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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AMONG
CHOLESTECH CORPORATION,
WELLCHECK, INC,
HEALTH NET, INC.,
THOMAS M. CHAUVIN
AND
VIKKI L. CHAUVIN
JANUARY 21, 2000
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TABLE OF CONTENTS
PAGE
1. Definitions....................................................... 1
2. Acquisition of Assets by Buyer...................................... 1
(a) Purchase and Sale of Assets................................ 1
(b) Excluded Assets............................................ 2
(c) Assumption of Liabilities.................................. 2
(d) Liabilities Not Assumed.................................... 2
(e) Purchase Price............................................. 4
(f) Purchase Price Adjustments................................. 4
(g) The Closing................................................ 9
(h) Deliveries at the Closing.................................. 9
(i) Allocation of Purchase Price............................... 9
3. Representations and Warranties of Seller and Shareholders........... 9
(a) Organization of Seller..................................... 10
(b) Authorization of Transaction............................... 10
(c) Noncontravention........................................... 10
(d) Brokers' Fees.............................................. 10
(e) Title to Assets............................................ 10
(f) Sufficiency of Acquired Assets............................. 11
(g) Subsidiaries............................................... 11
(h) Financial Statements....................................... 11
(i) Indebtedness; Guarantees................................... 11
(j) Absence of Changes......................................... 11
(k) Absence of Undisclosed Liabilities......................... 12
(l) Legal and Other Compliance................................. 12
(m) Taxes...................................................... 13
(n) Property, Plant and Equipment.............................. 13
(o) Intellectual Property...................................... 13
(p) Contracts.................................................. 13
(q) Powers of Attorney......................................... 14
(r) Litigation................................................. 14
(s) Employees.................................................. 15
(t) Employee Benefits.......................................... 15
(u) Insolvency................................................. 16
(v) Subcontractors, Customers, Suppliers....................... 16
(w) Consents................................................... 16
(x) Permits.................................................... 16
(y) Interested Party Transactions.............................. 16
(z) Accounts Receivable........................................ 17
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(aa) Environmental Matters........................................ 17
(bb) Insurance.................................................... 17
(cc) Disclosure................................................... 18
(dd) Share Acquisition Entirely for Own Account................... 18
(ee) Reliance Upon Seller's and the Shareholders' Representations. 18
(ff) Receipt of Information....................................... 18
(gg) Investment Experience........................................ 18
(hh) Restricted Securities........................................ 19
4 Representations and Warranties of Buyer............................. 19
(a) Organization of Buyer........................................ 20
(b) Authority for Agreement...................................... 20
(c) Noncontravention............................................. 20
(d) Brokers' Fees................................................ 20
(e) Consents..................................................... 20
(f) Shares of Common Stock....................................... 20
5. Covenants........................................................... 20
(a) General...................................................... 21
(b) Notices and Consents......................................... 21
(c) Preservation of Business..................................... 21
(d) Conduct of Business.......................................... 21
(e) Full Access.................................................. 21
(f) Notice of Developments....................................... 21
(g) Exclusivity.................................................. 22
(h) Employee Matters............................................. 22
(i) Transfer Taxes............................................... 22
(j) Payment of Trade and Other Creditors......................... 23
(k) Bulk Sales Compliance........................................ 23
6. Conditions to Obligation to Close................................... 23
(a) Conditions to Obligation of Buyer............................ 23
(b) Conditions to Obligation of Seller........................... 24
7. Indemnification..................................................... 25
(a) Survival of Representations, Etc............................. 25
(b) Indemnification of Buyer..................................... 26
(c) Indemnification of Seller and Shareholders................... 26
(d) Maximum Liability............................................ 27
(e) Offset Against the Note...................................... 27
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8. Resolution of Conflicts: Arbitration................................ 28
9. Confidentiality..................................................... 28
10. Termination......................................................... 29
(a) Termination of Agreement..................................... 29
(b) Effect of Termination........................................ 29
11. Miscellaneous....................................................... 29
(a) Press Releases and Public Announcements...................... 29
(b) No Third Party Beneficiaries................................. 29
(c) Entire Agreement............................................. 30
(d) Succession and Assignment.................................... 30
(e) Counterparts................................................. 30
(f) Headings..................................................... 30
(g) Notices...................................................... 30
(h) Governing Law................................................ 31
(i) Amendments and Waivers....................................... 31
(j) Severability................................................. 32
(k) Expenses..................................................... 32
(l) Incorporation of Exhibits and Schedules...................... 32
(m) Specific Performance......................................... 32
A - Definitions
B-1 - Assignment and Assumption Agreement
B-2 - Bill of Sale and General Assignment of Assets
C - Allocation of Purchase Price
D - Financial Statements
E List of Employees to Be Hired
F - Form of Key Employee Employment Agreement
G Form of Non-Competition Agreement
H Form of Lease
I Form of Escrow Agreement
J [Reserved]
K Form of Note
L Procedures for Indemnification
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SCHEDULES
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Schedule 2(a)(i) Cash, Claims, Deposits, Etc.
Schedule 2(a)(iii) - Contracts
Schedule 2(a)(v) - Intellectual Property
Schedule 2b - Excluded Assets
Disclosure Letter - Exceptions to Representations and Warranties
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into on
January 21, 2000 by and among Cholestech Corporation, a California
corporation("Parent"), WellCheck Inc. , a California corporation and
wholly-owned subsidiary of Parent ("Buyer"), Health Net, Inc., a Louisiana
corporation ("Seller") and Thomas M. Chauvin and Vikki L. Chauvin (together, the
"Shareholders" and each a "Shareholder"). Parent, Buyer, Seller and Shareholders
are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which Buyer will purchase
and the Seller and Shareholders will sell certain of the assets of Seller in
consideration of the Purchase Price (as hereinafter defined) and Buyer's
assumption of certain of the liabilities.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
1. Definitions.
The capitalized terms used throughout this Agreement shall have the
meaning attributed to them in Exhibit A.
2. Acquisition of Assets by Buyer.
(a) Purchase and Sale of Assets. Seller agrees to sell and
transfer to Buyer, and Buyer agrees to purchase from Seller at the Closing,
subject to and upon the terms and conditions contained herein, free and clear of
any Lien or Security Interest, all of Seller's right, title and interest in and
to all Seller Assets wherever situated, as of the Closing Date including without
limitation the following properties and assets, except to the extent that any
such properties and assets form a part of the Excluded Assets as provided in
Section 2(b) (collectively, the "Acquired Assets"):
(i) All customer, distribution, supplier and mailing
lists of Seller relating to the Business;
(ii) All cash, bank accounts, accounts receivable,
orders for Services and all claims, deposits, prepayments, refunds, causes of
action, rights of recovery, rights of setoff and rights of recoupment relating
to the Seller Assets or the Business, including without limitation those listed
on Schedule 2(a)(i);
(iii) All contracts, instruments or other agreements
relating to Seller Assets or the Business listed on Schedule 2(a)(iii) (the
"Contracts"), all contracts or orders for supplies, components, parts, goods,
promotional material, services or other items used in connection with the
Business or relating to Seller Assets, but only to the extent such contracts or
orders are described in
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summary form in Schedule 2(a)(iii) and, all warranty rights and claims against
third parties relating to or arising under any of the Seller Assets;
(iv) All licenses (other than Intellectual Property),
permits, orders, registrations, certificates, variances, approvals and
franchises primarily pertaining to or used primarily in connection with Seller
Assets or the Business or any pending applications relating to any of the
foregoing, including without limitation all governmental permits, licenses,
authorizations, approvals and consents (the "Permits");
(v) All Intellectual Property, goodwill associated
therewith and with the Business, licenses and sublicenses granted in respect
thereto and rights thereunder, remedies against infringements thereof and rights
to protection of interest therein, including without limitation the Intellectual
Property described in Schedule 2(a)(v) hereto; and
(vi) All business and financial records, books, ledgers,
files, plans, documents, lists, drawings, creative materials, advertising and
promotional materials, marketing materials, studies, reports, equipment repair,
maintenance or service records exclusively relating to the Seller Assets,
whether written or electronically stored or otherwise recorded.
(vii) All equipment, inventory, vehicles, fixed assets
and other tangible assets used in the Business, wherever located, including
leasehold improvements to facilities subject to leases included among the
Contracts, to the extent such leasehold improvements are owned by the Seller.
(b) Excluded Assets. There shall be no Seller Assets excluded
from the Acquired Assets to be sold, assigned, transferred, conveyed and
delivered to Buyer hereunder except as set forth on Schedule 2(b) which assets,
to the extent in existence on the Closing Date, shall be retained by Seller
(collectively, the "Excluded Assets").
(c) Assumption of Liabilities. On the terms and subject to the
conditions set forth herein and subject to Section 2(d) hereof, from and after
the Closing, Buyer will assume and satisfy or perform when due only the
Liabilities and obligations under the Contracts listed in Schedule 2(a)(iii)
(the "Assumed Liabilities").
(d) Liabilities Not Assumed. Except as expressly set forth in
this Agreement, neither Buyer nor Parent will assume or perform any Liabilities
or obligations not specifically contemplated by Section 2(c) hereof nor any of
the following Liabilities and obligations:
(i) Any Liabilities arising from accounts payable of
Seller;
(ii) Any indebtedness of Seller for money borrowed or
for the deferred purchase price of property or services or capital lease
obligations;
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(iii) Any Liability or obligation of Seller for Taxes of
Seller or any Person for any taxable period and any Liability or obligation for
Taxes attributable to the Acquired Assets for all periods (or portions thereof)
ending on or prior to the Closing Date.
(iv) Any Liability of Seller for the unpaid Taxes of any
Person prior to the Closing Date or as a consequence of the Closing (except as
specifically provided in Section 5(i)), including Taxes imposed on Seller as a
transferee or successor, by contract or otherwise;
(v) Any Liability or obligation of Seller as a result of
any legal or equitable action or judicial or administrative proceeding initiated
at any time caused by or resulting from any action that occurred or condition
that existed prior to the Closing Date and in respect of anything done, suffered
to be done or omitted to be done by Seller or any of its directors, officers,
employees or agents, including without limitation any Liability arising from
negligent performance of the Services;
(vi) Any Liability of Seller or any Shareholder for
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby;
(vii) Any Liability or obligation of Seller or any
Shareholder under this Agreement or incurred in connection with the making or
performance of this Agreement;
(viii) Any Liability or obligation of Seller arising out
of any Employee Benefit Plan (including without limitation the Seller's
Simple-IRA retirement plan) established or maintained by Seller for the benefit
of past or present employees of Seller, or to which Seller contributes, or any
Liability on the termination of any such plan;
(ix) Any Liability or obligation of Seller for making
payments or providing benefits of any kind to their employees or former
employees, including, without limitation, (A) as a result of the sale of the
Acquired Assets or as a result of the termination by Seller of any Employee or
decision by Buyer not to hire any such Employee, (B) any obligation to provide
current or former employees of Seller (including individuals who become former
Employees by reason of the consummation of the transactions contemplated by this
Agreement) COBRA continuation coverage or continuation coverage under any other
comparable law (state or federal), (C) any Liability or obligation in respect of
medical and other benefits for existing and future retirees of Seller and for
claims made after Closing in respect of costs and expenses incurred prior to
Closing, (D) any Liability or obligation in respect of work-related employee
injuries or worker's compensation claims by Employees or former Employees of
Seller, and (E) any Liability or obligation in respect of employee bonuses
payable to current or former employees of Seller, and (D) any Liability or
obligation in respect of any severance payment or any other benefit due to
Employees of Seller who do not become Employees of Buyer or Parent;
(x) Any Liability pertaining to Seller or its businesses
and arising out of or resulting from noncompliance prior to the Closing Date
with any laws, statutes, ordinances, rules,
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regulations, orders, determinations, judgments or directives, whether
legislatively, judicially or administratively promulgated; and
(xi) Any Liability or obligation of Seller under any
licenses, contracts or agreements not listed on Schedule 2(a)(iii).
