**Exhibit2.1**

 

**EXECUTIONCOPY**

 

 

ASSET PURCHASE AGREEMENT

 

 

by and between

 

GENAISSANCEPHARMACEUTICALS, INC.

 

and

 

DNA SCIENCES, INC.

 

 

Dated as of March 28,2003

 

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT (this **“Agreement”**), dated as of March 28, 2003,by and between Genaissance Pharmaceuticals, Inc., a Delaware corporation(including its assignees, the **“Purchaser”**),and DNA Sciences, Inc., a Delaware corporation (the **“Seller”**, and together with the Purchaser, each, a **“Party”** and, collectively, the **“Parties”**).

 

W I T N E S S E T H:

 

WHEREAS, on or before April 4, 2003, the Seller shallfile the Chapter 11 Case with the Bankruptcy Court under Chapter 11 of theBankruptcy Code, and will continue in possession of its assets and in themanagement of its businesses pursuant to Sections 1107 and 1108 of theBankruptcy Code; and

 

WHEREAS, the Purchaser desires to purchase certainassets of the Seller and to assume certain contracts and leases of the Seller,and the Seller desires to sell such assets to the Purchaser and to assign suchcontracts and leases to the Purchaser, on the terms and conditions set forth inthis Agreement and in accordance with Sections 105, 363 and 365 of theBankruptcy Code and other applicable provisions of the Bankruptcy Code.

 

NOW, THEREFORE, in consideration of the premises andin consideration of the representations, warranties, and covenants hereincontained, and for other good and valuable consideration described herein, thereceipt and sufficiency of which are hereby acknowledged, the Parties heretoagree as follows:

 

# **ARTICLE I**

 

# **DEFINITIONS**

 

Section 1.1                                      Definitions.  As used in this Agreement, the followingterms shall have the following meanings:

##  

“**Acquired Assets**”shall have the meaning set forth in Section 2.1(a).

 

“**Affiliate**”means, with respect to any specified Person, any other Person that directly, orindirectly through one or more intermediaries, controls, is controlled by, oris under common control with, such specified Person.

 

“**Allocation**”shall have the meaning set forth in Section 3.2.

 

“**AlternativeTransaction**” shall mean a single transaction or a series oftransactions involving (a) a sale of all or substantially all of the assets ofthe Seller’s business by the Seller to a Person other than (i) the Purchaser or(ii) an Affiliate of the Purchaser or (b) confirmation by the Bankruptcy Courtof a plan of reorganization under which the Seller retains all or substantiallyall of the Acquired Assets.

 

“**Agreement**”shall have the meaning set forth in the Preamble.

 

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“**AncillaryAgreements**” means the Bill of Sale Agreement, the Assignment andAssumption Agreement, the Patent Assignment Agreement and the TrademarkAssignment Agreement.

 

“**Approval Order**”shall have the meaning set forth in Section 5.1(b).

 

“**Assigned Contractsand Leases**” shall have the meaning set forth inSection 2.1(a)(iv).

 

“**AssignedIntellectual Property**” shall have the meaning set forth inSection 2.1(a)(vi).

 

“**Assigned Permits**”shall have the meaning set forth in Section 2.1(a)(v).

 

“**Assumed Liabilities**”shall have the meaning set forth in Section 2.2.

 

“**Bankruptcy Code**”means the Bankruptcy Reform Act of 1978, as heretofore and hereinafter amended,and codified as 11 U.S.C. Section 101, *etseq*.

 

“**Bankruptcy Court**”means the United States Bankruptcy Court for the Northern District ofCalifornia or any other court, having jurisdiction over the Chapter 11 Casefrom time to time.

 

“**Bill of Sale,Assignment and Assumption Agreement**” shall have the meaning setforth in Section 4.2(i).

 

“**Break-Up Fee**”means $100,000 or such other amount as the Bankruptcy Court may allow.

 

“**Business**”means any and all business activities of any kind that are conducted by theSeller.

 

“**Business Day**”means any day except a Saturday, a Sunday or other day on which commercialbanks are required or authorized to close in California.

 

“**Certificate**”shall have the meaning set forth in Section 3.1(a).

 

“**Chapter 11 Case**”means the Chapter 11 case of Seller to be filed in the Bankruptcy Court.

 

“**Charges**”shall have the meaning set forth in Section 12.2.

 

“**Closing**”shall have the meaning set forth in Section 4.1.

 

“**Closing Date**”shall have the meaning set forth in Section 4.1.

 

“**Code**”means the Internal Revenue Code of 1986, as amended, together with the Treasuryregulations promulgated thereunder.

 

“**ConfidentialityAgreement**” means the Confidentiality Agreement, dated March 4, 2002by and between the Purchaser and the Seller.

 

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“**Copyrights**”shall have the meaning set forth in Section 6.8(e).

 

“**Consent**”means any consent, approval or waiver required pursuant toSection 365(c)(1) of the Bankruptcy Code.

 

“**Consideration**”shall have the meaning set forth in Section 3.1.

 

“**Cure Costs**”shall have the meaning set forth in Section 5.1(f).

 

“**Dollars**”or “**$**” means the currency of theUnited States of America, unless otherwise specified.

 

“**Encumbrances**”means and includes interests, contractual rights, security interests,mortgages, liens, licenses, pledges, guarantees, charges, easements,reservations, restrictions, clouds, equities, rights of way, options, rights offirst refusal and all other encumbrances, whether or not relating to theextension of credit or the borrowing of money.

 

“**ERISA**”means the Employee Retirement Income Security Act of 1974, as amended, togetherwith the rules and regulations promulgated thereunder.

 

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

 

“**Excluded Assets**”shall have the meaning set forth in Section 2.1(b).

 

“**Filing Date**”means the date on which Seller commences the Chapter 11 Case with theBankruptcy Court.

 

“**Final ApprovalOrder**” means the Approval Order, the operation or effect of whichhas not been stayed, reversed or amended (including any revisions,modifications or amendment thereof), and the time to appeal or seek review orrehearing has expired and no appeal or petition for review or rehearing wasfiled or, if filed, remains pending.

 

“**GovernmentalAuthority**” means any foreign, United States federal, state or localgovernment, political subdivision or governmental, regulatory or administrativeauthority, body, agency, board, bureau, commission, department, instrumentalityor court, quasi-governmental authority, self-regulatory organization or stockexchange.

 

“**IntellectualProperty**” shall have the meaning set forth in Section 6.8(e).

 

“**Law**” or“**Laws**” means any and all statutes,laws, ordinances, proclamations, regulations, orders, decrees, consent decreesand rules of any Governmental Authority, in each case, as amended and in effectfrom time to time.

 

“**Leases**”shall have the meaning set forth in Section 6.7.

 

“**Liability**”means any liability or obligation of any nature, whether matured or unmatured,fixed or contingent, secured or unsecured, accrued, absolute or otherwise.

 

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“**Liens**”means all liens, claims, judgments, licenses, subleases, encumbrances,mortgages, pledges, security interests, conditional sales agreements, charges,options, rights of first refusal, reservations, restrictions or otherencumbrances or defects in title of any kind.

 

“**Material AdverseEffect**” means any material adverse change, event, circumstance ordevelopment with respect to, or material adverse effect on, (i) the AcquiredAssets, Assumed Liabilities, prospects, condition (financial or other), orresults of operations of the Business, or (ii) the prospective ability of thePurchaser to operate the Business immediately after the Closing.  For the avoidance of doubt, the Partiesagree that the terms “material”, “materially” or “materiality” as used in thisAgreement with an initial lower case “m” shall have their respective customaryand ordinary meanings, without regard to the meaning ascribed to MaterialAdverse Effect.

 

“**MaterialIn-Licensed IP**” shall have the meaning set forth inSection 6.9(a).

 

“**Ordinary Course ofBusiness**” means the operation of the Business in the ordinary courseof business consistent with Seller’s usual and customary practices in managingand operating the Business as they existed on the date hereof without regard tothe transactions contemplated hereby, but giving effect to Section 12.19herein.

 

“**Outbound LicenseAgreements**” shall have the meaning set forth in Section 6.8(d).

 

“**Party**”or “**Parties**” shall have themeaning set forth in the Preamble.

 

“**Patent AssignmentAgreement**” shall have the meaning set forth in Section 4.2(i).

 

“**Patents**”shall have the meaning set forth in Section 6.8(e).

 

“**PermittedEncumbrances**” means: (a) statutory liens for Taxes that are not yetdue and payable or are being contested in good faith by appropriate proceedingsor that are otherwise not material; (b) statutory or common law liens to secureobligations to landlords, lessors or renters under leases or rental agreements;(c) deposits or pledges made in connection with, or to secure payment of,workers’ compensation, unemployment insurance or similar programs mandated byapplicable Law; (d) statutory or common law liens in favor of carriers,warehousemen, mechanics and materialmen, to secure claims for labor, materialsor supplies and other like liens; (e) Encumbrances that relate to, or arecreated, arise or exist in connection with, any legal proceeding that is beingcontested in good faith; and (f) Encumbrances that do not materially impair theownership or use of the assets to which they relate.

 

“**Person**”means and includes any individual, any legal entity, including, withoutlimitation, any partnership, joint venture, corporation, limited liabilitycompany, trust, or unincorporated organization, and any Governmental Authority.

 

“**Plan**”shall have the meaning set forth in Section 6.11(b).

 

“**Proposed Sale**”shall have the meaning set forth in Section 5.1(a).

 

“**Purchase Price**”shall have the meaning set forth in Section 3.1(a).

 

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“**Purchaser**”shall have the meaning set forth in the Preamble.

 

“**Purchaser ClosingCertificate**” shall have the meaning set forth inSection 10.1(a).

 

“**Sale Approval Date**”shall have the meaning set forth in Section 5.1(a).

 

“**Sale Hearing**”shall have the meaning set forth in Section 5.1(a).

 

“**Sale Procedures**”shall have the meaning set forth in Section 5.1(a).

 

“**Sale ProcedureOrder**” shall have the meaning set forth in Section 5.1(a).

 

“**SEC**” meansthe United States Securities and Exchange Commission.

 

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

 

“**Seller**”shall have the meaning set forth in the Preamble.

 

“**Seller ClosingCertificate**” shall have the meaning set forth in Section 9.2(a).

 

“**Seller DisclosureSchedule**” means the disclosure schedule delivered by Seller toPurchaser contemporaneously with the execution and delivery of the Agreement.

 

“**Shares**”means 250,000 shares of the common stock, par value $0.001 per share, of GenaissancePharmaceuticals, Inc., a Delaware corporation.

 

“**Tax**” or“**Taxes**” means any foreign, UnitedStates federal, state or local income, gross receipts, license, payroll,employment, excise, severance, stamp, occupation, premium, windfall profits,environmental, customs duties, capital stock, franchise, profits, withholding,social security (or similar), unemployment, disability, real property, personalproperty, sales, use, transfer, registration, value added, alternative oradd-on minimum, estimated or other tax of any kind whatsoever, including allestimated taxes, deficiency assessments and any interest, penalty or additionthereto.

 

“**TrademarkAssignment Agreement**” shall have the meaning set forth inSection 4.2(i).

