EXHIBIT 10.13
EXECUTION COPY
STOCK PURCHASE AGREEMENT
Dated as of August 16, 2004
among
__________
BUYER:
Bio-Rad Laboratories, Inc.
__________
AND
_______________
SELLERS:
THE SHAREHOLDERS
NAMED ON THE
SIGNATURE PAGES HEREOF
RELATING TO THE STOCK OF
________________
COMPANY:
MJ GeneWorks, Incorporated
_______________
Legend:
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
1.1 Defined Terms 1
1.2 Other Defined Terms 8
ARTICLE II. PURCHASE AND SALE OF STOCK 9
2.1 Purchase and Sale of Stock 9
2.2 Indemnification Escrow 11
ARTICLE III. POST-CLOSING MATTERS 11
3.1 Post-Closing Calculations 11
3.2 Closing Costs; Transfer Taxes 13
3.3 The Deferred Purchase Price 13
ARTICLE IV. CLOSING 14
4.1 Closing 14
4.2 Deliveries at Closing 14
4.3 Other Closing Transactions 14
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE
SUBJECT COMPANIES AND THE SHAREHOLDERS 15
5.1. Organization; Capitalization 15
5.2 Authorization 16
5.3 Title to Assets 16
5.4 Intellectual Property Rights 17
5.5 Facility Leases 18
5.6 Contracts and Commitments 19
5.7 No Conflict of Violation 21
5.8 Financial Statements 21
5.9 Absence of Certain Changes or Events 22
5.10 Liabilities 24
5.11 Accounts Receivable 24
5.12 Inventories 25
5.13 Litigation 25
5.14 Labor Matters 25
5.15 Compliance with Law; Permits 26
5.16 Tax Matters 26
5.17 Severance Arrangements 28
5.18 Insurance 28
5.19 Purchase Commitments and Outstanding Bids 29
5.20 Reserved 29
5.21 Customers and Suppliers 29
5.22 Bank Accounts 29
5.23 Environmental Matters 29
5.24 Employee Benefit Plans 32
5.25 No Brokers 35
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5.26 No Other Agreements to Sell the Assets or Capital Stock
of such Subject 35
5.27 Material Misstatements Or Omissions 35
5.28 Reserved 35
5.29 Product Returns, Product Liability
and Product Warranty 35
5.30 Line of Credit 35
ARTICLE VI. REPRESENTATIONS AND WARRANTIES AND
COVENANTS OF BUYER 36
6.1 Organization of Buyer 36
6.2 Authorization 36
6.3 No Conflict or Violation 36
6.4 Consents and Approvals 36
6.5 Buyer Knowledge of Breach 36
6.6 Reserved 36
6.7 Canadian Employees 36
6.8 Bankruptcy 36
6.9 Facility Side Letters; Simson Agreement; Etc. 36
ARTICLE VII. COVENANTS OF THE SUBJECT COMPANIES,
THE SHAREHOLDERS AND BUYER 38
7.1 Maintenance of Business Prior to Closing 38
7.2 Reserved 38
7.3 Environmental 38
7.4 Consents and Commercially Reasonable Efforts 39
7.5 Financial Statements 39
7.6 Employee Matters 39
7.7 Reserved 39
7.8 No Mergers, Consolidations, Sale of Stock, Etc. 39
7.9 Litigation Escrow 40
7.10 Reserved 40
7.11 Line of Credit 40
7.12 Shareholders' Loans 40
7.13 Confidentiality 40
7.14 Section 338(h)(10) Election; 2004 Stockholder Tax
Liability 41
7.15 Reserved 43
7.16 Filings 43
7.17 401(k) Plan 43
7.18 Colonnade Apartment 43
7.19 Additional Transfer of Assets 44
7.20 Jeanette Finney 45
ARTICLE VIII.CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS 46
8.1 Representations, Warranties and Covenants 46
8.2 Consents 46
8.3 No Governmental Proceedings of Litigation 46
8.4 Opinion of Counsel 46
8.5 Certificates 46
8.6 Consulting Agreements 46
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ARTICLE IX. CONDITIONS TO BUYER'S OBLIGATIONS 46
9.1 Representations, Warranties and Covenants 47
9.2 Consents 47
9.3 No Governmental Proceedings or Litigation 47
9.4 Opinion of Counsel 47
9.5 Certificates 47
9.6 Reserved 48
9.7 Reserved 48
9.8 Escrow Agreements 48
9.9 Consulting Agreements 48
9.10 Reserved 48
9.11 Reserved 48
9.12 Tax Matters 48
9.13 Endorsement of Loans 48
9.14 Financial Statements 48
ARTICLE X. COVENANT NO TO COMPETE 48
ARTICLE XI. ACTIONS BY THE SHAREHOLDERS AND BUYER
AFTER THE CLOSING 50
11.1 Books and Records 50
11.2 Survival of Representations, Etc. 50
11.3 Indemnifications 51
11.4 Further Assurances 53
ARTICLE XII. MISCELLANEOUS 54
12.1 Termination 54
12.2 Assignment 54
12.3 Notices; Transfer of Funds 54
12.4 Choice of Law; Service of Process 55
12.5 Entire Agreement; Amendments and Waivers 56
12.6 Multiple Counterparts 56
12.7 Expenses 56
12.8 Invalidity 56
12.9 Titles 56
12.10 Publicity 56
12.11 Burden and Benefit 56
12.12 Cumulative Remedies 56
EXHIBITS
Exhibit 2.2(a) - Indemnification Escrow Agreement
Exhibit 4.3(c) - Consulting Agreement
Exhibit 4.3(d) - Facility Side Letters
Exhibit 6.8 - Common Interest - Confidentiality Agreement
Exhibit 7.19 - Severance Escrow Agreement
Exhibit 8.4 - Opinion of Counsel - Buyer
Exhibit 9.4 - Opinion of Counsel - Seller
Exhibit 11.3 - Simson Letter Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of August 16, 2004 by
and among BIO-RAD LABORATORIES, INC., a Delaware corporation
("Buyer"), MJ GENEWORKS, INCORPORATED, a Wisconsin corporation
("MJ GeneWorks"); and together with its subsidiaries MJ Research,
Incorporated, a Massachusetts corporation ("MJ Research"), MJ
BioWorks, Inc., a Delaware corporation ("MJ BioWorks"), and MJ
Japan, K.K., a Japanese company ("MJ Japan"), sometimes referred
to herein each as a "Subject Company" and collectively as the
"Subject Companies"), and MICHAEL J. FINNEY and JOHN D. FINNEY
(individually, a "Shareholder," and collectively, the
"Shareholders").
RECITALS
A. MJ Research, MJ BioWorks and MJ Japan are wholly-
owned subsidiaries of MJ GeneWorks.
B. Buyer desires to purchase from the Shareholders,
and the Shareholders desire to sell to Buyer, all of the issued
and outstanding capital stock of MJ GeneWorks (and thus
indirectly all of the issued and outstanding capital stock of MJ
Research, MJ BioWorks and MJ Japan) on the terms and conditions
contained herein (the "Acquisition").
C. In connection with the Acquisition, the
Shareholders are willing to be bound by a covenant not to compete
with Buyer, on the terms and subject to the conditions contained
herein.
D. In connection with the Acquisition, the
Shareholders are willing to indemnify Buyer, and Buyer is willing
to indemnify the Shareholders, against certain liabilities they
may incur as a result of the Acquisition, on the terms and
subject to the conditions contained herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants
and promises contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below
shall have the following meanings. Any of these terms, unless
the context otherwise requires, may be used in the singular or
plural depending upon the reference.
"2003 Balance Sheet Date" shall mean as at December 31,
2003.
"2003 Balance Sheet" shall mean the unaudited balance
sheets of the Subject Companies as at the 2003 Balance Sheet
Date.
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"2003 Financial Statements" shall mean the 2003 Balance
Sheet and the unaudited statements of income, retained earnings
and cash flows of the Subject Companies for the period ended
December 31, 2003.
[**]
[**]
[**]
"Assets" shall mean, with respect to each Subject
Company, all of such Subject Company's right, title and interest
in and to all properties, assets and rights of any kind, whether
tangible or intangible, real or personal, owned by such Subject
Company or in which such Subject Company has any interest
whatsoever, including without limitation, the following:
(a) accounts and notes receivable, refunds or deposits
and prepaid expenses (including, without limitation, any prepaid
insurance premiums) of such Subject Company;
(b) cash and cash equivalents of such Subject Company;
(c) all Contract Rights of such Subject Company;
(d) all Leasehold Estates of such Subject Company;
(e) all Leasehold Improvements of such Subject Company;
(f) all Fixtures and Equipment of such Subject Company;
(g) all Inventory of such Subject Company;
(h) all Books and Records of such Subject Company;
(i) all Intellectual Property Rights of such Subject Company;
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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(j) all Claims of such Subject Company;
(k) the Insurance Policies of such Subject Company to
the extent Buyer desires such policies to be assigned; and
(l) all Permits of such Subject Company.
"Bankruptcy Proceeding" shall mean the Chapter 11
bankruptcy proceeding of MJ Research taking place before the
Bankruptcy Court in Reno, Nevada.
"Books and Records" shall mean, with respect to each
Subject Company, all records pertaining to such Subject Company,
including, without limitation, all corporate books and records of
such Subject Company.
"Business" shall mean (a) the design, manufacture,
direct sales and distribution through third parties of (i)
instrumentation used for thermal cycling or real time PCR nucleic
acid detection, and (ii) other instrumentation generally
incorporating thermal cyclers together with florescence detection
systems or similar optical scanning technologies; and (b) the
development, manufacturing and licensing of DNA polymerase
reagents used for the PCR process, or DNA polymerase reagents
used for the detection of real time PCR reaction, but in all
events shall not include any of the following activities:
(1) The businesses in which Orion Genomics is
currently engaged or in which it has firm plans to engage, which
shall be limited to: reagents, methods and services relating to
DNA methylation in the research, agriculture, and diagnostic
markets, even though those might make use of (provided that they
do not design, manufacture, sell, or distribute) thermal cyclers
and real time thermal cyclers, and (provided they do not design
or manufacture) DNA polymerase reagents for real-time PCR
detection.
(2) The businesses in which Cardinal Diagnostics
is currently engaged or in which it has firm plans to engage,
which shall be limited to: computerized methods and software for
DNA-based diagnostics, including licensing of intellectual
property rights concerning such methods and software; as well as
licensing of such intellectual property rights as may be acquired
in the future by Cardinal.
(3) The businesses in which Geneworks Pty. Ltd.
is currently engaged or in which they have firm plans to engage,
which shall be limited to: commercial oligonucleotide synthesis;
the importation into Australia or New Zealand and/or resale of
equipment and supplies for the biological sciences in those
countries, including reagents, but with respect to equipment for
PCR and real-time PCR, including equipment manufactured by or for
a Subject Company, only until the termination or expiration of
the Distribution Agreement dated June 1, 2003 by and between
GeneWorks Pty. Ltd. and MJ Research.
(4) The businesses in which ActivBiotics is
currently engaged or in which it has firm plans to engage, which
shall be limited to: drug discovery, testing, licensing, and
marketing.
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(5) The businesses in which ManifesTech, Inc. is
currently engaged or in which it has firm plans to engage, which
shall be limited to: inventory control for medical devices and
similar items.
"Claims" shall mean, with respect to each Subject
Company, all claims, causes of action, choses in action, rights
of recovery and rights of set-off of whatever kind or description
against any person or entity arising out of or relating to the
Assets of such Subject Company or relating to such Subject
Company.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as
the same may be amended from time to time.
"Contract" shall mean, with respect to each Subject
Company, any of the agreements, contracts, Leases, notes, loans,
evidence of indebtedness, purchase orders, letters of credit,
franchise agreements, undertakings, covenants not to compete,
employment agreements, licenses, instruments, obligations,
commitments, policies, binding purchase and sales orders, binding
quotations and other executory commitments to which such Subject
Company is a party or to which any of its Assets are subject,
whether oral or written, express or implied, including, without
limitation, those described in Schedule 5.6.
"Contract Rights" shall mean, with respect to each
Subject Company, all of such Subject Company's rights and
obligations under the Contracts of such Subject Company.
"Disclosure Schedule" shall mean a schedule to this
Agreement, together with the Statement of Financial Affairs and
the Schedule of Assets and Liabilities, which sets forth the
exceptions to the representations and warranties contained in
Article V hereof and certain other information called for by
Article V hereof and other provisions of this Agreement or any
Other Transaction Document. Unless otherwise specified, each
reference in this Agreement or in any Other Transaction Document
to any numbered schedule is a reference to that numbered schedule
which is included in the Disclosure Schedule. For purposes of
this Agreement and the Other Transaction Documents, the
"Disclosure Schedules" shall mean the Disclosure Schedules
attached to this Agreement and the Statement of Financial Affairs
and the Schedule of Assets and Liabilities as of the execution of
this Agreement except as otherwise agreed to in writing by the
Buyer and the Shareholders. A disclosure made in any Disclosure
Schedule shall be deemed to be a disclosure for the purpose of
each other relevant Disclosure Schedule, provided that such
disclosure must be reasonably apparent as a disclosure relating
to such other Disclosure Schedule.
"Encumbrances" shall mean any claim, lien, pledge,
option, charge, easement, security interest, right-of-way,
encumbrance or other right of third parties.
"Facilities" shall mean, with respect to each Subject
Company, the plants, offices, manufacturing facilities, stores,
warehouses, administration buildings, and all other real property
and related facilities that are identified or listed under such
Subject Company's name on Schedule 5.5.
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"Facility Leases" shall mean, with respect to each
Subject Company, all of the Leases of Facilities listed under
such Subject Company's name on Schedule 5.5.
"Fixtures and Equipment" shall mean, with respect to
each Subject Company, all of the furniture, fixtures,
furnishings, machinery and equipment, spare parts, supplies,
Vehicles and other tangible personal property owned by such
Subject Company or used by or held for use by such Subject
Company in its business as of the 2003 Balance Sheet Date plus
all additions, replacements or deletions thereof since the 2003
Balance Sheet Date in the ordinary course of such Subject
Company's business.
"GAAP" shall mean generally accepted accounting
principles in the United States of America, as in effect from
time to time.
"Insurance Policies" shall mean, with respect to each
Subject Company, the insurance policies relating to the Assets of
such Subject Company or relating to such Subject Company listed
under such Subject Company's name on Schedule 5.18.
"Inventory" shall mean, with respect to each Subject
Company, (a) all of such Subject Company's inventories within the
Facilities of such Subject Company held for resale or lease in
the ordinary course of such Subject Company's business to its
customers, (b) all of such Subject Company's inventories of
computers and other equipment that are leased to and in the
possession of such Subject Company's customers, (c) all office
supplies and similar materials of such Subject Company located in
the Facilities of such Subject Company, and (d) all of the raw
materials, work in process, spare parts, finished products,
wrapping, supply and packaging items, employee uniforms and
similar items of such Subject Company, in the Facilities of such
Subject Company or wherever otherwise located.
"Joint Defense Agreement" means the Joint Defense and
Prosecution Agreement, dated as of May 20, 2004, by and among MJ
Research, Michael Finney and John Finney and their counsel, and
Buyer and its counsel.
"Knowledge" or "known", whether or not capitalized,
when used in connection with MJ GeneWorks, shall mean the
knowledge, after reasonable inquiry, of John Finney, Michael
Finney, Michael Mortillaro, Peter Vander Horn, Sam Peper, Mark
Lynch and Jennifer Tweet and Paul Lariviere.
"Leasehold Estates" shall mean, with respect to each
Subject Company, all of such Subject Company's rights and
obligations as lessee under the Leases of such Subject Company
listed on the Disclosure Schedule.
"Leasehold Improvements" shall mean, with respect to
each Subject Company, all of such Subject Company's leasehold
improvements situated in or on the property leased under the
Leases of such Subject Company.
"Leases" shall mean, with respect to each Subject
Company, all of the leases and subleases of such Subject Company
listed under such Subject Company's name on the Disclosure
Schedule and all other leases and subleases relating to the
Assets of such Subject Company that are not required to be
scheduled pursuant to this Agreement.
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"Litigation Matters" shall mean the[**], the
Senior Executive Dispute, the Qui Tam Dispute and the Simson
Litigation, and any of them.
"Material Adverse Effect" shall mean, with respect to
the Subject Companies taken as a whole, a material adverse effect
on (i) the business, operations, Properties, Assets, liabilities
or financial condition of the Subject Companies taken as a whole
or (ii) the right or ability of MJ GeneWorks to consummate the
transactions contemplated hereby; provided that "Material Adverse
Effect" specifically excludes any change relating to the [**]
the Qui Tam Dispute or the Bankruptcy Proceeding.
"Other Transaction Documents" means each of the
following documents, including, without limitation, the
attachments and schedules thereto:
(a) Litigation Escrow Agreement;
(b) Indemnification Escrow Agreement;
(c) Facility Side Letters;
(d) Endorsement Allonges;
(e) Consulting Agreement (John Finney);
(f) Consulting Agreement (Michael Finney);
(g) Joint Defense Agreement; and
(i) Side Letter.
"Permits" shall mean, with respect to each Subject
Company, all licenses, permits and other governmental
authorizations necessary to carry on the business of such Subject
Company as currently operated or as such Subject Company
proposes, prior to the Closing Date, to presently operate.
"Person" means a natural person or any association,
relationship or artificial person or entity through or by means
of which an enterprise or activity may be conducted, including a
corporation (whether for-profit or not-for-profit), partnership
(whether general or limited), limited liability company,
professional association or corporation, joint venture, estate,
trust, cooperative, association, foundation, union, syndicate,
league, consortium, coalition, committee, society, firm, company
or other enterprise, association, organization or governmental
body.
"Product Liability/Warranty Claims" shall mean product
liability claims and product warranty claims made against a
Subject Company for products sold, or services rendered, by such
Subject Company prior to the Closing.
[ ** ]
[**] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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[ ** ]
"Qui Tam Dispute" shall mean the proceeding entitled
United States ex rel. MJ Research, Inc. v. Applera Corp., et al.,
Case No. CV 03-5429 MRP (Ex) (C.D. Cal.), Appeal No. 03-57229
(9th Cir.).
"Roche" shall mean Roche Molecular Systems, Inc.