(e) Purchase Price. At the Closing, subject to Section 2(f) and
2(g) below, Buyer agrees to pay Seller the amount of $3,000,000 (the "Initial
Purchase Price"), payable as follows:
(i) $2,200,000 (the "Cash Purchase Price") in cash
payable by check or by wire transfer upon such wire instructions delivered by
Seller to Buyer three business days prior to the Closing;
(ii) $500,000 (the "Note Purchase Price") in a
promissory note in the form attached hereto as Exhibit L (the "Note"), payable
in a single payment due on the Adjustment Payment Date, subject to the
provisions of Section 7(e) hereof;
(iii) $300,000 (the "Stock Purchase Price") in Parent's
Common Stock (the "Parent Shares"), to be satisfied by Buyer's issuance to
Seller of 51,010 duly authorized, fully paid and nonassessable shares of
Parent's Common Stock; and
In addition, Buyer shall, at the Closing, grant to Seller the contingent right
to receive up to an additional $1,000,000 (the "Earnout Purchase Price") as
provided and subject to the conditions in Section 2(g). The sum of the Initial
Purchase Price and the Earnout Purchase Price are referred to as the "Purchase
Price."
(f) Purchase Price Adjustments.
(i) Earnings and Balance Sheet Audit. Within seventeen
(17) days of the Closing Date Seller will provide to Parent any information
required by Parent's outside accounting firm in order to perform the audit
described in this Section 2(f)(i). Within thirty five (35) days following the
Closing Date, Buyer will cause to be prepared and delivered to Seller and the
Shareholders an audited income statement of Seller (the "Audited Income
Statement") for the twelve (12) month period ended December 31, 1999 (the "Audit
Period") and an audited balance sheet of the Seller as of the Closing Date (the
"Audited Balance Sheet ").
(ii) Seller Review of Audited Income Statement and
Audited Balance Sheet. Seller shall have fourteen (14) days following the
delivery of the Audited Income Statement and Audited Balance Sheet to review the
Audited Income Statement and Audited Balance Sheet and to give Buyer written
notice of a Seller dispute with respect to the Audited Income Statement and
Audited Balance Sheet (an "Adjustment Dispute Notice"); provided, that for an
Adjustment Dispute Notice to be valid, it must state with specificity the
deficiencies asserted by Seller with respect to the Audited Income Statement and
Audited Balance Sheet (including the line item amounts in such financial
statements asserted by Seller to be incorrect, and the alternative numbers that
Seller asserts
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are correct). Any dispute as to the Audited Income Statement and Audited Balance
Sheet shall be subject to the dispute resolution provisions of Section 8. The
fees of any arbitration under this Section 2(f)(ii) shall be borne by the party
whose asserted position with respect to disputed amounts in the Audited Income
Statement and Audited Balance Sheet most deviates (in the aggregate) from that
determined by the arbitration. If Seller does not deliver to Buyer a valid Audit
Dispute Notice on or prior to the 14th day following Buyer's delivery of the
Audited Income Statement and Audited Balance Sheet to Seller, the Audited Income
Statement and Audited Balance Sheet delivered by Buyer shall be binding upon the
Parties in calculating the adjustments provided for in Sections 2(f)(iii) and
2(f)(iv). The Audited Income Statement and Audited Balance Sheet, as revised by
the dispute resolution process described in this Section 2(f)(ii) shall be
binding upon the Parties in calculating the adjustments provided for in Sections
2(f)(iii) and 2(f)(iv). The binding Audited Balance Sheet and Audited Income
Statement are referred to herein as the "Final Audited Income Statement" and the
"Final Audited Balance Sheet", respectively.
(iii) Operating Earnings Adjustment. The Purchase Price
shall be reduced by an amount equal to the product of (A) the amount by which
the Adjusted Audited Earnings are less than $486,500, times (B) six (the
"Earnings Adjustment"); provided that no adjustment shall be made if the
Adjusted Audited Earnings equal or exceed $486,500.
(iv) Balance Sheet Adjustment. The Purchase Price shall
be reduced by an amount equal to the amount by which the value of Tangible Net
Assets (the "Tangible Net Assets Value") as reflected in the Final Audited
Balance Sheet is less than $450,000 (the "Balance Sheet Adjustment"); provided
that no adjustment shall be made if the Tangible Net Assets Value equals or
exceeds $450,000.
(v) Adjustment Certificate. Buyer will prepare a
certificate (the "Adjustment Certificate") setting forth the Audited Earnings,
Earnings Adjustment, Tangible Net Assets Value and the Balance Sheet Adjustment.
The Final Audited Income Statement and the Final Audited Balance Sheet shall be
attached as exhibits to the Adjustment Certificate. The Balance Sheet Adjustment
and Earnings Adjustment stated in the Adjustment Certificate shall be binding
upon the Seller and Shareholders.
(vi) Obligation to Pay Adjustment; Method of
Satisfaction. The Seller and the Shareholders shall pay to the Buyer the sum of
the Earnings Adjustment and the Balance Sheet Adjustment (the "Purchase Price
Adjustment"). Such obligation of the Seller and the Shareholders shall be joint
and several. The Seller's and the Shareholders' obligation to pay the Purchase
Price Adjustment shall first be satisfied by offsetting such amount against any
amount then owed by Buyer to Seller under the Note. Subject to Section 7(e), any
remaining unsatisfied portion of the Purchase Price Adjustment after offset
against the Note shall be paid by the Seller and the Shareholders in cash, by
certified check or wire transfer within ten business days following delivery of
the Adjustment Certificate (the "Adjustment Payment Date").
(g) Earnout Payment.
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(i) Earnout Audit. Within 90 days following December 29,
2000, Buyer will cause to be completed by Parent's outside accounting firm an
audit/SAS 71 interim financial review of revenues of Buyer for the period
beginning February 1, 2000 and ending on December 29, 2000 (the "Earnout
Period"). Buyer shall compute "Earnout Performance" based on revenues identified
by the audit/SAS 71 interim financial review for the Earnout Period in
accordance with the following formula: (X) add to revenues identified by the
audit/SAS 71 interim financial review any additional net payments from customers
not included in revenues (Y) multiply the resulting sum by 1.091, (Z) subtract
from such product, the lesser of (A) the aggregate revenues generated by Later
Acquired Assets between the first day of the month following Buyer's acquisition
of such Later Acquired Assets and the end of the Earnout Period, or (B) the
aggregate revenues generated by such Later Acquired Assets in the corresponding
period (corresponding to the period described in Section 2(g)(i)(A)) of the
twelve (12) month period ended December 31, 1999 (as so adjusted, the "Earnout
Performance"). Buyer shall prepare and deliver to Sellers a certificate (the
"Earnout Certificate") stating such revenues and adjustments.
(ii) Seller shall have thirty (30) days following the
delivery of the Earnout Certificate to review the Earnout Certificate and to
give Buyer written notice of a Seller dispute as to Buyer's asserted Earnout
Performance (an "Earnout Dispute Notice"); provided, that for an Earnout Dispute
Notice to be valid, it must state with specificity the deficiencies asserted by
Seller with respect to Buyer's asserted Earnout Performance (including the
amount asserted by Seller to be correct (the "Seller Asserted Earnout
Performance")). Any dispute as to the Earnout Certificate shall be subject to
the dispute resolution provisions of Section 8. The fees of any arbitration
under this Section 2(g)(ii) shall be borne by the party whose asserted Earnout
Performance most deviates from that determined by the dispute resolution
process. If Seller does not deliver to Buyer a valid Earnout Dispute Notice on
or prior to the 30th day following Buyer's delivery of the Earnout Certificate
to Seller, Buyer's asserted Earnout Performance in the Earnout Certificate shall
be binding upon the Parties in calculating the amount of the Earnout Payment
pursuant to Section 2(g)(iii). The Earnout Performance as determined by the
dispute resolution process described in this Section 2(g)(ii) shall be binding
upon the Parties in calculating the amount of the Earnout Payment pursuant to
Section 2(g)(iii). The binding Earnout Performance are referred to herein as the
"Final Earnout Performance."
(iii) Contingent Payment. Subject to the provisions of
Section 2(h) and Section 7(e) hereof, in the event that Final Earnout
Performance of Buyer is greater than revenues for the twelve-month period ended
December 31, 1999 as reported in the Final Audited Income Statement adjusted by
adding any additional net payments from customers not included in revenues
reported in the Audited Income Statement for the Audit Period (as so adjusted,
the "Base Year Performance"), Seller shall be entitled to receive from Buyer a
payment in an amount equal to the lesser of (A) $1,000,000, or (B) the amount
determined by multiplying (1) $1,000,000 by (2) the ratio determined by dividing
(X) the Final Earnout Performance less Base Year Performance by (Y) $5,579,383
less Base Year Performance (the amount determined by the foregoing formula, the
"Earnout Payment").
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(iv) Escrow. At the Closing, Buyer shall deposit in an
interest bearing escrow account (the "Escrow Account") with NorWest Bank
Minnesota, N.A. (the "Escrow Agent") $1,000,000 (the "Escrow Amount"), in
accordance with the Escrow Agreement substantially in the form attached hereto
as Exhibit I (the "Escrow Agreement"). The costs of the Escrow Account shall be
paid by the Shareholders at the Closing.
(v) Payment of Undisputed Portion of Contingent Payment.
In the event that there is a dispute regarding the Earnout Performance (by
delivery of a valid Earnout Dispute Notice in accordance with Section 2(g)(ii)),
the Earnout Payment shall be calculated using the Seller Asserted Earnout
Performance (such Earnout Payment, the "Undisputed Earnout Payment"), and Buyer
shall be obligated to pay the Undisputed Earnout Payment. After resolution of
the dispute procedure described in Section 2(g)(ii), if the Earnout Payment
calculated using the Earnout Performance determined by such dispute resolution
process is greater than the Undisputed Earnout Payment, then Buyer shall be
obligated to pay such difference to Seller (the "Adjusted Earnout Payment
Amount").
(h) Escrow and Earnout Procedures.