 

“**Trademarks**”shall have the meaning set forth in Section 6.8(e).

 

“**Trade Secrets**”shall have the meaning set forth in Section 6.8(e).

 

“**TransferredEmployees**” shall have the meaning set forth in Section 8.8(a).

 

“**UnassignedContracts and Leases**” shall have the meaning set forth in Section 2.1(b)(ii).

 

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# **ARTICLE II**

 

# **PURCHASE AND SALE OF ACQUIREDASSETS; ASSUMPTION OF LIABILITIES**

# ** **

## Section 2.1                                      Purchaseand Sale of Acquired Assets.

##  

### (a)                                  Subjectto and upon the terms and conditions of this Agreement, Purchaser shallpurchase from the Seller, and the Seller shall grant, transfer, sell, convey,assign and deliver to the Purchaser, as a good faith purchaser for value withinthe meaning of Section 363(m) of the Bankruptcy Code, free and clear ofall Liens, interests and Encumbrances to the fullest extent of the BankruptcyCourt’s authority to so order, all rights, title and interest of Seller in andto all of the assets, properties and business, other than the Excluded Assets,of every kind and description, wherever located, real, personal or mixed,tangible or intangible, owned or held by Seller in the Business as the sameexisted immediately prior to the Closing and including without limitation allrights, title and interest of Seller as of the Closing Date, in, to and undersuch of the foregoing as more specifically described below (collectively, the “**Acquired Assets**”):

###  

#### (i)                                     allraw materials, work in process, finished goods, supplies and inventory of theSeller, and all computer records and other records relating to the foregoing;

####  

#### (ii)                                  allof the Seller’s accounts receivable, notes receivable or other obligationsreceivable, other than those notes receivable and other receivables outside theOrdinary Course of Business as set forth on Exhibit 2.1(b) (the “**Excluded Receivables**”);

####  

#### (iii)                               allpersonal property and interests therein, including, without limitation,vehicles, machinery, equipment, furniture, office equipment, tools and othertangible property;

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#### (iv)                              allrights of the Seller under all executory contracts and unexpired leases(including, without limitation, license agreements pursuant to whichIntellectual Property and Material In-Licensed IP is licensed to Seller),except as set forth in Section 2.1(b) or Exhibit 2.1(b)(collectively, the “**Assigned Contracts andLeases**”);

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#### (v)                                 alltransferable foreign, federal, state or local or other governmental permits(including occupancy permits), certificates, licenses, consents,authorizations, approvals, registrations or franchises held by the Seller tothe fullest extent such right, title and interest may be transferred(collectively, the “**Assigned Permits**”);

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#### (vi)                              allIntellectual Property owned by the Seller (collectively, the “**Assigned Intellectual Property**”);

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#### (vii)                           copiesof all books, records, files and papers, whether in hard copy or computerformat, including, without limitation, all books, records, 

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#### materials, manuals, salesand promotional materials and records, advertising materials, customer lists,supplier lists, mailing lists, distribution lists, business plans, litigationfiles, credit information, cost and pricing information, and all documentsembodying the Assigned Intellectual Property, in each case relating to theAcquired Assets, excluding records which are attorney-client privileged orconsidered attorney work product;

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#### (viii)                        anytelephone and facsimile numbers, websites, e-mail addresses and Internet domainnames; and

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#### (ix)                                allrights of the Seller as of the Closing Date under the non-competitionagreements in favor of the Seller set forth in Exhibit 2.1(a)(ix).

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### (b)                                 NotwithstandingSection 2.1(a), the Seller will not be required to sell or transfer to thePurchaser, and the Acquired Assets shall not include, the following assets orany right or interest in or to any of the following assets (collectively, the “**Excluded Assets**”):

###  

#### (i)                                     allrights of Seller under this Agreement, the Ancillary Agreements and theagreements and instruments executed and delivered to the Seller by Purchaserpursuant to this Agreement;

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#### (ii)                                  anyexecutory contracts and unexpired leases to which the Seller is a party orotherwise is bound if, after taking into account Section 365 of theBankruptcy Code, (i) a Consent is required to be obtained from any Person inorder to permit the sale or transfer to Purchaser of Seller’s rights under suchcontract or lease and (ii) such Consent shall not have been obtained prior tothe Closing (the “**Unassigned Contracts andLeases**”);

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#### (iii)                               allcash, cash equivalents (including deposits) and securities in entities otherthan Seller owned by Seller;

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#### (iv)                              allof Seller’s books, records, ledgers, files and documents (except that Purchasermay obtain copies of certain records described in Section 2.1(a)(vii));

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#### (v)                                 Seller’sformal corporate records, including its certificate of incorporation, bylaws,minute books, corporate books, stock transfer records and other records havingto do with the corporate organization of Seller;

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#### (vi)                              anyIntellectual Property to the extent that the Seller’s rights thereto aresubject to the Unassigned Contracts and Leases;

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#### (vii)                           allinsurance benefits, including rights and proceeds, arising from or relating tothe Acquired Assets prior to the date of this Agreement;

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#### (viii)                        theCollaboration Agreement dated March 16, 2000 between the Seller andHealtheon/WebMD Corporation, the First Amendment thereto dated 

####  

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#### January 5, 2001 and theSecond Amendment thereto dated February 1, 2002;

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#### (ix)                                theLease Agreement dated June 5, 2000 between the John Arrillaga, Trustee, or hisSuccessor Trustee, UTA dated 7/20/77 as amended, and Richard T. Peery, Trustee,or his Successor Trustee, UTA dated 7/20/77 as amended, and the Seller,including all amendments thereto;

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#### (x)                                   theLease Agreement dated October 26, 2000 between Newcourt Communications FinanceCorporation and the Seller, and all items leased thereunder;

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#### (xi)                                theMaster Lease Agreement dated as of August 26, 2001, between De Lage LandenFinancial Services, Inc. and the Seller, and all items leased thereunder;

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#### (xii)                             theSubscription Agreement dated as of May 14, 2001, by and between PE Corporation,doing business through its wholly owned affiliate the Celera Genomics Group,and the Seller and the Amendment No. 1. thereto dated November 18, 2002 by andbetween Applera Corporation, through Celera Genomics Group, and the Seller;

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#### (xiii)                          ServiceAgreement and License No. 1, effective as of November 9, 2001, by and betweenthe Seller and the University of Utah;

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#### (xiv)                         theExcluded Receivables;

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#### (xv)                            anyTax attributes of Seller, including, without limitation, any net operating losscarryovers and any right or claim for a Tax refund attributable to theoperations or assets of Seller, whether arising before, on or after theClosing;

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#### (xvi)                         allpersonnel records and other records that Seller is required by any Law toretain in its possession; and

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#### (xvii)                      those assetsspecifically identified as “Excluded Assets” on Exhibit 2.1(b).

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## Section 2.2                                      NoAssumption of Liabilities.  Subjectto and upon the terms and conditions of this Agreement, the Purchaser shall notassume any Liabilities of the Seller, except for the following obligations andother liabilities (whether known, unknown, accrued, absolute, matured,unmatured, contingent or otherwise, and whether arising before (only in thecase of clauses (ii), (iii) and (iv) below) or after (in the case of clauses(i) through (v) below) the Closing) as they may exist at and/or after theClosing:  (i) all obligations and otherliabilities of Seller under or relating to the Assigned Contracts and Leases,the Assigned Permits and the Assigned Intellectual Property; (ii) all costs andexpenses related to Purchaser’s taking possession and control of the AcquiredAssets; (iii) all obligations and other liabilities of Seller relating to anyof the Charges that the Purchaser is required to bear and pay pursuant toSection 12.2 (it being understood that the Purchaser shall not assume any otherTax Liability of the Seller 

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## whatsoever); (iv)to the extent that the Purchaser elects to make payments for Cure Costs inexcess of an aggregate of $75,000 pursuant to Section 5.1(f), any such CureCosts greater than such $75,000 amount; and (v) each other obligation or otherliability of Seller relating to any of the Acquired Assets (the “**Assumed Liabilities**”).  All other liabilities of the Seller shallremain the sole responsibility of Seller and shall be retained, paid, performedand discharged solely by Seller.

 

# **ARTICLE III**

 

# **PURCHASE PRICE;PAYMENT OF PURCHASE PRICE;ALLOCATION OF PURCHASE PRICE**

# ** **

## Section 3.1                                      PurchasePrice; Payment of Purchase Price. As consideration for the sale of the Acquired Assets to Purchaser:

##  

### (a)                                  PurchasePrice.  At the Closing, asconsideration for the sale, conveyance, transfer and assignment of the AcquiredAssets, the Purchaser will (i) deliver, or cause to be delivered, by wiretransfer of immediately available funds to an account specified by Seller, anamount in cash equal to $1,000,000 and (ii) subject to Section 4.3, issue andsell to Seller the Shares by delivering, or causing to be delivered, to Sellera stock certificate, registered in the name of the Seller, evidencing theShares (the “**Certificate**,” and,collectively, the “**Purchase Price**”).

###  

### (b)                                 Assumptionof Liabilities.  At the Closing, thePurchaser shall assume the Assumed Liabilities by delivering to Seller the Billof Sale, Assignment and Assumption Agreement.

###  

The consideration described in subparagraphs (a) and(b) of this Section 3.1 shall be collectively referred to as the “**Consideration**.”

 

## Section 3.2                                      Allocationof Purchase Price.  TheConsideration shall be allocated among the Acquired Assets and, to the extentappropriate, the Ancillary Agreements as of the Closing Date in accordance withan allocation to be mutually agreed upon in good faith by the Parties prior tothe Closing (the “**Allocation**”).  The Allocation will be determined in amanner consistent with Section 1060 of the Code and the TreasuryRegulations thereunder.  For all Taxpurposes, Purchaser and Seller agree to report the transactions contemplated inthis Agreement in a manner consistent with the terms of this Agreement,including the Allocation, except as provided below, and that neither Party willtake, or permit any of its Affiliates or representatives to take, any positioninconsistent therewith in any Tax return, in any refund claim, in anylitigation, or otherwise except as required by a final determination within themeaning of Section 1313(a) of the Code or any equivalent provision of anyapplicable state or local Law.  EachParty will promptly provide the other Party with any additional informationrequired to complete Form 8594 if the filing of such form is required.  Each Party will timely notify the otherParty, and will timely provide the other Party with assistance, in the event ofan examination, audit or other proceeding regarding the Allocation.

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# **ARTICLE IV**

 

# **CLOSING**

 

## Section 4.1                                      Closing.  Subject to the terms and conditions of thisAgreement, the closing of the purchase and sale of the Acquired Assets (the “**Closing**”) will be at 10:00 A.M. PacificStandard Time at the offices of Cooley Godward LLP, Five Palo Alto Square, 3000El Camino Real, Palo Alto, California 94306, or at such other location agreedto by the Purchaser and the Seller, on the first Business Day following thedate of the issuance of the Final Approval Order, or such other earlier orlater date as may be agreed upon in writing by the Parties after thesatisfaction or waiver of the last to be satisfied or waived of the conditionsset forth in Articles IX and X (other than those conditions that by theirnature are to be satisfied at the Closing) (the date of the Closing beingherein referred to as the “**Closing Date**”).

