EXECUTION COPY

 

EXHIBIT 10.30

 

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ASSET PURCHASE AGREEMENT

 

BETWEEN

 

NAPRO BIOTHERAPEUTICS, INC.

 

AND

 

PANGENE CORPORATION

 

DECEMBER 31, 2002

 

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TABLE OF CONTENTS

 

    

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1. Definitions

  

1

2. Basic Transaction

  

8

(a) Purchase and Sale of Assets

  

8

(b) Assumption of Liabilities

  

8

(c) Purchase Price

  

8

(d) First Closing

  

8

(e) Deliveries at First Closing

  

9

(f) Second Closing

  

9

(g) Prorations

  

9

(h) Procedures for Assets Not Transferred

  

9

(i) Procedures for Invalid Partial Assignments

  

10

(j) Sales and Transfer Taxes

  

10

(k) Allocation

  

10

(l) Risk of Loss

  

10

3. Seller’s Representations and Warranties

  

10

(a) Organization of Seller

  

11

(b) Authorization of Transaction

  

11

(c) Noncontravention

  

11

(d) Brokers’ Fees

  

11

(e) Title to Assets; Sufficiency of Assets

  

11

(f) Financial Statements

  

12

(g) Events Subsequent to July 31, 2002

  

13

(h) Undisclosed Liabilities

  

15

(i) Legal Compliance

  

15

(j) Tax Matters

  

15

(k) Intellectual Property

  

16

(l) Inventory

  

18

(m) Contracts

  

18

(n) Notes and Accounts Receivable

  

18

(o) Powers of Attorney

  

19

(p) Insurance

  

19

(q) Litigation

  

19

(r) Product Warranty

  

19

(s) Product Liability

  

19

(t) Employees

  

19

(u) Employee Benefits

  

20

(v) Certain Business Relationships With Seller

  

20

(w) Customers and Suppliers

  

20

(x) Regulatory Matters

  

21

(y) Solvency

  

22

(z) Disclosure

  

22

4. Buyer’s Representations and Warranties

  

22

(a) Organization of Buyer

  

22

(b) Authorization of Transaction

  

22

(c) Noncontravention

  

23

(d) Brokers’ Fees

  

23

 

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(e) Financing

  

23

5. Conditions to Obligation to Close at First Closing

  

23

(a) Conditions to Buyer’s Obligation

  

23

(b) Conditions to Seller’s Obligation

  

25

6. Conditions to Obligation to Close at Second Closing

  

25

(a) Conditions to Buyer’s Obligation

  

25

7. Remedies for Breaches of This Agreement

  

26

(a) Survival of Representations and Warranties

  

26

(b) Indemnification Provisions for Benefit of Buyer

  

26

(c) Indemnification Provisions for Benefit of Seller

  

27

(d) Indemnification Claims

  

28

(e) Limitation on Remedies

  

30

(f) Losses Threshold

  

30

(g) Maximum Indemnification Amount

  

30

(h) Bulk Sales Compliance

  

30

8. Termination

  

31

(a) Termination of Agreement

  

31

(b) Effect of Termination

  

31

9. Post-Closing Covenants

  

31

(a) Daikin Patents

  

31

(b) Technology Transfer Services

  

31

(c) Employees and Employee Benefits

  

32

(d) Confidentiality

  

33

(e) Non-Competition

  

33

(f) Amendment of Invitrogen and Pioneer Licenses

  

34

(g) Further Assurances

  

34

10. Miscellaneous

  

34

(a) Press Releases and Public Announcements

  

35

(b) No Third-Party Beneficiaries

  

35

(c) Entire Agreement

  

35

(d) Succession and Assignment

  

35

(e) Counterparts

  

35

(f) Headings

  

35

(g) Notices

  

35

(h) Governing Law

  

36

(i) Amendments and Waivers

  

36

(j) Severability

  

36

(k) Expenses

  

36

(l) Construction

  

37

(m) Incorporation of Annexes, Exhibits and the Disclosure Schedules

  

37

(n) Specific Performance

  

37

(o) Submission to Jurisdiction

  

37

(p) Governing Language

  

38

 

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Annex A—Daikin Patents

Annex B—Claims

Annex C—Contracts

Annex D—Genomics Business Intellectual Property

Annex E—Persons to Whom “Knowledge” is Attributable

Annex F—Records

Annex G—Tangible Personal Property

Annex H—Contracts, Property and Rights Which May Not Be Assigned

 

Exhibit A—Escrow Agreement

Exhibit B—Assignment and Assumption Agreement

Exhibit C—Bill of Sale

Exhibit D—Seller Consolidated Financial Statements

Exhibit E—Estimated Genomics Business Financials

Exhibit F—Cross-License Agreement

 

Seller Disclosure Schedule—Exceptions to Representations and Warranties

 

Buyer Disclosure Schedule—Exceptions to Representations and Warranties

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “Agreement”) is entered into as of December
31, 2002, by and between NaPro BioTherapeutics, Inc., a Delaware corporation
(“Buyer”), and Pangene Corporation, a California corporation (“Seller”). Each of
Buyer and Seller are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

 

This Agreement contemplates a transaction in which (i) Buyer will purchase
substantially all of the assets (and assume certain of the liabilities) of
Seller used in Seller’s Genomics Business (as defined below) in return for cash,
(ii) Seller will assist in procuring the assignment to Buyer of the patents set
forth on Annex A (the “Daikin Patents”), and (iii) Buyer will pay cash to Seller
following the completion of such assignment of the Daikin Patents to Buyer.

 

Now, therefore, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.

 

1. Definitions.

 

“Active Motif” has the meaning set forth in Section 5(a)(vi) below.

 

“Acquired Assets” means all right, title, and interest in and to all of the
assets of Seller used in the Genomics Business, including, without limitation,
(a) the Tangible Personal Property, (b) the Genomics Business Intellectual
Property, (c) rights under the Contracts, (d) Acquired Receivables, (e) the
Claims, and (f) the Records; provided that notwithstanding the above, the
Acquired Assets shall not include the Excluded Assets.

 

“Acquired Receivables” means all Receivables, other than those with respect to
shipped products where a final invoice has been received by the customer on or
prior to the First Closing Date.

 

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.

 

“Affiliated Group” means any affiliated group within the meaning of Code Section
1504(a) or any similar group defined under a similar provision of state, local,
or foreign law.

 

“Agreed Amount” has the meaning set forth in Section 7(d)(iii) below.

 

“Arbitration Board” has the meaning set forth in Section 7(d)(iv) below.

 

“Assumed Liabilities” means only the Liabilities arising under the Contracts in
effect on the date hereof due to actions taken or omitted to be taken by Buyer
from and after the First Closing; provided that notwithstanding the above, the
Assumed Liabilities shall not include the Excluded Liabilities.

 

“Bankruptcy and Equity Exception” has the meaning set forth in Section 3(b)
below.

 

“Basis” means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could reasonably form the basis for
any specified consequence.

 

“Buyer” has the meaning set forth in the preface above.

 

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“Buyer Disclosure Schedule” has the meaning set forth in Section 4 below.

 

“Buyer Indemnified Party” and “Buyer Indemnified Parties” have the meanings set
forth in Section 7(b) below.

 

“Claim Notice” has the meaning set forth in Section 7(d)(ii) below.

 

“Claimed Amount” has the meaning set forth in Section 7(d)(ii) below.

 

“Claims” means the claims, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment (including any such item relating to the payment of Taxes) relating
to the Genomics Business (excluding those pertaining solely to the Excluded
Assets), including, without limitation, those set forth on Annex B attached
hereto.

 

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and
Code Section 4980B and of any similar state law.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means confidential documents, material and other
information, but does not include any information which (a) at the time of
disclosure or thereafter is generally known by the public (other than as a
result of its disclosure by a Party bound to keep such information confidential
pursuant to this Agreement) or (b) was or becomes available to any Party on a
non-confidential basis from a Person not otherwise bound by a confidentiality
agreement with the owner of the information and not otherwise prohibited from
transmitting the information to the recipient Party.

 

“Contingent Workers” means any independent contractor, temporary employee,
leased employee or any other servant or agent employed or used with respect to
the operation of the Genomics Business who is compensated other than through
Seller’s payroll department with wages reportable on a Form W-2 or on a Form
1099.

 

“Contracts” means the agreements, contracts, leases, subleases, indentures,
mortgages, instruments, Liens, guaranties, customer orders, purchase orders,
dealer and distributorship agreements, supply agreements, development
agreements, licenses, sublicenses, joint venture agreements, partnership
agreements and other similar arrangements and commitments of the Genomics
Business or relating to the Acquired Assets (whether written or oral and
including any rights thereunder), including, without limitation, those set forth
on Annex C attached hereto, but excluding (a) those pertaining solely to the
Excluded Assets and (b) this Agreement.

 

“Controlled Group” has the meaning set forth in Code Section 1563.

 

“Controlling Party” has the meaning set forth in Section 7(d)(i) below.

 

“Cross-License Agreement” means the Cross-License Agreement of even date
herewith between Buyer and Seller in the form attached hereto as Exhibit F.

 

“Daikin Agreement” has the meaning set forth in Section 5(a)(v) below.

 

“Daikin Patents” has the meaning set forth in the preface above.

 

“Damages” has the meaning set forth in Section 7(b) below.

 

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“Disclosure Schedules” means the Seller Disclosure Schedule and the Buyer
Disclosure Schedule.

 

“Dispute” has the meaning set forth in Section 7(d)(iii) below.

 

“Employee” means any employee of Seller principally employed in the operation of
the Genomics Business, other than Contingent Workers.

 

“Employee Benefit Plan” means any “employee benefit plan” (as such term is
defined in ERISA Section 3(3)) and any other employee benefit plan, program or
arrangement of any kind.

 

“Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2).

 

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1).

 

“Equipment Leases” means the Contracts which are leases for the equipment used
in the Genomics Business.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means each entity that is treated as a single employer with
Seller for purposes of Code Section 414.

 

“Escrow Agent” has the meaning set forth in Section 2(c)(ii) below.

 

“Escrow Agreement” has the meaning set forth in Section 2(c)(ii) below.

 

“Escrow Fund” has the meaning set forth in Section 2(c)(ii) below.

 

“Excluded Assets” means (a) Seller’s corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of Seller as
a corporation, (b) any assets, contracts or records related to or maintained in
connection with any Employee Benefit Plan, (c) any Receivable other than an
Acquired Receivable, (d) any cash or cash equivalents, (e) any of the rights of
Seller under this Agreement, and (f) all assets of Seller that are not Acquired
Assets, including, without limitation, those listed in Section 3(e)(iii) of the
Seller Disclosure Schedule.

 

“Excluded Liabilities” means (a) any and all Indemnity Liabilities and (b) any
and all Liabilities of Seller or any of its Affiliates whether or not related to
the Genomics Business that are not explicitly Assumed Liabilities, including,
without limitation, (i) all Liabilities arising prior to the First Closing Date,
including, without limitation, any Liability arising out of or relating to,
directly or indirectly, any infringement, misappropriation or violation of the
Intellectual Property right of any Person and (ii) whether arising before, on or
after the First Closing Date, (A) any Liability of Seller for Taxes, (B) any
Liability of Seller for income, transfer, sales, use, and other Taxes arising in
connection with the consummation of the transactions contemplated hereby
(including any income Taxes arising because Seller is transferring the Acquired
Assets), (C) any Liability of Seller for the unpaid Taxes of any Person under
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise, (D) any Liability
arising under any Contracts entered into by Seller between the date hereof and
the First Closing that is not permitted by this Agreement, (E) any Liability
arising under the Contracts effective as of the date hereof due to actions taken
or omitted to be taken by

 

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Seller prior to the First Closing, (F) any Liability arising under any Contracts
entered into by Seller between the date hereof and the First Closing as
permitted by this Agreement due to actions taken or omitted to be taken by
Seller prior to the First Closing, (G) any Liability of Seller arising out of or
relating to, directly or indirectly, any obligation to indemnify any Person by
reason of the fact that such Person was a director, officer, employee, or agent
of any of Seller and its Subsidiaries or was serving at the request of any such
entity as a partner, trustee, director, officer, employee, or agent of another
entity (whether such indemnification is for judgments, damages, penalties,
fines, costs, amounts paid in settlement, losses, expenses, or otherwise and
whether such indemnification is pursuant to any statute, charter document,
bylaw, agreement, or otherwise), (H) all Liabilities under or arising in
connection with any Employee Benefit Plan, including, without limitation,
employee benefits-related Liabilities of any ERISA Affiliate, employee or
employer contributions to any employee benefit or pension plan and obligations
and liabilities of Seller for payroll, severance pay and other compensation, (I)
all other Liabilities or obligations of Seller to any Employees, former
Employees or Contingent Workers, (J) any Liabilities relating to the Genomics
Business arising under any intercompany payables or under any other Liability or
obligation of the Genomics Business to Seller or any of its Affiliates, (K) any
Liabilities relating to the operation of the Genomics Business in any facilities
owned, leased or otherwise used by Seller, whether such operation occurs prior
to, on or after the First Closing as contemplated by Section 9(b)(ii) below, (L)
any Liability of Seller or any of its Affiliates for costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
except as set forth in Sections 3(d) and 4(d) below, or (M) any Liability or
obligation of Seller under this Agreement (or under any side agreement between
Seller on the one hand and Buyer on the other hand entered into on or after the
date of this Agreement).

