve intact
its present business organization, maintain its properties in
good operating condition and repair, keep available the
services of its present officers and significant employees
(other than Phillip A. Bounsall), and preserve its
relationship with customers, suppliers and others having
business dealings with it, to the end that its goodwill and
going business shall be unimpaired following the Closing;
(b) except for matters disputed in good faith, pay
accounts payable and other obligations of the Business when
they become due and payable in the ordinary course of business
consistent with prior practice;
(c) perform all of its obligations under all Contracts and
other agreements and instruments relating to or affecting the
Business or the Purchased Assets, and comply with all Laws
applicable to it, the Purchased Assets or the Business;
(d) not enter into or assume any material Contract
relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect
thereof;
(e) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of
any employee engaged in the operation of the Business or
institute, adopt or amend (or commit to institute, adopt or
amend) any compensation or benefit plan, policy, program or
arrangement applicable to any such employee;
(f) not take any action or omit to take any action, which
action or omission would result in a breach of any of the
representations and warranties set forth in Article V.
7.3 PERFORMANCE OF CONDITIONS TO CLOSING. Seller,
Stockholders and Buyer agree to use their best efforts to refrain from taking
any action (or omitting to take any
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necessary action) the result or potential result of which would be to cause the
nonfulfillment of any condition to any party's obligation to close the
transactions contemplated hereunder, and they agree to otherwise cooperate with
each other in taking such actions as may reasonably be required to effect the
Closing as contemplated hereunder.
7.4 CONFIDENTIALITY. Buyer, Stockholders and Seller agree that
any information contained in any Schedule or Exhibit to this Agreement or
otherwise provided to Buyer, Stockholders or Seller pursuant to this Agreement
shall be held by Buyer, Stockholders or Seller in strictest confidence and
Buyer, Stockholders and Seller shall not use such information except for the
purpose of evaluating the transaction contemplated hereby; provided, however,
this Section 7.4 shall not apply to any information which (A) is or becomes
generally known to the public other than by the disclosure or use thereof by
Buyer, Stockholders or Seller, or (B) is obtained by Buyer, Stockholders or
Seller from a third party who is lawfully in possession of such information and
is not subject to any obligation to refrain from disclosing such information to
Buyer, Stockholders or Seller.
7.5 EXPENSES; TRANSFER TAXES. Except to the extent otherwise
specifically provided herein, Buyer shall pay all of the expenses incident to
the transactions contemplated by this Agreement which are incurred by Buyer or
its representatives, and Seller shall bear and pay all of the expenses incident
to the transactions contemplated by this Agreement which are incurred by Seller,
Stockholder or their representatives. Notwithstanding the foregoing, Buyer shall
pay the third party accounting fees and expenses incurred in connection with the
audit of the December 31, 1995 and September 30, 1996 financial statements of
the Business described in Section 5.3.1. Seller and Buyer agree to share equally
in the payment of all sales or other transfer taxes, if any, which may be
payable in connection with the transactions contemplated by this Agreement.
7.6 FURTHER ASSURANCES. Seller agrees that, at any time and
from time to time after the date hereof, it will, upon the request of Buyer and
at Seller's expense, do all such further reasonable acts as may be required to
further transfer, assign and confirm to Buyer, or to aid and assist in the
collection or gaining of possession by Buyer of, any of the Purchased Assets, or
to vest in Buyer good and marketable title to the Purchased Assets.
7.7 ASSIGNMENT OF CONTRACTS, RIGHTS, ETC. To the extent that
any Assigned Contract is not capable of being assigned or transferred by Seller
(or if Buyer's purchase is deemed a prohibited transfer or assignment because of
change in control to the extent that an Assigned Contract would or may not
remain in effect on its existing terms upon such purchase) without the consent,
release or waiver of any third party (a "Non-Assignable Contract"), or if the
assignment or transfer or attempted assignment or transfer without such consent,
release or waiver would breach the Non-Assignable Contract (or result in the
third party having the right to terminate the Non-Assignable Contract), Seller
shall use its best efforts to obtain such consent, release or waiver and the
Non-Assignable Contract need not be assigned or transferred by Seller to Buyer
unless and until any such required consent, release or waiver has been obtained.
If at the Closing Date, any Non-Assignable Contract shall not have been assigned
or transferred to Buyer (or if Buyer's purchase continues to be deemed a
prohibited transfer or assignment as aforesaid), Seller shall make an equitable
assignment to Buyer of the rights, benefits, and interest in each Non-Assignable
Contract which can be enjoyed indirectly
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by Buyer. Where necessary or appropriate as permitted, Seller may designate
Buyer an "affiliate" (as such term may be defined in a Non-Assignable Contract)
and Seller shall, on behalf of Buyer, complete, fulfill and discharge all of the
rights and obligations arising after the Closing with respect to each
Non-Assignable Contract. Seller shall use its best efforts to provide Buyer with
the benefit of each Non-Assignable Contract, including but not limited to (a)
enforcing any rights arising with respect to the Non-Assignable Contract
(including without limitation the right to terminate in accordance with the
terms thereof upon the advice of Buyer) and (b) permitting, assisting, and
acting in the direction of, Buyer to enforce any rights arising with respect to
each Non-Assignable Contract. Except as specifically provided herein, nothing in
this Section 7.7 shall (x) limit or expand any representation or warranty of
Seller under this Agreement or (y) require Seller to breach any provision of any
contract that is a Purchased Asset or to modify any course of dealing respecting
any Contract that is a Purchased Asset. Seller shall use its best efforts to
ensure that any successor agreement relating to a Non-Assignable Contract
complies with the reasonable needs of Buyer to service the Business.