##  

## Section 4.2                                      Deliveriesby the Seller at the Closing.  Atthe Closing, the Seller will:

##  

#### (i)                                     deliver,or cause to be delivered, to the Purchaser, a receipt for the Purchase Pricepaid by the Purchaser in accordance with Section 3.1(a) and a bill of sale,assignment and assumption agreement (the “**Billof Sale, Assignment and Assumption Agreement**”), a patent assignmentagreement (the “**Patent Assignment Agreement**”),and a confirmatory trademark assignment agreement (the “**Trademark Assignment Agreement**”)substantially in the forms of Exhibit A, Exhibit B and ExhibitC hereto, respectively;

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#### (ii)                                  deliver,or cause to be delivered, to the Purchaser all consents, orders and approvalsof the Bankruptcy Court (including, without limitation, a certified copy of theApproval Order);

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#### (iii)                               deliver,or cause to be delivered, to the Purchaser the Seller Closing Certificatereferred to in Sections 9.2(a) and (b) hereof;

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#### (iv)                              deliver,or cause to be delivered, to the Purchaser certified copies of the resolutionsof the Board of Directors of the Seller authorizing the sale of the AcquiredAssets, the execution and delivery of this Agreement, the Ancillary Agreementsand all other documents and agreements delivered in connection herewith byofficers of the Seller and consummation of the transactions contemplated herebyand thereby; and

####  

#### (v)                                 deliver,or cause to be delivered, to the Purchaser such good standing certificates andother similar documents as Purchaser may reasonably request to ensure that theactions required to be taken by Seller at the Closing have been properlyauthorized.

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## Section 4.3                                      Deliveriesby the Purchaser at the Closing.  Atthe Closing, the Purchaser will:

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#### (i)                                     deliver,or cause to be delivered, to the Seller the Bill of Sale, Assignment andAssumption Agreement and the Trademark Assignment Agreement duly executed bythe Purchaser;

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#### (ii)                                  payto the Seller the Purchase Price in accordance with Section 3.1(a); *provided, however*, that upon the writtenrequest of the Seller to be provided to the Purchaser not less than one (1) dayprior to the Closing Date, the Purchaserwill deliver the Certificate to a third party escrow agent of the Seller’schoosing pursuant to instructions approved in the sole discretion of Sellerthat provide for the release of such Certificate from escrow upon either (i)the entry of an order by the Bankruptcy Court confirming a plan ofreorganization of Seller under the Bankruptcy Code providing for the transferor distribution of the Shares in a transaction exempt from the registrationrequirements of the Securities Act pursuant to Section 1145 of the BankruptcyCode; or (ii) the mutual consent of the Purchaser and the Seller, it beingunderstood that all fees and expenses of any such escrow agent shall be borneexclusively by the Seller;

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#### (iii)                               deliver,or cause to be delivered to the Seller the Purchaser Closing Certificatereferred to in Sections 10.1(a) and (b) hereof; and

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#### (iv)                              deliver,or cause to be delivered, to the Seller such good standing certificates andother similar documents as Seller may reasonably request to ensure that theactions required to be taken by Purchaser at the Closing have been properlyauthorized.

####  

## Section 4.4                                      FurtherAssurances.

##  

##### (i)                                     EachParty will from time to time, at the reasonable request of any other Party,execute and deliver such other instruments of conveyance and transfer and suchother instruments, documents and agreements and take such other actions as suchother Party may reasonably request or as may be reasonably requested by anyapplicable Governmental Authorities or third parties, in each case in order toconsummate and make effective any of the transactions contemplated hereby and tovest in the Purchaser the right, title and interest in, to and under theAcquired Assets, to assist the Purchaser in the transfer, assignment,collection and reduction to possession of the Acquired Assets (and the exerciseof rights with respect thereto); provided that the requesting Party willprepare any additional documents and instruments and will handle any submittal,applications, processing, recording and registrations and bear all expensesrelated thereto.  Without limiting theprovisions of Section 12.4, the Parties hereby irrevocably consent to thepersonal and subject-matter jurisdiction of the Bankruptcy Court for allpurposes necessary to effectuate this Section 4.4.

#####  

##### (ii)                                  Purchaserwill return any records Seller inadvertently delivers to Purchaser that are orare reasonably likely to be attorney-client privileged or considered attorneywork product or which Purchaser realizes are or are likely to beattorney-client privileged or considered attorney work product.

#####  

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##### (iii)                               Purchaseragrees that should Purchaser receive a subpoena to provide to a third partycopies of records relating to the Acquired Assets at any time after the ClosingDate, Purchaser shall within three (3) Business Days of the receipt of thesubpoena, provide written notice to Seller of the receipt of such subpoena sothat Seller may seek a protective order or an appropriate remedy.  Purchaser will cooperate with Seller toobtain such protective order or other remedy. If Seller elects not to seek, or is unsuccessful in obtaining, any suchprotective order or other remedy in connection with any requirement thatPurchaser provide certain records, then Purchaser may provide to the thirdparty the records requested in the subpoena.

#####  

## Section 4.5                                      Grant-backLicense of “DNA Sciences” Name. Effective immediately after the Closing,Purchaser hereby grants to Seller a non-exclusive license to use the name “DNASciences” and logo solely for the purpose of completing the bankruptcy process.

##  

# **ARTICLE V**

 

# **BANKRUPTCY COURT MATTERS**

 

## Section 5.1                                      BankruptcyCourt Orders.

##  

### (a)                                  Nolater than five (5) Business Days after execution of this Agreement, or, ifearlier, three (3) Business Days after the filing of the Chapter 11 Case,Seller shall file a motion that seeks, on an expedited basis, the entry of anorder (the “**Sale Procedure Order**”)approving, among other things, the procedures in connection with (i) theSeller’s request to sell and assign, as applicable, the Acquired Assets to thePurchaser pursuant to this Agreement and Sections 363, 365 and 1146 of theBankruptcy Code, free and clear of all Liens, interests or Encumbrances in oron the Acquired Assets to the fullest extent of the Bankruptcy Court’sauthority to so order (the “**Proposed Sale**”and the hearing to consider approval of the Proposed Sale, the “**Sale Hearing**”), (ii) establishing noticeand service requirements to all creditors and parties in interest of theProposed Sale and the Sale Hearing (including the Internal Revenue Service andall other Tax authorities with jurisdiction over the Seller or the AcquiredAssets), (iii) approving the payment of the Break-Up Fee in the event that itbecomes payable as specified in Section 11.2 as the sole and exclusive remedy against Seller in the event thetransaction contemplated herein is not consummated, (iv) establishing adeadline of the submission of competing bids for the Acquired Assets and (v)establishing thresholds for initial overbids consistent with those set forth inSection 5.1(g), the bidding procedures and setting a date for the Sale Hearing(collectively, the “**Sale Procedures**”),which shall be substantially in the form of Exhibit D.

###  

### (b)                                 Theorder approving the Proposed Sale (the “**ApprovalOrder**”) will be substantially in the form annexed hereto as ExhibitE (provided, that, in each case, any material changes to such formof order must be approved by the Purchaser and Seller), and the motionsrelating to the Approval Order will be in form and substance reasonablysatisfactory to the Purchaser; *provided,however*, that in no event shall Purchaser have the right todisapprove the Approval Order or terminate this transaction by reason of (A)subject to Section 9.2(i), the failure to assign all of the Assigned Contractsand Leases or (B) Seller’s inability to assign any or all of the AssignedContracts and Leases by reason of the Bankruptcy Court’s determination thatPurchaser has failed to provide adequate assurance of future performance to thecounter party. If (xx) the Bankruptcy Court refuses to issue the Approval Order(except as otherwise 

###  

### 12

### 

###  

### provided in thepreceding sentence) or (yy) an Alternative Transaction is approved by theBankruptcy Court at the Sale Hearing, then in any such event, this transactionshall automatically terminate and Seller and Purchaser shall be relieved of anyfurther liability or obligation hereunder; *provided,however*, in the event an Alternative Transaction is approved by theBankruptcy Court at the Sale Hearing, and Purchaser is otherwise entitled tothe Break-Up Fee then such obligation on the part of Seller to pay the Break-UpFee shall survive.  Upon timely entry ofthe Approval Order (such entry date being referred to herein as the “**Sale Approval Date**”), the conditions setforth in this Section 5.1(b) shall conclusively be deemed satisfied.

###  

### (c)                                  Subjectto the Seller’s obligations to comply with any order of the Bankruptcy Court(including, without limitation, the Sale Procedures), the Seller and thePurchaser will promptly make any filings, take all actions and use commerciallyreasonable efforts to obtain any and all other approvals and orders necessaryor appropriate for consummation of the transactions contemplated hereby.

###  

### (d)                                 TheSeller shall file a motion requesting the Bankruptcy Court to hold a hearing onthe sale of the Acquired Assets.  Sellershall use its best efforts to expedite the timing of the hearing so that itshall be held on or before the date 45 days after the Filing Date but in noevent shall the hearing be held later than the date 60 days after the FilingDate.

###  

### (e)                                  TheSeller shall promptly provide the Purchaser with drafts of all documents,motions, orders, filings or pleadings that the Seller proposes to file with theBankruptcy Court which relate to the consummation or approval of this Agreementand will provide the Purchaser with reasonable opportunity to review suchfilings.  The Seller will also promptlyprovide the Purchaser with written notice and copies of any other or further noticeof appeal, motion or application filed in connection with any appeal from orapplication for reconsideration of, any of such orders and any related briefs.

###  

### (f)                                    TheSeller shall be responsible for the payment or satisfaction of any amounts (the“**Cure Costs**”) necessary to cureany defaults and arrearages that exist on the Closing Date under the AssignedContracts and Leases, up to an aggregate of $75,000, and the Purchaser shall beresponsible for any Cure Costs in excess of such amount.

###  

### (g)                                 Buyeracknowledges and understands that the Bankruptcy Court customarily requiresthat any offer to purchase a debtor’s assets be subject to counteroffers bythird parties and that the Bankruptcy Court may conduct a bidding process at orprior to the hearing on approval of the sale of the Acquired Assetscontemplated by this Agreement; provided, however, that theSeller shall oppose, and shall not submit any motions, plans of reorganizationor disclosure statements proposing, any counteroffer by a third party (i) pursuantto which the payment of any non-cash consideration is contingent upon the makerthereof meeting or exceeding any performance criteria or is payable solely outof any profits or a percentage of revenue of the maker, or (ii) if suchcounteroffer contains any non-cash consideration, the maker’s capital structureis not at least as financially sound as that of Buyer and (iii) provides for atotal purchase price payable pursuant to such counteroffer which does notexceed the Purchase Price payable by Buyer hereunder by an amount in excess of$50,000.

###  

13

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# **ARTICLE VI**

 

# **REPRESENTATIONS OF THE SELLER**

 

The Seller represents and warrants to the Purchaser asfollows:

 

## Section 6.1                                      CorporatePower and Authority.  Subject tocompliance with applicable provisions of the Bankruptcy Code and orders of theBankruptcy Court, the Seller has the corporate power and authority to own,lease and operate its properties and to conduct its business as is presentlyconducted.