 

“FDA” has the meaning set forth in Section 3(x)(i) below.

 

“Financial Statements” has the meaning set forth in Section 3(f) below.

 

“First Closing” has the meaning set forth in Section 2(d) below.

 

“First Closing Date” has the meaning set forth in Section 2(d) below.

 

“First Closing Purchase Price” has the meaning set forth in Section 2(c) below.

 

“Foreign Authorities” has the meaning set forth in Section 3(x)(i) below.

 

“GAAP” means United States generally accepted accounting principles as in effect
from time to time, consistently applied.

 

“Genomics Business” means Seller’s genomics business as presently conducted
comprising the use of recombination protein mediated DNA targeting for: (i) the
screening, identification, isolation or cloning of oligonucleotides/nucleic
acids; (ii) gene cloning; (iii) creation or modification of nucleotide
sequences; (iv) determination and analysis of protein or nucleic acid properties
or functions; (v) protein and drug screening; and (vi) the manipulation,
modification or analysis of the genome of any cell or animal and such cells and
animals. The Genomics Business shall include the use of recombination protein
mediated DNA targeting in connection with Seller’s performance of any of the
activities described in clauses (i) through (vi) above (a) for the discovery,
screening, testing, commercialization or evaluation of drugs or drug candidates;
(b) for preventive purposes; or (c) for the performance of either of clauses (a)
or (b) above for third parties.

 

“Genomics Business Intellectual Property” means the Intellectual Property used
in or held specifically for use in the Genomics Business, including, without
limitation, the Intellectual Property

 

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listed on Annex D attached hereto, together with all goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
privileges relating thereto, and rights thereunder, remedies against
infringements or misappropriation thereof, and rights to protection of interests
therein under the laws of all jurisdictions.

 

“Governmental Entity” means any federal, state, local or foreign governmental or
regulatory authority, agency, commission, body or other governmental entity.

 

“Indemnified Party” has the meaning set forth in Section 7(d)(i) below.

 

“Indemnifying Party” has the meaning set forth in Section 7(d)(i) below.

 

“Indemnity Liabilities” means all Liabilities of Buyer or Seller, whenever
arising, arising out of or relating to, directly or indirectly, any obligation
of Buyer or Seller to indemnify any Person pursuant to any Contract, whether
such obligation or the facts or events giving rise to such obligations arose or
arises before, at or after the First Closing or the Second Closing.

 

“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, Internet domain names and rights in telephone numbers,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes, standard
operating procedures and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including source code, executable code, data, databases, and related
documentation), (g) all advertising and promotional materials, (h) all other
proprietary rights, and (i) all copies and tangible embodiments thereof (in
whatever form or medium).

 

“Inventory” means all raw materials and supplies, manufactured and purchased
parts, packaging materials, goods in process and finished goods of the Genomics
Business.

 

“Invitrogen License” has the meaning set forth in Section 9(f) below.

 

“Knowledge” or “aware” means, when used in reference to any Party to this
Agreement, the actual knowledge, after reasonable investigation, of the
directors, officers and key employees of such Party, including, without
limitation, those individuals listed on Annex E attached hereto.

 

“Liability” means any liability or obligation of whatever kind or nature
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for Taxes.

 

“Lien” means any mortgage, pledge, lien, encumbrance, charge, or other security
interest other than (a) liens for Taxes not yet due and payable, (b) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (c) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.

 

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“Material Adverse Effect” or “Material Adverse Change” means any change,
development or effect that has been or would reasonably be expected to be
materially adverse to the business, assets, condition (financial or otherwise),
operating results, operations, earnings, customer and supplier relations,
employee relations or business prospects of the Genomics Business, taken as a
whole, or on the ability of Seller to consummate timely the transactions
contemplated hereby (regardless of whether or not such adverse effect or change
can be or has been cured at any time or whether Buyer has knowledge of such
effect or change on the date hereof).

 

“Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).

 

“Non-controlling Party” has the meaning set forth in Section 7(d)(i) below.

 

“Notification of Suit” has the meaning set forth in Section 7(d)(i) below.

 

“Ordinary Course of Business” means the ordinary course of business consistent
with past custom and practice (including with respect to quantity and
frequency).

 

“Party” has the meaning set forth in the preface above.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Permits” means the franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies relating to the Genomics Business.

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity, or a governmental entity
(or any department, agency, or political subdivision thereof).

 

“Person Day” means a standard work day for an Employee based on past custom and
practice of Seller.

 

“Pioneer License” has the meaning set forth in Section 9(f) below.

 

“Purchase Price” has the meaning set forth in Section 2(c)(i) below.

 

“Receivables” means all receivables arising from the Genomics Business.

 

“Records” means the books, records, ledgers, files, databases, documents,
laboratory notebooks, correspondence, lists, plats, architectural plans,
drawings, and specifications, creative materials, advertising and promotional
materials, studies, reports, and other printed, written or electronic materials
relating to the Genomics Business, including, without limitation, those listed
on Annex F attached hereto.

 

“Registered Genomics Business Intellectual Property” has the meaning set forth
in Section 3(k)(iv) below.

 

“Remaining Payment” has the meaning set forth in Section 9(f) below.

 

“Representatives” has the meaning set forth in Section 9(d) below.

 

“Response” has the meaning set forth in Section 7(d)(iii) below.

 

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“Second Closing” has the meaning set forth in Section 2(f) below.

 

“Second Closing Date” has the meaning set forth in Section 2(f) below.

 

“Second Closing Purchase Price” has the meaning set forth in Section 2(c) below.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Seller Audited Financial Statements” has the meaning set forth in Section 3(f)
below.

 

“Seller Disclosure Schedule” has the meaning set forth in Section 3 below.

 

“Seller Indemnified Party” and “Seller Indemnified Parties” have the meanings
set forth in Section 7(c) below.

 

“Seller Unaudited Financial Statements” has the meaning set forth in Section
3(f) below.

 

“SRI” has the meaning set forth in Section 5(a)(v) below.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or other business entity of which
(a) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (b) if a limited
liability company, partnership, association, or other business entity (other
than a corporation), a majority of partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more Subsidiaries of that Person or a combination thereof
and for this purpose, a Person or Persons owns a majority ownership interest in
such a business entity (other than a corporation) if such Person or Persons
shall be allocated a majority of such business entity’s gains or losses or shall
be or control any managing director or general partner of such business entity
(other than a corporation). The term “Subsidiary” shall include all Subsidiaries
of such Subsidiary.

 

“Seller” has the meaning set forth in the preface above.

 

“Tangible Personal Property” means all tangible personal property used in or
held for use in the Genomics Business, (such as Inventory, biomaterials,
reagents, machinery, equipment, furniture, vehicles, tools, instruments, spare
parts, pallets, office and laboratory equipment, materials, fuel, and other
similar personal property not normally included in Inventory) including, without
limitation, the tangible personal property listed on Annex G attached hereto.

 

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, whether computed on a
separate or consolidated, unitary or combined basis or in any other manner,
including any interest, penalty, or addition thereto, whether disputed or not
and including any obligation to indemnify or otherwise assume or succeed to the
Tax Liability of any other Person.

 

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“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

“Transferred Employee” means any Employee that accepts Buyer’s offer of
employment made pursuant to Section 9(c)(i) below.

 

2. Basic Transaction.

 

(a) Purchase and Sale of Assets. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell,
transfer, assign, convey, and deliver to Buyer, all of the Acquired Assets at
the First Closing for the consideration specified below in this Section 2 (it
being understood that all of the Excluded Assets shall remain the property of
Seller following the Closing).

 

(b) Assumption of Liabilities. On and subject to the terms and conditions of
this Agreement, Buyer agrees to assume and become responsible for all Assumed
Liabilities at the First Closing. Buyer will not assume or have any
responsibility, however, with respect to any Excluded Liabilities.

 

(c) Purchase Price.

 

(i) On and subject to the terms and conditions of this Agreement, Buyer agrees
to pay to Seller (i) $1,200,000 at the First Closing (the “First Closing
Purchase Price”) and (ii) $200,000 at the Second Closing (the “Second Closing
Purchase Price”), by delivery of cash payable by wire transfer or delivery of
other immediately available funds. The sum of the First Closing Purchase Price,
the Second Closing Purchase Price and the amount initially deposited by Buyer
into the Escrow Fund (as defined below) pursuant to Section 2(c)(ii) below is
referred to herein as the “Purchase Price”.

 

(ii) At the First Closing, Buyer shall deliver to State Street Bank and Trust
Company, N.A., as escrow agent (the “Escrow Agent”), the amount of $100,000 (the
“Escrow Fund”). The Escrow Fund shall be held in escrow by the Escrow Agent in
an interest-bearing account subject to an Escrow Agreement, by and among Seller,
Buyer and the Escrow Agent, in substantially the form of Exhibit A attached
hereto (the “Escrow Agreement”). The purpose of the Escrow Fund shall be to fund
indemnity claims pursuant to Section 7 below, including, without limitation,
claims related to (A) the failure to deliver, or make available for delivery at
the First Closing, any Acquired Assets or (B) any Damages of Buyer related to
any Excluded Liability. On the date which is ninety (90) days after the First
Closing (or if such day is not a business day, the next business day), the
Escrow Agreement shall terminate in accordance with its terms, subject to the
rights of the Parties with respect to claims asserted prior to such date under
the Escrow Agreement. At the expiration of the term of the Escrow Agreement, the
balance of the Escrow Fund (including all accrued interest), if any, shall be
distributed to Seller, subject to any requirement to reserve amounts that may be
required to pay unresolved claims as provided in the Escrow Agreement.

 

(d) First Closing. The closing of the transactions contemplated by this
Agreement with respect to the Acquired Assets (the “First Closing”) shall take
place at the offices of Kirkland & Ellis, in New York, New York commencing at
10:00 a.m. local time on the date hereof or such other date as the Parties may
mutually determine (the “First Closing Date”) upon the satisfaction or waiver of
all conditions to the Parties to consummate the transactions contemplated hereby
to occur at the First Closing.

 

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(e) Deliveries at First Closing. At the First Closing, (i) Seller will deliver
to Buyer the various certificates, instruments, and documents referred to in
Section 5(a) below; (ii) Buyer will deliver to Seller the various certificates,
instruments, and documents referred to in Section 5(b) below; and (iii) Seller
will execute, acknowledge (if appropriate), and deliver to Buyer (A) an
Assignment and Assumption Agreement in the form attached hereto as Exhibit B,
(B) a Bill of Sale in the form attached hereto as Exhibit C, and (C) such other
instruments of sale, transfer, conveyance, and assignment as Buyer and its
counsel reasonably may request; (iv) Buyer will execute, acknowledge (if
appropriate), and deliver to Seller (A) an Assignment and Assumption Agreement
in the form attached hereto as Exhibit B and (B) such other instruments of
assumption as Seller and its counsel reasonably may request.

 

(f) Second Closing. The closing of the transactions contemplated by this
Agreement with respect to the Second Closing Purchase Price (the “Second
Closing”) shall take place at the offices of Kirkland & Ellis, in New York, New
York commencing at 10:00 a.m. local time on the fifth day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby to occur at the Second Closing
(or if such day is not a business day, the next business day) or such other date
as the Parties may mutually determine (the “Second Closing Date”).