(i) If no Earnout Dispute Notice is received by Buyer
prior to the 30th day following Buyer's delivery of the Earnout Certificate to
Seller, as soon as practicable after such 30th day (such date, the "Earnout
Payment Date"), the Buyer shall deliver to Seller and the Escrow Agent a
certificate, signed by Buyer's and Parent's chief financial officer (the "Buyer
Escrow Instruction Certificate"), ordering the Escrow Agent to pay to Seller the
Earnout Payment, plus a pro rata portion of the interest that has accrued in the
Escrow Account based on the portion of the $1,000,000 maximum possible Earnout
Payment that is being made (the "Pro Rata Portion of Interest"), and, pursuant
to Section 7(e), less any unsatisfied portion of the Purchase Price Adjustment
and less any amount necessary to satisfy any unsatisfied claims by Buyer
Indemnities . If an Earnout Dispute Notice is delivered prior to the 30th day
following delivery of the Earnout Certificate to Seller, (A) Buyer shall deliver
a Buyer Escrow Instruction Certificate ordering the Escrow Agent to pay to
Seller the Undisputed Earnout Payment, plus the Pro Rata Portion of Interest,
and, pursuant to Section 7(e), less any unsatisfied portion of the Purchase
Price Adjustment and less any amount necessary to satisfy any unsatisfied claims
by Buyer Indemnities, and (B) as soon as practicable following the conclusion of
the dispute resolution process set forth in Section 2(g)(ii) and Section 8, if
there is an Adjusted Earnout Payment Amount, Buyer shall deliver a Buyer Escrow
Instruction Certificate ordering the Escrow Agent to pay to Seller the Adjusted
Earnout Payment Amount, plus the Pro Rata Portion of Interest, and, pursuant to
Section 7(e), less any unsatisfied portion of the Purchase Price Adjustment and
less any amount necessary to satisfy any unsatisfied claims by Buyer
Indemnities.
(ii) If Seller objects to the amounts stated in a Buyer
Escrow Instruction Certificate, it shall give written notice to Buyer and Escrow
Agent (the "Seller Escrow Dispute Notice") within thirty (30) days following
receipt of Buyer Escrow Instruction Certificate, advising Buyer and Escrow Agent
that Seller does not consent to the delivery of any of the Escrow Amount
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out of escrow pursuant to the Buyer Escrow Instruction Certificate. If no such
Seller Escrow Dispute Notice is timely received from Seller by Buyer and Escrow
Agent, pursuant to the provisions of the Escrow Agreement, Escrow Agent shall,
within five (5) business days after the expiration of the above-referenced
thirty (30) day notice period, deliver to Seller out of escrow the amount stated
in the Buyer Escrow Instruction Certificate.
(iii) If Seller advises Buyer and Escrow Agent (by
delivery of a Seller Escrow Dispute Notice) within the foregoing thirty (30) day
notice period that it objects to such application of the Escrow Amount, pursuant
to the provisions of the Escrow Agreement, Escrow Agent shall hold the Escrow
Amount in escrow until the rights of the Seller and Buyer with respect thereto
have been agreed upon among Seller and Buyer (as evidenced by a certificate of
such agreement executed by Seller and the chief financial officer of Buyer and
Parent) or until such rights are finally determined by an arbitration panel in
accordance with Section 8 of the Acquisition Agreement. Pursuant to the
provisions of the Escrow Agreement, Escrow Agent may rely on any determination
by any such arbitration panel. If any such arbitration panel shall determine
that a portion of the Escrow Amount is to be delivered out of escrow, pursuant
to the provisions of the Escrow Agreement, Escrow Agent shall, within five (5)
business days following receipt of a copy of such determination, deliver to
Seller out of escrow such amount. If Seller and Buyer agree upon the portion of
the Escrow Amount that is to be delivered out of escrow to Seller, pursuant to
the provisions of the Escrow Agreement, Escrow Agent shall, within five (5)
business days following receipt of the certificate of such agreement executed by
Seller and the chief financial officer of Buyer and Parent, deliver to Seller
out of escrow such amount.
(iv) Parent and Buyer Obligations. It is the present
intent of the Parties to develop and actively promote the business to be
operated utilizing the Acquired Assets or to otherwise be operated by Buyer (the
"New Business") to the mutual advantage of Parent, Buyer and Seller. Buyer and
Parent agree to operate the New Business in the ordinary course of Parent's
other businesses and to provide reasonable support to the development, sale and
customer support of the services provided by Buyer in such areas as development,
sales, marketing, quality assurance, contract administration, public relations,
staffing and other direct business activities, all in accordance with Parent's
standard practices and procedures for the allocation of such resources. However,
the sale of the services provided by, and the operation of, the New Business
shall be accorded no special status or priority by virtue of the earnout
provisions or otherwise. In addition, the Parties acknowledge that the industry
in which Buyer and Parent operate is characterized by rapidly changing
technologies, evolving industry trends, frequent new product and service
introductions, short product/service life-cycles and an evolving regulatory
landscape and that Buyer and Parent must be able to react on a timely and
cost-effective basis to meet changing customer requirements. Accordingly, except
as provided in this Section 2(h) the operations of Buyer and Parent shall at all
times be subject solely to the management control of Buyer and Parent. Without
limiting the generality of the foregoing, except as specifically provided in
this Section 2(h), Buyer and Parent shall not be required to (i) devote more
resources to the development, sale, marketing of the services to be provided by
the New Business or otherwise to be provided by Buyer and Parent
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than is, in the sole opinion of Buyer's and Parent's management, prudent in the
context of Parent's and its affiliates' overall operations or (ii) seek to
maximize revenues of Buyer if to do so, in the sole opinion of Buyer's and
Parent's management, would have an adverse effect on Buyer's and Parent's
profitability or strategic interests.
(i) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Wilson Sonsini
Goodrich & Rosati, P.C., in Palo Alto, California, commencing at 10:00 a.m.,
within three business days following satisfaction of the Closing conditions set
forth in Sections 6(a) and 6(b), or such other date as the Parties may mutually
determine (the "Closing Date").
(j) Deliveries at the Closing. At the Closing, (i) Seller will
deliver to Buyer the various certificates, instruments and documents referred to
in Section 6(a) below; (ii) Seller will execute, acknowledge (if appropriate)
and deliver to Buyer (A) assignments of the Permits, Intellectual Property and
Contracts (including Intellectual Property transfer documents), and (B) such
other instruments of sale, transfer, conveyance and assignment as Buyer and its
counsel may reasonably request; (iii) Buyer and Seller will execute, acknowledge
(if appropriate), and deliver the Assignment and Assumption Agreement in the
form attached hereto as Exhibit B-1 and the Bill of Sale and General Assignment
of Assets in the form attached hereto as Exhibit B-2; and (iv) Buyer will
deliver to Seller the consideration payable at Closing specified in Section 2(e)
above.
Simultaneously with such delivery, Seller will use its best efforts and
take all action as may be necessary to put Buyer in possession and operating
control of the Acquired Assets.
At any time and from time to time after the Closing, at the request of
Buyer and without further consideration, Seller and the Shareholders will
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation and take such action as Buyer may reasonably
determine is necessary to transfer, convey and assign to Buyer, and to confirm
Buyer's title to or interest in the Acquired Assets, to put Buyer in actual
possession and operating control thereof and to assist Buyer in exercising all
rights with respect thereto.
(k) Allocation of Purchase Price. The Parties agree that the
allocation of the Purchase Price for the Acquired Assets shall be as determined
by the Parent within 90 days following the Closing Date, subject to the approval
of Seller (which approval shall not be unreasonably withheld or delayed) and
shall be binding on both parties. Seller and Buyer shall use such allocation in
all Tax Returns.
3. Representations and Warranties of Seller and Shareholders.
Seller and each Shareholder jointly and severally represent and warrant
to Parent and Buyer that the statements contained in this Section 3 are correct
and complete as of the date of this Agreement and, if different than the date of
this Agreement, will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of
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his Agreement throughout this Section 3), except as set forth in the Disclosure
Letter accompanying this Agreement (the "Disclosure Letter").
(a) Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana. Copies of the articles of incorporation and bylaws of Seller, as
amended to date, have been delivered to Buyer and are accurate and complete.
(b) Authorization of Transaction. Seller and the Shareholders
have the power and authority to execute and deliver this Agreement and to
perform their obligations hereunder. All corporate and other actions or
proceedings to be taken by or on the part of Seller to authorize and permit the
execution and delivery by it of this Agreement and the instruments required to
be executed and delivered by it pursuant hereto, the performance by Seller of
its obligations hereunder, and the consummation by Seller of the transactions
contemplated herein, have been duly and properly taken. This Agreement has been
duly executed and delivered by Seller and the Shareholders and constitutes the
legal, valid and binding obligation of Seller and the Shareholders, enforceable
in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency or
court to which Seller, the Shareholders or the Acquired Assets is subject or any
provision of the charter or bylaws of Seller or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument, Lien, Security
Interest or other arrangement to which Seller is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets) except where such violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice or Security Interest would not have a material adverse effect on
the Acquired Assets, the Business or on the ability of Seller to consummate the
transactions contemplated by this Agreement. Seller does not need to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above).
(d) Brokers' Fees. Neither Seller nor any Shareholder has any
Liability to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Buyer or
Parent could become liable or obligated.
(e) Title to Assets. Except as set forth in the Disclosure
Letter, Seller has good and valid title to, or a valid and subsisting leasehold
interest in, and the power to sell and assign as provided in Section 2 the
Acquired Assets, free and clear of all Liens and Security Interests. The
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Shareholders have good and valid title to and the power to lease to Buyer as
provided in the Lease attached hereto as Exhibit H, free and clear of all Liens
and Security Interests.
(f) Sufficiency of Acquired Assets. The Acquired Assets comprise
all of the assets, properties and rights of every type and description, real,
personal, tangible and intangible used by Seller in the Business.
(g) Capitalization and Subsidiaries. Seller has the
capitalization (authorized and outstanding) set forth in the Disclosure Letter,
and the only holders of the equity of Seller (or of any options, warrants or
other rights or agreements to acquire any equity of Seller or any instruments
convertible into equity of Seller) are the Shareholders. Seller does not have
and has not ever had any Subsidiaries and Seller does not otherwise own and has
never otherwise owned any shares of capital stock or any interest in, or,
control of, directly or indirectly, any other corporation, partnership,
association, joint venture or other business entity.
(h) Financial Statements. Attached hereto as Exhibit D are the
following financial statements (collectively the "Financial Statements"): (i)
the unaudited balance sheet as of December 31, 1998 and the related unaudited
statements of income and cash flows for the twelve-month period then ended (the
"Most Recent Fiscal Year End Financial Statements") and (ii) the unaudited
balance sheet as of November 30, 1999 and the related unaudited statements of
income and cash flows for the 11-month period then ended (the "Most Recent
Financial Statements"). The Financial Statements fairly present the financial
condition of the Seller as of the dates thereof and the results of operations
for the periods covered thereby.
(i) Indebtedness; Guarantees. Except as set forth in the
Disclosure Letter, Seller has no indebtedness for money borrowed or for the
deferred purchase price of property or services, capital lease obligations,
conditional sale or other title retention agreements relating to the Acquired
Assets ("Indebtedness"). Seller is not a guarantor or otherwise liable for any
Liability or obligation of any other Person for any matter which relates to or
affects or will affect the Acquired Assets.