##  

## Section 6.2                                      Existenceand Good Standing.  The Seller is acorporation duly incorporated, validly existing and in good standing under thelaws of the State of Delaware.  TheSeller is duly qualified as a foreign corporation and is in good standing ineach jurisdiction in which such qualification is required by law, except wherethe failure to be so qualified or to be in good standing has not had, or wouldnot reasonably be expected to have, a Material Adverse Effect.

##  

## Section 6.3                                      Authority;No Consents.  Except as set forth inSection 6.3(i) of the Seller Disclosure Schedule, subject to compliancewith the applicable provisions of the Bankruptcy Code and the entry by theBankruptcy Court of the Final Approval Order prior to the Closing, theexecution, delivery and performance by the Seller of this Agreement and theAncillary Agreements to which it is a party and the consummation of thetransactions contemplated hereby and thereby have been duly and validlyauthorized by all necessary corporate action on the part of the Seller and thisAgreement has been, and the Ancillary Agreements to which it is a party whenexecuted and delivered by the Seller will be, duly and validly executed anddelivered and the valid and binding obligations of the Seller, enforceableagainst it in accordance with their respective terms, subject to (i) laws ofgeneral application relating to bankruptcy, insolvency and the relief ofdebtors and (ii) rules of law governing specific performance, injunctive reliefand other equitable remedies. Except as set forth in Section 6.3(ii) ofthe Seller Disclosure Schedule, subject to compliance with the applicableprovisions of the Bankruptcy Code and the entry by the Bankruptcy Court of theFinal Approval Order and the payment by the Purchaser or the Seller of allapplicable Cure Costs prior to the Closing, neither the execution, delivery andperformance by the Seller of this Agreement or the Ancillary Agreements towhich the Seller is a party, the consummation by the Seller of the transactionscontemplated hereby or thereby, nor compliance by the Seller with any provisionhereof or thereof will (I) (A) conflict with, (B) result in any violation of,(C) cause a default under (with or without due notice, lapse of time or both),(D) give rise to any right of termination, amendment, cancellation oracceleration of any obligation contained in or the loss of any benefit under or(E) result in the creation of any Encumbrance on or against any assets, rightsor property of the Seller under any term, condition or provision of (x) any ofthe Assigned Contracts and Leases or (y) any law, statute, rule, regulation,order, writ, injunction, decree, permit, concession, license or franchise ofany Governmental Authority applicable to the Seller or any of its properties, assetsor rights, other than any such conflict, violation, default, right, loss orEncumbrance that would not have a Material Adverse Effect, or (II) conflictwith or result in any violation of the Seller’s Certificate of Incorporation orBylaws.

##  

## 14

## 

##  

## Section 6.4                                      Titleto Assets, Properties and Rights and Related Matters.  As of the Closing and assuming the entry ofthe Final Approval Order by the Bankruptcy Court and the payment by Seller ofthe Cure Costs, the Seller will have good and valid title to all of theAcquired Assets free and clear of all Encumbrances to the fullest extent of theBankruptcy Court’s authority to so order.

##  

## Section 6.5                                      Contracts.  Section 6.5 of the Seller DisclosureSchedule lists all written or oral contracts (other than contracts which areExcluded Assets) to which Seller is a party that provide for the payment to orby the Seller of more than $25,000. The Seller has delivered to the Purchaser acorrect and complete copy of each contract (and all amendments, modificationsand supplements thereto) listed in Section 6.5 of the Seller DisclosureSchedule. Subject to (i) laws of general application relating to bankruptcy,insolvency and the relief of debtors and (ii) rules of law governing specificperformance, injunctive relief and other equitable remedies, each of theAssigned Contracts and Leases is valid and in full force and effect inaccordance with its terms, except where the failure of any of the AssignedContracts and Leases to be valid or in full force and effect would not have aMaterial Adverse Effect.

##  

## Section 6.6                                      Litigation.  Except for the Chapter 11 Case andproceedings therein, and except as set forth in Section 6.6 of the SellerDisclosure Schedule, there is no action, suit, proceeding in equity or at law,arbitration or administrative or other proceeding by or before any Person(including, without limitation, any Governmental Authority), pending or, to thebest of the Seller’s knowledge, threatened in writing against the Seller which,if adversely determined, would result in a Material Adverse Effect after theClosing Date.  Except as set forth inSection 6.6 of the Seller Disclosure Schedule, the Acquired Assets are notsubject to any judgment, order or decree entered in any material lawsuit orproceeding.

##  

## Section 6.7                                      RealProperty - Owned or Leased.  TheSeller does not currently own any real property.  Seller has provided to Purchaser copies of all leases for realproperty that are Assigned Contracts and Leases (“**Leases**”).  The Sellerowns and holds all the leasehold estates purported to be granted by each Lease,and all Leases are in full force and effect and constitute valid and bindingobligations of the Seller.

##  

## Section 6.8                                      IntellectualProperty.

##  

### (a)                                  Tothe Seller’s knowledge, the Seller has good and valid title to, and owns freeand clear of all Encumbrances, other than Permitted Encumbrances andnon-exclusive licenses, and has the right to bring actions for the infringementof, all Assigned Intellectual Property. Section 6.8(a) of the Seller Disclosure Schedule includes acomplete and accurate list of all of the Seller’s United States and foreign (a)Patents; (b) registered Trademarks (including Internet domain nameregistrations); and (c) registered Copyrights, indicating for each theapplicable jurisdiction, registration number (or application number), and dateissued (or date filed).

###  

### (b)                                 Tothe knowledge of the Seller, there are no royalties, honoraria, fees or otherpayments payable by the Seller to any person by reason of the Seller’sownership, use, license, transmission, broadcast, delivery (electronically orotherwise), sale, or disposition of Assigned Intellectual Property.

###  

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### (c)                                  Exceptas set forth in Section 6.8(c) of the Seller Disclosure Schedule, to theknowledge of the Seller, no third party is infringing upon, or violating anylicense or agreement with the Seller relating to, any Assigned IntellectualProperty; and there is no pending or, to the Seller’s knowledge, threatenedclaim or litigation contesting the validity of, Seller’s ownership of, orSeller’s right to use, sell, license or dispose of, any Assigned IntellectualProperty, nor, to the Seller’s knowledge, is there any legitimate basis for anysuch claim.  To the knowledge of theSeller, the Seller has not received any written notice asserting that anyAssigned Intellectual Property or the proposed sale thereof to Purchaserpursuant to the terms of this Agreement conflicts or will conflict with therights of any other party, nor to the knowledge of the Seller is there anylegitimate basis for any such assertion.

###  

### (d)                                 Section 6.8(d)of the Seller Disclosure Schedule sets forth a complete and accurate list ofall license agreements currently in effect in which the Seller has expresslygranted any right to a third party to use or practice any rights under anyAssigned Intellectual Property (except for licenses identified inSection 6.9(a) of the Seller Disclosure Schedule) and any assignments, consents,term, forbearances to sue, judgments, orders, settlements or similarobligations relating to any Assigned Intellectual Property to which the Selleris a party or otherwise bound (collectively, the “**Outbound License Agreements**”).  The Outbound License Agreements are valid and binding obligationsof the Seller, enforceable in accordance with their terms, subject to (i) lawsof general application relating to bankruptcy, insolvency and the relief ofdebtors and (ii) rules of law governing specific performance, injunctive reliefand other equitable remedies, except where the failure of any of the OutboundLicense Agreements to be valid or binding obligations or enforceable inaccordance with their terms would not have a Material Adverse Effect.

###  

### (e)                                  Asused in this Agreement, the term “**IntellectualProperty**” shall mean all intellectual property rights worldwide,including, without limitation, trademarks, service marks, trade names, servicenames, URLs and Internet domain names and applications therefore (and allinterest therein), and general intangibles of like nature, together with allgoodwill related to the foregoing (including any registrations and applicationsfor any of the foregoing) (collectively, “**Trademarks**”);patents (including any registrations, continuations, continuations in part,renewals and applications for any of the foregoing) (collectively, “**Patents**”); copyrights (including anyregistrations, applications and renewals for any of the foregoing)(collectively, “**Copyrights**”);confidential or proprietary information that derives economic value (actual orpotential) from not being generally known to other persons who can obtaineconomic value from its disclosure, but excluding any Copyrights or Patentsthat cover or protect any of the foregoing (collectively, “**Trade Secrets**”); and all other proprietaryrights recognized under the laws of any jurisdiction in the world in concepts,ideas, designs, plans, schematics, drawings, specifications, research anddevelopment information, technology and product roadmaps, technology,confidential information, know-how, proprietary technology, processes,formulae, algorithms, models, customer lists, inventions, discoveries,improvements, methodologies, architecture, structure, layouts, and inventions.

###  

## Section 6.9                                      MaterialIn-Licensed IP.

##  

### (a)                                  Section 6.9(a)of the Seller Disclosure Schedule sets forth a true and complete list of alllicense agreements currently in effect in which the Seller has been granted alicense to 

###  

16

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### IntellectualProperty that is material to the operation of the Business (other than suchlicenses or agreements arising from the purchase or license of “off the shelf”or standard software products for which the purchase price or license fee isless than $5,000) (the “**Material In-LicensedIP**”).

###  

### (b)                                 TheMaterial In-Licensed IP is validly held and used by the Seller and may be usedby the Seller pursuant to the applicable license agreements with respectthereto without the consent of or notice to any third party.  Except as set forth in Section 6.9(b) of theSeller Disclosure Schedule, the license agreements relating to the MaterialIn-Licensed IP are valid and binding obligations of the Seller, enforceable inaccordance with their terms, subject to (i) laws of general applicationrelating to bankruptcy, insolvency and the relief of debtors and (ii) rules oflaw governing specific performance, injunctive relief and other equitableremedies, except where the failure of any of such license agreements to bevalid or binding obligations or enforceable in accordance with their termswould not have a Material Adverse Effect.

###  

## Section 6.10                                Compliancewith Laws; Assigned Permits.  Exceptas disclosed in Section 6.10 of the Seller Disclosure Schedule, theBusiness is being conducted in substantial compliance with all applicable Lawsrelating to the Acquired Assets.  Setforth in Section 6.10 of the Seller Disclosure Schedule is a true andcomplete list of all Assigned Permits.

##  

## Section 6.11                                Employees;Employee Benefit Plans.

##  

### (a)                                  TheSeller is not a party to or bound by any collective bargaining agreement withany labor organization, group or association covering any of its employees, andthe Seller has no knowledge of any attempt to organize any of its employees byany person, unit or group seeking to act as their bargaining agent.  The Seller has no knowledge of any pendingor threatened charges (by employees, their representatives or governmentalauthorities) of unfair labor practices or of employment discrimination or ofany other wrongful action with respect to any aspect of employment of anyperson employed or formerly employed by the Seller.  No union representation elections relating to employees of theSeller have been scheduled by any Governmental Authority, and, to the Seller’sknowledge, no organizational effort is being made with respect to any of suchemployees, and there is no investigation of the Seller’s employment policies orpractices by any governmental agency or authority pending or, to the Seller’sknowledge, threatened.  The Seller isnot currently, and has not within the last three years been, involved in labornegotiations with any unit or group seeking to become the bargaining unit forany employees of the Seller’s employees. The Seller has not experienced any work stoppages during the last threeyears, and to the best of the Seller’s knowledge, no work stoppage is planned.