7.8 RECEIVABLES. Buyer shall use all reasonable efforts to
collect the accounts receivable included in the Purchased Assets, but Buyer
shall not be required to take or threaten legal action to collect any of such
receivables. Seller shall, at the option of Buyer, repurchase from Buyer, for an
amount equal to the unpaid balance thereof, all or any part of the accounts
receivable included in the Purchased Assets which have not been paid in full by
the first anniversary of the Closing Date, it being understood that Buyer may
exercise such option until the end of the 18th month after the Closing Date
without waiving any rights hereunder. Seller shall have the right to verify the
existence of the unpaid balance of any receivables. Seller shall, as may be
reasonably requested by Buyer, assist Buyer in the collection of all accounts
receivable included among the Purchased Assets. Seller shall promptly remit to
Buyer any amounts received by Seller in respect of the accounts receivable
included among the Purchased Assets.
7.9 NONCOMPETITION.
7.9.1 BY SELLER AND STOCKHOLDERS. To protect the value of
Seller's goodwill included among the Purchased Assets, until the fifth
anniversary of the Closing Date, neither Seller, Stockholders, nor any Affiliate
of any of them shall, in the continental United States, without prior written
consent of Buyer: (a) perform clinical research services or provide broker or
manager services in connection therewith; or (b) perform any advisory or
consulting services for, invest in (other than less than a one percent interest
in the capital stock of a publicly traded company) or otherwise become
associated with in any capacity, any Person which performs clinical research
services or provides broker or manager services in connection therewith.
7.9.2 NONINTERFERENCE. Neither Seller, Stockholders nor
any Affiliate of either of them shall induce, attempt to induce, or assist
others in inducing or attempting to induce any employee or agent of Buyer or any
other Person affiliated or doing business with Buyer to terminate his
relationship with Buyer or in any other manner to interfere with the
relationship between Buyer and any such Person or the relationship between Buyer
and any of its suppliers or customers.
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7.9.3 EQUITABLE RELIEF. Money damages alone will not be a
sufficient remedy for any breach of the provisions of this Section 7.9 by any
party, and in addition to all other remedies the parties shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any such breach, and they waive the securing or posting of any bond in
connection with such remedy.
7.9.4 REFORMATION. If any of the covenants contained in
this Section 7.9 is found by a court of competent jurisdiction to be invalid or
unenforceable as against public policy or for any other reason, such court is
directed to exercise its discretion to reform such covenant to the end that the
parties shall be subject to noncompetition and noninterference covenants that
are reasonable under the circumstances and are enforceable.
7.10 NO ASSIGNMENT. No party may assign all or any part of
this Agreement or all or any part of its rights and obligations hereunder
without the prior written consent of the others. Any assignment made without
such consent will be void. Notwithstanding the foregoing, Buyer may assign this
Agreement to any Affiliate of Buyer.
7.11 EMPLOYEES. On or prior to the Closing Date, and effective
as of and conditioned on the occurrence of the Closing, Buyer shall offer
positions of employment with Buyer, on an "at will" basis, to those employees of
Seller whose names are set forth on SCHEDULE 5.5.1, in each case, on
substantially similar terms of employment (solely with respect to salary) as the
employee enjoyed with Seller on the business day immediately preceding the
Closing Date.
7.12 EMPLOYEE BENEFITS. Pending the Closing, Seller shall use
its best efforts to retain the services of Seller's employees employed in the
Business and encourage them to continue their employment with Buyer after the
Closing. Buyer shall offer employment, on such terms and conditions as shall be
determined by Buyer in its sole discretion, to those employees of Seller
employed in the Business as Buyer shall determine in its sole discretion, but
Buyer shall not be required to offer employment to any or all of Seller's
employees. The employment by Buyer of any employee of Seller who accepts the
terms of employment offered by Buyer will commence at the Closing. Seller agrees
in this regard to cooperate with Buyer by permitting Buyer throughout the period
prior to the Closing to meet with Seller's employees employed in the Business at
such reasonable times as shall be approved by a representative of Seller and to
distribute to Seller's employees employed in the Business such forms and other
documents relating to employment by Buyer after the Closing as Buyer shall
reasonably request. Except Paid Time Off and the Buyer Bonus Payment, Seller
shall pay the cost of any compensation, severance or other benefits which may be
payable to Seller's employees as a result of the consummation of the
transactions contemplated hereby, including, without limitation, with respect to
employees to whom Buyer does not offer employment or to such other persons as
shall claim compensation, severance or other benefits in connection with the
consummation of the transactions contemplated by this Agreement. Nothing in this
Section 7.12 shall be deemed to require Buyer to retain any of the employees it
hires for any period of time or at any particular compensation rate or in any
particular position.
7.13 NO SOLICITATION. During the term of this Agreement,
neither Seller, the Stockholders nor any of their Affiliates or any Person
acting on their behalf shall (a) offer for
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sale the Purchased Assets (or any material portion thereof) or any ownership
interest in any entity owning any of the Purchased Assets, (b) solicit offers to
buy all or any material portion of the Purchased Assets or any ownership
interest in any entity owning any of the Purchased Assets, (c) hold discussions
with any party (other than Buyer) looking toward such an offer or solicitation
or looking toward a merger or consolidation of any entity owning any of the
Purchased Assets, or (d) enter into any agreement with any party (other than
Buyer) with respect to the sale or other disposition of the Purchased Assets (or
any material portion thereof) or any ownership interest in any entity owning any
of the Purchased Assets or with respect to any merger, consolidation, or similar
transactions involving any entity owning any of the Purchased Assets. Seller
will promptly communicate to Buyer the substance of any serious inquiry or
proposal concerning any such transaction.