(j) Absence of Changes. Since the Most Recent Financial
Statements date there has not been any adverse change in the business, financial
condition, operations or results of operations of the Business or the Acquired
Assets. Without limiting the generality of the foregoing, since that date:
(i) No party (including Seller) has accelerated,
terminated, modified or canceled any agreement, contract, lease or license (or
series of related agreements, contracts, leases, and licenses) involving
payments of more than $10,000, in the aggregate, relating to the Acquired
Assets;
(ii) Seller has not made any capital expenditures (or
series of related capital expenditures) relating to the Business or the Acquired
Assets involving more than $10,000 singly or $25,000 in the aggregate;
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(iii) Seller has not delayed or postponed the payment of
accounts payable and other Liabilities relating to the Business or the Acquired
Assets outside the Ordinary Course of Business;
(iv) Seller has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) relating to
the Acquired Assets involving payments of more than $10,000;
(v) Seller has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
(vi) Seller has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement relating to the Business or the Acquired
Assets;
(vii) Seller has not changed employment or compensation
terms for any of the Employees or Key Employees;
(viii) There has not been any other occurrence, event,
incident, action, failure to act or transaction outside the Ordinary Course of
Business involving the Acquired Assets or the Business; and
(ix) Seller has not accelerated the collection or
conversion of accounts receivable or notes receivable relating to the Services
by offering any incentive for such acceleration, including but not limited to
prepayment discounts, allowances or enhancements; and
(x) Seller has not committed to do any of the foregoing.
(k) Absence of Undisclosed Liabilities. There is no Liability
and, to the Knowledge of Seller, there is no threatened action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand which
could give rise to any Liability relating to the Business or the Acquired Assets
(including, without limitation, any Liability relating to or arising out of the
provision of Services prior to the Closing Date), except for Liabilities assumed
pursuant to Section 2(c).
(l) Legal and Other Compliance. Seller is in compliance with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) of federal, state,
local and foreign governments (and all agencies thereof) the violation of which
would have a material adverse effect on the Acquired Assets, the Business or the
ability of Seller to consummate the transactions contemplated by this Agreement
or conduct (in any state) a business similar to the Business with the Acquired
Assets, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice has been filed or commenced against Seller or
any Shareholder alleging any failure so to comply.
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(m) Taxes.
(i) Seller has timely filed all Tax Returns that it was
required to file concerning the Business or the Acquired Assets. All Taxes owed
by Seller concerning the Business or the Acquired Assets (whether or not shown
on any Tax Return) have been paid. Seller currently is not the beneficiary of
any extension of time within which to file any Tax Return relating to the
Business or the Acquired Assets. No claim has ever been made by an authority in
a jurisdiction where Seller does not file Tax Returns that it may be subject to
taxation by that jurisdiction in respect of the Business or the Acquired Assets.
There are no Security Interests in any of the Acquired Assets that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) There is no dispute or claim concerning any Tax
Liability relating to the Business or the Acquired Assets either (A) claimed or
raised by any authority in writing or (B) as to which Seller has Knowledge based
upon communication by any authorized agent of such authority. No Tax Returns
filed with respect to the Business or the Acquired Assets have been audited.
(n) Property, Plant and Equipment. Seller does not own any real
property.
(o) Intellectual Property.
(i) Seller owns all Intellectual Property.
(ii) To the Seller's Knowledge, the Seller has not
infringed upon or misappropriated any intellectual property rights of third
parties. Neither the Seller nor any officer (and employee with responsibility
for Intellectual Property matters at Seller) of Seller has received any notice
alleging any such infringement or misappropriation. To the Seller's Knowledge,
no third party has infringed upon or misappropriated any Intellectual Property.
(iii) Seller's employees and consultants that have
participated in the development of Intellectual Property have entered into
employee or consulting agreements with Seller assigning all right, title and
interest in the Intellectual Property therein to Seller. Pursuant to such
agreements or applicable law, Seller collectively owns all of the right, title
and interest of its employees and third party contractors and consultants to any
Intellectual Property.
(p) Contracts. Section 3(p) of the Disclosure Letter lists the
following contracts and other agreements (including the Contracts listed on
Schedule 2(a)(iii)) related to the Acquired Assets to which Seller is a party:
(i) Any agreement (or group of related agreements) for
the lease of real property or personal property to or from any Person providing
for lease payments in excess of $10,000 singly or $30,000 in the aggregate;
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(ii) Any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property, or for the furnishing or receipt of services, the performance
of which will involve consideration in excess of $10,000 singly, or $50,000 in
the aggregate;
(iii) Any agreement concerning a partnership or joint
venture;
(iv) Any agreement (or group of related agreements)
under which Seller has created, incurred, assumed or guaranteed any Indebtedness
in excess of $5,000 or under which it has imposed a Security Interest on any of
the Acquired Assets;
(v) Any agreement concerning confidentiality or
noncompetition;
(vi) Any contract or arrangement with any federal, state
or local government agency;
(vii) Any contract with customers or otherwise regarding
the provision of the Services;
(viii) Any agreement, contract, lease or license (or
series of related agreements, contracts, leases, and licenses) involving
payments of more than $10,000 relating to the Acquired Assets; and
(ix) Any agreement that would limit Buyer's rights to
provide the Services or any other services or select subcontractors or other
parties to provide the Services on Buyer's behalf.
Seller has delivered to Buyer a correct and complete copy of each
written agreement listed in Section 3(p) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid and binding
and in full force and effect on Seller; (B) Seller is not and, to Seller's
Knowledge, no other party is in breach or default in any material respect, and,
to Seller's Knowledge, no event has occurred which with notice or lapse of time
would constitute a breach or default in any material respect, or permit
termination, modification or acceleration, under the agreement; and (C) to the
Knowledge of the Seller, no party has repudiated any provision of the agreement.
(q) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of Seller in respect of the Acquired Assets.
(r) Litigation. There are no judicial or administrative actions,
claims, suits, proceedings or investigations pending or threatened that may
result in any adverse change in the Business or the Acquired Assets or which may
interfere with any part of the Business or that question the validity of this
Agreement or of any action taken or to be taken pursuant to or in connection
with the provisions of this Agreement and, to Seller's and the Shareholders'
Knowledge,
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no basis therefor exists. There are no judgments, orders, decrees, citations,
fines or penalties heretofore assessed against Seller affecting the Business or
the Acquired Assets under any federal, state or local law, except for such
judgments, orders, decrees, citations, fines or penalties which would not have a
material adverse effect on the Acquired Assets. Seller has never received any
threat of any action, suit or claim for damages relating to the Business, the
Acquired Assets or the Services.
(s) Employees. Seller is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours and has not been and is not engaged in any unfair
labor practice as defined in the National Labor Relations Act, as amended, the
violation of which could have a material adverse effect on the Acquired Assets.
There is no unfair labor practice charge or complaint against Seller pending or
threatened before the National Labor Relations Board. Seller is not a party to
any collective bargaining agreement. No grievance which if successful, would
have a material adverse effect on the Business or Acquired Assets nor any
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no pending claims therefor have been made.
(t) Employee Benefits.
(i) Section 3(t) of the Disclosure Letter contains an
accurate and complete list of each Employee Benefit Plan, International Plan and
Employee Agreement. Following the Closing, neither Parent nor Buyer will have
any Liability or obligation arising out of any Employee Benefit Plan (including
without limitation the Seller's Simple-IRA retirement plan), International Plan
or Employee Agreement established or maintained by Seller for the benefit of
past or present Employees of Seller, or to which Seller contributes, or any
Liability on the termination of any such plan or agreement; and
(ii) Following the Closing, neither Parent nor Buyer
will have any Liability or obligation for making payments or providing benefits
of any kind (A) to Seller's Employees or former Employees who do not become
Employees of Buyer or (B) with respect to Seller's Employees who become
Employees of Buyer or Parent, payments or benefits relating to any period of
employment or any event or occurrence prior to the Closing or any Employee
Benefit Plan (including without limitation the Seller's Simple-IRA retirement
plan), International Plan or Employee Agreement maintained or provided by Seller
(including, without limitation, (1) as a result of the sale of the Acquired
Assets or as a result of the termination by Seller of any Employees or decision
by Buyer and Parent not to hire any such Employee, (2) any obligation to provide
current or former Employees of Seller (including individuals who become former
Employees by reason of the consummation of the transactions contemplated by this
Agreement) COBRA continuation coverage or continuation coverage under any other
comparable law (state or federal), (3) any Liability or obligation in respect of
medical and other benefits for existing and future retirees of Seller and for
claims made after Closing in respect of costs and expenses incurred prior to
Closing, (4) any Liability or obligation in respect of work-related employee
injuries or worker's compensation claims by current or former Employees of
Seller, (E) any Liability or obligation in respect of employee
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bonuses payable to current or former Employees of Seller and (F) any Liability
or obligation in respect of any severance payment or any other benefit due to
Employees of Seller who do not become Employees of Buyer or Parent.
(iii) Except as set forth in Section 3(t)(iii) of the
Disclosure Letter, no payment or benefit which will or may be made by the Seller
or its Affiliates with respect to any Employee will be characterized as a
"parachute payment," within the meaning of Section 280G(b)(2) of the Code.
(u) Insolvency. No insolvency proceedings of any character,
including bankruptcy, receivership, reorganization, composition or arrangement
with creditors, voluntary or involuntary, affecting any of the Acquired Assets
are pending or, to the Knowledge of Seller, are threatened, and Seller has not
made any assignment for the benefit of creditors, or taken any other action
which would constitute the basis for the institution of such insolvency
proceedings. Seller has, and upon consummation of the transactions contemplated
by this Agreement will have, realizable assets that exceed its liabilities, and
Seller is able, and upon consummation of the transactions contemplated by this
Agreement will be able, to pay its debts and other obligations as they become
due.
(v) Subcontractors, Customers, Suppliers. Section 3(v) of the
Disclosure Letter sets forth a complete and accurate list of (i) all the
subcontractor or other currently existing agreements, arrangements or
understandings pursuant to which third parties currently perform, or in the
future shall or may perform, the Services on behalf of Seller, indicating the
specific Service, existing contractual arrangements, if any, with each such
subcontractor or service provider and the volume of Services performed, (ii)
currently existing agreements or other arrangements or understandings pursuant
to which Seller is obligated to or has the right to perform Services for any
Person now or in the future, (iii) all the suppliers of materials or services
for the Services and the Business, indicating the contractual arrangements for
continued supply from such Person and (iv) all customers of the Business. All
agreements relating to the Services are terminable at the election of Seller on
not more than 30 days notice and none of such agreements provides that a
subcontractor or any other Person has exclusive rights for any geographic area
or for any Service.
(w) Consents. Section 3(w) of the Disclosure Letter sets forth a
true, correct and complete list of the identities of any Person whose consent or
approval is required and the matter, agreement or contract to which such consent
relates, in connection with the transfer, assignment or conveyance by Seller of
any of the Acquired Assets.