"Schedule of Assets and Liabilities" shall mean the
schedule of assets and liabilities filed by MJ Research in the
Bankruptcy Proceeding, as amended, including as amended by
Schedule 1.1-A.
"Side Letter" means that certain Side Letter executed
on the date hereof by and among Buyer, the Subject Companies and
the Shareholders.
"Statement of Financial Affairs" shall mean the
statement of financial affairs, dated May 7, 2004.
"Subsidiary" shall mean, with respect to each Subject
Company, (i) any corporation in an unbroken chain of corporations
beginning with such Subject Company if each of the corporations
other than the last corporation in the unbroken chain then owns
stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporation in such
chain; (ii) any partnership in which such Subject Company is a
general partner; or (iii) any partnership in which such Subject
Company possesses a 50% or greater interest in the total capital
or total income of such partnership.
"Tax" or "Taxes" shall mean, with respect to each
Subject Company, all federal, state, local, foreign and other
taxes, assessments or other government charges, including,
without limitation, income, estimated income, business,
occupation, franchise, property, sales, transfer, use,
employment, commercial rent or withholding taxes, including
interest, penalties and additions in connection therewith for
which such Subject Company may be liable.
"Vehicles" shall mean, with respect to each Subject
Company, all automobiles and other vehicles owned or leased by
such Subject Company as listed under such Subject Company's name
on Schedule 1.1.
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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1.2 Other Defined Terms. In addition to the terms
defined in the Recitals to this Agreement and Section 1.1, the
following terms shall have the meanings defined for such terms
in the Sections set forth below:
Term Section
Accounting Firm 3.1
Actions 5.13
Adjusted Reserves 5.29
Adjustments 3.1
Aggregate Settlement Amount 3.3(c)(i)
Buyer Payment 7.15
Buyer's Accountants 3.1
Buyer Employees 7.19
Buyer 401(k) Plan 7.17
Closing 4.1
Closing Date 4.1
Closing Adjusted Net Worth 3.1
Closing Date Balance Sheet 3.1
Closing Date Income Statement 3.1
Closing Date Financial Statement 3.1
Computer Software 5.4(b)
Confidential Information Art. X
Consulting Agreements 4.3(c)
Controlling Shareholder Art. X
Damages 11.3(a)
Deferred Purchase Price 2.1
Developments Art. X
Difference 7.14(c)
Dismissal of the Bankruptcy Proceeding 6.9
Employee Plan 5.24(a)(i)
Endorsement Allonges 9.13
Environmental Claims 5.23(f)(ii)
Environmental Conditions 5.23(f)(iii)
ERISA 5.24(a)(ii)
ERISA Affiliate 5.24(a)(iii)
Environmental Laws 5.23(f)(i)
Facility Side Letters 4.3(d)
Final Order 6.9
Gross Up Amount 7.14
Hazardous Substances 5.23(f)(iv)
Intellectual Property Rights 5.4
Indemnification Amount 2.1
Indemnification Escrow Agreement 2.2(a)
IRS 7.17
2004 Interim Financial Statements 7.5
KERP 7.15
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KERP Payment 7.15
Leased Property 5.5
Line of Credit 5.30
Line of Credit Maximum Amount 5.30
Litigation Escrow 7.9
MJ GeneWorks 401(k) Plan 7.17
Multiemployer Plan 5.24(a)(iv)
New Products 5.4
Non-competition Period Art.X
PBGC 5.24(a)(v)
Pension Plan 5.24(a)(vi)
Personnel 5.9(c)(i)
Purchase Price 2.1
Section 338(h)(10) Election 7.14
Senior Executive Dispute Schedule 5.13
Severance Costs 7.19
Shareholders' Accountants 3.1
Shareholders' Loans 7.12
Simson Agreement 11.3(d)
Simson Litigation 11.3(a)
Territory Art. X
Third-Party Purchaser 7.19
30-Day Transfer Preparation Period 7.19
Transfer 7.19
Transfer Net Profit 7.19
Transferred Assets 7.19
Warn Act 7.6(a)
Welfare Plan 5.24(a)(viii)
ARTICLE II.
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Stock.
(a) Transfer of Stock. Upon the terms and subject to
the conditions herein set forth, on the Closing Date each of the
Shareholders shall sell, convey, transfer, assign, and deliver to
Buyer, and Buyer shall purchase from such Shareholders, all of
the outstanding shares of capital stock of MJ GeneWorks as set
forth on Schedule 5.1, in exchange for the Purchase Price and the
other covenants and obligations of Buyer set forth in this
Agreement.
(b) Purchase Price. Upon the terms and subject to the
conditions herein set forth, in consideration for the transfer of
the capital stock of MJ GeneWorks pursuant to Section 2.1(a), the
Shareholders are entitled to receive (1) the Closing Payment (as
defined below), (2) a contingent deferred payment of up to $10
million, subject to the terms and conditions of the
Indemnification Escrow Agreement as set forth in clause (c)(ii)
below (the "Indemnification Amount"), (3) the contingent deferred
payment of up to [ ** ] that
[**] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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represents the Deferred Purchase Price as set forth in clause (c)(iii) below,
(4) certain contingent payments to be made pursuant to
Section 7.14 (the "338(h)(10) Payments"), and (5) a contingent
deferred payment equal to 50% of the Transfer Net Profits as
determined pursuant to Section 7.19, plus that portion of the
$500,000 released to Shareholders from the Severance Escrow
pursuant to Section 7.19 (such payments pursuant to Section 7.19
are referred to herein as the "MJ Japan Payments") (all such
payments are sometimes referred to herein collectively as the
"Purchase Price").
(c) Delivery of Purchase Price. Upon the terms and
subject to the conditions set forth herein, at the Closing or
thereafter, as applicable, the Buyer will take the following
actions:
(i) At Closing, Buyer will deliver to Greenberg
Traurig, on behalf of the Shareholders, via wire transfer, a
payment equal to (A) $22 million, minus (B) the total amount of
the [ ** ] which, in the aggregate, exceed $3
million (the "Closing Payment"). A portion of the Closing
Payment, equal to $500,000, will be deemed transferred directly
by Buyer to Greenberg Traurig, to be held on behalf of Buyer,
pursuant to the Severance Escrow Agreement. The remainder of the
Closing Payment will be deemed held on behalf of Shareholders.
(ii) At the Closing, Buyer shall deposit with
Wells Fargo, as Indemnification Escrow Agent (as defined in
Section 2.2(b)), the $10 million Indemnification Amount pursuant
to the escrow provided for in Section 2.2.
(iii) Buyer agrees, by delivery of this
Agreement, to pay the Shareholders a contingent deferred amount
of up to a maximum of [ ** ] , in the manner and at the
times, and subject to any additions or reductions, as are
described in Section 3.3(c) (the "Deferred Purchase Price").
(iv) At or after Closing, Buyer will deliver to
the third party payees the amounts of the [ ** ] as
provided for in Section 4.3(b) below, and shall account for such
payments to the Shareholders. All such payments shall be made as
soon as commercially reasonable (consistent with Bio-Rad's
ordinary course billing practices and except where disputed in
good faith) after MJ Research is dismissed from Bankruptcy. In
the event that the amount of the [ ** ] is reduced
for any reason, including the agreement of any third party payee
to accept less than the full amount listed under Section 4.3(b),
the Buyer shall promptly pay the full amount of such reduction
actually credited to Buyer to the Shareholders as an additional
payment pursuant to Section 2.1(c)(i), above.
(v) Buyer will pay, at each of the times
specified or required by Section 7.14, the applicable 338(h)(10)
Payments to each Shareholder.
(vi) Out of the Closing Payment delivered to
Greenberg Traurig pursuant to Section 2.1(c)(1), $500,000 will be
deemed held for the benefit of the Buyer, pursuant to the
Severance Escrow Agreement, and shall be treated by all parties
for all purposes as a contingent deferred payment. Any portion
of the Severance Escrow that becomes payable to the Shareholders
under the terms of Section 7.19, and, if there is a Transfer Net
Profit, the 50%
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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of Transfer Net Profits payable to the Shareholders pursuant to
Section 7.19, shall be deemed payments received at the time actually
or constructively released to the Shareholders.
(d) Overall Payment Limitation. Notwithstanding any
other provision to the contrary, the maximum aggregate Purchase
Price payable hereunder, exclusive of interest payments or
original issue discount, shall be [ ** ] .
(e) Deferred Salary to Shareholders. Upon the
dismissal of MJ Research from Bankruptcy, MJ Research shall pay
to each of the Shareholders his accrued but unpaid salary for
the periods from March 29, 2004, which amount is agreed to be,
in the aggregate, $155,106.20, of which $93,567 is payable as
compensation to John Finney and $61,539 is payable as
compensation to Michael Finney.
2.2 Indemnification Escrow.
(a) Indemnification Escrow Agreement. In order to
establish a procedure for the satisfaction of any claims by Buyer
for indemnification pursuant to Section 11.3 hereof, the
Shareholders shall enter into an escrow agreement, substantially
in the form of Exhibit 2.2(a) hereto (the "Indemnification Escrow
Agreement"), with Buyer pursuant to which the Indemnification
Amount shall be held in escrow for a period ending thirty-six
(36) months from the Closing Date; provided that the parties will
confer and negotiate in good faith on the first anniversary date
and the second anniversary date of the Closing to determine
whether the amount remaining in the Indemnification Escrow can be
reduced and distributed to the Shareholders before the end of the
thirty-six month escrow period.
(b) Deliveries to Indemnification Escrow Agent. At
Closing, the Buyer will deliver to the Indemnification Escrow
Agent (as such term is defined in the Indemnification Escrow
Agreement) the Indemnification Amount.
ARTICLE III.
POST-CLOSING MATTERS
3.1 Post-Closing Calculations.
(a) As promptly as practicable after the Closing Date,
Buyer will prepare in accordance with GAAP (as GAAP has been
historically applied by the Subject Companies) and deliver to the
Shareholders consolidated financial statements of the Subject
Companies as of the close of business on the Closing Date (the
"Closing Date Financial Statement"), including, without
limitation, the related balance sheets (the "Closing Date Balance
Sheet") and the related income statements (the "Closing Date
Income Statement"); provided that such Closing date Financial
Statement, Closing Date Balance Sheet or Closing Date Income
Statement shall be adjusted to delete the following liabilities
or other obligations (i) amounts representing any [ ** ] or [ ** ]
(ii) any reserves or other entries representing any [ ** ](it being
understood that such adjustment shall not be made for accruals
shown on the books of MJ Research for anticipated license fees
from May 1, 2004 under the TCMA license agreement or the real
time license agreement), (iii) amounts representing any Shareholder
Loans listed on Schedule 7.12, (iv) amounts relating to the Simson
Litigation or the
[**] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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Senior Executive Dispute, if any, and
(v) amounts to be paid by the Shareholders pursuant to this
Agreement (including, without limitation, under their
indemnification obligations pursuant to this Agreement) which
represent items included on the Closing Date Financial
Statements, (collectively, the "Adjustments"). In the event that
the Shareholders shall have delivered, within thirty (30) days
after the date on which the Closing Date Financial Statements are
delivered to the Shareholders, a written notice to Buyer
requesting that such Closing Date Financial Statements be
audited, Buyer shall deliver as promptly as commercially
reasonable a report of Deloitte & Touche LLP, or such other
nationally recognized firm of independent public accountants as
may be chosen by Buyer (but not including Price Waterhouse
Coopers or its successors and assigns) ("Buyer's Accountants"),
the cost of which shall be borne by Buyer, which report shall
note any changes that need to be made to the Closing Date
Financial Statements in order that such Closing Date Financial
Statements present fairly in all material respects, in accordance
with GAAP (as GAAP has been historically applied by the Subject
Companies), the financial condition of such Subject Company as of
the close of business on the Closing Date, as adjusted by the
Adjustments. The Shareholders and a firm of independent public
accountants designated by the Shareholders (the "Shareholders'
Accountants") will be entitled to reasonable access during normal
business hours to the relevant records and working papers of the
Subject Companies, Buyer and Buyer's Accountants to aid in their
review of the Closing Date Financial Statements. The Closing
Date Financial Statements shall be deemed to be accepted by each
of the Shareholders and shall be conclusive for the purposes of
the adjustment described in Section 3.1(b) hereof with respect to
the Subject Companies except to the extent, if any, that the
Shareholders' Accountants shall have delivered, within thirty
(30) days after the date on which the Closing Date Financial
Statements are delivered to the Shareholders or, in the event
that the Shareholders have requested that the Closing Date
Financial Statements be accompanied by a report of Buyer's
Accountant, within thirty (30) days after the date on which such
written report is delivered to the Shareholders, a written notice
to Buyer stating each and every item to which the Shareholders
take exception, specifying in detail the nature and extent of any
such exception. If a change proposed by the Shareholders is
disputed by Buyer, then the Shareholders and Buyer shall
negotiate in good faith to resolve such dispute. If, after a
period of thirty (30) days following the date on which the
Shareholders give Buyer notice of any such proposed change, any
such proposed change still remains disputed, then Buyer's
Accountants and Shareholders' Accountants shall together choose
an independent firm of public accountants of nationally
recognized standing (the "Accounting Firm") to resolve any
remaining disputes. The Accounting Firm shall act as an
arbitrator to determine, based solely on presentations by the
Shareholders and Buyer, and not by independent review, only those
issues still in dispute. The decision of the Accounting Firm
shall be final and binding and shall be in accordance with the
provisions of this Section 3.1(a). The fees and expenses of the
Accounting Firm, if any, shall be paid equally by Buyer and the
Shareholders; provided, however, that, if the Accounting Firm
determines that either party's positions on all disputed issues
are correct in all respects, then the other party shall pay the
reasonable fees and expenses of the Accounting Firm in connection
with the resolution of such disputes. For purposes of the
remainder of this Agreement, "Closing Date Financial Statements",
"Closing Date Balance Sheets" and "Closing Date Income
Statements" shall mean the Closing Date Financial Statements,
Closing Date Balance Sheets and Closing Date Income Statements as
modified by agreement of the parties, whether or not with the
assistance of the Buyer's Accountants or the Shareholders'
Accountants or by the determinations of the Accounting Firm.
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"Closing Adjusted Net Worth" shall mean, with respect
to the Subject Companies taken as a whole, the amount by which
the total assets exceed the total liabilities of the Subject
Companies in the aggregate, as set forth on the Closing Date
Balance Sheet.
In the event that the Closing Adjusted Net Worth is
less than zero, the Shareholders shall pay to Buyer the amount by
which the Closing Adjusted Net Worth is less than zero.
3.2 Closing Costs; Transfer Taxes. The Shareholders
shall be responsible for any stock transfer taxes and any sales,
use or other taxes imposed by reason of the transfer of the
capital stock of MJ GeneWorks to Buyer as provided hereunder and
any deficiency, interest or penalty asserted with respect
thereto.
3.3 The Deferred Purchase Price.
(a) From and after the Closing, Buyer shall properly
account for and track the expenses and costs associated with the
[ ** ] and the [ ** ] . The
Shareholders shall promptly send Buyer all invoices, receipts or
other documents relating to the [ ** ]
and the [ ** ] and otherwise
cooperate with the reasonable requests of Buyer in accounting for
and keeping track of such expenses and costs.
(b) As promptly as practicable after the final
resolution of the [ ** ] and payment in full
settlement of the [ ** ] and the
[ ** ] , but in any event
within the latter of (w) ninety (90) days after the execution of
a settlement agreement relating to the [ ** ]
, (x) if the settlement is contingent upon an action to be taken
by [ ** ], upon satisfaction of such contingency, (y) if the
settlement is contingent upon an action to be taken by Bio-Rad,
upon the passage of a commercially reasonable period of time for
the taking of such action, and (z) if the settlement is
contingent upon an action to be taken by any party other than
[ ** ] or Bio-Rad, upon the passage of a commercially reasonable
period of time, Buyer shall prepare and deliver to the
Shareholders a statement (the "Deferred Purchase Price
Statement") indicating:
(i) The total amount paid to fully settle the
[ ** ] ;
(ii) The total amount paid to fully settle the
[ ** ] ; and
(iii) Buyer's calculation of the Deferred
Purchase Price pursuant to the formula set forth in Section
3.3(c) below.
(c) The Deferred Purchase Price shall be calculated as
follows:
(i) if the sum of the [ ** ] and
the [ ** ] in the aggregate
(the "Aggregate Settlement Amount") is equal to or less than
[ ** ] , the Deferred Purchase Price shall be
[ ** ] plus accrued interest on the Deferred
Purchase Price from and after the Closing at the Applicable
Federal Rate as defined in IRS Code Section 1274(d);
[**] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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(ii) if the Aggregate Settlement Amount is between
[ ** ] and [ ** ] , the Deferred
Purchase Price shall be an amount equal to the difference
between [ ** ] and the Aggregate Settlement
Amount, plus accrued interest on the Deferred Purchase Price
from and after the Closing at the Applicable Federal Rate as
defined in IRS Code Section 1274(d); and
(iii) if the Aggregate Settlement Amount is
equal to or greater than [ ** ], the Deferred Purchase
Price shall be zero.
Promptly after the date of delivery of the Deferred Purchase
Price Statement, Buyer shall deliver the Deferred Purchase Price,
if any, to the Shareholders in cash by wire transfer of
immediately available funds in the percentages set forth on
Schedule 2.1(c) and to the accounts designated by the
Shareholders set forth on Schedule 2.1(c).
ARTICLE IV.
CLOSING
4.1 Closing. Upon the terms and subject to the
conditions set forth herein, and subject to Section 12.1, the
closing of the transactions contemplated herein (the "Closing")
shall be held at 10:00 a.m. local time on the first business day
following the business day in which all of the conditions set
forth in Articles VIII and IX are satisfied (the "Closing Date")
at the offices of Buyer, 1000 Alfred Nobel Drive, Hercules,
California, unless the parties hereto otherwise agree.
4.2 Deliveries at Closing.
(a) Stock Certificates. To effect the Stock Purchase,
the Shareholders shall, on the Closing Date, deliver to Buyer
certificate(s) evidencing all of the issued and outstanding
shares of capital stock of MJ GeneWorks, free and clear of any
Encumbrances of any nature whatsoever, duly endorsed in blank for
transfer or accompanied by stock powers duly executed in blank,
together with evidence of the payment of any applicable stock
transfer taxes.