7.14 NO PUBLIC ANNOUNCEMENT. Neither Buyer, Seller nor any
Stockholder will announce to the public, customers, vendors, or Seller's
employees, the terms and conditions of this Agreement or the transactions
contemplated hereby without the prior approval of the other party, which will
not be unreasonably withheld, unless such announcement is required by law and in
such a case, the announcing party will notify the other party and provide it in
advance with a copy of the public disclosure.
7.15 WALKER NAME. Seller hereby grants Buyer the
non-exclusive, royalty free license to use the name "Walker Clinical
Evaluations" in connection with the operation of the Business from existing
facilities within the Louisville, Kentucky and Indianapolis, Indiana greater
metropolitan areas for a period of one year commencing on the Closing Date.
Nothing herein shall be construed to prohibit the use of the name or words
"Clinical Evaluations" (or any derivation thereof) by Buyer at any time after
the one year anniversary of the Closing Date.
7.16 OPERATION OF SELLER. During the two year period following
the Closing, or for such longer period as there shall be an unresolved claim by
Buyer against Seller under Article VIII hereof, Seller shall not, without the
prior written consent of Buyer, (a) merge or consolidate with or into any other
entity, cause any entity to be merged or consolidated with or into Seller, or
dividend, distribute, convey, transfer or lease all or substantially all of its
assets to any other entity unless the surviving entity, distributee, purchaser,
transferee or lessee expressly assumes all the obligations of Seller hereunder,
including, without limitation, pursuant to Article VIII; or (b) make any payment
or distribution to any Stockholder or Affiliate of Seller or any Stockholder
except (i) dividends from net income for any fiscal year during which Seller is
an "S corporation" as defined in the Internal Revenue Code in an aggregate
amount designed to reimburse the Stockholders for taxes imposed on the earnings
attributable to them by virtue of their status as S corporation Stockholders;
(ii) scheduled payments on Seller's indebtedness in the approximate amount of
$2,200,000 owed to one or more Affiliates of Seller existing prior to the
execution hereof; and (iii) ordinary and reasonable compensation for services
rendered, consistent with past practice. Buyer will not withhold its consent to
any action described in (b) above if such action is undertaken in connection
with an initial public offering of Seller or other transaction which
significantly enhances the financial position of Seller such that Seller's
equity value (assets less liabilities) exceeds Four Million Dollars
($4,000,000), notwithstanding the action described in (b) above.
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7.17 EMPLOYEE BONUS. On January 31, 1997 or such later date as
the Purchase Price is finally determined pursuant to Sections 3.1 and 3.2, Buyer
and Seller shall each distribute, as Buyer shall determine, among the former
employees of Seller employed by Buyer as of December 31, 1996, one half of the
aggregate amount of the bonus pool corresponding to the appropriate 1996 Pre-Tax
Net Income set forth on SCHEDULE 7.17. (The amount payable by Buyer shall be
deemed the "Buyer Bonus Payment." The amount payable by Seller shall be deemed
the "Seller Bonus Payment.")
ARTICLE VIII
INDEMNIFICATION
---------------
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or in any agreement
or document delivered in connection herewith shall survive the Closing and
continue to be binding regardless of any investigation made at any time by any
party.
8.2 INDEMNIFICATION BY SELLER. Seller shall indemnify Buyer
and its Affiliates and the shareholders, directors, employees and agents of
Buyer and its Affiliates ("Buyer Indemnified Parties") against and hold them
harmless from:
(a) All Liability, loss, damage or deficiency resulting from
or arising out of any inaccuracy in or breach of any representation or
warranty by Seller herein or in any other agreement or document
delivered by or on behalf of Seller in connection herewith;
(b) All Liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Seller herein or in any other agreement
or document delivered by or on behalf of Seller in connection herewith;
(c) Any imposition (including, but not limited to, imposition
by operation of any bulk transfer or other Law) or attempted imposition
by a third-party upon any of the Buyer Indemnified Parties of any
Liability of Seller which Buyer has not specifically agreed to assume
under Section 2.2 of this Agreement;
(d) All Liability, loss, damage or deficiency resulting from
or arising out of the claims of any broker, finder, or other Person
acting in a similar capacity on behalf of Seller or Stockholders in
connection with the transactions herein contemplated; and
(e) Any and all costs and expenses (including legal and
accounting fees) related to any of the foregoing.
8.3 INDEMNIFICATION BY BUYER. Buyer shall indemnify Seller
and its Affiliates and the stockholders, directors, employees and agents of
Seller and its Affiliates (the "Seller Indemnified Parties") against and hold
them harmless from:
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(a) All Liability, loss, damage or deficiency resulting from
or arising out of any inaccuracy in or breach of any representation or
warranty by Buyer herein or in any other agreement or document
delivered by or on behalf of Buyer in connection herewith;
(b) All Liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Buyer herein or in any other agreement
or document delivered by or on behalf of Buyer in connection herewith;
(c) Any imposition (including, but not limited to, by
operation of Law) or attempted imposition by a third-party upon any of
the Seller Indemnified Parties of any Assumed Liability;
(d) All Liability, loss, damage or deficiency resulting from
or arising out the claims of any broker, finder or other Person acting
in a similar capacity on behalf of Buyer in connection with the
transactions herein contemplated; and
(e) Any and all costs and expenses (including legal and
accounting fees) related to any of the foregoing.