 

(g) Prorations. At the First Closing, appropriate prorations shall be made with
respect to payments made pursuant to the Equipment Leases in the following
manner: (i) if Seller has made any payments with respect to the Equipment Leases
for any period of time during which the First Closing occurs, at the First
Closing Buyer shall pay to Seller an amount equal to the product of the total
amount paid by Seller for such period multiplied by a fraction, the numerator of
which shall be the number of days during such period beginning with the day
immediately after the First Closing Date through the end of such period and the
denominator of which shall be the number of days during such period, or (ii) if
Buyer is required to make any payments with respect to Equipment Leases for any
period of time during which the First Closing occurs, within thirty (30) days
after Buyer delivers notice of such payment to Seller, Seller shall pay to Buyer
an amount equal to the product of the total amount paid by Buyer for such period
of time multiplied by a fraction, the numerator of which shall be the number of
days during such period beginning with the first day of such period through the
First Closing Date and the denominator of which shall be the number of days
during such period. If the Parties are unable to resolve any dispute with
respect to prorations within thirty (30) days after any payments pursuant to
this Section 2(g) are due, such dispute shall be resolved by an independent
accounting firm mutually acceptable to the Parties. The fees and other expense
of retaining such independent public accounting firm shall be borne equally by
the Parties. Such firm shall report its conclusions pursuant to this Section
2(g), and such report shall be conclusive on the Parties and not subject to
dispute or review. The Parties agree that any prorations that cannot be
precisely calculated as of the First Closing Date will be re-prorated as soon as
reasonably practicable after the First Closing Date (but in no event more than
sixty (60) days after the First Closing Date), and the Party responsible for any
payments resulting from such re-prorations agrees to make such payments
promptly.

 

(h) Procedures for Assets Not Transferred. If (i) any of the Contracts or any
other property or rights included in the Acquired Assets is not assignable or
transferable either by virtue of the provisions thereof or under applicable law
without the consent of some party or parties, including Governmental Entities,
(ii) any such consent is not obtained prior to the First Closing, and (iii)
Buyer elects to waive the condition to its obligations to close that such
consent be obtained prior to the First Closing, then this Agreement and the
related instruments of transfer shall not constitute an assignment or transfer
thereof and, unless otherwise agreed between Buyer and Seller with respect to
such Contract, property or rights, Buyer shall not assume Seller’s obligations
with respect thereto, but Seller shall use its reasonable best efforts to obtain
any such consent as soon as possible after the First Closing, or, if and until
any such consent is not obtained, use its reasonable best efforts to otherwise
obtain or provide for Buyer the practical benefit of such Contract, property or
rights and Buyer shall use its reasonable best

 

 

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efforts to assist in that endeavor, as well as take sole responsibility for any
contractual obligations arising in consideration of such practical benefits
pursuant to such non-assigned or non-transferred Contract, property or rights;
provided that with respect to any Contracts, property or rights listed on Annex
H, if such consents are not obtained within thirty (30) days after the First
Closing, such Contracts, property or rights shall be deemed Excluded Assets;
provided, however, that such Contracts, property or rights for which consent for
assignment was unattainable shall not be deemed Excluded Assets if they involve
in the aggregate more than $10,000; provided further that this Section 2(g)
shall not be deemed to amend or supplement the Disclosure Schedule or to prevent
or cure any misrepresentation, breach of warranty, or breach of covenant.

 

(i) Procedures for Invalid Partial Assignments. If any of the Contracts is not
assignable or transferable in accordance with the terms of this Agreement either
by virtue of the provisions thereof or under applicable law without the
assumption of all of the Liabilities thereunder, this Agreement shall be deemed
to be modified, only with respect to any such Contract, such that all of the
Liabilities under such Contract shall be assumed by Buyer and such Contract
shall be assigned to Buyer. Any such Liabilities shall continue to constitute
Excluded Liabilities for purposes of Section 7 below.

 

(j) Sales and Transfer Taxes. All sales and transfer taxes, fees and duties
under applicable law incurred in connection with this Agreement or the
transactions contemplated hereby shall be borne and paid by Seller. The Parties
agree to cooperate to avoid or minimize any sales, use or other transfer taxes
due in connection with the transfer of the Acquired Assets, including Buyer’s
acceptance of delivery of certain software assets by electronic transmission
from Seller’s place of business to Buyer’s computers, with such delivery to be
effected at a time and in a manner to be established by reasonable mutual
agreement of the parties.

 

(k) Allocation. Buyer and Seller shall agree upon an allocation of the Purchase
Price (and all other capitalized costs) among the Acquired Assets in accordance
with Code Section 1060 and the Treasury regulations thereunder (and any similar
provision of state, local or foreign law, as appropriate), which allocation
shall be binding upon both parties. Subject to the approval of Ernst & Young
LLP, as Buyer’s accountants, such allocation shall be agreed upon prior to the
First Closing Date and attached to this Agreement. Buyer and Seller and their
Affiliates shall report, act and file all Tax Returns (including, but not
limited to, Internal Revenue Service Form 8594) in all respects and for all
purposes consistent with such allocation. Seller shall timely and properly
prepare, execute, file and deliver all such documents, forms and other
information as Buyer may reasonably request to allow the parties to prepare such
allocation. Neither Buyer nor Seller shall take any position (whether in audits,
tax returns or otherwise) which is inconsistent with such allocation unless
required to do so by applicable law.

 

(l) Risk of Loss. Buyer may elect to defer taking physical possession of all or
any portion of the tangible Acquired Assets for a period of up to fifteen (15)
business days following the First Closing Date, during which time risk of loss
shall be retained by Seller. Upon the earlier to occur of (i) the expiration of
such fifteen (15) business day period or (ii) the loading of the tangible
Acquired Assets by Buyer at Seller’s Fremont, California facility, the risk of
loss shall pass to Buyer. Any costs associated with insuring the tangible
Acquired Assets after the passing of the risk of loss as described in the
previous sentence or transporting the tangible Acquired Assets to Buyer’s
facility shall be the sole responsibility of Buyer.

 

3. Seller’s Representations and Warranties. Seller represents and warrants to
Buyer that on the date hereof the statements contained in this Section 3 are
true, correct and complete, except as set forth in the corresponding section of
the Seller’s disclosure schedule accompanying this Agreement (the “Seller
Disclosure Schedule”). The Seller Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.

 

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(a) Organization of Seller.

 

(i) Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation with full power
and authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by it. The copies of the charter documents of Seller, as
amended to date, and the bylaws of Seller, as amended to date, and heretofore
delivered to Buyer’s counsel, are complete and correct, and no amendments
thereto are pending. Seller is qualified to do business as a foreign corporation
in each jurisdiction in which such qualification is necessary, except where the
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(ii) None of the Genomics Business is conducted by, and none of the Acquired
Assets are owned or held by, any Subsidiaries or Affiliates of Seller.

 

(b) Authorization of Transaction. Seller has full power and authority (including
full corporate power) to execute and deliver this Agreement and each agreement,
document and instrument to be executed and delivered by it pursuant to or
contemplated by this Agreement and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and each
such other agreement, document and instrument by Seller has been duly authorized
by all necessary corporate action of Seller, and no other action on the part of
Seller is required in connection therewith. This Agreement and each agreement,
document and instrument to be executed and delivered by Seller pursuant to or as
contemplated by this Agreement constitute, or when executed and delivered by
Seller will constitute, the valid and legally binding obligations of Seller,
enforceable in accordance with their respective terms and conditions, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the rights of creditors generally and subject to the rules
of law governing (and all limitations on) specific performance, injunctive
relief and other equitable remedies (the “Bankruptcy and Equity Exception”).

 

(c) Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above), will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Entity to which
Seller is, or its assets or properties are, subject, (ii) contravene, conflict
with or result in a breach or violation of any provision of the charter or
bylaws of Seller, or (iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Seller is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Lien upon any of the Acquired
Assets). Seller does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Entity in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above). There is no proceeding pending or, to the Knowledge of Seller,
threatened against Seller that challenges, or may have the effect of preventing,
delaying, making illegal or otherwise interfering with the transactions
contemplated by this Agreement.

 

(d) Brokers’ Fees. Seller has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Buyer could become liable or obligated.

 

(e) Title to Assets; Sufficiency of Assets.

 

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(i) Seller has good and marketable title to, or a valid leasehold interest in or
a license to, pursuant to a license agreement listed in Section 3(k)(iv) of the
Seller Disclosure Schedule, the Acquired Assets, free and clear of all Liens or
restriction on transfer, and Seller has and will convey at the First Closing
good title to, or a valid leasehold interest in or a license to, pursuant to a
license agreement listed in Section 3(k)(iv) of the Seller Disclosure Schedule,
all of its personal property, tangible and intangible, included in the Acquired
Assets, free and clear of all Liens.

 

(ii) The Acquired Assets and the Excluded Assets are all of the assets used or
held for use in or owned or possessed by or arising from the operation of the
Genomics Business. Except as set forth in Section 3(e)(ii) of the Seller
Disclosure Schedule, the machinery and equipment included in the Acquired Assets
(A) are in good working order (reasonable wear and tear excepted), (B) have been
and shall through the First Closing be maintained in a manner consistent with
the past maintenance practices of Seller, (C) are usable in the Ordinary Course
of Business and (D) are usable for purposes of the Business for which they were
acquired.

 

(iii) Except as specifically set forth in Section 3(e)(iii) of the Seller
Disclosure Schedule, the Acquired Assets constitute all of the assets necessary
for Buyer to operate the Genomics Business in a manner substantially equivalent
to the manner in which Seller has operated the Genomics Business prior to and
through the First Closing Date.

 

(f) Financial Statements.

 

(i) Attached hereto as Exhibit D are the following financial statements
(collectively the “Seller Consolidated Financial Statements”): (i) the
consolidated audited balance sheets of Seller as of December 31, 2000, 1999,
1998 and 1997, and the related consolidated statements of income for the fiscal
years ended December 31, 2000, 1999, 1998 and 1997, which in each case reflect
the Genomics Business on a consolidated basis (the “Seller Audited Financial
Statements”); and (ii) the consolidated unaudited balance sheets of Seller as of
December 31, 2001 and July 31, 2002, and the related consolidated statements of
income of Seller for the fiscal year ended December 31, 2001 and for the seven
(7) months ended July 31, 2002, which in each case reflect the Genomics Business
on a consolidated basis (collectively, the “Seller Unaudited Financial
Statements”). Except as set forth in Section 3(f)(i) of the Seller Disclosure
Schedule, the Seller Consolidated Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of Seller (including the Genomics Business on a consolidated basis) as
of such dates and the results of operations of Seller (including the Genomics
Business on a consolidated basis) for such periods, subject, in the case of the
Seller Unaudited Financial Statements, to year-end audit adjustments.

 

(ii) Attached hereto as Exhibit E are the estimated balance sheet of July 31,
2002 and the estimated statement of operations for the seven months ended July
31, 2002 for the Genomics Business (collectively, the “Estimated Genomics
Business Financials”). The Estimated Genomics Business Financials reflect the
mutually determined best estimates of Buyer and Seller with respect to the
financial condition, results of operations and cash flows of the Genomics
Business on an unconsolidated basis as of the dates and during the period
indicated therein. Seller is not aware of any information that would reasonably
be expected to cause it to believe that the Estimated Genomics Business
Financials do not present fairly the financial condition of the Genomics
Business as of such date and the result of operations of the Genomics Business
for such periods.

 

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(g) Events Subsequent to July 31, 2002. Since July 31, 2002, there has not been
any Material Adverse Change. Without limiting the generality of the foregoing,
except as set forth in the appropriate subsection of Section 3(g) of the Seller
Disclosure Schedule, since July 31, 2002:

 

(i) Seller has not sold, leased, transferred, or assigned any of its assets,
tangible or intangible, relating to or used in the Genomics Business or the
Acquired Assets other than for a fair consideration in the Ordinary Course of
Business;

 

(ii) Seller has not entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) relating to the
Genomics Business or the Acquired Assets either involving more than $10,000 or
outside the Ordinary Course of Business;

 

(iii) no party (including Seller) has accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) relating to the Genomics Business
or the Acquired Assets to which Seller is a party or by which it is bound;

 

(iv) Seller has not made or entered into any oral guaranties related to the
Genomics Business or the Acquired Assets;

 

(v) Seller has not discounted, marked down or made any price reductions with
respect to any products or services of the Genomics Business;

 

(vi) Seller has not imposed or permitted to exist any Lien upon any of its
assets, tangible or intangible, relating to the Genomics Business or the
Acquired Assets;

 

(vii) Seller has not made any capital expenditure (or series of related capital
expenditures) relating to the Genomics Business or the Acquired Assets either
involving more than $10,000 or outside the Ordinary Course of Business;

 

(viii) Seller has not delayed or postponed the payment of accounts payable or
other Liabilities relating to the Genomics Business or the Acquired Assets
outside the Ordinary Course of Business;

 

(ix) Seller has not issued an invoice to any third party prior to the delivery
of the product or service to which such invoice relates;

 

(x) Seller has not canceled, compromised, waived, or released any right or claim
(or series of related rights and claims) relating to the Genomics Business or
the Acquired Assets either involving more than $10,000 or outside the Ordinary
Course of Business;

 

(xi) Seller has not transferred, assigned, or granted any license or sublicense
of any rights under or with respect to any Genomics Business Intellectual
Property;

 