(x) Permits. Section 3(x) contains a complete list of all
Permits.
(y) Interested Party Transactions. No officer, director or
shareholder of Seller (nor any ancestor, sibling, descendant or spouse of any of
such persons, or any trust, partnership or corporation in which any of such
persons has or has had an interest), has or has had, directly or indirectly, (i)
an interest in any entity which furnished or sold, or furnishes or sells,
services or
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products that Seller furnishes or sells, or proposes to furnish or sell, or (ii)
any interest in any entity that purchases from or sells or furnishes to, Seller,
any goods or services or (iii) a beneficial interest in any Contract; provided,
that ownership of no more than one percent (1%) of the outstanding voting stock
of a publicly traded corporation shall not be deemed an "interest in any entity"
for purposes of this Section 3(y).
(z) Accounts Receivable. Seller has made available to Buyer a
list of all accounts receivable of Seller as of the date of the Most Recent
Financial Statements ("Accounts Receivable"), along with the number of days that
have elapsed since each invoice. All Accounts Receivable of Seller arose in the
Ordinary Course of Business. No person has any Lien on any of such Accounts
Receivable and no request or agreement for deduction or discount has been made,
and no dispute or refusal to pay has been communicated, with respect to any of
such Accounts Receivable.
(aa) Environmental Matters. Seller has not transported, stored,
used, manufactured, released or exposed its employees or any other person to any
Hazardous Material in violation of any applicable local, state, or federal
statute, rule, regulation, order or law. Seller has no obligation to
investigate, remediate or take other action with respect to any Hazardous
Material that is present on any Seller facility or other property as a result of
any action or omission ( A) by the Seller, other than those obligations for
which adequate reserves have been established on the Financial Statements or (B)
by any Person other than Seller.
(i) No action, claim or proceeding is pending or, to the
knowledge of the Seller or any Shareholder, threatened concerning any Seller
facility or Seller's transportation, storage, use, manufacture, release or
exposure of any employee or any other person to a Hazardous Material, and
neither Seller nor any Shareholder is aware of any fact or circumstance that
would be reasonably likely to impose any material environmental liability upon
the Seller other than liabilities for which an adequate reserve has been
established on the Financial Statements.
(ii) The Leased Premises, including without limitation
the buildings, structures and improvements thereon, does not contain any: (i)
underground storage tanks; (ii) asbestos; (iii) equipment using PCBs; (iv)
underground injection wells; (v) urea formaldehyde foam insulation; or (vi)
septic tanks into which process wastewater or any Hazardous Materials have been
disposed
(bb) Insurance. Section 3(bb) of the Disclosure Schedule lists
all insurance policies and fidelity bonds ("Insurance ") covering the assets,
business, equipment, properties, operations, employees, officers and directors
of Seller. There is no claim by Seller pending under any of such Insurance as to
which coverage has been questioned, denied or disputed by the underwriters of
such Insurance. All premiums due and payable under all such Insurance have been
paid and Seller is otherwise in compliance with the terms of such Insurance (or
other policies and bonds providing substantially similar insurance coverage).
Such Insurance is adequate in amount, types and risks insured against in
accordance with good judgment, Seller's past practices and normal
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trade practice in businesses similar to the Business of Seller. Seller has no
Knowledge of any threatened termination of, or premium increase with respect to,
any of such Insurance.
(cc) Disclosure. Neither the representations and warranties
contained in this Section 3 (including the Disclosure Letter) nor any
certificate furnished or to be furnished by Seller to Buyer and Parent contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements and information contained in this
Section 3 (including the Disclosure Letter) not misleading. There is no material
fact known to Seller relating to the Business or the Acquired Assets which may
materially adversely affect the Acquired Assets which has not been disclosed in
writing in this Agreement (including the Disclosure Letter) to Buyer.
(dd) Share Acquisition Entirely for Own Account. This Agreement
is made with Seller and the Shareholders in reliance upon the Seller's and the
Shareholders' representation to Buyer and Parent, which by the Seller's and the
Shareholders' execution of this Agreement the Seller and the Shareholders hereby
confirm, that the Parent Shares to be acquired by the Seller and the
Shareholders will be acquired for investment for Seller's and the Shareholders'
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Seller and the Shareholders have no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Seller and the Shareholders
further represent that Seller and the Shareholders do not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
shares of Parent Shares.
(ee) Reliance Upon Seller's and the Shareholders'
Representations. Seller and the Shareholders understand that the Parent Shares
are not registered under the Securities Act on the ground that the sale provided
for in this Agreement and the issuance of securities hereunder is exempt from
registration under the Securities Act pursuant to section 4(2) thereof, and that
the Company's reliance on such exemption is based on the Shareholders'
representations set forth herein.
(ff) Receipt of Information. Seller and the Shareholders
acknowledge that they have received all the information they consider necessary
or appropriate for deciding whether to acquire the Parent Shares, including
without limitation Parent's most recent annual report on Form 10-K filed with
the Securities and Exchange Commission and each quarterly report on Form 10-Q
filed by Parent since its most recent fiscal year end. Seller and the
Shareholders further represent that they have had an opportunity to ask
questions and receive answers from Parent and Buyer regarding the business,
properties, prospects and financial condition of Parent and to obtain additional
information (to the extent Parent possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to them or to which they had access.
(gg) Investment Experience. Seller and the Shareholders are
experienced in evaluating and investing in securities and acknowledges that they
are able to fend for themselves, can bear the economic risk of their investment,
and have such knowledge and experience in financial
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and business matters that they are capable of evaluating the merits and risks of
the investment in the Parent Shares.
(hh) Restricted Securities. Seller and the Shareholders
understand that the Parent Shares may not be sold, transferred or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration statement
covering the Parent Shares or an available exemption from registration under the
Securities Act, the Parent Shares must be held indefinitely. To the extent
applicable, each certificate or other document evidencing any of the Parent
Shares shall be endorsed with the following restrictive legend:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED
(1) ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT, (2)
UNLESS SOLD PURSUANT TO RULE 144 PROMULGATED UNDER SUCH ACT, (3)
UNLESS IN THE OPINION OF COUNSEL TO THE TRANSFERRING SHAREHOLDER
(WHICH SHALL BE REASONABLY SATISFACTORY TO THE ISSUER) SOME
OTHER EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE OR
(4) UNLESS THE SALE IS OTHERWISE EXEMPT FROM REGISTRATION UNDER
THE ACT."
Seller and the Shareholders covenant that, except to the
extent such restrictions are waived by Parent, Seller and the Shareholders shall
not transfer the shares represented by any such certificate without complying
with the restrictions on transfer described in such legend. Seller and the
Shareholders may sell the Parent Shares in compliance with Rule 144 promulgated
under the Securities Act without providing Parent or any of its representatives
an opinion of counsel regarding such sale and with an opinion of counsel in
reliance on any other exemption. Seller and the Shareholders agree-to provide
Parent with notice of any sale of Parent Shares no later than ten (10) business
days prior to any such sale. Each certificate evidencing the Parent Shares
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth above, except
that such certificate shall not bear such restrictive legend if in the opinion
of counsel for such holder and the Company such legend is not required in order
to establish compliance with any provision of the Securities Act.
4. Representations and Warranties of Parent and Buyer.
Parent and Buyer jointly and severally represent and warrant to Seller
that the statements contained in this Section 4 are correct and complete as of
the date of this Agreement and, if different than the date of this Agreement,
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4).
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(a) Organization of Buyer. Each of Parent and Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California.
(b) Authority for Agreement. Each of Parent and Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its respective obligations hereunder.
All corporate and other actions or proceedings to be taken by or on the part of
Parent and Buyer to authorize and permit the execution and delivery by it of
this Agreement and the instruments required to be executed and delivered by it
pursuant hereto, the performance by Parent and Buyer of their respective
obligations hereunder, and the consummation by Parent and Buyer of the
transactions contemplated herein, have been duly and properly taken. This
Agreement has been duly executed and delivered by Parent and Buyer and
constitutes the legal, valid and binding obligation of Parent and Buyer,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency or
court to which Parent or Buyer is subject or any provision of their respective
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
Parent or Buyer is a party or by which it is bound or to which any of its assets
is subject, except where such violation, conflict, breach, default,
acceleration, termination, modification, cancellation or failure to give notice
would not have an adverse effect on the ability of Parent or Buyer to consummate
the transactions contemplated by this Agreement. Neither Parent nor Buyer needs
to give any notice to, make any filing with, or obtain any authorization,
consent or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Section 2 above).
(d) Brokers' Fees. Neither Parent nor Buyer has any Liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which Seller
could become liable or obligated.
(e) Consents. No consent or approval of any Person is required
in connection with the acquisition by Buyer of any of the Acquired Assets or the
payment by Buyer of the Purchase Price.
(f) Shares of Common Stock. The Parent Shares, when issued and
delivered to Seller in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
5. Covenants.
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The Parties agree as follows:
(a) General. During the period between the date of execution of
this Agreement and the Closing Date, subject to the terms and conditions
provided in this Agreement, each of the Parties will use its best efforts to
take all action and to do all things reasonably necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. During the period between the date of
execution of this Agreement and the Closing Date, Seller will give any notices
to third parties, and will use its best efforts to obtain any third party
consents, that are required to transfer the Acquired Assets to Buyer, and any
other consent that Parent or Buyer may reasonably request.
(c) Preservation of Business. During the period between the date
of execution of this Agreement and the Closing Date, Seller will use its best
efforts to keep the Business and the Acquired Assets intact, including its
present operations, physical facilities, working conditions and relationships
with lessors, licensors, suppliers, distributors, customers and employees and
Seller shall not take any action which shall have material adverse effect on the
Acquired Assets, the Business or on the ability of Seller to consummate the
transactions contemplated by this Agreement.
(d) Conduct of Business. During the period between the date of
execution of this Agreement and the Closing Date, Seller shall not, without the
prior written consent of Buyer (i) enter into any contracts with potential
obligations in excess of $25,000 in the aggregate or contracts binding Seller
for a period of time longer than 30 days; (ii) other than in the Ordinary Course
of Business or as contemplated by this Agreement, pay any bonuses or make any
salary or wage increases or other adjustments affecting Sellers' employees,
(iii) act or omit to act, or consent to any act or omission to act by another
party, which will (with or without notice and/or the passage of time) cause a
breach or violation of, or default under, any Contract or other commitments or
other obligations adversely affecting the Acquired Assets or the Business or
(iv) other than in the Ordinary Course of Business consistent with past
practice, assign, pay or otherwise transfer assets in aggregate value in excess
of $25,000.
(e) Full Access. During the period between the date of execution
of this Agreement and the Closing Date, Seller will permit representatives of
Parent and Buyer to have full access at all reasonable times, and in a manner so
as not to interfere with the normal business operations of Seller, to all
premises, properties, personnel, books, records (including Tax records),
contacts, vendors, distributors, customers and documents of or pertaining to the
Business or the Acquired Assets.