8.4 LIMITATIONS ON INDEMNIFICATION OF BUYER INDEMNIFIED
PARTIES. Any claim for indemnification under paragraph (a) of Section 8.2 by the
Buyer Indemnified Parties shall be made by the second anniversary of the Closing
Date except that there shall be no limits on the time for making a claim for
indemnification relating to the representations and warranties contained in
Subsections 5.2.1 (Seller Enforceability) and 5.7.1 (Title) and except that a
claim for such indemnification relating to the representations and warranties
contained in Subsection 5.3.4 (Taxes), may be made until ninety (90) days after
the expiration of the applicable statute of limitations for either the
assessment or collection of Taxes for the periods referred to therein.
8.5 LIMITATIONS ON INDEMNIFICATION OF SELLER INDEMNIFIED
PARTIES. Any claim for indemnification under paragraph (a) of Section 8.3 by the
Seller Indemnified Parties shall be made by the second anniversary of the
Closing Date except that there shall be no limits on the time for making a claim
for indemnification relating to the representations and warranties contained in
Subsection 6.2.1 (Buyer Enforceability).
8.6 THIRD PARTY CLAIMS. If any legal proceedings shall be
instituted or any claim or demand is asserted by any third party in respect of
which Seller on the one hand, or Buyer on the other hand, may have an obligation
to indemnify the other, the party asserting such right to indemnity shall give
the party from whom indemnity is sought written notice thereof and the notified
party shall have the right, at its option and expense, to participate in the
defense of such proceedings, claim or demand, but not to control the defense,
negotiation or settlement thereof, which control shall at all times rest with
the party asserting such right to indemnity, unless the action is for money
damages only and the party from whom indemnity may be sought:
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(a) irrevocably acknowledges in writing complete
responsibility for and agrees to indemnify the party asserting such
right to indemnity, and
(b) furnishes reasonably satisfactory evidence of the
financial ability to indemnify the party asserting such right to
indemnity,
in which case such indemnifying party may assume such control through counsel of
its choice and at its expense, but the indemnified party shall continue to have
the right to be represented, at its own expense, by counsel of its choice in
connection with the defense of such proceedings, claim or demand. If the party
from whom indemnity is sought does not assume control of the defense of such a
proceeding or claim, the entire defense of the proceeding or claim by the party
asserting such right to indemnity, any settlement made by the party asserting
such right to indemnity, and any judgment entered in the proceeding or claim
shall be deemed to have been consented to by, and shall be binding on, the party
from whom indemnity is sought as fully as though it alone had assumed the
defense thereof and a judgment had been entered in the proceeding or claim in
the amount of such settlement or judgment, except that the right of the party
from whom indemnity is sought to contest the right of the other to
indemnification under this Agreement with respect to the proceeding or claim
shall not be extinguished. If the party from whom indemnity is sought does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the party asserting such right to
indemnity, settle the proceeding or claim or consent to entry of any judgment
relating thereto which does not include as an unconditional term thereof the
giving by the claimant to the party asserting such right to indemnity a release
from all Liability in respect of the proceeding or claim. The parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
ARTICLE IX
TERMINATION
-----------
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual agreement of Seller, Stockholders and Buyer;
(b) by Buyer, if there has been a material violation or breach
by Seller of any of the representations or warranties contained in this
Agreement, or if there has been any violation, breach, or failure to
perform by Seller or Stockholders of any of the agreements, covenants,
or conditions to Closing contained in this Agreement, unless Seller or
Stockholders have informed Buyer that such violation, breach, or
failure to perform will be cured on or before the Closing Date;
(c) by Seller or Stockholders, if (i) there has been a
material violation or breach by Buyer of any of the representations or
warranties contained in this Agreement, or if there has been any
violation, breach, or failure to perform by Buyer of any of the
agreements, covenants, or conditions to Closing contained in this
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Agreement, unless Buyer has informed Seller and Stockholders that such
violation, breach, or failure to perform will be cured on or before the
Closing Date; or (ii) the Closing has not occurred by November 1, 1996.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by Buyer, Seller or Stockholder as provided in Section 9.1 above, this
Agreement shall forthwith be of no further force and effect (except that the
provisions of Sections 7.4, 7.5, 7.14, and 10.14 shall continue in full force
and effect) and there shall be no liability on the part of Buyer, Seller and
Stockholder, except based upon: (i) a material and willful breach by a party of
any of its obligations under this Agreement, or (ii) the obligations set forth
in Sections 7.4, 7.5, or 7.14.
ARTICLE X
CONSTRUCTION
------------
10.1 DEFINITION. When used in this Agreement, the following
terms in all of their tenses and cases shall have the meanings assigned to them
below or elsewhere in this Agreement as indicated below:
"Acquisition Balance Sheet" is defined in Section 5.3.1.
"Affiliate" of any Person means any person directly or
indirectly controlling, controlled by, or under common control with, any such
Person and any officer, director or controlling person of such Person.
"Assigned Contracts" is defined in Section 2.2(d).
"Assumed Liabilities" is defined in Section 2.2.
"Books and Records" means all books and records of Seller
relating to the Business and properties, including, without limitation, (i) all
books and records relating to the purchase of materials and supplies, sales of
products, dealings with customers, invoices, suppliers' lists and personnel
records, (ii) all contracts, reports, opinions, maps and other documents
affecting the title to or the value of the properties of Seller, (iii) tax
returns, and (iv) all financial and operating data, files and other information
with respect to Seller's business and properties.
"Business" is defined in the Recitals.
"Buyer Bonus Payment" is defined in Section 7.17.
"Buyer Escrow Amount" is defined in Section 3.1.
"Buyer's Notice" is defined in Section 3.2.
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"Closing" means the commencement of business on the Closing
Date.
"Closing Date" is defined in Section 4.1.
"Closing Payment" is defined in Section 3.1.