(b) Certificates; Opinions. At the Closing, Buyer and
the Shareholders shall deliver the certificates, opinions of
counsel and other items described in Articles VIII and IX.
4.3 Other Closing Transactions.
(a) Payment of Closing Payment. At the Closing, Buyer
shall deliver the Closing Payment as provided in Section
2.1(c)(i).
(b) Payment of the [ ** ]. At the Closing,
the Shareholders shall deliver to Buyer a statement
which provides a complete and accurate accounting of all the
as provided in Schedule 4.3(b). The Shareholders shall
[ ** ] jointly and severally indemnify, save and hold harmless
Buyer and its affiliates and subsidiaries from and
against any and all Damages incurred if the actual [ ** ]
required to be paid by Buyer or any Subject Company
exceed $4,195,613.39 in the aggregate.
[**] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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(c) Consulting Agreements. At the Closing, Buyer
shall enter into consulting agreements with each of the
Shareholders, substantially in the form of Exhibit 4.3(c) hereto
(the "Consulting Agreements"), pursuant to Section 8.5.
(d) Facility Side Letters. At the Closing, the
Shareholders, Buyer and MJ GeneWorks shall enter into the
Facility Side Letters, substantially in the forms of
Exhibit 4.3(d) hereto (the "Facility Side Letters"), pursuant to
Section 9.7.
(e) Escrow Agreements. At the Closing, the Buyer and
Shareholders shall enter into the Indemnification Escrow
Agreement, pursuant to Section 9.8, shall enter into the
Severance Escrow Agreement, pursuant to Section 7.19, and, to the
extent the parties have not already done so, shall enter into the
agreement establishing the Litigation Escrow with Buyer pursuant
to Section 7.9, and Buyer shall make the deposits (to the extent
not already done) into the escrows thereunder.
(f) Endorsement Allonges. At the Closing, each of the
Shareholders shall deliver to Buyer the Endorsement Allonges,
pursuant to Section 9.13.
(g) Other Closing Transactions. At the Closing, each
of the parties shall take such other actions required hereby to
be performed by it prior to or on the Closing Date, including,
without limitation, satisfying the conditions set forth in
Articles VIII and IX.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE SUBJECT
COMPANIES AND THE SHAREHOLDERS
Each of the Shareholders and MJ GeneWorks hereby
jointly and severally represents and warrants to Buyer that the
following representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct:
5.1 Organization; Capitalization. (a) Each Subject
Company is duly organized, validly existing and in good standing
under the laws of the state or country of its incorporation, has
full corporate power and authority to conduct its business as it
is currently being conducted and to own and lease its properties
and assets. Such Subject Company is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under
the applicable law as a result of the conduct of its business or
the ownership of its properties except where the failure to be
so qualified and in good standing is not reasonably likely to
have a Material Adverse Effect. Each jurisdiction in which such
Subject Company is qualified to do business as a foreign
corporation is listed on Schedule 5.1. Other than MJ Research,
MJ BioWorks and MJ Japan and as set forth on Schedule 5.1, MJ
GeneWorks does not own capital stock or other equity interests
in any other Person.
(b) The capitalization of each Subject Company is set
forth on Schedule 5.1 hereto. All of such Subject Company's
outstanding shares of capital stock are duly authorized, validly
issued, fully paid and non-assessable. Except as set forth on
Schedule 5.1, each Shareholder represents as to himself that he
has title to all of the outstanding shares of capital
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stock set forth next to his name on Schedule 5.1 hereto free and clear of
all Encumbrances with full right, power and authority to transfer
such shares to Buyer. MJ GeneWorks represents that it has title
to all of the issued and outstanding shares of capital stock of
each of MJ Research, MJ BioWorks and MJ Japan set forth next to
its name on Schedule 5.1 hereto free and clear of all
Encumbrances. Except as set forth on Schedule 5.1, there are no
outstanding subscriptions, calls, commitments, warrants or
options for the purchase of shares of any capital stock or other
equity securities of such Subject Company or any securities
convertible into or exchangeable for shares of capital stock or
other securities issued by such Subject Company, or any other
commitments of any kind for the issuance of additional shares of
capital stock or other securities issued by such Subject Company.
Upon delivery to Buyer, the capital stock of MJ GeneWorks will be
free and clear of all Encumbrances and shall be duly authorized,
validly issued, fully paid and non-assessable.
5.2 Authorization. MJ GeneWorks has all necessary
corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement, to consummate
the transactions contemplated hereby and to perform its
obligations hereunder, and no other proceedings on the part of
such Subject Company are necessary to authorize this Agreement
and the transactions contemplated hereby. Each Shareholder
represents as to himself that he has the requisite power and
authority and has taken all action necessary to execute and
deliver this Agreement, to consummate the transactions
contemplated hereby and to perform his obligations hereunder,
and no other proceedings on the part of such Shareholder are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by MJ GeneWorks and the Shareholders and is a legal,
valid and binding obligation of MJ GeneWorks and such
Shareholders enforceable against each of them in accordance with
its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditors' rights generally and (ii) the
general principles of equity, regardless of whether asserted in
a proceeding in equity or at law. All of the Shareholders have
approved the terms of this Agreement and the transactions
contemplated hereby.
5.3 Title to Assets. Schedule 5.3 identifies all real
and personal property with a book value in excess of $20,000
owned or leased by a Subject Company. Each Subject Company owns
free and clear of any Encumbrances or, as set forth on Schedule
5.3, leases or has rights to use, the Assets set forth on
Schedule 5.3, except for (i) minor liens or Encumbrances that in
the aggregate are not substantial in amount, do not materially
detract from the value of the Assets taken as a whole or
interfere with the present use thereof and have not arisen other
than in the ordinary course of business and (ii) Encumbrances
specifically identified on Schedule 5.3. Except in respect of
the issues raised in connection with[ ** ], the Assets include
all assets necessary for the conduct of the business of each
Subject Company in the ordinary course consistent with past
practice. The Assets have been maintained in accordance
with normal industry practice, are in reasonable operating
condition and repair (except for ordinary wear and
tear). No Subject Company owns any real property.
5.4 Intellectual Property Rights.
(a) "Intellectual Property Rights" shall mean, with
respect to a Subject Company, (x) all of such Subject Company's
registrations of trademarks and of other marks,
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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trade names or other trade rights, and all pending applications for
any such registrations and all of such Subject Company's patents and
registered copyrights and all pending applications therefor; (y)
all computer software used by such Subject Company in the conduct
of its business and/or offered by such Subject Company or any
joint venture in which such Subject Company has an interest to
its customers for use in any material respect in connection with
or as part of a product now or previously sold by such Subject
Company or such joint venture; and (z) all other trademarks and
other marks, trade names and other trade rights and all other
trade secrets, designs, plans, specifications, and other
intellectual property rights of any kind of such Subject Company,
whether or not registered, including, without limitation, all
rights of such Subject Company to use the names MJ GeneWorks, MJ
Research, MJ BioWorks and MJ Japan (and all trade names listed on
Schedule 5.4); but in any event excluding all off-the-shelf
software purchased from third parties.
(b) Schedule 5.4
(i) contains detailed information (including
where applicable the registration number and the date of
registration or application for registration and the name in
which registration was applied for) concerning (x) all of each
Subject Company's registrations of trademarks and of other marks,
trade names or other trade rights, and all pending applications
for any such registrations and all of such Subject Company's
patents and registered copyrights and all pending applications
therefor, and (y) all computer software used by a Subject Company
in the conduct of its business and/or in which a Subject Company
or any joint venture to which such Subject Company has an
interest offers to its customers for use in any material respect
in connection with or as part of a product now sold or sold
within the last three (3) years by such Subject Company
(excluding off-the-shelf software purchased from third parties)
("Computer Software"),
(ii) identifies, to the knowledge of MJ GeneWorks
and the Shareholders, all persons claiming to have a right to any
intellectual property (excluding off-the-shelf software purchased
from third parties) that a Subject Company uses in any material
way in its business, and specifies whether such use is pursuant
to license, sublicense, agreement, permission or over the
objection of such person claiming such right other than in
respect of material intellectual property rights at issue in
connection with the [ ** ],
(iii) identifies, to the knowledge of MJ
GeneWorks and the Shareholders, all persons claiming to have a
right to receive a royalty or similar payment in respect to any
Intellectual Property Rights pursuant to any contractual
arrangements entered into by such Subject Company or otherwise,
and
(iv) lists all proceedings instituted against or
notices received by a Subject Company alleging that such Subject
Company's use of any Intellectual Property Rights infringes upon
or otherwise violates any rights of a third party in or to such
Intellectual Property Rights, which infringement or violation is
reasonably likely to have a Material Adverse Effect.
(c) Except as listed on Schedule 5.4, each Subject
Company (x) owns, or possesses adequate and enforceable licenses
or other rights to use, in each case free and clear of any
pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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whatsoever, all Intellectual Property Rights associated with (i)
products sold prior to the Closing by such Subject Company,
(ii) the MiniCycler 2 and MiniOpticon, in each case as designed and
intended to be marketed as of the Closing (the "New Products") and
(iii) Intellectual Property Rights used prior to the Closing by such
Subject Company; and (y) is not interfering with or infringing upon or
otherwise violating the rights of any third party with respect to
the Intellectual Property Rights associated with (A) products
sold prior to Closing by such Subject Company, (B) New Products
and (C) Intellectual Property Rights used prior to the Closing by
a Subject Company.
(d) Each Subject Company has taken all commercially
reasonable actions to protect the Intellectual Property Rights of
such Subject Company. To the knowledge of MJ GeneWorks and the
Shareholders, the Intellectual Property Rights of each Subject
Company that constitute confidential information are, and have at
all times been, maintained on a confidential basis. To the
knowledge of MJ GeneWorks and the Shareholders, except as
otherwise described in Schedule 5.4, each Subject Company's
confidential information has never been misappropriated by any
third party.
(e) The most current version and all prior versions of
all material Computer Software that such Subject Company has,
during the last three (3) years, marketed or currently markets
to any of its customers will, if the appropriate operating
medium is provided, function substantially in accordance with
the specifications therefor, substantially as set forth in such
Subject Company's written materials describing such Computer
Software.
5.5 Facility Leases. Schedule 5.5 lists all Facility
Leases. Such Leases constitute all leases, subleases or other
occupancy agreements pursuant to which a Subject Company
occupies, uses, leases or subleases real property. Except as
described on Schedule 5.5, each Subject Company has in all
material respects performed all the obligations required to be
performed by it under the terms of the Facility Leases through
the date hereof with respect to all leased property described in
the Facility Leases of such Subject Company (the "Leased
Property"), and each Subject Company enjoys peaceful and
undisturbed possession of all the Leased Property, but subject
to the terms of said leases and subleases. With respect to each
such Facility Lease:
(i) All Facilities leased or subleased thereunder
by or from a Subject Company have received all material
approvals of governmental authorities (including licenses
and Permits) required in connection with the operation
thereof that are of such a nature as to be obtainable by a
tenant and not the fee owner/landlord, and have been
operated and maintained by the Subject Companies, to the
extent such operation and maintenance is the responsibility
of the Subject Companies pursuant to the Facility Leases, in
all material respects in accordance with applicable laws,
rules and regulations;
(ii) All Facilities leased or subleased thereunder
by a Subject Company are supplied with utilities (including
water, sewage, disposal, electricity, gas and telephone) and
other services necessary for the Subject Companies'
operation of such Facilities as currently operated (or, in
the case of a subleased property, the relevant subtenant has
the responsibility to provide such services);
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(iii) To the knowledge of MJ GeneWorks and the
Shareholders, the relevant Subject Companies, there is no
pending, threatened condemnation proceedings with respect to
any Leased Property or, to the knowledge of such Subject
Company and its Shareholders, pending or threatened
litigation or administrative actions relating to the Leased
Property;
(iv) Except as set forth on Schedule 5.5, there
are no subleases, licenses, options, rights, concessions or
other agreements or arrangements, written or oral, to which
any Subject Company is a party, granting to any Person the
right to use or occupy such Leased Property or any portion
thereof or interest therein;
(v) To the knowledge of MJ GeneWorks and the
Shareholders, the improvements constructed by any Subject
Company on the Leased Property are in good operating
condition and repair without any material structural or
mechanical defects of any kind, ordinary wear and tear
excepted; and
(vi) No Subject Company has received written
notice of any special assessment relating to the Leased
Property and to the knowledge of MJ GeneWorks and the
Shareholders, there has been no pending or threatened
special assessment.
5.6 Contracts and Commitments. Schedule 5.6 lists the
following Contracts to which a Subject Company is a party, or by
which a Subject Company is bound to perform after the Closing
Date:
(i) any written arrangements (or group of related
written arrangements) for the lease of personal property by
a Subject Company providing for lease payments in excess of
$25,000 per annum and that is not subject to cancellation on
not more than 30 days' notice by such Subject Company
without penalty or increased cost;
(ii) any other written arrangement (or group of
related written arrangements) involving aggregate payments
by a Subject Company of more than $25,000 per annum and that
is not subject to cancellation on not more than 30 days'
notice by such Subject Company without penalty or increased
cost;
(iii) any written arrangement (or group of
related written arrangements) in excess of $25,000 per annum
for the purchase or sale of raw materials, commodities,
supplies, products or other property by a Subject Company or
for the furnishing or receipt of services by a Subject
Company, including, without limitation, any customer or
vendor contracts and that is not subject to cancellation on
not more than 30 days' notice by such Subject Company
without penalty or increased cost;
(iv) any written arrangement (or group of related
written arrangements) concerning a partnership or joint
venture between a Subject Company and any other person;
(v) any written arrangement (or group of related
written arrangements) under which it has created, incurred,
assumed or guaranteed (or may create, incur,
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assume or guarantee) indebtedness (including capitalized lease
obligations) of a Subject Company involving more than
$25,000 in principal amount or under which is imposed (or
may impose) upon a Subject Company a security interest or
lien on any of its assets, tangible or intangible;
(vi) any written arrangement (or group of related
written arrangements) obligating a Subject Company to
maintain confidentiality or to refrain from competition or
competitive arrangements;
(vii) any written arrangement (or group of
related written arrangements) involving another Subject
Company;
(viii) any Employee Plan of such Subject
Company and any written arrangement with any of its
directors, officers, shareholders or employees in the nature
of a collective bargaining agreement, employment agreement
or severance agreement;
(ix) any written arrangement with any of its
directors, officers, shareholders or employees or any member
of any such person's immediate family (x) providing for the
furnishing of material services by, (y) providing for the
rental of material real or personal property from, or (z)
otherwise requiring material payments to (other than for
services as officers, directors or employees of such Subject
Company), any such person or any corporation, partnership,
trust or other entity in which any such person has a
substantial interest as a shareholder, officer, director,
trustee or partner;
(x) any other written arrangement (or group of
related written arrangements) either involving aggregate
payments of more than $25,000 or not entered into in the
ordinary course of business consistent with past practice;
(xi) any other written arrangement (or group of
related written arrangements) under which the consequences
of a default or termination is reasonably likely to have a
Material Adverse Effect;
(xii) any material written agreement with any
Personnel or other affiliates of a Subject Company; or
(xiii) any oral contract, agreement or other
arrangement with respect to any of the matters referred to
in the foregoing clauses (i) through (xii) and any
obligation (oral or written) to enter into any contract,
agreement or other arrangement with respect to any of the
matters referred to in the foregoing clauses (i) through
(xi).
Each Subject Company has delivered to Buyer a correct and
complete copy of each written arrangement listed under the name
of such Subject Company in Schedule 5.6 and has included as part
of Schedule 5.6 a brief summary of any such oral contracts,
agreements or other arrangements and any obligations (oral or
written) to enter into any such contracts, agreements or other
arrangements, in each case as described in clause (xiii) above.
Except as set forth on Schedule 5.6, with respect to each written
arrangement listed, (A) the written arrangement is legal, valid,
binding, enforceable (except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium, reorganization
and other similar laws affecting
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creditors' rights generally and (ii) the general principles of equity,
regardless of whether asserted in a proceeding in equity or at law) and
in full force and effect; (B) the written arrangement will continue to be
legal, valid binding, enforceable (except as such enforceability
may be limited by (i) bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting creditors' rights
generally and (ii) the general principles of equity, regardless
of whether asserted in a proceeding in equity or at law) and in
full force and effect on identical terms following the Closing
Date; (C) there is no default by any Subject Company to any
Contract, and, to the knowledge of MJ GeneWorks and the
Shareholders, no default by any third party to any such Contract,
in each case which default is reasonably likely to have a
Material Adverse Effect; and (D) no Subject Company is in
material breach or default, and to the knowledge of MJ GeneWorks
or the Shareholders no other party is in material breach or
default, under any written agreement, and to the knowledge of MJ
GeneWorks or its Shareholders no event has occurred which with
notice or lapse of time could constitute a material breach or
default or permit termination, modification or acceleration under
any written agreement.
5.7 No Conflict or Violation. Except as set forth on
Schedule 5.7, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by a
Subject Company in connection with the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby. Except as set forth on
Schedule 5.7, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will result in (a) a violation of or a conflict with any
provision of the articles of incorporation, certificate of
incorporation or equivalent or bylaws of any Subject Company,
(b) a breach of, or a default under any term or provision of,
any contract, agreement, indebtedness, lease, commitment,
license, franchise, permit, authorization or concession to which
a Subject Company is a party, or the creation of any right of
any party to accelerate, terminate or cancel, any contract,
agreement, indebtedness, lease, commitment, license, franchise,
permit, authorization or concession to which a Subject Company
is a party, which breach, default or right is reasonably likely
to have a Material Adverse Effect, (c) a violation by any
Subject Company of any law, statute, rule, regulation,
ordinance, code, order, judgment, writ, injunction, decree or
award, or (d) an imposition of any Encumbrance, restriction or
charge on the business of a Subject Company or on the Assets of
a Subject Company which is reasonably likely to have a Material
Adverse Effect.
5.8 Financial Statements. MJ GeneWorks has heretofore
delivered to Buyer true and complete copies of the 2003
Financial Statements and the 2004 Interim Financial Statements.