(f) Notice of Developments. During the period between the date
of execution of this Agreement and the Closing Date, each Party will give prompt
written notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties in Section 3 and Section
4 above. No disclosure by any Party pursuant to this Section 5(e), however,
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shall be deemed to amend or supplement the Disclosure Letter or to prevent or
cure any misrepresentations, breach of warranty or breach of covenant.
(g) Exclusivity. During the period between the date of execution
of this Agreement and the Closing Date, Seller will not and will use its best
efforts to cause Seller's Affiliates, directors, officers, employees,
representatives and agents not to (i) solicit, encourage, initiate or
participate in any negotiations or discussions with any third party with respect
to any offer or proposal to acquire all or substantially all of the Acquired
Assets whether by purchase of assets or otherwise; (ii) disclose to any third
party any information concerning the Acquired Assets or the related properties,
books or records except as may be required by law; or (iii) cooperate with any
third party to make any proposal to acquire all or any part of the Acquired
Assets, other than Inventory in the Ordinary Course of Business. Any Party
receiving a formal or informal offer or proposal for such an acquisition (or an
offer or proposal to enter negotiations therefor) shall immediately inform Buyer
thereof (including the terms of such offer and identity of the offeror) and
provide Buyer with copies of any documents relating thereto.
(h) Employee Matters.
(i) Buyer intends to hire the employees listed on
Exhibit E attached hereto (the "Continuing Employees"), including Thomas Chauvin
and Vikki Chauvin (the "Key Employees"). Seller agrees to (i) cooperate with
Buyer in Buyer's recruitment of the Continuing Employees, (ii) terminate the
employment of the Continuing Employees with Seller at Closing and to pay any and
all Liabilities relating to such termination, including, without limitation any
payments and benefits due such Continuing Employees pursuant to accrued salary
and wages, pension, retirement, savings, health, welfare and other benefits and
severance payments or similar payments of the Continuing Employees and (iii)
provide to each Continuing Employee any notice (which notice shall be reasonably
acceptable to Buyer) required under any law or regulations in respect of such
termination including, without limitation COBRA. Buyer will offer to such
Continuing Employees as part of its recruitment thereof compensation and
benefits reasonably consistent with the compensation and benefits such Employees
are provided by Seller; provided, however, Seller agrees to provide Buyer,
within fifteen (15) days of Buyer's request, information pertaining to any
Continuing Employee's compensation and benefits which such individual was an
Employee of Seller.
(ii) After Closing, Seller will within 7 days of the
Closing Date pay each Employee's accrued vacation through the Closing Date.
(i) Simple-IRA(i). Prior to Closing, Seller agrees to terminate
its Simple-IRA retirement plan or convert the Simple-IRA retirement plan to
separate individual retirement accounts that are fully-vested and are held in
the name of each participant prior to Closing.
(j) Transfer Taxes. Seller shall promptly pay any sales, use,
excise, value added or other Taxes that may be imposed on the transfer of the
Acquired Assets hereunder, payment of
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which Taxes shall be the sole responsibility of Seller and the Shareholders but
for which Buyer shall reimburse Seller for fifty percent (50%) of such Taxes.
(k) Payment of Trade and Other Creditors. Seller shall comply
with its obligation to satisfy amounts due to trade and other creditors of
Seller.
(l) Bulk Sales Compliance. Seller shall comply in all respects
with the provisions of any so-called "bulk sales law" of any relevant
jurisdiction in connection with the sale of the Acquired Assets to Buyer.
(m) Cooperation in Parent Compliance with Disclosure
Obligations. Seller and the Shareholders shall promptly provide to Parent and
its agents all assistance reasonably requested by Parent in order to assist
Parent in complying with its disclosure obligations under the Securities and
Exchange Act of 1934, as amended, including without limitation Parents
obligation to file certain financial statements regarding Seller's business and
pro-forma financial statements regarding the businesses of Seller, Parent and
Buyer. The assistance that Seller and the Shareholders shall provide shall
include, without limitation, access to all Seller books, records and accounts,
access to Seller's personnel and prompt response to requests for information by
Parent and its agents.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Parent and Buyer. The obligation
of Parent and Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) Representations and Warranties. The representations
and warranties set forth in Section 3 above shall be true and correct in all
material respects (except for such representations and warranties which are
qualified by their terms by a reference to materiality, which representations
and warranties as so qualified shall be true and correct in all respects) when
made and on and as of the Closing Date.
(ii) Performance by Seller. Seller and the Shareholders
shall have performed and complied with all of its covenants, agreements and
obligations hereunder in all material respects through the Closing.
(iii) Consents and Approval. Seller shall have procured
all of the governmental approvals, consents or authorizations and third party
consents specified in Section 3(w) and Section 5(b) above and this Agreement and
the transactions contemplated hereby shall have been duly approved by 100% of
the outstanding shares of Seller.
(iv) Lease Termination. Seller shall have terminated all
leases (other than those listed on Schedule 2(a)(iii)), whether for real
property, equipment or otherwise, and shall have paid all liabilities associated
therewith, related to the Acquired Assets.
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(v) Bank Debt Satisfied. Any and all obligations of
Seller to commercial lending institutions shall have been repaid, all Liens or
Security Interests encumbering the Acquired Assets shall have been released and
copies of the documentation related thereto shall have been delivered to Buyer.
(vi) Absence of Litigation. No action, suit or
proceeding shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction,
including any such actions, suits or proceedings wherein an unfavorable
injunction, judgment, order, decree, ruling or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (iii) prevent Buyer from owning the Acquired Assets (and
no such injunction, judgment, order, decree, ruling or charge shall be in
effect).
(vii) Absence of Material Adverse Change. There shall
not have occurred any material adverse change in the condition, financial or
otherwise, business properties, assets or prospects of the Business relating to
the Acquired Assets.
(viii) Opinion. Parent and Buyer shall have received
from Seller a corporate opinion of Seale Daigle & Ross in form and substance
satisfactory to Parent and Buyer, addressed to Parent and Buyer, and dated as of
the Closing Date.
(ix) Certificates. Seller shall have delivered to Parent
and Buyer a certificate to the effect that each of the conditions specified in
Sections 6(a)(i)-(vii) are satisfied in all respects.
(x) Employment Agreements. The Key Employees shall have
entered into employment agreements with Buyer in substantially the form of
Exhibit F (the "Employment Agreements").
(xi) Non-Competition Agreements. Seller and the
Shareholders shall have entered into a non-competition agreement with Parent and
Buyer, in the form attached hereto as Exhibit G (the "Non-Competition
Agreements").
(xii) Lease. The Shareholders shall have entered into
with Buyer a lease agreement relating to the Leased Premises in substantially
the form of Exhibit H (the "Lease").
(b) Conditions to Obligation of Seller. The obligation of Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) Representations and Warranties. The representations
and warranties set forth in Section 4 above shall be true and correct in all
material respects (except for such representations and warranties which are
qualified by their terms by a reference to materiality, which
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representations and warranties as so qualified shall be true and correct in all
respects) when made and on and as of the Closing Date;
(ii) Performance by Buyer. Buyer shall have performed
and complied with all of its covenants hereunder in all material respects
through the Closing.
(iii) Absence of Litigation. No action, suit or
proceeding shall be pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction
wherein an unfavorable injunction, judgment, order, decree, ruling or charge
would (i) prevent consummation of any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect).
(iv) Opinion. Seller shall have received from counsel to
Parent and Buyer an opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, in form and substance satisfactory to Seller addressed to Seller
and dated as of the Closing Date.
(v) Certificates. Parent and Buyer shall have delivered
to Seller a certificate to the effect that each of the conditions specified in
Sections 6(b)(i)-(iii) is satisfied in all respects.
7. Indemnification.
(a) Survival of Representations, Etc. It is the express
intention and agreement of the parties to this Agreement that all covenants,
agreements, statements, representations, warranties and indemnities made by
Parent, Buyer, Seller and Shareholders in this Agreement, the Exhibits or
Schedules hereto or in any document or instrument delivered by Parent, Buyer,
Seller or a Shareholder pursuant to the provisions of this Agreement at or in
connection with the Closing shall survive the Closing as follows:
(i) all representations, warranties, covenants and
agreements of Seller and Shareholders in Section 3(m) or otherwise relating to
the federal, state, local or foreign Tax obligations of the Seller with respect
to the Tax Returns filed or required to be filed prior to or on the Closing Date
("Tax Matters") shall survive the Closing for the period of the applicable
statute of limitations plus any extensions or waivers granted or imposed with
respect thereto, and with respect thereto.
(ii) all representations, warranties, covenants and
agreements contained in the Lease, the Employment Agreements and the
Non-Competition Agreements shall survive for the term specified therein;
(iii) all other representations, warranties, covenants
and agreements contained in this Agreement, the Exhibits or Schedules hereto or
in any document or instrument
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delivered by Parent, Buyer, Seller or a Shareholder pursuant to the provisions
of this Agreement shall survive the Closing for a period of one hundred eighty
(180) days from the Closing Date;
(iv) notwithstanding 7(a)(i)-7(a)(iii), with respect to
claims for fraud or a knowing, intentional or willful breach of a
representation, warranty, covenant or agreement contained in this Agreement, the
Exhibits or Schedules hereto or in any document or instrument delivered by
Parent, Buyer, Seller or a Shareholder pursuant to the provisions of this
Agreement, such representation, warranty, covenant or agreement shall survive
until the end of the statute of limitations applicable to such claim; and
(v) the right of Buyer to recover Damages (as defined in
Section 7(b)) on any claim shall not be affected by the termination of any
representations, warranties, covenants and agreements as set forth above in
subparagraphs 7(a)(i) through 7(a)(iv), provided that notice of the existence of
any Damages (but not necessarily the fixed amount of any such Damages) as a
result of such claim has been given by the indemnified to the indemnifying party
prior to such termination.
(b) Indemnification of Parent and Buyer. Subject to the
limitations expressed in Sections 7(a) and 7(d) and in accordance with the
procedures set forth in Exhibit M hereto, from and after the Closing, Seller and
the Shareholders shall jointly and severally indemnify and hold Parent and Buyer
and Parent's and Buyer's directors, officers and affiliates (each a "Buyer
Indemnitee") harmless from and against any liability, loss, cost, expense,
claim, lien or other damage including, without limitation, reasonable attorney's
fees and expenses (all of the foregoing items for purposes of this Agreement are
referred to as "Damages"), resulting from, arising out of or incurred with
respect to, or alleged to result from, arise out of or have been incurred with
respect to:
(i) the falsity or breach of any representation,
warranty, covenant or agreement by Seller or the Shareholders herein or in the
Schedules or Exhibits hereto or in any document or instrument delivered by
Seller or a Shareholder pursuant to the provisions of this Agreement;
(ii) the assertion against Parent, Buyer, the Seller or
the Shareholders or against any Buyer Indemnitee of any Damages created by or
attributable to any unknown, undisclosed or contingent liability of the Seller
or the Shareholders arising out of the Seller's or the Shareholders' conduct
prior to the Closing; or
(iii) any Excluded Liability.