"Contract" means any bid, commitment, understanding,
instrument, lease, pledge, mortgage, indenture, note, license, agreement,
purchase or sale order, contract, promise, or similar arrangement evidencing or
creating any obligation, whether written or oral.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan.
"Environmental Law" is defined in Section 5.5.10.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"Escrow Account" means the escrow account established pursuant
to the Escrow Agreement.
"Escrow Agreement" is defined in Section 4.2(a).
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any foreign, federal, state,
regional or local authority, agency, body, court or instrumentality, regulatory
or otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Hazardous Substance" is defined in Section 5.5.10.
"Hazardous Waste" is defined in Section 5.5.10.
"In Person-Respondent Database" is defined in Section 1.3.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
"Law" means any common law and any federal, state, regional,
local or foreign law, rule, statute, ordinance or regulation, including, without
limitation, any law, rule, statute, ordinance or regulation relating to
discrimination, Hazardous Substances, wage, hour, working condition, payroll
withholding, pension, building, zoning and taxes.
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"Liabilities" means responsibilities, obligations, duties,
commitments, claims and liabilities of any and every kind, whether known or
unknown, accrued, absolute, contingent or otherwise.
"Lien" means any lien, charge, covenant, condition, easement,
adverse claim, demand, encumbrance, security interest, option, pledge or any
other title defect or restriction of any kind.
"Maximum Purchase Price" is defined in Section 3.3.
"Minimum Purchase Price" is defined in Section 3.3.
"Multiemployer Plan" means any multiemployer plan within the
meaning of Section 3(37) of ERISA.
"Other Plan" means any employment, noncompetition, management,
agency or consulting arrangement, bonus, profit sharing, deferred compensation,
incentive, stock, option, stock ownership or stock purchase plan, or other
similar plan, policy, or arrangement, whether or not in written form, which does
not constitute an Employee Benefit Plan and which is not listed on SCHEDULE
2.2(D).
"Paid Time Off" is defined in Section 2.2.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan.
"Permits" is defined in Section 5.4.1.
"Person" means any individual, corporation, partnership,
association or any other entity or organization.
"Purchase Price" is defined in Section 3.1.
"Seller Bonus Payment" is defined in Section 7.17.
"Seller Escrow Amount" is defined in Section 3.3.
"Tax" means any charge or assessment by, or liability to, any
Governmental Authority, including, but not limited to, any deficiency, interest
or penalty.
"Tax Returns" is defined in Section 5.3.4.
"To the Knowledge of Seller" or "to Seller's Knowledge" means
the actual knowledge of any director or officer of Seller, and also means the
knowledge such a Person would have had after making diligent inquiry of the
Seller's personnel and diligent investigation and review of the Books and
Records and other relevant documentation.
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<PAGE> 38
"Trade Secret" means any information which if known to a
competitor of the owner of the information could be harmful to the owner of the
information.
"Waste" is defined in Section 5.5.10.
"Welfare Plan" means any employee welfare benefit plan within
the meaning of Section 3(1) of ERISA, other than a Multiemployer Plan.
"Working Capital Deficit" is defined in Section 3.1
"Working Capital Surplus" is defined in Section 3.1.
"Working Capital Value" is defined in Section 3.1.
"1996 Pre-Tax Net Income" is defined in Section 3.1.
10.2 NOTICES. All notices shall be in writing delivered as
follows:
(a) If to Buyer, to:
Collaborative Holdings, Inc.
20600 Chagrin Boulevard, Suite 1050
Cleveland, Ohio 44122
Attention: Dr. Jeffrey A. Green, President
Facsimile: (216) 491-9494
With a copy to:
Calfee, Halter & Griswold
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Attention: Thomas F. McKee, Esq.
Facsimile: (216) 241-0816
(b) If to the Seller or Stockholders, to:
Walker Information, Inc.
3939 Priority Way South Drive
Indianapolis, Indiana 46240-0972
Attention: Mr. Steven F. Walker,
President and Chief Executive Officer
Facsimile: (317) 843-8904
With a copy to:
Ice, Miller, Donadio & Ryan
33
<PAGE> 39
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attention: Steven K. Humke, Esq.
Facsimile: (317) 236-5817
or to such other address as may have been designated in a prior notice. Notices
may be sent via registered or certified mail, nationally recognized overnight
courier or facsimile. Notices sent by registered or certified mail, return
receipt requested, shall be deemed to have been given two business days after
the day of registration or the date of certification, as the case may be, and
otherwise notices shall be deemed to have been given when received by the Person
to whom the notice is addressed or any other Person with apparent authority to
accept notices on behalf of the Person to whom the notice is addressed.
10.3 BINDING EFFECT. Except as may be otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
10.4 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
10.5 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be a part of this Agreement.
10.6 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
10.7 GOVERNING LAW. This Agreement shall be governed by and
construed under Ohio law, without regard to conflict of laws principles.
10.8 WAIVERS. Compliance with the provisions of this Agreement
may be waived only by a written instrument specifically referring to this
Agreement and signed by the party waiving compliance. No course of dealing, nor
any failure or delay in exercising any right, shall be construed as a waiver. In
addition, no single or partial exercise of a right shall preclude any other or
further exercise of that or any other right.
10.9 PRONOUNS. The use of a particular pronoun herein shall
not be restrictive as to gender or number but shall be interpreted in all cases
as the context may require.
10.10 TIME PERIODS. Any action required hereunder to be taken
within a certain number of days shall be taken within that number of CALENDAR
days; provided, however, that if the last day for taking such action falls on a
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
34
<PAGE> 40
10.11 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against either party.
10.12 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement among the parties concerning the subject matter
hereof. All negotiations among the parties are merged into this Agreement, and
there are no representations, warranties, covenants, understandings or
agreements, oral or otherwise, in relation thereto among the parties other than
those incorporated herein and to be delivered hereunder.