Except as set forth on Schedule 5.8, the 2003 Financial
Statements (i) were prepared in accordance with GAAP
consistently applied throughout the periods indicated, (ii) are
in accordance with the Books and Records of MJ GeneWorks and its
Subsidiaries, and (iii) present fairly in all material respects,
as of the respective dates thereof or the periods covered
thereby, as applicable, the financial position, shareholder's
equity, cash flow and results of operations of MJ GeneWorks and
its Subsidiaries. Except as set forth on Schedule 5.8, the 2004
Interim Financial Statements (a) were prepared consistent with
past practice for such statements, and (b) are in accordance
with the Books and Records of MJ GeneWorks and its Subsidiaries.
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5.9 Absence Of Certain Changes Or Events. Except as
set forth on Schedule 5.9 or as otherwise reflected in the 2004
Interim Financial Statements, since the 2003 Balance Sheet Date
there has not been any:
(a) Reserved;
(b) (i) except for normal periodic increases in the
ordinary course of business consistent with past practice,
increase in the compensation payable or to become payable by a
Subject Company to any of its officers, employees, former
employees or agents (collectively, "Personnel"), (ii) grant,
payment or accrual, contingent or otherwise, for or to the credit
of any of the Personnel with respect to any bonus, incentive
compensation, service award or other like benefit, (iii)
adoption, creation or amendment of any Employee Plan of such
Subject Company, (iv) employment agreement (written or verbal)
made by such Subject Company to which such Subject Company is a
party or (v) other change in employment terms for any of such
Subject Company's officers, employees or agents;
(c) sale, lease, assignment or transfer of any of the
material Assets of such Subject Company, other than to persons
that are not affiliates for fair consideration and in the
ordinary course consistent with past practice; cancellation,
compromise, waiver or release of any rights or claim (or series
of related rights or claims) either (i) involving an affiliate of
such Subject Company, (ii) involving more than $50,000, or (iii)
outside the ordinary course of business consistent with past
practice, in each case except in respect of matters relating to
the [ ** ] as disclosed to Buyer;
(d) amendment, cancellation or termination of any
Contract, license or other instrument (but not including purchase
orders) (i) involving payments in excess of $10,000 each, (ii)
involving payments in excess of $50,000 in the aggregate, or
(iii) the amendment, cancellation or termination of which is
reasonably likely to have a Material Adverse Effect;
(e) capital expenditure or the execution of any Lease,
Contract, license, sublease or sublicense (or series of related
Contracts, Leases, subleases, licenses and sublicenses) or any
incurring of liability therefor (i) involving payments in excess
of $10,000 each, (ii) involving payments in excess of $50,000 in
the aggregate, or (iii) outside the ordinary course of business
consistent with past practice;
(f) delay or failure to repay when due any material
obligation of such Subject Company;
(g) failure to use commercially reasonable efforts to
operate the business of each Subject Company in the ordinary
course consistent with past practice so as to preserve the
business intact, to keep available to Buyer the services of
Personnel, and to preserve for Buyer the goodwill of such Subject
Company's suppliers, customers, distributors and others having
business relations with it;
(h) material change in accounting methods or practices
by such Subject Company;
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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(i) material revaluation by such Subject Company of
any of the Assets of such Subject Company, including without
limitation, writing off notes or accounts receivable other than
in the ordinary course of business consistent with past practice;
(j) damage, destruction or loss (whether or not
covered by insurance) that has a Material Adverse Effect or that
is reasonably likely to have a Material Adverse Effect;
(k) mortgage, pledge or other encumbrance of any of
the material Assets of such Subject Company other than in the
ordinary course of business consistent with past practice;
(l) any declaration, setting aside for payment or
payment of any dividend or distribution in respect of any capital
stock of any Subject Company or any redemption, purchase, or
other acquisition of any of such Subject Company's equity
securities or any bonus, fee or other payment, or any other
transfer of the Assets to or on behalf of any shareholder of such
Subject Company, any affiliate of such Subject Company or any
affiliate of any shareholder, including, but not limited to, any
payment of principal of or interest on any debt owed to any such
shareholder or affiliate or any payment of a bonus, fee or other
payment to any such shareholder or affiliate as an employee of
such Subject Company except in the ordinary course of business
consistent with past practice;
(m) issuance by a Subject Company of, or commitment of
such Subject Company to issue, any shares of stock or other
equity securities or obligations or securities convertible into
or exchangeable for shares of stock or other equity securities;
(n) indebtedness incurred by any Subject Company for
borrowed money or any commitment to borrow money entered into by
such Subject Company, or any loans or guarantees made or agreed
to be made by such Subject Company other than to non-affiliates
in the ordinary course of business consistent with past practice;
(o) liabilities involving $50,000 or more or otherwise
material to the business of such Subject Company except in the
ordinary course of business and consistent with past practice, or
any increase or change in any assumptions underlying or methods
of calculating any bad debt, contingency or other reserves;
(p) payment, discharge or satisfaction of any material
liabilities other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice
of liabilities reflected or reserved against on the 2003 Balance
Sheets or incurred in the ordinary course of business and
consistent with past practice since the 2003 Balance Sheet Date;
(q) acceleration, termination, modification,
cancellation or threatened termination or cancellation of any
Contract to which such Subject Company is a party or by which
such Subject Company is bound and which would have a Materially
Adverse Effect;
(r) capital investment in, any loan to, or any
acquisition of the securities or assets of any other person (i)
involving an affiliate of such Subject Company (except
investments, loans or acquisitions or the securities or assets of
another Subject Company),
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(ii) involving more than $25,000 in the
aggregate, or (iii) outside the ordinary course of business
consistent with past practice;
(s) grant of any material license or sublicense of any
rights under or with respect to any Intellectual Property Rights
of such Subject Company except in the ordinary course of business
consistent with past practice;
(t) loan to, or other material agreement with any
Personnel of a Subject Company outside the ordinary course of
business consistent with past practice giving rise to any claim
or right on the part of the person against it;
(u) charitable or other capital contribution made or
pledged by such Subject Company in an aggregate amount in excess
of $25,000;
(v) payment by any Subject Company of any expenses
relating to the transactions contemplated by this Agreement,
including, without limitation, the payment of the fees and
expenses of any professionals engaged in connection with the
transactions contemplated by this Agreement;
(w) agreement (either oral or written) by a Subject
Company or any of its Personnel on behalf of a Subject Company to
do any of the foregoing; or
(x) other event or condition of any character which is
reasonably likely to have, in any one case or in the aggregate, a
Material Adverse Effect, or any event or condition (other than
events or conditions affecting the economy generally) known to MJ
GeneWorks or the Shareholders which is reasonably likely to have,
in any one case or in the aggregate, a Material Adverse Effect in
the future.
5.10 Liabilities. Except as set forth on Schedule 5.10
or otherwise accounted for on the 2004 Interim Financial
Statements, and except in respect of the Litigation Matters, no
Subject Company has any liabilities or obligations (absolute,
accrued, contingent or otherwise) except (i) liabilities that
are reflected and reserved against on the 2004 Interim Financial
Statements, and (ii) liabilities incurred since the 2004 Interim
Financial Statement in the ordinary course of business
consistent with past practice and in accordance with this
Agreement (none of which relates to any breach of contract,
breach of warranty, tort, infringement or violation of law or
arose out of any complaint, action, suit or proceeding (but not
including any issues relating to the Litigation Matters) which
individually or in the aggregate is reasonably likely to have a
Material Adverse Effect).
5.11 Accounts Receivable. Except as set forth on
Schedule 5.11, the accounts receivable reflected on the 2003
Balance Sheet, and all accounts receivable arising since the
2003 Balance Sheet Date, represent bona fide claims against
debtors for sales made, services performed or other charges
arising on or before the date hereof, and all the goods
delivered and services performed that gave rise to said accounts
were delivered or performed in accordance with the applicable
orders, Contracts or customer requirements, except to the extent
of any reserve with respect thereto set forth on the 2004
Interim Financial Statements. No accounts receivable reflected
on the 2004 Interim Financial Statements shall be subject to
material defenses, counterclaims or rights of setoff and shall
be fully collectible in the ordinary course of
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business without cost to Buyer in collection efforts therefor other than
consistent with past practice except to the extent of any
reserve with respect thereto set forth on the 2004 Interim
Financial Statements.
5.12 Inventories. The values at which the Inventories
are shown on the 2003 Balance Sheet have been determined in
accordance with the normal valuation policy of MJ GeneWorks and
its Subsidiaries, consistently applied, and in accordance with
GAAP. Except as set forth on Schedule 5.12, the Inventories
(and items of Inventory acquired or manufactured subsequent to
the 2003 Balance Sheet Date) consist only of items of quality
and quantity commercially usable and salable in the ordinary
course of business, except for any items of obsolete material or
material below standard quality, all of which have been written
down to realizable market value, or for which adequate reserves
have been provided on the 2003 Balance Sheet or on the 2004
Interim Financial Statements, and the current quantities of all
Inventories are reasonable in the current circumstances of the
business of MJ GeneWorks and its Subsidiaries.
5.13 Litigation. Except as set forth on Schedule 5.13
and except for the Litigation Matters, there is no charge,
complaint, action, order, writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, labor
dispute, arbitral action or, to the knowledge of MJ GeneWorks or
the Shareholders, investigation (collectively, "Actions")
pending or, to the knowledge of MJ GeneWorks or the
Shareholders, threatened against any Subject Company or
Shareholder relating to or affecting (i) any Subject Company or
any material Assets of any Subject Company or the material
operation of the business of any Subject Company as currently
operated or as such Subject Company proposes, prior to the
Closing Date, to presently operate, (ii) any Employee Plan of
any Subject Company or any trust or other funding instrument,
fiduciary or administrator thereof or (iii) the transactions
contemplated by this Agreement, any of which is reasonably
likely to have a Material Adverse Effect. No Subject Company is
in default with respect to any judgment, order, writ, injunction
or decree of any court or governmental agency, and there are no
unsatisfied judgments against such Subject Company or the
business of such Subject Company that would have a Materially
Adverse Effect. Except for the Litigation Matters, there is not
a reasonable likelihood of an adverse determination of any
pending Actions that would, individually or in the aggregate,
have a Material Adverse Effect. No Action pending or, to the
knowledge of MJ GeneWorks or the Shareholders, threatened is
covered by insurance. To the knowledge of the Shareholders, the
[ ** ] could have been settled by them and by the
Subject Companies as of May 27, 2004 for [ ** ] or less
in total [ ** ] and [ ** ]
..
5.14 Labor Matters. No Subject Company is a party to
any labor agreement with respect to its employees with any labor
organization, group or association. No Subject Company has
experienced any attempt by organized labor or its
representatives to make such Subject Company conform to demands
of organized labor relating to its employees or to enter into a
binding agreement with organized labor that would cover the
employees of such Subject Company. Each Subject Company is in
material compliance with all applicable laws respecting
employment practices, terms and conditions of employment and
wages and hours and, to the knowledge of MJ GeneWorks and the
Shareholders, is not and has not engaged in any unfair labor
practice. There is no unfair labor practice charge or complaint
against such Subject Company pending before the National Labor
Relations Board or any other governmental agency
[**] The material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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and to which MJ GeneWorks or the Shareholders have notice arising out
of such Subject Company's activities, and to the knowledge of MJ
GeneWorks and the Shareholders, there are no facts or
information that would give rise thereto; there is no labor
strike or labor disturbance pending or threatened against any
Subject Company nor is any grievance currently being asserted;
and no Subject Company has ever experienced a work stoppage or
other labor difficulty.
5.15 Compliance with Law; Permits. Each Subject
Company and the conduct of the business of such Subject Company
are in compliance with all applicable laws, statutes,
ordinances, rules and regulations promulgated, or judgments,
decisions or orders entered, by any federal, state, local, or
foreign court or governmental agency, department, authority or
instrumentality relating to the Assets or the business of such
Subject Company, except where the failure to comply is not
reasonably likely to have a Material Adverse Effect. Except as
disclosed on Schedule 5.15, no Subject Company has received any
written notice to the effect that, or otherwise been advised by
counsel or other advisors to the Company in writing that, it is
not in compliance with any of such statutes, regulations,
orders, ordinances or other laws for which corrective action has
not been taken and completed, and such Subject Company does not
anticipate that any currently existing circumstances are
reasonably likely to result in violations of any such
regulations which is reasonably likely to have, in any one case
or in the aggregate, a Material Adverse Effect. Such Subject
Company has all Permits, authorizations and approvals, each of
which is currently valid and in full force and effect, the lack
of which is reasonably likely to have a Material Adverse Effect,
which Permits are set forth on Schedule 5.15 and which licenses,
authorizations and approvals are set forth on Schedule 5.7.
Without limiting the generality of the preceding representation
and warranty, no Subject Company has (i) made or agreed to make
any contribution, payment or gift to any government official,
employee, or agent where either the contribution, payment or
gift or the purpose thereof was illegal under the laws of any
federal, state, local or foreign jurisdiction, (ii) established
or maintained any fund or asset unrecorded on the Books and
Records of the Subject Companies for any purpose or made any
false entries on the Books and Records of such Subject Company
for any reason and (iii) made or agreed to make any political
contribution, or reimbursed any political gift or contribution
made by any other person, to any candidate for federal, state,
local or foreign public office. In addition, each Subject
Company (a) has complied with all applicable laws relating to
employee and civil rights and relating to the employment
opportunities, except where the failure to comply is not
reasonably likely to have a Material Adverse Effect, (b) filed
in a timely manner all material reports, documents it was
required to file (and the information contained therein was
correct and complete in all material respects) under all
applicable laws, (c) has possession of all material records and
documents it was required to retain under all applicable laws
and (d) has not violated or received a notice or charge
asserting any violation of the Sherman Act, the Clayton Act, the
Robinson-Patman Act, the Federal Trade Commission Act, the
Securities Act of 1933 or the Securities Exchange Act of 1934
(or any analogous foreign antitrust, trade regulation or
securities laws, rules or regulations), each as amended, except
where such violation is not reasonably likely to have a Material
Adverse Effect.
5.16 Tax Matters.
(a) Filing of Tax Returns. Each Subject Company has
timely filed with the appropriate taxing or other governmental
authorities all returns in respect of Taxes (including,
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without limitation, information returns and other information) required
to be filed through the date hereof. The returns and information
filed are complete, correct and accurate in all material
respects. Each Subject Company has delivered to Buyer complete
and accurate copies of each Subject Company's federal, state and
local tax returns for the years 2002 and 2003 or such lesser
number of years as such Subject Company shall have been in
existence. As of the date hereof, no Subject Company has filed
any federal, state or local tax returns for the year 2004.
(b) Payment of Taxes. All Taxes for which such
Subject Company is or may be liable, in respect of periods or
portions thereof ending on or before the Closing Date, shall have
been paid, or an adequate reserve (in conformity with GAAP) has
been established therefor, and such Subject Company has no
material liability for Taxes in excess of the amounts so paid or
reserves so established. All Taxes that such Subject Company has
been required to collect or withhold have been duly collected or
withheld and, to the extent required when due, have been or will
be duly paid to the proper taxing authority.
(c) Audit History. Except as set forth on Schedule
5.16, no deficiencies for Taxes of a Subject Company have been
claimed, proposed or assessed by any taxing or other governmental
authority. Except as set forth on Schedule 5.16, there are no
pending or, to the knowledge of MJ GeneWorks or the Shareholders,
threatened audits, investigations or claims for or relating to
any liability in respect of Taxes of a Subject Company, and there
are no matters under discussion with any governmental authorities
with respect to Taxes of a Subject Company. Except as set forth
on Schedule 5.16, no Subject Company has been notified that any
taxing authority intends to audit a return for any other period.
Except as set forth on Schedule 5.16, no extension of a statute
of limitations relating to Taxes is in effect with respect to any
Subject Company.
(d) Tax Elections.
(i) All elections with respect to Taxes affecting
such Subject Company as of the date hereof are set forth on
Schedule 5.16.
(ii) No Subject Company has made an election, and
is not required, to treat any Asset of such Subject Company
as owned by another person or as tax-exempt bond financed
property or tax-exempt use property within the meaning of
Section 168 of the Code or under any comparable state or
local income tax or other tax provision.
(iii) No Subject Company is a party to or
bound by any binding tax sharing, tax indemnity or tax
allocation agreement or other similar arrangement with any
other party.
(iv) No Subject Company has filed a consent
pursuant to the collapsible corporation provisions of
Section 341(f) of the Code (or any corresponding provision
of state, foreign or local law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of
state, foreign or local law) apply to any disposition of any
asset owned by it.
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(e) Additional Representations.
(i) There are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the Assets of
any Subject Company.
(ii) Except as set forth in Schedule 5.16, no
Subject Company has ever been a member of an affiliated
group of corporations, within the meaning of Section 1504 of
the Code.
(iii) No Subject Company has agreed to make,
nor is required to make, any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or
otherwise.
(iv) No Subject Company is a party to any
agreement, contract, arrangement or plan that has resulted
or would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(v) No Subject Company is a party to any joint
venture, partnership, or other arrangement or contract which
is reasonably likely to be treated as a partnership for
federal income tax purposes.
(vi) Each Subject Company other than MJ Japan is
an "S corporation" (within the meaning of Section 1361(a)(1)
of the Code) for federal income tax purposes and has been so
treated continuously since the time of its organization.
5.17 Severance Arrangements. Except as set forth on
Schedule 5.17, no Subject Company has entered into any severance
or similar arrangement in respect of any Personnel of such
Subject Company that will result in any obligation (absolute or
contingent) of Buyer, such Subject Company or other person to
make any payment to any such Personnel following termination of
employment.
5.18 Insurance. Schedule 5.18 contains a materially
complete and accurate list of all policies or binders of fire,
liability, title, worker's compensation and other forms of
insurance (showing as to each policy or binder the carrier,
policy number, coverage limits, expiration dates, annual
premiums and a general description of the type of coverage
provided) maintained by such Subject Company on the business,
the Assets or the Personnel of such Subject Company. All of
such policies are consistent with industry practices and are
sufficient for compliance with all requirements of law and of
all Contracts to which such Subject Company is a party, except
where the failure to comply is not reasonably likely to have a
Material Adverse Effect. No Subject Company is in default under
any of such policies or binders, and no Subject Company has
failed to give any notice or to present any material claim under
any such policy or binder in a due and timely fashion. There are
no facts known to MJ GeneWorks or the Shareholders upon which an
insurer might be justified in reducing coverage or increasing
premiums on existing policies or binders. There are no
outstanding unpaid claims under any such policies or binders.