###  

### (b)                                 TheSeller has never maintained or contributed to an employee benefit plan withinthe meaning of Section 3(3) of ERISA (a “**Plan**”)covered by Title IV of ERISA or subject to Section 412 of the Code orSection 302 of ERISA or a multiemployer plan as defined inSection 4001(a)(3) of ERISA.  NoPlan provides for post-employment or retiree welfare benefits, except to theextent required by Part 6 of Subtitle B of Title I of ERISA orSection 4980B of the Code.

###  

## Section 6.12                                Broker’sor Finder’s Fees.  No agent, broker,Person or firm is, or will be, entitled to any commission or broker’s orfinder’s fees from any Party, or from any Affiliate of 

##  

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## any Party, inconnection with any of the transactions contemplated by this Agreement basedupon arrangements made by or on behalf of Seller.

##  

## Section 6.13                                InsuranceCoverage.  The Seller has furnishedor made available to the Purchaser, a list of, and true and complete copies of,all insurance policies covering the Acquired Assets, all of which are set forthin Section 6.13 of the Seller Disclosure Schedule.  There is no material claim by Seller pendingunder any of such policies as to which coverage has been questioned, denied ordisputed by the underwriters of such policies or bonds.

##  

## Section 6.14                                Accountsand Notes Receivable.  Subject tolaws of general application relating to bankruptcy, insolvency and relief ofdebtors, all of the accounts receivable and notes receivable owing to theSeller being transferred and assigned to Purchaser pursuant to this Agreementconstitute valid and enforceable claims, and, as of the date of this Agreement,there are no known or asserted claims, refusals to pay or other rights ofset-off against any thereof.  As of thedate of this Agreement, there is (i) no account debtor or note debtor that hasrefused (or, to the knowledge of the Seller, threatened to refuse) to pay anymaterial obligation to the Seller that constitutes an Acquired Asset for anyreason, (ii) to the knowledge of the Seller, no account debtor or note debtorthat is bankrupt and owes a material obligation to the Seller that constitutesan Acquired Asset and (iii) no account receivable or note receivable thatconstitutes an Acquired Asset which is pledged to any third party by theSeller.

##  

## Section 6.15                                GovernmentalAuthorizations and Consents.

##  

### (a)                                  TheSeller has all Federal, state, local and foreign governmental licenses,consents, approvals, authorizations, permits, orders, decrees and othercompliance agreements necessary in the conduct of the Business as presentlyconducted, the lack of which would have a Material Adverse Effect; suchlicenses, consents, approvals, authorizations, permits, orders, decrees andother compliance agreements are in full force and effect, no materialviolations are or have been recorded in respect of any thereof and noproceeding is pending or, to the knowledge of the Seller, threatened to revokeor limit any thereof.

###  

### (b)                                 Section 6.15(b)of the Seller Disclosure Schedule contains a true and complete list of all suchgovernmental licenses, consents, approvals, authorizations, permits, orders,decrees and other compliance agreements and the Seller has furnished toPurchaser true and complete copies thereof.

###  

## Section 6.16                                Customers.  Section 6.16 of the Seller DisclosureSchedule sets forth a list of each customer that accounted for more than$25,000 of the Seller’s revenues for its most recently completed fiscal year orfor the 12-month period ended February 28, 2003.

##  

## Section 6.17                                Shares.  The Seller is acquiring the Shares for itsown account for investment only, and not with a view to, or for sale inconnection with, any distribution of the Shares in violation of the SecuritiesAct or any rule or regulation under the Securities Act.  The Seller understands that the Shares arebeing issued to the Seller in a transaction exempt from the registration requirementsof the Securities Act pursuant to Section 4(2) thereof.  Accordingly, the Seller understands that theShares have not been registered under the Securities Act and are “restrictedsecurities” within the meaning of Rule 144 under the Securities Act; and theShares 

##  

18

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## cannot be sold,transferred or otherwise disposed of unless they are subsequently registeredunder the Securities Act or an exemption from registration is thenavailable.  The Seller acknowledges thata legend substantially in the following form will be placed on thecertificate(s) representing the Shares:

##  

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOTBEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVEREGISTRATION STATEMENT UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TOTHE CORPORATION TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

 

# **ARTICLE VII**

 

# **REPRESENTATIONS OF THE PURCHASER**

 

The Purchaser represents and warrants to the Seller asfollows:

 

## Section 7.1                                      Existenceand Good Standing; Authorization and Validity of Agreement.

##  

### (a)                                  ThePurchaser is a corporation duly incorporated, validly existing and in goodstanding under the laws of the State of Delaware.  The Purchaser is duly qualified as a foreign corporation and isin good standing in each jurisdiction in which such qualification is requiredby law, except where the failure to be so qualified or to be in good standingwould not prevent, interfere or delay the Purchaser from performing itsobligations under this Agreement or the consummation of the transactionscontemplated by this Agreement. The Purchaser has the corporate power andauthority to enter into this Agreement and the Ancillary Agreements to which itis a party and to consummate the transactions contemplated hereby and thereby.

###  

### (b)                                 Theexecution, delivery and performance by the Purchaser of this Agreement and theAncillary Agreements to which it is a party and the consummation of thetransactions contemplated hereby and thereby have been duly and validlyauthorized by all necessary corporate action on the part of the Purchaser andthis Agreement has been, and the Ancillary Agreements to which it is a partywhen executed and delivered by the Purchaser will be, duly and validly executedand delivered and the valid and binding obligations of the Purchaser,enforceable against it in accordance with their respective terms, subject to(i) laws of general application relating to bankruptcy, insolvency and therelief of debtors and (ii) rules of law governing specific performance,injunctive relief and other equitable remedies. Neither the execution, deliveryand performance by the Purchaser of this Agreement or the Ancillary Agreementsto which the Purchaser is a party, the consummation by the Purchaser of thetransactions contemplated hereby or thereby, nor compliance by the Purchaserwith any provision hereof or thereof will (I) (A) conflict with, (B) result in anyviolation of, (C) cause a default under (with or without due notice, lapse oftime or both), (D) give rise to any right of termination, amendment,cancellation or acceleration of any obligation contained in or the loss of anybenefit under or (E) result in the creation of any Encumbrance on or againstany assets, 

###  

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### rights or propertyof the Purchaser under any term, condition or provision of (x) any instrumentor agreement to which the Purchaser is a party, or by which the Purchaser orany of its properties, assets or rights may be bound or (y) any law, statute,rule, regulation, order, writ, injunction, decree, permit, concession, licenseor franchise of any Governmental Authority applicable to the Purchaser or anyof its properties, assets or rights, other than any such conflict, violation,default, right, loss or Encumbrance that would not prevent, interfere or delaythe Purchaser from performing its obligations under this Agreement or theconsummation of the transactions contemplated by this Agreement, or (II)conflict with or result in any violation of the Purchaser’s Certificate ofIncorporation or Bylaws.  No permit,authorization, consent or approval of or by, or any notification of or filingwith, any Governmental Authority is required to be made or obtained byPurchaser in connection with the execution, delivery and performance by thePurchaser of this Agreement or the Ancillary Agreements or the consummation bythe Purchaser of the transactions contemplated hereby or thereby.  Purchaser is not and will not be required toobtain any consent from any Person, in connection with the execution, deliveryor performance of this Agreement or any of the Ancillary Agreements or theconsummation of any of the transactions contemplated hereby or thereby.

###  

## Section 7.2                                      SECFilings; Financial Statements.  

##  

### (a)                                  Allreports, statements and other documents required to have been filed by thePurchaser with the SEC pursuant to the Securities Act or the Exchange Act sinceJanuary 1, 2002 (the “**Purchaser SEC Documents**”)have been so filed on a timely basis. As of the time it was filed with the SEC (or, if amended or supersededby a filing prior to the date of this Agreement, then on the date of suchfiling):  (i) each of the Purchaser SECDocuments complied in all material respects with the applicable requirements ofthe Securities Act or the Exchange Act (as the case may be); and (ii) none ofthe Purchaser SEC Documents contained any untrue statement of a material factor omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in the light of the circumstancesunder which they were made, not misleading.

###  

### (b)                                 Thefinancial statements contained in the Purchaser SEC Documents:  (i) complied as to form in all materialrespects with the published rules and regulations of the SEC applicablethereto; (ii) were prepared in accordance with generally accepted accountingprinciples applied on a consistent basis throughout the periods covered (exceptas may be indicated in the notes to such financial statements and, in the caseof unaudited statements, as permitted by Form 10-Q of the SEC, and except thatunaudited financial statements may not contain footnotes and are subject tonormal and recurring year-end audit adjustments which will not, individually orin the aggregate, be material in amount); and (iii) fairly present thefinancial position of Purchaser as of the respective dates thereof and theresults of operations and cash flows of the Purchaser for the periods coveredthereby.

###  

## Section 7.3                                      Shares.  The Shares have been duly authorized by allnecessary corporate action on the part of the Purchaser, and when issued inaccordance with this Agreement, will be validly issued, fully paid andnonassessable and not subject to preemptive rights.

##  

## Section 7.4                                      Broker’sor Finder’s Fees.  No agent, broker,Person or firm is, or will be, entitled to any commission or broker’s orfinder’s fees from any Party, or from any Affiliate of 

##  

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## any Party, inconnection with any of the transactions contemplated by this Agreement basedupon arrangements made by or on behalf of Purchaser.  Purchaser agrees to indemnify Seller for any claims, losses orexpenses incurred by Seller as a result of the representation in thisSection 7.2 being untrue.