10.13 MODIFICATION. No supplement, modification or amendment
of this Agreement shall be binding unless made in a written instrument which is
signed by all of the parties and which specifically refers to this Agreement.
10.14 THIRD PARTIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or entity,
other than the parties hereto, any rights or remedies by reason of this
Agreement.
10.15 SURVIVAL OF COVENANTS. The covenants contained in
Article XII (other than Sections 7.1, 7.2 and 7.3) shall survive the Closing.
35
<PAGE> 41
INTENDING TO BE LEGALLY BOUND, the parties have signed this
Agreement as of the date first above written.
WALKER INFORMATION, INC.
By: /s/ Steven F. Walker
--------------------------------
Its: President/CEO
---------------------------------
("Seller")
COLLABORATIVE HOLDINGS, INC.
By: /s/ Jeffrey A Green
--------------------------------
Jeffrey A. Green, President
("Buyer")
The following are signatories solely with respect to Articles
VII, IX and X:
/s/ Steven F. Walker
------------------------------------
Steven F. Walker
/s/ Frank D. Walker
------------------------------------
Frank D. Walker
/s/ Leah R. Walker
------------------------------------
Leah R. Walker
/s/ James E. Sammer
------------------------------------
James E. Sammer
("Stockholders")
36
<PAGE> 1
Exhibit 10.1
LICENSE AGREEMENT
This Agreement is effective as of the 25th day of October,
1996 by and between Collaborative Holdings, Inc., ("Collaborative"), an Ohio
Corporation, and Walker Information, Inc. ("Walker"), an Indiana Corporation.
WHEREAS, Walker has developed and is the owner of copyrights relating
to a Database which is described in Schedule A ("Database A"), attached hereto;
WHEREAS, Walker has collected and is in the possession of the data and
confidential information in Database A that relates to the health conditions of
a group of residents in Louisville, Kentucky and a group of residents in
Indianapolis, Indiana (hereinafter defined in Section 1 of this Agreement as the
"Proprietary Information");
WHEREAS, Walker has developed and is the owner of copyrights relating
to a Database which is described in Schedule B ("Database B"), attached hereto;
WHEREAS, Walker has collected and is in the possession of the data and
confidential information in Database B that relates to Walker's clients
(hereinafter defined in Section 1 of this Agreement as the "Client List");
WHEREAS, Walker has the exclusive right to license the Proprietary
Information, the Client List, Database A, and Database B;
WHEREAS, Collaborative desires an exclusive license to use the
Proprietary Information, the Client List, Database A, and Database B in
connection with its business of providing contract research clinical trials for
pharmaceuticals, medical devices, food products and other products which undergo
clinical trials prior to receiving certain regulatory approvals from the Food
and Drug Administration and other Governmental Authorities (the "Business");
WHEREAS, Walker wishes to retain a license to use the Proprietary
Information, the Client List, Database A, and Database B in connection with
businesses that are different from and do not compete with the Business; and
WHEREAS, Walker and Collaborative are parties to an asset purchase
agreement dated as of October 16, 1996 (the "Asset Purchase Agreement") which
transfers to Collaborative substantially all Walker's assets that are primarily
related to or used in the operation of the Business, but which does not transfer
or assign the Proprietary Information, the Client List Database A, or Database
B;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and other good and valuable consideration set forth in the Asset
Purchase Agreement, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto mutually agree as follows:
<PAGE> 2
1. DEFINITIONS.
(a) "Client List" shall mean and include any and all data and other
information of any type and in any form which relates to Walker's
clients, including, but not limited to, the written, graphic, or
machine-readable data and information which is in Walker's possession
as of the date of this Agreement and/or which has been entered into
Database B, except information or data which:
i) is part of the written public knowledge as of the date of
this Agreement;
ii) becomes available in writing to the general public other
than as a result of any action or inaction by either party hereto which
violates any provision of this Agreement;
iii) is received by any party hereto in writing from a third
party which is not under an obligation of secrecy and did not derive
the information, directly or indirectly, from either party to this
Agreement in violation of the terms hereof; or
iv) is developed independently by Collaborative before or
after the date of this Agreement.
(b) "Derivative Work" shall mean a work which is based upon the
pre-existing Databases such as a revision, modification, translation,
abridgment, condensation, expansion, collection, compilation or any
other form which, if prepared without authorization by the owner of the
pre-existing works, would constitute a copyright infringement, and for
which copyright registrations may be obtained, maintained and enforced.
(c) "Proprietary Information" shall mean and include any and all data
and other information of any type and in any form which relates to
Database A, including but not limited to the written, graphic, or
machine-readable data and information which has been entered into the
fields of Database A as of the date of this Agreement, except
information or data which:
i) is part of the written public knowledge as of the date of
this Agreement;
ii) becomes available in writing to the general public other
than as a result of any action or inaction by either party hereto which
violates any provision of this Agreement;
iii) is received by any party hereto in writing from a third
party which is not under an obligation of secrecy and did not derive
the information, directly or indirectly, from either party to this
Agreement in violation of the terms hereof; or
iv) is developed independently by Collaborative before or
after the date of this Agreement.
<PAGE> 3
2. LICENSE.
(a) Walker hereby grants, and Collaborative hereby accepts, a
perpetual, exclusive, paid-up, world-wide license to use the Proprietary
Information, the Client List, Database A, and Database B (hereinafter referred
to collectively as "the Licensed Materials") in connection with its development
and operation of the Business. Without limiting the generality of the foregoing,
Collaborative's right to use the Licensed Materials shall include the right to
copy, reproduce and update the Proprietary Information and the Client List and
the right to copy, modify, and make Derivative Works of the Databases.