(c) Indemnification of Seller and Shareholders. Subject to the
limitations expressed in Sections 7(a) and 7(d) and in accordance with the
procedures set forth in Exhibit M hereto, from and after the Closing, Parent and
Buyer shall jointly and severally indemnify and hold Seller, the Shareholders
and Seller's directors, officers and affiliates harmless from and against any
Damages, resulting from, arising out of or incurred with respect to, or alleged
to result from, arise out of or have been incurred with respect to the falsity
or breach of any representation, warranty,
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covenant or agreement by Parent or Buyer herein or in the Schedules or Exhibits
hereto or in any document or instrument delivered by the Buyer pursuant to the
provisions of this Agreement.
(d) Maximum Liability. The Parent's and Buyer's, on the one
hand, and Seller's and Shareholders', on the other hand, maximum liability under
this Agreement shall be equal to the Purchase Price less the Purchase Price
Adjustment (if any), provided, however, there shall be no maximum liability with
respect to (i) knowing, intentional, willful or fraudulent breaches, (ii) claims
by Parent, Buyer or any Buyer Indemnitee against Seller or any Shareholder
relating to Tax Matters, (iii) claims by Parent, Buyer or any Buyer Indemnitee
against Seller or any Shareholder relating to any Excluded Liability and (iv)
claims by Parent, Buyer or any Buyer Indemnitee against Seller or any
Shareholder relating to any covenant or agreement contained in a Non-Competition
Agreement or Employment Agreement.
(e) Offset Against the Note and Escrow. Parent, Buyer, Seller
and the Shareholders agree that any claims by Parent or Buyer for
indemnification under this Section 7 or other claims by Parent or Buyer under
this Agreement or any agreement delivered pursuant to this Agreement shall
(except for claims for equitable relief) be satisfied first by Buyer's
offsetting the amount of any such claims against amounts payable by Buyer to
Seller pursuant to the terms of the Note. If Parent or Buyer have made any
claims for indemnification under this Section 7 or other claims by Parent or
Buyer under this Agreement or any agreement delivered pursuant to this Agreement
(except for claims for equitable relief) that have not been satisfied at the
time that Buyer is to make a payment to Sellers pursuant to Section 2(g)(iii),
the amount of such claims may be offset against the amounts that Buyer is
otherwise obligated to pay to Seller pursuant to Section 2(g)(iii). The offset
provisions in this section 7(e) shall not limit Parent's or Buyer's right to
full indemnification or other remedy. Buyer may refrain from affecting such an
offset without in any way compromising, reducing or otherwise harming Buyer's
right to full indemnification under this Section 7 or other rights. In no case
shall such an offset be construed as Parent's or Buyer's sole or exclusive
remedy. Notwithstanding the other provisions of this Agreement (or the
provisions of the Note) regarding the date of payment of the Note, Buyer shall
not be obligated to pay that amount (or some portion thereof) payable under the
Note that is necessary in the reasonable judgment of Parent (subject to the
objection of the Seller and the subsequent arbitration of the matter in the
manner provided in Section 8 hereof) to satisfy any unsatisfied claims existing
prior to the payment date of the Note, as specified in any notice delivered to
the Seller prior to payment date of the Note. As soon as all such claims have
been resolved, as evidenced by written memorandum of the Seller and Buyer, the
Buyer shall deliver to the Seller the remaining portion of the amounts due under
the Note not required to satisfy such claims. Notwithstanding the provisions of
Section 2(g) of this Agreement, Buyer and Escrow Agent shall not be obligated to
pay that amount (or some portion thereof) of the Earnout Payment that is
necessary in the reasonable judgment of Parent (subject to the objection of the
Seller and the subsequent arbitration of the matter in the manner provided in
Section 8 hereof) to satisfy any unsatisfied claims existing prior to the date
on which the Earnout Payment would have otherwise been made, as specified in any
notice delivered to the Seller prior to the date on which the Earnout Payment
would have otherwise been made. As soon as all such
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claims have been resolved, as evidenced by written memorandum of the Seller and
Buyer, the Buyer shall cause the Escrow Agent to deliver to the Seller the
remaining portion of the amounts due under Section 2(g) not required to satisfy
such claims.
8. Resolution of Conflicts: Arbitration.
(a) In the event of any dispute among the parties (or any party
and any Person entitled to indemnification under Section 7) in connection with
this Agreement, including without limitation, disputes over a claim pursuant to
Section 7, the parties to such dispute shall attempt in good faith to resolve
the dispute. If no such resolution can be reached within 60 days of notice by
one party to the dispute to the other, the dispute shall be resolved by final
and binding arbitration before a three arbitrator panel conducted under the
auspices of the American Arbitration Association. In order to invoke arbitration
of the dispute, a party to the dispute may demand arbitration of the matter by
delivering a letter to the other party stating such demand ("Demand Letter"),
unless the amount of the damage or loss is at issue in pending litigation with a
third party, in which event arbitration shall not be commenced until such amount
is ascertained (provided that the rights of any Person entitled to
indemnification under Section 7 shall not be prejudiced by any delay in
determining the amount of such claim) or all parties to the dispute agree to
arbitration. Within ten (10) days after Demand Letter is delivered, the parties
on each of the two sides to the dispute shall each select one arbitrator, and
thereafter the two arbitrators so selected shall select a third arbitrator. The
decision of the majority of the arbitrators as to the validity and amount of any
claim pursuant to this Agreement shall be binding and conclusive upon the
parties to this Agreement.
(b) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
San Jose, California under the commercial rules then in effect of the American
Arbitration Association. The costs of arbitration shall be borne by the party
incurring such costs unless otherwise specified in certain other provisions of
this Agreement.
9. Confidentiality.
Except as expressly provided in this Agreement, no party hereto
shall disclose or use Confidential Information of any other party without the
express written consent of the other party unless such disclosure is required by
law. In the event that a party is required by law to disclose the Confidential
Information of another party, it shall promptly notify the other party of such
requirement so that the other party may seek an appropriate waiver or protective
order. If, in the absence of a protective order or waiver, the party is, on the
advice of counsel, compelled to disclose any Confidential Information, the party
may disclose such information provided such party first uses its best efforts to
obtain assurances from the tribunal or regulatory authority requiring disclosure
that such disclosure will be as limited as possible under the circumstances. If
and when the Closing occurs, Parent and Buyer shall have the right, except as
prohibited by law, to require Seller and Shareholders to deliver or destroy all
tangible embodiments (and all copies) of any Confidential Information relating
to the Acquired Assets which are in Seller's or Shareholders' possession.
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10. Termination.
(a) Termination of Agreement. Each of the Parties may terminate
this Agreement as provided below.
(i) The Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Parent and Buyer may terminate this Agreement by
giving written notice to Seller at any time prior to the Closing (A) in the
event Seller or any Shareholder has breached any representation, warranty or
covenant contained in this Agreement in any material respect, Buyer has notified
Seller of the breach, and the breach has continued without cure for a period of
15 days after the notice of breach or (B) if the Closing shall not have occurred
on or before January 31, 2000, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results primarily from
Buyer itself breaching any representation, warranty or covenant contained in
this Agreement); and
(iii) Seller may terminate this Agreement by giving
written notice to Buyer at any time prior to the Closing (A) in the event Parent
or Buyer has breached any representation, warranty or covenant contained in this
Agreement in any material respect, Seller has notified Buyer of the breach, and
the breach has continued without cure for a period of 15 days after the notice
of breach or (B) if the Closing shall not have occurred on or before January 31,
2000, by reason of the failure of any condition precedent under Section 6(b)
hereof (unless the failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. In the event of termination of this
Agreement as provided in this Section 10, the terminating Party shall provide
written notice of such termination to the other Party, the provisions of this
Agreement shall forthwith become void, except that the agreements contained or
referred to in Section 4(d) (Brokers; Finders); 8 (Resolution of Conflicts;
Arbitration) and 9 (Confidentiality) and 10 (Termination) and 11 (Miscellaneous)
shall survive. Understanding the foregoing, in the event of a termination of
this Agreement by any Party hereto, nothing herein shall limit the remedies at
law or in equity of any Party with respect to any breaches hereof by any other
Party.
11. Miscellaneous.
(a) Press Releases and Public Announcements. Neither Seller nor
any Shareholder shall issue any press release or make any public announcement
relating to the existence of or subject matter of this Agreement prior to the
Closing without the prior written approval of Parent or Buyer.
(b) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted
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assigns and except for where Buyer has assumed the Assumed Liabilities
(including, without limitation, any warranties).
(c) Entire Agreement. This Agreement (including the documents
referred to herein and attached hereto) constitutes the entire agreement between
the Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that Buyer may (i) assign any or
all of its rights and interests hereunder to one or more wholly-owned
subsidiaries and (ii) designate one or more of its wholly-owned subsidiaries to
perform its obligations hereunder.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given (i) upon
confirmation of facsimile, (ii) when sent by overnight delivery or (iii) when
mailed by registered or certified mail return receipt requested and postage
prepaid at the following address:
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If to Parent or Buyer: Copy to:
Cholestech Corporation Wilson Sonsini Goodrich & Rosati
3347 Investment Boulevard 650 Page Mill Road
Hayward, CA 94545-3808 Palo Alto, CA 94304-1050
Tel: (510) 732-7200 Tel: (650) 493-9300
Fax: (510) 732-7227 Fax: (650) 493-6811
Attention: Chief Financial Officer Attention: Robert P. Latta, Esq.
If to Seller: Copy to:
Health Net, Inc. Seale, Daigle & Ross
207 West Thomas Street 200 N. Cate Street, P.O. Drawer 699
Hammond, LA 70401 Hammond, LA 70404
Tel: (504) 549-0894 Tel: (504) 542-8500
Fax: (504) 429-0664 Fax: (504) 542-4111
Attention: Thomas Chauvin Attention: T. Jay Seale, III, Esq.
If to Shareholders: Copy to:
Health Net, Inc. Seale, Daigle & Ross
207 West Thomas Street 200 N. Cate Street, P.O. Drawer 699
Hammond, LA 70401 Hammond, LA 70404
Tel: (504) 549-0894 Tel: (504) 542-8500
Fax: (504) 429-0664 Fax: (504) 542-4111
Attention: Thomas Chauvin Attention: T. Jay Seale, III, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California.
(i) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
Parent, Buyer, Seller and Shareholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
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(j) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) Expenses. Whether or not the transactions contemplated
hereby are consummated, all fees and expenses, including any legal, accounting,
investment banking and other professional services, costs and expenses, incurred
in connection with the negotiation and/or effectuation of the transactions
contemplated hereby shall be the obligation of the respective Party incurring
such fees and expenses.
(l) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
"PARENT" CHOLESTECH CORPORATION
/s/ WARREN E. PINCKERT II
---------------------------------------------
Signature
Warren E. Pinckert II
---------------------------------------------
Print Name
President
---------------------------------------------
Title
"BUYER" WellCheck Inc.
/s/ ANDREA J. TILLER
---------------------------------------------
Signature
Andrea J. Tiller
---------------------------------------------
Print Name
CFO
---------------------------------------------
Title
"SELLER" HEALTH NET, INC.