Such policies and binders provide sufficient coverage, in the
reasonable opinion of such Subject Company and the Shareholders,
for the risks insured
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against, are in full force and effect on the date hereof and shall
be kept in full force and effect by such Subject Company through the
Closing Date.
5.19 Purchase Commitments and Outstanding Bids. As of
June 16, 2004, except as listed on Schedule 5.19, there are no
accepted and unfulfilled orders for the sale of merchandise or
services entered into by a Subject Company in excess of $50,000
per customer, all of which orders were made in the ordinary
course of business consistent with past practice. In addition,
as of June 16, 2004, except as listed on Schedule 5.19, there
are no Contracts or commitments for the purchase of supplies
entered into by a Subject Company in excess of $50,000 per
vendor or supplier, all of which Contracts and commitments were
made in the ordinary course of business consistent with past
practice. As of the date of this Agreement, there are no claims
against such Subject Company known to MJ GeneWorks or the
Shareholders to return in excess of an aggregate of $100,000 of
merchandise by reason of alleged overshipments, defective
merchandise or otherwise, or of merchandise in the hands of
customers under an understanding that such merchandise would be
returned. No outstanding purchase or outstanding lease
(excluding real property leases) commitment of a Subject Company
currently is in excess of the normal, ordinary and usual
requirements of its business consistent with past practices.
Except as set forth on Schedule 5.19, there is no outstanding
bid, proposal, Contract or unfilled order of such Subject
Company that is reasonably likely to have, if accepted by the
other party thereto, a Material Adverse Effect.
5.20 Reserved.
5.21 Customers and Suppliers. Schedule 5.21 contains a
complete and accurate list of (i) all customers of such Subject
Company during such Subject Company's last fiscal year, showing
the approximate total sales by such Subject Company to each such
customer during such fiscal year, and (ii) all suppliers of such
Subject Company from whom such Subject Company has made
aggregate purchases in excess of $50,000 during such Subject
Company's last fiscal year, showing the approximate total
purchases by such Subject Company from each such supplier during
such fiscal year. To the knowledge of MJ GeneWorks and the
Shareholders, since the 2003 Balance Sheet Date, there has been
no adverse change in the business relationship with any material
customer or supplier named in Schedule 5.21 and no threat or
indication that any such change is reasonably foreseeable other
than in connection with the Bankruptcy Case as described on
Schedule 5.9.
5.22 Bank Accounts. Schedule 5.22 contains a list,
true and correct in all material respects, of the names of each
bank, savings and loan, or other financial institution in which
such Subject Company has an account, including cash contribution
accounts, or safe deposit boxes, and the names of all persons
authorized to draw thereon or to access thereto.
5.23 Environmental Matters.
(a) Except as set forth on Schedule 5.23, each
Subject Company is, and at all times has been, in compliance
with all Environmental Laws (as defined below), except where the
failure to comply would not reasonably be likely to have a
Material Adverse Effect.
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(b) Except as set forth on Schedule 5.23, MJ GeneWorks
and the Shareholders have no knowledge (without any duty of
inquiry) of an existing or potential Environmental Claim (as
defined below), and no Subject Company has received any written
notification, nor does MJ GeneWorks or any Shareholder have any
knowledge, of alleged, actual or potential responsibility for, or
any inquiry or investigation regarding, any material disposal,
release, or threatened release at any location, of any Hazardous
Substance (as defined below) generated or transported by a
Subject Company.
(c) Except as set forth on Schedule 5.23, (i) no
underground tank or other underground storage receptacle for
Hazardous Substances has been constructed or installed or used by
any Subject Company located on each Subject Company's properties
and there have been no releases of any Hazardous Substances from
any underground tank or related piping at any time caused by a
Subject Company; and (ii) there have been no releases (i.e., any
past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping) of Hazardous Substances by any Subject
Company on, upon, or into the properties of such Subject Company,
except where such circumstance or event is not reasonably likely
to have a Material Adverse Effect.
(d) Except as set forth on Schedule 5.23, there are no
polychlorinated biphenyls or asbestos placed or released by any
Subject Company on the Leased Property of any Subject Company,
except where the presence of such material is not reasonably
likely to have a Material Adverse Effect.
(e) To the knowledge of MJ GeneWorks and the
Shareholders, no environmental lien has attached to any property
to be transferred to Buyer under this Agreement.
(f) Definitions.
(i) For purposes of this Agreement,
"Environmental Laws" shall mean all federal, state,
district, local, and foreign laws, all rules or regulations
promulgated thereunder, and all orders, consent orders,
judgments, notices, permits, or demand letters issued,
promulgated, or entered pursuant thereto, relating to
pollution or protection of the environment (including
without limitation ambient air, surface water, ground water,
land surface, or subsurface strata), including without
limitation (i) laws relating to emissions, discharges,
releases, or threatened releases of pollutants,
contaminants, chemicals, materials, wastes, or other
substances into the environment and (ii) laws relating to
the identification, generation, manufacture, processing,
distribution, use, treatment, storage, disposal, recovery,
transport, or other handling of pollutants, contaminants,
chemicals, industrial materials, wastes, or other
substances. Environmental Laws shall include without
limitation the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the
Toxic Substances Control Act, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Clean Water
Act, as amended, the Safe Drinking Water Act, as amended,
the Clean Air Act, as amended, the Atomic Energy Act of
1954, as amended, the Occupational Safety and Health Act, as
amended, and all analogous laws promulgated or issued by any
state, foreign nation or other governmental authority.
Notwithstanding the foregoing to the contrary, Environmental
Laws shall include and be
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limited to those laws, rules and regulation governing each Subject
Company in its capacity as a tenant or sublessor.
(ii) For purposes of this Agreement,
"Environmental Claims" shall mean all accusations,
allegations, notice of violations, liens, claims, demands,
suits, or causes of action for any damage, including without
limitation, personal injury, property damage (including any
depreciation of property values), lost use of property, or
consequential damages, arising directly or indirectly out of
Environmental Conditions or Environmental Laws. By way of
example only, Environmental Claims include (A) violations of
or obligations under any contract between such Subject
Company and any other person, (B) actual or threatened
damages to natural resources, (C) claims for nuisance or its
statutory equivalent, (D) claims for the recovery of
response costs, or administrative or judicial orders
directing the performance of investigations, response or
remedial actions under any Environmental Laws, (E) a
requirement to implement "corrective action" pursuant to any
order or permit issued pursuant to the Resource Conservation
and Recovery Act, as amended or similar provisions of
applicable state or foreign law, (F) claims for restitution,
contribution, or indemnity, (G) fines, penalties, or liens
of any kind against property, (H) claims for injunctive
relief or other orders or notices of violation from federal,
state, foreign or local agencies or courts, and (I) with
regard to any present or former employees, claims relating
to exposure to or injury from Environmental Conditions.
(iii) For purposes of this Agreement,
"Environmental Conditions" shall mean the state of the
environment, including natural resources (e.g., flora and
fauna), soil, surface water, ground water, any present or
potential drinking water supply, subsurface strata, or
ambient air, relating to or arising out of the use,
handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping,
pouring, emptying, discharging, injecting, escaping,
leaching, disposal, dumping, or threatened release of
Hazardous Substances by such Subject Company or its
predecessors or successors in interest, agents,
representatives, employees, or independent contractors.
With respect to Environmental Claims by third parties,
Environmental Conditions also include the exposure of
persons to Hazardous Substances at the work place or the
exposure of persons or property to Hazardous Substances
migrating from or otherwise emanating from or located on
property owned or occupied by such Subject Company.
(iv) For purposes of this Agreement, "Hazardous
Substances" shall mean all pollutants, contaminants,
chemicals, wastes, and any other carcinogenic, ignitable,
corrosive, reactive, toxic, or otherwise hazardous
substances or materials (whether solids, liquids or gases),
placed or released on any Leased Facility by a Subject
Company or its employees or agents, including but not
limited to any substances, materials, or wastes subject to
regulation, control, or remediation under Environmental
Laws. By way of example only, the term Hazardous Substances
includes petroleum, urea formaldehyde, flammable, explosive,
and radioactive materials, PCBs, pesticides, herbicides,
asbestos, sludge, slag, acids, metals, solvents, or waste
waters.
(g) Notwithstanding anything contained in this
Agreement to the contrary, it is the intention of the parties to
address issues concerning Environmental Laws, Environmental
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Claims, Environmental Conditions and Hazardous Substances in this
Section 5.23, and the violation of laws, statutes, orders, rules
and regulations, ordinances, codes, orders, judgments, writs,
injunctions, decrees or awards of any federal, state, local, or
foreign court or governmental agency, department, authority or
instrumentality relating thereto, in this Section 5.23, and no
other more general reference in any other section of this
Article V to issues concerning or otherwise relating, directly or
indirectly, to Environmental Laws, Environmental Claims,
Environmental Conditions and Hazardous Substances, and the
violation of laws, statutes, orders, rules and regulations,
ordinances, codes, orders, judgments, writs, injunctions, decrees
or awards of any federal, state, local, or foreign court or
governmental agency, department, authority or instrumentality
relating thereto shall be deemed to be a reference thereto except
as otherwise specifically set forth in this Section 5.23.
5.24 Employee Benefit Plans.
(a) Definitions. The following terms, when used in
this Section 5.24, shall have the following meanings. Any of
these terms may, unless the context otherwise requires, be used
in the singular or the plural depending on the reference.
(i) Employee Plan. "Employee Plan" shall mean,
with respect to each Subject Company, any employee benefit
plan, program or arrangement, whether oral or written, with
respect to which such Subject Company or any Subsidiary of
such Subject Company may incur any liability to an employee
or which covers any employee or former employee of such
Subject Company or any Subsidiary of such Subject Company.
(ii) ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
(iii) ERISA Affiliate. "ERISA Affiliate"
shall mean, with respect to each Subject Company, any entity
which is a member of a "controlled group of corporations"
with or is under "common control" with such Subject Company
or any Subsidiary of such Subject Company as defined in
section 414(b) or (c) of the Code.
(iv) Multiemployer Plan. "Multiemployer Plan"
shall mean, with respect to each Subject Company, any
Employee Plan with respect to such Subject Company which is
a "multiemployer plan," as defined in Section 4001(a)(3) of
ERISA.
(v) PBGC. "PBGC" shall mean the Pension Benefit
Guaranty Corporation.
(vi) Pension Plan. "Pension Plan" shall mean,
with respect to each Subject Company, any Employee Plan with
respect to such Subject Company which is an "employee
pension benefit plan" as defined in Section 3(2) of ERISA
(other than a Multiemployer Plan).
(vii) Welfare Plan. "Welfare Plan" shall
mean, with respect to each Subject Company, any Employee
Plan with respect to such Subject Company which is an
"employee welfare benefit plan", as defined in Section 3(1)
of ERISA.
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(b) Disclosure; Delivery of Copies of Relevant
Documents and Other Information. Schedule 5.24 contains a
complete list of Employee Plans with respect to each Subject
Company. True and complete copies of each of the following
documents have been delivered by each Subject Company to the
Buyer: (i) each Employee Plan with respect to such Subject
Company (and each related trust agreement or other funding
instrument) or written description thereof (where an Employee
Plan is not in writing), (ii) the most recent determination
letter issued by the Internal Revenue Service with respect to
each Pension Plan with respect to such Subject Company, (iii) for
the three most recent plan years, Annual Reports on Form 5500
Series required to be filed with any governmental agency for each
Pension Plan with respect to such Subject Company, (iv) all
actuarial reports prepared for the last three plan years for each
Pension Plan with respect to such Subject Company, (v) a
description of complete age, salary, service and related data
with respect to each Pension Plan, as of the last day of the most
recent plan year for employees and former employees of such
Subject Company and each Subsidiary of such Subject Company, and
(vi) a description setting forth the amount of any liability of
such Subject Company as of the Closing Date for payments more
than thirty days past due with respect to each Welfare Plan with
respect to such Subject Company.
(c) Representations. Except as set forth on Schedule
5.24, each Subject Company other than MJ Japan represents as
follows:
(i) As of the last day of the last plan year of
each Pension Plan of such Subject Company and as of the
Closing Date, the "amount of unfunded benefit liabilities"
as defined in Section 4001(a)(18) of ERISA (but excluding
from the definition of "current value" of "assets" of such
Pension Plan accrued but unpaid contributions) did not and
will not exceed zero. None of such Subject Company, any
Subsidiary of such Subject Company or any ERISA Affiliate of
such Subject Company has any liability for unpaid
contributions that are past due with respect to any Pension
Plan with respect to such Subject Company.
(ii) There are no Multiemployer Plans with respect
to such Subject Company.
(iii) Each Pension Plan with respect to such
Subject Company and each related trust agreement, annuity
contract or other funding instrument that is intended to be
qualified under Section 401(a) of the Code is, to the
Knowledge of each Subject Company, so qualified, and has
received a favorable determination letter from the Internal
Revenue Service as to its qualification under Section 401(a)
of the Code. To the Knowledge of each Subject Company
nothing has occurred with respect to any such Plan that
could cause the loss of such qualification.
(iv) There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the PBGC regulations
under such Section) with respect to any Pension Plan with
respect to such Subject Company. No filing has been made by
such Subject Company, any Subsidiary of such Subject Company
or any ERISA Affiliate of such Subject Company with the
PBGC, and no proceeding has been commenced by any person,
(including the PBGC), to terminate any Pension Plan with
respect to such Subject Company. No condition exists and no
event has occurred that could constitute grounds
33
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for termination of any Pension Plan with respect to such Subject
Company, except where such termination is not reasonably
likely to have a Material Adverse Effect. None of such
Subject Company, any Subsidiary of such Subject Company or
any ERISA Affiliate of such Subject Company has, at any
time, incurred any liability, contingent or otherwise,
pursuant to any provision of Title IV of ERISA or the
regulations thereunder, other than for premiums due the
PBGC.
(v) Each Employee Plan with respect to such
Subject Company and each related trust agreement, annuity
contract or other funding instrument has been maintained and
currently is in material compliance with its terms and, both
as to form and operation, with the requirements prescribed
by any and all statutes, orders, rules and regulations which
are applicable to such Employee Plan, including but not
limited to ERISA and the Code.
(vi) None of such Subject Company, any Subsidiary
of such Subject Company, any ERISA Affiliate of such Subject
Company or any Welfare Plan with respect to such Subject
Company has any present or future obligation to provide
medical (other than COBRA) or death benefits after
termination of employment with such Subject Company, any
Subsidiary of such Subject Company or any ERISA Affiliate of
such Subject Company, to the extent required under Section
4980B of the Code or other applicable law (but not including
any such obligation that may arise from the treatment of or
other actions affecting such Personnel by or after the
Closing), and no condition exists which would prevent such
Subject Company from amending or terminating any such
benefit program or Welfare Plan. Except as provided by law
or as set forth in Schedule 5.24, as of the Closing Date no
Subject Company has any obligation to any former employee of
such Subject Company to provide medical insurance coverage
to such former employee under COBRA.
(vii) Except as provided by law or as set
forth in Schedule 5.24, the employment of all persons
presently employed or retained by such Subject Company or a
Subsidiary of such Subject Company is terminable at will.
(viii) There is no Employee Plan with respect
to such Subject Company that if terminated would give rise
to any penalty or forfeiture except as set forth in Schedule
5.24.
(ix) No amounts required to be contributed under
any Employee Plan with respect to such Subject Company would
not be deductible pursuant to the terms of Sections
162(a)(1), 404 or 280G of the Code. None of such Subject
Company, any Subsidiary of such Subject Company or any plan
fiduciary of any Welfare Plan or Pension Plan with respect
to such Subject Company has engaged in any transaction in
material violation of Sections 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1)
of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code.
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(x) Each Employee Plan with respect to such
Subject Company and related trust agreement, annuity
contract or other funding instrument is legally valid and
binding and in full force and effect.
(xi) None of such Subject Company, any Subsidiary
of such Subject Company, any ERISA Affiliate of such Subject
Company or any Employee Plan with respect to such Subject
Company is a party to any litigation relating to or seeking
benefits under any Employee Plan with respect to such
Subject Company.
(xii) Except as listed on Schedule 5.24, none
of such Subject Company, any Subsidiary of such Subject
Company or any ERISA Affiliate of such Subject Company has
any announced plan or legally binding commitment to create
any additional Employee Plans or to amend or modify any
existing Employee Plan with respect to such Subject Company.
(xiii) No event has occurred in connection with
which such Subject Company, any Subsidiary of such Subject
Company, any ERISA Affiliate of such Subject Company or any
Employee Plan with respect to such Subject Company directly
or indirectly, could be subject to any material liability
(other than for contributions or payment of benefits under
such Employee Plan as they come due) under ERISA, the Code
or any other law, regulation or governmental order or under
any agreement, instrument, statute, rule of law or
regulation and for which such Subject Company or a
Subsidiary of such Subject Company has agreed to indemnify
or is required to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the
requirements of, any such statute, regulation or order.
5.25 No Brokers. Except as set forth on Schedule 5.25,
such Subject Company does not have nor will have any obligation
to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
5.26 No Other Agreements to Sell the Assets or Capital
Stock of such Subject Company. Except as listed on
Schedule 5.26 and except in connection with the Senior Executive
Dispute, neither a Subject Company nor any Shareholders have any
legal obligation, absolute or contingent, to any other person or
firm to sell or effect a sale of the Assets of such Subject
Company (other than in the ordinary course of business), to sell
or effect a sale of any of the capital stock of such Subject
Company or to effect any merger, consolidation or other
reorganization of such Subject Company or to enter into any
agreement or cause the entering into of an agreement with
respect thereto.
5.27 Material Misstatements Or Omissions. No
representations or warranties by such Subject Company or the
Shareholders in this Agreement, nor any document, exhibit,
statement, certificate or schedule furnished or to be furnished
to Buyer pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements or facts
contained therein not misleading.
5.28 Reserved.
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5.29 Product Returns, Product Liability and Product
Warranty. Schedule 5.29 contains a true and complete description
of (a) all material warranties granted or made with respect to
products sold, or services rendered, by each Subject Company and
(b) each Subject Company's material product liability claims and
product warranty experience for the last three (3) years and each
Subject Company's material product returns experience for the
last five (5) months, in each case for products that have been
sold for such periods of time. Each Subject Company warrants
that it has committed no act, and there has been no omission,
which may result in, and there has been no occurrence which may
give rise to, product liability or liability for breach of
warranty (not covered by any of the insurance policies of a
Subject Company effective as of the Closing Date) on the part of
such Subject Company, with respect to products designed,
manufactured, assembled, repaired, maintained, delivered or
installed or services rendered prior to or on the Closing Date in
excess of $3,252,502 in the aggregate.