(b) Walker shall retain the right to use the Licensed Materials solely
in connection with the development and operation of any business which does not
involve providing contract research clinical trials for pharmaceuticals, medical
devices, food products and other products which undergo clinical trials, and
which does not otherwise compete with the Business.
3. DELIVERY OF THE LICENSED MATERIALS.
(a) Upon execution of this Agreement, Walker shall deliver to
Collaborative's newly-acquired Indianapolis and Louisville facilities all
Proprietary Information which Walker may have in documentary form, including two
complete copies of Database A, together with two complete copies of Database B.
Walker shall bear all freight, shipping and handling costs for delivery of the
Licensed Materials and all risk of loss, including any insurance costs.
(b) As previously provided, Collaborative shall have the right, as part
of the license granted herein, to make as many additional copies of the Licensed
Materials as it, in its sole discretion, determines are needed to operate the
Business.
4. MAINTENANCE AND UPDATES.
(a) Collaborative acknowledges that, pursuant to this Agreement, Walker
is not required to supply Collaborative with updates of the Licensed Materials
or to provide to Collaborative any improvements, modifications or alternative
versions or enhancements of the Licensed Materials which Walker develops
subsequent to the date of this Agreement.
(b) Collaborative shall have the right, in its own discretion, to
independently update the Proprietary Information and the Client List for its own
purposes and use, through the services of its own employees or of independent
contractors. Collaborative shall be the owner of any such updates and is not
required to supply such updates to Walker.
(c) Collaborative shall have the right to improve and prepare
Derivative Works of Database A and of Database B. Collaborative shall be the
owner of any such improvements and Derivative Works and is not required to
supply such improvements or Derivative Works to Walker.
<PAGE> 4
5. CONFIDENTIALITY.
(a) Except as necessary to develop, conduct, and operate the Business,
Collaborative shall keep the Proprietary Information secret and shall not
disclose the Proprietary Information to any third party without the prior
written consent of Walker. The above notwithstanding, Collaborative shall have
the right, with exercise of discretion and insofar as practical, to make
disclosures on a confidential basis of such portions of the Proprietary
Information to its Affiliates, as such term is defined in the Asset Purchase
Agreement, and to representatives of contractors or government agencies where,
in Collaborative's judgment, such disclosure is essential to conducting and
operating the Business.
(b) Walker shall keep all the Proprietary Information secret and shall
not disclose any of the Proprietary Information to any third party without the
prior written consent of Collaborative; provided, however, that nothing herein
shall be construed to prohibit Walker from disclosing the Proprietary
Information to any purchaser of substantially all of Walker's assets so long as
such purchaser assumes Walker's obligations hereunder, including, without
limitation, this Section 5 and that nothing herein shall be construed to
prohibit Walker from using a statistical representation of the Proprietary
Information as normative data in Walker's operation of any business which does
not involve providing contract research clinical trials for pharmaceuticals,
medical devices, food products and other products which undergo clinical trials,
and which does not otherwise compete with the business.
(c) Neither party will use the Proprietary Information for purposes
other than specified in this Agreement.
(d) Both parties shall keep the Client List secret and neither party
shall disclose any of the information contained in the Client List to any third
party without the prior written consent of the other party; provided, however,
that nothing herein shall be construed to prohibit Walker from disclosing the
Client List to any purchaser of substantially all of Walker's assets so long as
such purchaser assumes Walker's obligations hereunder, including, with
limitation, with respect to this Section 5, and further provided that nothing
herein shall be construed to prohibit Collaborative from disclosing the Client
List to any Affiliate as such term is defined in the Asset Purchase Agreement.
(e) In protecting the secrecy of the Proprietary Information and Client
List, each party shall exercise the same degree of care that it uses to protect
its own confidential information.
6. TRANSFERABILITY OF THE LICENSED MATERIALS.
Walker shall not license, sell, or otherwise transfer the Proprietary
Information, the Client List, Database A, or Database B to any third party
without the prior written consent of Collaborative; provided, however, nothing
herein shall be construed to prohibit Walker from licensing, selling or
otherwise transferring the Proprietary Information, the Client List, Database A,
and Database B to any purchaser of substantially all of Walker's assets so long
as
<PAGE> 5
such purchaser assumes Walker's obligations hereunder, including, without
limitation, Section 5 hereof.
7. REPRESENTATIONS AND WARRANTIES.
Walker represents and warrants to Collaborative as follows:
i) Walker is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Indiana.
ii) Walker is the sole owner of the Client List,
Database A, and Database B and has full and exclusive right to
license such property as well as the Proprietary Information
and that no other persons, entities or governmental agencies
whatsoever, have any claim, right, or title to the Proprietary
Information, the Client List, Database A, or Database B.
iii) There is no claim, legal action, suit,
arbitration, governmental investigation or other legal
administrative proceeding, nor any decree or judgment in
progress, pending or in effect or, to the knowledge or Walker,
threatened against or relating to the Proprietary Information,
the Client List, Database A , Database B, or the transactions
contemplated by this Agreement.
iv) Walker has not otherwise granted, sold or
licensed any person, firm or corporation any right license or
privileges relating to the Propriety Information, the Client
List, Database A, or Database B. Nor has Walker disclosed the
Proprietary Information, the Client List, Database A or
Database B to any third party without having a written
agreement with such third party concerning the confidentiality
of such information.
v) No representation or warranty by Walker contained
in this Agreement knowingly contains any untrue statement of a
material fact or knowingly omits to state any material fact
required to make the statements herein contained not
misleading.
vi) Walker is fully aware of Business's (as defined
in the Asset Purchase Agreement) business requirements and
intended uses for the Proprietary Information, the Client
List, Database A, and Database B and that the Proprietary
Information, Client List, Database A and Database B shall
satisfy such requirements and is fit for such intended uses.