##  

# **ARTICLE VIII**

 

# **ADDITIONAL AGREEMENTS**

 

## Section 8.1                                      Operationof Business.

##  

### (a)                                  Exceptas contemplated by this Agreement, the Seller Disclosure Schedule or any of theAncillary Documents, as may be necessary to carry out any of the transactionscontemplated by this Agreement or the Ancillary Agreements, as may be necessaryto facilitate compliance with the requirements of any of the Assigned Contractsand Leases, or as consented to by the Purchaser, which consent shall not beunreasonably withheld, and to the extent not inconsistent with the BankruptcyCode, or any orders entered by the Bankruptcy Court in the Chapter 11 Case orotherwise required by applicable Law, prior to the Closing, the Seller shallnot, subject to Bankruptcy Court jurisdiction:

###  

#### (i)                                     sell,lease, license, sublicense, encumber or dispose of any Acquired Assets, exceptin the ordinary course of business consistent with past practices;

####  

#### (ii)                                  enterinto any agreement or commitment or engage in any transaction which is not inthe ordinary course of business, other than agreements or commitments enteredinto in connection with the wind-down of the business and operations of theSeller in a manner that does not materially and adversely alter the value ofthe Acquired Assets;

####  

#### (iii)                               takeany action to waive or compromise any material claims (whether or not assertedin any pending litigation) which are included in the Acquired Assets; or

####  

#### (iv)                              agreein writing or otherwise to take any of the foregoing actions.

####  

### (b)                                 Exceptas contemplated by this Agreement, the Seller Disclosure Schedule or any of theAncillary Documents, as may be necessary to carry out any of the transactionscontemplated by this Agreement or the Ancillary Agreements, as may be necessaryto facilitate compliance with the requirements of any of the Assigned Contractsand Leases, or as consented to by the Purchaser, which consent shall not beunreasonably withheld, and to the extent not inconsistent with the BankruptcyCode, or any orders entered by the Bankruptcy Court in the Chapter 11 Case orotherwise required by applicable Law, prior to the Closing, the Seller shall,subject to Bankruptcy Court jurisdiction, conduct its operations in theOrdinary Course of Business, and shall:

###  

#### (i)                                     reportperiodically to Purchaser concerning the status of its business, operations andfinances;

 

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#### (ii)                                  engagein no material involuntary terminations of management personnel without priorconsultation with Purchaser;

####  

#### (iii)                               usereasonable commercial efforts to maintain the Acquired Assets in a state ofrepair and condition that is consistent with the requirements and normalconduct of the Business;

####  

#### (iv)                              usereasonable commercial efforts to keep in full force and effect, withoutamendment, all material rights relating to the Acquired Assets;

####  

#### (v)                                 complymaterially with all Laws applicable to the operations of the Business;

####  

#### (vi)                              cooperatewith Purchaser and assist Purchaser in identifying the permits and governmentalauthorization required by Purchaser to operate the Business from and after theClosing Date and either transferring existing permits and governmentalauthorities of Seller to Purchaser, where permissible, or obtaining new permitsand governmental authorizations for Purchaser; and

####  

#### (vii)                           maintainall books and records of Seller relating to the Business in the Ordinary Courseof Business.

####  

## Section 8.2                                      Reviewof the Seller.  Subject to the provisionsof the Confidentiality Agreement and applicable laws and regulations, prior tothe Closing Date, Seller will, after receiving reasonable advance notice fromPurchaser, give Purchaser reasonable access to the premises, the books andrecords (excluding records which are attorney-client privileged or consideredattorney work product) of the Seller that relate to the Acquired Assets duringnormal working hours, for the sole purposes of enabling Purchaser (i) tofurther investigate, at Purchaser’s sole expense, the Acquired Assets and anyother appropriate matters germane to the subject matter of this Agreement andthe Ancillary Agreements and (ii) to verify the accuracy of the representationsand warranties of the Seller set forth in Section 6 or elsewhere in thisAgreement.

##  

## Section 8.3                                      ReasonableEfforts; Cooperation; Consents and Approvals.  Subject to the Seller’s obligations to comply with any order ofthe Bankruptcy Court, each of the Parties agrees to use its commerciallyreasonable efforts to take, or cause to be taken, all action to do or cause tobe done, and to assist and cooperate with each other Party in doing, all thingsnecessary, proper or advisable to consummate and make effective, in the mostexpeditious manner practicable, the transactions contemplated by this Agreement(in each case, to the extent that the same is within the control of suchParty), including, without limitation, (i) compliance with any Bankruptcy Courtapprovals, consents and orders, (ii) the obtaining of all necessary waivers,consents and approvals from Governmental Authorities and the making of allnecessary registrations and filings and the taking of all reasonable steps asmay be necessary to obtain any approval or waiver from, or to avoid any actionor proceeding by, any Governmental Authority, (iii) the defending of anylawsuits or any other legal proceedings whether judicial or administrative,challenging this Agreement, the Ancillary Agreements or the consummation of 

 

22

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## the transactionscontemplated hereby and thereby and (iv) causing the conditions set forth inArticles IX and X to be satisfied. Except as otherwise expressly set forth in the Sale Procedures, theSeller will use its commercially reasonable efforts to obtain from theBankruptcy Court all orders, consents and approvals necessary to consummate thetransactions contemplated by this Agreement, including without limitation, theApproval Order.

##  

## Section 8.4                                      SaleProcedures. The Seller (a) will conduct the auction process in accordancewith the Sale Procedures and (b) will not amend, waive, modify or supplement inany material respect the Sale Procedures except as set forth herein or thereinor as required or ordered by the Bankruptcy Court.

##  

## Section 8.5                                      PublicDisclosure.  Except as otherwiserequired by law or regulation, as contemplated by the Sale Procedures or as maybe necessary or appropriate in connection with the pending Chapter 11 Case inrespect of the Seller, each Party shall consult with the other Party and obtainsuch other Party’s consent, which consent shall not be unreasonably withheld,before issuing any press release or otherwise making any public statements withrespect to this Agreement or the matters contained herein and will not issue anysuch press release or make any such statement prior to such consultation andagreement.  This Section 8.5 shallsurvive any termination of this Agreement.

##  

## Section 8.6                                      Apportionment.  All real property and personal propertyTaxes, assessments and similar governmental charges levied with respect to theAcquired Assets for a taxable period which includes (but does not end on) theClosing Date shall be apportioned between the pre-Closing Tax period and thepost-Closing Tax period as of the Closing Date on a per diem basis.  Thereafter, the Seller shall notify thePurchaser upon receipt of any bill for real or personal property Taxes orsimilar charges relating to the Acquired Assets, part or all of which areattributable to any post-Closing Tax period, and shall promptly deliver suchTax bill to the Purchaser who shall pay the same to the appropriategovernmental authority; provided, that if such bill covers thepre-Closing period, the Seller shall also remit to the Purchaser, prior to thedue date of such Tax bill, payment for the proportionate amount of such billthat is attributable to the pre-Closing period.  If either the Seller or the Purchaser shall make a payment forwhich such Party is entitled to have such payment made by the other Party underthis Section, the other Party shall make reimbursement promptly but in no eventlater than 15 Business Days after the presentation of a statement setting forththe amount of reimbursement to which the presenting Party is entitled alongwith such supporting evidence as is reasonably necessary to calculate theamount of reimbursement.  Any paymentbetween the Parties required under this Section shall bear interest at the rateper annum determined, from time to time, under the provisions ofSection 6621(a)(2) of the Code for each day from the date the relevant Taxis due to be paid to the Tax authority until paid.

##  

## Section 8.7                                      Accessto Records and Certain Personnel. Following the Closing, (a) upon prior written notice, the Purchasershall permit the Seller and any successors or assigns, its counsel, taxadvisors and other Affiliates reasonable access during ordinary business hoursto (i) the financial and other books and records relating to the Business(whether in documentary or data form), (ii) the Seller’s employees and (iii)the Seller’s leased real property for any purpose relating to the sale,operation, winding down, liquidation and final administration of the Businessor the bankruptcy estate, which access shall include (i) the right of suchprofessionals to copy 

 

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## and use suchdocuments and records as they may request, and (ii) Purchaser’s copying anddelivering to the Seller or its professionals such documents or records as theymay request (provided, that the Seller reimburses Purchaser for the reasonableout-of-pocket expenses thereof).

##  

## Section 8.8                                      Employees;Employee Benefits.

##  

### (a)                                  AgreementsRegarding Employees.  Purchasershall offer employment to the Seller’s employees identified in a memorandum to bedelivered by the Purchaser to the Seller within 45 days after the Filing Date,such employment to commence as of the Closing Date.  (Notwithstanding any provision to the contrary contained in thisAgreement, the Purchaser may, in its sole discretion, supplement or amend suchmemorandum (including to remove individuals therefrom) on or before the ClosingDate.) Such employees who accept employment with Purchaser shall be referred tohereinafter as “**Transferred Employees**,”all of whom shall be employed as an “at will” employee of the Purchaser.  In accordance with Section 4980B andthe Treasury Regulations promulgated thereunder, Purchaser shall make COBRAcoverage available to Seller’s M&A Qualified Beneficiaries (within themeaning of Section 4980B and the Treasury Regulations promulgatedthereunder).

###  

### (b)                                 OtherObligations.  Seller and Purchaseragree to cooperate reasonably concerning all matters relating to theTransferred Employees.

###  

## Section 8.9                                      Cooperation.

##  

### (a)                                  TheSeller covenants and agrees that, during the period between the date hereof andthe Closing, the Seller shall promptly inform Purchaser in writing of anymaterial breaches of the representations and warranties contained in Article VIor any material breach of any covenant of the Seller.

###  

### (b)                                 ThePurchaser covenants and agrees that, during the period between the date hereofand the Closing, the Purchaser shall promptly inform Seller in writing of anymaterial breaches of the representations and warranties contained in ArticleVII or any material breach of any covenant of the Purchaser.

###  

## Section 8.10                                Consents;Releases.  Purchaser will cooperatewith Seller, and will provide Seller with such assistance as Seller mayreasonably request, for the purpose of arranging for Seller to be released and dischargedfrom its obligations and other liabilities under the Assigned Contracts andLeases.

##  

## Section 8.11                                BankruptcyCase.  Purchaser will cooperatefully with the Bankruptcy Court and with Seller to expedite the Bankruptcy Caseand to obtain orders as described in Article V.

##  

## Section 8.12                                Possessionof the Assets.  Purchaser will makeall necessary arrangements for Purchaser to take possession of the AcquiredAssets (other than intangible assets), and, at Purchaser’s expense, to transferthe same to a location operated by Purchaser, promptly, but in no event laterthan 30 days following the Closing.

 

24

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## Section 8.13                                Collectionof Receivables.  The Seller agreesthat it shall forward promptly to the Purchaser any monies, checks orinstruments received by the Seller after the Closing Date with respect to theaccounts receivable, notes receivable or other obligations receivable purchasedby the Purchaser from the Seller pursuant to this Agreement.  The Seller shall provide to the Purchasersuch reasonable assistance as the Purchaser may request with respect to thecollection of any such receivables, provided the Purchaser pays the reasonableout-of-pocket expenses of the Seller and its officers, directors and employeesincurred in providing such assistance. The Seller hereby grants to the Purchaser a power of attorney to endorseand cash any checks or instruments payable or endorsed to the Seller or itsorder which are received by the Purchaser and which relate to accountsreceivable, notes receivable or other obligations receivable purchased by thePurchaser from the Seller.

##  

## Section 8.14                                Non-Solicitation.  The Seller will not solicit or initiate thesubmission of any proposal or offer from any Person relating to the acquisitionof any portion of the Acquired Assets or as to all or substantially all of thecapital stock or assets of the Seller (including, without limitation, anyacquisition structured as a merger, consolidation, or share exchange), provided,however, that the Seller and its directors and officers will remain freeto participate in any unsolicited discussions or negotiations regarding,furnish any information with respect to, assist or participate in, orfacilitate in any other manner any effort or attempt by any Person to do orseek any of the foregoing to the extent their fiduciary duties or the SaleProcedure Order may require.

##  

# **ARTICLE IX**

 

# **CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER**

 

## Section 9.1                                      Conditionsto the Purchaser’s Obligations.  Theobligations of the Purchaser to purchase the Acquired Assets and to take theother actions required to be taken by Purchaser at the Closing hereunder areconditioned upon the satisfaction or waiver in writing (subject to applicableLaw), on or prior to the Closing Date, of the following conditions:

##  

### (a)                                  Motionto Approve Sale Procedures Order. The Seller shall have filed a motion to approve the Sale ProceduresOrder no later than five (5) Business Days from the date of this Agreement.