5.30 Line of Credit. As of May 20, 2004, the principal
amount owed by MJ Research under the line of credit with Bank of
America (formerly Fleet Bank), which line of credit is no longer
available (the "Line of Credit") was $7,650,000 (the "Line of
Credit Maximum Principal Amount"), and accrued and unpaid
interest was $14,450. Interest on the Line of Credit was
accruing as of May 20, 2004 at approximately $850 per day,
subject to interest rate change as provided in the loan
agreement for the Line of Credit.
5.31 John Hansen. John Hansen resigned his position as
Vice President, Communications of MJ Research on August 6, 2004.
5.32 [ ** ]. The [ ** ] incurred by MJ Research from
May 1, 2004 through July 31, 2004 shall be no more than [ ** ].
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF BUYER
Buyer hereby represents and warrants and Covenants to
each Subject Company and the Shareholders as follows:
6.1 Organization of Buyer. Buyer is duly organized,
validly existing and in good standing under the laws of the
state of its incorporation.
6.2 Authorization. Buyer has all necessary corporate
power and authority and has taken all corporate action necessary
to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and
is a legal, valid and binding obligation of Buyer, enforceable
against it in accordance with its terms.
6.3 No Conflict or Violation. Neither the execution
and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (a) a violation
of or a conflict with any provision of the Certificate of
Incorporation or bylaws of Buyer, (b) a breach of, or a default
under, any term or provision of any contract, agreement,
indebtedness, lease, commitment, license, franchise, permit,
authorization or concession to which Buyer is a party, which
breach or default is reasonably likely to have a Material
Adverse
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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Effect or (c) a violation by Buyer of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction,
decree or award.
6.4 Consents and Approvals. No consent, approval or
authorization of, or declaration, filing or registration with,
any governmental or regulatory authority is required to be made
or obtained by Buyer in connection with the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby.
6.5 Reserved.
6.6 Reserved.
6.7 Canadian Employees. Buyer hereby agrees that,
upon the Closing or promptly thereafter, it will offer employment
to the three employees of MJ Instrument Sales Co., a Nova Scotia
entity, at salaries (including, without limitation, commissions
and benefits) reasonably equivalent to existing amounts. Buyer
hereby covenants and agrees to assume and pay amounts owing to MJ
Instruments Sales Co. as of the Closing Date under the
Organization and Support Services Agreement dated as of January
1, 2003 between MJ Research and MJ Instrument Sales Co., as
amended, and the Non-Exclusive Agency Agreement dated as of
January 1, 2004 between MJ Research and MJ Instrument Sales Co.,
as amended (including, without limitation, amounts that will be
payable as commissions to MJ Instrument Sales Co. and its
employees for sales incurred prior to Closing); it being
understood that such covenant and agreement shall not have any
effect on any other valid obligation of any Subject Company to MJ
Instrument Sales Co.
6.8 Bankruptcy. Buyer hereby covenants and agrees
that it will (i) in the Bankruptcy Proceeding, use commercially
reasonable efforts to cause MJ Research to emerge from the
Bankruptcy Proceeding as quickly as commercially reasonable,
including, without limitation, that in the Bankruptcy Proceeding,
Buyer will execute and deliver, where appropriate, and will cause
to be filed within two days of the execution of this Agreement,
and use commercially reasonable efforts to support, a motion and
supporting documentation substantially in the form attached
hereto as Exhibit 6.8, and (ii) in the Bankruptcy Proceeding,
cause motions to be filed and defended in connection with actions
to be taken by MJ Research under or pursuant to this Agreement or
the documents executed in connection herewith, and (iii) cause MJ
Research and its affiliates to take any actions to be taken by it
under or pursuant to this Agreement or the documents executed in
connection herewith.
6.9 Facility Side Letters; Simson Agreement; Etc..
Buyer hereby agrees to cause MJ Research or its successor or
assign to execute, deliver and perform the Facility Side Letters,
the Simson Agreement, the Joint Defense Agreement and any other
document to be executed by MJ Research pursuant to this Agreement
either (i) immediately upon the Dismissal of the Bankruptcy
Proceeding, or, if the Dismissal of the Bankruptcy Proceeding has
not occurred on or before September 30, 2004 (ii) by filing or
causing to be filed in the Bankruptcy Proceeding and using
commercially reasonable efforts to support a motion or motions in
support of the execution, delivery and performance by MJ Research
of each of the Facility Side Letters and the Simson Agreement.
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"Dismissal of the Bankruptcy Proceeding" shall mean the
Final Order of the Bankruptcy Court dismissing the Bankruptcy
Proceeding. "Final Order" shall mean an order or judgment of the
Bankruptcy Court or other applicable court as to which the time
to appeal, petition for certiorari, or move for reargument or
rehearing has expired and as to which no appeal, petition for
certiorari, or other proceedings for reargument or rehearing
shall then be pending or as to which any right to appeal,
petition for certiorari, reargue, or rehear shall have been
waived in writing in form and substance satisfactory to the
Debtor or, in the event that an appeal, writ of certiorari, or
reargument or rehearing thereof has been sought, such order or
judgment of the Court or other applicable court shall have been
affirmed by the highest court to which such order or judgment was
appealed, or certiorari has been denied, or from which reargument
or rehearing was sought, and the time to take any further appeal,
petition for certiorari or move for reargument or rehearing shall
have expired.
ARTICLE VII.
COVENANTS OF THE SUBJECT COMPANIES, THE
SHAREHOLDERS AND BUYER
Each Shareholder and each of MJ GeneWorks and Buyer
covenant and agree one with the other that, prior to the Closing
Date:
7.1 Maintenance of Business Prior to Closing.
(a) MJ GeneWorks shall, and shall cause each other
Subject Company to, use its commercially reasonable efforts to
continue to carry on the business of such Subject Company in the
ordinary course and consistent with past practice and will not
take any action inconsistent therewith or with the consummation
of the transactions contemplated hereby. Without limiting the
generality of the foregoing, MJ GeneWorks shall, and shall cause
each other Subject Company to, (i) maintain the Assets of such
Subject Company in their current state of repair in the ordinary
course of business, excepting normal wear and tear; (ii) maintain
insurance covering the Assets of such Subject Company
substantially similar to that in effect on the date hereof;
(iii) use commercially reasonable efforts to preserve the current
business organization of such Subject Company intact; (iv) use
its commercially reasonable efforts to keep available the
services of its current Personnel; and (v) use its commercially
reasonable efforts to preserve the current business relationships
with customers, suppliers, distributors and others having
business dealings with such Subject Company. No Subject Company
will engage in any practice, take any action, embark on any
course of inaction or enter into any transaction that would cause
or result in any of its representations and warranties set forth
in Article V to be untrue as of the Closing Date.
(b) Prior to the Closing, Buyer shall use commercially
reasonable efforts to continue to carry on the business of Buyer
in the ordinary course and consistent with past practice and will
not take any action inconsistent therewith or with the
consummation of the transactions contemplated hereby. Buyer will
not engage in any practice, take any action, embark on any course
of inaction or enter into any transaction that would cause or
result in any of its representations and warranties set forth in
Article VI to be untrue as of the Closing Date.
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7.2 Reserved.
7.3 Environmental. Buyer shall have the right, at its
sole cost and expense, subject to any required consents of the
owners of any Leased Property, to (i) conduct tests of the soil
surface or subsurface waters and air quality at, in, on, beneath
or about the Leased Property of such Subject Company, and to
conduct such other procedures as may be recommended by an
environmental consultant engaged by Buyer based on its
reasonable professional judgment, in a manner consistent with
good engineering practice, (ii) inspect records, reports,
permits, applications, monitoring results, studies,
correspondence data and any other information or documents
relevant to environmental conditions or environmental
noncompliance; and (iii) inspect all buildings and equipment at
the Leased Property of such Subject Company including, without
limitation, the visual inspection of the physical plans for
asbestos-containing construction materials; provided, in each
case, such tests and inspections shall be conducted only (x)
during regular business hours; and (y) in a matter that will not
unduly interfere with the operation of the business of such
Subject Company and/or the use of, access to or egress from the
Leased Property of such Subject Company. Buyer acknowledges
that no Subject Company has the right to permit any invasive
testing or testing of soil or groundwater and that any such
permission must be sought from the applicable land owner.
7.4 Consents and Commercially Reasonable Efforts. As
soon as practicable, each of Buyer and MJ GeneWorks and the
Shareholders will commence all commercially reasonable action to
obtain all applicable Permits, consents, approvals and
agreements of, and to give all notices and make all filings
with, any third parties as may be necessary to authorize,
approve or permit the consummation of the transactions provided
for hereby on or prior to the Closing Date. The costs of such
consents are to be born by equally by Buyer and the
Shareholders.
7.5 Financial Statements.
(a) MJ GeneWorks shall have provided Buyer with the
2003 Financial Statements as provided in Section 5.8.
(b) MJ GeneWorks and its Subsidiaries have provided
Buyer with the unaudited balance sheet and the unaudited
statements of income, retained earnings and cash flows of the
Subject Companies for the period ended July 31, 2004, as adjusted
(the "2004 Interim Financial Statements").
7.6 Employee Matters.
(a) Buyer does not anticipate that there will be an
"employment loss" as defined under the Worker Adjustment and
Retraining Notification Act or any applicable state law
equivalent (the "Warn Act") in connection with the transaction
contemplated hereby. In the event that there is an employment
loss in connection with the transaction contemplated hereby,
Buyer shall indemnify and save and hold harmless the Shareholders
from any and all liabilities arising under the Warn Act.
(b) During the period between the date hereof and the
Closing Date, MJ GeneWorks shall, and MJ GeneWorks and the
Shareholders shall cause each Subject Company
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to, use its commercially reasonable efforts to keep available such
Subject Company's current employees now employed with respect to the
business of such Subject Company.
7.7 Reserved.
7.8 No Mergers, Consolidations, Sale of Stock, Etc.
Such Subject Company and the Shareholders will not, directly or
indirectly, solicit any inquiries or proposals or enter into or
continue any discussions, negotiations or agreements relating to
the sale or exchange of its capital stock or the merger of such
Subject Company with, or any direct or indirect disposition of a
significant amount of the Assets or the business of such Subject
Company to, any person other than Buyer or its affiliates or
provide any assistance or any information to or otherwise
cooperate with any person in connection with any such inquiry,
proposal or transaction.
7.9 Litigation Escrow. Buyer and, upon the consent in
the Bankruptcy Proceeding if necessary, MJ Research, Inc. shall
enter into a joint defense agreement whereby the parties will
define Buyer's ability to participate in the [ ** ],
which participation will require, among other things, that Buyer
pay in full when due all [ ** ] as
more fully set forth in Section 3.3; provided that,
simultaneously with its execution and delivery to the
Shareholders of this Agreement, Buyer shall, to the extent it has
not already done so, deposit $2.5 million into an escrow account
pursuant to the Litigation Escrow Agreement dated as of the date
hereof by and among certain of the Subject Companies, the
Shareholders, Buyer and the Escrow Agent named therein (the
"Litigation Escrow"), which shall be used to pay the [
** ] (which fees will be paid
promptly upon receipt by Buyer, MJ GeneWorks and the Shareholders
of a copy of the invoice therefor), and all amounts so paid shall
be allocated to the payment of the [ ** ]
as more fully described in Section 3.3, and shall be treated as
part of the [ ** ] for purposes
of Section 3.3. For the avoidance of doubt, prior to the
Closing, Buyer shall have no obligation to pay any [ **
] except to the extent of the amount deposited in the
Litigation Escrow.
7.10 Reserved.
7.11 Line of Credit. As of the Closing Date, the
outstanding principal amount on the Line of Credit shall not
exceed the Line of Credit Maximum Principal Amount (not including
the capitalization of any interest, fees, expenses or other
amounts owing under the Line of Credit).
7.12 Shareholders' Loans. Schedule 7.12 lists all
outstanding loans by the Shareholders or their Affiliates to any
Subject Companies (the "Shareholder Loans").
7.13 Confidentiality.
(a) Buyer recognizes and acknowledges that prior to
the Closing it will have access to certain confidential
information about the business of the Subject Companies and the
Shareholders, including without limitation intellectual property,
lists of customers, operational policies, pricing and cost
policies, all of which has been provided to Buyer for the purpose
of evaluating the transactions contemplated by this Agreement.
Buyer agrees, that, without the prior written consent of the
Subject Companies and the Shareholders, prior to the Closing it
will
[**] The material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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<page>
not use such confidential information other than for the
purposes for which it has been provided and will not disclose
such confidential information to any person or entity for any
purpose whatsoever except for employees or other advisors of
Buyer involved in the transactions described herein and who are
subject to confidentiality agreements and only in connection with
such transactions and except in connection with notices required
to be given by Buyer in this Agreement provided that Buyer has
discussed such notices with the Shareholders or their counsel
prior to such disclosure, it will not use such confidential
information for any purpose whatsoever (including without
limitation for purposes of its own business) and will not
disclose such confidential information to any other person or
entity for any purpose whatsoever unless such person is
identified in, and subject to a confidentiality agreement as more
fully provided in, Section 7.2; in each case unless such
information becomes known to the public generally through no
fault of Buyer, was known by Buyer or its affiliates prior to the
beginning of negotiations regarding the Subject Companies or
unless Buyer is required by law or subpoena to disclose such
information. If the Buyer is requested to provide such
information pursuant to requirements of applicable law or by
subpoena, it shall notify the Subject Companies and the
Shareholders as promptly as possible and shall allow the Subject
Companies and the Shareholders the opportunity to oppose such
request or to seek an appropriate protective order.
(b) Each of the Shareholders and the Subject Companies
recognize and acknowledge that prior to the Closing it will have
access to certain confidential information about the Buyer for
the purpose of evaluating the transactions contemplated by this
Agreement. Each of the Shareholders and the Subject Companies
agree, that, without the prior written consent of the Buyer,
prior to the Closing it will not use such confidential
information other than for the purposes for which it has been
provided and will not disclose such confidential information to
any person or entity for any purpose whatsoever except for
employees or other advisors of either of the Shareholders or the
Subject Companies involved in the transactions described herein
and who are subject to confidentiality agreements and only in
connection with such transactions and except in connection with
notices required to be given by either of the Shareholders or the
Subject Companies in this Agreement provided each of the
Shareholders or the Subject Companies has discussed such notices
with the Buyer or their counsel prior to such disclosure, it will
not use such confidential information for any purpose whatsoever
(including without limitation for purposes of its own business)
and will not disclose such confidential information to any other
person or entity for any purpose whatsoever unless such person is
identified in, and subject to a confidentiality agreement as more
fully provided in, Section 7.2; in each case unless such
information becomes known to the public generally through no
fault of either the Shareholders or the Subject Companies, was
known by either of the Shareholders or the Subject Companies or
the Subject Companies' affiliates prior to the beginning of
negotiations regarding the Subject Companies or unless either of
the Shareholders or the Subject Companies is required by law or
subpoena to disclose such information. If either of the
Shareholders or the Subject Companies is requested to provide
such information pursuant to requirements of applicable law or by
subpoena, it shall notify the Buyer as promptly as possible and
shall allow the Buyer the opportunity to oppose such request or
to seek an appropriate protective order.
7.14 Section 338(h)(10) Election; 2004 Stockholder Tax
Liability.
(a) Buyer, the Shareholders and MJ GeneWorks shall
take all necessary and appropriate steps to join in the making of
an election pursuant to Section 338(h)(10) of the Code
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(and any corresponding elections under state, local or foreign tax laws)
(the "Section 338(h)(10) Election") with respect to the purchase
and sale of the capital stock of MJ GeneWorks and will jointly
take such actions as are necessary to effect such election. As
soon as practicable, on or after the Closing Date, the parties
will timely file IRS Form 8023 and such other forms as are
required to effect such election.
(b) The modified aggregate deemed Purchase Price shall
be allocated among the assets of the Company on the basis set
forth on Schedule 7.14; such allocations will be used in filing
Form 8883 and such other forms as are required to effect the
Section 338(h)(10) Election. Subject to the requirements of any
applicable tax law or election, all income tax returns filed by
the Shareholders, Buyer or any Subject Company will be prepared
consistently with such allocations. None of Buyer, any Subject
Company or any Shareholder shall take any position before any
taxing authority or in any judicial proceeding with respect to
income taxes that is inconsistent with such mutually agreed-upon
allocations.
(c) On or before the date that is ten days prior to
the date any Shareholder is required to pay any estimated or
actual federal, state or local income taxes resulting from the
transactions contemplated by this Agreement, Buyer shall pay to
such Shareholder, by wire transfer of immediately available funds
to an account designated by such Shareholder, an additional
payment amount equal to the following:
(1) the difference between
(A) the aggregate amount of federal, state and
local income taxes that would have been payable by such
Shareholder had the Section 338(h)(10) Election not
been made, assuming for these purposes that the
Shareholder was or is in the maximum marginal tax
brackets for federal, state and local income tax
purposes, and further assuming that the Shareholder is
subject to the federal alternative minimum tax, and
(B) the aggregate amount of federal, state and
local income taxes that will be payable by the
Shareholder as a result of the Section 338(h)(10)
Election, assuming the Shareholder was or is in the
maximum marginal tax brackets for federal state and
local income tax purposes, and further assuming that
the Shareholder is subject to the federal alternative
minimum tax;
all such computations to take into account all factors,
including, but not limited to, the increase in income and
gain recognized as a result of the Section 338(h)(10)
Election and changes in character of the income subject to
tax (the difference between such two tax calculations is
referred to herein as the "Difference"), plus
(2) an incremental amount further grossing up such
Difference for any federal, state or local taxes, arising from
(A) the payment of the Difference plus (B) the payment of such
incremental amount (said incremental amount being referred to
herein as the "Gross Up Amount") such that, after taking into
account payment of the Gross Up Amount and the Difference, such
Shareholder will have received approximately the same aggregate
after-tax proceeds from the aggregate transactions under this
Agreement that such Shareholder would
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have enjoyed but for the Section 338(h)(10) Election, again based on the
assumptions set forth in this subsection (c).