(xii) Seller has not licensed any Intellectual Property from any third party;

 

(xiii) Seller has not failed to take any action necessary or customary in
accordance with reasonable industry practice to maintain, renew, or protect any
Genomics Business Intellectual Property;

 

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(xiv) Seller has not experienced any damage, destruction, or loss (whether or
not covered by insurance) affecting any of the properties or assets of Seller
relating to the Genomics Business or the Genomics Business itself;

 

(xv) Seller has not entered into any employment contract with any Employee or
collective bargaining agreement covering any Employee, written or oral, or
modified the terms of any such existing contract or agreement;

 

(xvi) Seller has not granted any increase in the base compensation payable or to
become payable by Seller to any of its Employees or officers, agents or
independent contractors rendering services principally to the Genomics Business,
or (B) any bonus payment or arrangement made to or with any such Employees or
officers, agents or independent contractors;

 

(xvii) Seller has not adopted, amended, modified, or terminated any bonus,
profit sharing, incentive, severance, or other plan, contract, or commitment for
the benefit of any of its Employees or officers, agents or independent
contractors rendering services principally to the Genomics Business (or taken
any such action with respect to any other Employee Benefit Plan);

 

(xviii) there has not been any change, and Seller has not obtained any
information concerning a prospective change, with respect to the officers or
management of Seller rendering services principally to the Genomics Business,
any grant of any severance or termination pay to any Employee or officer of
Seller rendering services principally to the Genomics Business or any increase
in benefits payable under any existing severance or termination pay policies or
employment agreements;

 

(xix) Seller has not incurred any obligation or Liability to any of the
Employees or officers of Seller rendering services principally to the Genomics
Business or family members of any of the foregoing, or any loans or advances
made by Seller to any such Employees or officers or family members thereof,
except normal compensation and expense allowances payable to such Employees or
officers;

 

(xx) there has not been any termination of the employment of any Employee or
officer of Seller rendering services principally to the Genomics Business who
had a salary of $50,000 or more;

 

(xxi) there has not been any other material occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
Seller relating to the Genomics Business or the Acquired Assets;

 

(xxii) Seller has not materially changed any of the types or levels of support
services provided to the Genomics Business by Seller in the conduct of the
Genomics Business;

 

(xxiii) there has not been any change in the kind and amount of insurance
maintained by Seller relating to the Genomics Business;

 

(xxiv) to the Knowledge of Seller, there has not been any material increase or
notice thereof in the cost of raw materials used in the Genomics Business;

 

(xxv) Seller has not discharged a material Liability or Lien relating to the
Genomics Business or the Acquired Assets outside the Ordinary Course of
Business;

 

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(xxvi) there has not been any change in the manner of keeping books, accounts or
records, accounting methods or practices, standard costs, credit practices or
collection or pricing policies used by Seller relating to the Genomics Business;

 

(xxvii) Seller has not disclosed any Confidential Information relating to the
Genomics Business or the Acquired Assets, except in the Ordinary Course of
Business and pursuant to written agreements obligating the recipient to maintain
the confidentiality thereof; and

 

(xxviii) Seller has not committed to do any of the foregoing.

 

(h) Undisclosed Liabilities. Seller does not have any Liability relating to the
Genomics Business or the Acquired Assets (and there is no Basis for any present
or, to the Knowledge of Seller, future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
balance sheet for the Genomics Business as of July 31, 2002 (rather than in any
notes thereto) and (ii) Liabilities which have arisen after July 31, 2002 in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).

 

(i) Legal Compliance. Each of Seller and its predecessors and Affiliates has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder and
including, without limitation, the Foreign Corrupt Practices Act, 15 U.S.C.
78dd-1 et seq. and all such laws relating to the import, export, storage,
handling treatment and/or disposal of or otherwise relating to animals and
biologic materials (including transgenic animals and materials)) of all
Governmental Entities, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply.

 

(j) Tax Matters.

 

(i) Seller has timely filed all Tax Returns that it was required to file. All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by Seller (whether or not shown or required to be shown on any Tax Return)
have been paid. Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where Seller does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of the
Acquired Assets that arose in connection with any failure (or alleged failure)
to pay any Tax.

 

(ii) Seller has withheld and paid all Taxes required to have been withheld and
paid in connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and all Forms W-2 and
1099 required with respect thereto have been properly completed and timely filed
in all material respects.

 

(iii) Seller does not expect any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or claim
concerning any Tax Liability of Seller either (A) claimed or raised by any
authority in writing or (B) to the Knowledge of Seller based upon personal
contact with any agent of such authority.

 

(iv) Seller has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.

 

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(v) None of the Assumed Liabilities is an obligation to make a payment that will
not be deductible under Code Section 280G. Seller is not a party to any Tax
allocation or sharing agreement that could result in any Liability to Buyer.
Seller (A) has not been a member of an Affiliated Group filing a consolidated
federal income Tax Return (other than a group the common parent of which was
Seller) and (B) has no Liability for the Taxes of any Person under Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise that could result in any
Liability to Buyer.

 

(vi) All references to Taxes in this Section 3(j) are limited to Taxes relating
to the Genomics Business or the Acquired Assets, or Taxes for which Buyer could
become liable as successor to or transferee of the Genomics Business or the
Acquired Assets or which could become a charge against or lien on any of the
Acquired Assets, and all references to Tax Returns are limited to returns of
such Taxes.

 

(k) Intellectual Property.

 

(i) Seller owns all right, title and interest in and to, or has the right to use
pursuant to a valid and enforceable written license, sublicense, agreement, or
permission listed on Section 3(k)(iv) of the Seller Disclosure Schedule, all
Intellectual Property necessary for the operation of the Genomics Business as
presently conducted. The Intellectual Property set forth on Section 3(k)(iv) of
the Seller Disclosure Schedule constitutes all Intellectual Property necessary
for the operation of the Genomics Business as presently conducted. Each item of
Genomics Business Intellectual Property owned or used by Seller immediately
prior to the First Closing will be owned or available for use by Buyer on
identical terms and conditions immediately subsequent to the First Closing.
Seller has taken all action necessary or customary in accordance with reasonable
industry practice to maintain and protect all current federal, state and foreign
registrations pertaining to any of the Registered Genomics Business Intellectual
Property.

 

(ii) Seller follows reasonable commercial practices common in the industry to
protect its proprietary and confidential information, including requiring its
employees, consultants and agents to be bound in writing by obligations of
confidentiality and non-disclosure, and requiring its employees, consultants and
agents to assign to it any and all inventions and discoveries and other
Intellectual Property conceived, reduced to practice, developed or discovered by
such employees, consultants and/or agents made within the scope of, and during
their employment (to the extent permitted by law), and only disclosing
proprietary and confidential information to third parties pursuant to written
confidentiality and non-disclosure agreements.

 

(iii) The conduct of the Genomics Business has not and, to the Knowledge of
Seller, as of the First Closing Date, will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with any Intellectual Property
rights of third parties, and Seller has never received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or other violation (including any claim that Seller must
license or refrain from using any Intellectual Property rights of any Person)
and Seller is not aware of any Basis for the same. To the Knowledge of Seller,
no third party has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Genomics Business Intellectual Property.
To Seller’s Knowledge, no licensee or sublicensee of Seller has provided Seller
with any information of any infringement by such licensee or sublicensee of any
third party Intellectual Property in connection with such licensee’s or
sublicensee’s practice of the Intellectual Property licensed or sublicensed to
it by Seller.

 

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(iv) Section 3(k)(iv) of the Seller Disclosure Schedule identifies (A) each
patent or registration which has been issued to Seller with respect to any of
the Genomics Business Intellectual Property and each pending patent application
or application for registration which Seller has made with respect to any of the
Genomics Business Intellectual Property (collectively, the “Registered Genomics
Business Intellectual Property”), and (B) each license, sublicense, agreement,
or other permission which Seller has granted to any third party with respect to
any of the Genomics Business Intellectual Property (together with any
exceptions). Seller has made available to Buyer correct and complete copies of
all such patents, registrations, applications, licenses, sublicenses,
agreements, and permissions (as amended to date) and has made available to Buyer
correct and complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item. Section 3(k)(iv) of
the Seller Disclosure Schedule also identifies each material unregistered
trademark, material unregistered service mark, trade name, corporate name or
Internet domain name, computer software item (other than commercially available
off-the-shelf software purchased or licensed for less than a total per seat cost
of $500) and each material unregistered copyright used by Seller in connection
with the Genomics Business. Except as otherwise set forth in Section 3(k)(iv) of
the Seller Disclosure Schedule, with respect to each item of the Genomics
Business Intellectual Property, including the Registered Genomics Business
Intellectual Property:

 

(A) Seller owns and possesses all right, title, and interest in and to the item,
free and clear of any Lien, license, or other restriction or limitation
regarding use or disclosure;

 

(B) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;

 

(C) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item, and there are no
grounds for the same;

 

(D) Seller has never agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with respect to
the item; and

 

(E) no loss or expiration of the item is threatened, pending, or reasonably
foreseeable, except for patents expiring at the end of their statutory terms
(and not as a result of any act or omission by Seller, including without
limitation, a failure by Seller to pay any required maintenance fees).

 

(v) Section 3(k)(iv) of the Seller Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that Seller uses or holds
for use in the Genomics Business as currently conducted and as proposed to be
conducted pursuant to license, sublicense, agreement, or permission. Seller has
delivered to Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each item of Intellectual Property required to be identified in Section 3(k)(iv)
of the Seller Disclosure Schedule, except as set forth in Section 3(k)(v) of the
Seller Disclosure Schedule, Seller has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission. To the
Knowledge of Seller, with respect to each item of Intellectual Property required
to be identified in Section 3(k)(iv) of the Seller Disclosure Schedule:

 

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(A) the license, sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable, and in full force and effect;

 

(B) the license, sublicense, agreement, or permission will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following consummation of the transactions contemplated hereby;

 

(C) no party to the license, sublicense, agreement, or permission is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;

 

(D) no party to the license, sublicense, agreement, or permission has repudiated
any provision thereof;

 

(E) with respect to each sublicense, the representations and warranties set
forth in subsections (A) through (D) above are true and correct with respect to
the underlying license;

 

(F) the underlying item of Intellectual Property is not subject to any
outstanding attachment, injunction, judgment, order, decree, ruling, or charge;

 

(G) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or is threatened that challenges the legality,
validity, or enforceability of the underlying item of Intellectual Property, and
there are no grounds for the same; and

 

(vi) Seller has complied in all material respects with and is presently in
compliance in all material respects with all foreign, federal, state, local,
governmental (including, but not limited to, the FDA (as defined below), the
Federal Trade Commission and State Attorneys General), administrative or
regulatory laws, regulations, guidelines and rules applicable to any Genomics
Business Intellectual Property and the conduct of the Genomics Business and
Seller shall take all steps necessary to ensure such compliance until the First
Closing.

 

(l) Inventory. The Inventory is merchantable and fit for the purpose for which
it was procured or manufactured, and none of it is slow-moving, obsolete,
damaged, or defective, subject only to the reserve for inventory writedown set
forth on the face of the balance sheet of the Genomics Business as of July 31,
2002 (rather than in any notes thereto) as adjusted for the passage of time
through the First Closing Date in accordance with the past custom and practice
of Seller.

 

(m) Contracts. Seller has delivered to Buyer a correct and complete copy of each
Contract (as amended to date). With respect to each such Contract (excluding
Contracts relating to the Genomics Intellectual Property, which are the subject
of Section 3(k) above): (i) the Contract is legal, valid, binding, enforceable,
and in full force and effect; (ii) the Contract will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby (including
the assignments and assumptions referred to in Section 2 above); (iii) no party
is in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination, modification,
or acceleration, under the agreement; and (iv) no party has repudiated any
provision of the Contract.

 

(n) Notes and Accounts Receivable. All notes and accounts receivable of Seller
relating to the Genomics Business are reflected properly on its books and
records, are valid receivables subject to no

 

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setoffs or counterclaims, are current and collectible, and will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of balance sheet of the Genomics
Business as of July 31, 2002 (rather than in any notes thereto) as adjusted for
the passage of time through the First Closing Date in accordance with the past
custom and practice of Seller.

 

(o) Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of Seller relating to the Genomics Business or involving the Acquired
Assets.

 

(p) Insurance. The Acquired Assets are insured to the extent disclosed in
Section 3(p) of the Seller Disclosure Schedule and all insurance policies and
arrangements of Seller relating to the Acquired Assets or the Genomics Business
are disclosed in Section 3(p) of the Seller Disclosure Schedule. Said insurance
policies and arrangements are in full force and effect, all premiums with
respect thereto are currently paid, and Seller is in compliance in all material
respects with the terms of such policies. There is no claim by Seller pending
under any such policies as to which coverage has been questioned, denied or
disputed by the insurer. Each such insurance policy shall continue to be in full
force and effect through the date of the First Closing. To the Knowledge of
Seller, such policies of insurance are of the type and in amounts customarily
carried by persons conducting business similar to that of the Genomics Business.