###  

### (b)                                 Hearingon Sale Procedures Order.  TheBankruptcy Court shall have conducted a hearing to establish the saleprocedures for the Sale Hearing and entered an Order on the Sale Procedures.

###  

### (c)                                  Hearingon the Sale of Acquired Assets.  TheBankruptcy Court shall have conducted a hearing on the sale of the AcquiredAssets.

###  

### (d)                                 ApprovalOrder.  The issuance of the FinalApproval Order in form and substance that is in accordance with the provisionsof this Agreement on or prior to the date which is 45 days after the Filing Date.

 

25

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## Section 9.2                                      ClosingConditions to the Purchaser’s Obligations. The obligations of the Purchaser to consummate the Closing areconditioned upon the satisfaction or waiver in writing (subject to applicableLaw), on or prior to the Closing Date, of the following conditions:

##  

### (a)                                  Representationsand Warranties.  The representationsand warranties of Seller contained in Article VI (and any representations andwarranties of Seller set forth in the Ancillary Agreements) qualified bymateriality shall be true and correct in all respects, except for suchexceptions as are permitted by this Agreement, without further qualification asof the date hereof and the Closing Date, as if made on such date (except for suchrepresentations and warranties that relate to a specific date, which shall betrue and correct in all respects as of such date), and all representations andwarranties of the Seller contained in Article VI (and any representations andwarranties of the Seller set forth in the Ancillary Agreements) that are not soqualified shall be true and correct in all material respects as of the ClosingDate, as if made on such date (except for such representations and warrantiesthat relate to a specific date, which shall be true and correct in all materialrespects as of such date); provided, however, that, for purposesof this Section 9.2(a), any inaccuracies in the representations and warrantiesof the Seller will be disregarded unless all such inaccuracies, consideredcollectively, would have a Material Adverse Effect.  Seller shall have delivered to the Purchaser a certificate, datedas of the Closing Date and signed by Seller’s President and Chief FinancialOfficer (the “**Seller Closing Certificate**”),confirming that the conditions set forth in this Section 9.2(a) have beensatisfied.

###  

### (b)                                 Performanceof Agreements.  Each and all of theagreements of the Seller to be performed on or prior to the Closing pursuant tothe terms hereof shall have been duly performed in all material respects, andthe Seller Closing Certificate shall confirm that the conditions set forth inthis Section 9.2(b) have been satisfied.

###  

### (c)                                  Consentsand Approvals.  Purchaser shall havereceived the documents required to be delivered by Seller to Purchaser pursuantto Section 4.2.

###  

### (d)                                 NoInjunction.  No court or otherGovernmental Authority of competent jurisdiction shall have issued an order orstay pending appeal which shall then be in effect restraining or prohibitingthe completion of the transactions contemplated hereby.

###  

### (e)                                  Statutes.  No Law of any kind shall have been enacted,entered, promulgated or enforced by any Governmental Authority which prohibits,or has the effect of making illegal, the consummation of the transactionscontemplated hereby and shall remain in effect.

###  

### (f)                                    GovernmentalApprovals.  All materialgovernmental and other material consents and approvals necessary to permit theconsummation of the transactions contemplated by this Agreement shall have beenreceived.

###  

### (g)                                 BankruptcyMatters.  (a) a Final Approval Ordershall have been entered by the Bankruptcy Court and (b) the Seller shall havepaid the portion of the Cure Costs related to the Assigned Contracts and Leasesrequired to be paid by it pursuant to Section 5.1(f).

###  

### (h)                                 CureCosts.  The Cure Costs, includingthose payable by the Seller pursuant to Section 5.1(f), shall not exceed anaggregate of $150,000.

 

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### (i)                                     Assignmentand Assumption.  The Final ApprovalOrder shall have approved the assignment and assumption of the contracts listedon Exhibit 9.2(i) and, to the extent any Consent is needed for suchassignment and assumption, the Seller shall have obtained all such Consents.

###  

### (j)                                     Customers.  None of the customers of the Sellerspecified in Exhibit 9.2(j) shall have terminated its relationship withthe Seller prior to the Closing or have indicated in writing its intention toterminate such relationship or significantly reduce its business activity withthe Business subsequent to the Closing.

###  

# **ARTICLE X**

 

# **CONDITIONS TO THE OBLIGATIONS OF THE SELLER**

 

## Section 10.1                                Conditionsto the Seller’s Obligations.  Theobligations of the Seller to consummate the Closing are conditioned upon thesatisfaction or waiver in writing (subject to applicable Law), on or prior tothe Closing Date, of the following conditions:

##  

### (a)                                  Representationsand Warranties.  The representationsand warranties of Purchaser contained in Article VII (and any representationsand warranties of Purchaser set forth in the Ancillary Agreements) qualified bymateriality shall be true and correct in all respects, except for suchexceptions as are permitted by this Agreement, without further qualification asof the Closing Date, as if made on such date (except for such representationsand warranties that relate to a specific date, which shall be true and correctin all respects as of such date), and all representations and warranties of thePurchaser contained in Article VII (and any representations and warranties ofPurchaser set forth in the Ancillary Agreements) that are not so qualifiedshall be true and correct in all material respects as of the Closing Date, asif made on such date (except for such representations and warranties thatrelate to a specific date, which shall be true and correct in all materialrespects as of such date) with only such exceptions as are permitted by thisAgreement or which, individually or in the aggregate, would not (i) have amaterial adverse effect on the business, capitalization, assets (tangible orintangible), liabilities or operations of the Purchaser or (ii) prevent,interfere or delay the Purchaser from performing its obligations under thisAgreement or the consummation of the transactions contemplated by this Agreement.Purchaser shall have delivered to Seller a certificate, dated as of the ClosingDate and signed by the Purchaser’s President (the “**Purchaser Closing Certificate**”), confirming that theconditions set forth in this Section 10.1(a) have been satisfied.

###  

### (b)                                 Performanceof Agreements.  Each and all of theagreements of the Purchaser to be performed on or prior to the Closing pursuantto the terms hereof and the Ancillary Agreements shall have been duly performedin all material respects, and the Purchaser Closing Certificate shall confirmthat the conditions set forth in this Section 10.1(b) have been satisfied.

###  

### (c)                                  Consentsand Approvals.  Seller shall havereceived the documents required to be delivered by Purchaser to Seller pursuantto Section 4.3.

###  

### (d)                                 Paymentof Purchase Price.  Purchaser shallhave paid to the Seller (subject to Section 4.3(iii)) the Purchase Price inaccordance with Section 3.1(a).

 

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### (e)                                  NoInjunction.  No court or otherGovernmental Authority of competent jurisdiction shall have issued an order orstay pending appeal which shall then be in effect restraining or prohibitingthe completion of the transactions contemplated hereby.

###  

### (f)                                    Statutes.  No Law of any kind shall have been enacted,entered, promulgated or enforced by any Governmental Authority which prohibits,or has the effect of making illegal, the consummation of the transactionscontemplated hereby and shall remain in effect.

###  

### (g)                                 GovernmentalApprovals.  All material governmentaland other material consents and approvals necessary to permit the consummationof the transactions contemplated by this Agreement shall have been received.

###  

### (h)                                 BankruptcyMatters.  (a) a Final Approval Ordershall have been entered by the Bankruptcy Court; and (b) the Seller shall havereceived from the Bankruptcy Court all applicable orders, approvals andconsents required to transfer the Acquired Assets, and to consummate thetransactions contemplated by this Agreement.

###  

# **ARTICLE XI**

 

# **TERMINATION**

 

## Section 11.1                                Eventsof Termination.  This Agreement maybe terminated and the transactions contemplated hereby may be abandoned at anytime prior to the Closing:

##  

### (a)                                  bymutual written consent of the Parties;

###  

### (b)                                 byany Party, if the Closing Date shall not have occurred by the date 90 daysafter the Filing Date; provided, that the right to terminate thisAgreement under this Section 11.1(b) shall not be available to any Partywhose failure to fulfill any obligation under this Agreement shall be the causeof the failure of the Closing Date to occur on or before such date;

###  

### (c)                                  bythe Seller if (i) there shall have been a material breach on the part ofPurchaser of any of its representations, warranties or covenants such that theconditions set forth in Section 10.1(a) or Section 10.1(b) would notbe satisfied as of the time of such breach, (ii) Seller shall have givenwritten notice of such breach to Purchaser, (iii) at least twenty days shallhave elapsed since the delivery of such written notice to Purchaser and (iv)such breach shall not have been cured in all material respects; provided thatSeller may not terminate this Agreement pursuant to this Section 11.1(c)if it shall have willfully and materially breached this Agreement;

###  

### (d)                                 bythe Purchaser if (i) there shall have been a material breach on the part ofSeller of any of its representations, warranties or covenants such that theconditions set forth in Section 9.2(a) or Section 9.2(b) would not besatisfied as of the time of such breach, (ii) Purchaser shall have givenwritten notice of such breach to Seller, (iii) at least twenty days shall haveelapsed since the delivery of such written notice to Seller and (iv) suchbreach shall not have been cured in all material respects; provided that thePurchaser may not terminate this Agreement pursuant to thisSection 11.1(d) if it shall have willfully and materially breached thisAgreement;

 

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### (e)                                  bythe Purchaser, if the Approval Order in form and substance that is inaccordance with the provisions of this Agreement has not been entered on orprior to the date 65 days after the Filing Date or the Final Approval Order hasnot been entered on or prior to the date 75 days after the Filing Date;

###  

### (f)                                    bythe Purchaser, if the Chapter 11 Case is converted to a case under Chapter 7 ofthe Bankruptcy Code;

###  

### (g)                                 byany Party, if there shall be any Law of any Governmental Authority that makesconsummation of the transactions contemplated hereby illegal or otherwise prohibitedor if any judgment, injunction, order or decree of any competent authorityprohibiting such transactions is entered and such judgment, injunction, orderor decree shall have become final and non-appealable;

###  

### (h)                                 byeither Party if the Sale Procedure Order is not issued by the Bankruptcy Courton substantially similar terms as contained in Section 5.1(a) (*provided*, *however*,that no change to the Sale Order Procedure with respect to the Break-Up Feeshall be deemed to give rise to such right of termination) or in the event thata stay pending appeal or a writ of mandate of the Approval Order is granted onbehalf of any party; or

###  

### (i)                                     byany Party, if an Alternative Transaction is approved by the Bankruptcy Court.

###  

If either Party wishes to terminate this Agreement pursuant to thisSection 11.1, such Party will deliver to the other Party a writtentermination notification stating that such Party is terminating this Agreementand setting forth a brief statement of the basis on which such Party is terminatingthis Agreement.

 

## Section 11.2                                Effectof Termination.

##  

### (a)                                  Exceptas otherwise provided in this Section 11.2, in the event that thisAgreement shall be terminated pursuant to Section 11.1, all furtherobligations of the Parties under this Agreement shall terminate without furtherliability or obligation of any Party to any other Party hereunder except forthose provisions that expressly survive the termination of this Agreement; provided,that (i) the Parties will remain bound by the provisions of the ConfidentialityAgreement and (ii) no Party shall be released from liability hereunder if thisAgreement is terminated and the transactions abandoned by reason of (A) failureof such Party to have performed its obligations hereunder in any respect or (B)any knowing misrepresentation made by such Party of any matter set forthherein.