The purpose of this subsection (c) is to provide a method
for reasonably approximating the additional payments necessary to
put each Shareholder in the same position after the Section
338(h)(10) Election as that person would be in absent such
election, by assuming for such calculation purposes that each
Shareholder is in the maximum tax bracket in each jurisdiction,
and further assuming that such Shareholder is subject to the
Federal alternative minimum tax, in order to make it possible to
simplify the calculation and complete it contemporaneously with
any payment or other event that results in tax liabilities to
such Shareholder pursuant to the transactions contemplated by
this Agreement. The Buyer is agreeing to make all such
additional payments to each Shareholder, under this section 7.14,
as consideration for each Shareholder's agreement to execute and
file the 338(h)(10) Election.
(d) Buyer and Shareholders acknowledge and agree in
advance that, at the time the 338(h)(10) Election is filed, it
may be difficult or impossible to determine the full and correct
amount of both the Difference and the Gross Up Amount
contemplated in section 7.14(c), due, among other things, to the
existence of contingent payments that may not be fixed and
determinable on or before such date. Buyer therefore agrees
that, at the time any future payments are made to the
Shareholders under this Agreement, Buyer shall at that time pay
to each Shareholder such amount as would be required under
Section 7.14(c), hereof.
(e) The parties acknowledge and agree that, when and
if any taxing authority increases the tax liability for any
Shareholder as a result of the transactions contemplated by this
Agreement, the Buyer shall make such payments to such Shareholder
as required in accordance with Section 7.14(c); provided,
however, that in the event of an actual tax audit and adjustment
by any taxing authority, the additional payments owed by Buyer to
such Shareholder at that time will be the Difference and Gross Up
Amount determined using the actual tax return and actual tax
items of such Shareholder, as adjusted by the taxing authorities.
The purpose and intention of this section 7.14(e) is to assure
that, after any tax audit, each Shareholder is in the same
economic position on an after-tax basis that he would be in if no
Section 338(h)(10) Election were filed.
7.15 Reserved.
7.16 Filings. Notwithstanding anything in this
Agreement to the contrary, no party hereto makes any
representation, warranty, covenant or agreement in respect of
notices to any person or filings with any non-United States
government or other foreign jurisdiction in connection with the
execution, delivery or performance of this Agreement.
7.17 401(k) Plan. The Shareholders shall have no
liability with respect to the action by MJ GeneWorks's board of
directors to terminate its 401(k) plan (the "Seller's 401(k)
Plan") effective immediately prior to the Closing Date, and Buyer
shall indemnify the Shareholders from any liability with respect
to such termination and from any liability with respect to any
actions or omissions taken by the Buyer after the Closing Date
with respect to the termination of the Seller's 401(k) Plan
and/or the Buyer's distribution of benefits or merger of account
balances. The preceding sentence and the indemnity it contains
shall not apply to any
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liability, tax, penalty, cost or other expense attributable to acts or
omissions prior to the Closing other than the adoption of a corporate
resolution to terminate the Seller's 401(k) Plan, which resolutions were
adopted at the request of the Buyer.
7.18 Colonnade Apartment. Buyer shall permit (or cause
to be permitted) John D. Finney, at his sole costs and expense,
to continue to occupy the corporate residence at the Colonnade
Residences, 118 Huntington Avenue, Apt. 901, Boston, MA from the
date hereof through December 31, 2004.
7.19 Transfer of MJ Japan. Immediately following the
Closing, Buyer shall make or cause to be made employment offers
to at least three of the following four persons: Yoshiharu Naito,
Sales Manager, Makoto Abe, Applications Manager, Yukimasa
Nakashima, Technical Service Manager, and Hiroko Yoshida,
Accounting Manager (such three or four employees to whom
employment offers are made being the "Buyer Employees"; all other
employees of MJ Japan collectively referred to as the "Remaining
Employees"). Within the period that is 30 days after the Closing
(the "30-Day Transfer Preparation Period"), the parties hereto
will pursue a sale or other transfer (a "Transfer") to a
purchaser (the "Third-Party Purchaser") of MJ Japan, as a legal
entity, provided that at the time of such transfer, such entity
will have only the following assets and liabilities: (1) the
current lease for the office space occupied by MJ Japan; (2) the
employment relationship with all or some portion of the Remaining
Employees; (3) furniture and fixtures (including, without
limitation, the laboratory equipment) currently used by MJ Japan;
(4) the computer equipment and systems currently used by MJ
Japan; (5) any lease for furniture, fixtures and equipment used
by MJ Japan, and any automobile leases for automobiles used
primarily by employees whose employment relationships are being
transferred pursuant to clause (2) above; and (6) all corporate
books and records and other similar assets of MJ Japan (but not
including the name "MJ Japan" itself) (collectively, the
"Transferred Assets"). Within the Transfer Preparation Period,
in anticipation of the Transfer, Buyer shall make reasonable
efforts to transfer out of MJ Japan all assets and liabilities
other than the Transferred Assets. If Buyer is not able to
transfer out all such assets on a commercially reasonable basis,
including because the accounts receivable are not easily
transferred or distributed, then the parties agree that the Buyer
will be allocated an appropriate portion of any proceeds from a
Transfer such that Buyer is made whole for leaving such assets in
MJ Japan. Definitive documentation relating to the Transfer
shall be executed by the Third-Party Purchaser within the
Transfer Preparation Period, and such transaction shall be
consummated within the period that is 45 days after the Closing.
In the event the parties consummate a Transfer in which
Buyer recognizes a net profit calculated in the manner described
below (the "Transfer Net Profit"), Buyer will pay the
Shareholders an additional amount equal to 50% of the Transfer
Net Profit. The Transfer Net Profit will be determined based on
the following factors: (1) all costs of transferring to Buyer
the assets and liabilities of MJ Japan other than the Transferred
Assets will be disregarded; (2) Buyer will bear the costs of
operating MJ Japan during the 30-Day Transfer Preparation Period,
and such operating costs are to be taken into account in
determining Transfer Net Profit; (3) if Buyer elects to retain
and employ any Remaining Employees after the 30-Day Transfer
Preparation Period in preparation for a Transfer, such other
operating costs will be deducted from the gross proceeds of a
Transfer in determining Transfer Net Profit; (4) and any all
other costs reasonably incurred by Buyer or MJ Japan directly in
connection with the Transfer,
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including, without limitation, attorneys' fees, will be taken into
account in determining Transfer Net Profit; and (5) if the purchase price
paid by the Third-Party Purchaser is increased to reimburse Buyer for MJ
Japan assets other than the Transferred Assets, such portion of
the purchase price shall be allocated exclusively to Buyer and
shall not be taken into account when calculating Transfer Net
Profit.
In the event the Third Party Purchaser requires that
one or more of the Remaining Employees be terminated prior to the
Transfer and Buyer must pay severance costs (including, without
limitation, severance payments that are customarily made to
Japanese employees by Japanese companies in similar situations
(the "Severance Costs")) to such terminated employees, the
Shareholders receive 50% of the Transfer Net Profit less 50% of
the Severance Costs paid by Buyer to such terminated employees.
In the event the parties are not able to identify a
Third Party Purchaser during the 30-Day Transfer Preparation
Period, Buyer may at any time thereafter, in its sole and
absolute discretion, elect to terminate the Remaining Employees.
In the event Buyer terminates one or more of the Remaining
Employees upon or after the termination of the 30-Day Transfer
Termination Period and thereafter pays Severance Costs to such
terminated employee(s), the Shareholders shall pay to Buyer an
amount equal to the lesser of the following: (a) 50% of the
amount of the Severance Costs paid by Buyer to such terminated
employee(s); and (b) in the aggregate for all such terminations,
US$500,000. Notwithstanding the foregoing, the Shareholder's
obligation to make payments pursuant to this paragraph with
respect to unterminated Remaining Employees shall terminate in
the event a Transfer has not occurred within one hundred twenty
days of the Closing Date (the "Expiration Date") except in
respect of specific amounts claimed to be owed to Buyer pursuant
to this paragraph in a writing delivered to the Shareholders by
the Buyer before the Expiration Date. The parties may extend
such one hundred twenty day period by mutual written agreement
executed by all parties.
To secure payment by the Shareholders to Buyer of their
portion of any Severance Costs, the parties agree to enter into
an escrow agreement (the "Severance Escrow Agreement") in
substantially the form attached hereto as Exhibit 7.19. The
parties agree to treat the $500,000 held under the Severance
Escrow Agreement as belonging to the Buyer until such funds are
released pursuant to the terms of said escrow agreement.
7.20 Jeanette Finney. Buyer intends to continue
employing Jeanette Finney in her current capacity at her current
salary and with the benefits package offered most remaining
employees of the Subject Company for some period after the
Closing. Ms. Finney's employment may be terminated by Buyer upon
two week's notice or two weeks' pay in lieu of notice, but in any
event shall terminate effective October 30, 2004. Upon such
termination, in exchange for a full release by Ms. Finney for all
claims she may have against the Subject Companies, Buyer agrees
to pay Ms. Finney severance equal to $16,228. Provided Buyer
complies with the terms of this Section 7.20, John D. Finney
agrees to indemnify Buyer for Damages (as defined below) incurred
in connection with any claims made by Ms. Finney arising from her
employment with any Subject Company.
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ARTICLE VIII.
CONDITIONS TO THE SHAREHOLDERS' OBLIGATIONS
The obligations of each Shareholder to consummate the
transactions provided for hereby are subject to the satisfaction,
on or prior to the Closing Date, of each of the following
conditions (any of which may be waived by such Shareholder):
8.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at
and as of the date of this Agreement and at and as of the Closing
Date as though made on the Closing Date except to the extent that
any such representation and warranty refers to a specific date,
in which case it shall be true and correct in all material
respects as and as of said date, and Buyer shall have performed
all material agreements and covenants required hereby to be
performed by it prior to or at the Closing Date.
8.2 Consents. Any necessary governmental approvals
under applicable U.S. and foreign laws and other third party
approvals required to be obtained by Buyer pursuant to
Section 7.4 shall have been obtained.
8.3 No Governmental Proceedings or Litigation. No
Action by any governmental authority shall have been instituted
or threatened for the purpose of enjoining or preventing the
transactions contemplated by this Agreement, that questions the
validity or legality of the transactions contemplated hereby that
is reasonably likely to have a Material Adverse Effect.
8.4 Opinion of Counsel. Buyer shall have delivered to
the Shareholders an opinion of the general counsel to Buyer,
dated as of the Closing Date, as to the matters set forth on
Exhibit 8.4 hereto.
8.5 Certificates. The Buyer will furnish the
Shareholders the following certificates:
(a) A certificate executed by the Secretary or an
Assistant Secretary of Buyer certifying as of the Closing Date
(i) a true and complete copy of the bylaws of Buyer, (ii) a true
and complete copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions
contemplated hereby, and (iii) incumbency matters.
(b) A certificate executed by the President or any
Vice President of Buyer certifying that, as of the Closing Date,
the conditions set forth in Article VIII and Article IX have been
satisfied; and
(c) A copy of the certificate of incorporation of
Buyer and all amendments thereto, certified as of a recent date
by the Secretary of State of Delaware.
8.6 Consulting Agreements. Buyer shall have entered
into the Consulting Agreements with the Shareholders.
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ARTICLE IX.
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate any of the
transactions provided for hereby are subject to the satisfaction,
on or prior to the Closing Date, of each of the following
conditions (any of which may be waived by Buyer):
9.1 Representations, Warranties and Covenants. All
representations and warranties of each of the Subject Companies
and the Shareholders contained in this Agreement shall be true
and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date as though made
on the Closing Date except to the extent that any such
representation and warranty refers to a specific date, in which
case it shall be true and correct in all material respects as and
as of said date, and each Subject Company and the Shareholders
shall have performed all agreements and covenants required hereby
to be performed by either of them prior to or at the Closing
Date.
9.2 Consents. Any necessary governmental approvals
under applicable U.S. and foreign laws and other third party
approvals required to be obtained by MJ GeneWorks or the
Shareholders pursuant to Section 7.4 shall have been obtained.
9.3 No Governmental Proceedings or Litigation. No
Action by any governmental authority shall have been instituted
or threatened for the purpose of enjoining or preventing the
transactions contemplated by this Agreement, or that questions
the validity or legality of the transactions contemplated hereby.
9.4 Opinion of Counsel. MJ GeneWorks and the
Shareholders shall have delivered to Buyer an opinion of
Greenberg Traurig, LLP, dated as of the Closing Date, as to the
matters set forth on Exhibit 9.4 hereto.
9.5 Certificates. The Shareholders will furnish Buyer
the following certificates:
(a) A certificate executed by the Secretary or an
Assistant Secretary of MJ GeneWorks and each Subject Company
other than MJ Japan and MJ Research certifying as of the Closing
Date (i) a true and complete copy of the bylaws of such Subject
Company; (ii) a true and complete copy of the resolutions of the
board of directors of such Subject Company authorizing, in the
case of MJ GeneWorks, the execution, delivery and performance of
this Agreement, and, in the case of such Subject Company, and the
consummation of the transactions contemplated hereby; and
(iii) incumbency matters.
(b) A certificate executed by the President or any
Vice President of MJ GeneWorks and by each Shareholder certifying
that, as of the Closing Date, the conditions set forth in Article
IX and in Article VIII have been satisfied;
(c) A copy of the articles of incorporation,
certificate of incorporation or equivalent of each Subject
Company other than MJ Japan and all amendments thereto, certified
as of a recent date by the appropriate Secretary of State;
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(d) A copy of the certificate to do business of each
Subject Company other than MJ Japan, certified by the appropriate
Secretary of State, in each state where such Subject Company is
qualified to do business as a foreign entity;
(e) A certificate of the appropriate Secretary of
State certifying the good standing of each Subject Company other
than MJ Japan in its state, or country of incorporation and all
states where it is qualified to do business;
(f) Reserved.
9.6 Reserved.
9.7 Reserved.
9.8 Escrow Agreements. The Shareholders shall have
entered into the Indemnification Escrow Agreement with Buyer.
9.9 Consulting Agreements. The Shareholders shall
have entered into the Consulting Agreements with Buyer.
9.10 Reserved.
9.11 Reserved.
9.12 Tax Matters. No new elections with respect to
Taxes, or changes in current elections with respect to Taxes,
affecting any Subject Company shall have been made after the date
of this Agreement without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.
9.13 Endorsement of Loans. Buyer shall have received
executed endorsement allonges (the "Endorsement Allonges") for
each of the Promissory Notes identified on Schedule 7.12.
9.14 Financial Statements. Buyer shall have received
the 2003 Financial Statements and the 2004 Interim Financial
Statements.
ARTICLE X.
COVENANT NOT TO COMPETE
Each of Michael J. Finney and John D. Finney
(individually, a "Controlling Shareholder" and, collectively, the
"Controlling Shareholders") acknowledges and agrees that the
business of each Subject Company is conducted throughout the
world (the "Territory") and that such Subject Company's
reputation and goodwill are an integral part of its business
success throughout the Territory. If a Controlling Shareholder
deprives such Subject Company of its goodwill or in any manner
utilizes its reputation and goodwill in competition with Buyer or
any Subject Company, Buyer will be deprived of the benefits it
has bargained for pursuant to this Agreement. Accordingly, as an
inducement for Buyer to enter into this Agreement, each
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Controlling Shareholder, with respect to each Subject Company,
agrees that for a period of five (5) years after the Closing Date
(the "Non-competition Period"), such Controlling Shareholder
shall not, without Buyer's prior written consent, directly or
indirectly, own, manage, operate, join, control or participate in
the ownership, management, operation or control of, or be
connected as a director, officer, employee, partner, consultant
or otherwise with, any profit or non-profit business or
organization that, directly or indirectly, is engaged in the
Business in the Territory; except that ownership of an equity
interest of 2% or less in any such firm or business that is a
public corporation shall not be prohibited by this Article X. In
the event the agreement in this Article X shall be determined by
any court of competent jurisdiction to be unenforceable by reason
of its extending for too great a period of time or over too great
a geographical area or by reason of its being too extensive in
any other respect, it shall be interpreted to extend only over
the maximum period of time for which it may be enforceable and/or
over the maximum geographical area as to which it may be
enforceable and/or to the maximum extent in all other respects as
to which it may be enforceable, all as determined by such court
in such action.
From the date hereof until one year following the
termination of the Consulting Agreement for the relevant
Controlling Shareholder, such Controlling Shareholder shall not
(a) solicit, raid, entice, induce or contact, or attempt to
solicit, raid, entice, induce or contact, any Person, firm or
corporation that is a customer of any Subject Company at the time
of the Closing or has been a customer of any Subject Company
within the 18 months immediately preceding the Closing (or,
during the term of the Consulting Agreement, any Person who is a
customer of a Subject Company during such term) for products or
services the same as, or competitive with, the Business, or
approach any such Person, firm or corporation for such purpose or
authorize the taking of such actions by any other Person, firm or
corporation or assist or participate with any such Person, firm
or corporation in taking such action, or (b) solicit, raid,
entice, induce or contact, or attempt to solicit, raid, entice,
induce or contact, any Person, firm or corporation that is an
employee, agent or consultant of or to such Subject Company
within the 18 months immediately preceding the Closing (or,
during the term of the Consulting Agreement, any Person who is an
employee, agent or consultant of a Subject Company during such
term) to do anything such Controlling Shareholder is restricted
from doing by reason of this Article X, and no Controlling
Shareholder shall approach any such employee, agent or consultant
for such purpose or authorize or participate with the taking of
such actions by any other Person, firm or corporation or assist
or participate with any such Person, firm or corporation in
taking such action; provided that, notwithstanding anything in
this clause (b) to the contrary, this clause (b) shall not relate
to the following persons: Edward Breakell, Facilities Project
Manager, Rita Dunton, Accountant, Jeanette Finney, Financial
Analyst, and Javier Sanchez, Facilities Engineer.