/s/ THOMAS M. CHAUVIN
---------------------------------------------
Signature
Thomas M. Chauvin
---------------------------------------------
Print Name
President
---------------------------------------------
Title
"SHAREHOLDERS" THOMAS M. CHAUVIN
---------------------------------------------
Thomas M. Chauvin
VIKKI L. CHAUVIN
---------------------------------------------
Vikki L. Chauvin
39
EXHIBIT A
CERTAIN DEFINITIONS
"Acquired Assets" shall have the meaning set forth in Section 2(a).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" shall have the meaning set forth in the preamble above.
"Acquired Assets" has the meaning set forth in Section 2(a).
"Adjustment Certificate" has the meaning set forth in Section 2(f)(v).
"Audit Dispute Notice" has the meaning set forth in Section 2(f)(ii).
"Adjustment Payment Date" shall have the meaning set forth in Section
2(f)(vi).
"Assumed Liabilities" shall have the meaning set forth in Section 2(c).
"Adjusted Audited Earnings" shall mean the Audited Earnings, with the
following adjustments:
(i) add back any reduction in net income for the Audit
Period due to income taxes,
(ii) add back any reduction in net income for the Audit
Period due to interest expense,
(iii) deduct any increase in net income for the Audit
Period due to interest income,
(iv) adjust salary expense for the Audit Period
attributable to Shareholders to $155,000 in the aggregate,
(v) adjust rent for the Audit Period with respect to the
property located at 207 West Thomas Street, Hammond, LA 70401, to $30,000, and
(vi) add back any reduction in net income for the Audit
Period due to expenses associated with the ownership of any vehicles included in
the Excluded Assets, other than expenses for fuel and ordinary preventative
maintenance.
"Adjusted Earnout Payment Amount" shall have the meaning set forth in
Section 2(f)(v).
"Audited Balance Sheet" shall have the meaning set forth in Section
2(f)(i).
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"Audited Earnings" shall mean the net income of Seller set forth in the
Final Audited Income Statement.
"Audited Income Statement" shall have the meaning set forth in Section
2(f)(i).
"Audited Revenues" shall have the meaning set forth in Section 2(g)(iv).
"Audit Period" has the meaning set forth in Section 2(f)(i).
"Balance Sheet Adjustment" has the meaning set forth in Section
2(f)(iv).
"Base Period Revenues" shall have the meaning set forth in Section
2(g)(iii).
"Buyer" has the meaning set forth in the preamble above.
"Buyer Indemnitee" shall have the meaning set forth in Section 7(b).
"Buyer Escrow Instructions Certificate" has the meaning set forth in
Section 2(h)(i).
"Business" means Seller's business of performing the Services.
"Cash Purchase Price" has the meaning set forth in Section 2(e)(i).
"Closing" has the meaning set forth in Section 2(i).
"Closing Date" has the meaning set forth in Section 2(i).
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any and all proprietary and
confidential information concerning the parties hereto including, without
limitation, inventions, trade secrets, ideas, processes, formulas, source and
object codes, data programs, other works of authorships, know-how, improvements,
discoveries, developments, designs, techniques, sales and marketing plans,
business plans, budgets and unpublished financial statements; provided, however,
that "Confidential Information" shall not include any material or information
that (i) has been made public by the party; (ii) becomes known to another party
hereto prior to receipt from the party; (iii) is received by another party
hereto without breach of this Agreement from a third party not under an
obligation to maintain its confidentiality; (iv) has been independently
developed by another party without the use of the other party's Confidential
Information.
"Continuing Employees" has the meaning set forth in Section 5(h).
"Contracts" has the meaning set forth in Section 2(a)(iii).
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"Damages" shall have the meaning set forth in Section 7(b).
"Demand Letter" shall have the meaning set forth in Section 8(a).
"Disclosure Letter" has the meaning set forth in Section 3.
"Earnings Adjustment" has the meaning set forth in Section 2(f)(iii).
"Earnout Certificate" has the meaning set forth in Section 2(g)(i).
"Earnout Dispute Notice" has the meaning set forth in Section 2(g)(ii).
"Earnout Payment" has the meaning set forth in Section 2(g)(iv).
"Earnout Payment Date" has the meaning set forth in Section 2(h)(i).
"Earnout Performance" has the meaning set forth in Section 2(g)(i).
"Earnout Period" has the meaning set forth in Section 2(g)(i).
"Earnout Purchase Price" has the meaning set forth in Section 2(e)(iv).
"Earnout Performance" has the meaning set forth in Section 2(g)(i).
"Employee" means any current or former employee, consultant or director
of the Seller or any Affiliate or the Buyer or any Affiliate, as applicable.
"Employee Agreement" shall mean each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or other
agreement, contract or understanding between the Seller or any Affiliate and any
Employee.
"Employee Benefit Plan" means any plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by the Seller or any Affiliate for the benefit of
any Employee, or with respect to which the Seller or any Affiliate has or may
have any liability or obligation.
"Employment Agreements" has the meaning set forth in Section 6(a)(x).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" has the meaning set forth in Section 2(g)(iv).
"Escrow Agent" has the meaning set forth in Section 2(g)(iv).
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"Escrow Agreement" has the meaning set forth in Section 2(g)(iv).
"Excluded Assets" has the meaning set forth in Section 2(b).
"Excluded Liability" has the meaning set forth in Section 24(d)(3).
"Final Earnout Performance" shall have the meaning set forth in Section
2(g)(ii).
"Financial Statements" has the meaning set forth in Section 3(h).
"Final Audited Balance Sheet" shall have the meaning set forth in
Section 2(f)(ii).
"Final Audited Income Statement" shall have the meaning set forth in
Section 2(f)(ii).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" means any substance that is regulated or
prohibited by any local, state or federal government authority or which has been
designated by any such authority to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment.
"Indebtedness" has the meaning set forth in Section 3(i).
"Initial Purchase Price" shall have the meaning set forth in Section
2(e).
"Insurance" has the meaning set forth in Section 3(bb).
"Intellectual Property" means the entire right, title and interest in
and to all proprietary rights of every kind and nature, including Patents,
copyrights, Trademarks, mask works, trade secrets and proprietary information,
all applications for any of the foregoing, and any license or agreements
granting rights related to the foregoing: (i) that are owned, licensed or
controlled in whole or in part by Seller and directly relate to Seller Assets or
(ii) that are used in or necessary to the Business.
"International Employee Plan" shall mean each Employee Benefit Plan of
the Seller or an Affiliate that has been adopted or maintained by the Seller or
any Affiliate, whether informally or formally, or with respect to which the
Seller or any Affiliate will or may have any liability, for the benefit of
Employees who perform services outside the United States.
"Inventory" means any inventory relating to the Business, including all
related raw materials and supplies, manufactured and purchased parts, goods in
process, finished goods and packaging.
"IRS" shall mean the Internal Revenue Service.
"Key Employees" has the meaning set forth in Section 5(h).
"Knowledge" means actual knowledge after reasonable inquiry.
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"Later Acquired Assets" shall mean assets and businesses acquired
(whether by asset purchase, merger or otherwise) by Buyer after the Closing Date
but prior to the end of the Earnout Period from Persons other than the Seller or
Shareholders, which purchased assets were used, prior to their acquisition, in
the conduct of businesses similar to the Business.
"Lease" has the meaning set forth in Section 6(a)(xii).
"Leased Premises" means the building located at 207 West Thomas Street,
Hammond, LA 70401.
"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, whether incurred or
consequential and whether due or to become due), including any liability for
Taxes.
"Lien" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer, conditional sale or other
title retention device or arrangement (including, without limitation, a capital
lease), transfer for the purpose of subjection to the payment of any
Indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom; provided,
however, that the term "Lien" shall not include (i) statutory liens for Taxes to
the extent that the payment thereof is not in arrears or otherwise due, (ii)
statutory or common law liens to secure landlords, lessors or renters under
leases or rental agreements confined to the premises rented to the extent that
no payment or performance under any such lease or rental agreement is in arrears
or is otherwise due, (iii) deposits or pledges made in connection with, or to
secure payment of, worker's compensation, unemployment insurance, old age
pension programs mandated under applicable laws or other social security
regulations and (iv) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens to secure
claims for labor, materials or supplies and other like liens, which secure
obligations to the extent that payment thereof is not in arrears or otherwise
due.
"Most Recent Financial Statements" has the meaning set forth in Section
3(h).
"Most Recent Fiscal Year End Financial Statements" has the meaning set
forth in Section 3(h).
"New Business" has the meaning set forth in Section 2(h)(iv).
"Non-Competition Agreements" has the meaning set forth in Section
3(a)(xi).
"Note" has the meaning set forth in Section 2(e)(ii).
"Note Purchase Price" has the meaning set forth in Section 2(e)(ii).
"Ordinary Course of Business" means the ordinary course of business
consistent with past practice (including with respect to quantity and
frequency).
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"Parent" has the meaning set forth in the preamble of the Agreement.
"Parent Shares" has the meaning set forth in Section 2(e)(iii).
"Parties" has the meaning set forth in the preamble of the Agreement.
"Patent" means any: (i) United States or foreign patent, patent
application, patent disclosure or other patent right; (ii) any division,
continuation, continuation-in-part or similar extension of an application that
is a Patent; and (iii) any patent or other patent right that issues or is based
upon an application that is a Patent.
"Permits" has the meaning set forth in Section 2(a)(iv).
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political
subdivision thereof).
"Pro Rata Portion of Interest" shall have the meaning set forth in
Section 2(h)(i).
"Purchase Price" has the meaning set forth in Section 2(e).
"Purchase Price Adjustment" has the meaning set forth in Section
2(f)(vi).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, other than (a) mechanic's, materialmen's and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Seller" has the meaning set forth in the preamble above.
"Seller Asserted Earnout Performance" shall have the meaning set forth
in Section 2(g)(ii).
"Seller Assets" means the assets, rights, agreements and operations that
directly or indirectly relate to, are incorporated or embodied in, or are used
in or necessary to the Business.
"Seller Escrow Dispute Notice" has the meaning set forth in Section
2(h)(ii).
"Services" means conducting tests and screening human patients for
biological and physiological health parameters, including, but not limited to
cholesterol levels, lipid profiles, liver function, blood glucose and
osteoporosis.
"Shareholders" has the meaning set forth in the preamble above.
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"Stock Purchase Price" has the meaning set forth in Section 2(e)(iii).
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tangible Net Assets" means the assets of Seller reflected in the Final
Audited Balance Sheet, including cash, accounts receivable (net of revenues),
inventory (net of revenues), fixed assets (net of depreciation), deposits, but
excluding goodwill, contracts, agreements, Intellectual Property and other
intangible assets.
"Tangible Net Assets Value" shall have the meaning set forth in Section
2(f)(iv).
"Tax" or "Taxes" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar, including FICA), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Trademarks" means any trademarks, service marks, trade dress, and
logos, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith.
"Trading Day" means a day on which The Nasdaq Stock Market's National
Market reports a closing price for the Parent's Common Stock.
"Undisputed Earnout Payment" shall have the meaning set forth in Section
2(f)(v).
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