 

(q) Litigation. Section 3(q) of the Seller Disclosure Schedule sets forth each
instance relating to the Genomics Business or any of the Acquired Assets in
which Seller (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the Knowledge of Seller, is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court, arbitrator or Governmental Entity.
None of the actions, suits, proceedings, hearings, and investigations set forth
in Section 3(q) of the Seller Disclosure Schedule could result in any Liability
to Buyer. Seller does not have any reason to believe that any such action, suit,
proceeding, hearing, or investigation may be brought or threatened against
Seller or that there is a Basis for the foregoing.

 

(r) Product Warranty. Each product within or arising from the Genomics Business
sold, leased, or delivered by Seller has been in conformity with all applicable
contractual commitments and all applicable express and implied warranties, and
Seller does not have any Liability (and there is no Basis for any present or, or
to the Knowledge of Seller, future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) for replacement or repair thereof or other damages in
connection therewith, subject only to the reserve for product warranty claims
set forth on the face of the balance sheet of the Genomics Business as of July
31, 2002 (rather than in any notes thereto) as adjusted for the passage of time
through the First Closing Date in accordance with the past custom and practice
of Seller. Section 3(r) of the Seller Disclosure Schedule includes copies of the
standard terms and conditions of sale or lease (containing applicable guaranty,
warranty, and indemnity provisions) that Seller uses in the Genomics Business.
No product within or arising from the Genomics Business manufactured, sold,
leased, or delivered by Seller is subject to any guaranty, warranty, or other
indemnity beyond the applicable standard terms and conditions of sale or lease
set forth in Section 3(r) of the Seller Disclosure Schedule.

 

(s) Product Liability. Seller does not have any Liability (and there is no Basis
for any present or, the Knowledge of Seller, future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against Seller
giving rise to any Liability) arising out of any injury to individuals or
property as a result of the ownership, possession, or use of any product related
to the Genomics Business manufactured, sold, leased, or delivered by Seller.

 

(t) Employees. Except as contemplated by Section 9(c)(i) hereof, Seller has not
received notice that any Employee or executive rendering services principally to
the Genomics Business has any plans to terminate employment with Seller and to
the Knowledge of Seller, no such Employee or

 

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executive has any plans to terminate employment with Seller. Seller is not a
party to or bound by any collective bargaining agreement, nor has it experienced
any strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes. Seller has not committed any unfair labor practice. There
is no organizational effort presently being made or threatened by or on behalf
of any labor union with respect to Employees.

 

(u) Employee Benefits.

 

(i) Section 3(u) of the Seller Disclosure Schedule lists each Employee Benefit
Plan in which employees (or former employees) of the Genomics Business
participate that Seller maintains, to which Seller contributes or has any
obligation to contribute, or with respect to which Seller has any Liability or
potential Liability.

 

(ii) Each such Employee Benefit Plan which is intended to meet the requirements
of a “qualified plan” under Code Section 401(a) has received a determination
from the Internal Revenue Service that such Employee Benefit Plan is so
qualified, and nothing has occurred since the date of such determination that
could adversely affect the qualified status of any such Employee Benefit Plan.

 

(iii) Seller is not a party to any collective bargaining agreement covering any
employee and Seller knows of no effort to organize any such employee as a part
of any collective bargaining unit. Seller has complied with all of its
obligations (including obligations to make contributions) in respect of the
pension funds of which its employees are members, there is no outstanding
liability of Seller or any of its Affiliates to any such funds and all such
funds are fully funded to meet all potential claims for benefits by any and all
such employees and any former employee.

 

(iv) Seller has not incurred, and Seller does not have any reason to expect that
Seller will incur, any Liability to the PBGC or otherwise under Title IV of
ERISA, including in connection with any Multiemployer Plan.

 

(v) Certain Business Relationships With Seller. None of Seller’s Subsidiaries,
Seller’s stockholders and their Affiliates, and Seller’s and its Subsidiaries’
directors, officers, employees, and stockholders has been involved in any
business arrangement or relationship relating to the Genomics Business or the
Acquired Assets with Seller within the past twelve (12) months, and none of
Seller’s Subsidiaries, Seller’s stockholders and their Affiliates, and Seller’s
and its Subsidiaries’ directors, officers, employees, and stockholders owns any
asset, tangible or intangible, which is used in the Genomics Business.

 

(w) Customers and Suppliers.

 

(i) Section 3(w) of the Seller Disclosure Schedule lists all customers of the
Genomics Business (on a consolidated basis) for each of the two most recent
fiscal years (the “Customers”) and sets forth opposite the name of each such
Customer the percentage of consolidated net sales attributable to such Customer.

 

(ii) No material supplier of the Genomics Business has indicated that it shall
stop, or materially decrease the rate of, supplying materials, products or
services to the Genomics Business, and no Customer has indicated that it shall
stop, or materially decrease the rate of, buying materials, products or services
from the Genomics Business other than in the Ordinary Course of Business.

 

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(x) Regulatory Matters

 

(i) Except as set forth on Section 3(x)(i) of the Seller Disclosure Schedule,
Seller is in compliance in all material respects with all applicable statutes,
rules and regulations of the U.S. Food and Drug Administration or similar
federal, state or local governmental authority (the “FDA”) or similar foreign
governmental authority (“Foreign Authorities”) with respect to the operation of
the Genomics Business. Seller has all requisite permits, approvals,
registrations, licenses or the like from the FDA and Foreign Authorities to
conduct the Genomics Business as it is currently conducted by Seller. Seller has
previously delivered or made available to Buyer an index of all applications,
approvals, registrations or licenses obtained by Seller from the FDA and Foreign
Authorities or required in connection with the conduct of the Genomics Business
as it is currently conducted and has made all such information available to
Buyer.

 

(ii) All test methods being developed or distributed by the Genomics Business
that are subject to the jurisdiction of the FDA, the Centers for Disease Control
and Prevention, or similar federal, state or local government authorities have
been and are being developed, tested, labeled, distributed and marketed in
compliance in all material respects with all applicable statutory or regulatory
requirements under the Clinical Laboratory Improvement Act of 1988 and its
implementing regulations.

 

(iii) Seller has made available to Buyer all written communications and oral
communications to the extent reduced to written form between Seller and the FDA
or Foreign Authorities from December 1, 1999 through the date hereof with
respect to the Genomics Business or the Acquired Assets. Seller shall promptly
deliver or make available to Buyer copies of all written communications and
information and records regarding all oral communications reduced to written
form, between Seller and the FDA or Foreign Authorities with respect to the
Genomics Business or the Acquired Assets from the date hereof through, and to
the extent relevant to the Genomics Business, after, the First Closing Date.
Except as described in Section 3(x)(iii) of the Seller Disclosure Schedule,
Seller is not in receipt of notice of and not subject to any adverse inspection,
finding of deficiency, finding of non-compliance, compelled or voluntary recall,
investigation, penalty for corrective or remedial action or other compliance or
enforcement action, in each case relating to any products of the Genomics
Business or to the facilities in which the products of the Genomics Business are
manufactured, collected or handled, by the FDA or Foreign Authorities. Except as
set forth on Section 3(x)(iii) of the Seller Disclosure Schedule, there are no
pending or, to the Knowledge of Seller, threatened, actions, proceedings or
complaints by the FDA or Foreign Authorities which would prohibit or impede the
conduct of the Genomics Business as it is currently conducted.

 

(iv) Seller has not made any material false statements on, or omissions from,
the applications, approvals, reports and other submissions to the FDA or Foreign
Authorities prepared or maintained to comply with the requirements of the FDA or
Foreign Authorities relating to the Genomics Business or the Acquired Assets.

 

(v) The Seller has not received any notification, written or oral, that remains
unresolved, from Foreign Authorities, the FDA or other authorities indicating
that any product of the Genomics Business is misbranded or adulterated as
defined in the U.S. Food, Drug & Cosmetic Act, 21 U.S.C. 321, et seq., as
amended, and the rules and regulations promulgated thereunder.

 

(vi) Except as set forth on Section 3(x)(vi) of the Seller Disclosure Schedule,
no product of the Genomics Business has been recalled, suspended or discontinued
as a result of any

 

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action by the FDA or any Foreign Authority against Seller or, to the Knowledge
of Seller, any licensee, distributor or marketer of any product of the Genomics
Business, in the United States or outside of the United States.

 

(vii) Seller has not committed any act, made any statement or failed to make any
statement that would reasonably be expected to provide a basis for the FDA to
invoke its policy with respect to “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10,
1991) and any amendments thereto. Neither Seller, nor to the Knowledge of
Seller, any Employee, officer, or agent of Seller has been convicted of any
crime or engaged in any conduct that would reasonably be expected to result in
(i) debarment under 21 U.S.C. Section 335a or any similar state law or
regulation or (ii) exclusion under 42 U.S.C. Section 1320a-7 or any similar
state law or regulation.

 

(y) Solvency. Seller is, and immediately after the consummation of the
transaction contemplated hereby at the First Closing will be, Solvent. As used
herein, “Solvent” means, on a particular date, that on such date (i) the fair
market value of the assets of Seller is greater than the total amount of
Liabilities (including contingent Liabilities) of Seller, (ii) the present
salable value of the assets of Seller is greater than the amount that will be
required to pay the probable Liabilities of Seller on its debts as they become
absolute and matured, and (iii) Seller is able to realize upon its assets and
pay its debts and other Liabilities, including contingent obligations, as they
mature.

 

(z) Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a fact or omit to state any fact
necessary in order to make the statements and information contained in this
Section 3 not misleading.

 

4. Buyer’s Representations and Warranties. Buyer represents and warrants to
Seller that the statements contained in this Section 4 are correct and complete,
except as set forth in the corresponding section of Buyer’s disclosure schedule
accompanying this Agreement (the “Buyer Disclosure Schedule”). The Buyer
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 4.

 

(a) Organization of Buyer. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation with full power and authority to own or lease its properties and
to conduct its business in the manner and in the places where such properties
are owned or leased or such business is conducted by it. The copies of the
charter documents of Buyer, as amended to date, and the bylaws of Buyer, as
amended to date, and heretofore delivered to Seller’s counsel, are complete and
correct, and no amendments thereto are pending. Buyer is qualified to do
business as a foreign corporation in each jurisdiction in which such
qualification is necessary, except where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect.

 

(b) Authorization of Transaction. Buyer has full power and authority (including
full corporate power) to execute and deliver this Agreement and each agreement,
document and instrument to be executed and delivered by it pursuant to or
contemplated by this Agreement and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of this Agreement and each
such other agreement, document and instrument by Buyer has been duly authorized
by all necessary corporate action of Buyer, and no other action on the part of
Buyer is required in connection therewith. This Agreement and each agreement,
document and instrument to be executed and delivered by Buyer pursuant to or as
contemplated by this Agreement constitute, or when executed and delivered by
Buyer will constitute, the valid and legally binding obligations of Buyer,
enforceable in accordance with their

 

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respective terms and conditions, except as the same may be limited by the
Bankruptcy and Equity Exception.

 

(c) Noncontravention. Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby (including the
assignments and assumptions referred to in Section 2 above), will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Entity to which
Buyer is, or its assets or properties are, subject, (ii) contravene, conflict
with or result in a breach or violation of any provision of the charter or
bylaws of Buyer, or (iii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Lien upon any of its assets). Buyer
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Entity in order for the
Parties to consummate the transactions contemplated by this Agreement (including
the assignments and assumptions referred to in Section 2 above).

 

(d) Brokers’ Fees. Buyer has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller could become liable or
obligated, except with respect to any fees of Wells Fargo incurred in connection
with the transaction contemplated by this Agreement, which shall be the sole
responsibility of Buyer.

 

(e) Financing. Buyer possesses, or has access to, sufficient unencumbered cash
and cash equivalents to enable Buyer to pay the Purchase Price and all fees and
expenses payable by Buyer related to the transactions contemplated by this
Agreement.