Each Controlling Shareholder acknowledges that the
Confidential Information (as defined below) of each Subject
Company is valuable and proprietary to the business of such
Subject Company and agrees not to, directly or indirectly, use,
publish, disseminate, describe or otherwise disclose any
Confidential Information or Developments (as defined below) of
such Subject Company without the prior written consent of Buyer
and/or its affiliates. For purposes of this Agreement,
"Confidential Information" shall mean with respect to each
Subject Company, all confidential information of such Subject
Company existing at, or, if not in tangible form, arising prior
to, the time of the Closing and that is not otherwise publicly
disclosed or generally available (other than as a result of a
disclosure by such Controlling Shareholder in violation of this
Article X), including information entrusted to such Subject
Company by others
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as of such time, and including, without
limitation, any such information in the form of: (a) customer
lists, lists of potential customers and details of agreements
with customers of such Subject Company; (b) acquisition,
expansion, marketing, financial and other business information
and plans of such Subject Company; (c) research and development
of such Subject Company; (d) computer programs and Computer
Software of such Subject Company; (e) sources of supplies of such
Subject Company; (f) identity of specialized consultants and
contractors and Confidential Information developed by them for
such Subject Company; (g) purchasing, operating and other cost
data of such Subject Company; (h) special customer needs, cost
and pricing data of such Subject Company; (i) employee
information with respect to such Subject Company, (j) information
recorded in manuals, memoranda, projections, minutes, plans,
drawings, designs, formula books, specifications, computer
programs and records of such Subject Company, whether or not
legended or otherwise identified as Confidential Information, as
well as information that was the subject of meetings and
discussions and not so recorded. For purposes of this Agreement,
"Developments" shall mean with respect to each Subject Company
all data, concepts, ideas, findings, discoveries, developments,
programs, designs, inventions, improvements, methods, practices
and techniques, whether or not patentable, of such Subject
Company existing at, or, if not in tangible form, arising prior
to, the time of the Closing and relating to the products,
services or activities of such Subject Company at the time of the
Closing or with respect to which such Subject Company has
substantial plans for development as of the time of the Closing.
Each Controlling Shareholder acknowledges that a breach
of the covenants contained in this Article X will cause
irreparable damage to Buyer, the exact amount of which will be
difficult to ascertain, and that the remedies at law for any such
breach will be inadequate. Accordingly, each Controlling
Shareholder agrees that if such Controlling Shareholder breaches
the covenant contained in this Article X in addition to any other
remedy that may be available at law or in equity, Buyer shall be
entitled to specific performance and injunctive relief, without
posting bond or other security.
ARTICLE XI.
ACTIONS BY THE SHAREHOLDERS AND BUYER
AFTER THE CLOSING
11.1 Books and Records. The Shareholders and Buyer
agree that, for a period of seven (7) years following the Closing
Date, each will reasonably cooperate with and make available to
the other party, during normal business hours, all Books and
Records, information and Personnel (without substantial
disruption of employment) retained and remaining in existence
after the Closing Date that are necessary or useful in connection
with the preparation of tax returns for periods prior to the
Closing Date and in connection with any tax inquiry, audit,
investigation or dispute, any litigation or investigation or any
other matter requiring any such Books and Records, information or
employees for any reasonable business purpose. The party
requesting any such Books and Records, information or Personnel
shall bear all of the out-of-pocket costs and expenses (including
without limitation, attorneys' fees, but excluding reimbursement
for salaries and employee benefits) reasonably incurred in
connection with providing such Books and Records, information or
Personnel. In addition, Buyer will make available to the
Shareholders for review or copying, during normal business hours,
all books,
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records and other information relating to 7000
Shoreline Drive, South San Francisco, California or to the
ownership thereof, and to Personnel (without substantial
disruption of employment) familiar with such books and records
for purposes of transitioning the maintenance of such books and
records to the Shareholders or their agent, and all out-of-pocket
costs and expenses incurred in connection therewith shall be
borne by the Shareholders.
11.2 Survival of Representations, Etc. The
representations and warranties of the Shareholders and Buyer
contained herein shall survive the Closing Date until the third
anniversary of the Closing Date; provided, however, that (a) the
representations and warranties contained in Section 5.16 shall
survive until all applicable statute of limitations expires,
(b) the representations and warranties contained in Section 5.23
shall survive for a period of five (5) years, and (c) the
representations and warranties contained in Section 5.1(b) shall
survive indefinitely.
11.3 Indemnifications.
(a) By the Shareholders. From and after the Closing,
each Shareholder shall jointly and severally indemnify, save and
hold harmless Buyer, its affiliates and subsidiaries, and its and
their respective officers, directors, employees, agents and other
representatives, from and against any and all costs, losses,
liabilities, damages, lawsuits, deficiencies, claims and expenses
(whether or not arising out of third-party claims), including
without limitation, interest, penalties, reasonable attorneys'
fees and all amounts paid in investigation, defense or settlement
of any of the foregoing (herein, the "Damages"), (1) incurred in
connection with or arising out of or resulting from any breach of
any representation, warranty, covenant or agreement, or the
inaccuracy of any representation or warranty, made by MJ
GeneWorks or by any Shareholder in or pursuant to this Agreement
(subject to the limitations set forth in Section 11.2), (2)
incurred in connection with or arising out of or resulting from
the lawsuits between Walter A. Simson and MJ Research (MJ
Research, Incorporated, et. al. v. Walter A. Simson, Middlesex
Superior Court Civil Action No. 02-3671 and Walter A. Simson v.
MJ Research, Incorporated, Middlesex Superior Court Civil Action
No. 01-4089F, both in Middlesex Superior Court) (the "Simson
Litigation"), and (3) incurred in connection with or arising out
of or resulting from the Senior Executive Dispute. The term
"Damages" as used in this Section 11.3 is not limited to matters
asserted by third parties against such Subject Company or Buyer,
but includes Damages incurred or sustained by such Subject
Company or Buyer in the absence of third party claims.
(b) By Buyer. Subject to the limitation set forth in
Section 11.2, from and after the Closing, Buyer shall indemnify
and save and hold harmless the Shareholders from and against (1)
any and all Damages incurred in connection with or arising out of
or resulting from any breach of any representation, warranty,
covenant or agreement, or the inaccuracy of any representation or
warranty, made by Buyer in or pursuant to this Agreement, (2)
subject to the Shareholders' obligations to indemnify Buyer and
its affiliates for the inaccuracy or breach of the representation
and warranty set forth in the last sentence of Section 5.13, any
and all [ ** ] , (3) any and all Damages relating
to the Line of Credit, except to the extent incurred in
connection with or arising out of or resulting from a breach of
the covenants set forth in Section 7.11 or the inaccuracy or
breach of the representation and warranty set forth in
Section 5.30, (4) any and all Damages relating to or arising from
sales, services or other operations of any Subject Company or
their businesses after the Closing Date (but specifically
excluding any
[**] The material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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Damages relating to or arising from sales, services
or other operations of any Subject Company or their businesses
prior to the Closing Date and with respect to which Shareholders
are obligated to indemnify Buyer pursuant to Section 11.3(a) or
which otherwise represents a breach by the Shareholder of his
obligations under this Agreement), (5) any and all Damages
incurred in connection with or arising out of or resulting from
any claim by the creditors committee or any individual creditor
or other person for breach of fiduciary duty, piercing the
corporate veil or any other claim of any similar kind or nature
originating or derived from conduct in connection with claims
based on the same transactions or occurrences as those made in
the [ ** ] or such conduct in connection with the
negotiation or consummation of the transactions reflected in this
Agreement or the Other Transaction Documents, and (6) any and all
Damages incurred in connection with or arising out of or
resulting from any actions or omissions taken in respect to the
termination of the MJ GeneWorks 401(k) Plan in connection with
the Closing and/or the Buyer's distribution of benefits or merger
of account balances, provided that such indemnification shall not
apply to any liability, tax, penalty, cost or other expense
attributable to acts or omissions prior to the Closing other than
the adoption of a corporate resolution to terminate the Seller's
401(k) Plan.
(c) Defense of Claims. If any action or proceeding
(including any governmental investigation or inquiry) shall be
brought or asserted or threatened to be brought or asserted
against an indemnified party in respect of which indemnity may be
sought from an indemnifying party, such indemnified party shall
promptly notify the indemnifying party in writing, and the
indemnifying party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such
indemnified party and the payment of all expenses. Such
indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but
the fees and expenses of such counsel shall be the expense of
such indemnified party unless (i) the indemnifying party has
agreed to pay such fees and expenses or (ii) the indemnifying
party shall have failed to assume the defense of such action or
proceeding or shall have failed to employ counsel reasonably
satisfactory to such indemnified party in any such action or
proceeding or (iii) the named parties to any such action or
proceeding (including any impleaded parties) include both such
indemnified party and the indemnifying party, and such
indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to such indemnified
party that are different from or additional to those available to
the indemnifying party (in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such action or proceeding on behalf of such
indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such
action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of more than one separate
firm of attorneys at any time for such indemnified party and any
other indemnified parties, which firm shall be designated in
writing to the indemnifying party by such indemnified parties).
The indemnifying party shall not be liable for any settlement of
any such action or proceeding effected without its written
consent, but if settled with its written consent (which shall not
be unreasonably withheld), or if there be a final judgment for
the plaintiff in any such action or proceeding, the indemnifying
party agrees to indemnify and hold harmless such indemnified
parties from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding anything herein to the
contrary, Shareholders shall have the right to
[**] The material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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control the conduct of any audit or proceeding with respect to Taxes
involving such Subject Company for any period or periods prior to
and including the Closing Date so long as such audit or
proceeding either (i) will not result in any Tax being assessed
against any Subject Company for the period or periods prior to
and including the Closing Date or (ii) the Shareholders have
indemnified Buyer against any liabilities for any Tax being
assessed against any Subject Company for the period or periods
prior to and including the Closing Date.
(d) Simson Litigation. In addition, notwithstanding
anything herein to the contrary, the Shareholders shall have
control of and shall manage the Simson Litigation and the Senior
Executive Dispute, and Buyer shall grant or will cause to be
granted to the Shareholders, as more fully provided in
Section 6.9, an irrevocable agreement in the form attached hereto
as Exhibit 11.3 (the "Simson Agreement") for the purpose of
exercising such right of control and management. All monies
derived from the Simson Litigation and the Senior Executive
Dispute or the settlement thereof for the benefit of the Subject
Companies, if any, shall be paid over to the Shareholders
promptly after receipt thereof, but only after deducting from
such sum the amounts necessary to fully indemnify Buyer for all
out-of-pocket costs and expenses (including without limitation
attorneys' fees) of Buyer incurred in connection with or arising
out of or resulting from the Simson Litigation or the Senior
Executive Dispute.
(e) Limitation on Indemnity. Notwithstanding the
foregoing, the maximum aggregate amount of Damages the
Shareholders shall be liable pursuant to this Section 11.3 shall
be $10,000,000 in the aggregate (provided, however, that
the foregoing limitation on indemnity shall not apply for the
purpose of indemnification by the Shareholders of Damages
incurred in connection with or arising out of or resulting from
the Simson Litigation and/or Senior Executive Dispute to the
extent such Damages exceed, in the aggregate, $600,000)
provided that the maximum aggregate amount of Damages the
Shareholders shall be liable pursuant to this Section 11.3 with
respect to a breach of the representation and warranty contained
in clause (y) of Section 5.4(c) as it applies to any and all of
the molecular biology reagent products sold or used by Subject
Companies shall be $1,000,000.
(f) Further Limitation on Shareholder Indemnification.
No indemnifying party will have any obligation under to indemnify
any person under this Agreement or any related document,
(a) until the aggregate combined total of all such Damages
incurred by such person exceeds $100,000, whereupon such
person shall be entitled to indemnification with respect to
Damages incurred by such person in excess of $100,000.
11.4 Further Assurances.
(a) Time is of the essence with respect to the
Closing.
(b) Each of Buyer, the Shareholders and each Subject
Company shall use commercially reasonable efforts to take all
action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by
this Agreement (including, without limitation, satisfying the
closing conditions in Articles VIII and IX hereto). Following
the Closing, the Shareholders agree to execute such documents and
take such actions as may be reasonably requested by Buyer's
counsel and otherwise reasonably cooperate with Buyer and its
affiliate and their representatives in connection with any
filings required to be
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made with the Securities and Exchange
Commission as a consequence of the transactions contemplated by
this Agreement, all at the cost of Buyer.
(c) The Shareholders and Buyer agree to furnish or
cause to be furnished to each other, upon reasonable request, as
promptly as practicable, such information and assistance
(including access to books and records) relating to each Subject
Company as is reasonably necessary for the preparation of any
return with respect to Taxes, claim for refund or audit, and the
prosecution or defense of any claim, suit or proceeding relating
to any proposed adjustment with respect to Taxes, all at the cost
of the requesting party.
ARTICLE XII.
MISCELLANEOUS
12.1 Termination.
(a) In the event the Closing does not occur on or
before the earlier of (i) the date any final and non-appealable
judgment is entered in the [ ** ] or (ii) December
31, 2004, for any reason other than the failure of the Subject
Companies or the Shareholders to use commercially reasonable
efforts to achieve the Closing as promptly as possible, then, at
the option of the Shareholders, this Agreement and the documents
executed and delivered in connection herewith shall terminate.
Upon such termination, Buyer shall be deemed to pay or otherwise
forfeit the $2.5 Million contributed to the Litigation Escrow,
which $2.5 Million shall in such case be treated as a signing
payment to the Subject Companies for this Agreement and such
related Agreements and the right of Buyer to hold the Subject
Companies off the market during the period prior to the Closing.
The provisions of this Section 12.1 shall survive the termination
of this Agreement.
(b) In the event of termination of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same;
provided that outside counsel to each party may maintain, in a
secure location in its legal department or with outside counsel,
one copy of such materials to be used solely and exclusively for
the purpose of demonstrating such party's compliance with such
party's confidentiality obligations in respect of such
information if challenged by the other party, and for no other
purpose, and such copy shall be maintained in all respects as
confidential by the retaining party and shall not be disclosed to
any person, including, without limitation, any employee of Buyer,
unless a claim is made by the owing party that the retaining
party breached its confidentiality obligation with respect to
such information, and then only to the persons directly involved
in resolving such dispute and only to the extent necessary to
resolve such issue; and
(ii) No confidential information received by any
party with respect to the business of any other party or its
affiliates shall be disclosed to any third party, unless required
by law.
[ ** ] This material has been omitted pursuant to a request for
confidential treatment. The material has been filed separately
with the Commission.
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12.2 Assignment. The parties to this Agreement may
assign their rights under this Agreement, but not their
obligations hereunder, without the prior written consent of all
other parties to this Agreement. Without limiting the generality
of the foregoing, each Subject Company and the Shareholders agree
to the assignment by Buyer of its rights pursuant to this
Agreement, including its rights to indemnification, to any
affiliate or subsidiary of Buyer and agrees to execute any
appropriate agreement or instrument that Buyer may reasonably
request in order to effect or evidence such assignment or
consent.
12.3 Notices; Transfer of Funds. All notices,
requests, demands and other communications which are required or
may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally
delivered; when transmitted if transmitted by telecopy,
electronic or digital transmission method; the day after it is
sent, if sent for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal Express);
and upon receipt, if sent by certified or registered mail, return
receipt requested. In each case notice shall be sent to:
If to the Shareholders, to:
John D. Finney
774 Mays Boulevard #10
PMB 352
Incline Village, NV 89451-9613
and to:
Michael J. Finney
489 Douglass Street
San Francisco, CA 94114-2725
In each case with a copy to:
Greenberg Traurig LLC
One International Place, 20th Floor
Boston, Massachusetts 02110
Attn: Joseph B. Darby, III
If to Buyer, addressed to:
Bio-Rad Laboratories, Inc.
1000 Alfred Nobel Drive
Hercules, California 94547
Attn: General Counsel
or to such other place and with such other copies as either party
may designate as to itself by written notice to the others.
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12.4 Choice of Law; Service of Process. This Agreement
shall be construed, interpreted and the rights of the parties
determined in accordance with the laws of the State of California
without reference to its choice of law provisions, except that
the internal governance of any Delaware corporation affected by
this Agreement shall be construed, interpreted and the rights of
the parties determined in accordance with Delaware General
Corporation Law without reference to its choice of law
provisions. Each Shareholder irrevocably consents to the service
of any and all process in any action or proceeding arising out of
or relating to this Agreement by the mailing of copies of such
process to the Shareholders of such Shareholder at his address
specified in Section 12.3.
12.5 Entire Agreement; Amendments and Waivers. This
Agreement, together with all exhibits and schedules hereto and
the Other Transaction Documents, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No
supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly
provided.
12.6 Multiple Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
12.7 Expenses. Each party hereto shall pay its own
legal, accounting, out-of-pocket and other expenses incident to
this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
12.8 Invalidity. In the event that any one or more of
the provisions contained in this Agreement or in any other
instrument referred to herein, shall, for any reason, be held to
be invalid, illegal or unenforceable in any material respect,
then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
12.9 Titles. The titles, captions or headings of the
Articles and Sections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
12.10 Publicity. No party shall issue any press
release or make any public statement regarding the transactions
contemplated hereby, without the prior approval of the other
party, and the parties hereto shall issue a mutually acceptable
press release as soon as practicable after the execution and
delivery of this Agreement; provided, however, that nothing
herein shall be deemed to prohibit any party from making any
disclosure which its counsel deems necessary in order to fulfill
such party's disclosure obligations imposed by law.
12.11 Burden and Benefit. This Agreement shall be
binding upon and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
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There are no third party beneficiaries of this Agreement;
provided, however, that any person that is not a party to this
Agreement but, by the terms of Section 11.3, is entitled to
indemnification, shall be considered a third party beneficiary of
this Agreement, with full rights of enforcement as though such
person was a signatory to this Agreement.
12.12 Cumulative Remedies. All rights and remedies
of either party hereto are cumulative of each other and of every
other right or remedy such party may otherwise have at law or in
equity, and the exercise of one or more rights or remedies shall
not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
[SIGNATURE(S) APPEAR ON THE FOLLOWING PAGE(S).]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by
their respective officers thereunto duly authorized, all as of
the day and year first above written.
BUYER:
BIO-RAD LABORATORIES, INC.
By:/s/ Sanford S. Wadler
Sanford S. Wadler, Vice
President and General
Counsel
COMPANY:
MJ GENEWORKS, INCORPORATED
By: /s/John D. Finney
John D. Finney, President
SHAREHOLDERS:
/s/ John D. Finnery
JOHN D. FINNEY
/s/ Michael J. Finnery
MICHAEL J. FINNEY
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