8. NO OBLIGATION TO SUE OR DEFEND.
The parties agree that Collaborative is not under any obligation to
either sue infringers of the copyrights to Database A or Database B or to defend
Collaborative against infringement claims.
<PAGE> 6
9. INDEMNITY BY WALKER.
Walker shall indemnify and hold Collaborative harmless against all
costs, claims, expenses, injuries, losses, damages and liabilities, including
reasonable attorneys fees, arising from any breach by Walker of the
representations and warranties contained in paragraph 7 of this Agreement.
Collaborative shall indemnify and hold Walker harmless against all costs,
claims, expenses, injuries, losses, damages, liabilities, including reasonable
attorneys fees, arising from or on account of Collaborative's use of the license
materials.
10. TERM.
Subject to the terms and provisions of this Agreement, the term of this
Agreement shall commence on the date of this Agreement and shall continue in
perpetuity.
11. REMEDIES.
It is understood that a breach of this Agreement Walker could cause
Collaborative to suffer loss which would not be adequately compensated for by
damages and that in addition to claiming damages in respect of any breach
hereof, Collaborative shall be entitled as a matter of right to seek an
injunction and such right shall be cumulative and in addition to any other
remedies which may be available to Collaborative as a result of the breach.
12. ASSIGNABILITY.
Neither party may assign, license, pledge, mortgage, encumber, or
otherwise transfer any or all of its rights and interests in this Agreement
without prior notice to and the permission of the other party, except that
Collaborative may assign the Agreement to any Affiliate, as such term is defined
in the Asset Purchase Agreement.
13. NOTICES.
All notices shall be in writing delivered as follows:
(a) If to Collaborative, to: Collaborative Holdings, Inc.
20600 Chagrin Boulevard, Suite 1050
Cleveland, Ohio 44122
Attention: Dr. Jeffrey A. Green, President
Facsimile: (216) 491-9494
<PAGE> 7
With a copy to: Calfee, Halter & Griswold
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Attention: Thomas F. McKee, Esq.
Facsimile: (216) 241-0816
(b) If to Walker, to: Walker Information, Inc.
3939 Priority Way South Drive
Indianapolis, Indiana 46240-0972
Attention: Mr. Steven F. Walker,
President and Chief Executive Officer
Facsimile: (317) 843-8904
With a copy to: Ice, Miller, Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attention: Steven K. Humke, Esq.
Facsimile: (317) 236-5817
or to such other address as may have been designated in a prior notice. Notices
may be sent via registered or certified mail, nationally recognized overnight
courier or facsimile. Notices sent by registered or certified mail, return
receipt requested, shall be deemed to have been given two business days after
the day of registration or the date of certification, as the case may be, and
otherwise notices shall be deemed to have been given when received by the person
to whom the notice is addressed or any other person with apparent authority to
accept notices on behalf of the person to whom the notice is addressed.
14. MISCELLANEOUS.
(a) This Agreement shall be construed, interpreted and applied in
accordance with the laws of the State of Ohio, without regard to any conflict of
laws principles thereof.
(b) The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(c) Except for the Asset Purchase Agreement and the Exhibits thereto,
this Agreement constitutes the entire Agreement between the parties with respect
to the subject matter hereof and may not be modified or amended except by an
instrument in writing signed by a duly authorized representative of each party.
(d) If any provision of this Agreement is held to be illegal, invalid,
or unenforceable under present or future laws, then such provision shall be
fully severable, this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this
<PAGE> 8
Agreement shall remain in full force and effect, and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance from this
Agreement.
(e) This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS HEREOF, Walker and Collaborative have caused this Agreement
to be duly executed as of the date first written above.
COLLABORATIVE HOLDINGS, INC.
By: /s/ Jeffrey A. Green
--------------------------------
Jeffrey A. Green, President
("Collaborative")
WALKER INFORMATION, INC.
By: /s/ Steven F. Walker
--------------------------------
Its: President
--------------------------------
("Walker")
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE:
COLLABORATIVE CLINICAL RESEARCH
CLOSES WALKER CLINICAL EVALUATIONS ACQUISITION
Cleveland, Ohio, October 29, 1996--Collaborative Clinical Research,
Inc., (NASDAQ:CCLR) announced that it has completed the acquisition of the
assets of Walker Clinical Evaluations, a division of Walker Information, Inc.
As announced on October 17, 1996, Walker Clinical Evaluations is a
provider of contract research services on pharmaceuticals, medical devices,
foods and other products which must undergo clinical trials prior to receiving
certain regulatory approvals of the Food and Drug Administration and other
Governmental Authorities. The purchase price for the acquired business will be
determined based upon the division's 1996 performance, with a minimum price of
$2.8 million and a maximum of $4.2 million.
Collaborative Clinical Research, Inc., manages a multitherapeutic
network of over 480 affiliated research sites providing access to over 3,700
principal investigators in the United States, Canada and the United Kingdom.
Through its GFI and Walker subsidiaries, the Company operates five research
facilities, conducts Phase I through Phase IV clinical research, and provides
clinical development consulting, reference laboratory and Institutional Review
Board services. In addition, through its investment in Health Research
Innovations, LLC, the Company also provides health economics, outcomes and
disease management research services to the pharmaceutical and biotechnology
industries.
CONTACT: Jeffrey A. Green, Pharm.D., FCP
President and Chief Executive Officer
Collaborative Clinical Research, Inc.
(216) 491-9930