 

5. Conditions to Obligation to Close at First Closing.

 

(a) Conditions to Buyer’s Obligation. Buyer’s obligation to consummate the
transactions to be performed by it in connection with the First Closing is
subject to satisfaction of the following conditions:

 

(i) the representations and warranties set forth in Section 3 above shall be
true and correct at and as of the date hereof and true and correct in all
material respects at and as of the First Closing Date, except to the extent that
such representations and warranties are qualified by terms such as “material”,
“Material Adverse Change” and “Material Adverse Effect”, in which case such
representations and warranties shall be true and correct in all respects at and
as of the First Closing Date;

 

(ii) Seller shall have procured all of the third party consents specified in
Section 3(c) above;

 

(iii) no action, suit, or proceeding shall be pending or threatened before any
court or Governmental Entity or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (C) affect adversely the right of Buyer to own the
Acquired Assets and to operate the Genomics Business (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);

 

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(iv) Seller shall have delivered to Buyer a certificate to the effect that each
of the conditions specified above in Section 5(a)(i)-(iii) is satisfied in all
respects;

 

(v) either of the following shall have occurred: (A) SRI’s rights pursuant to
Amendment No. 2, dated as of September 5, 1991, to the Agreement dated August
28, 1989 by and between Daikin Industries, Ltd. and SRI International (“SRI”)
(as currently in effect) (the “Daikin Agreement”) shall have been transferred to
Buyer or (B) Seller shall have delivered to Buyer a letter agreement executed by
SRI to the effect that SRI will assign (or to the extent not assignable, that
SRI will hold or void) its option pursuant to Section 5 of Amendment No. 2,
dated as of September 5, 1991, to the Daikin Agreement for the benefit of Buyer
upon Buyer’s instruction;

 

(vi) Seller shall have delivered to Buyer a letter agreement executed by Active
Motif, LLC (“Active Motif”) to the effect that Buyer is not a competitor of
Active Motif as defined by Section 11.13 of the License Agreement dated as of
December 18, 2001 by and between Seller and Active Motif;

 

(vii) Seller and Buyer shall have received all other authorizations, consents,
and approvals of Governmental Entities referred to in Section 3(c) and Section
4(c) above;

 

(viii) Seller shall have delivered to Buyer forms of assignment of all patents,
trademarks, service marks and copyrights and applications for any of the
foregoing included in the Registered Genomics Business Intellectual Property
suitable for recordation in the relevant U.S. or foreign government offices, and
shall have taken all actions necessary to transfer to Buyer any domain name
registrations included in the Genomics Business Intellectual Property;

 

(ix) all actions to be taken by Seller in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other
documents required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to Buyer;

 

(x) Seller shall have delivered to Buyer copies of the Articles of Incorporation
(or formation) of Seller certified on or soon before the First Closing Date by
the Secretary of State (or comparable officer) of the jurisdiction of Seller’s
incorporation (or formation);

 

(xi) Seller shall have delivered to Buyer copies of the certificate of good
standing of Seller issued on or soon before the First Closing Date by the
Secretary of State (or comparable officer) of the jurisdiction of Seller’s
organization and of each jurisdiction in which Seller is qualified to do
business; and

 

(xii) Seller shall have delivered to Buyer a certificate of the secretary or an
assistant secretary of Seller, dated the First Closing Date, in form and
substance reasonably satisfactory to Buyer, as to (i) no amendments to the
Articles of Incorporation of Seller since the date specified in clause (x)
above; (ii) the bylaws (or other organizational documents) of Seller; (iii) the
resolutions of the board of directors (or other authorizing body) (or a duly
authorized committee thereof) of Seller authorizing the execution, delivery, and
performance of this Agreement and the transactions contemplated hereby; and (iv)
incumbency and signatures of the officers of Seller executing this Agreement or
any other agreement contemplated by this Agreement.

 

Buyer may waive any condition specified in this Section 5(a) if it executes a
writing so stating at or prior to the First Closing.

 

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(b) Conditions to Seller’s Obligation. Seller’s obligation to consummate the
transactions to be performed by it in connection with the First Closing is
subject to satisfaction of the following conditions:

 

(i) the representations and warranties set forth in Section 4 above shall be
true and correct at and as of the date hereof and true and correct in all
material respects at and as of the First Closing Date, except to the extent that
such representations and warranties are qualified by terms such as “material”,
“Material Adverse Change” and “Material Adverse Effect”, in which case such
representations and warranties shall be true and correct in all respects at and
as of the First Closing Date;

 

(ii) no action, suit, or proceeding shall be pending or threatened before any
court or Governmental Entity or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);

 

(iii) Buyer shall have delivered to Seller a certificate to the effect that each
of the conditions specified above in Section 5(b)(i) and (ii) is satisfied in
all respects;

 

(iv) Seller and Buyer shall have received all other authorizations, consents,
and approvals of governments and governmental agencies referred to in Section
3(c) and Section 4(c) above;

 

(v) Seller and Buyer shall have executed and delivered the Cross-License
Agreement in the form set forth on Exhibit F attached hereto; and

 

(vi) all actions to be taken by Buyer in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other
documents required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to Seller.

 

Seller may waive any condition specified in this Section 5(b) if it executes a
writing so stating at or prior to the First Closing.

 

6. Conditions to Obligation to Close at Second Closing.

 

(a) Conditions to Buyer’s Obligation. Buyer’s obligation to consummate the
transactions to be performed by it in connection with the Second Closing is
subject to satisfaction of the following conditions:

 

(i) Buyer and Daikin Industries, Ltd. shall have executed a written agreement
pursuant to which each of the Daikin Patents has been assigned to Buyer;
provided that if Buyer elects to receive less than all of the Daikin Patents and
executes a written agreement with Daikin Industries, Ltd. in accordance
therewith, this condition shall be deemed to have been satisfied; and

 

(ii) no action, suit, or proceeding shall be pending or threatened before any
court or Governmental Entity or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent the
assignment of the Daikin Patents to Buyer, (B)

 

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cause the assignment of the Daikin Patents to Buyer to be rescinded following
consummation, or (C) affect adversely the right of Buyer to assume the Daikin
Patents.

 

Buyer may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Second Closing.

 

7. Remedies for Breaches of This Agreement.

 

(a) Survival of Representations and Warranties. All of the representations and
warranties of Seller contained in Section 3 of this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereby (even if Buyer knew or had
reason to know of any misrepresentation or breach of warranty at the time of the
First Closing) and continue in full force and effect until 11:59 p.m.,
California time, on the first anniversary of the First Closing Date; provided,
however, that the representations and warranties of Seller contained in (i)
Section 3(j) above shall survive the First Closing and continue in full force
and effect until 60 days after the expiration of all applicable statute of
limitations, (ii) Section 3(k) above shall survive the First Closing and
continue in full force and effect until 11:59 p.m., California time, on the
sixth anniversary of the First Closing Date, and (iii) Sections 3(a) through
3(d) above shall survive the First Closing and continue in full force and effect
forever thereafter. All of the representations and warranties of Buyer contained
in Section 4 of this Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the consummation of the transactions
contemplated hereby (even if Seller knew or had reason to know of any
misrepresentation or breach of warranty at the time of the First Closing) and
continue in full force and effect forever thereafter. Each Party’s
indemnification obligations with respect to representations, warranties,
covenants, and obligations in this Agreement, the Disclosure Schedules and any
other certificate or document delivered pursuant to this Agreement shall survive
until the applicable representation, warranty, covenant, or obligation period
ends (or, if there is no such end, forever) pursuant to this Section 7(a);
provided, however, that if an Indemnified Party (as defined below) delivers to
an Indemnifying Party (as defined below), before expiration of a representation,
warranty or covenant, either a Claim Notice (as defined below) based upon a
breach of such representation, warranty or covenant, or a notice that, as a
result of a legal proceeding instituted by or written claim made by a third
party, the Indemnified Party reasonably expects to incur Damages (as defined
below) as a result of a breach of such representation, warranty or covenant (an
“Expected Claim Notice”), then such representation, warranty or covenant shall
survive until, but only for purposes of, the resolution of the matter covered by
such notice. If the legal proceeding or written claim with respect to which an
Expected Claim Notice has been given is definitively withdrawn or resolved in
favor of the Indemnified Party, the Indemnified Party shall promptly so notify
the Indemnifying Party.

 

(b) Indemnification Provisions for Benefit of Buyer. Seller shall indemnify
Buyer and each of its officers, directors, agents, and each person, if any, who
controls Buyer within the meaning of the Securities Act (each a “Buyer
Indemnified Party” and collectively, the “Buyer Indemnified Parties”) in respect
of, and hold them harmless against, any and all debts, obligations and other
Liabilities, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including without limitation amounts paid to
enforce the provisions of this Section 7 and amounts paid in settlement,
interest, court costs, costs of investigators, reasonable fees and out-of-pocket
expenses of attorneys, accountants, financial advisors and other experts, and
other expenses of litigation), but excluding any consequential damages
(“Damages”) incurred or suffered by any of the foregoing parties resulting from,
relating to or constituting:

 

(i) fraud, intentional misrepresentation or a deliberate or willful breach by
Seller of any of its representations, warranties or covenants under this
Agreement (including any

 

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representations or warranties deemed to have been made by the delivery of any
certificate or instrument delivered pursuant to this Agreement);

 

(ii) any other misrepresentation or breach of warranty of Seller contained in
this Agreement (including any misrepresentation or breach of warranty deemed to
have been made by the delivery of any certificate or instrument delivered
pursuant to this Agreement), or by reason of any claim, action or proceeding
asserted or instituted arising out of any matter constituting a breach of such
representations or warranties (including any breach of any representations or
warranties deemed to have been made by the delivery of any certificate or
instrument delivered pursuant to this Agreement);

 

(iii) any failure to perform any covenant or agreement of Seller contained in
this Agreement, or by reason of any claim, action or proceeding asserted or
instituted arising out of any matter or thing constituting a breach of such
covenants or agreement;

 

(iv) any claim by any third party, seeking to assert, or based upon ownership or
rights to ownership of any Acquired Asset;

 

(v) any claim, action or proceeding asserted or instituted against Buyer, or any
of its properties or assets, by any third party for Damages suffered by such
third party by reason of or resulting from (A) any Excluded Liability, (B) the
ownership or operation of the Excluded Assets or the Genomics Business prior to
the First Closing, or (C) any actions taken or omitted to be taken by Seller
prior to the First Closing (other than Assumed Liabilities);

 

(vi) any Excluded Liabilities; and

 

(vii) any Liabilities arising from Seller’s failure to comply with the
provisions of any bulk transfer laws of any jurisdiction in connection with the
transactions contemplated by this Agreement.

 

(c) Indemnification Provisions for Benefit of Seller. Buyer shall indemnify
Seller and each of its officers, directors, agents, and each person, if any, who
controls Buyer within the meaning of the Securities Act (each a “Seller
Indemnified Party” and collectively, the “Seller Indemnified Parties”) in
respect of, and hold them harmless against, any and all Damages incurred or
suffered by any of the foregoing parties resulting from, relating to or
constituting:

 

(i) fraud, intentional misrepresentation or a deliberate or willful breach by
Buyer of any of its representations, warranties or covenants under this
Agreement (including any representations or warranties deemed to have been made
by the delivery of any certificate or instrument delivered pursuant to this
Agreement);

 

(ii) any other misrepresentation or breach of warranty of Buyer contained in
this Agreement (including any misrepresentation or breach of warranty deemed to
have been made by the delivery of any certificate or instrument delivered
pursuant to this Agreement), or by reason of any claim, action or proceeding
asserted or instituted arising out of any matter constituting a breach of such
representations or warranties (including any breach of any representations or
warranties deemed to have been made by the delivery of any certificate or
instrument delivered pursuant to this Agreement);

 

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(iii) any failure to perform any covenant or agreement of Buyer contained in
this Agreement, or by reason of any claim, action or proceeding asserted or
instituted arising out of any matter or thing constituting a breach of such
covenants or agreement;

 

(iv) any claim, action or proceeding asserted or instituted against Seller, or
any of its properties or assets, by any third party for Damages suffered by such
third party by reason of or resulting from (A) any Assumed Liability, (B) the
ownership or operation of the Acquired Assets or the Genomics Business after the
First Closing, or (C) the assumption of the Daikin Patents by Buyer.

 

(d) Indemnification Claims.