###  

### (b)                                 Inthe event that this Agreement is terminated pursuant to Section 11.1(b),(d), (e), (f), (g), (h) or (i), the Seller shall, except to the extent that theSeller is not permitted to do so by the Bankruptcy Court, pay to the Purchaser,by wire transfer of immediately available funds to a bank account specified inwriting by the Purchaser, the Break-Up Fee not later than two (2) Business Daysafter the date of such termination.

###  

This Section 11.2 shall survive any terminationof this Agreement.

 

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# **ARTICLE XII**

 

# **MISCELLANEOUS**

 

## Section 12.1                                Expenses;Fees.  Except as otherwise set forthin the Agreement, the Parties shall pay all of their own expenses relating tothe transactions contemplated by this Agreement.

##  

## Section 12.2                                TransferTaxes.  The Parties recognize andacknowledge that the sale, transfer, assignment and delivery of the AcquiredAssets may be exempt under Section 1146(c) of the Bankruptcy Code and theApproval Order from all state and local transfer, recording, stamp or othersimilar transfer Taxes that may be imposed by reason of the sale, transfer,assignment and delivery of the Acquired Assets.  Notwithstanding the foregoing, the Seller will bear and pay, upto a maximum of $25,000, any sales Taxes, use Taxes, transfer Taxes,documentary charges, recording fees, filing fees or similar Taxes, charges,fees or expenses that may become payable by Purchaser or Seller in connectionwith the sale of the Acquired Assets to Purchaser, the assumption by Purchaserof the Assumed Liabilities or any of the other transactions contemplated bythis Agreement or the Ancillary Agreements (the **“Charges”**).  ThePurchaser will solely bear and pay any Charges in excess of $25,000.  In the event that the Seller bears and paysany such Charges in excess of $25,000, the Purchaser will reimburse the Sellerfor such excess amount.  In the eventthat Purchaser bears and pays any Charges that the Seller has agreed to paypursuant to this Section 12.2, then Seller will reimburse Purchaser for suchamount. Seller and Purchaser agree to use their commercially reasonable effortsto minimize, and to cooperate with and assist the other in, minimizing the Charges.

##  

## Section 12.3                                APPLICABLELAW.  THIS AGREEMENT IS TO BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH U.S. FEDERAL BANKRUPTCY LAW, TOTHE EXTENT APPLICABLE, AND WHERE STATE LAW IS IMPLICATED, THE LAWS OF THE STATEOF DELAWARE SHALL GOVERN, WITHOUT REFERENCE TO CHOICE OF LAW PRINCIPLES,INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

##  

## Section 12.4                                JURISDICTION;WAIVER OF JURY TRIAL.  THEBANKRUPTCY COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN ORAMONG THE PARTIES, WHETHER IN LAW OR EQUITY, ARISING OUT OF OR RELATING TO THISAGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY; PROVIDED, THAT IF THEBANKRUPTCY COURT IS UNWILLING OR UNABLE TO HEAR ANY SUCH DISPUTE, THE COURTS OFTHE STATE OF CALIFORNIA AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICALOCATED IN THE STATE OF CALIFORNIA WILL HAVE SOLE JURISDICTION OVER ANY AND ALLDISPUTES BETWEEN OR AMONG THE PARTIES, WHETHER IN LAW OR EQUITY, ARISING OUT OFOR RELATING TO THIS AGREEMENT OR ANY AGREEMENT CONTEMPLATED HEREBY.  EACH OF THE PARTIES HERETO HEREBYIRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF SUCH COURTS AND WAIVESANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF ORRELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

30

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## Section 12.5                                Captions;Headings.  The Article andSection captions and the headings set forth herein are for referencepurposes only, and shall not in any way affect the meaning or interpretation ofthis Agreement.

##  

## Section 12.6                                Notices.All notices, requests, demands, waivers and other communications required orpermitted to be given under this Agreement shall be in writing and shall bedeemed to have been duly given if delivered in person or mailed, certified orregistered mail with postage prepaid, or sent by telex, telegram or telecopyand a confirmation of transmission is obtained, as follows:

##  

### (a)                                  ifto the Seller, to:

###  

DNA Sciences, Inc.6540 Kaiser Dr.Fremont, CA 94555Facsimile: (510) 494-4014Attention: Steve Lehrer, President

 

with a copy to:

 

Cooley Godward LLPFive Palo Alto Square3000 El Camino RealPalo Alto, CA 94306Facsimile:  (650) 849-7400Attention:  Laura A. Berezin

 

### (b)                                 ifto the Purchaser, to:

###  

Genaissance Pharmaceuticals, Inc.Five Science ParkNew Haven, CT  06511Facsimile:  (203) 786-3656Attention:  Kevin L. Rakin, Presidentand Chief Executive Officer

 

with a copy to:

 

Hale and Dorr LLP60 State StreetBoston, MA  02109Facsimile:  (617) 526-5000Attention:  Steven D. Singer

 

or to such other Person or address as any Party shall specify by noticein writing to each of the other Parties. All such notices, requests, demands, waivers and communications shall bedeemed to have been received on the date of delivery unless if mailed, in whichcase on the third 

 

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Business Day after the mailing thereof except for a notice of a changeof address, which shall be effective only upon receipt thereof.

 

## Section 12.7                                Assignment;Parties in Interest.  This Agreementmay not be transferred, assigned, pledged or hypothecated by either Party(whether voluntarily, involuntarily, by way of merger or otherwise) to anyother Person without the prior written consent of the other Party except thatSeller may assign without the prior written consent of Purchaser its rights toreceive the Purchase Price.  ThisAgreement shall be binding upon and shall inure to the benefit of the Partiesand their respective successors and permitted assigns.

##  

## Section 12.8                                Counterparts.  This Agreement may be executed in two (2) ormore counterparts, in original form or by facsimile, each of which shall bedeemed an original, but all of which together will constitute one and the samedocument.

##  

## Section 12.9                                EntireAgreement.  This Agreement,including the exhibits, schedules and other documents referred to herein whichform a part hereof, and the Confidentiality Agreement, contains the entireunderstanding of the Parties with respect to the subject matter contained hereinand therein.  This Agreement supersedesall prior agreements and understandings between the Parties with respect tosuch subject matter.

##  

## Section 12.10                          Severability;Enforcement.  The invalidity of anyportion hereof shall not affect the validity, force or effect of the remainingportions hereof.  If it is ever heldthat any restriction hereunder is too broad to permit enforcement of suchrestriction to its fullest extent, each Party agrees that a court of competentjurisdiction may enforce such restriction to the maximum extent permitted byLaw, and each Party hereby consents and agrees that such scope may bejudicially modified accordingly in any proceeding brought to enforce suchrestriction.

##  

## Section 12.11                          Amendments;Waiver.  This Agreement may not bechanged orally, but only by an agreement in writing signed by all Parties.  Any provision of this Agreement can bewaived, amended, supplemented or modified by written agreement of the Parties.  The failure of any Party to enforce at anytime any of the provisions of this Agreement shall in no way be construed to bea waiver of any such provision, nor in any way to affect the validity of thisAgreement or any part hereof or the right of such Party thereafter to enforceeach and every such provision.  Nowaiver of any breach of or non-compliance with this Agreement shall be held tobe a waiver of any other or subsequent breach or non-compliance.

##  

## Section 12.12                          NoStrict Construction.  The Partieshereto have participated jointly in the negotiation and drafting of thisAgreement.  In the event any ambiguityor question of intent or interpretation arises, this Agreement shall beconstrued as if drafted jointly by all Parties hereto, and no presumption orburden of proof shall arise favoring or disfavoring any Party by virtue of theauthorship of any provision of this Agreement.

##  

## Section 12.13                          Pronouns.As used herein, all pronouns shall include the masculine, feminine, neuter,singular and plural thereof whenever the context and facts require suchconstruction.

##  

## Section 12.14                          NoThird Party Beneficiaries.  Nothingexpress or implied in this Agreement is intended to confer, nor shall anythingherein confer, upon any Person other than 

 

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## the Parties andthe respective successors or assigns of the Parties, any rights, remedies,obligations or liabilities whatsoever.

##  

## Section 12.15                          NoJoint Venture.  No party heretoshall make any warranties or representations, or assume or create anyobligations, on the other party’s behalf except as may be expressly permittedhereunder or in writing by such other party. Each Party shall be solely responsible for the actions of all itsrespective employees, agents and representatives.

##  

## Section 12.16                          SpecificPerformance.  The transactionscontemplated by this Agreement are unique transactions and any failure on thepart of either Party to complete the transactions contemplated by thisAgreement or any of the Ancillary Agreements on the terms of this Agreement orany of the Ancillary Agreements will not be fully compensable in damages andthe breach or threatened breach of the provisions of this Agreement or any ofthe Ancillary Agreements would cause the non-breaching Party irreparableharm.  Accordingly, in addition to andnot in limitation of any other remedies available to the non-breaching Partyfor a breach or threatened breach of this Agreement or any of the AncillaryAgreements, such Party will be entitled to specific performance of thisAgreement or any of the Ancillary Agreements upon any breach by the otherParty, and to an injunction restraining any such party from such breach orthreatened breach.

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## Section 12.17                          Survivalof Representations and Warranties. None of Seller’s representations, warranties and pre-closing covenantscontained in this Agreement, the Ancillary Agreements, the Seller ClosingCertificate or in any other agreement, document or certificate deliveredpursuant to this Agreement shall survive the Closing.  None of Purchaser’s representations, warranties and pre-closingcovenants contained in this Agreement, the Ancillary Agreements, the PurchaserClosing Certificate or in any other agreement, document or certificatedelivered pursuant to this Agreement shall survive the Closing.

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## Section 12.18                          Deductionor Setoff.  Purchaser shall fulfillall of its obligations under this Agreement and the Ancillary Agreementswithout any deductions or setoffs of any nature.

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## Section 12.19                          OrdinaryCourse of Business.  The Partiesacknowledge that the phrases “ordinary course” or the “ordinary course ofbusiness” when used to describe the conduct of Seller shall contemplate andinclude the filing of the Chapter 11 Case and the effect such filing has on theAcquired Assets.

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**[SignaturePage Follows.]**

 

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IN WITNESS WHEREOF, each of the Parties has causedthis Agreement to be executed by its officers thereunto duly authorized, all asof the day and year first above written.

 
|   | GENAISSANCE PHARMACEUTICALS, INC. |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               | /s/ Kevin Rakin |   |
|   |                              | Name: | Kevin Rakin |
|   |                              | Title: | President and Chief Executive Officer |
|   |                              |
|   |                              |
|   | DNA SCIENCES, INC.                |
|   |                              |
|   |                              |
|   | By:                               | /s/ Steven B. Lehrer |   |
|   |                              | Name: | Steven B. Lehrer |
|   |                              | Title: | President and Chief Operating Officer |
|        |                                   |  |  |  |

 

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