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Exhibit 4.6
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SHARE PURCHASE AGREEMENT
Among
XXXXX INCORPORATED
and
THE SHAREHOLDERS
of
INTERACTIVE CLINICAL TECHNOLOGIES, INC.
DATED AS OF: April 30, 1999
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1. DEFINITIONS; GENERAL PROVISIONS..........................................2
1.1 Definitions........................................................2
1.2 General Provisions; Incorporation of Background...................14
2. PURCHASE AND SALE OF SHARES; CLOSING....................................15
2.1 Purchase and Sale of Purchased Shares.............................15
2.2 Payment of Purchase Price.........................................15
2.3 Closing Deliveries................................................21
2.4 Closing...........................................................24
2.5 Allocation of the Purchase Price..................................24
3. REPRESENTATIONS AND WARRANTIES OF SELLERS...............................24
3.1 Organization and Good Standing; No Subsidiaries, Etc..............24
3.2 Capitalization....................................................25
3.3 Authority; No Conflict............................................25
3.4 Financial Statements..............................................27
3.5 Receivables; Tangible Property; Equipment; Books and Records......28
3.6 Title To Assets; Encumbrances; Real Estate Matters................28
3.7 Products; Warranties; Claims......................................29
3.8 Taxes.............................................................30
3.9 Employment Agreements; Employee Benefits; ERISA...................31
3.10 Compliance With Certain Legal Requirements; Governmental
Authorizations..................................................34
3.11 Legal Proceedings; Orders; Workers' Compensation Claims...........35
3.12 Absence of Certain Changes and Events.............................36
3.13 Contracts; Leases; Absence of Certain Practices...................38
3.14 Insurance.........................................................42
3.15 Environmental Matters.............................................43
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3.16 Employees.........................................................45
3.17 Labor Disputes; Compliance........................................45
3.18 Intellectual Property.............................................47
3.19 Relationships With Related Persons................................49
3.20 Brokers or Finders................................................50
3.21 Bank Accounts; Powers of Attorney.................................50
3.22 No Undisclosed Liabilities........................................50
3.23 Disclosure........................................................50
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................50
4.1 Organization and Good Standing....................................50
4.2 Authority; No Conflict............................................51
4.3 Certain Proceedings...............................................51
4.4 Brokers or Finders................................................52
4.5 Investment Representations........................................52
4.6 Xxxxx Stock.......................................................52
4.7 Summaries.........................................................52
5. MUTUAL COVENANTS; COVENANTS OF SELLERS..................................52
5.1 Mutual Covenants Regarding Taxes, Etc.............................52
5.2 Investment Representations........................................57
5.3 Subordination of Deferred Payments................................57
6. COVENANTS OF PURCHASER..................................................57
6.1 Filing of Tax Returns.............................................57
6.2 Change of Fiscal Year of ICTI.....................................58
6.3 Default Rate of Interest..........................................58
6.4 Operation of Business During Earnout Period.......................58
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6.5 Operations Through September 30, 1999.............................59
6.6 Delivery of Certain Minutes.......................................59
7. INDEMNIFICATION; REMEDIES...............................................59
7.1 Survival..........................................................59
7.2 General Indemnification and Reimbursement by the Sellers..........59
7.3 General Indemnification and Reimbursement by Purchaser............60
7.4 Tax Indemnification; Apportionment of Taxes.......................60
7.5 Time Limitations..................................................61
7.6 Limitations on Amount of Liability................................62
7.7 Procedure for Indemnification - Third Party Claims................63
7.8 Exclusive Remedy; Etc.............................................66
7.9 Set-Off...........................................................67
7.10 Form of Indemnification Payments..................................67
7.11 Waiver of Trial by Jury...........................................67
7.12 Limited Liability of Certain Sellers..............................67
8. GENERAL PROVISIONS......................................................68
8.1 Seller Representatives; Power of Attorney.........................68
8.2 Expenses..........................................................69
8.3 Public Announcements..............................................69
8.4 Notices...........................................................69
8.5 Jurisdiction; Service of Process..................................70
8.6 Further Assurances................................................71
8.7 Waiver............................................................71
8.8 Entire Agreement and Modification.................................71
8.9 Assignments, Successors, and No Third-Party Rights................71
8.10 Severability......................................................72
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8.11 Section Headings, Construction....................................72
8.12 Time of Essence...................................................72
8.13 Governing Law.....................................................72
8.14 Counterparts......................................................72
8.15 Records Retention.................................................72
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EXHIBITS
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Exhibit "A" - List of Sellers
Exhibits "B-1", - Agreements Not to Compete
"B-2", and "B-3"
Exhibits "C-1", - Confidentiality and Noncompete Agreements
"C-2", and "C-3"
Exhibits "D-1" and - Employment Agreements
"D-2"
Exhibit "E" - Form 8023
Exhibit "F" - General Release
Exhibit "G" - Opinion of Counsel to ICTI and Sellers
Exhibit "H" - Opinion of Counsel to Purchaser
SCHEDULES
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Schedule 1.1.4(B-1) - List of Sellers Owning In Excess of 100,000 Shares
of ICTI Stock
Schedule 1.1.4(B-2) - List of Sellers Owning More Than 15,000 But Less
Than 100,000 Shares of ICTI Stock
Schedule 1.1.4(B-3) - List of Sellers Owning Not More Than 15,000 Shares
of ICTI Stock
Schedule 1.1.6 - Balance Sheet
Schedule 1.1.14(C-1) - List of Sellers Executing the Confidentiality and
Noncompete Agreement in the form of Exhibit "C-1"
Schedule 1.1.14(C-2) - List of Sellers Executing the Confidentiality and
Noncompete Agreement in the form of Exhibit "C-2"
Schedule 1.1.14(C-3) - List of Sellers Executing the Confidentiality and
Noncompete Agreement in the form of Exhibit "C-3"
Schedule 1.1.35 - Financial Statements
Schedule 1.1.54 - Leased Personal Property
Schedule 1.1.55 - Leased Real Property
Schedule 1.1.56 - Leases
Schedule 1.1.67 - Permitted Encumbrances
Schedule 1.1.72 - Purchased Shares
Schedule 2.2(a) - Allocation of Purchase Price Among Sellers
Schedule 2.5 - Allocation of Purchase Price
Schedule 3.1 - Ownership of Stock; Control
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Schedule 3.2(b) - Exceptions Regarding ICTI Stock
Schedule 3.3(b) - Conflicts Regarding ICTI
Schedule 3.3(c) - Consents
Schedule 3.3(d) - Conflicts Regarding Sellers
Schedule 3.4(b) - Interim Financial Statements
Schedule 3.5(b) - Tangible Property
Schedule 3.6(b) - Exceptions Regarding Leased Real Property
Schedule 3.7 - Warranty and Products Liabilities Claims
Schedule 3.8(a) - Tax Returns and Payments
Schedule 3.8(c) - State "S Corporation" Elections
Schedule 3.8(d) - Audits
Schedule 3.9(a) - List of Officers, Directors, Employees and Related
Employment Agreements, Etc.
Schedule 3.9(b) - Employee Benefit Plans
Schedule 3.9(c) - Exceptions Regarding Employee Benefit Plans
Schedule 3.9(d) - Certain Payments to Employees, Etc.
Schedule 3.9(e) - Contributions; Absence of Events
Schedule 3.10(a) - Exceptions to Compliance with Legal Requirements;
Etc.
Schedule 3.10(b) - List of Material Government Permits; Exceptions
Schedule 3.11(a) - Proceedings
Schedule 3.11(b) - Orders
Schedule 3.11(c) - Workers Compensation Claims
Schedule 3.12(a) - Absence of Certain Changes and Events
Schedule 3.12(b) - Material Adverse Effect
Schedule 3.13(a) - Certain Contracts and Leases
Schedule 3.13(b) - Exceptions Regarding Contracts and Leases
Schedule 3.14(a) - Insurance Policies
Schedule 3.14(b) - Contracts and Arrangements Regarding Third Party
Insurance Coverage
Schedule 3.14(d) - Prior Insurance Policies
Schedule 3.15(a) - Environmental Matters
Schedule 3.15(b) - List of Environmental Reports
Schedule 3.15(c) - List of Environmental Permits
Schedule 3.16 - List of Certain Employees
Schedule 3.17 - Labor Matters
Schedule 3.18(a) - Contracts Relating to Intellectual Property;
Disputes; Etc.
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Schedule 3.18(b) - List of Intellectual Property
Schedule 3.18(e) - Royalty Payments; Etc.
Schedule 3.19(a) - Relationships with Related Persons
Schedule 3.21 - Bank Accounts, Etc.
Schedule 4.2(b) - No Conflict Regarding Purchaser
Schedule 4.2(c) - Consents
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT is made as of the 30th day of
April, 1999, by and among XXXXX INCORPORATED, a Pennsylvania corporation trading
and doing business under the registered fictitious name "Clinical Trial
Services" ("Purchaser"), and the adult individuals identified on Exhibit "A"
attached hereto and made a part hereof (collectively, the "Sellers").
BACKGROUND
A. Interactive Clinical Technologies, Inc. ("ICTI") is a
New Jersey corporation engaged throughout the world in the business (the
"Business") of developing, marketing, selling, installing, validating and
servicing interactive voice response systems for use in the pharmaceutical and
healthcare industries, specifically for use in connection with the conducting of
pharmaceutical clinical trials.
B. The Sellers collectively own all of the issued and
outstanding shares of capital stock of ICTI.
C. Purchaser desires to purchase from the Sellers, and
the Sellers desire to sell to Purchaser, all of the issued and outstanding
shares of capital stock of ICTI, representing all interests in ICTI's equity,
pursuant to, and in accordance with, the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, agreements, representations, and warranties herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each intending to be legally
bound, do hereby agree as follows:
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1. DEFINITIONS; GENERAL PROVISIONS.
1.1 Definitions. For purposes of this Agreement and the
Exhibits and Schedules attached hereto, the following terms shall have the
meanings specified or referred to below, unless the context otherwise requires:
1.1.1 "Accounting Arbitrator" - as defined in Section
2.2(d)(ii).
1.1.2 "Affiliate" - with respect to a specified
Person, any other Person that directly, or indirectly through one or more
intermediaries, controls or in controlled by, or is under common control with,
the specified Person.
1.1.3 "Agreement" - this Share Purchase Agreement,
including all amendments hereof and all Exhibits and Schedules hereto.
1.1.4 "Agreements Not to Compete" - collectively, the
Agreements Not to Compete in the forms attached hereto as Exhibits "B-1," "B-2"
and "B-3" to be executed by those Sellers identified on Schedules 1.1.4(B-1),
1.1.4(B-2) and 1.1.4(B-3), respectively.
1.1.5 "Average Mid Price" - an amount, expressed in
terms of British Pounds Sterling, equal to the mid market quotation for Xxxxx
Stock for the ten (10) trading days immediately preceding the Supplemental
Closing Date, as determined by reference to the Daily Official List of the
London Stock Exchange, as converted to Dollars in accordance with the mid market
spot foreign exchange rate in effect as of 8:00 a.m. (British Summer Time or the
then prevailing time in the United Kingdom) on the Supplemental Closing Date or
the nearest business day thereafter, as published by the Bank of Ireland in the
United Kingdom.
1.1.6 "Balance Sheet" - the reviewed balance sheet of
ICTI as of December 31, 1997, a copy of which is attached hereto as Schedule
1.1.6.
1.1.7 "Balance Sheet Date" - December 31, 1997.
1.1.8 "Breach" - a "Breach" of a representation,
warranty, covenant, obligation or other provision of this Agreement or any
Related Agreement will be deemed to have occurred if there is or has been any
inaccuracy
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in or breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation or other provision.
1.1.9 "Business" - as defined in the Background of
this Agreement.
1.1.10 "Claim Notice" - as defined in Section 7.5(a).
1.1.11 "Closing" - the consummation of the
Contemplated Transactions pursuant to Section 2.4.
1.1.12 "Closing Date" - the date and time as of which
the Closing actually takes place.
1.1.13 "Code" - the Internal Revenue Code of 1986, as
amended, or any successor law, and any regulations promulgated by the IRS
pursuant to that code or any successor law.
1.1.14 "Confidentiality and Noncompete Agreements" -
collectively, the Confidentiality and Noncompete Agreements in the forms
attached hereto as Exhibits "C-1", "C-2" and "C-3" to be executed by those
Sellers identified on Schedules 1.14(C-1), 1.1.14(C-2) and 1.1.14(C-3),
respectively.
1.1.15 "Consent" - any approval, consent,
ratification, waiver, or other authorization or release (including any
Governmental Authorization).
1.1.16 "Contamination" - the uncontained presence of
any Hazardous Substances which requires remedial actions under any applicable
Environmental Law.
1.1.17 "Contemplated Transactions" - collectively,
all of the transactions contemplated by this Agreement and each of the Related
Agreements.
1.1.18 "Contract" - any agreement or contract
(whether written or oral) that is legally binding.
1.1.19 "control" - or any derivation thereof, shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of
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the management or policies (whether through the ownership of securities or of
partnership or other ownership interests, by contract or otherwise), provided,
that, in any event, any Person that owns or holds, directly or indirectly, ten
percent (10%) or more of the voting securities or ten percent (10%) or more of
the partnership or other equity interests of any other Person (other than as a
limited partner of such Person) will be deemed to control such other Person.
1.1.20 "Damages" - collectively, all claims,
Liabilities, obligations, losses, damages (whether special, incidental,
consequential or otherwise), deficiencies, assessments, Encumbrances, judgments,
penalties, fines, costs, and expenses (including reasonable attorneys' fees and
costs and expenses incurred in investigating, preparing, defending against or
prosecuting any litigation or claim, action, suit, or other Proceeding or
demand); provided, however, that in the event that the loss, claim or other
Liability which gave rise to the right to receive indemnification (a) is covered
by insurance maintained by or for the benefit of the party entitled to receive
indemnification or that was heretofore or is hereafter maintained by ICTI or (b)
results in a Tax benefit to the party entitled to receive indemnification, the
amount of any "Damages" will be reduced by the amount of (i) any insurance
proceeds actually received by, or actually paid to a third party for the benefit
of, the party entitled to receive indemnification less an amount equal to (A)
any costs incurred for the collection of such insurance proceeds plus (B) any
actual insurance premium increase attributable to the claim with respect to
which such insurance proceeds are paid and (ii) any such Tax benefit that is
actually realized by the party entitled to receive indemnification.
1.1.21 "Deductible" - as defined in Section 7.6(a).
1.1.22 "Department" - United States Department of
Labor.
1.1.23 "Earnout Financial Statements" - as defined in
Section 2.2(d)(i).
1.1.24 "Earnout Payments" - as defined in Section
2.2(c).
1.1.25 "Earnout Periods" - collectively, the twelve
(12) month periods ending September 30, 2000 and September 30, 2001.
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1.1.26 "Earnout Statement" - as defined in Section
2.2(d)(ii).
1.1.27 "Employee Benefit Plans" - collectively, any
plan, program, arrangement, agreement or commitment that is a severance or
deferred compensation agreement, or an executive compensation, incentive bonus
or other bonus, pension, stock purchase, stock option, restricted stock, profit
sharing, severance pay, life, health, disability, accident, medical insurance,
vacation, or other employee benefit plan, program, arrangement, agreement or
commitment, including any "employee benefit plan" as defined in Section 3(3) of
ERISA that is maintained by ICTI or to which ICTI contributes to, or has any
obligation to contribute to, or with respect to which ICTI would be reasonably
likely to have any liability.
1.1.28 "Employment Agreements" - collectively, the
Employment Agreements to be executed by Xxxxxx X. Xxxxxxx and Xxxxx X. XxXxxxx
in the forms attached hereto as Exhibits "D-1" and "D-2," respectively.
1.1.29 "Encumbrance" - any charge, claim, equitable
interest, lien, option, pledge, security interest, or right of first refusal,
restriction, covenant, easement, license, lease, mortgage, obligation, title
defect or imperfection or right of others.
1.1.30 "Environmental, Health and Safety Liabilities"
- collectively, any Liabilities arising from or under any Environmental Law or
Occupational Safety and Health Law.
1.1.31 "Environmental Law" - collectively, all Legal
Requirements (including rules, regulations, codes, plans, injunctions,
judgments, Orders, decrees, rulings and charges thereunder) concerning pollution
or protection of the environment, including laws relating to emissions,
discharges, Releases, or threatened Releases of pollutants, contaminants, or
Hazardous Substances into ambient air, surface water, groundwater, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous Substances, including the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
42 U.S.C. Sections 9601 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 1001 et seq., the Resource
Conservation and Recovery Act of 1976, 42 C.S.C. Sections 6901 et seq., each as
amended through the date hereof.
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1.1.32 "Environmental Permits" - as defined in
Section 3.15(c).
1.1.33 "ERISA" - the Employee Retirement Income
Security Act of 1974, as amended, or any successor law, and any regulations and
rules issued pursuant to that act or to any successor law.
1.1.34 "European Operation" - the European
corporation or operating division that Xxxxx Holdings will form, or cause to be
formed, after the Closing to engage in the Business throughout Europe, which
business will be developed with the assistance of Xxxxxx X. Xxxxxxx, Xxxxx X.
XxXxxxx, Xxxxxxx X. Xxxx and Xxxxx X'Xxxx.
1.1.35 "Financial Statements" - collectively, (a)
ICTI's reviewed balance sheets for, and related reviewed statements of income
and accumulated earnings for, the fiscal years ended December 31, 1996 and
December 31, 1997, including the notes thereto and the reports prepared in
connection therewith by the independent certified public accountants reporting
thereon, copies of which financial statements are attached hereto as Schedule
1.1.35 and (b) ICTI's internally prepared balance sheets for and related
statements of income and accumulated earnings for the fiscal year ended December
31, 1998, copies of which are attached hereto as Schedule 1.1.35.
1.1.36 "Form 8023" - Department or Treasury Form
8023, revised September 1997, in the form attached hereto as Exhibit "E".
1.1.37 "GAAP" - at any particular time, generally
accepted accounting principles as in effect in the United States at such time.
1.1.38 "Xxxxx Holdings" - Xxxxx Holdings, PLC, a
corporation organized under the laws of the United Kingdom and the ultimate
parent corporation of Purchaser.
1.1.39 "Xxxxx Stock" - the shares of the capital
stock of Xxxxx Holdings.
1.1.40 "General Release" - the mutual general release
executed by ICTI and each of the Sellers in the form attached hereto as Exhibit
"F".
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1.1.41 "Governmental Authorization" - any Consent,
license or permit issued, granted or given by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
1.1.42 "Governmental Body" - any federal, state,
local, municipal, foreign or other governmental or quasi-governmental entity or
authority of any nature.
1.1.43 "Hazardous Substances" - any substance that is
now defined or listed in, or otherwise classified pursuant to, any applicable
Environmental Law, Legal Requirement or Order, as a "hazardous substance,"
"hazardous material," "hazardous air pollutant," "extremely hazardous
substance," "hazardous waste," "biohazardous waste," "toxic substance," "toxic
pollutant," or any other formulation intended to define, list, regulate or
classify substances by reason of their potentially deleterious properties such
as ignitability, flammability, corrosivity, reactivity, combustibility,
dispersability, volatility, carcinogenicity, or toxicity including, radioactive
materials, explosives, urea formaldehyde, asbestos, polychlorinated biphenyls
and also including petroleum products, byproducts and wastes or byproducts
associated with the extraction, refining or use of petroleum, petroleum products
or other hydrocarbons, whether or not any such petroleum products, byproducts,
wastes or other hydrocarbons are listed or classified in such laws or
regulations.
1.1.44 "ICTI" - as defined in the Background of this
Agreement.
1.1.45 "ICTI Stock" - the authorized capital stock of
ICTI.
1.1.46 "Indemnified Party" - as defined in Section
7.7(b).
1.1.47 "Indemnifying Party" - as defined in Section
7.7(b).
1.1.48 "Intellectual Property" - collectively, the
following intangible assets that are owned or used by ICTI in connection with
the Business:
(a) all fictitious business names, and any
trade names, registered and unregistered trademarks, servicemarks and
logos (including, the names "Interactive Clinical Technologies, Inc."
and "ICTI"
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and any derivation thereof), together with all translations,
adaptations, derivations and combinations thereof that are used in
connection therewith and including all goodwill associated therewith
and any applications or registrations therefor, and renewals in
connection therewith;
(b) all patents and patent applications and
patent disclosures, together with all reissuances, continuations (in
whole or in part), revisions and reexaminations thereof;
(c) all registered copyrights in both
published works and unpublished works that are material to the
conducting of the Business and all applications, renewals and
registrations thereof;
(d) all inventions (whether or not
patentable), all proprietary rights and business information
(including, but not limited to, ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer/subscriber lists, supplier lists, pricing and
cost information, and business and marketing plans and proposals); and
(e) all computer software and databases
(including all source code, object code and all related applications
and data files, as well as all documentation pertaining thereto,
including flow charts, logic diagrams, manuals, guides and
specifications) including any software incorporated into any products
sold or licensed by ICTI ("Software").
1.1.49 "Interim Balance Sheet Date" - as defined in
Section 3.4(b).
1.1.50 "Interim Financial Statements" - as defined in
Section 3.4(b).
1.1.51 "Interim Period" - as defined in Section
7.4(b).
1.1.52 "IRS" - the United States Internal Revenue
Service.
1.1.53 "Knowledge" - a Person will be deemed to have
"Knowledge" of a particular fact or matter if, after reasonable inquiry, such
Person
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is aware of such fact or matter, and the Sellers will be deemed to have
"Knowledge" of a particular fact or matter if, after (a) reasonable inquiry of
the members of ICTI's administrative, sales and quality assurance staffs and (b)
reasonable review of ICTI's books and records, any of Xxxxxx X. Xxxxxxx, Xxxxx
X. XxXxxxx, Xxxxxxx X. Xxxx or Xxxxx X'Xxxx is aware of such fact or matter.
1.1.54 "Leased Personal Property" - collectively, all
computer equipment, telephones, packaging equipment, motor vehicles, and other
tangible personal property described on Schedule 1.1.54 with respect to which a
Lease is in effect.
1.1.55 "Leased Real Property" - collectively, all
real estate and the buildings and improvements erected on, and all improvements
and asset additions which are affixed to, any such real estate that are
described on Schedule 1.1.55 and with respect to which a Lease is in effect.
1.1.56 "Leases" - collectively, ICTI's leasehold
interest in the Leased Real Property and the Leased Personal Property pursuant
to the leases identified on Schedule 1.1.56.
1.1.57 "Legal Requirement" - any United States
federal or state, local or foreign law, ordinance, principle of common law,
regulation or statute.
1.1.58 "Liabilities" - collectively, any debt,
obligation, or liability (whether known or unknown, liquidated, contingent or
otherwise), regardless of whether any such debt, obligation or liability would
be required to be disclosed on a balance sheet (or in the footnotes thereto)
prepared in accordance with GAAP.
1.1.59 "Material Adverse Effect" - a material adverse
effect on the business, assets, liabilities, properties, financial condition,
operations, results of operations or prospects of ICTI or the Business, taken as
a whole.
1.1.60 "Material Contracts" - as defined in Section
3.13(a).
1.1.61 "Net Sales" - for any period, the net sales of
ICTI, as determined in accordance with GAAP, consistently applied.
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1.1.62 "NIBT" - for any period, ICTI's net income
from operations for such period, calculated as if ICTI were being operated as a
separate and independent corporation and not a member of a controlled group or
affiliated group of corporations, plus the aggregate amounts deducted in
determining such net income in respect of (a) all federal, state and local
income Taxes accrued or paid during such period and (b) all state and local
franchise or other Taxes accrued or paid during such period, all as determined
in accordance with GAAP, applied on a consistent basis; provided, however, that
in determining NIBT (i) all extraordinary items shall be disregarded, (ii) any
gains, losses or profits realized from the sale of any assets other than
inventory or other assets sold in the ordinary course of business consistent
with ICTI's past practices shall be disregarded, (iii) no deduction shall be
made for any management fees, general overhead expenses, or other intercompany
charges, of whatever kind or nature, charged by Purchaser or any of its
Affiliates to ICTI, except that Purchaser or its Affiliates may charge an annual
administrative services fee to ICTI with respect to the centralized financial,
legal, marketing, and human resources services that will be afforded to ICTI,
which fee shall not exceed One Hundred Thousand Dollars ($100,000.00) per year,
(iv) any interest paid, accrued or received during such period shall be
disregarded, (v) any royalties paid, accrued or received during such period
shall be disregarded, (vi) any amortization with respect to goodwill shall be
disregarded, (vii) the purchase and sale prices of goods and services (including
information technology services) sold by ICTI to Purchaser or any of its
Affiliates or purchased by ICTI from Purchaser or its Affiliates shall be
adjusted, to the extent necessary, to reflect amounts that ICTI would have
realized or paid, as appropriate, if dealing with an independent party in an
arm's-length commercial transaction as determined in accordance with Section 482
of the Code and the regulations promulgated thereunder, (viii) income shall be
recognized when products or services have been provided and properly invoiced by
ICTI in accordance with its past practices, (ix) any net income or net loss from
the operations of the European Operation will be included in the calculation of
ICTI's net income, except that any expenses incurred by ICTI prior to September
30, 1999 with respect to the commencement of the European Operation shall be
disregarded, and (x) the costs of the premiums, if any, paid by ICTI to obtain
or maintain the life insurance coverage with respect to the lives of Xxxxxx X.
Xxxxxxx and Xxxxx X. XxXxxxx described in Section 2.3(a)(xiii) will be
disregarded.
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1.1.63 "Occupational Safety and Health Law" - any
Legal Requirement or governmental program designed to provide safe and healthful
working conditions, and to reduce occupational safety and health hazards.
1.1.64 "Operational Profit" - for any period, the
quotient, expressed in terms of a percentage, obtained by dividing (a) NIBT for
such period by (b) Net Sales for such period.
1.1.65 "Order" - any award, decision, injunction,
judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered
by any court, administrative agency, or other Governmental Body.
1.1.66 "PBGC" - the Pension Benefit Guaranty
Corporation.
1.1.67 "Permitted Encumbrances" - collectively, the
Encumbrances set forth on Schedule 1.1.67.
1.1.68 "Permitted S Corporation Distributions" - as
defined in Section 5.1(c).
1.1.69 "Person" - any individual, corporation,
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, or other legal entity or Governmental
Body.
1.1.70 "Proceeding" - any action, arbitration, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental Body or arbitrator.
1.1.71 "Purchase Price" - the aggregate amount of
consideration payable by Purchaser for the Purchased Shares, which shall be an
amount equal to the sum of (a) Eight Million Dollars ($8,000,000.00) plus (b)
the total Earnout Payments, if any, to which the Sellers are entitled pursuant
to Section 2.2(c); provided, however, in no event shall the Purchase Price
exceed Twenty-Five Million Dollars ($25,000,000.00) in the aggregate.
1.1.72 "Purchased Shares" - collectively, the shares
of ICTI Stock set forth opposite the name of each of the Sellers on Schedule
1.1.72.
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1.1.73 "Purchaser" - as defined in the Introduction
to this Agreement.
1.1.74 "Purchaser's Accountants" -
PricewaterhouseCoopers and any successor thereto.
1.1.75 "Purchaser Indemnitees" - as defined in
Section 7.2.
1.1.76 "Qualified Plans" - as defined in Section
3.9(c).
1.1.77 "Related Agreements" - collectively, all
agreements, documents, certificates and instruments to be delivered pursuant to
or in connection with this Agreement or the Contemplated Transactions, as well
as all exhibits, annexes and schedules to any of the foregoing.
1.1.78 "Related Person" - with respect to a Person
who is an individual shall mean:
(a) any other individual having a
relationship with such specified individual (by blood, marriage or
adoption) of grandparent, parent, child, grandchild, aunt, uncle,
niece, nephew, sister, brother or first cousin (collectively,
"Relatives");
(b) any Person that is directly or
indirectly controlled by any one or more members of such individual's
Relatives; and
(c) any Person with respect to which one or
more members of such individual's Relatives serves as a director,
officer, partner, or trustee (or in a similar capacity); or
with respect to a specified Person other than an individual shall mean:
(i) any Affiliate of such specified
Person; and
(ii) each Person that serves as a
director, officer, partner, or trustee (or in a similar
capacity) of such specified Person.
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1.1.79 "Release" - any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, ejecting, escaping, or dumping,
including any "release" as defined in the Comprehensive Environmental
Compensation, Response and Liability Act, 42 U.S.C. Sections 9601 et seq., as
amended.
1.1.80 "Representative" - with respect to a
particular Person shall include any director, officer, employee, agent,
consultant, advisor, or other representative of such Person, including legal
counsel, accountants and financial advisors.
1.1.81 "Secured Lender" - PNC National Bank, lender
to ICTI.
1.1.82 "S corporation" - as defined in Section
1361(a)(1) of the Code and the applicable Legal Requirements of any state in
which an election to be treated as an S corporation has been filed and is
effective with respect to ICTI.
1.1.83 "Seller Indemnitees" - as defined in Section
7.3.
1.1.84 "Seller Representatives" - the Sellers that
are appointed as agent for the Sellers pursuant to Section 9.1.
1.1.85 "Sellers' Accountants" - Xxxxxx X. Xxxxx, LLP
and any successor thereto.
1.1.86 "Sellers" - as defined in the Introduction to
this Agreement.
1.1.87 "Short Period" - as defined in Section 7.4(b).
1.1.88 "Supplemental Closing" - as defined in Section
2.2(c).
1.1.89 "Supplemental Closing Date" - the date upon
which a Supplemental Closing occurs.
1.1.90 "Tax" - any tax, levy, assessment, tariff or
duty imposed, assessed or collected by or under the authority of any
Governmental Body.
1.1.91 "Tax Claim" - as defined in Section 7.5(b).
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1.1.92 "Tax Return" - any return, report, form or
other document or information filed with or submitted to, or required to be
filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax, including any
amendments thereto.
1.1.93 "Third Party Claims" - as defined in Section
7.7(b).
1.1.94 "Threatened" - a Proceeding, claim, dispute or
other matter will be deemed to have been "Threatened" with respect to any
Person, if such Person has received any written demand, statement or other
written notice with respect to such Proceeding, claim, dispute or other matter.
1.1.95 "Year 2000 Compliant" - as defined in Section
3.18(f).
1.2 General Provisions; Incorporation of Background.
(a) Unless expressly provided otherwise
in this Agreement, or the Related Agreements, or unless the context
requires otherwise:
(i) all capitalized terms used in
the Related Agreements that are defined in this Agreement
shall have the respective meanings assigned to them herein;
(ii) all accounting terms used in
this Agreement and in the Related Agreements shall have the
meanings given to them in accordance with GAAP;
(iii) the singular shall mean the
plural, the plural shall mean the singular, and the use of any
gender shall include all genders; and all references to any
particular party defined herein shall be deemed to refer to
each and every Person defined herein as such party
individually, and to all of them, collectively, jointly and
severally, as though each were named wherever the applicable
defined term is used;
(iv) all references to "Sections"
shall be deemed to refer to the provisions of this Agreement
and all references
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to "Schedules" and "Exhibits" shall be deemed to refer to the
schedules and exhibits annexed to this Agreement;
(v) all references to time herein
shall mean Eastern Standard Time or Eastern Daylight Time, as
then in effect;
(vi) all references to sections,
subsections, paragraphs or other provisions of any Legal
Requirement that consists of a law, ordinance, regulation,
statute or treaty, shall be deemed to include successor,
amended, renumbered and replacement provisions thereof as of
the Closing Date;
(vii) the word "including" shall
not limit the preceding words or terms;
(viii) any reference to "Dollars"
and "$" means dollars constituting legal tender for the
payment of public and private debts in the United States of
America; and
(ix) the terms "hereof," "hereby,"
"hereunder," and similar terms shall refer to this Agreement
as a whole.
(b) The Background provisions set forth
above are hereby incorporated by reference into this Agreement and made
a part hereof as if set forth in their entirety in this Section 1.2(b).
2. PURCHASE AND SALE OF SHARES; CLOSING
2.1 Purchase and Sale of Purchased Shares. Upon
the terms and subject to the conditions set forth in this Agreement, at the
Closing, Purchaser will purchase and accept from the Sellers, and the Sellers
will sell, assign, transfer, and deliver to Purchaser, all of the Purchased
Shares.
2.2 Payment of Purchase Price. In consideration
of the purchase and sale of the Purchased Shares pursuant to Section 2.1,
Purchaser shall pay the Purchase Price to the Sellers as follows:
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(a) At the Closing, Purchaser shall pay
to the Sellers the sum of Five Million Dollars ($5,000,000.00), which
amount shall be:
(i) allocated among each of the
Sellers in accordance with the respective percentages set
forth opposite their names on Schedule 2.2(a); provided,
however, that:
(A) such amount, insofar
as it relates to those Sellers identified in
Schedules 1.1.4(B-2) and 1.1.4(B-3), shall be paid to
such Sellers net of an aggregate amount of One
Hundred Fifty-Seven Thousand Seven Hundred
Seventy-Eight Dollars and Nineteen Cents
($157,778.19) consisting of (1) Seventy-Three
Thousand Eight Hundred Fifty Dollars ($73,850.00)
representing the aggregate unpaid balance of the
exercise price due to ICTI with regard to the options
to purchase shares of ICTI Stock that were exercised
by such Sellers immediately prior to the Closing)
(the "Unpaid Exercise Price") and (2) Eighty-Three
Thousand Nine Hundred Twenty-Eight Dollars and
Nineteen Cents ($83,928.19) representing the
applicable state and federal Tax withholdings due in
connection with the exercise of the options referred
to in clause (i)(A)(1) of this Section 2.2(a) (the
"Tax Withholdings"), and
(B) such amount, insofar
as it relates to all of the Sellers, shall be paid to
the Sellers net of an aggregate amount of Fifty-Seven
Thousand One Hundred Dollars ($57,100.00)
representing the legal and accounting expenses
incurred by the Sellers in connection with the
Contemplated Transactions (the "Seller Professional
Fees"); and
(ii) paid to an account or accounts
of the Sellers specified in written wire transfer instructions
delivered by the Seller Representatives to Purchaser at least
three (3) business days prior to the Closing Date or, with
respect to the Sellers identified on Schedules 1.1.4(B-2) and
1.1.4(B-3), paid by means of checks drawn on an account of
Purchaser.
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The Sellers identified on Schedules 1.1.4(B-2) and 1.1.4(B-3) hereby irrevocably
authorize and direct Purchaser to pay to ICTI at the Closing on account and in
satisfaction of the Unpaid Exercise Price and the Tax Withholdings their
respective allocable shares of the One Hundred Fifty-Seven Thousand Seven
Hundred Seventy-Eight Dollars and Nineteen Cents ($157,778.19) of the Purchase
Price that would have otherwise been payable by Purchaser to such Sellers at the
Closing had they paid the required exercise price to ICTI in cash at the time of
the exercise of their ICTI Stock options and had the appropriate Taxes withheld,
all as reflected on Schedule 2.2(a). Furthermore, all of the Sellers hereby
irrevocably authorize and direct Purchaser to pay to Sellers' Accountant and
Sellers' counsel, Xxxxxx, Xxxxx & Xxxxxxx LLP, promptly following the Closing on
account and in satisfaction of the Seller Professional Fees, the Sellers'
respective allocable shares of the Fifty-Seven Thousand One Hundred Dollars
($57,100.00) of the Purchase Price that would have otherwise been payable by
Purchaser to the Sellers at the Closing had the Sellers elected to pay the
Seller Professional Fees directly to Sellers' Accountant and Sellers' counsel
after the Closing, all as reflected on Schedule 2.2(a). Of such Fifty-Seven
Thousand One Hundred Dollars ($57,100.00) allocable to the Seller Professional
Fees, Fifty Thousand Dollars ($50,000.00) shall be paid to Sellers' counsel and
Seven Thousand One Hundred Dollars ($7,100.00) shall be paid to Sellers'
Accountant.
(b) Subject to the set-off rights of
Purchaser described in Section 7.9, on January 2, 2000, Purchaser shall
pay to Sellers, without interest, the sum of Three Million Dollars
($3,000,000.00), which sum shall be (i) allocated among each of the
Sellers in accordance with the respective percentages set forth
opposite their names on Schedule 2.2(a) and (ii) paid to an account or
accounts of the Sellers specified in written wire transfer instructions
delivered by the Seller Representatives to Purchaser at least three (3)
business days prior to such date.
(c) Subject to the set-off rights of
Purchaser described in Section 7.9, at separate supplemental closings
to be held on or before the later of (i) one hundred twenty (120) days
after the end of each Earnout Period or (ii) ten (10) days after the
final determination of Operational Profit for each of the Earnout
Periods pursuant to Section 2.2(d)(ii) (individually, a "Supplemental
Closing"), Purchaser shall pay to the Sellers a combination of cash and
such number of shares of Xxxxx Stock (or, in Purchaser's sole
discretion, all cash) as shall have an aggregate
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value equal to the applicable amount set forth below (the "Earnout
Payments"):
(A) If Operational Profit
for either Earnout Period equals or exceeds
thirty-four percent (34%), an amount equal to the
product obtained by multiplying (1) Net Sales for
such Earnout Period by (2) seventy-five percent
(75%);
(B) If Operational Profit
for either Earnout Period equals or exceeds thirty
percent (30%), but is less than thirty-four percent
(34%), an amount equal to the product obtained by
multiplying (1) Net Sales for such Earnout Period by
(2) sixty-five percent (65%);
(C) If Operational Profit
for either Earnout Period equals or exceeds
twenty-five percent (25%), but is less than thirty
percent (30%), an amount equal to the product
obtained by multiplying (1) Net Sales for such
Earnout Period by (2) fifty-five percent (55%);
(D) If Operational Profit
for either Earnout Period equals or exceeds twenty
percent (20%), but is less than twenty-five percent
(25%), an amount equal to the product obtained by
multiplying (1) Net Sales for such Earnout Period by
(2) thirty-five percent (35%);
(E) If Operational Profit
for either Earnout Period equals or exceeds fifteen
percent (15%), but is less than twenty percent (20%),
an amount equal to the product obtained by
multiplying (1) Net Sales for such Earnout Period by
(2) ten percent (10%); or
(F) If Operational Profit
for either Earnout Period equals or exceeds ten
percent (10%), but is less than fifteen percent
(15%), an amount equal to the product obtained by
multiplying (1) Net Sales for such Earnout Period by
(2) five percent (5%).
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(d) Operational Profit for each of the
Earnout Periods shall be determined as follows:
(i) As soon as practicable, but in
no event later than (A) December 31, 2000 with respect to the
Earnout Period ending September 30, 2000 and (B) December 31,
2001 with respect to the Earnout Period ending September 30,
2001, Purchaser will cause to be prepared and delivered to the
Seller Representatives an audited balance sheet and the
related audited statements of income and changes in
shareholder equity of ICTI as of the end of each of the
Earnout Periods (collectively, the "Earnout Financial
Statements"). The Earnout Financial Statements shall be
prepared by Purchaser in accordance with GAAP.
(ii) Upon the completion of the
Earnout Financial Statements for each of the Earnout Periods,
a copy thereof shall be delivered to the Seller
Representatives together with Purchaser's calculation of the
Earnout Payment for such Earnout Period, if any, and the
components of such calculation, including its calculation of
NIBT and Operational Profit for such Earnout Period (the
"Earnout Statement"). Sellers' Accountant shall have the
right, for a period of twenty (20) days following its receipt
thereof to review the Earnout Financial Statements, the
related work papers and the Earnout Statement to determine
whether the Earnout Financial Statements and the Earnout
Statement were prepared in accordance with GAAP and the terms
of this Agreement. If, following such review, Sellers'
Accountant determines that the Earnout Financial Statements
and the Earnout Statement were not prepared in accordance with
GAAP and the terms of this Agreement, it shall so notify the
Seller Representatives and Purchaser. For a period of ten (10)
days following the receipt of such notice, Purchaser and
Sellers' Accountant shall attempt to resolve any such dispute
with respect to the Earnout Financial Statements and the
Earnout Statement. If, at the expiration of such ten (10) day
period, Purchaser and Sellers are not able to resolve such
disputes, they shall each notify the Seller Representatives of
their inability to resolve their dispute within the three (3)
day period immediately following the expiration of such ten
(10) day period, whereupon Purchaser and the Seller
Representatives
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shall promptly submit to the Philadelphia, Pennsylvania office
of any "big five" firm of independent certified public
accountants (other than Purchaser's Accountant and Sellers'
Accountant) (the "Accounting Arbitrator"), which Accounting
Arbitrator shall resolve all matters in dispute with respect
to the Earnout Financial Statements and the Earnout Statement
within the thirty (30) day period immediately following such
submission and whose determination shall be final, binding and
conclusive upon Purchaser and the Sellers. The fees of the
Accounting Arbitrator shall be borne equally by Purchaser and
the Sellers; provided, however, that the fees paid or payable
to such Accounting Arbitrator shall not be treated as an
expense of ICTI for the calculation of Operational Profit
pursuant to this Agreement. The scope of the Accounting
Arbitrator's review shall be limited to only those matters in
dispute with respect to the Earnout Financial Statements and
the Earnout Statement.
(e) Subject to Paragraph 2.2(g) below,
forty percent (40%) of each Earnout Payment will be payable in cash and
shall be (i) allocated among each of the Sellers in accordance with the
respective percentages set forth opposite their names on Schedule
2.2(a) and (ii) paid by means of a wire transfer of immediately
available funds to an account or accounts designated by the Seller
Representative in writing at least three (3) business days prior to the
applicable Supplemental Closing.
(f) Subject to Paragraph 2.2(g) below,
sixty percent (60%) of each Earnout Payment will be payable by means of
transfer to the Sellers of shares of Xxxxx Stock and, accordingly,
Purchaser shall take such actions as are necessary to cause Xxxxx
Holdings to issue to the Sellers at the applicable Supplemental Closing
such number of shares of Xxxxx Stock as shall equal the quotient
obtained by dividing (i) sixty percent (60%) of the amount of the
Earnout Payment by (ii) the Average Mid Price, which Xxxxx Stock shall
be issued to the Sellers, pro rata, in accordance with the respective
percentages set forth opposite their names on Schedule 2.2(a);
provided, however, that such quotient shall be rounded up to the
nearest whole number of shares of Xxxxx Stock.
(g) Purchaser shall have the right, in
its sole discretion, to increase the cash portion of each Earnout
Payment, and to
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make a corresponding decrease in the number of shares of Xxxxx Stock
payable to Sellers on account of any such Earnout Payment, to such
percentage of the Earnout Payment as it desires.
2.3 Closing Deliveries. At the Closing:
(a) the Sellers will deliver, or cause
to be delivered, to Purchaser:
(i) the original stock certificates
representing all of the Purchased Shares accompanied by duly
executed stock transfer powers endorsed in blank with
signatures thereon duly acknowledged by a notary public;
(ii) the General Release executed
on behalf of ICTI and the Sellers;
(iii) certified copies of
resolutions duly adopted or consented to by the board of
directors and the shareholders of ICTI approving ICTI's
execution and delivery of the General Release and any other
Related Agreements to which it is a party and to the
consummation of the Contemplated Transactions;
(iv) an opinion letter of counsel
to ICTI and the Sellers, in the form attached hereto as
Exhibit "G";
(v) the respective Employment
Agreements, executed by Xxxxxx X. Xxxxxxx and Xxxxx X.
XxXxxxx;
(vi) the respective Agreements Not
to Compete, executed by each of the Sellers who are a party
thereto, provided, however, that the Sellers will be deemed to
have satisfied its obligations under this Section 2.3(a)(vi)
if it delivers Agreements Not to Compete duly signed by (A)
all of the Sellers identified in Schedule 1.1.5(B-1) and
1.1.5(B-2) and (B) at least seventy-five percent (75%) of the
Sellers identified in Schedule 1.1.5(B-3);
(vii) the respective
Confidentiality and Noncompete Agreements, executed by each of
the Sellers who are a party thereto, provided, that the
Sellers will be deemed to have
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satisfied its obligations under this Section 2.3(a)(vii) if it
delivers Confidentiality and Noncompete Agreements duly signed
by (A) all of the Sellers identified in Schedule 1.1.14(C-1)
and 1.1.14(C-2) and (B) at least seventy-five percent (75%) of
the Sellers identified in Schedule 1.1.14(C-3);
(viii) such number of original
counterparts of Form 8023 executed by the Sellers as Purchaser
may reasonably request, together with all information required
to be disclosed or set forth in the schedules and exhibits to
be appended thereto as contemplated in the general
instructions that accompany Form 8023;
(ix) a letter from the Secured
Lender to ICTI confirming that all Liabilities of ICTI to the
Secured Lender have been paid and discharged in full and that
all security interests, liens and other Encumbrances granted
in connection with such Liabilities in or on any of ICTI's
assets have been or will be released, together with Form UCC-3
termination statements executed by the Secured Lender
terminating the original financing statements that were filed
in favor of the Secured Lender with respect to the assets of
ICTI;
(x) a written amendment to the
Interactive Clinical Technologies, Inc. 1997 Stock Option
Plan, executed by ICTI and the Sellers, amending such plan to
the extent necessary to permit the completion of the
Contemplated Transactions, which amendment shall be
satisfactory to Purchaser in all respects;
(xi) written evidence that all
outstanding options to purchase shares of ICTI Stock have been
duly exercised by the holders thereof prior to the Closing and
that the exercise price therefor has been paid to ICTI in
accordance with the terms of the amended stock option plan
referred to in Section 2.3(a)(x);
(xii) all information and documents
necessary to allow Purchaser or ICTI to obtain life insurance
policies with respect to the lives of Xxxxxx X. Xxxxxxx and
Xxxxx X. XxXxxxx in the face amount of Three Million Dollars
($3,000,000.00) each,
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including all necessary or appropriate applications or related
forms relating to such life insurance; and
(xiii) all other certificates,
instruments and documents to be delivered by ICTI or any of
the Sellers pursuant to this Agreement or any of the Related
Agreements.
(b) Purchaser will deliver, or cause to
be delivered, to the Sellers:
(i) that portion of the Purchase
Price described in Section 2.2(a), payable in the manner
described therein;
(ii) certified copies of
resolutions duly adopted or consented to by the board of
directors of Purchaser approving the execution and delivery by
Purchaser of this Agreement and the Related Agreements to
which it is a party and the consummation of the Contemplated
Transactions;
(iii) the opinion letter of counsel
to Purchaser, Xxxxxxx & Xxx, in the form attached hereto as
Exhibit "H";
(iv) the Agreements Not to Compete,
executed on behalf of ICTI;
(v) the Employment Agreements,
executed on behalf of ICTI;
(vi) the Confidentiality and
Noncompete Agreements, executed by ICTI;
(vii) such number of original
counterparts of Form 8023 executed on behalf of Purchaser as
the Seller Representative may reasonably request, together
with all information required to be disclosed or set forth in
the schedules and exhibits to be appended thereto as
contemplated in the general instructions that accompany Form
8023; and
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(viii) all other certificates,
instruments and documents to be delivered by Purchaser
pursuant to this Agreement or any other Related Agreements.
2.4 Closing. The Closing will take place
simultaneously with the execution and delivery of this Agreement at the offices
of ICTI at 00 Xxxxxx Xxxxxx, Xxxxx 00, Xxxxxxxxx, Xxx Xxxxxx.
2.5 Allocation of the Purchase Price. The
Purchase Price and all other items that comprise the "modified aggregate deemed
sale price" (as defined in, and required to be allocated pursuant to, Section
338(h)(10) of the Code) shall be allocated in accordance with Treasury
Regulation Section 1.338(b)-2T. Such allocation shall be set forth in Schedule
2.5 and shall, for tax purposes, be binding on ICTI, the Sellers and Purchaser.
ICTI, the Sellers and Purchaser shall file their respective Tax Returns in
accordance with such allocation and shall not take any position inconsistent
with such allocation.
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby jointly and severally represent and warrant
to Purchaser as follows:
3.1 Organization and Good Standing; No
Subsidiaries, Etc. ICTI is a corporation duly organized, validly existing, and
in good standing under the laws of the State of New Jersey, with full corporate
power and authority to (a) conduct its Business as it is now being conducted,
(b) own or use the property and assets that it owns or uses, and (c) perform all
its obligations under all Contracts to which it is a party. ICTI is duly
qualified to do business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the ownership or
use of the properties or assets owned or used by it, or the nature of the
activities conducted by it, requires such qualification and in which the failure
to so qualify would have a Material Adverse Effect. Except as set forth on
Schedule 3.1, ICTI does not, directly or indirectly, (i) own, of record or
beneficially, any outstanding voting securities or other equity interests in any
other Person or (ii) otherwise control any other Person.
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3.2 Capitalization.
(a) The ICTI Stock consists of ten
million (10,000,000) authorized shares of no par common voting stock of
which, as of the date hereof, five million five hundred eleven thousand
three hundred sixty-four (5,511,364) shares are issued and outstanding.
(b) All of the Purchased Shares are
duly authorized, validly issued and outstanding, fully paid and
non-assessable. No shares of ICTI Stock are reserved for any purpose.
Except as set forth on Schedule 3.2(b), each of the Sellers (i) owns
beneficially and of record the number of Purchased Shares set forth
opposite their name on Schedule 1.1.72, and (ii) has good and
marketable title to such Purchased Shares and owns such Purchased
Shares free and clear of all Encumbrances. The Purchased Shares
constitute one hundred percent (100%) of all of the issued and
outstanding shares of ICTI Stock. Except for the Contemplated
Transactions and as otherwise set forth on Schedule 3.2(b), none of the
Sellers nor ICTI has any commitment or obligation to redeem, buy,
issue, deliver or sell any shares of ICTI Stock or any securities or
obligations convertible into or exchangeable for, or giving any Person
any right or option to put, or subscribe for, purchase or otherwise
acquire from ICTI or the Sellers, any shares of ICTI Stock, and no such
securities or obligations are issued or outstanding.
3.3 Authority; No Conflict.
(a) Each Seller has all requisite legal
right, power and authority to execute and deliver this Agreement and
the Related Agreements to which such Seller is a party and to fully
perform such Seller's obligations hereunder and thereunder. This
Agreement constitutes the legal, valid, and binding obligation of the
Sellers, enforceable against the Sellers in accordance with its terms.
Upon the execution and delivery by the Sellers of the Related
Agreements to which the Sellers are a party, such Related Agreements
will constitute the legal, valid, and binding obligations of the
Sellers, enforceable against the Sellers in accordance with their
respective terms.
(b) Except as set forth in Schedule
3.3(b), neither the execution, delivery and performance of this
Agreement and the
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Related Agreements nor the consummation of the Contemplated
Transactions will, directly or indirectly:
(i) contravene, conflict with, or
result in a violation of any provision of the articles of
incorporation, bylaws or other organizational documents of
ICTI;
(ii) contravene, conflict with, or
result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which ICTI is
subject;
(iii) contravene, conflict with, or
result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, or terminate any Governmental Authorization
that is listed on Schedule 3.10(b);
(iv) contravene, conflict with, or
result in a violation or breach of any provision of, or give
any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of,
or to cancel or terminate any Material Contract (including,
without limitation, any material Lease) to which ICTI is a
party or by which ICTI or any of its properties are bound; or
(v) result in the imposition or
creation of any Encumbrance upon or with respect to any of the
property or assets of ICTI.
(c) Except as set forth in Schedule
3.3(c), neither ICTI nor the Sellers are, or will be, required to give
any notice to or obtain any Consent from any Person in connection with
the execution, delivery and performance of this Agreement and the
Related Agreements or the consummation of the Contemplated
Transactions.
(d) Except as set forth in Schedule
3.3(d), neither the Sellers' execution, delivery and performance of
this Agreement or the Related Agreements to which they are a party nor
the consummation
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by the Sellers of any of the Contemplated Transactions will, directly
or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or
result in a violation of, or give any Governmental Body or
other Person the right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which any of the
Sellers is subject; or
(ii) result in the imposition or
creation of any material Encumbrance upon or with respect to
any of the Purchased Shares or Purchased Options.
3.4 Financial Statements.
(a) Schedule 1.1.35 contains true and
complete copies of the Financial Statements. The Financial Statements
are true and correct and present fairly, in all respects, the financial
position and the results of operations and changes in stockholders'
equity of ICTI as at the respective dates of and for the periods
referred to in such Financial Statements, all in conformity with GAAP
consistently applied throughout the periods involved. No financial
statements of any Person other than ICTI are required by GAAP to be
included in the Financial Statements.
(b) Schedule 3.4(b) contains true and
complete copies of the internally prepared balance sheet of ICTI as at
March 31, 1999 (the "Interim Balance Sheet Date") and the related
internally prepared statements of income and accumulated earnings for
the period then ended (such financial statements, including any notes
thereto, being hereinafter referred to as the "Interim Financial
Statements"). Except as may be otherwise noted therein and subject to
year-end audit adjustments (which, in the aggregate, are not material),
the Interim Financial Statements are true and correct and present
fairly, in all respects, in accordance with GAAP applied on a basis
consistent with the Financial Statements (subject to year-end
adjustments and except for the absence of detailed notes or other
exceptions customary for interim financial statements), the financial
position and the results of operations and changes in stockholders'
equity of ICTI as at the Interim Balance Sheet Date and for the period
then ended.
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3.5 Receivables; Tangible Property; Equipment;
Books and Records.
(a) All accounts receivable of ICTI
have arisen in the ordinary course of business of ICTI consistent with
past practice from bona fide transactions and represent valid
obligations payable to, and will be collected by, ICTI in accordance
with their terms in the ordinary course of the Business, without resort
to collection Proceedings.
(b) Except as set forth on Schedule
3.5(b), the machinery, equipment, computers, telephones, furniture,
leasehold improvements, fixtures, and structures and other tangible
property of ICTI are in good operating condition, ordinary wear and
tear excepted. The buildings or structures located on the Leased Real
Property are in operating condition, ordinary wear and tear excepted
and are, to the Knowledge of the Sellers, free of any material
structural or engineering defects.
(c) The books of account, minute books,
stock record books, and other records of ICTI are complete and correct
in all material respects.
3.6 Title To Assets; Encumbrances; Real Estate
Matters.
(a) ICTI does not own in fee any real
property or interests in real property. Schedule 1.1.55 sets forth a
true and complete list of all real property leased by ICTI. ICTI has
(i) good and marketable title to all of its property and assets
(whether tangible or intangible and including all Intellectual
Property), which property and assets will not, at the Closing, be
subject to any Encumbrance other than the Permitted Encumbrances
identified on Schedule 1.1.67 that specifically relate to such other
property and assets and (ii) a valid leasehold interest in the Leased
Personal Property and the Leased Real Property pursuant to the
respective Leases subject, however, to the Permitted Encumbrances
identified on Schedule 1.1.67 that specifically relate to the Leased
Personal Property and Leased Real Property.
(b) Except as set forth on Schedule
3.6(b), (i) the Leased Real Property, the use and occupancy thereof by
ICTI, and the conduct thereon and therein of the Business does not
violate in any material
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respect any applicable Legal Requirement relating to any Leased Real
Property consisting of requirements applicable to licenses and permits
and requirements consisting of building codes, deed restrictions, or
any zoning, subdivision or other land use or similar laws; (ii) ICTI
has received no notice of any material violation of any applicable
Legal Requirements relating to any Leased Real Property (including
requirements applicable to licenses and permits and requirements
consisting of building codes, deed restrictions or any zoning,
subdivision or other land use or similar laws which relate to the
Leased Real Property, the use and occupancy thereof by ICTI or the
conduct therein and thereon of the Business); (iii) there are no
existing or pending, and to the Knowledge of the Sellers no Threatened,
(A) requests, applications or proceedings to alter or restrict the
zoning or other use restrictions applicable to any of the Leased Real
Property, (B) condemnation proceedings that would affect any of the
Leased Real Property, or (C) public improvements that would result in
any material charge or Tax being levied or assessed against, or would
result in the creation of any material Encumbrance upon, any of the
Leased Real Property; and (iv) to the Knowledge of the Sellers, there
are no other developments or conditions affecting any of the Leased
Real Property which would be reasonably likely to materially interfere
with any present use of the Leased Real Property.
3.7 Products; Warranties; Claims.
(a) Except as set forth in Schedule
3.7, (i) there is no Liability for the replacement, repair or remedying
of any products or services that ICTI has sold, leased or produced or,
to the Knowledge of Sellers, any basis for any present or future
Proceeding against ICTI giving rise to any such Liability and (ii) no
material claim in respect thereof has been asserted by any Person.
Except as set forth in Schedule 3.7, no product produced, sold or
licensed by, or service performed by, ICTI is subject to any express
warranty nor any other warranty other than any warranties that are
implied by any applicable Legal Requirement.
(b) Except as set forth on Schedule
3.7, (i) there is no Liability to ICTI arising out of any injury to
individuals or property that occurred by reason of the ownership,
possession, or use of any product produced or sold by, or service
performed by, ICTI or, to the Knowledge of Sellers, any basis for any
present or future Proceeding against ICTI that
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would result in any such Liability to ICTI and (ii) no claim in respect
thereof has been asserted by any Person.
3.8 Taxes.
(a) Except as set forth on Schedule
3.8(a), (i) ICTI has filed or caused to be filed all Tax Returns that
are or were required to be filed by it (taking into account any valid
extensions of time for filing) pursuant to applicable Legal
Requirements and (ii) ICTI has paid, or made provision for the payment
of, all Taxes that have become due and payable by it, regardless of
whether or not shown on such Tax Returns, except such Taxes, if any, as
are listed in such Schedule 3.8(a) and are being contested in good
faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Balance Sheet.
(b) All Tax Returns filed by ICTI (i)
were prepared in good faith and in a manner reasonably believed, by
management of ICTI, to be in accordance with tenable interpretations
and applications of the Code and any other applicable Legal Requirement
and (ii) are true and correct in all material respects.
(c) For federal income tax purposes,
ICTI is, and has been since the date of its incorporation, properly
classified as an "S corporation" under Section 1361(a) of the Code and
the Treasury Regulations promulgated thereunder, and is and has been so
classified for state income tax purposes pursuant to analogous state or
local provisions in the jurisdictions and since the dates set forth on
Schedule 3.8(c).
(d) Except as set forth on Schedule
3.8(d), since ICTI's inception, there has been no audit commenced
against ICTI regarding Taxes.
(e) No Tax is required to be withheld
pursuant to Section 1445 of the Code as a result of any of the
transfers contemplated by this Agreement.
(f) ICTI has withheld from its
employees (and timely paid to the appropriate Governmental Body) proper
and accurate amounts for all periods through the Closing Date in
compliance with all Tax
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withholding provisions of applicable Legal Requirements (including
income, social security and employment tax withholding for all types of
compensation).
3.9 Employment Agreements; Employee Benefits;
ERISA.
(a) Schedule 3.9(a) sets forth an
accurate list of (i) all officers, directors and employees of ICTI and
(ii) all employment agreements with any such officers, directors and
employees and the rate of compensation (and the portions thereof
attributable to salary, bonus and other compensation, respectively) of
each of such officers, directors or employees as of (A) the first
payroll date immediately preceding the Balance Sheet Date and (B) the
last payroll date immediately preceding the date of this Agreement.
Schedule 3.9(a) includes true, complete and correct copies of any
existing employment agreements for the officers, directors or employees
listed on Schedule 3.9(a). Since the Balance Sheet Date and except as
described in Schedule 3.9(a), there have been no increases in the
compensation payable or any special bonuses to any officer, director,
or employee, except ordinary salary increases and bonuses implemented
on a basis consistent with past practices and bonuses, as described in
Schedule 3.9(a).
(b) Schedule 3.9(b) sets forth a
complete and accurate list of all Employee Benefit Plans, and Schedule
3.9(b) includes true, complete and correct copies of such Employee
Benefit Plans, and any agreements, insurance contracts and trusts
related thereto. Except for the Employee Benefit Plans identified on
Schedule 3.9(b), ICTI does not sponsor, maintain, contribute to or have
any material Liability with respect to any Employee Benefit Plan.
Except as set forth in Schedule 3.9(b), ICTI is not now, nor, to the
Knowledge of the Sellers, will it as a result of its past activities
become, liable to the PBGC or to any multiemployer employee pension
benefit plan under the provisions of Title IV of ERISA. All Employee
Benefit Plans and the administration thereof comply in all material
respects with the terms thereof and all applicable provisions of ERISA,
as well as all other applicable Legal Requirements. As of the Interim
Balance Sheet Date, all accrued contribution obligations of ICTI with
respect to any Employee Benefit Plan have either been paid or are
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reflected on the Interim Financial Statements as of the Interim Balance
Sheet Date.
(c) Except as set forth on Schedule
3.9(c), all Employee Benefit Plans that are intended to qualify
(collectively, "Qualified Plans") under Section 401(a) of the Code are,
and have since their inception been so qualified and have been
determined by the IRS to be so qualified, and copies of the most recent
determination letters with respect thereto are attached to Schedule
3.9(c) and nothing has occurred since the date of such letter that has
or, to the Knowledge of the Sellers, is reasonably likely to, and the
consummation of the Contemplated Transactions will not, adversely
affect such qualification. Except as disclosed on Schedule 3.9(c), all
reports and other documents required to be filed with the Department,
the PBGC or the IRS or any other Governmental Body or distributed to
plan participants or beneficiaries (including actuarial reports, audits
or tax returns) have been timely filed or distributed, and copies of
the most recent reports and filings relating thereto are included as a
part of Schedule 3.9(c). Neither the Sellers, any of the Employee
Benefit Plans listed in Schedule 3.9(a), nor ICTI has engaged in any
transaction prohibited under the provisions of Section 4975 of the Code
or Section 406 of ERISA. No Employee Benefit Plan has incurred an
accumulated funding deficiency (as defined in Section 412(a) of the
Code and Section 302(1) of ERISA); and ICTI has not incurred any
liability for excise tax or penalty due to the IRS, nor any liability
to the PBGC. Except as set forth on Schedule 3.9(c):
(i) there have been no
terminations, partial terminations or discontinuations of
contributions to any Qualified Plan without the giving of all
notices and the obtaining of all approvals required by
applicable Legal Requirements;
(ii) no Employee Benefit Plan
listed on Schedule 3.9(a) that is subject to the provisions of
Title IV of ERISA has been terminated;
(iii) there have been no
"reportable events" (as that phrase is defined in Section 4043
of ERISA) with respect to any Employee Benefit Plan listed on
Schedule 3.9(a);
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(iv) ICTI has not incurred any
liability under Section 4062 of ERISA; and
(v) to the Knowledge of the
Sellers, no circumstances exist pursuant to which ICTI would
have any direct or indirect Liability (including, but not
limited to, any Liability to any multiemployer plan or the
PBGC under Title IV of ERISA or to the IRS for any excise tax
or penalty, or being subject to any statutory lien to secure
payment of any such Liability) with respect to any Employee
Benefit Plan now or heretofore maintained or contributed to by
any Person other than ICTI that is, or at any time was, a
member of a "controlled group" (as defined in Section
412(n)(6)(B) of the Code) that includes ICTI.
(d) Except for the vesting of the
Purchased Options that will occur as a result of the Contemplated
Transactions, and as otherwise set forth in Schedule 3.9(d), the
consummation of the Contemplated Transactions will not (i) entitle any
employee or former employee of ICTI to any payment (whether in the
nature of severance or otherwise), (ii) increase the amount of
compensation due to any such employee, (iii) accelerate the time of
vesting of any compensation, stock incentive or other benefit or (iv)
result in any "parachute payment" under Section 280G of the Code
whether or not such payment is considered to be reasonable compensation
for services rendered.
(e) Except as described in Schedule
3.9(e), (i) with respect to each Employee Benefit Plan, (A) all
contributions required or payments due from ICTI to the date hereof
have been made or will be timely made and all such amounts have been
properly recorded on the books of ICTI, and (B) there are no actions,
suits or claims pending (other than routine claims for benefits) or, to
the Knowledge of the Sellers Threatened, with respect to such Employee
Benefit Plan or against the assets or fiduciaries of such Employee
Benefit Plan and (ii) to the Knowledge of the Sellers, no event has
occurred as a result of which ICTI or any Employee Benefit Plan would
be reasonably likely to be subject to any Liability under ERISA, the
Code or any other Legal Requirement applicable to any Employee Benefit
Plan.
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3.10 Compliance With Certain Legal Requirements;
Governmental Authorizations.
(a) Except as set forth in Schedule
3.10(a):
(i) ICTI has complied and is in
compliance in all material respects with each Legal
Requirement that is applicable to it or to the conduct or
operation of the Business or the ownership or use of any of
its properties or assets;
(ii) to the Knowledge of the
Sellers, no event has occurred or circumstances exist that (A)
would constitute or result in a material violation by ICTI of,
or a material failure on the part of ICTI to comply with, any
Legal Requirement, or (B) would give rise to any material
Liability on the part of ICTI to undertake, or to bear all or
any portion of the cost of, any remedial action pursuant to
any such Legal Requirement; and
(iii) ICTI has not received any
notice from any Governmental Body or any other Person
regarding (A) any actual, alleged, or potential material
violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, or potential material
Liability on the part of ICTI to undertake, or to bear all or
any portion of the cost of, any remedial action pursuant to
any applicable Legal Requirement.
(b) Schedule 3.10(b) contains a
complete and accurate list of each material Governmental Authorization
that is held by ICTI or that otherwise relates to the Business, in each
case indicating the expiration date thereof, if any. The Governmental
Authorizations listed in Schedule 3.10(b) constitute all Governmental
Authorizations required under applicable Legal Requirements to permit
ICTI's operation of the Business in the manner in which it is currently
conducted. Each Governmental Authorization listed in Schedule 3.10(b)
is valid and in full force and effect. Except as set forth in Schedule
3.10(b):
(i) ICTI has complied in all
material respects with all of the terms and requirements of
each Governmental Authorization identified in Schedule
3.10(b); and
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(ii) to the Knowledge of the
Sellers, no event has occurred or circumstance exists that (A)
would constitute or result directly or indirectly in a
material violation of or a material failure to comply with any
term or requirement of any Governmental Authorizations listed
in Schedule 3.10(b) or (B) would result in the revocation,
withdrawal, suspension, cancellation, or termination of, any
Governmental Authorization listed in Schedule 3.10(b).
3.11 Legal Proceedings; Orders; Workers'
Compensation Claims.
(a) Except as set forth in Schedule
3.11(a) attached hereto:
(i) there is no Proceeding that has
been commenced by or against ICTI or that, to the Knowledge of
the Sellers, otherwise relates to, or would materially and
adversely affect, the Business or any of ICTI's properties or
assets; or
(ii) there is no Proceeding pending
that challenges, or that is reasonably likely to have the
effect of preventing, materially delaying or rendering illegal
any of the Contemplated Transactions; or
(iii) to the Knowledge of the
Sellers, no Proceeding of the type described in Sections
3.11(a)(i) or 3.11(a)(ii) has been Threatened, nor, to the
Knowledge of the Sellers, has any event occurred or
circumstances exist that would give rise to or serve as a
basis for the commencement of any such Proceeding.
(b) Except as set forth in Schedule
3.11(b):
(i) there is no Order to which ICTI
or any of its property or assets or the Business is subject;
and
(ii) ICTI has complied in all
material respects with all of the terms and requirements of
each Order set forth in Schedule 3.11(b).
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(c) Schedule 3.11(c) sets forth a
complete and accurate summary and current status of all pending and
Threatened workers' compensation claims by any current or former
employees of ICTI.
(d) No attachments, executions,
assignments for the benefit of creditors, receiverships,
conservatorships or voluntary or involuntary proceedings in bankruptcy
or actions pursuant to any other debtor relief laws are pending against
ICTI or any of the Sellers.
3.12 Absence of Certain Changes and Events.
(a) Except as set forth in Schedule
3.12(a), since the Balance Sheet Date, ICTI has conducted the Business
only in the ordinary course consistent with past practice and there has
not been any:
(i) (A) amendment to the
certificate of incorporation, bylaws or other organizational
documents of ICTI, (B) merger by ICTI with or into or
consolidation by ICTI with any other Person, (C) subdivision
in any way or reclassification of any shares of ICTI's capital
stock, or (D) change or agreement to change in any manner the
rights of ICTI's outstanding capital stock or the character of
the Business;
(ii) material payment or increase
by ICTI of any bonuses, salaries, or other compensation to any
director, officer, or employee or the execution or amendment
by ICTI of any employment, severance, deferred compensation or
similar Contract with any director, officer, or employee or
the payment of bonuses to any of the Sellers;
(iii) adoption or amendment of any
Employee Benefit Plan or increase in the payments to or
benefits under any of the plans or arrangements identified on
Schedule 3.9(b);
(iv) damage to or destruction or
loss of any property or assets of ICTI, whether or not covered
by insurance;
(v) execution of, termination or
amendment of, or receipt of notice of termination of (i) any
license, distributorship, sales representative, joint venture,
credit, or similar
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Contract or (ii) any Contract or transaction or (iii) waiver
or relinquishment of any material rights;
(vi) acquisition, sale, lease, or
other disposition of any property or assets of ICTI or any
mortgage, pledge, or imposition of any Encumbrance on any of
its property or assets, including the acquisition, sale,
lease, or other disposition of any of the Intellectual
Property or the factoring of its accounts receivable, other
than (A) sales of inventory in the ordinary course of
Business, (B) the sale or other disposition of used machinery,
equipment, motor vehicles or other property or assets no
longer used or useful in connection with the Business with an
aggregate value of less than Five Thousand Dollars ($5,000.00)
and (C) any other acquisition, sale or disposition of an
insubstantial amount of property or assets in the ordinary
course of Business consistent with past practice;
(vii) change in the accounting
methods used by ICTI;
(viii) issuance of securities or
declaration or payment of any dividends in cash or in kind by
ICTI or declaration or making of any other distributions of
any kind to any of the Sellers by ICTI (other than Permitted S
Corporation Distributions) or any direct or indirect
redemption, retirement, purchase or other acquisition by ICTI
of any shares of ICTI Stock or options, warrants or rights to
purchase such ICTI Stock;
(ix) failure by ICTI to pay and
discharge current liabilities within fifteen (15) days of the
due date thereof, except as permitted by ICTI's vendors, or
where disputed in good faith by appropriate Proceedings (and
no Proceeding (other than a Proceeding which has been stayed)
has been commenced by any creditor to collect such
liabilities);
(x) any loans, advances or capital
contributions made by ICTI to, or investments made by ICTI in,
any Person;
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(xi) amendment, cancellation,
termination, relinquishment, waiver or release of any material
Contract or right except for such actions effected in the
ordinary course of business consistent with past practice of
ICTI and which, in the aggregate, would not be material to the
operation of the Business or to ICTI;
(xii) extraordinary loss as
determined in accordance with GAAP;
(xiii) capital expenditures or
capital additions or betterments to the Business; or
(xiv) acceleration or delay in the
collection of any notes or accounts receivable in advance of
or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of business
consistent with past practice if the individual amount of any
such note or account receivable, or series of related notes or
accounts receivable, exceeds Five Thousand Dollars
($5,000.00); and
(xv) delay or acceleration of the
payment of any accounts payable or other liabilities beyond or
in advance of their due dates or the dates when such
liabilities would have been paid in the ordinary course of
business consistent with past practice if the individual
amount of any such account payable, or other liability, or
series of related accounts payable or other liabilities,
exceeds Five Thousand Dollars ($5,000.00).
(xvi) agreement, whether oral or
written, by ICTI to do any of the foregoing set forth in
clauses (i) through (xv) of this Section 3.12(a).
(b) Except as set forth on Schedule
3.12(b), since the Balance Sheet Date, ICTI has not suffered any change
or event which had or, to the Knowledge of the Sellers, would
reasonably be expected to have a Material Adverse Effect.
3.13 Contracts; Leases; Absence of Certain
Practices.
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(a) Schedule 3.13(a) sets forth a
complete and accurate list of each Contract (including any amendments,
supplements or modifications thereto) to which ICTI is a party, or by
which it or any of its properties or assets are bound, of the type
described below (collectively, "Material Contracts"), and Schedule
3.13(a) includes true and complete copies of or, if such Contracts are
oral, complete and accurate summaries of:
(i) each Contract (other than open
sales orders) that involves performance of services or
delivery of products, goods or materials by ICTI of an amount
or value in excess of Five Thousand Dollars ($5,000.00);
(ii) each Contract (other than open
purchase orders) that involves performance of services or
delivery of goods or materials to ICTI of an amount or value
in excess of Five Thousand Dollars ($5,000.00);
(iii) each Contract that was not
entered into in the ordinary course of Business and that
involves expenditures or receipts of ICTI of an amount or
value in excess of Five Thousand Dollars ($5,000.00);
(iv) each licensing agreement or
other Contract with respect to any Intellectual Property;
(v) each Contract to or with any
employee or Representative of a group of employees of ICTI
relating to wages, hours, and other conditions or terms of
employment, or any consulting agreement;
(vi) each joint venture,
partnership, and other Contract (however named) involving a
sharing of profits, losses, costs, or Liabilities by ICTI with
any other Person;
(vii) each Contract containing
covenants that purport to restrict, in any respect, a Person's
business activity or limit, in any respect, the freedom of a
Person to engage in any line of business or to compete with
any other Person;
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(viii) each Contract for capital
expenditures of an amount or value in excess of Five Thousand
Dollars ($5,000.00);
(ix) each Contract entered into by
ICTI for, or regarding, the sale, distribution, exportation or
importation of products by any distributor, broker, agent or
other Representative of ICTI, together with the name and
address of each distributor, broker, agent or other
Representative of ICTI that is engaged in the sale,
distribution, import or export of any products manufactured or
sold by ICTI, as well as a list of all informal arrangements
and understandings which relate to any of such distributors,
brokers, agents or other Representatives;
(x) each of the Leases;
(xi) each Contract for the sale of
any properties, assets or operations of ICTI or the Business
other than inventory in the ordinary course of business, or
for the grant of option or preferential rights to purchase any
such properties, assets or operations;
(xii) each Contract relating to
the acquisition by ICTI of any operating business or the
capital stock or all or substantially all of the assets (other
than in the ordinary course of business) of any other Person,
whether or not consummated;
(xiii) each Contract pursuant to
which any party is required to purchase or sell a stated
portion of its requirements or output to another party;
(xiv) each Contract relating to the
lending or borrowing of money, including loan agreements,
guarantees of obligations of Affiliates and other Persons,
performance bonds, letters of credit, and similar instruments
or arrangements, and any security agreement, factoring
agreement or other agreement pursuant to which any lien,
security interest or similar Encumbrance is created with
respect to ICTI or its assets as security for its obligations
with respect to any such borrowed money; and
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(xv) each Contract with a
Governmental Body.
(b) Except as set forth in Schedule
3.13(b):
(i) each Material Contract is and
at the Closing Date will be in full force and effect and is
and at the Closing Date will be valid and enforceable against
ICTI in accordance with its terms;
(ii) ICTI and, to the Knowledge of
the Sellers, each other Person that has or had any Liability
under any Material Contract, has complied in all material
respects with all applicable terms and requirements of such
Contract, except waivers of terms in the ordinary course of
business consistent with past practice of ICTI and which, in
the aggregate, would not be material to the operation of the
Business or to ICTI;
(iii) (A) no event, to the
Knowledge of the Sellers, has occurred or circumstance exists
that would contravene, conflict with, or result in a violation
or breach of, or give ICTI or any other Person the right to
declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel or
terminate, any Material Contract; (B) ICTI has not received
from any Person that is a party to any Material Contract, (1)
any notice that any such Person intends to terminate any
Material Contract, or (2) any material claim for
indemnification from any such Person with respect to the
delivery or performance of products or services; and (C) ICTI
has not affirmatively waived any of its rights under, or
modified the terms of, any Material Contract, or, to the
Knowledge of the Sellers, has any such waiver of rights
occurred by a pattern of practice or course of dealing.
(c) No direct or indirect payments have
been made to any Person by ICTI for the purposes of inducing such
Person to sell or purchase any products to or from ICTI or any of its
distributors, brokers, agents or other Representatives or to induce
such Person not to purchase or sell any items to or from any other
Person. Neither ICTI nor, to the Knowledge of the Sellers, any of its
officers, directors or employees has,
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directly or indirectly, given or made or agreed to give or make any
improper or illegal commission, payment, gratuity, gift, political
contribution or similar benefit, to any customer, supplier,
governmental employee or other Person who is or may be in a position to
assist or hinder ICTI or the Business or to assist ICTI in connection
with any actual or proposed transaction relating to the Business or any
of its property or assets.
3.14 Insurance.
(a) Schedule 3.14(a) sets forth a
complete and accurate list, and includes true and complete copies, of:
(i) all comprehensive general
liability and other liability policies of insurance under
which ICTI or its officers or directors is or has been insured
at any time within the three (3) year period immediately
preceding the date of this Agreement;
(ii) all property and casualty
policies of insurance under which ICTI is presently insured;
and
(iii) all pending applications for
policies of insurance.
(b) Schedule 3.14(b) describes:
(i) any Contract other than a
policy of insurance, for the transfer or sharing of any
material risk by ICTI; and
(ii) all obligations of ICTI to
provide coverage to third parties (for example, under Leases
or other Contracts) and identifies the policy under which such
coverage is provided.
(c) Each policy of insurance described
in Schedule 3.14(a) is in full force and effect and, to the Knowledge
of the Sellers, will continue to provide coverage following the Closing
Date to the same extent provided prior to the Closing Date (assuming,
for this purpose, that (i) ICTI pays, from and after the Closing Date,
all premiums required to be paid under such policies, (ii) the
respective insurers thereunder agree to continue such policies and
(iii) neither Purchaser nor its Affiliates takes any
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action, or fails to take any action, that would result in the
cancellation or termination of such policies).
(d) Except as set forth in Schedule
3.14(d), at all times during the three (3) year period immediately
preceding the date of this Agreement, ICTI has maintained insurance
covering itself, its employees and its assets comparable in terms of
the type of coverage to that maintained by it as of the date hereof.
Schedule 3.14(a) sets forth for each policy of insurance maintained by
ICTI during the aforementioned period, (i) the name and address of the
provider thereof, (ii) the property or casualty covered thereby and
(iii) the amount of coverage provided thereby (including the deductible
thereof).
3.15 Environmental Matters.
(a) Except as set forth in Schedule
3.15(a):
(i) no Leased Real Property is
currently being used to, nor to the Knowledge of the Sellers,
has the Leased Real Property ever been used to make, store,
handle, treat, dispose of, generate, or transport Hazardous
Substances in material violation of any applicable
Environmental Law or Occupational Safety and Health Law;
(ii) to the Knowledge of the
Sellers, there has never been a Release, or threatened
Release, of Hazardous Substances on, from, or migrating onto
any of the Leased Real Property that caused, or would cause,
Contamination;
(iii) ICTI and the Leased Real
Property have complied in all material respects with all
applicable Environmental Laws and Occupational Safety and
Health Laws (which compliance includes, possession by ICTI of
all environmental, health and safety permits, approvals,
licenses, registrations and other governmental authorizations
required in connection with the ownership and operation of the
Leased Real Property under all applicable Environmental Laws),
and, to the Knowledge of the Sellers, no event has occurred or
circumstances exist that (A) would constitute or result in a
material violation by ICTI of, or a material
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failure on the part of ICTI to comply with, any such
Environmental Laws or Occupational Safety and Health Laws, or
(B) would give rise to any material Liability on the part of
ICTI to undertake, or to bear all or any portion of the cost
of, any remedial action pursuant to any such Environmental
Laws or Occupational Safety and Health Laws;
(iv) no Proceeding arising under or
relating to any Environmental Laws, Occupational Safety and
Health Laws or any Environmental, Health, and Safety
Liabilities, is pending, or to the Knowledge of the Sellers is
Threatened, against ICTI or any of the Leased Real Property;
(v) ICTI has never received any
notification, citation, complaint, violation, notice or Order
of any kind from any Governmental Body or any other Person
relating or pertaining to its actual, alleged or potential
failure to comply with any Environmental Laws or Occupational
Safety and Health Laws or alleging that it has any material
Environmental, Health, and Safety Liabilities or regarding the
making, storing, handling, treating, disposing, generating,
transporting or Release of any Hazardous Substances; and
(vi) to the Knowledge of the
Sellers, there are no (A) above or below ground storage tanks
presently in use or formerly used for the storage of any
Hazardous Substances on any of the Leased Real Property or (B)
friable asbestos-containing materials or PCB-containing
electrical equipment on any of the Leased Real Property.
(b) Schedule 3.15(b) attached hereto
sets forth a complete and accurate list of, and includes true and
complete copies and results of, (i) any reports, studies, analyses,
tests, or monitorings that it possesses pertaining to Hazardous
activities conducted by ICTI in or on, or Hazardous Substances in, on,
removed from or under, any of the Leased Real Property, or concerning
compliance by ICTI with any applicable Environmental Laws and (ii) all
notices received by ICTI from any Governmental Body with respect to the
Release of Hazardous Substance in, on or under any of the Leased Real
Property that caused, or would cause, Contamination.
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(c) ICTI has obtained all Governmental
Authorizations required through the date hereof with respect to the
Leased Real Property or the operation of the Business under any
applicable Environmental Law (collectively, the "Environmental
Permits"), a complete and accurate list of which is set forth on
Schedule 3.15(c), all of which Environmental Permits are valid and in
full force and effect. Except as set forth in Schedule 3.15(c), (i)
ICTI has complied in all material respects with all of the terms and
conditions of each Environmental Permit identified in Schedule 3.15(c)
and (ii) to the Knowledge of the Sellers, no event has occurred or
circumstance exists that (A) would constitute or result directly or
indirectly in a material violation of or a material failure to comply
with any term or requirement of any Environmental Permit listed in
Schedule 3.15(c) or (B) would result in the revocation, withdrawal,
suspension, cancellation, or termination of any Environmental Permit
listed in Schedule 3.15(c).
3.16 Employees. To the Knowledge of the Sellers,
no employee of ICTI intends to terminate his or her employment with ICTI as a
result of the Contemplated Transactions or otherwise.
3.17 Labor Disputes; Compliance. Except as set
forth on Schedule 3.17:
(a) ICTI is not a party to or bound by
any labor Contract, ICTI's employees are not represented by any union
or other employee organization, and there has not been, there is not
presently pending or existing, and to the Knowledge of the Sellers,
there is not Threatened (i) any strike, slowdown, picketing, work
stoppage, lockout, labor arbitration or Proceeding in respect of the
grievance of any employee, (ii) any application or complaint filed by
an employee or union with the National Labor Relations Board or any
comparable Governmental Body, or (iii) any organizational activity, or
other labor dispute against or affecting ICTI, and no application for
certification of a collective bargaining agent is pending or, to the
Knowledge of the Sellers, is Threatened;
(b) to the Knowledge of the Sellers, no
event has occurred or circumstances exist that would provide the basis
for any work stoppage or other labor dispute;
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(c) there are no complaints, charges or
claims against ICTI pending or, to the Knowledge of the Sellers,
Threatened, based on, arising out of, in connection with or otherwise
relating to the employment (or termination of employment) by ICTI of
any individual, including individuals classified as independent
contractors or "leased employees" (within the meaning of Section 414(n)
of the Code), or the failure to employ any individual, including any
claim relating to employment discrimination, equal pay, employee safety
and health, immigration, wages and hours or workers' compensation.
(d) ICTI has complied in all material
respects with all Legal Requirements relating to employment, of former,
current, and prospective employees, independent contractors and "leased
employees" (within the meaning of Section 414(n) of the Code) including
all such Legal Requirements relating to equal employment opportunity,
nondiscrimination, immigration, wages, plant closings or mass layoffs,
hours, benefits, the payment of social security and similar Taxes;
(e) ICTI is not liable for the payment
of any material Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the Legal Requirements
described in Section 3.17(d) and, in the aggregate, the matters set
forth on Schedule 3.17 would not have a Material Adverse Effect even if
each were resolved adversely to ICTI; and
(f) There are no Liabilities of ICTI
relating to workers compensation benefits that are not fully insured
against by a bona fide third-party insurance carrier (except for
deductibles, retentions or rights to retroactive premium adjustment
that may be provided for in the respective policies of insurance
relating thereto). With respect to each workers' compensation
arrangement that is funded wholly or partially through an insurance
policy or public or private fund, all premiums required to have been
paid to the date hereof under the insurance policy or fund have been
paid, all premiums required to be paid under the insurance policy or
fund through the Closing Date will have been paid on or before the
Closing Date and, as of the Closing Date. ICTI has received no notice
of any Liability of ICTI under any such insurance policy, fund or
ancillary agreement with respect to such insurance policy or fund in
the nature of a retroactive rate
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adjustment, loss sharing arrangement or other similar actual or
contingent Liability arising wholly or partially out of events
occurring prior to the Closing Date.
3.18 Intellectual Property.
(a) Schedule 3.18(a) sets forth a
complete and accurate list of, and includes true and complete copies
of, all Contracts to which ICTI is a party or by which ICTI is bound
that relate to the Intellectual Property owned, licensed (whether as
licensor or licensee) or used in the Business by ICTI. Except as set
forth in Schedule 3.18(a), there are no outstanding and, to the
Knowledge of the Sellers, no Threatened disputes or disagreements with
respect to any such Contract.
(b) Schedule 3.18(b) sets forth a
complete and accurate list of all Intellectual Property owned by ICTI
or used by ICTI in the conduct of the Business or necessary therefor,
other than software consisting exclusively of commercially available
software that is subject to a "shrink wrap" license agreement. Except
as set forth in Schedule 3.18(a) or 3.18(b):
(i) ICTI is the owner of all right,
title, and interest in and to each item of Intellectual
Property identified on Schedule 3.18(b), free and clear of all
Encumbrances, except for any Encumbrances referred to in
Schedules 3.18(a) or 3.18(b);
(ii) all registered Intellectual
Property, if any, identified on Schedule 3.18(b) currently
comply in all material respects with all Legal Requirements;
(iii) to the Knowledge of the
Sellers, there is no intellectual property or application of
any other Person which is reasonably likely to interfere with
the Intellectual Property identified on Schedule 3.18(b);
(iv) to the Knowledge of the
Sellers, no Intellectual Property identified on Schedule
3.18(b) is infringed or has been challenged or misappropriated
by any other Person in any way nor has any Proceeding been
Threatened with respect thereto; and
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(v) the Intellectual Property has
not been misappropriated by ICTI, nor does it infringe or, to
the Knowledge of the Sellers, has it been alleged to infringe,
any intellectual property rights of any other Person.
(c) Except as set forth on Schedule
3.18(c), ICTI owns or has the right to use all Software, free and clear
of all Encumbrances (other than usual and customary restrictions under
"shrink wrap" license agreements or similar software license agreements
relating to commercially available software). No Software has been
misappropriated by ICTI or challenged in any way nor, to the Knowledge
of the Sellers, has any Proceeding been Threatened with respect
thereto. None of the subject matter of any such Software has been
misappropriated or, to the Knowledge of the Sellers, is alleged to have
been misappropriated from any Person.
(d) ICTI has taken all commercially
reasonable measures necessary to protect the Intellectual Property
identified on Schedule 3.18(b). ICTI has not caused any of such
Intellectual Property to enter the public domain, or taken any action
which has in any way affected its absolute and unconditional ownership
of any portion of the Intellectual Property owned by it, or its use of
any portion of the Intellectual Property licensed by it.
(e) No licensing fees, royalties or
payments are due and payable in connection with ICTI's use of any
Intellectual Property except for (i) those which have been paid or
accrued on the Financial Statements in accordance with past practice,
(ii) those incurred by ICTI in the ordinary course of its business
since the Balance Sheet Date, or (iii) those referred to in Schedule
3.18(e).
(f) ICTI has all computer systems and
software solutions that are necessary to address "Year 2000" computer
systems issues relating to the Business. Accordingly, the computer
systems of ICTI (including all hardware, workstations and related
components and date sensitive equipment and all Software (including not
only the Software owned or used by ICTI internally, but all Software
incorporated into, or comprising a portion of, or in any way affecting,
any product sold or licensed by, or any service performed by, ICTI) are
Year 2000 Compliant. The term "Year 2000 Compliant," as used herein,
means, with respect to any
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computer system or Software, that such computer systems or Software (i)
are capable of recognizing, processing, managing, representing,
interpreting, and manipulating accurately date-related data for dates
earlier and later than January 1, 2000 (including calculating,
comparing, sorting, storing, tagging and sequencing such data) without
resulting in or causing logical or mathematical errors or
inconsistencies in any user-interface functionalities or otherwise,
including data input and retrieval, data storage, data fields,
calculations, reports, processing, or any other input or output, (ii)
have the ability to provide date recognition for any data element
without limitation (including date-related data represented without a
century designation, date-related data whose year is represented by
only two digits and date fields assigned special values), (iii) have
the ability to automatically function into and beyond the year 2000
without human intervention and without any material change or any
disruption in operations associated with the advent of the year 2000,
and (iv) have the ability to correctly interpret data, dates and time
into and beyond the year 2000 including any data containing dates
before January 1, 2000.
3.19 Relationships With Related Persons.
(a) Except as set forth in Schedule 3.19(a):
(i) no Related Person of ICTI has
any interest in the Business or any of its properties and assets;
(ii) no Related Person of ICTI owns
of record or as a beneficial owner, an equity interest or any other
financial or profit interest in any Person that has (i) had material
business dealings or a material financial interest in any material
transaction with ICTI or (ii) engaged in competition with ICTI with
respect to any line of products or services of ICTI in any market
presently served by ICTI; and
(iii) no Related Person of ICTI is
a party to any Material Contract with, or has any material claim or
right against, ICTI.
(b) As of the Closing Date, after giving
effect to the Contemplated Transactions, ICTI will not be required to
make any
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payment to or perform any services for any Related Person of ICTI,
except as set forth on Schedule 3.19(a).
3.20 Brokers or Finders. Neither ICTI nor any of the Sellers
has incurred any Liability for brokerage or finders' fees or agents' commissions
or other similar payments in connection with this Agreement or the Contemplated
Transactions for which Purchaser or ICTI will directly or indirectly have any
Liability.
3.21 Bank Accounts; Powers of Attorney. Schedule 3.21 sets
forth a true, correct and complete list of (a) all bank accounts, fiduciary
accounts and safe deposit boxes of ICTI and Persons authorized to sign or
otherwise act with respect thereto as of the date hereof and (b) Persons holding
powers of attorney or similar instruments allowing such Persons to take any
actions for or on behalf of ICTI.
3.22 No Undisclosed Liabilities. ICTI has no Liabilities of
any nature except for (a) liabilities reflected or reserved against in the
Financial Statements or the Interim Financial Statements, (b) current
liabilities incurred in the ordinary course of the Business since the respective
dates of such financial statements and (c) performance obligations arising under
the terms of any Material Contracts that are executory in nature, but excluding
however any Liabilities associated with its failure to perform any such
obligations or any other breach of any duty or obligation of ICTI under or with
respect to any such Material Contract.
3.23 Disclosure. No representation or warranty of the Sellers
in this Agreement or in any Related Agreement and no statement of the Sellers in
any of the Schedules hereto or thereto omits to state a material fact necessary
to make the statement herein or therein, in light of the circumstances in which
they were made, not misleading in any material respect.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Sellers as follows:
4.1 Organization and Good Standing. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania.
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4.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms. Upon the execution and delivery by Purchaser
of the Related Agreements to which Purchaser is a party, such Related
Agreements will constitute the legal, valid, and binding obligations of
Purchaser, enforceable against Purchaser in accordance with their
respective terms. Purchaser has full corporate power and authority to
execute and deliver this Agreement and such Related Agreements and to
perform its obligations under this Agreement and such Related
Agreements.
(b) Except as set forth in Schedule 4.2(b), neither
Purchaser's execution and delivery of this Agreement or the Related
Agreements to which it is a party nor the consummation or performance
by Purchaser of any of the Contemplated Transactions will give any
Person the right, or ability, to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i) any provision of the articles
of incorporation, bylaws or other organizational documents of
Purchaser;
(ii) any Legal Requirement or Order
to which Purchaser may be subject; or
(iii) any Contract to which
Purchaser is a party or by which Purchaser may be bound.
(c) Except as set forth in Schedule 4.2(c), Purchaser
is not, nor will it be, required to give any notice to or obtain any
Consent from, any Person in connection with the Contemplated
Transactions.
4.3 Certain Proceedings. There is no pending Proceeding that
has been commenced against Purchaser and that challenges, or may have the effect
of preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions. To the Knowledge of Purchaser, no such Proceeding
has been Threatened.
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4.4 Brokers or Finders. Purchaser and its Representatives have
incurred no obligation or Liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payments in connection
with this Agreement or any of the Contemplated Transactions for which ICTI or
the Sellers will directly or indirectly have any Liability.
4.5 Investment Representations. Purchaser is acquiring the
Purchased Shares and the Purchased Options as an investment, and not with a view
to, or for, sale or transfer in connection with any distribution thereof, or for
any sale or transfer thereof.
4.6 Xxxxx Stock. Any shares of Xxxxx Stock issued pursuant to
Section 2.2(c) will, upon the issuance thereof to the Sellers, be (a) validly
issued, fully paid, non-assessable and free and clear of any Encumbrances or any
restrictions regarding the transferability thereof except for (i) any
restrictions imposed pursuant to the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or any other applicable Legal
Requirements including the "blue sky" laws of any state or the laws of the
United Kingdom or (ii) a requirement, imposed by Xxxxx Holdings generally with
respect to employees who desire to sell in excess of ten thousand (10,000)
shares of Xxxxx Stock at any time, that any such employee (A) give Xxxxx
Holdings at least ten (10) days written notice prior to the sale of such Xxxxx
Stock, (B) allow Xxxxx, at its discretion, to find a purchaser, at market
prices, for such Xxxxx Stock during such ten (10) day period, and (C) shall sell
such Xxxxx Stock to the purchaser identified by Xxxxx, and (b) duly registered
on the London Stock Exchange.
4.7 Summaries. Purchaser makes no representations or
warranties, express or implied, with respect to the summaries of the essential
terms of this Agreement or of the Related Agreements that were prepared by
Purchaser and disseminated by ICTI to the Sellers prior to the Closing.
5. MUTUAL COVENANTS; COVENANTS OF SELLERS
5.1 Mutual Covenants Regarding Taxes, Etc.
(i) The Sellers shall be required to, and
shall have the sole and exclusive authority to, prepare, execute and
file on behalf of ICTI (A) the federal income Tax Returns to be filed
on behalf of ICTI for periods ending on or before the Closing Date and
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(B) the corresponding state and local income Tax Returns for the State
of New Jersey and any of the other jurisdictions identified in Schedule
3.8(c) to be filed on behalf of ICTI for periods ending on or before
the Closing Date, that will include the gain or loss resulting from the
"deemed sale" and "deemed liquidation" that will occur (pursuant to
Treasury Regulation Sections 1.338(h)(10)-1(e)(1) and (2) promulgated
under the Code) by reason of Purchaser's and the Sellers' election
pursuant to Section 338(h)(10) of the Code and any Tax pursuant to
Section 1374 of the Code. All such federal, state and local Tax Returns
shall be prepared in a manner consistent with the tax accounting
methods and principles that ICTI has used in its immediately preceding
tax year to report its income to each relevant taxing authority.
Subject to the provisions of Section 5.1(a)(iii)(A), the Sellers will
provide to ICTI a copy of each such Tax Return no less than fifteen
(15) business days prior to the due date for filing such Tax Return,
together with payment for all Taxes due, and ICTI will promptly execute
and timely file such Tax Return, together with the Sellers' payment
therefor, with the appropriate taxing authority or other Governmental
Body.
(ii) Purchaser shall promptly notify the
Seller Representatives in writing upon receipt by Purchaser or ICTI of
notice of any pending or threatened Tax audits of or assessments
against ICTI for taxable periods of ICTI ending on or prior to the
Closing Date and with respect to which Sellers would be reasonably
likely to have any Liability, whether as the result of ICTI's being
classified as an S corporation under the Code and any comparable state
statutes or pursuant to this Agreement. Subject to Sections
5.1(a)(iii), 5.1(a)(iv), 7.2 and 7.4, the Seller Representatives shall
have the right, at their own expense, to control any audit or
determination by any taxing authority or other Governmental Body,
initiate any claim for refund or amended return, and contest, resolve
and defend against any assessment, notice of deficiency, or other
adjustment or proposed adjustment of Taxes for any taxable period
described in the immediately preceding sentence, and the Sellers shall
retain all rights with respect to any Tax refunds that may be due or
payable with regard to any such taxable periods. Purchaser agrees not
to amend or cause to be amended any income Tax Return filed by
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ICTI for taxable periods of ICTI ending on or before the Closing Date
without obtaining the consent of the Seller Representatives (which
consent will not be unreasonably withheld or delayed) unless such
amendment is required to correct a clearly erroneous matter of fact or
law or Purchaser or ICTI is directed to file such amendment by any
taxing authority or other Governmental Body. If the Seller
Representatives consent to Purchaser's request to amend any such
previously filed Tax Return to correct a matter of fact or law that is
arguably correct under the standards so imposed by applicable Legal
Requirements (i.e., reasonable basis, substantial authority, more
likely than not, etc.), the Sellers shall timely pay any increase in
Tax liability that the Sellers are required to pay to any taxing
authority as a result of such amendment and Purchaser shall promptly
reimburse the Sellers for the amount of any penalty or interest payable
by them as a result of such increase in Tax.
(iii) In furtherance of the provisions of
Sections 5.1(a)(i) and 5.1(a)(ii), Purchaser will cooperate fully with
and, if requested by the Seller Representatives, will (A) appoint one
or both of the Seller Representatives as duly authorized officers of
ICTI solely for purposes of executing and filing on behalf of ICTI the
final Tax Returns referred to in this Section 5.1(a), conducting any
audits or examinations with respect thereto or any Tax Return with
respect to which, or as the result of which, the Sellers may have any
Liability, negotiating and approving all changes or adjustments to such
Tax Returns or any Tax Return with respect to which, or as the result
of which, the Sellers may have any Liability, and negotiating,
approving and executing all agreements (including closing agreements)
with the appropriate taxing authorities or other Governmental Bodies at
the conclusion of any such audits or examinations, which shall be
binding upon ICTI and Purchaser, and (B) join in the filing of all
final Tax Returns. The Seller Representatives shall have sole and
exclusive authority with respect to the conduct, negotiation and
settlement of any such audits or examinations; provided, however, that
(1) anything to the contrary set forth in this Section 5.1(a)(iii)
notwithstanding, with respect to any matters that may adversely affect
the Purchaser or ICTI after the Closing Date, the Seller
Representatives shall consult with, and consider in good faith, the
suggestions of ICTI and
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Purchaser, and the Seller Representatives shall not settle any such
matter without Purchaser's written consent, which consent will not be
unreasonably withheld and (2) nothing set forth in this Section
5.1(a)(iii) will alter or affect Purchaser's right to receive, or the
Sellers' obligation to provide, indemnity pursuant to Sections 7.2 or
7.4. Form 8023 shall be filed together with, and as a part of, each
such final Tax Return if the filing of Form 8023 is required by any
applicable Legal Requirement.
(iv) Notwithstanding anything set forth
herein to the contrary, Purchaser shall have sole and exclusive
authority with respect to the conduct, negotiation and settlement of
any examinations or audits arising out of or relating to the Sellers'
election pursuant to Section 338(h)(10) of the Code (and any comparable
state statutes) and any Tax under Section 1374 of the Code. The Sellers
will cooperate fully with Purchaser in connection with any such
examination or audit.
(b) Each of the Seller Representatives and Purchaser,
upon the request of the other party, will, at any time and from time to time,
afford to the other party, or any other Representatives of other party, full and
complete access to the books and records of ICTI (including all accounting,
financial and tax records) as shall be necessary to permit the Sellers and
Purchaser to effectuate the provisions of Section 5.1(a) and, in connection
therewith, Purchaser will make available, or cause to be made available, to the
Seller Representatives, such qualified personnel of ICTI and Purchaser as the
Seller Representatives shall reasonably request to assist in the compilation of
the information necessary to prepare and file the Tax Returns referred to in
Section 5.1(a) as well as may be necessary to respond to any audit that may be
conducted from time to time with respect to such Tax Returns or any other Tax
Returns filed by ICTI on or prior to the Closing Date.
(c) Purchaser acknowledges that ICTI has made, and at
or prior to the Closing will make, distributions to the Sellers, to fund
estimated tax payments relating to the income attributable to the Sellers as a
result of ICTI's election to be treated as an S corporation under the Code and
under the laws of the State of New Jersey and the other jurisdictions
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identified in Schedule 3.8(c), including any such distributions as may be
necessary to fund the estimated tax payments relating to ICTI's income for the
taxable periods ending on or before the Closing Date but not including any
income arising out of or relating to the elections described in Section 5.1(d)
below (all of the distributions described in this Section 5.1(c) shall be
collectively referred to herein as the "Permitted S Corporation Distributions").
(d) Purchaser and the Sellers shall make a timely
election under Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the
Treasury Regulations promulgated pursuant to the Code, and any corresponding
elections under state or local tax law in the State of New Jersey and in the
other jurisdictions identified in Schedule 3.8(c). Purchaser and the Sellers
shall (i) take, and cooperate with each other to take, all actions necessary and
appropriate (including, without limitation, the preparation, completion and
timely joint filing by Purchaser and the Sellers of Form 8023, and the
preparation, completion and timely filing of such other forms, returns,
elections, schedules and other documents and instruments) to effect, perfect and
preserve a timely Section 338(h)(10) election in accordance with Section
338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations
promulgated pursuant to the Code, and (ii) report the purchase and sale of the
Purchased Shares, consistent with the election pursuant to Section 338(h)(10)
referred to in this Section 5.1(d) and shall take no position contrary thereto
or inconsistent therewith in any Tax Return, or in any discussion with or any
Proceeding before any taxing authority or other Governmental Body or otherwise.
(e) In the event that, in connection with an audit
relating to an election pursuant to Section 338(h)(10) of the Code (and any
comparable state or local statutes), the Sellers' final Tax liability relating
to such election is, after audit or examination, increased above the amounts
reflected on the Tax Returns described in Section 5.1(a)(i) and referred to in
Section 5.1(d), then (i) the Sellers shall pay, when due, any such increased Tax
liability and (ii) the Purchaser shall promptly reimburse the Sellers for the
amount of any penalty or interest payable by them as the result of such increase
in Tax.
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5.2 Investment Representations. Prior to, or concurrently
with, the issuance of any shares of Xxxxx Stock to the Sellers pursuant to
Section 2.3(c), the Sellers shall execute and deliver to Purchaser a letter
addressed to Purchaser and Xxxxx Holdings stating that the Sellers are acquiring
the shares of Xxxxx Stock as an investment, and not with a view to, or for, sale
or transfer in connection with any distribution thereof, or for any sale or
transfer thereof. The Sellers acknowledge that each certificate evidencing
shares of Xxxxx Stock will have endorsed thereon a restrictive legend setting
forth the restrictions referred to in Section 4.6(a).
5.3 Subordination of Deferred Payments. The Sellers
acknowledge that the deferred portion of the Purchaser Price described in
Section 2.2(b) and any Earnout Payment to which they may become entitled will be
unsecured and at all times under, subject and subordinate in right of payment
and enforcement to the prior, irrevocable payment in full of all existing or
future Liabilities that may owed to the senior lenders to Purchaser, Xxxxx
Holdings or the consolidated group of corporations of which Purchaser and Xxxxx
Holdings are members. In furtherance of such subordination, the Sellers will,
upon the request of Purchaser or Xxxxx Holdings, promptly execute and deliver to
any or all of the aforementioned senior lenders a subordination agreement in the
standard form prescribed by such senior lenders (which subordination agreement
shall be reasonably acceptable to the Sellers) and will also execute such other
documents and instruments and take such other actions as may be reasonably
necessary to further evidence or effectuate the provisions of this Section 5.6.
Anything to the contrary set forth in this Section 5.3 notwithstanding, no
Seller may refuse to execute the form of subordination agreement referred to in
the immediately preceding sentence unless the terms of such subordination
agreement are expressly inconsistent with the essential terms of subordination
described in the first sentence of this Section 5.3.
6. COVENANTS OF PURCHASER
6.1 Filing of Tax Returns. Purchaser shall prepare, execute
and file within the time periods established by any applicable Legal Requirement
(a) Purchaser's federal income Tax Return for the tax year of Purchaser in which
the Closing occurred and (b) ICTI's federal income Tax Return for the tax year
of ICTI that begins with, and includes, the first day of the tax year of ICTI
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immediately following the end of the tax year of ICTI for which the final Tax
Returns referred to in Section 5.1(a) are filed.
6.2 Change of Fiscal Year of ICTI. Purchaser, as soon as
practicable following the Closing, will take such actions as are necessary to
cause ICTI's fiscal-year for financial reporting and Tax purposes to be changed
to the twelve (12) month period commencing on October 1 of each calendar year
and ending on September 30 of the following calendar year.
6.3 Default Rate of Interest. Subject to Purchaser's set-off
rights described in Section 7.9, if Purchaser fails to pay either (a) the
deferred portion of the Purchase Price described in Section 2.2(b) or (b) any
portion of any Earnout Payment that is payable in cash, when due, and such
failure shall continue for a period of five (5) business days following such due
date, such unpaid amount shall bear interest at an annual rate of twelve percent
(12%) from the date of the expiration of such five (5) day grace period until
paid in full by Purchaser.
6.4 Operation of Business During Earnout Period. During the
Earnout Period, Purchaser will use commercially reasonable efforts to cause the
business of ICTI to be operated in the ordinary course consistent with the past
practice of ICTI, and neither Purchaser nor its director representatives on the
board of directors of ICTI will intentionally take any affirmative action, or
intentionally omit to take any commercially reasonable action within its
reasonable control, that would directly, materially and adversely affect NIBT
prior to September 30, 2001. If Purchaser takes any such intentional action or
makes any such intentional omission which has a direct, material and adverse
effect on NIBT during the Earnout Periods, Purchaser and Sellers shall proceed
diligently and in good faith, using commercially reasonable efforts, to make
such reasonable adjustments to the calculation of NIBT as may be necessary to
mitigate or neutralize the impact of any such intentional act or omission.
Anything to the contrary set forth in this Section 6.4 notwithstanding,
Purchaser will not be deemed to have violated its obligations under this Section
6.4 if any such intentional act or omission that has a direct, material and
adverse effect on NIBT during the Earnout Periods was (a) directly or indirectly
necessitated by Purchaser's efforts to mitigate or otherwise alleviate the
adverse consequences of a breach of any representation, warranty or covenant of
any Seller under this Agreement or (b) believed by Purchaser or its director
representatives on the board of directors of ICTI, in good faith and in their
business judgment, to have been in, or not opposed to, the best interests of
ICTI or
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the consolidated group of corporations of which ICTI is then a member.
Furthermore, insofar as ICTI's working capital line of credit facility with the
Secured Lender will be terminated at or prior to the Closing, Purchaser shall,
during the Earnout Periods, use commercially reasonable efforts to ensure that
ICTI has working capital sufficient to undertake and complete projects that are
normally within the scope of ICTI's business and which would affect NIBT.
Nothing set forth in this Section 6.4 or in Section 6.5 shall require, or shall
be deemed to require, Purchaser to make any additional capital contribution to
ICTI.
6.5 Operations Through September 30, 1999. Insofar as ICTI's
working capital line of credit facility with the Secured Lender will be
terminated at or prior to the Closing, during the period between the Closing
Date and September 30, 1999, Purchaser will permit ICTI to use its earnings for
such period for usual, customary and legitimate working capital purposes.
6.6 Delivery of Certain Minutes. As soon as available, but in
no event later than June 30, 1999, Purchaser will deliver, or cause to be
delivered, to the Seller Representatives copies of the minutes of Xxxxx Holdings
ratifying its execution and delivery of the Guaranty appended hereto, which
minutes will be certified as true and correct by the Secretary of Xxxxx
Holdings.
7. INDEMNIFICATION; REMEDIES
7.1 Survival. Subject to the limitations set forth in Section
7.5 and the provisions of Section 7.6, all representations, warranties,
covenants, and obligations in this Agreement, the Schedules, any supplements to
the Schedules, and in the Related Agreements will survive the Closing.
7.2 General Indemnification and Reimbursement by the Sellers.
In addition to the specific indemnity set forth in Section 7.4 relating to
Taxes, the Sellers will jointly and severally indemnify, defend and hold
harmless Purchaser, its Affiliates (including ICTI) and the respective officers,
directors, shareholders, successors and permitted transferees and assigns of
Purchaser and its Affiliates (collectively, the "Purchaser Indemnitees") from
and against, and will reimburse the Purchaser Indemnitees for, any Damages
arising directly from any of the following:
(a) any Breach of any representation or
warranty made by any of the Sellers in this Agreement, the Schedules,
any
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supplements to the Schedules, or any other Related Agreements delivered
by any of the Sellers pursuant to or in connection with this Agreement;
(b) any Breach by any of the Sellers of any
covenant or obligation of any of the Sellers in this Agreement or any
Related Agreement; and
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any Person with
ICTI or any of the Sellers (or any Person acting on their behalf) in
connection with any of the Contemplated Transactions.
7.3 General Indemnification and Reimbursement by Purchaser.
Purchaser will indemnify, defend and hold harmless the Sellers and the
respective Affiliates, successors and permitted transferees and assigns of the
Sellers (collectively, the "Seller Indemnitees") from and against, and will
reimburse the Seller Indemnitees for, any Damages arising directly from any of
the following:
(a) any Breach of any representation or
warranty made by Purchaser in this Agreement or in any Related
Agreement delivered by Purchaser pursuant to or in connection with this
Agreement;
(b) any Breach by Purchaser of any covenant
or obligation of Purchaser in this Agreement or any Related Agreement;
or
(c) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such Person
with Purchaser (or any Person acting on its behalf) in connection with
any of the Contemplated Transactions.
7.4 Tax Indemnification; Apportionment of Taxes.
(a) In addition to the general
indemnification set forth in Section 7.2, the Sellers will jointly and
severally indemnify, defend and hold harmless the Purchaser Indemnitees
and ICTI harmless from any and all Taxes and related Damages imposed on
ICTI in respect of its income, business, property or operations or for
which ICTI may otherwise
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be liable (i) for any period ending prior to or on the Closing Date,
including any Short Period or Interim Period and including any Tax
arising under Section 1374 of the Code, (ii) arising out of a Breach of
any of the representations and warranties contained in Section 3.8, or
(iii) for any costs or expenses incurred by Purchaser or ICTI with
respect to any Taxes for which Purchaser or ICTI is indemnified by the
Sellers pursuant to this Section 7.4(a).
(b) In order to appropriately apportion any
Taxes relating to any taxable period that includes the Closing Date,
the parties hereto will, to the extent permitted by applicable law,
elect with the relevant taxing authority to treat for all purposes the
Closing Date as the last day of a taxable period of ICTI (a "Short
Period"), and such period shall be treated as a Short Period and a
period ending prior to or on the Closing Date for purposes of this
Agreement. In any case where applicable Legal Requirements do not
permit ICTI to treat the Closing Date as the last day of a Short
Period, then for purposes of this Agreement, the portion of each Tax
that is attributable to the operations of ICTI for such interim period
(the "Interim Period") shall be (i) in the case of a Tax that is not
based on net income, the total amount of such Tax for the period in
question multiplied by a fraction, the numerator of which is the number
of days in the Interim Period, and the denominator of which is the
total number of days in such period, and (ii) in the case of a Tax that
is based on net income, the Tax that would be due with respect to the
Interim Period if such Interim Period were a Short Period determined
based upon an interim closing of the books of ICTI.
7.5 Time Limitations.
(a) Except as otherwise specifically
provided in Sections 7.5(b) and 7.5(c), the Sellers will have no
Liability to the Purchaser Indemnitees under, or in connection with,
this Agreement or any of the Related Agreements or any of the
Contemplated Transactions pursuant to Section 7.2(a), unless on or
before September 30, 2001, the Seller Representatives are given written
notice from a Purchaser Indemnitee of a bona fide indemnity claim
specifying the factual basis of that claim in reasonable detail (a
"Claim Notice"); provided, however, that with respect to any such claim
for which a Claim Notice has been given to the Seller Representatives
on or before September 30, 2001, the Sellers' Liability to the
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Purchaser Indemnitees for such claim shall survive without limitation
as to time until such claim is resolved.
(b) Notwithstanding the provisions of
Section 7.5(a), the Sellers will have no Liability to the Purchaser
Indemnitees under, or in connection with, any claims made pursuant to
Section 7.4, unless before the end of the thirty (30) day period
immediately following the expiration of the applicable tax statute of
limitations, the Seller Representatives are given a Claim Notice for a
claim arising under Section 7.4 (a "Tax Claim"); provided, however,
that with respect to any such Tax Claim for which a Claim Notice has
been given to the Seller Representatives prior to the end of the thirty
(30) day period immediately following the expiration of the applicable
tax statute of limitations, the Sellers' Liability to the Purchaser
Indemnitees for such Tax Claim shall survive without limitation as to
time until such claim is resolved. The term "applicable tax statute of
limitations," as used in this Section 7.5(b), means, with respect to
any particular type of Tax, a period of time equal to the applicable
statute of limitations established pursuant to any Legal Requirement
pertaining to such Tax.
(c) Notwithstanding the provisions of
Section 7.5(a), the limitations set forth in Section 7.5(a) shall not
apply to any claims which are made by any Purchaser Indemnitee pursuant
to Section 7.2(a) to the extent that such claims are (i) based upon a
Breach of any of the representations or warranties set forth in
Sections 3.2, 3.6(a)(i), 3.18(b)(i), 3.18(b)(v) or 3.18(c) or (ii)
attributable to the fraud of any of the Sellers.
7.6 Limitations on Amount of Liability.
(a) Except as otherwise provided in Section
7.6(c), the Sellers will have no Liability to the Purchaser
Indemnitees, under, or in connection with, this Agreement or any of the
Related Agreements or any of the Contemplated Transactions pursuant to
indemnity claims made pursuant to Section 7.2(a), until the total of
all Damages with respect to such claims exceeds Eighty Thousand Dollars
($80,000.00) (the "Deductible"), and then only for the amount by which
such Damages exceed the Deductible.
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(b) Except as otherwise provided in Section
7.6(c), the maximum amount of Damages that the Sellers shall, in the
aggregate, be required to pay to the Purchaser Indemnitees pursuant to
Section 7.2(a) shall be an amount equal to (i) Four Million Dollars
($4,000,000.00) plus (ii) the Earnout Payments.
(c) Notwithstanding the provisions of
Sections 7.6(a) and 7.6(b), (i) Sections 7.6(a) and 7.6(b) shall not
apply with regard to any Tax Claims or any claim attributable to the
fraud of any of the Sellers, (ii) Section 7.6(a) shall not apply to any
claims which are made by any Purchaser Indemnitee pursuant to Section
7.2(a) to the extent that such claims are based upon a Breach of any of
the representations or warranties set forth in Section 3.2, and (iii)
Section 7.6(b) shall not apply to any claims which are made by any
Purchaser Indemnitee pursuant to Section 7.2(a) to the extent that such
claims are based upon a Breach of any of the representations or
warranties set forth in Sections 3.2, 3.6(a)(i), 3.18(b)(i), 3.18(b)(v)
or 3.18(c).
7.7 Procedure for Indemnification - Third Party Claims.
(a) All claims for indemnification under
this Agreement shall be governed by the procedures set forth in this
Section 7.7.
(b) When a party seeking indemnification
under Sections 7.2, 7.3 or 7.4 (the "Indemnified Party") receives
notice of any claims made by third parties ("Third Party Claims") or
has any other claim for indemnification other than a Third Party Claim,
which is or may be the basis of a claim for indemnification hereunder,
the Indemnified Party shall promptly deliver a Claim Notice to the
other party (the "Indemnifying Party"); provided, however, that the
failure of the Indemnified Party to promptly deliver a Claim Notice as
provided herein shall not relieve the Indemnifying Party of any of its
obligations hereunder unless and only to the extent that the
Indemnifying Party shall have been prejudiced thereby. Upon receipt of
a Claim Notice from the Indemnified Party with respect to a Third Party
Claim, the Indemnifying Party may, but shall not be required to, assume
the defense of such Third Party Claim. Should the Indemnifying Party
elect to undertake the defense of any Third Party Claim, it shall use
counsel of its choice but reasonably acceptable to the Indemnified
Party, and the Indemnifying Party shall pay all reasonable costs and
expenses thereof
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(including the reasonable costs and expenses incurred by the
Indemnified Party in connection with the defense of such Third Party
Claim prior to the assumption of such defense by the Indemnifying
Party) and shall be fully responsible for the outcome thereof;
provided, however, that in such case, the Indemnifying Party shall have
no obligation to pay any further costs or expenses of legal counsel of
the Indemnified Party thereafter incurred in connection with such
defense. An Indemnifying Party's right to assume the defense of any
Third Party Claim is conditioned upon (i) the Indemnifying Party
acknowledging in writing to the Indemnified Party, without
qualification or limitation, its obligation to indemnify the
Indemnified Party for all Damages arising from such Third Party Claim
and (ii) the Indemnifying Party providing the Indemnified Party with
security or other satisfactory assurances that it has the financial
ability to fully indemnify the Indemnified Party for such Damages. No
compromise or settlement in respect of any Third Party Claims may be
effected by the Indemnifying Party without the Indemnified Party's
prior written consent (which consent shall not be unreasonably withheld
or delayed). The Indemnifying Party shall give notice to the
Indemnified Party as to its intention to assume the defense of any
Third Party Claims within ten (10) days after the date of receipt of
the Indemnified Party's Claim Notice in respect of such Third Party
Claims. If an Indemnifying Party does not, within ten (10) days after
the Indemnified Party's Claim Notice is given, give notice to the
Indemnified Party of its assumption of the defense of the Third Party
Claims, the Indemnifying Party shall be deemed to have waived its right
to control the defense thereof. If the Indemnified Party assumes the
defense of any Third Party Claims because of the failure of the
Indemnifying Party to do so in accordance with this Section 7.7(b), it
may do so in such manner as it may deem appropriate, and the
Indemnifying Party shall pay all costs and expenses of such defense.
The Indemnifying Party shall have no liability with respect to any
compromise or settlement of a Third Party Claim that is effected
without its prior written consent (which consent shall not be
unreasonably withheld or delayed).
(c) Notwithstanding the provisions of
Section 7.7(b), with respect to any Third Party Claim that the
Indemnifying Party is defending, the Indemnified Party shall have the
right to retain separate counsel to represent it and the Indemnifying
Party shall pay the reasonable fees and expenses of such separate
counsel, but only if, and to the
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extent that (ii) the Indemnifying Party shall not have engaged counsel
reasonably satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable amount of time after the
Indemnified Party's Claim Notice is given or (iii) the Indemnifying
Party shall authorize, in writing, the Indemnified Party to engage
separate counsel at the Indemnifying Party's expense.
(d) If the Indemnified Party desires to
settle any Third Party Claim (whether or not contested by the
Indemnifying Party), the Indemnified Party shall advise the
Indemnifying Party in writing of the amount it proposes to pay in
settlement thereof. If such proposed settlement is unsatisfactory to
the Indemnifying Party, it shall have the right, at its expense,
reasonably to contest (or continue to contest) such Third Party Claim
by giving written notice of such election to the Indemnified Party
within fifteen (15) days after the Indemnifying Party's receipt of the
advice of the proposed settlement. If the Indemnifying Party does not
deliver such written notice within fifteen (15) days after receipt of
such advice, or if the Indemnifying Party, after having given such
notice to the Indemnified Party, fails to defend, settle or pay such
Third Party Claim, the Indemnified Party may offer the proposed
settlement to the third party making such Third Party Claim. If the
proposed settlement is not accepted by the party making such Third
Party Claim, any new proposed settlement figure which the Indemnified
Party may wish to present to the party making such Third Party Claim
shall first be presented to the Indemnifying Party who shall have the
right, subject to the conditions set forth in this Section 7.7(d),
reasonably to contest such Third Party Claim. In all such events, the
Indemnifying Party shall indemnify the Indemnified Party and hold it
harmless against and from any and all costs of defense, payment or
settlement, including reasonable attorneys' fees incurred in connection
therewith.
(e) The Indemnifying Party may settle any
Third Party Claim only if it has agreed to contest the claim in
accordance with Section 7.7(b) above. If any Indemnifying Party desires
to settle any Third Party Claim, the Indemnifying Party shall not,
without the Indemnified Party's prior written consent (which consent
shall not be unreasonably withheld, delayed or conditioned), (i) settle
or compromise such proceeding, claim or demand, or consent to the entry
of any judgment which does not include as an unconditional term thereof
the delivery by the
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claimant or plaintiff to the Indemnified Party of a written release
from all liability in respect of such proceeding, claim or demand or
(ii) settle or compromise any such proceeding, claim or demand, in any
manner that would be reasonably likely to adversely affect the
Indemnified Party other than as a result of money damages or other
money payments which are fully indemnified against by the Indemnifying
Party.
(f) Notwithstanding the foregoing, if an
Indemnified Party determines in good faith that there is a reasonable
probability that a Third Party Claim may adversely affect it or any of
its Related Persons other than as a result of monetary damages for
which it would be entitled to indemnification under this Agreement, or
if an Indemnified Party reasonably believes that it may not receive the
indemnification to which it may be entitled from the Indemnifying
Party, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise or settle such Third
Party Claim, but the Indemnifying Party will not be bound by any
compromise or settlement of a Third Party Claim so defended if such
compromise or settlement is effected without its consent (which consent
may not be unreasonably withheld or delayed).
7.8 Exclusive Remedy; Etc.
(a) Except as specifically set forth in
Section 7.8(c), the sole and exclusive remedy of Purchaser and the
Sellers for any all claims or Damages relating to or arising out of or
in connection with this Agreement or any of the Related Agreements or
Contemplated Transactions and the facts and circumstances relating and
pertaining thereto (whether any such claim may be made in contract,
breach of warranty, tort or otherwise) shall be an action for indemnity
pursuant to this Section 7, which shall be governed and limited by this
Section 7.
(b) Notwithstanding the provisions of
Section 7.8(a), each party shall be entitled to pursue those equitable
or other remedies that may otherwise be available to it pursuant to the
provisions of the Agreements Not to Compete, the Employment Agreements
or the Confidentiality and Noncompete Agreements.
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7.9 Set-Off. Purchaser will have the right to set off against
and reduce any sums that may be payable by it to any of the Sellers from time to
time pursuant to this Agreement (including the Three Million Dollar
($3,000,000.00) deferred payment due pursuant to Section 2.2(b) and any of the
Earnout Payments) for any claims that it may have from time to time against any
of the Sellers, whether pursuant to this Section 7 or otherwise.
7.10 Form of Indemnification Payments. Except to the extent
the Damages for claims of Purchaser against the Sellers under this Section 7
exceed Three Million Dollars ($3,000,000.00), the Purchaser Indemnitees shall
have the right to seek indemnification from the Sellers for claims against the
Sellers under this Section 7 only by setting-off against the Three Million
Dollar ($3,000,000.00) deferred payment payable pursuant to Section 2.2(b).
However, with regard to claims for Damages with respect to which a Purchaser
Indemnitee gives a Claim Notice after Purchaser's payment of the Three Million
Dollar ($3,000,000.00) deferred payment described in Section 2.2(b) or to the
extent that the aggregate amount of Damages for claims against the Sellers
pursuant to this Section 7 exceeds Three Million Dollars ($3,000,000.00), the
Purchaser Indemnitees may elect to proceed against the Sellers for such excess
(rather than, but not in lieu of, setting-off against any Earnout Payments that
may be payable to Sellers hereunder), provided however, that with respect to any
such claims or excess Damages the maximum amount of Damages that any particular
Seller shall be required to pay to the Purchaser Indemnitees shall not exceed an
amount equal to (a) One Million Dollars ($1,000,000.00) multiplied by the
percentage set forth opposite such Seller's name on Schedule 2.2(a) plus (b) the
Earnout Payments multiplied by the percentage set forth opposite such Seller's
name on Schedule 2.2(a).
7.11 Waiver of Trial by Jury. Each party to this Agreement
agrees that any suit, action, or proceeding, whether claim or counterclaim,
brought or instituted by any party hereto, or any successor or assign of any
party on or with respect to this Agreement or any other document which in any
way relates, directly or indirectly, to the transactions contemplated herein,
shall be tried only by a court and not a jury. EACH PARTY HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING.
7.12 Limited Liability of Certain Sellers. Anything to the
contrary set forth in this Section 7 notwithstanding, none of the Sellers, other
than
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Xxxxxx X. Xxxxxxx, Xxxxx X. XxXxxxx, Xxxxxxx X. Xxxx and Xxxxx X. X'Xxxx, will
be liable to the Purchaser Indemnitees under Section 7.2(a) for any Breaches of
any of the representations or warranties of the Sellers under this Agreement
unless such Seller Breaches any of the representations and warranties set forth
in Section 3.2(b). With regard to any such Seller that Breaches any of the
representations and warranties set forth in Section 3.2(b), (a) Purchaser will
have all rights and remedies against such Seller with respect to such Breach
that are available to Purchaser under this Agreement including those set forth
in Section 7.9 and (b) such Seller's liability to the Purchaser Indemnitees for
such Breach will not exceed an amount equal to (i) Four Million Dollars
($4,000,000.00) multiplied by the percentage set forth opposite such Seller's
name on Schedule 2.2(a) plus (ii) the Earnout Payments multiplied by the
percentage set forth opposite such Seller's name on Schedule 2.2(a). Nothing set
forth in this Section 7.12 shall alter, affect or limit, in any way, any of the
rights or remedies that any of the Purchaser Indemnitees may have against Xxxxxx
X. Xxxxxxx, Xxxxx X. XxXxxxx, Xxxxxxx X. Xxxx or Xxxxx X. X'Xxxx under this
Agreement, nor will this Section 7.12 alter, affect or limit any rights or
remedies that any of the Purchaser Indemnitees may have against any of the
Sellers for their Breach of any of their respective obligations under any
Related Agreement (including the Agreements Not to Compete and the
Confidentiality and Noncompete Agreements).
8. GENERAL PROVISIONS
8.1 Seller Representatives; Power of Attorney. Each of the
Sellers hereby irrevocably makes, constitutes, and appoints Xxxxxx X. Xxxxxxx
and Xxxxx X. XxXxxxx as the Seller Representatives and irrevocably authorizes
and empowers the Seller Representatives to receive all demands and notices on or
with respect to the Sellers hereunder as such Sellers' true and lawful
attorneys-in-fact and agents, and for such Seller and in such Seller's name, to
(a) endorse for assignment and transfer to Purchaser the stock certificates
representing the Purchased Shares owned by such Seller for purposes of
facilitating compliance with the provisions of Section 2.3(a)(i), (b) receive
all demands, notices or other communications directed to such Seller under this
Agreement and to take any action (or to determine to refrain from taking any
action) with respect thereto as they may deem appropriate as effectively as such
Seller could act for himself or herself (including, without limitation, the
settlement or compromise of any dispute or controversy) and (c) execute and
deliver all instruments and documents of every kind incident to the foregoing
with the same effect as if such Seller had executed
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and delivered such instruments and documents personally. Accordingly, any
demands, notices or other communications directed to the Sellers hereunder shall
be deemed effective if given to the Seller Representatives. Upon the death,
resignation or incapacity of either of the Seller Representatives, a successor
shall be appointed by the remaining Sellers within the thirty (30) day period
immediately following the date of such death, resignation or incapacity, and
such successor shall either be a Seller or any other Person reasonably
acceptable to Purchaser who shall agree in writing to accept such appointment in
accordance with the terms hereof. The resignation of any Seller Representative
shall not be effective until a successor Seller Representative has been
appointed, and has accepted such appointment in accordance with the provisions
of this Section 8.1. The selection of a successor Seller Representative
appointed in any manner permitted in this Section 8.1 shall be final and binding
upon all of the Sellers and written notice of such selection and appointment
shall be provided to Purchaser promptly.
8.2 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with (a) the preparation, negotiation, execution, and
performance of this Agreement and (b) any of the Contemplated Transactions,
including all fees and expenses of agents, Representatives, counsel, and
accountants and in no event shall any such costs of the Sellers be paid,
directly or indirectly, by ICTI.
8.3 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement, the Contemplated Transactions or any
of the terms thereof will be issued, if at all, at such time, in such manner and
shall include only such information as Purchaser and the Sellers shall mutually
agree upon in writing. Unless consented to by the other party in advance in
writing or required by Legal Requirements, Purchaser and the Sellers shall keep
this Agreement strictly confidential and neither Purchaser nor the Sellers will
make, or cause to be made, any disclosure of this Agreement or any of its terms
to any Person. Anything to the contrary set forth in this Section 8.3
notwithstanding, in no event shall any party be permitted to announce publicly
the Purchase Price without the prior written consent of the other parties unless
required by applicable Legal Requirements.
8.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed to
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have been duly given (a) when delivered by hand (with written confirmation of
receipt), (b) three (3) days after being deposited in the mails, if sent by
certified mail, with return receipt requested, (c) upon confirmed receipt, if
sent by facsimile transmission, or (d) one (1) day after sending, if sent by a
nationally recognized overnight delivery service (receipt requested) specifying
next day delivery, in each case to the appropriate addresses set forth below (or
to such other addresses as a party may designate by notice to the other
parties):
If to the Sellers: Xxxxxx X. Xxxxxxx and Xxxxx X. XxXxxxx
Seller Representatives
00 Xxxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax No. (000) 000-0000
with a copy to: Xxxxxx, Xxxxx & Bockius LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax No. (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esquire
If to Purchaser: Xxxxx Incorporated
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Fax No. (000) 000-0000
Attention: Xxxxxxx XxXxxx,
Chief Financial Officer
with a copy to:. Xxxxxxx & Xxx, P.C.
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxxxx 00000
Fax No. (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esquire
Xxxx X. Xxxxxxx, Esquire
8.5 Jurisdiction; Service of Process. Any suit, action or
other Proceeding seeking to enforce any provision of, or based upon any right
arising out of, in connection with, or in any way relating to, this Agreement
shall be brought only in the United States District Court for the Eastern
District of Pennsylvania in
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Philadelphia, Pennsylvania. Each party hereby irrevocably consents and submits
to the jurisdiction and venue of such courts and irrevocably waives any
objection which it may now or hereafter have to the laying of the venue of any
suit, action or Proceeding brought in such courts and any claim that such suit,
action or Proceeding brought in such courts has been brought in an inconvenient
forum or that such courts lack jurisdiction.
8.6 Further Assurances. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such other documents, and (c) to do such other acts and things, all
as the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the Related Agreements and the documents referred
to in this Agreement and the Related Agreements.
8.7 Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
8.8 Entire Agreement and Modification. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the Related Agreements) a complete and
exclusive statement of the terms of the agreement between the parties with
respect to its and their subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
8.9 Assignments, Successors, and No Third-Party Rights. None
of the parties may assign or otherwise transfer any of their respective rights
under this Agreement without the prior consent of the other parties; provided,
however, that Purchaser, without the consent of the Sellers, shall be permitted
to pledge and assign any or all of Purchaser's rights hereunder to any of its
Affiliates or to any financial institutions now or hereafter providing financing
to Purchaser or to Xxxxx Holdings or to the consolidated group of corporations
of which they are a member as collateral security for their obligations to such
institutions. Any attempted assignment in contravention of the foregoing
restrictions on assignment or transfer shall be null and void. Subject to the
two preceding sentences, this
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Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors, permitted assigns, heirs, executors, and personal
representatives of the parties. Except as provided in this Section 8.9, nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their
successors, permitted assigns, heirs, executors, and personal representatives.
8.10 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
8.11 Section Headings, Construction. The headings of Sections
in this Agreement are provided for convenience only and will not affect its
construction or interpretation.
8.12 Time of Essence. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
8.13 Governing Law. This Agreement will be governed by and
construed under the laws of the Commonwealth of Pennsylvania without regard to
its principles pertaining to conflict of laws.
8.14 Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed to be an original of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement. Any party to this Agreement, as well as Xxxxx
Holdings who is a party to the Guaranty appended hereto, may deliver an executed
copy hereof, the Guaranty and of any of the Related Agreements by facsimile
transmission to another party hereto or thereto and any such delivery shall have
the same force and effect as any other delivery of a manually signed copy of
this Agreement, the Guaranty or of any other Related Agreement.
8.15 Records Retention. For a period of seven (7) years after
the Closing Date, Purchaser shall afford to the Seller Representatives
reasonable
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access to, and Purchaser shall retain and shall not destroy, all of the books,
records, Governmental Authorizations, Tax Returns, reports, data, materials, and
documents which relate to the Business prior to the Closing Date for purposes of
preparing Tax Returns and any audit thereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXX INCORPORATED
By /s/ Xxxxxxxx Xxxxxx
--------------------------------------
Xxxxxxxx Xxxxxx, Vice President
Attest: /s/ Xxxxxxx XxXxxx
---------------------------------
Xxxxxxx XxXxxx, Secretary
/s/ Xxxxxx X. Xxxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. XxXxxxx (SEAL)
-----------------------------------------
Xxxxx X. XxXxxxx
/s/ Xxxxxxx X. Xxxx (SEAL)
-----------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxx X. X'Xxxx (SEAL)
-----------------------------------------
Xxxxx X. X'Xxxx
/s/ Xxxxx Xxxxxxx (SEAL)
-----------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxx X. Xxxxx
[SIGNATURES CONTINUED ON NEXT PAGE]
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/s/ Xxxxxx X. Xxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxxx (SEAL)
-----------------------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxx (SEAL)
-----------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. X'Xxxxxx (SEAL)
-----------------------------------------
Xxxxxxx X. X'Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ April E. Ruby (SEAL)
-----------------------------------------
April E. Ruby
/s/ Xxxxx X. XxxXxxxxx-Xxxxxxxxxxx (SEAL)
-----------------------------------------
Xxxxx X. XxxXxxxxx-Xxxxxxxxxxx
/s/ Xxxxxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxxxxx X. Xxxxx
/s/ Xxxxx Xxxx Xxxxxx (SEAL)
-----------------------------------------
Xxxxx Xxxx Xxxxxx
/s/ Xxxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxx
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/s/ Xxxxxxxx X. Xxxxx (SEAL)
-----------------------------------------
Xxxxxxxx X. Xxxxx
/s/ Xxxxx Xxxx Leader (SEAL)
-----------------------------------------
Xxxxx Xxxx Leader
/s/ Xxxxx X. Xxxxxxx (SEAL)
-----------------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxx XxXxxxx (SEAL)
-----------------------------------------
Xxxxx XxXxxxx
/s/ Xxxxxx Xxxxxxxxx (SEAL)
-----------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Mai A. Qaraman (SEAL)
-----------------------------------------
Mai A. Qaraman
/s/ Xxxxxx X. Xxxxxxxxxxxx (SEAL)
-----------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
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GUARANTY
Reference is made to the foregoing Share Purchase Agreement
dated as of April 30, 1999 (the "Purchase Agreement") among Xxxxx Incorporated
("Purchaser") and the individuals identified on Exhibit "A" attached to the
Purchase Agreement (collectively, the "Sellers") pursuant to which, among other
things, Purchaser has agreed to purchase from the Sellers all of the issued and
outstanding shares of capital stock of Interactive Clinical Technologies, Inc.,
a New Jersey corporation ("ICTI"). Capitalized terms used in this Guaranty which
are not defined herein shall have the respective meanings assigned to them in
the Purchase Agreement.
To induce the Sellers to enter into the Purchase Agreement and
to perform their respective obligations thereunder, the undersigned, XXXXX
HOLDINGS, PLC, a corporation organized under the laws of the United Kingdom and
the ultimate parent corporation of Purchaser ("Guarantor"), hereby guarantees to
the Sellers the prompt payment and performance, when due, of Purchaser's
obligation to pay the deferred portion of the Purchase Price described in
Sections 2.2(b) and 2.2(c) of the Purchase Agreement, subject, however, to
Purchaser's set-off rights described in Section 7.9 of the Purchase Agreement.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
duly executed by its appropriate officers as of the 30th day of April, 1999.
XXXXX HOLDINGS, PLC
By: /s/ Xxxxxxxx Xxxxxx
Name: Xxxxxxxx Xxxxxx
Title: Group Financial Director
Attest: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Secretary
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