 

(i) A Party entitled, or seeking to assert rights, to indemnification under this
Section 7 (an “Indemnified Party”) shall give written notification (a
“Notification of Suit”) to the Party from whom indemnification is sought (an
“Indemnifying Party”) of the commencement of any suit or proceeding relating to
a third party claim for which indemnification pursuant to this Section 7 may be
sought. Such Notification of Suit shall be given within 30 business days after
receipt by the Indemnified Party of notice of such suit or proceeding, and shall
describe in reasonable detail (to the extent known by the Indemnified Party) the
facts constituting the basis for such suit or proceeding and the amount of the
claimed damages; provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party
of any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. If the Indemnifying Party is
Seller, within 30 days after delivery of such Notification of Suit, the
Indemnifying Party may, upon (A) the delivery of written notice thereof to the
Indemnified Party and (B) the delivery of evidence to the Indemnified Party
reasonably demonstrating the ability of the Indemnifying Party (I) to defend
vigorously against such suit or proceeding (including the ability to timely pay
attorneys’ fees) and (II) to pay the amount of Damages that may reasonably be
expected to be incurred as a result of such suit or proceeding, assume control
of the defense of such suit or proceeding if, but only if, the Indemnifying
Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Damages that such Indemnified Party incurs or has incurred
in connection with such third party claim; provided that the Indemnifying Party
may not assume control of the defense of a suit or proceeding involving criminal
liability or in which equitable relief is sought against the Indemnified Party.
If the Indemnifying Party is Buyer, within 30 days after delivery of such
Notification of Suit, the Indemnifying Party may, upon the delivery of written
notice thereof to the Indemnified Party, assume control of the defense of such
suit or proceeding if, but only if, the Indemnifying Party acknowledges in
writing its obligation to indemnify the Indemnified Party hereunder against any
Damages that such Indemnified Party incurs or has incurred in connection with
such third party claim; provided that the Indemnifying Party may not assume
control of the defense of a suit or proceeding involving criminal liability or
in which equitable relief is sought against the Indemnified Party. If the
Indemnifying Party does not so assume control of such defense, the Indemnified
Party shall control such defense. The Party not controlling such defense (the
“Non-controlling Party”) may participate therein at its own expense. The Party
controlling such defense (the “Controlling Party”) shall keep the
Non-controlling Party advised of the status of such suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such suit or proceeding (including copies of any summons, complaint or other
pleading which may have been served on such Party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of such
suit or proceeding. The Indemnifying Party shall not

 

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agree to any settlement of, or the entry of any judgment arising from, any such
suit or proceeding without the prior written consent of the Indemnified Party,
which shall not be unreasonably withheld or delayed. The Indemnified Party shall
not agree to any settlement of, or the entry of any judgment arising from, any
such suit or proceeding without the prior written consent of the Indemnifying
Party, which shall not be unreasonably withheld or delayed.

 

(ii) In order to seek indemnification under this Section 7, an Indemnified Party
shall give written notification (a “Claim Notice”) to the Indemnifying Party
which contains (i) a description and the amount (the “Claimed Amount”) of any
Damages incurred or reasonably expected to be incurred by the Indemnified Party,
(ii) a statement that the Indemnified Party is entitled to indemnification under
this Section 7 for such Damages and a reasonable explanation of the basis
therefor, and (iii) a demand for payment (in the manner provided in paragraph
(iii) below) in the amount of such Damages.

 

(iii) Within 20 days after delivery of a Claim Notice, the Indemnifying Party
shall deliver to the Indemnified Party a written response (the “Response”) in
which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount; (ii) agree that the Indemnified
Party is entitled to receive part, but not all, of the Claimed Amount (the
“Agreed Amount”); or (iii) dispute that the Indemnified Party is entitled to
receive any of the Claimed Amount. If the Indemnifying Party agrees that the
Indemnified Party is entitled to receive all of the Claimed Amount, the
Indemnifying Party shall deliver to the Indemnified Party with the Response a
payment for the Claimed Amount, by check or by wire transfer. If the
Indemnifying Party agrees that the Indemnified Party is entitled to receive
part, but not all, of the Claimed Amount, the Indemnifying Party shall deliver
to the Indemnified Party with the Response a payment for the Agreed Amount, by
check or by wire transfer. If the Indemnifying Party in the Response disputes
its liability for all or part of the Claimed Amount, the Indemnifying Party and
the Indemnified Party shall follow the procedures set forth in Section 7(d)(iv)
below for the resolution of such dispute (a “Dispute”).

 

(iv) During the 60-day period following the delivery of a Response that reflects
a Dispute, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve the Dispute. If the Dispute is not resolved within such
60-day period, the Indemnifying Party and the Indemnified Party shall settle
such Dispute by binding arbitration in accordance with the Commercial
Arbitration rules of the American Arbitration Association in effect as of the
date of commencement of arbitration. After the expiration of the aforementioned
60-day period, either Party may demand that any Dispute be submitted to
arbitration in writing. Such demand shall be served on the other Party in the
manner prescribed in Section 10(g) below, and shall set forth a short statement
of the factual basis for the claim, specifying the matter or matters to be
arbitrated. The arbitration will be held in the City of New York unless the
Parties mutually agree to have the arbitration held elsewhere, and judgment upon
the award made therein may be entered by any court having jurisdiction thereof;
provided that nothing contained in this Section 7(d)(iv) will be construed to
limit or preclude a Party from bringing any action in any court of competent
jurisdiction in the United States for injunctive or other provisional relief to
compel the other Party hereto to comply with its obligations under this
Agreement or any other agreement between or among the Parties during the
pendency of the arbitration proceedings. The arbitration shall be conducted by
three arbitrators (the “Arbitration Board”), one of whom shall be selected by
Buyer, one of whom shall be selected by Seller, and one of whom shall be
selected by the other two arbitrators upon their mutual agreement. The
Arbitration Board shall conduct such evidentiary or other hearings as it deems
necessary or appropriate and thereafter shall make a final determination
applying the internal laws of the State of New York as soon as practicable after
the conclusion of the hearings. Any arbitration pursuant to this Section
7(d)(iv) shall be conducted

 

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by the Arbitration Board as the Parties may mutually agree or, if the Parties do
not so agree, under the guidance of the Federal Rules of Civil Procedure and the
Federal Rules of Evidence; provided that the Arbitration Board shall not be
required to comply strictly with such rules in conducting any such arbitration.
The Arbitration Board shall have the authority to award any remedy or relief
that a Court of the State of New York could order or grant, including, without
limitation, specific performance of any obligation under this Agreement, the
awarding of punitive damages, the issuance of an injunction or the imposition of
sanctions for abuse or frustration of the arbitration process. The final and
binding decision of the Arbitration Board shall be by a majority of the
arbitrators on the Arbitration Board. Such decision and award of the Arbitration
Board shall be in writing and counterpart copies thereof shall be delivered to
each Party. In rendering such decision and award, the Arbitration Board shall
not add to, subtract from or otherwise modify the provisions of this Agreement.
Either Party to the arbitration may seek to have the ruling of the Arbitration
Board entered in any court having jurisdiction thereof. Each Party agrees that
it will not file suit, motion, petition or otherwise commence any legal action
or proceeding for any matter which is required to be submitted to arbitration as
contemplated herein except in connection with the enforcement of an award
rendered by the Arbitration Board and except to seek the issuance of an
injunction or temporary restraining order pending a final determination by the
Arbitration Board. Upon the entry of any order dismissing or staying any action
or proceeding filed contrary to the preceding sentence, the Party which filed
such action or proceeding shall promptly pay to the other Party the reasonable
attorney’s fees, costs and expenses incurred by such other Party prior to the
entry of such order. All aspects of the arbitration shall be considered
confidential and shall not be disseminated by any Party with the exception of
the ability and opportunity to prosecute its claim or assert its defense to any
such claim. The Arbitration Board shall be required to issue prescriptive orders
as may be required to enforce and maintain this covenant of confidentiality
during the course of the arbitration and after the conclusion of the arbitration
so that the result and underlying data, information, materials and other
evidence are forever withheld from public dissemination with the exception of
its subpoena by a court of competence jurisdiction in an unrelated proceeding
brought by a third party. The fees and expenses of the Arbitration Board shall
be shared equally by the Parties.

 

(e) Limitation on Remedies. Each of Buyer and Seller acknowledges and agrees
that, its sole and exclusive remedy with respect to any breach of any
representations or warranties of any Party under this Agreement (including in a
certificate or instrument delivered pursuant to this Agreement) shall be
pursuant to the provisions set forth in this Section 7; provided, however, that
nothing in this Section 7(e) shall be deemed to (i) prohibit or limit any
Party’s right at any time before, on or after the First Closing Date to seek
injunctive relief or other equitable relief or (ii) limit, prohibit or restrict
any of the rights or remedies of a Party in respect or any claim based upon any
such breach by the other Party if such breach is deliberate or willful or
involves fraud or an intentional misrepresentation.

 

(f) Losses Threshold. An Indemnifying Party shall not have any obligation to
indemnify any Indemnified Parties from and against any Damages pursuant to
Sections 7(b)(ii) or 7(c)(ii), as applicable, unless and until the aggregate
amount of all such claims against the Indemnifying Party exceeds $25,000,
whereupon satisfaction of such claims shall begin at the first dollar of
Liability.

 

(g) Maximum Indemnification Amount. The maximum aggregate indemnification amount
that shall be due from an Indemnifying Party for Damages pursuant to Sections
7(b)(ii) and 7(c)(ii), as applicable, shall not exceed the Purchase Price.

 

(h) Bulk Sales Compliance. Subject to Buyer’s rights to indemnification under
Section 7(b) hereof, Buyer hereby waives compliance by Seller with the
provisions of the bulk sales laws of the State

 

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of California and Seller shall pay and discharge when due all claims of
creditors that could be asserted against Buyer or the Acquired Assets by reason
of such non-compliance.

 

8. Termination.

 

(a) Termination of Agreement. Buyer may terminate this Agreement with respect to
the transactions contemplated hereby at the Second Closing by giving written
notice to Seller at any time prior to the Second Closing (A) in the event Seller
has breached any material representation, warranty, or covenant contained in
this Agreement in any material respect, Buyer has notified Seller of the breach,
and the breach has continued without cure for a period of 30 days after the
notice of breach or (B) if the Second Closing shall not have occurred on or
before December 31, 2003 by reason of the failure of any condition precedent
under Section 6(a) hereof (unless the failure results primarily from Buyer
itself breaching any representation, warranty, or covenant contained in this
Agreement).

 

(b) Effect of Termination. If Buyer terminates this Agreement pursuant to
Section 8(a) above, all rights and obligations of the Parties hereunder with
respect to the assignment of the Daikin Patents and the transactions
contemplated hereby at the Second Closing, except with respect to the
confidentiality obligations in Section 9(d) below which shall survive forever,
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).

 

9. Post-Closing Covenants.

 

(a) Daikin Patents.

 

(i) During the period between the execution of this Agreement and the earlier to
occur of (A) the Second Closing or (B) December 31, 2003, Seller will use its
reasonable best efforts to assist Buyer to procure the assignment to Buyer of
the Daikin Patents (it being understood that any third party fees incurred in
connection with such assignments shall be the sole responsibility of Buyer
without set-off against the Second Closing Purchase Price).

 

(ii) Buyer hereby irrevocably covenants not to sue or otherwise bring any claim
under the Daikin Patents against any licensee or permitted sublicensee of the
Genomics Business Intellectual Property to the extent that such suit or claim
would give rise to an indemnification obligation by Seller pursuant to such
license. Buyer further covenants and agrees to impose the covenant contained in
this Section 9(a)(ii) on any third party to whom Buyer (or any successor or
transferee of Buyer) may assign the Daikin Patents.

 

(b) Technology Transfer Services.

 

(i) During the three (3) month period following the First Closing Date, Buyer
shall have the right to utilize, and Seller shall make available without charge,
the services of each Employee for up to thirty (30) Person Days, in the
aggregate, to provide technology transfer transitional support services. Buyer
shall provide written notice at least five business days prior to the first day
of any period during which it desires to utilize such transitional support
services. Such written notice shall include the names of the Employees who Buyer
requests to utilize and the period during which such services are requested.
Seller shall use its reasonable best efforts to make such Employees available to
provide such technology transfer services to Buyer. If Seller is unable to make
such Employees available to provide such technology transfer services to Buyer,
Seller shall notify Buyer of such Employees’ unavailability at least three
business days prior to first day of the period during which Buyer desired to
utilize such technology transfer services and shall (i) suggest alternate
Employees employed in similar positions by Seller and (ii)

 

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notify Buyer of when such originally requested Employees will be available.
Buyer shall notify Seller at least two business days prior to the first day of
any period during which Buyer desired to utilize such technology transfer
services if such alternate Employees are unacceptable, in which case Buyer shall
have the right to postpone the services requested until a later date without
subtracting from its usable Person Days. Buyer shall pay all out-of-pocket
travel, lodging and meal expenses incurred by each Employee in connection with
the provision of such transitional support services. Prior to the initiation of
any technology transfer services, Seller shall create necessary back-up files of
all data relating to the Genomics Business to ensure that data is not lost
during the provision of such technology transfer services.

 

(ii) During the three (3) month period following the First Closing Date, Buyer
shall have the right to utilize, and Seller shall make available without charge,
the facilities currently used by Seller to operate the Genomics Business to the
extent necessary to utilize the technology transfer services to be provided by
Seller pursuant to Section 9(b)(i) hereof.

 

(iii) During the three (3) month period following the First Closing Date, Seller
shall (A) have a continuing obligation to provide and maintain a “hotlink
rollover” from the Genomics Business portion of its website at “www.pangene.com”
or any successor sites containing information relating to the Genomics Business
to Buyer’s website at “www.naprobio.com” and (B) provide the necessary personnel
and other resources to maintain and support such link and shall provide Buyer
with a contact person for support issues arising with respect to such link.

 

(iv) Each Party agrees from time to time following the First Closing to
cooperate with the other Party in connection with, and agrees to provide access
in a timely manner to the accounting and tax related books and records of and
related to the Genomics Business, in a manner sufficient to enable such other
Party to complete its respective accounting, tax and regulatory filings.

 

(c) Employees and Employee Benefits.

 

(i) Upon the agreement between Buyer and any Employee or Contingent Worker with
respect to such Employee’s or Contingent Worker’s employment by Buyer, Seller
shall terminate the employment of such Employee or Contingent Worker, effective
as of the most recent business day prior to the start of such Employee’s or
Contingent Worker’s employment by Buyer, which start date shall not be prior to
the First Closing Date.

 

(ii) From the date hereof through the third anniversary of the First Closing
Date, without the prior written permission of Buyer, Seller shall not, in any
capacity, directly or indirectly, (A) hire or employ any Transferred Employee or
(B) recruit, solicit or induce (or in any way assist any other person or
enterprise in recruiting, soliciting or inducing) any Transferred Employee to
refuse to accept an offer of employment from Buyer or to terminate his or her
employment or other relationship with Buyer, other than any Transferred Employee
who is terminated by Buyer. For purposes of this Section 9(c)(ii), the term
“solicit” shall not include the following activities by Seller: (i) advertising
for employment in any bulletin board (including electronic bulletin boards),
newspaper, trade journal or other publication available for general distribution
to the public without specific reference to any particular employees; (ii)
participation in any hiring fair or similar event open to the public not
targeted at Buyer’s employees; and (iii) use of recruiting or employee search
firms that have been instructed by Seller not to target any Transferred
Employee.

 

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(iii) On and after the First Closing Date, Transferred Employees shall be
eligible for participation under all of Buyer’s benefit plans and programs that
are offered to Buyer’s current employees.

 

(iv) On and after the First Closing Date, Seller shall have sole responsibility
for the provision of COBRA coverage to any individual covered under any Seller
health benefit plan who experienced a “qualifying event” (as defined under
COBRA) on or prior to the First Closing Date and who is not a Transferred
Employee.

 

(v) Buyer will incur no Liability with respect to, or on account of, and Seller
will retain any Liability for, and on account of, any Employee Benefit Plan of
Seller, any of its Affiliates or any predecessor employer of any employee,
including, but not limited to, Liabilities Seller may have to such employees
under all employee benefit schemes, incentive compensation plans, bonus plans,
pension and retirement plans, vacation, profit-sharing plans (including any
profit-sharing plan with a cash-or-deferred arrangement) share purchase and
option plans, savings and similar plans, medical, dental, travel, accident,
life, disability and other insurance and other plans or arrangements, whether
written or oral and whether “qualified” or “non-qualified,” or to any employee
as a result of termination of employment by Seller as contemplated by this
Agreement.

 

(vi) Seller shall retain sole responsibility for the payment of any accrued
vacation, sick pay and other personal leave pay and accrued bonus or incentive
pay for any employee or former employee of Seller, and shall pay out all such
accrued Liabilities for the Transferred Employees at or prior to the time at
which such Transferred Employees are terminated by Seller.

 

(d) Confidentiality. After the execution of this Agreement, Buyer shall keep any
Confidential Information (except Confidential Information included in the
Acquired Assets) acquired by Buyer from Seller or otherwise disclosed in
connection with the negotiation of this Agreement strictly confidential and will
not (except as required by applicable law, regulation or legal process, and only
after providing notification to Seller), without Seller’s prior written consent,
disclose any such Confidential Information, except to the extent Buyer provides,
or has provided, such Confidential Information to its directors, officers,
employees, agents or advisors (including, without limitation, attorneys,
accountants and consultants) (collectively, “Representatives”) to assist Buyer
in performing the transactions contemplated hereby, in which case Buyer’s
Representatives shall agree, or have agreed, to keep such Confidential
Information strictly confidential as a condition to such disclosure. After the
execution of this Agreement, Seller shall keep any Confidential Information
included in the Acquired Assets and any Confidential Information acquired by
Seller from Buyer or otherwise disclosed in connection with the negotiation of
this Agreement strictly confidential and will not (except as required by
applicable law, regulation or legal process, and only after providing
notification to Buyer), without Buyer’s prior written consent, disclose any such
Confidential Information, except to the extent Seller provides, or has provided,
such Confidential Information to its Representatives to assist Seller in
performing the transactions contemplated hereby, in which case Seller’s
Representatives shall agree, or have agreed, to keep such Confidential
Information strictly confidential as a condition to such disclosure.

 

(e) Non-Competition. From the time of the First Closing through the tenth
anniversary of the First Closing Date, Seller and its Affiliates shall refrain
from, without the express written consent of Buyer, directly or indirectly,
anywhere in the world, (A) engaging in the Genomics Business, or (B) owning,
managing, operating, financing, controlling, investing, or participating in the
ownership, management, operation, finance or control of, or acting as a sales or
marketing representative or consultant with respect to matters relating to or
lending its name or any similar name to any Person whose business, activities,
products or services are directly competitive with any of the business
activities

 

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conducted or offered by in connection with the Genomics Business.
Notwithstanding anything herein to the contrary, Seller and its Affiliates may:

 

(i) make passive investments in any enterprise the shares of which are publicly
traded if such investment constitutes less than five percent (5%) of the equity
of such enterprise;

 

(ii) engage in the research, development and commercialization of pharmaceutical
and therapeutic products without use of (expect as permitted under (iii) below)
any Acquired Assets assigned to Buyer hereunder; provided, however, that such
research and development of pharmaceutical and therapeutic products may be
performed in collaboration with third parties only pursuant to bona fide third
party research collaborations or bona fide joint development projects in which
Pangene participates in gene analysis and/or drug development. Third party
research collaborations and joint development projects pursuant to which Pangene
does no more than isolate genes shall not be considered bona fide. Furthermore,
Pangene shall not (A) advertise, market, sell, or offer to sell services for
gene isolation, or (B) provide to any third party (including any third party
collaborator or joint developer) any products or services that were offered by
Pangene through the Genomics Business immediately prior to the First Closing;
and

 

(iii) utilize the NaPro Acquired Technology in the Pangene Field (as each term
is defined in the Cross-License Agreement) as expressly permitted pursuant to
the Cross-License Agreement.

 

For the purposes of this Section 9(e), the term “Genomics Business” means the
Genomics Business as presently conducted by Seller, including the use of the
Daikin Patents in connection therewith.

 

(f) Amendment of Invitrogen and Pioneer Licenses. Buyer acknowledges that Seller
is currently in discussions with Invitrogen Corporation and Pioneer Hi-Bred
International, Inc. regarding the amendment of its respective Contracts with
such parties to secure Invitrogen Corporation’s remaining payment to Seller of
One Hundred Thousand Dollars ($100,000) (the “Remaining Payment”) as described
in Section 3.1 of Seller’s Contract with Invitrogen Corporation effective as of
July 18, 2002 (the “Invitrogen License”), and that Seller has provided to Buyer
the currently proposed amendments to the Invitrogen License and to the License
Agreement with Pioneer Hi-Bred International, Inc., amended and restated
effective as of August 15, 2000 (the “Pioneer License”). As of and after the
First Closing Date, Buyer authorizes Seller to continue to negotiate such
amendments to the Invitrogen License and the Pioneer License and, upon the prior
written consent of Buyer authorizing the execution of such amendments on behalf
of Buyer (which consent shall not be unreasonably withheld or delayed), Buyer
hereby authorizes and empowers Seller to execute such amendments, on behalf of
Buyer in the form to which Buyer has consented, (i) to the extent required to
remove the restrictions in the Invitrogen License relating to the Corn Field (as
such term is described in the Invitrogen License), and (ii) securing
Invitrogen’s prompt payment to Seller of the Remaining Payment. Buyer shall
refrain from, without the express consent of Seller, any amendment (or
negotiations thereof) of the Invitrogen License to remove the restrictions in
the Invitrogen License relating to the Corn Field.

 

(g) Further Assurances. After the First Closing Date, Seller shall from time to
time at Buyer’s request execute and deliver, or cause to be executed and
delivered, such further instruments of conveyance, assignment and transfer or
other documents, and perform such further acts and obtain such further consents,
approvals and authorizations, as Buyer may reasonably require in order to comply
with the provisions of this Agreement and consummate the transactions
contemplated by this Agreement.

 

10. Miscellaneous.

 

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(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the First Closing without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its commercially reasonable efforts to advise the
other Party prior to making the disclosure); provided, further, that in no event
shall any such press release or public announcement disclose any of the terms or
conditions of this Agreement unless, in the opinion of counsel, such disclosure
is reasonably required in order to satisfy any law, regulation or any listing or
trading agreement concerning its publicly-traded securities.

 

(b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.

 

(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they relate in any way to the subject matter
hereof.

 

(d) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder (in
any or all of which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).

 

(e) Counterparts. This Agreement may be executed in one or more counterparts
(including by means of facsimile), each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.

 

(f) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

(g) Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered personally
to the recipient, (ii) one business day after being sent to the recipient by
reputable overnight courier service (charges prepaid), (iii) one business day
after being sent to the recipient by facsimile transmission or electronic mail,
or (iv) four business days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, and addressed to
the intended recipient as set forth below:

 

If to Seller:

 

Pangene Corporation

5500 Stewart Avenue

Fremont, California 94538

Attention: David Zarling

Facsimile: (510) 360-9111

 

Copy to (which shall not constitute notice):

 

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Venture Law Group

2775 Sand Hill Road

Menlo Park, California 94025

Attention: Greg Ikonen

Facsimile: (650) 233-8386

 

If to Buyer:

 

NaPro BioTherapeutics, Inc.

6304 Spine Road, Unit A

Boulder, Colorado 80301

Attention: Kai Larson

Facsimile: (303) 530-1296

 

Copy to (which shall not constitute notice):

 

Kirkland & Ellis

333 Bush Street

San Francisco, California 94104-2806

Attention: Stephen Johnson

Facsimile: (415) 439-1500

 

Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

 

(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.

 

(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by Buyer and
Seller. No waiver by any Party of any provision of this Agreement or any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such default, misrepresentation, or breach of warranty or
covenant.

 

(j) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.

 

(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. Without limiting the generality of the
foregoing, all transfer, documentary, sales, use, stamp, registration and other
such Taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid by
Seller when due, and Seller will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Taxes, fees and
charges, and,

 

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if required by applicable law, the Parties will, and will cause their Affiliates
to, join in the execution of any such Tax Returns and other documentation.

 

(l) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word “including” shall
mean including without limitation. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms.
Nothing in the Disclosure Schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Disclosure
Schedules identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.

 

(m) Incorporation of Annexes, Exhibits and the Disclosure Schedules. The
Annexes, Exhibits and the Disclosure Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.

 

(n) Specific Performance. Each Party acknowledges and agrees that the other
Party would be damaged irreparably in the event any provision of this Agreement
not performed in accordance with its specific terms or otherwise is breached, so
that a Party shall be entitled to injunctive relief to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in addition to any other remedy to which such Party
may be entitled, at law or in equity. In particular, the Parties acknowledge
that the Genomics Business is unique and recognize and affirm that in the event
Seller breaches this Agreement, money damages would be inadequate and Buyer
would have no adequate remedy at law, so that Buyer shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce its
rights and the other Parties’ obligations hereunder not only by action for
damages but also by action for specific performance, injunctive, and/or other
equitable relief.

 

(o) Submission to Jurisdiction. Subject to Section 7(d) above, each of the
Parties submits to the jurisdiction of any state or federal court sitting in New
York City, New York, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court. Each Party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto. Any Party may make service on the other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 10(g) above. Nothing in this
Section 10(o), however, shall affect the right of any Party to serve legal
process in any other manner permitted by law or in equity. Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
law or in equity.

 

 

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(p) Governing Language. This Agreement has been negotiated and executed by the
Parties in English. In the event any translation of this Agreement is prepared
for convenience or any other purpose, the provisions of the English version
shall prevail.

 

* * * * *

 

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

NAPRO BIOTHERAPEUTICS, INC.

By:

 

 

--------------------------------------------------------------------------------

   

Name:

   

Title:

PANGENE CORPORATION

By:

 

 

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Name:

   

Title: