Document:

Exhibit 10.1

 

CONFIDENTIAL

 

EMPLOYMENT AGREEMENT

 

AGREEMENT,
dated as of June 20, 2005 (“Effective
Date”) by and between PLATO Learning, Inc., a Delaware corporation
headquartered in Minneapolis, Minnesota (the “Company”), and Robert Hickcox (“Executive”).

 

WITNESSETH
THAT:

 

WHEREAS, the Company wishes to offer
Executive employment and Executive wishes to accept employment from the
Company, pursuant to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the
premises and the mutual covenants hereinafter set forth, the Company and
Executive hereby agree as follows:

 

1.                                       Employment.  The Company hereby agrees to employ Executive
to perform the duties set forth in Section 3 hereof, and Executive hereby
accepts such employment, on the terms and conditions of this Agreement.

 

2.                                       Term.  The term of this Agreement (“Term”) shall
commence on the Effective Date and shall end on June 20, 2006, subject to earlier termination
pursuant to Section 6.  On June 20,
2006 and on each June 20
thereafter, unless earlier terminated pursuant to Section 6, the Term will
be automatically extended for an additional one (1) year, unless either
party gives written notice not to extend the Term hereof at least forty-five
(45) days prior to the date such extension would be effective.  Notwithstanding anything contained herein to
the contrary, in the event of a Change in Control (as such term is defined in
Appendix A), the Term shall be automatically extended until the second
anniversary of the Change in Control.

 

3.                                       Duties.  Executive will serve as the Company’s Vice
President — Chief Information Officer, with the responsibilities and duties
customarily associated with that position, and any other consistent
responsibilities and duties assigned or delegated to Executive by the Board of
Directors of the Company (the “Board”) or the Company’s Chief Executive
Officer.

 

4.                                       Time
Commitment.  Executive will devote
Executive’s time, attention and energies to the performance of his duties and
responsibilities under this Agreement. 
Executive may not be associated with, consult, advise, work for, be
employed by, contract with, or otherwise devote any of Executive’s time to the
pursuit of any other work or business activities that may interfere with the
performance of such duties and responsibilities.  The foregoing shall not preclude Executive
from devoting reasonable time to the supervision of his personal investments,
civic, charitable, educational, religious and similar types of activities,
speaking engagements and membership on other boards of directors, provided such
activities do not interfere in any way with the business of the Company; and
provided further that, Executive cannot serve on the board of directors of more
than one publicly-traded company without the written consent of the Board.  The time involved in

 

 

such activities shall not be treated as
vacation time.  Executive shall be
entitled to keep any amounts paid to him in connection with such activities (e.g., director fees and honoraria).

 

5.                                       Compensation
and Benefits.  The Company will pay
the following compensation to Executive in full consideration for performance
of his services hereunder, payable in regular installments in accordance with
the Company’s usual payroll policies and procedures.

 

(a)                                  Salary.  Executive will receive an annual salary of One
Hundred Eighty-five Thousand Dollars ($185,000).  The Board or the Compensation Committee of
the Board will review Executive’s salary at least annually.  Executive’s salary will not be reduced, and
after any increase the term “salary” for purposes of this Agreement shall refer
to Executive’s annual salary as most recently increased.

 

(b)                                 Bonus
Compensation.  Executive will be
eligible to participate in the Company’s executive incentive plan as established
each year by the Board of Directors or the Compensation Committee of the
Board.  Executive’s target bonus for
fiscal 2005 is set forth in the Company’s Fiscal 2005 Executive Annual
Incentive Plan.

 

(c)                                  Stock
Options.

 

(i)                                     On
the Effective Date, the Company shall grant Executive an option under the
Company’s 2002 Stock Plan to purchase 45,000 shares of the Company’s common
stock at an exercise price per share equal to the fair market value on the date
of grant.  Such option will vest at the
rate of one-third of the shares covered by such option on each of the first
three anniversaries of the date of grant and shall be exercisable for a period
of eight years from the date of grant, provided Executive continues to be
employed by the Company.

 

(ii)           Executive
shall be eligible to receive grants of stock options and restricted shares of
the Company’s common stock based on the achievement level by the Company of the
goals set forth in the Company’s Fiscal 2005 Executive Long-Term Incentive
Stock Plan.  Such options and restricted
shares, if granted, will vest at the rate of one-third of the shares covered by
such option or restricted share grant, as applicable, on each of the first
three anniversaries of the date of grant, provided Executive continues to be employed
by the Company.  Such options shall be
exercisable for a period of eight years from the date of grant.

 

Notwithstanding any other provisions as
outlined in the Company’s 2002 Stock Plan, and unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges, upon a Change
in Control the initial grant of options to purchase 45,000 shares pursuant to Section
5(c)(i)

 

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will become immediately exercisable, and will
remain exercisable throughout their entire term.  Any stock options or restricted shares granted
after the Effective Date will be subject to such provisions relating to change
in control as are set forth in the plan under which such stock options or
restricted shares are granted at the time of grant.  All options to purchase shares of the Company’s
common stock shall be evidenced by the Company’s standard form of stock option
agreement, and all grants of restricted shares of the Company’s common stock
shall be evidenced by the Company’s standard form of restricted stock
agreement.

 

(d)                                 Benefits.  Executive shall be entitled to five (5) weeks
of vacation each year, which shall be accrued on a prorated basis of each
payroll period.  Executive shall be
eligible to participate in such group life insurance, major medical, and other
employee benefit plans and programs (collectively “Benefit Plans”) as
established by the Company, in accordance with the applicable terms and
conditions of such Benefit Plans (including the requirements of the Benefit
Plans for participation).  The benefits
under the Benefit Plans available to Executive shall be no less favorable than those
available to other senior executives of the Company, excluding the Company’s
Chief Executive Officer.

 

(e)                                  Relocations
Expenses.  The Company will pay or
reimburse Executive, upon submission by Executive of appropriate documentation
in accordance with the Company’s expense reimbursement policy, for the
following expenses related to Executive relocating to the Twin Cities
area:  all reasonable expenses related to
movement of household goods; storage for an interim period of two months; house
hunting expenses for two trips not to exceed three days each; temporary living
expenses up to two months; interim home travel every other weekend for up to
two months; and miscellaneous expense payment of $5,000.

 

(f)                                    Expenses.  The Company will reimburse Executive for all
reasonable and necessary expenses incurred by Executive in connection with the
performance of his services hereunder upon submission by Executive of
appropriate documentation in accordance with the Company’s expense
reimbursement policy.

 

6.                                       Termination.

 

(a)                                  Death
or Disability.  This Agreement and
Executive’s employment shall be terminated immediately upon Executive’s
death.  In the event of Executive’s
Disability, this Agreement and Executive’s employment shall be terminated
thirty (30) days after the Company gives written notice to Executive, unless
Executive has returned to the substantial performance of his duties on a
full-time basis.  For purposes of this
Agreement, “Disability” means that as a result of physical or mental incapacity
Executive is unable for a period of 120 consecutive days during any consecutive
180-day period to perform his duties hereunder on a full-time basis.

 

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Upon
termination by reason of Death or Disability, Executive shall be entitled only
to accrued but unpaid salary through the date of termination, together with any
other benefit or payment provided under the Company’s plans, policies or
programs in accordance with their terms (collectively, “Accrued Obligations”).

 

(b)                                 Cause
or Without Good Reason.  The Company
may terminate this Agreement and Executive’s employment for Cause (as defined
in paragraph (d) of this Section) upon ten (10) day’s prior written
notice to Executive.  Executive may
terminate the Agreement and his employment without Good Reason (as defined in
paragraph (d) of this Section) upon thirty (30) days’ prior written notice
to the Company.

 

Upon
termination for Cause or without Good Reason, Executive shall be entitled only
to the Accrued Obligations.

 

(c)                                  Good
Reason; Without Cause.  Executive may
terminate this Agreement and his employment for Good Reason upon thirty (30)
days’ prior written notice to the Company. 
The Company may terminate this Agreement and Executive’s employment
without Cause upon thirty (30) days’ prior written notice to Executive.

 

Upon
termination for Good Reason or without Cause, Executive shall be entitled to:

 

(i)                                     the
Accrued Obligations;

 

(ii)           a lump sum severance
payment equal to one (1) times Executive’s annual salary in effect on the
termination date (without regard to any reduction in salary referred to in
clause (ii) of the definition of Good Reason), which shall be paid to
Executive within ten (10) business days following such termination; and

 

(iii)          continuation of health
and other welfare benefits (including life, accident and disability benefits)
to Executive and his spouse and dependents under the Benefit Plans in which
they participated on the date of Executive’s termination, for twelve (12) months following the date of Executive’s
termination on substantially the same terms and conditions (including
contributions by Executive) as in effect immediately prior to Executive’s
termination; provided, that the Company’s obligation to provide such
health or other welfare benefit shall cease with respect to such benefit at the
time Executive becomes eligible to participate in a group plan of another
employer providing comparable benefits in the aggregate.

 

To the extent
that the health and other welfare benefits referred to in clause (iii) above
cannot be provided after termination of employment under applicable law or the
terms of the Benefit Plans then in effect (and cannot be provided through

 

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the Company’s
paying the applicable premium for Executive under COBRA), the Company shall pay
to Executive such amount as is necessary to provide Executive, on an after-tax
basis, with an amount equal to the cost of acquiring, for Executive and his
spouse and dependents, (on a non-group basis) those health and other welfare benefits
that would otherwise be lost to Executive and his spouse and dependents as a
result of Executive’s termination.

 

(d)                                 Definitions.  For the purposes of this Agreement, “Cause”
shall mean Executive’s:

 

(i)                                     indictment
or plea of guilty or nolo contendere involving any felony or gross
misdemeanor involving dishonesty, fraud, or breach of trust under any law of
the United States or any State thereof;

 

(ii)           willful engagement in
any conduct or gross negligence that in either case materially injures the
Company or any of its subsidiaries; or

 

(iii)          willful and substantial
nonperformance of assigned duties, provided that such nonperformance has
continued more than ten days after the Company has given written notice of such
nonperformance and of its intention to terminate Executive’s employment because
of such nonperformance.

 

For purpose of
this Agreement “Good Reason” shall exist if the Company, without Executive’s
written consent:

 

(i)                                     materially
reduces the nature, scope, level or extent of Executive’s responsibilities;

 

(ii)                                  reduces
Executive’s salary;

 

(iii)                               gives written notice to the Executive
pursuant to Section 2 not to extend the Term of this Agreement; or

 

(iv)                              relocates
Executive’s principal business office to a location which is more than fifty
(50) miles from both (A) Executive’s principal business office immediately
prior to such relocation  and (B) Executive’s
principal place of residence at the time of such relocation.

 

(e)                                  Conditions.  Executive’s eligibility to receive the
payment and benefits under this Section is conditioned on (i) his
compliance with the provisions of Section 8 of this Agreement and (ii) his
execution of a general release and waiver of all claims against the Company and
its directors, officers and subsidiaries, in a reasonable and customary form
prepared by the Company.

 

(f)                                    Right
of Recapture.  In the event that (x)
within one (1) year after termination of this Agreement and Executive’s
employment for any reason the Company determines that prior to such termination
he engaged in any activity which would have constituted a basis for termination
by the Company for Cause while

 

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employed by
the Company or (y) Executive breaches the restrictive covenants of Section 8,
then:

 

(i)                                     the
Company shall have no further obligations to pay the lump sum severance payment
or to continue providing Executive and his spouse and dependents with health
and other welfare benefits, as provided in paragraph (c) above, if such
termination was by the Company without Cause or by Executive for Good Reason;

 

(ii)           upon written notice to
Executive from the Company, Executive shall pay to the Company within ten (10) business
days any lump severance payment received by Executive pursuant to paragraph (c) above,
and

 

(iii)          if Executive has
exercised any stock options granted to him by the Company, Executive shall pay
to the Company within ten (10) business days after written notice from the
Company the difference between (A) the aggregate fair market value on the date
(or dates) of exercise of the shares subject to stock options which were
exercised by Executive on or after the date which is one (1) year prior to
Executive’s termination of employment and (B) the aggregate exercise price
of such stock options.

 

If Executive
disputes the exercise by the Company of any rights under this Section 6(f),
Executive shall have the right to submit such dispute to arbitration in
accordance with Section 13(e). 
Notwithstanding anything contained herein, this paragraph shall not
apply to any breach of the provisions of Section 8(a) unless there
has been substantial damage to the Company. 
For purposes of this paragraph, “fair market value” on any date means
the per share closing price of the Company’s common stock on the Nasdaq Stock
Market on that date (or, if there was no reported closing price on that date,
on the last preceding date on which the closing price was reported) or, if the
Company is not then listed on the Nasdaq Stock Market, as determined by the
Board in good faith.

 

7.                                             Change
in Control.

 

(a)                                  Retention
Bonus.  In the event that Executive’s
employment continues for two (2) years after a Change in Control (as such
term is defined in Appendix A), Executive shall be entitled to a lump sum cash
retention bonus equal to one (1) times Executive’s annual salary then in
effect.  Such retention bonus shall be
paid to Executive within ten (10) business days following the second
anniversary of the Change in Control.

 

(b)                                 Severance
Payment and Benefits.  In the event
that Executive’s employment is terminated less than two (2) years after a
Change in Control by the Company without Cause or by Executive for Good Reason,
Executive shall be entitled to the same rights, payments and benefits as
provided in paragraph (c) of Section 6.

 

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For purposes
of this Section, Good Reason shall also include the Company’s failure without
Executive’s written consent to continue in effect any incentive or bonus plan,
or Benefit Plan, unless Executive is permitted to participate in other plans
providing Executive with substantially equivalent compensation and benefits in
the aggregate (and, with respect to life insurance, major medical and other
employee welfare benefit plans, at a substantially equivalent cost).

 

(c)                                  Reduction
of Payment.  If, as provided in
Appendix B, Executive would otherwise be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code, the amounts payable under this Agreement shall be
reduced as provided in Appendix B.

 

(d)                                 Legal
Fees.  If any contest or dispute
shall arise under this Agreement involving termination of Executive’s
employment with the Company after a Change in Control or involving the failure
or refusal of the Company to perform fully in accordance with the terms of this
Section, the Company shall reimburse Executive for all reasonable legal fees
and related expenses, if any, incurred by Executive in connection with such
contest or dispute if a court of competent jurisdiction or an arbitration panel
substantially upholds Executive’s position.

 

8.                                             Restrictive
Covenants.

 

(a)                                  Confidentiality.  Executive agrees not to directly or
indirectly, without the Company’s prior written consent:

 

(i)                                     use
or disclose, for the benefit of any person, firm or entity other than the
Company and its subsidiaries, the Confidential Business Information of the
Company or any of its subsidiaries;

 

(ii)           distribute or
disseminate in any way to any person, firm or entity anyone other than the
Company and its subsidiaries, any Confidential Business Information in any form
whatsoever;

 

(iii)          copy any Confidential
Business Information other than for use by the Company or any of its
subsidiaries;

 

(iv)                              remove
any Confidential Business Information from the premises of the Company;

 

(v)                                 fail
to safeguard all confidential documents; and

 

(vi)                              copy
any confidential documents belonging to any of the Company’s customers.

 

For purposes
of this Agreement, “Confidential Business Information” means information or
material that is not generally available to or used by others or the utility or
value of which is not generally known or recognized as a standard

 

7

 

practice,
whether or not the underlying details are in the public domain, including but
not limited to its computerized and manual systems, procedures, reports, client
lists, review criteria and methods, financial methods and practices, plans,
pricing and marketing techniques, business methods and procedures and other
valuable and proprietary information relating to the pricing, marketing,
design, manufacture and formulation of educational software, as well as
information regarding the past, present and prospective clients of the Company
or any of its subsidiaries, and their particular needs and requirements, and
their own confidential information.

 

Upon
termination of employment under this Agreement for any reason, Executive agrees
to return to the Company all policy and procedure manuals, records, notes,
data, memoranda, and reports of any nature (including computerized and
electronically stored information) which are in Executive’s possession and/or
control which relate to (i) the Confidential Business Information of the
Company or any of its subsidiaries, (ii) the business activities or facilities
of the Company or its past, present, or prospective clients.

 

(b)                                 Non-Compete.  During the period of Executive’s employment
and for a period of one (1) year following termination of this Agreement
and Executive’s employment for any reason (the “Restricted Period”), Executive
will not directly or indirectly, on his behalf, or as a partner, officer,
director, trustee, member, employee, or otherwise, within the United States or
in any foreign market in which Executive was engaged in activities on behalf of
the Company or any of its subsidiaries, own, engage in or participate in, in
any way, any business that is similar to or competitive with any actual or
planned business activity engaged in or planned by the Company or any of its
subsidiaries at the time the employment under this Agreement was
terminated.  However, this Agreement
shall not prohibit ownership by Executive of up to 2% of the shares of stock of
any corporation the stock of which is listed on a national securities exchange
or is traded in the over-the-counter market.

 

(c)                                  Non-Solicitation.  During the Restricted Period, Executive will
not directly or indirectly, for the purpose of selling services and/or products
provided or planned by the Company or any of its subsidiaries at the time the employment
under this Agreement was terminated, call upon, solicit or divert any actual
customer or prospective customer of the Company or any of its subsidiaries,
unless employed by the Company to do so. 
An actual customer, for purposes of this Section, is any customer to
whom the Company or any of its subsidiaries has provided services and/or
products within one year prior to Executive’s termination of employment under
this Agreement.  A prospective customer,
for purposes of this Section, is any prospective customer to whom the Company
or any of its subsidiaries sought to provide services and/or products within
one year prior to the date of Executive’s termination of employment under this
Agreement when Executive had knowledge of or was involved in such solicitation.

 

8

 

Executive
further agrees that during the Restricted Period Executive shall not directly
or indirectly induce any person to leave the employ of the Company or any of
its subsidiaries, or solicit any person who is currently or was an employee of
the Company or any of its subsidiaries at any time during the twelve months
prior to Executive’s termination of employment under this Agreement.

 

(d)                                 Judicial
Modification.  If the final judgment
of a court of competent jurisdiction declares that any term or provision of
this Section is invalid or unenforceable, the parties agree that (i) the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or geographic area of the term or
provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, (ii) the parties shall request that
the court exercise that power, and (iii) this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment or decision may be appealed.

 

9.                                       Remedies.  In the event Executive breaches or threatens
to breach any provision of Section 8 of this Agreement, the Company shall,
in addition to the provisions of Section 6(f) be entitled to
injunctive relief, enjoining or restraining such breach or threatened
breach.  Executive acknowledges that the
Company’s remedy at law is inadequate and that the Company and its subsidiaries
will suffer irreparable injury if such conduct is not prohibited.

 

Executive further agrees that the covenants
contained in Section 8 shall be construed as separate and independent of
other provisions of this Agreement and the existence of any claim by Executive
against the Company or any of its subsidiaries, except for a claim that
Executive was terminated without Cause or terminated his employment for Good
Reason, shall not constitute a defense to the enforcement by the Company of
either Section 8 or this Section.

 

10.                                 Property
Rights.  All discoveries, designs,
improvements, ideas, inventions, intellectual property, creations, and works of
art, whether or not patentable or subject to copyright, relating to the
business of the Company or any of its subsidiaries, or its clients, conceived,
developed or made by Executive during employment under this Agreement, either
solely or jointly with others (hereafter “Developments”) shall automatically
become the sole property of the Company. 
Executive shall immediately disclose to the Company all such
Developments and shall, without additional compensation, execute all
assignments, application or any other documents deemed necessary by the Company
to perfect the Company’s rights therein. 
These obligations shall continue throughout the Restricted Period under
this Agreement with respect to Developments conceived, developed or made by
Executive during the period of employment under this Agreement.

 

The Company acknowledges and agrees that the
provisions of this section shall not apply to inventions or for which no
equipment, supplies, facility or trade secret information of

 

9

 

the Company or its clients were used by
Executive and which were developed entirely on Executive’s own time unless (a) such
inventions relate (i) to the business of the Company or (ii) to the
Company’s actual or demonstrably anticipated research or development or (b) such
inventions result from any work performed by Executive for the Company.

 

11.                                 Assignments.  Neither party shall have the right or power
to assign any rights or duties under this Agreement without the written consent
of the other party, provided, however, that the Company shall have the right to
assign this Agreement without consent pursuant to any corporate reorganization,
merger, or other transaction involving a Change in Control of the Company or any
of its subsidiary companies.  Any
attempted assignment in breach of this Section shall be void.

 

If Executive performs services and duties for
any subsidiary or other affiliated entity of the Company, then the provisions
of Sections 8 and 9 shall apply to the confidential information and business
activities, property rights, clients, and employees of that subsidiary or other
entity.

 

12.                                 Severability.  Each section, paragraph, clause, sub-clause
and provision (collectively “Provisions”) of this Agreement shall be severable
from each of the others, and if for any reason any section, paragraph, clause,
sub-clause or provision is invalid or unenforceable, such invalidity or
unenforceability shall not prejudice or in any way affect the validity or
enforceability of any other Provision hereof.

 

13.                                 Miscellaneous.

 

(a)                                  This
Agreement (including the appendices) contains the entire agreement of the
parties with respect to the employment of Executive and supersedes all prior
agreements, provisions, covenants, arrangements, communications,
representations or warrantees, whether written or oral, by any officer,
employee or representative of any party with respect to the subject matter of
this Agreement.

 

(b)                                 Failure
on the part of either party to insist upon strict compliance by the other with
respect to any of the terms, covenants and conditions hereof, shall not be
deemed a subsequent waiver of such term, covenant or condition.

 

(c)                                  The
provisions of any section containing a continuing obligation after
termination shall survive such termination whether with or without Cause and
even if occasioned by the Company’s breach or wrongful termination.

 

(d)                                 This
Agreement may not be modified except in a written amendment signed by the
parties.

 

(e)                                  Except
for action by the Company to enforce the restrictive covenants of Section 8,
any dispute, controversy or difference that may arise between the parties
hereto out of or in relation to or in connection with this Agreement or for the
breach thereof which cannot be settled amicably by the parties within thirty
(30) days shall be finally and exclusively settled by arbitration in
Minneapolis, Minnesota,

 

10

 

in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect.  The arbitrator shall have discretion to award
the prevailing party reasonable attorney’s fees, subject to Section 7(d).  In the event of litigation under this
Agreement, the court shall have discretion to award the prevailing party
reasonable attorney’s fees, subject to Section 7(d).

 

(f)                                    The
headings in this Agreement are inserted for convenience and identification only
and are not intended to describe, interpret, define or limit the scope, extent,
or intent of this Agreement or any provision hereof.  Each party has cooperated in the preparation
of this Agreement.  As a result, this
Agreement shall not be construed against any party on the basis that the party
was the draftsperson.

 

(g)                                 All
forms of compensation referred to in this Agreement are subject to reduction to
reflect withholding for applicable income, payroll and other taxes.

 

14.                                 Governing
Law.  It is the intention of the
parties hereto that all questions with respect to the construction, formation,
and performance of this Agreement and the rights and liabilities of the parties
hereto shall be determined in accordance with the laws of the State of
Minnesota.  The parties hereto submit to
the jurisdiction and venue of the courts of Hennepin County, Minnesota in
respect to any dispute arising out of this agreement.

 

15.                                 Insurance.  For the period from the date hereof through
at least the fifth anniversary of Executive’s termination of employment from
the Company, the Company agrees to maintain Executive as an insured party on
all directors’ and officers’ insurance maintained by the Company for the
benefit of its directors and officers on at least the same basis as all other
covered individuals.

 

16.                                 Notices.  Any notice required pursuant to this
Agreement will be in writing and will be deemed given upon the earlier of (i) delivery
thereof, if by hand, (ii) five (5) business days after mailing if
sent by mail (registered or certified mail, postage prepaid, return receipt
requested), (iii) the next business day after deposit if sent by a
recognized overnight delivery service, or (iv) upon transmission if sent
by facsimile transmission or by electronic mail, with return notification
(provided that any notice sent by facsimile or electronic mail shall also
promptly be sent by one of the means described in clauses (i) through (iii) of
this Section.  All notices will be
addressed as follows or to such other address as a party may identify in a
written notice to the other party:

 

	
  to the
  Company:

  	
   

  	
  PLATO
  Learning, Inc.

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  	
  10801 Nesbitt Avenue South

  
	
   

  	
   

  	
  Bloomington, MN 55437-3109

  
	
   

  	
   

  	
   

  
	
  to Executive:

  	
   

  	
  Mr. Robert Hickcox

  
	
   

  	
   

  	
  [address]

  

 

11

 

Each party named above may change its address
and that of its representative for notice by the giving of notice thereof in
the manner hereinabove provided.

 

17.                                 Counterparts.  This Agreement may be executed in one or more
counterparts, all of which together shall constitute but one Agreement.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Employment Agreement in the State of Minnesota effective as of
the day and year first above written.

 

 

	
   

  	
  PLATO Learning, Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Robert Hickcox

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

12

 

APPENDIX
A

 

“Change in Control” means the occurrence of any one of the
following events:

 

(i)                                     individuals who,
on June 20, 2005, constitute
the Board (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to June 20, 2005
whose election or nomination for election was approved by a vote of at least a
majority of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however,
that no individual initially elected or nominated as a director of the Company
as a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;

 

(ii)                                  any “person” (as such
term is defined in the Securities Exchange Act of 1934 (the “Exchange Act”) and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities eligible to vote for the election of the Board (“Company
Voting Securities”); provided, however, that the event described
in this paragraph (ii) shall not be deemed to be a Change in Control
by virtue of any of the following acquisitions:  (A) by the
Company or any subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary, (C) by
any underwriter temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction, as defined in
paragraph (iii), or (E) by any person of Voting Securities from the
Company, if a majority of the Incumbent Board approves in advance the
acquisition of beneficial ownership of 50% or more of Company Voting Securities
by such person;

 

(iii)                               the consummation of a
merger, consolidation, statutory share exchange or similar form of corporate
transaction involving the Company or any of its subsidiaries that requires the
approval of the Company’s stockholders, whether for such transaction or the
issuance of securities in the transaction (a “Business Combination”), unless immediately
following such Business Combination:  (A) more
than 60% of the total voting power of (x) the corporation resulting from
such Business Combination (the “Surviving Corporation”),
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of 100% of the voting securities eligible
to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company
Voting Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such
Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior

 

A-1

 

to the Business Combination, (B) no
person (other than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Corporation or the Parent Corporation), is or
becomes the beneficial owner, directly or indirectly, of 50% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”);

 

(iv)                              the stockholders of the
Company approve a plan of complete liquidation or dissolution of the Company or
the consummation of a sale of all or substantially all of the Company’s assets;
or

 

(v)                                 the occurrence of any
other event that the Board determines by a duly approved resolution constitutes
a Change in Control.

 

Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any person acquires beneficial ownership of more than
50% of Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which reduces the number of Company Voting
Securities outstanding; provided, that if after such acquisition
by the Company such person becomes the beneficial owner of additional Company
Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the
Company shall then occur.

 

A-2

 

APPENDIX B

 

Cut-back to Safe Harbor Cap on Payments

 

(a)                                  Notwithstanding
anything in this Agreement to the contrary, in the event it shall be determined
that any payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) by the Company (or any of its affiliated
entities) or any entity which effectuates a Change in Control (or any of its
affiliated entities) to or for the benefit of Executive, whether pursuant to
the terms of this Agreement or otherwise (the “Payments”), would be subject to
the excise tax (the “Excise Tax”) imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), then the amounts payable to
Executive under this Agreement shall be reduced (reducing first the payments
under Section 7(a) and (b), unless an alternative method of reduction
is elected by Executive) to the maximum amounts will result in no portion of
the Payments being subject to such excise tax (the “Safe Harbor Cap”).  For purposes of reducing the Payments to the
Safe Harbor Cap, only amounts payable to Executive under this Agreement (and no
other Payments) shall be reduced, unless consented to by Executive.

 

(b)                                 All
determinations required to be made under this Appendix B shall be made by the
public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive
within ten (10) business days of the receipt of notice from the Company or
Executive that there has been a Payment, or such earlier time as is requested
by the Company.  Notwithstanding the
foregoing, in the event (i) the Board shall determine prior to the Change
in Control that the Accounting Firm is precluded from performing such services
under applicable auditor independence rules or (ii) the Audit
Committee of the Board determines that it does not want the Accounting Firm to
perform such services because of auditor independence concerns or (iii) the
Accounting Firm is serving as accountant or auditor for the person(s) effecting
the Change in Control, the Board shall appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder).  All fees and expenses
(including, but not limited to, the costs of retaining experts) of the
Accounting Firm shall be borne solely by the Company and the Company shall enter
into any agreement requested by the Accounting Firm in connection with the
performance of the services hereunder.

 

If the
Accounting Firm determines that payments shall be reduced to the Safe Harbor
Cap, it shall furnish Executive with a written opinion to that effect, and to
the effect that Executive is not required to report any Excise Tax on Executive’s
federal income tax return.  If the
Accounting Firm determines that no Excise Tax would otherwise be payable by
Executive, it shall furnish Executive with a written opinion to such effect,
and to the effect that Executive is not required to report any Excise Tax on
Executive’s federal income tax return. 
The determination by the Accounting Firm shall be binding upon the
Company and Executive (except as provided in paragraph (c) below).

 

B-1

 

(c)                                  If
it is established pursuant to a final determination of a court or the Internal
Revenue Service (the “IRS”) proceeding which has been finally and conclusively
resolved, that Payments have been made to, or provided for the benefit of,
Executive by the Company, which are in excess of the limitations provided in
this Appendix B (hereinafter referred to as an “Excess Payment”), Executive
shall repay the Excess Payment to the Company on demand, together with interest
on the Excess Payment at the applicable federal rate (as defined in Section 1274(d) of
the Code) from the date of Executive’s receipt of such Excess Payment until the
date of such repayment. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the determination, it is possible that Payments
which will not have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made under this Appendix
B.  In the event that it is determined (i) by
the Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (ii) pursuant to a determination by a court, that an
Underpayment has occurred, the Company shall pay an amount equal to such
Underpayment to Executive within ten (10) days of such determination
together with interest on such amount at the applicable federal rate from the
date such amount would have been paid to Executive until the date of
payment.  Executive shall cooperate, to
the extent Executive’s expenses
are reimbursed by the Company, with any reasonable requests by the Company in
connection with any contests or disputes with the Internal Revenue Service in
connection with the Excise Tax or the determination of the Excess Payment.  Notwithstanding the foregoing, in the event
that amounts payable under this Agreement were reduced pursuant to paragraph (a) of
this Appendix B and the value of its stock options is subsequently redetermined
by the Accounting Firm (as defined below) within the context of Treasury
Regulation §1.280G-1 Q/A 33 that reduces the value of the Payments attributable
to such options, the Company shall promptly pay to Executive any amounts
payable under this Agreement that were not previously paid solely as a result
of paragraph (a) up to the Safe Harbor Cap.

 

B-2Exhibit 10.1

 

Execution Copy

 

 

ASSET PURCHASE AGREEMENT

 

BETWEEN

 

FISCHER IMAGING CORPORATION

(“Seller”)

 

AND

 

HOLOGIC,
INC.

(“Buyer”)

 

 

JUNE 22, 2005

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I. PURCHASE AND SALE OF ASSETS

  	
   

  
	
   

  	
   

  
	
  SECTION 1.1

  	
  PURCHASE AND SALE OF ASSETS

  	
   

  
	
  SECTION 1.2

  	
  ASSUMED LIABILITIES

  	
   

  
	
  SECTION 1.3

  	
  PURCHASE PRICE AND
  PAYMENT

  	
   

  
	
  SECTION 1.4

  	
  TIME AND PLACE OF CLOSING

  	
   

  
	
  SECTION 1.5

  	
  TRANSFER OF THE MAMMOGRAPHY INTELLECTUAL
  PROPERTY

  	
   

  
	
  SECTION 1.6

  	
  DELIVERY OF LOAN AGREEMENT

  	
   

  
	
  SECTION 1.7

  	
  FURTHER ASSURANCES

  	
   

  
	
  SECTION 1.8

  	
  ALLOCATION OF PURCHASE PRICE

  	
   

  
	
  SECTION 1.9

  	
  TRANSFER TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  ORGANIZATION AND QUALIFICATION OF SELLER

  	
   

  
	
  SECTION 2.2

  	
  SUBSIDIARIES

  	
   

  
	
  SECTION 2.3

  	
  AUTHORIZATION OF TRANSACTION

  	
   

  
	
  SECTION 2.4

  	
  COMPLIANCE WITH OBLIGATIONS AND LAWS

  	
   

  
	
  SECTION 2.5

  	
  NO CONFLICT OF TRANSACTION WITH OBLIGATIONS
  AND LAWS

  	
   

  
	
  SECTION 2.6

  	
  SEC FILINGS; FINANCIAL STATEMENTS

  	
   

  
	
  SECTION 2.7

  	
  ABSENCE OF CERTAIN CHANGES

  	
   

  
	
  SECTION 2.8

  	
  PAYMENT OF TAXES

  	
   

  
	
  SECTION 2.9

  	
  TITLE TO THE MAMMOGRAPHY INTELLECTUAL
  PROPERTY

  	
   

  
	
  SECTION 2.10

  	
  INTELLECTUAL PROPERTY RIGHTS

  	
   

  
	
  SECTION 2.11

  	
  ERISA AND EMPLOYEE BENEFITS

  	
   

  
	
  SECTION 2.12

  	
  LITIGATION

  	
   

  
	
  SECTION 2.13

  	
  FINDER’S FEE

  	
   

  
	
  SECTION 2.14

  	
  OPINION OF FINANCIAL ADVISOR

  	
   

  
	
  SECTION 2.15

  	
  BOOKS AND RECORDS

  	
   

  
	
  SECTION 2.16

  	
  DISCLOSURE OF MATERIAL INFORMATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III. REPRESENTATIONS AND
  WARRANTIES OF BUYER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  ORGANIZATION OF BUYER

  	
   

  
	
  SECTION 3.2

  	
  AUTHORIZATION OF TRANSACTION

  	
   

  
	
  SECTION 3.3

  	
  NO CONFLICT OF TRANSACTION WITH OBLIGATIONS
  AND LAWS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV. CONDUCT OF BUSINESS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  COVENANTS OF SELLER

  	
   

  
	
  SECTION 4.2

  	
  COOPERATION

  	
   

  
	
  SECTION 4.3

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V. ADDITIONAL AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  NO SOLICITATION

  	
   

  
	
  SECTION 5.2

  	
  PROXY STATEMENT

  	
   

  
	
  SECTION 5.3

  	
  ACCESS TO INFORMATION

  	
   

  
	
  SECTION 5.4

  	
  SELLER MEETING

  	
   

  

 

i

 

	
  SECTION 5.5

  	
  LEGAL CONDITIONS TO CLOSING

  	
   

  
	
  SECTION 5.6

  	
  PUBLIC DISCLOSURE

  	
   

  
	
  SECTION 5.7

  	
  NOTIFICATION OF CERTAIN MATTERS

  	
   

  
	
  SECTION 5.8

  	
  EMPLOYMENT ARRANGEMENTS AND EMPLOYEE
  BENEFITS

  	
   

  
	
  SECTION 5.9

  	
  POST-CLOSING CONTRACTUAL ARRANGEMENTS

  	
   

  
	
  SECTION 5.10

  	
  LOAN TO SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VA. LICENSE AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5A.1.

  	
  LICENSE

  	
   

  
	
  SECTION 5A.2

  	
  ADDITIONAL LIMITATIONS AND RESTRICTIONS

  	
   

  
	
  SECTION 5A.3

  	
  CONFIDENTIALITY

  	
   

  
	
  SECTION 5A.4

  	
  PROPRIETARY NOTICES

  	
   

  
	
  SECTION 5A.5

  	
  MAINTENANCE OF RECORDS; AUDIT

  	
   

  
	
  SECTION 5A.6

  	
  NO WARRANTY

  	
   

  
	
  SECTION 5A.7

  	
  LIMITATION OF LIABILITY

  	
   

  
	
  SECTION 5A.8

  	
  TERM AND TERMINATION

  	
   

  
	
  SECTION 5A.9

  	
  EFFECT OF TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI. CONDITIONS TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  CONDITIONS TO EACH PARTY’S OBLIGATION TO
  CLOSE

  	
   

  
	
  SECTION 6.2

  	
  ADDITIONAL CONDITIONS TO OBLIGATIONS OF
  BUYER

  	
   

  
	
  SECTION 6.3

  	
  ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII. TERMINATION AND AMENDMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1

  	
  TERMINATION

  	
   

  
	
  SECTION 7.2

  	
  EFFECTS OF TERMINATION

  	
   

  
	
  SECTION 7.3

  	
  FEES, EXPENSES, LOAN REPAYMENT

  	
   

  
	
  SECTION 7.4

  	
  AMENDMENT

  	
   

  
	
  SECTION 7.5

  	
  EXTENSION; WAIVER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII. INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1

  	
  DEFINITIONS AND RULES

  	
   

  
	
  SECTION 8.2

  	
  INDEMNIFICATION BY SELLER

  	
   

  
	
  SECTION 8.3

  	
  INDEMNIFICATION BY BUYER

  	
   

  
	
  SECTION 8.4

  	
  NOTICE

  	
   

  
	
  SECTION 8.5

  	
  DEFENSE OF THIRD PARTY ACTIONS

  	
   

  
	
  SECTION 8.6

  	
  MISCELLANEOUS

  	
   

  
	
  SECTION 8.7

  	
  PAYMENT OF INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX. ADDITIONAL POST-CLOSING AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1

  	
  BOOKS AND RECORDS; TAX MATTERS

  	
   

  
	
  SECTION 9.2

  	
  NONSURVIVAL OF REPRESENTATIONS, WARRANTIES
  AND AGREEMENTS

  	
   

  
	
  SECTION 9.3

  	
  COVENANT NOT TO COMPETE

  	
   

  
	
  SECTION 9.4

  	
  FINANCIAL STATEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X. MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1

  	
  NOTICES

  	
   

  

 

ii

 

	
  SECTION 10.2

  	
  INTERPRETATION

  	
   

  
	
  SECTION 10.3

  	
  COUNTERPARTS

  	
   

  
	
  SECTION 10.4

  	
  ENTIRE AGREEMENT; NO THIRD PARTY
  BENEFICIARIES

  	
   

  
	
  SECTION 10.5

  	
  GOVERNING LAW AND VENUE

  	
   

  
	
  SECTION 10.6

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION 10.7

  	
  ASSIGNMENT

  	
   

  
	
  SECTION 10.8

  	
  SEVERABILITY

  	
   

  
	
  SECTION 10.9

  	
  SUBSIDIARIES

  	
   

  
	
   

  	
   

  	
   

  
	
  List
  of Exhibits

  	
   

  
	
  List of Schedules

  	
   

  

 

iii

 

TABLE OF DEFINED
TERMS

 

	
  Term

  	
   

  	
  Section or Place Where
  Defined

  
	
  Acquisition Proposal

  	
   

  	
  5.1

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Alternative Transaction

  	
   

  	
  7.3(f)

  
	
  Ancillary Agreements

  	
   

  	
  2.5(a)

  
	
  Antitrust Laws

  	
   

  	
  5.5(b)

  
	
  Assumed Intellectual Property
  Authorization Liabilities

  	
   

  	
  1.2(a)

  
	
  Assumed Liabilities

  	
   

  	
  1.2(a)

  
	
  Assumed License Obligations

  	
   

  	
  1.2(a)

  
	
  Balance Amount

  	
   

  	
  1.3(a)(ii)

  
	
  Base Balance Sheet

  	
   

  	
  2.6(b)

  
	
  Bill of Sale

  	
   

  	
  1.6

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer Disclosure Schedule

  	
   

  	
  Article III Preamble

  
	
  Buyer Financial Statements

  	
   

  	
  3.4(b)

  
	
  Buyer Material Adverse Effect

  	
   

  	
  3.3(a)

  
	
  Buyer Reimbursable Expense

  	
   

  	
  7.3(b)

  
	
  Buyer SEC Reports

  	
   

  	
  3.4(a)

  
	
  Buyer’s Indemnified Persons

  	
   

  	
  8.1(a)

  
	
  Buyer’s Modifications

  	
   

  	
  5A.2

  
	
  Buyer’s Notice

  	
   

  	
  5A.1(b)

  
	
  Buyer’s Purchase Period

  	
   

  	
  5A.1(b)

  
	
  Charter

  	
   

  	
  2.1

  
	
  Closing

  	
   

  	
  1.4

  
	
  Closing Date

  	
   

  	
  1.4

  
	
  Closing Loan Amount

  	
   

  	
  1.3(a)(i)

  
	
  Confidentiality Agreement

  	
   

  	
  4.3

  
	
  Consumables

  	
   

  	
  9.3(a)

  
	
  Customer Information

  	
   

  	
  1.1(iv)

  
	
  EES

  	
   

  	
  5A.1(a)

  
	
  EES Agreement

  	
   

  	
  5A.1(a)

  
	
  EES Distributor Agreement

  	
   

  	
  5A.1(a)

  
	
  EES Distributorship Agreement

  	
   

  	
  5A.1(a)

  
	
  EES Purchase Agreement

  	
   

  	
  5A.1(a)

  
	
  EES Termination Date

  	
   

  	
  5A.1(a)

  
	
  Encumbrances

  	
   

  	
  2.9

  
	
  ERISA

  	
   

  	
  2.11

  
	
  Exchange Act

  	
   

  	
  2.5(b)

  
	
  Excluded Software

  	
   

  	
  1.1(iii)

  
	
  GAAP

  	
   

  	
  2.6(b)

  
	
  Governmental Entity

  	
   

  	
  2.5(b)

  
	
  Indemnified Person

  	
   

  	
  8.1(a)

  
	
  Indemnifying Person

  	
   

  	
  8.1(a)

  

 

i

 

	
  Intellectual Property Assignments

  	
   

  	
  1.6

  
	
  Intellectual Property Authorizations

  	
   

  	
  1.1

  
	
  Intellectual Property Licenses

  	
   

  	
  1.1(vii)

  
	
  Interested Acquiror

  	
   

  	
  5.1(a)

  
	
  IP Contracts

  	
   

  	
  2.10(h)

  
	
  IP Registration Fees

  	
   

  	
  2.10(l)

  
	
  Licensed Intellectual Property

  	
   

  	
  5A.1(a)

  
	
  Loan Agreement

  	
   

  	
  1.7

  
	
  Losses

  	
   

  	
  8.1(a)

  
	
  Mammography Employees

  	
   

  	
  2.12(a)

  
	
  Mammography Business

  	
   

  	
  Recitals

  
	
  Mammography Intellectual Property

  	
   

  	
  1.1

  
	
  Mammography Intellectual Property Material
  Adverse Effect

  	
   

  	
  2.1

  
	
  Mammography Products

  	
   

  	
  Recitals

  
	
  Material Investigation or Inquiry

  	
   

  	
  7.1(c)

  
	
  Offered Business

  	
   

  	
  5A.1(b)

  
	
  Outside Date

  	
   

  	
  7.1(b)

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Pending Action

  	
   

  	
  7.1(c)

  
	
  Permitted Assets

  	
   

  	
  5.1(d)

  
	
  Permitted Upgrades

  	
   

  	
  5A.1(a)

  
	
  Philips

  	
   

  	
  5A.1(a)

  
	
  Philips Supply Agreement

  	
   

  	
  5A.1(a)

  
	
  Philips Termination Date

  	
   

  	
  5A.1(a)

  
	
  Proceeding

  	
   

  	
  6.2(d)

  
	
  Protection Policies

  	
   

  	
  2.10(f)

  
	
  Proxy Statement

  	
   

  	
  5.2(a)

  
	
  Purchase Price

  	
   

  	
  1.3(a)

  
	
  Registration Statement

  	
   

  	
  5.2(a)

  
	
  Regulatory Data

  	
   

  	
  1.1(vi)

  
	
  RE&S Activities

  	
   

  	
  5A.1(a)

  
	
  RE&S License

  	
   

  	
  5A.1(c)

  
	
  RE&S Products

  	
   

  	
  5A.1(d)

  
	
  Retained Liabilities

  	
   

  	
  1.2

  
	
  SEC

  	
   

  	
  2.5(b)

  
	
  Securities Act

  	
   

  	
  6.2(l)

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller Disclosure Schedule

  	
   

  	
  Article II Preamble

  
	
  Seller Financial Statements

  	
   

  	
  2.6(b)

  
	
  Seller Indemnified Persons

  	
   

  	
  8.1(a)

  
	
  Seller Meeting

  	
   

  	
  5.2(a)

  
	
  Seller Permitted Response Actions

  	
   

  	
  5.1(a)

  
	
  Seller SEC Filings

  	
   

  	
  2.6(a)

  
	
  Seller’s Notice

  	
   

  	
  5A.1(b)

  

 

ii

 

	
  Seller Voting Proposal

  	
   

  	
  5.4

  
	
  SenoScan Upgrade Contracts

  	
   

  	
  2.10(k)

  
	
  Service and Warranty Obligations

  	
   

  	
  5A.1(a)

  
	
  Superior Proposal

  	
   

  	
  5.1A(a)(1)

  
	
  Tax(es)

  	
   

  	
  2.8

  
	
  Third Party

  	
   

  	
  7.3(f)

  
	
  Third Party Action

  	
   

  	
  8.1(a)

  
	
  Transferred Employees

  	
   

  	
  5.11(b)

  
	
  Upgrade

  	
   

  	
  2.10(j)

  
	
  Vendor Lists

  	
   

  	
  1.1(v)

  
	
  WARN

  	
   

  	
  5.11(f)

  

 

iii

 

ASSET
PURCHASE AGREEMENT

 

This ASSET
PURCHASE AGREEMENT (the “Agreement”) is entered into as of June 22, 2005
between Fischer Imaging Corporation, a Delaware corporation (“Seller”), and Hologic, Inc., a Delaware corporation (“Buyer”).  Seller and Buyer are referred to together
herein as the “Parties.”

 

RECITALS:

 

WHEREAS, Seller is engaged in the business of
researching, designing, developing, manufacturing, distributing, servicing,
licensing and selling mammography and breast biopsy systems and other products
and technology related to such systems and/or breast health, or breast cancer
detection or therapy (including, without limitation, its research, development
and clinical testing activities related to ultrasound fusion and brachytherapy), including without limitation, its SenoScan and MammoTest product
lines (the SenoScan, MammoTest
product lines and such other products and technology are collectively referred
to herein as, the “Mammography Products” and the Seller’s business of
researching, designing, developing, manufacturing, distributing, servicing,
licensing, selling or otherwise transferring or disposing of for value the
Mammography Products is referred to herein as the “Mammography Business”);

 

WHEREAS, Seller owns, or is licensed or otherwise possesses legally
enforceable rights to use the Mammography Intellectual Property and the
Intellectual Property Authorizations (as each such term is defined in Section 1.1
hereof) used in the Mammography Business;

 

WHEREAS, Buyer desires to acquire from Seller and Seller desires to
sell to the Buyer the Mammography Intellectual Property and a limited right to
use the Intellectual Property Authorizations, subject to the terms and
conditions set forth in this Agreement; and

 

WHEREAS, following the consummation of the sale by Seller to Buyer of
the Mammography Intellectual Property, Buyer desires to grant to Seller a
non-exclusive, limited license to continue to use the Mammography Intellectual
Property in order to allow the Seller to fulfill certain continuing obligations
relating thereto and as necessary to carry out the RE&S
Activities (as defined in Section 5A.1(a) hereof).

 

NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, in order to consummate said sale
and license, the parties hereto agree as follows:

 

4

 

ARTICLE I.           PURCHASE
AND SALE OF THE MAMMOGRAPHY INTELLECTUAL PROPERTY

 

Section 1.1             Purchase
and Sale.

 

On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, on the Closing Date (as defined
in Section 1.4), Seller shall sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase and acquire from Seller, all of the
Mammography Intellectual Property free and clear of all Encumbrances (as
defined in Section 2.09 hereof) and, if so requested in writing by notice
from the Buyer to the Seller (which may be given at any time prior to or after
the Closing Date) in accordance with Section 10.1 hereof, the right to use
any Intellectual Property Authorizations in connection with the Buyer’s sale of
any Buyer manufactured products after the Closing Date.  “Mammography Intellectual Property” shall
mean all of the intellectual property rights used by Seller in conducting the
Mammography Business or otherwise related to the conduct of the Mammography
Business including, without limitation all of the following assets so used or
related to the Mammography Business:

 

(i)            all
United States and foreign patents, trademarks, trade names, domain names,
service marks and copyrights and any applications for and registrations of such
patents, trademarks, trade names, domain names, service marks and copyrights
and any renewal, derivation, modification or extensions thereof;

 

(ii)           all processes,
formulae, algorithms, methods, schematics, trade secrets, technology, mask
works, know-how, inventions and tangible or
intangible proprietary information or material, including without limitation
all catalogs, research material, technical information, designs, drawings,
formulae, processes, procedures, documentation, diagrams, flow charts, methods
and schematics;

 

(iii)          computer
software programs or applications (in object code and source code form)
excluding any computer software programs or applications set forth on Schedule 1.1(iii) (the
“Excluded Software”);

 

(iv)          past and present
customer lists for the Mammography Products to the extent reasonably available
which set forth the name, address and relevant contact person of each such
customer, a detailed list of each prospective customer of the Seller that has
previously received a sales quote from the Seller within the past 24 months
with respect to the Mammography Products including the name, address and
relevant contact person of each prospective customer accompanied by all of
Seller’s quote reports for the 24-month period prior to the date hereof, and
all other data and information relating to the customers of the Mammography
Products and sales activities relating thereto (collectively, the “Customer
Information”);

 

5

 

(v)           vendor
lists to the extent reasonably available detailing the name, address and relevant
contact person for each past and present vendor supplying products or services
to the Seller relating to the Mammography Products (collectively, the “Vendor
Lists”);

 

(vi)          all currently existing data relating to any of Seller’s approvals, clearances,
licenses, registrations, permits, franchises, product registrations or
authorizations issued by any federal, state, municipal or foreign authority, or
any third party test house, registrar or certification body, relating to the
Mammography Intellectual Property, including, without limitation, all
clinical trial data, and filings, engineering and design documentation,
manufacturing and test results and procedures (collectively, the “Regulatory
Data”);

 

(vii)         all licenses or sublicenses held by the Seller to any of the
foregoing intellectual property rights (the “Intellectual Property Licenses”)
to the extent transferable;

 

(viii)        all
rights to sue for past infringement of any of the Mammography Intellectual
Property.

 

“Intellectual Property Authorizations” shall
mean Seller’s then-in-force approvals,
clearances, licenses, registrations, permits, franchises, product registrations
or authorizations issued by any federal, state, municipal or foreign authority,
or any third party test house, registrar or certification body, relating to the
Mammography Intellectual Property, to the extent then-permissible by law.

 

Notwithstanding the foregoing, the Mammography Intellectual Property
shall not include the trade name Fischer Imaging or any derivative thereof, any
registered trademark containing the trade name Fischer Imaging or any
derivative thereof, or any domain name containing the name Fischer Imaging or any derivative thereof.

 

Section 1.2             Assumed Liabilities.

 

(a) Buyer agrees to assume all of the
obligations of the Seller under the Intellectual Property Licenses transferred
by Seller to Buyer hereunder; provided, however, that Buyer assumes no
liability under any Intellectual Property License arising out of or relating to
acts or omission of Seller, the conduct of the business or operations of
Seller, or the failure to obtain any consent necessary to transfer any
Intellectual Property License (collectively, the “Assumed License Liabilities”).  Buyer agrees to assume all obligations
relating exclusively to Buyer’s use of any of the Intellectual Property
Authorizations pursuant to the exercise of Buyer’s rights to use such
Intellectual Property Authorizations as set forth in Section 1.1. above (collectively, the “Assumed Intellectual Property
Authorization Liabilities” and collectively with the Assumed License
Liabilities, the “Assumed Liabilities.”  For the avoidance of doubt: (i) except with respect to the Assumed Intellectual
Property Authorization Liabilities, Buyer shall

 

6

 

assume no obligation,
responsibility or liability relating to the Intellectual Property
Authorizations, and Seller shall retain the right, in its sole discretion, to
continue or discontinue all Intellectual Property Authorizations, and shall remain
responsible for all obligations, responsibilities or liabilities relating to
the Intellectual Property Authorizations whether arising before or after the
Closing Date, and (ii) the parties acknowledge that Buyer does not assume
any obligation, responsibility or liability relating to the Regulatory Data,
including without limitation, any responsibility to update or maintain any
Regulatory Data.

 

(b) Upon the sale and purchase of the
Mammography Intellectual Property, except for the Assumed Liabilities, Buyer
shall not assume and shall not be liable for any debt, obligation,
responsibility or liability of Seller or any affiliate of Seller, or any claim
against any of the foregoing, whether known or unknown, contingent or absolute,
asserted or unasserted, or otherwise (all such liabilities of Seller, the “Retained
Liabilities”).  Seller shall remain
responsible for such Retained Liabilities.

 

Section 1.3             Purchase
Price and Payment.

 

In consideration of the sale, transfer,
conveyance, assignment and delivery of the Mammography Intellectual Property by
Seller to Buyer, and in reliance upon the representations and warranties made
herein by Seller, Buyer will, in full payment therefor,
pay to Seller an aggregate purchase price (the “Purchase Price”) of Thirty Two
Million Dollars ($32,000,000.00), payable as follows:

 

(i)            An amount equal to the
principal and interest and any other amounts due to Buyer under the Loan
Agreement (as defined in Section 1.7) to be evidenced by a termination of
the Loan Agreement and forgiveness of Buyer of all such amounts due (the “Closing
Loan Amount”); and

 

(ii)           The remaining portion
of the Purchase Price (the amount equal to Thirty Two Million Dollars
($32,000,000) less the Closing Loan Amount, being referred to herein as the “Balance
Amount”), shall be paid by wire transfer of immediately available funds to a
bank account designated in writing by Seller to Buyer not less than 24 hours
prior to Closing.

 

Section 1.4             Time and Place of Closing.

 

The closing of the purchase and sale provided
for in this Agreement (the “Closing”) will take place at 10:00 a.m., Boston time, on a date to be specified by Buyer and
Seller (the “Closing Date”), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VI
(other than delivery of items to be delivered at Closing), at the offices of
Brown Rudnick Berlack  Israels
LLP, One Financial Center, Boston, Massachusetts,
unless another date, place or time is agreed to in writing by Buyer and Seller.

 

7

 

Section 1.5             Transfer of the Mammography Intellectual Property.

 

At the Closing, Seller shall deliver or cause to be delivered to Buyer
good and sufficient instruments of transfer transferring to Buyer title to all
of the Mammography Intellectual Property, including among other things, (a) bills
of sale (including, without limitation, a bill of sale in substantially the
form attached hereto as Exhibit A hereof (“Bill of Sale”), (b) an
intellectual property assignment or assignments in substantially the form
attached hereto as Exhibits B-1 and B-2 or any equivalent
documents as may be required to accomplish the assignment of intellectual
property in foreign jurisdictions (collectively, the “Intellectual Property
Assignments”), (c) sublicenses or assignments of the Intellectual Property
Licenses to the extent transferrable, and (d) such
other instruments of transfer as may be reasonably required.  Such other instruments of transfer (i) shall be in the form and will contain the
warranties, covenants and other provisions (not inconsistent with the
provisions hereof) which are usual and customary for transferring the type of
property involved under the laws of the jurisdictions applicable to such
transfers, (ii) shall be in the form and substance reasonably satisfactory
to counsel for Buyer, and (iii) shall effectively vest in Buyer good title
to all of the Mammography Intellectual Property, free and clear of all liens,
restrictions and encumbrances.

 

Section 1.6             Delivery
of Loan Agreement

 

Simultaneously with the execution hereof,
Seller and Buyer have executed and delivered the Loan Agreement in the form
attached hereto as Exhibit C and such other agreements,
instruments, certificates and other documents contemplated to be executed by
such party in connection therewith, including without limitation the Security
Agreement, the Patent Security Agreement, the Trademark Security Agreement and
the Note in the forms set forth as Exhibits C-1, C-2, C-3 and C-4 (collectively,
the “Loan Agreement”).

 

Section 1.7             Further Assurances

 

Seller from time to time after the Closing, at the request of Buyer,
and without further consideration shall execute and deliver further instruments
of transfer and assignment (in addition to those delivered under Sections 1.5)
and take such other action as Buyer may reasonably require to more effectively
transfer and assign to, and vest in, Buyer the Mammography Intellectual
Property.  To the extent that the
assignment of any contract, license, application,
commitment or right shall require the consent of other parties thereto, this
Agreement shall not constitute an assignment thereof; however, (a) Seller
shall use its commercially reasonable efforts before and after the Closing to
obtain any necessary consents or waivers to assure Buyer of the benefits of
such contracts, licenses, applications, commitments or rights, and (b) Seller
shall otherwise take all further actions as shall be reasonably necessary to
procure for Buyer the economic rights and benefits under such contracts,
license, application, commitment or right, including without limitation if
appropriate, acquiring the intellectual property subject to such contract,
license, application, commitment or right as agent for, or for the benefit of
or resale to, Buyer.  Without limiting
the foregoing, from and after the Closing
Date, Seller will cooperate with Buyer, without further consideration, in order
to offer the Buyer reasonable access to the Mammography Employees (as such term
is defined in Section 2.12) involved in the design and development of the
Mammography Products in order to

 

8

 

assist the Buyer’s efforts to integrate the Mammography
Intellectual Property into the operations of the Buyer.  Nothing herein shall be read to require or
otherwise obligate the Seller to continue the employment of any of the
Mammography Employees before or after the Closing Date.

 

Section 1.8             Allocation
of Purchase Price.

 

As soon as practicable after the Closing, the Buyer shall prepare a
memorandum setting forth an allocation of the Purchase Price payable by Buyer
for the Mammography Intellectual Property acquired pursuant hereto among each
item of the Mammography Intellectual Property. 
Such allocations shall be subject to Seller’s reasonable approval. The
prices reflected in said memorandum shall represent the fair market values of
each item of the Mammography Intellectual Property at the Closing, to the best
of the knowledge and belief of Buyer, and the parties hereto agree that they
will not take a position inconsistent with such allocation for federal income
tax purposes.

 

Section 1.9             Transfer Taxes.

 

Any transfer or sales Tax, stamp duty or similar costs relating to the
consummation of the transactions contemplated hereby shall be borne by the
Buyer.

 

ARTICLE II.          REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller
represents and warrants to Buyer that the statements contained in this Article II
are true and correct, except as set forth herein or in the disclosure schedule delivered
by Seller to Buyer on or before the date of this Agreement (the “Seller
Disclosure Schedule”).  The Seller
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article II and the
disclosure in any paragraph shall qualify other paragraphs in this Article II
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other paragraphs.

 

Section 2.1             Organization
and Qualification of Seller.

 

Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power and authority
to own, lease and operate its properties in the manner and in the places where
such properties are owned or leased.  The
copies of Seller’s Certificate of Incorporation (“Charter”) or equivalent
document as amended to date, certified by the Secretary of State of the State
of Delaware, and of Seller’s bylaws as amended to date, certified by Seller’s
Secretary, previously delivered to Buyer’s counsel, are, and will be at the
Closing, complete and correct. Seller is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction where it is required
to be licensed or qualified to conduct its business or own its property except where
the failure to be so licensed or qualified or in good standing would not have a
material adverse effect upon (i) the Seller’s
ability to transfer the Mammography Intellectual Property to the Buyer at the
Closing in accordance with the terms and

 

9

 

conditions hereof including, without limitation, the ability to
transfer the Mammography Intellectual Property free and clear of any
Encumbrance (as such term is defined in Section 2.10), (ii) the Buyer’s
right to use, practice, license, sell, or otherwise dispose of the Mammography
Intellectual Property as contemplated hereby and to exclude any third party
from any use, practice, license, or sale of the Mammography Intellectual
Property from and after the Closing Date other than as specifically
contemplated under the terms of the license agreement contained in Section 5A.1
hereof, or (iii) the Seller’s ability to consummate the transactions
contemplated hereby in accordance with the terms and conditions hereof (a “Mammography
Intellectual Property Material Adverse Effect”).

 

Section 2.2             Subsidiaries.

 

Except as set forth on Schedule 2.2, Seller does not own,
directly or indirectly, any capital stock of any corporation and has no
subsidiary, in either case which has any ownership or other right or interest
in or to the Mammography Intellectual Property. 
Seller does not own securities issued by any other business organization
or governmental authority and Seller is not a partner or participant in any
joint venture or partnership of any kind, in either case which has any
ownership or other right or interest in or to the Mammography Intellectual
Property.

 

Section 2.3             Authorization
of Transaction.

 

Seller has full corporate right, power and
authority to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by it pursuant to, or as contemplated
by, this Agreement, and to consummate the transactions contemplated hereby and
thereby, and the execution and delivery by the Seller of this Agreement and
each such other agreement, document and instrument, and the performance by the
Seller of its obligations hereunder and thereunder,
have been duly authorized by all necessary corporate and other action on the
part of the Seller, except for the required approval of Seller’s
stockholders.  This Agreement and each
agreement, document and instrument executed and delivered by the Seller
pursuant to, or as contemplated by, this Agreement constitute, or when executed
and delivered will constitute, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws relating to or affecting creditors’
rights generally and by general principles of equity (regardless of whether
enforcement is sought in equity or at law).

 

Section 2.4             Compliance
with Obligations and Laws.

 

Neither Seller’s ownership nor use of the Mammography Intellectual
Property (a) constitutes a violation of any law, regulation,
administrative order or judicial order, decree or judgment applicable to Seller
or the Mammography Intellectual Property, or (b) has in the past
constituted a violation of any law, regulation, administrative order or
judicial order, decree or judgment applicable to Seller or the Mammography
Intellectual Property, that in either case, has or would reasonably be expected
to have a Mammography Intellectual Property Material Adverse Effect.

 

10

 

Section 2.5             No
Conflict of Transaction With Obligations and Laws.

 

Except as set forth in Schedule 2.5;

 

(a) Neither the execution and delivery
of this Agreement, the Loan Agreement or any other agreement, document or
instrument to be executed and delivered pursuant to, or as contemplated by,
this Agreement (collectively, the “Ancillary Agreements”), by Seller, nor the
performance of the transactions contemplated hereby will: (i) constitute
a breach or violation of any provision of the Charter or bylaws of Seller; (ii) conflict
with or constitute (with or without the passage of time or the giving of
notice) a breach of, or default under, any debt instrument to which Seller is a
party, or give any person the right to accelerate any indebtedness or
terminate, modify or cancel any right; (iii) constitute (with or without
the passage of time or giving of notice) a default under or breach of any other
agreement, instrument or obligation to which Seller is a party or by which it
or any of the Mammography Intellectual Property is bound; (iv) result in a
material violation of any law, regulation, administrative order or judicial order
applicable to it or the Mammography Intellectual Property or to which Seller is
subject, or by which the Mammography Intellectual Property may be bound; or (v) result
in the creation of any Encumbrance upon any item of the Mammography
Intellectual Property.

 

(b) No consent, approval, order or
authorization of, or registration, declaration or filing with, any person or
any court, administrative agency or commission or other governmental authority
or instrumentality, foreign or domestic, state or local (“Governmental Entity”),
is required by or with respect to Seller in connection with the execution and
delivery of this Agreement and each of the Ancillary Agreements to which Seller
is a party or the consummation of the transactions contemplated hereby, except
for (i) the filing of the Proxy Statement (as
defined in Section 5.2) with the Securities and Exchange Commission (the “SEC”)
in accordance with the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the filing of a Current Report on Form 8-K under the Exchange
Act and (ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the laws of any foreign country.  The Seller stockholder vote required for the
approval of the Seller Voting Proposal (as defined in Section 5.4) is a
majority of the outstanding shares of Seller Common Stock on the record date
for the Seller Meeting (as defined in Section 5.2).

 

Section 2.6             SEC Filings; Financial Statements.

 

(a) Seller has filed with the SEC all
reports, schedules, forms, statements and other documents (including exhibits)
required to be filed by it under the Securities Act and the Exchange Act from December 31,
2004 through the date of this Agreement. 
All reports, schedules, forms, statements and other documents (including
exhibits) filed by Seller with the SEC pursuant to the Securities Act and the
Exchange Act since December 31, 2004 are referred to herein as the “Seller
SEC Filings.”  Except as set forth on Schedule 2.6(a),
the Seller SEC Filings (i) were prepared in
compliance, in all material respects, with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be,

 

11

 

and the rules and regulations thereunder, and (ii) did not at the time they were
filed contain any untrue statement of material fact or omit to state a material
fact required to be stated in such Seller SEC Filings or necessary to make the
statements therein, in light of the circumstances in which they were made, not
false or misleading, except to the extent corrected prior to the date of this
Agreement by a subsequently filed Seller SEC Filing; provided, however, that
Seller is not making any representations pursuant to this Section 2.6(a) with
respect to information contained in the Seller SEC Filings that does not relate
directly to the Mammography Business or the Mammography Intellectual Property.

 

(b) Except as set forth in Schedule 2.6(b),
each of the consolidated financial statements (including, in each case, any
related notes thereto) contained in the Seller SEC Filings, (i) complied as to form in all material respects with
the then current published rules and regulations of the SEC with respect thereto,
(ii) were prepared in accordance with U.S. GAAP
(“GAAP”) applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) 
present fairly in all material respects the consolidated financial position of
Seller and its subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in amount.  The consolidated financial statements contained
in the Seller SEC Filings are referred to hereinafter as the “Seller Financial
Statements.”  The balance sheet dated March 31,
2005 contained in the Seller Financial Statements is referred to hereinafter as
the “Base Balance Sheet.”  At the
respective dates of the Seller Financial Statements, there were no material
liabilities of Seller, which, in accordance with GAAP,
should have been reserved for in the Seller Financial Statements and/or
disclosed in the notes thereto, which are not reserved for in the Seller
Financial Statements and/or disclosed in the notes thereto.

 

Section 2.7             Absence
of Certain Changes.

 

Except as set forth on Schedule 2.7, since the date of the
Base Balance Sheet there has not been:

 

(a) any
purchase, sale or other disposition, or any agreement or other arrangement for
the purchase, sale or other disposition, of any item of the Mammography
Intellectual Property other than the sale of inventory and products in the
ordinary course of business consistent with past practice;

 

(b) any change in the financial
condition, working capital, earnings, reserves, properties, assets,
liabilities, business or operations of the Seller, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or is reasonably likely to have a Mammography
Intellectual Property Material Adverse Effect;

 

(c) any
disposal or lapse of any rights to the use of any item of the Mammography
Intellectual Property or disposal of or disclosure to any person other than
Buyer of any

 

12

 

item of the
Mammography Intellectual Property not theretofore a matter of public knowledge
other than pursuant to confidentiality agreements; or

 

(d) any
agreement, whether in writing or otherwise, to take any action described in
this Section 2.7.

 

Section 2.8             Payment of Taxes.

 

As used herein, the term “Tax” or “Taxes”
shall mean all income, profit, franchise, sales, use, transfer, real property,
personal property, ad valorem, excise, employment,
social security and wage withholding, severance, stamp, occupation, and
windfall profit taxes, of every kind, character or description, and imposed by
any government or quasi-governmental authority (domestic or foreign), and any
interest or fines, and any and all penalties or additions relating to such
taxes, charges, fees, levies or other assessments.  Except as set forth on Schedule 2.8,
and except for Taxes to be paid by Buyer pursuant to Section 1.9 hereof,
Buyer will not have or assume any liability or other obligation for any Taxes
due upon the sale of the Mammography Intellectual Property as contemplated by
this Agreement.

 

Section 2.9             Title
to the Mammography Intellectual Property

 

Seller has and will transfer good title to all the Mammography
Intellectual Property and upon the consummation of the transactions
contemplated hereby, Buyer will acquire good title to all the Mammography
Intellectual Property, free and clear of any mortgage, pledge, deed of trust,
lien, conditional sale agreement, security interest, encumbrances, restriction
on competition or other adverse claim or interest of any kind (collectively
referred to herein as “Encumbrances”).

 

Section 2.10           Intellectual
Property Rights.

 

(a) A true and complete list of all
registered or applied for, as applicable: patents, patent applications,
trademarks, domain names, service marks, trademark, domain name and service
mark applications, trade names, and copyrights included in the Mammography
Intellectual Property and any license of or right related thereto, is set forth
on Schedule 2.10(a).  Schedule 2.10(a) also
lists any other material trademarks, domain names, service marks, trade names,
and copyrights included in the Mammography Intellectual Property and any
license of or right related thereto. 
Except as set forth on Schedule 2.10(a) there are no
other patents, patent applications, trademarks, domain names, service marks,
trademark, domain name and service mark applications, trade names, and
copyrights used by Seller in conducting the Mammography Business other than
those trademarks, domain names, service marks, trade names, and copyrights
which are unregistered and unapplied for and which are immaterial to the
Mammography Business.

 

(b) Schedule 2.10(b) contains
a true and complete list of all Intellectual Property Authorizations.  Except as set forth on Schedule 2.10(b) there
are no other Intellectual Property Authorizations used by Seller in conducting
the Mammography Business.  Except as
indicated on Schedule 2.10(b), Seller has not received any notification
of non-compliance

 

13

 

or violation from
any party responsible for issuing or granting such Intellectual Property
Authorizations.

 

(c) Schedule 2.10(c) contains
a true and complete list of all Intellectual Property Licenses.  Except as set forth on Schedule 2.10(c) there
are no other Intellectual Property Licenses used by Seller in conducting the
Mammography Business.  Except as set
forth on Schedule 2.10(c), all of the Intellectual Property
Licenses are now valid, binding and enforceable in accordance with their
respective terms against Seller subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in equity or at law), and to
Seller’s knowledge the other parties thereto, are subsisting and no default by
Seller, or to the knowledge of Seller, by any other party thereto exists thereunder.

 

(d) Except as set forth on Schedule 2.10(d),
the execution and delivery of this Agreement and each of the Ancillary
Agreements to which Seller is a party, and the consummation of the transactions
contemplated hereby will not result in the breach of, or create on behalf of
any third party the right to terminate or modify, any Intellectual Property
License.

 

(e) All patents, registered trademarks,
registered domain names, registered service marks and registered copyrights set
forth on Schedule 2.10(a) are valid and subsisting.

 

(f) Seller’s policies (the “Protection
Policies”) are to enter into confidentiality agreements in favor of Seller
which protect the proprietary nature of any item of the Mammography
Intellectual Property that are proprietary with its employees, consultants and
independent contractors who have access to any Seller Intellectual Property and
to require such employees, consultants and independent contractors to maintain
in confidence all trade secrets and confidential information owned or used by
Seller.  Any failure to comply with the
Protection Policies, individually or in the aggregate, is not reasonably likely
to have a Mammography Intellectual Property Material Adverse Effect.  To the knowledge of Seller, except as
disclosed on Schedule 2.10(f), no other person or entity is
infringing, violating or misappropriating any of the Seller’s rights to the
Mammography Intellectual Property.

 

(g) To the knowledge of Seller, none of
the activities currently conducted by the Seller in connection with the
Mammography Business infringes, violates or constitutes a misappropriation of,
any patents, trademarks, trade names, service marks and copyrights, any
applications for and registrations of such patents, trademarks, trade names,
service marks and copyrights, and all processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible
or intangible proprietary information or material of any other person or
entity.  Except as set forth in Schedule 2.10(g),
Seller has not received any written complaint, claim or notice alleging any
such infringement, violation or misappropriation.

 

14

 

(h) Seller has provided Buyer with a
true and complete copy of each contract, agreement or arrangement (or in the
case of any oral contracts, agreements or arrangements, provided a written
description thereof) which give any third party any right to purchase, license,
acquire or otherwise obtain, now or in the future, any right to the Mammography
Intellectual Property (other than (i) contracts
or agreements relating to the sale of Mammography Products in each case entered
into in the ordinary course of the Seller’s business consistent with past
practice, and (ii) contracts or agreements relating to the Seller’s
Service or Warranty Obligations as specifically contemplated by Section 5A.1(iii) hereof
and as defined therein)(collectively, the “IP Contracts”).

 

(i) Schedule 2.10(i) sets forth the name, address and relevant
contact information of any party to an IP Contract along with a detailed
summary of such purchase, license or other acquisition right and the
circumstances under which such purchase, license or other acquisition right may
be exercised.  Except as set forth on Schedule 2.10(i), each of the IP Contracts shall be terminable,
without penalty, by the Seller as of the Closing Date.  Except as set forth on Schedule 2.10(i), no IP Contract grants any third party any rights in
the Mammography Intellectual Property after the termination of such IP
Contract.  Except as set forth on Schedule 2.10(i) no other party has any right to purchase,
license, acquire or otherwise obtain any right, now or in the future, to the Mammography
Intellectual Property.  Except as set
forth on Schedule 2.10(i), each of the IP
Contracts is valid, binding and enforceable in accordance with its terms
against Seller subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or affecting
creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law), and to Seller’s knowledge
the other parties thereto, is subsisting and no default by Seller, or to the
knowledge of Seller, by any other party exists thereunder.

 

(j) Schedule 2.10(j) identifies each of the IP
Contracts which obligate the Seller to provide any alteration, upgrade,
improvement, modification, adaptation or feature enhancement (an “Upgrade”) to
any Mammography Product after the Closing Date and specifically identifies the
Mammography Products to which such obligations relate to (any such IP Contract
relating to the SenoScan Products being referred to
herein as the “SenoScan Upgrade Contracts”).

 

(k) Except as set forth on Schedule 2.10(k), Seller is
not a party to or subject to, any contract, commitment, plan, agreement,
understanding or license, whether written or oral that contains any covenant
limiting the freedom of Seller to engage in the Mammography Business or to
sell, license, transfer or otherwise dispose of the Mammography Intellectual
Property.

 

(l) Except
as set forth on Schedule 2.10(l), the Seller has made all filings
and recordations necessary to protect its interest in
the Mammography Intellectual Property in the United States Patent and Trademark
Office, the United States Copyright Office and in corresponding offices
throughout the world, as appropriate, and Seller has taken all reasonable steps
and has paid and will continue to pay all required governmental maintenance
fees, annuities and taxes to maintain each and every item of the registered or
patented Mammography Intellectual Property (or applications therefore) in full
force and

 

15

 

effect (the “IP
Registration Fees”) until the Closing Date. 
Schedule 2.10(l) sets forth each of the IP Registration Fees
payable during the twelve month period commencing as of the date hereof.

 

(m) Seller has previously delivered to Buyer true, correct and
complete copies of the Philips Supply Agreement.  Other than the Philips Supply Agreement there
are no other contracts, agreements or arrangements, whether oral or written,
between the Seller and Philips.  The
Philips Supply Agreement is terminable by the Seller as of the Philips
Termination Date and may not be continued beyond such date without the prior
approval of the Seller, which has not been granted as of the date hereof.  Pursuant to the terms of the Philips Supply
Agreement, if Seller discontinues the production activity contemplated by the
Philips Supply Agreement or if notice is served by Philips in accordance with
paragraph 19 thereunder, the only continuing rights
which Philips will have in the Mammography Intellectual Property are (i) Seller must supply Philips with servicing parts for
products delivered under the Philips Supply Agreement for at least ten years
after delivery of the product, (ii) Seller has ongoing warranty
obligations that expire 12 months from the date of installation or 15 months
from the date of replacement, whichever comes first, and additional 18 and 15
month warranty obligations for service and replacement parts, respectively, (iii) 
Seller must meet servicing support guidelines specified in Annex S-1 to the
Philips Supply Agreement, including the obligation to update and maintain
Service Documentation and diagnostic software, (iv) Seller must deposit
product specifications, test protocols, calculations and similar documents with
an escrow agent, and grant a corresponding license to use such information, to
enable Philips to manufacture necessary spare parts if Seller is unable or
unwilling to meet its contractual requirement to supply spare parts, and (v) Seller
must maintain a device master record that Philips can access and eventually
acquire.  As of the date hereof, Philips
has not sold 50 or more units of the product to be sold by Philips pursuant to
the Philips Supply Agreement. Upon termination of the Philips Supply Agreement,
except as set forth in this Section 2.10(m), Philips will have no
continuing right to use any of the Mammography Intellectual Property pursuant
to the Philips Supply Agreement or otherwise (unless such rights are expressly
granted by the Buyer). (All capitalized terms used in this Section 2.10(m)
other than Buyer, Seller and Mammography Intellectual Property are defined in Section 5A.)

 

(n) Seller has previously delivered to Buyer true, correct and
complete copies of the EES Agreements.  Other than the EES
Agreements there are no other contracts, agreements or arrangements, whether
oral or written, between the Seller and EES.  As of the date hereof, the EES Purchase Agreement is no longer of any force or effect
and has been terminated in accordance with the terms thereof.  The EES Distributor
Agreement and the EES Distributorship Agreement each
terminate as of October 10, 2006 without any further action on the part of
the Seller and may not be continued beyond such date without the prior written
approval of the Seller, which has not been granted as of the date hereof.  Pursuant to the terms of the EES Distributor Agreement, if Seller fails to supply the
products it is required to supply to EES there under,
and such failure to supply constitutes a “Failure to Supply” as defined thereunder, Seller shall have the obligation to (i) immediately pay EES the
amount of $600,000, and (ii) Seller may not make, have made, use or sell
the Products or Product Equivalents (as defined therein), or otherwise

 

16

 

compete with EES
with respect to the Products or Product Equivalents, in certain territories for
a period of 3 years following such Failure to Supply unless Seller is supplying
the Product or Product Equivalents to EES on the same
basis as Seller is supplying the same to its customers or distributors in those
territories.  The EES
Distributor Agreement also provides that if, for whatever reason, whether
during or after the term of the Distributor Agreement, Seller cannot provide
specified product service to the customers of EES or
abandons the market, EES has the option of assuming
the right to provide customers of EES with product
service for the Products and can force Seller to transfer relevant service
records, manuals, licenses, product drawings, component specifications,
technical know-how and access to sources of supply.  Additionally, Seller must sell at its
standard dealer net cost all spare parts on hand in Europe to EES.  Upon
termination of the EES Distributor Agreement, Seller
must refund a $40,000 deposit to EES.  Provided that Seller satisfies each of the
obligations set forth in the preceding four sentences, Seller shall have no
further liability resulting from the termination of the EES
Distributor Agreement in accordance with the terms thereof. Upon termination of
the EES Distributor Agreement, except as set forth in
this Section 2.10(n), EES will have no
continuing right to use any of the Mammography Intellectual Property pursuant
to the EES Agreements or otherwise (unless such
rights are expressly granted by the Buyer). (All capitalized terms used in this
Section 2.10(n) other than Buyer, Seller and Mammography Intellectual
Property are defined in Section 5A.)

 

Section 2.11           ERISA and Employee Benefits

 

The execution and delivery of this Agreement by Seller and the consummation
of the transactions contemplated hereby (i) do
not constitute a prohibited transaction within the meaning of Section 406
of The Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or Section 4975 of the Internal Revenue Code;
and (ii) will not result in any obligation or liability of Buyer to any
employee of Seller involved in the Mammography Business (collectively, the “Mammography
Employees”) or any other member of a controlled group or affiliated service
group (as defined in Internal Revenue Code Sections 414(b), (c), (m) and (o))
which includes Seller or to the Pension Benefit Guaranty Corporation in respect
of any employee benefit plan.

 

Section 2.12           Litigation.

 

Except for matters described in Schedule 2.12,
there are no claims, actions, suits, arbitrations or other proceedings or
investigations or inquiries pending (or, to the knowledge of Seller,
threatened) against Seller and there are no outstanding orders, decrees, or
stipulations of any federal, state, local or foreign Governmental Entity, in
either case relating to or affecting the Mammography Intellectual Property to
which Seller is a party or by which any item of the Mammography Intellectual
Property is bound, which in each of the foregoing cases could reasonably be
expected to result in a Mammography Intellectual Property Material Adverse
Effect.

 

17

 

Section 2.13           Finder’s Fee.

 

Except as set forth on Schedule 2.13,
Seller has not incurred or become liable for any broker’s commission, finder’s
fee, or investment banking fee relating to or in connection with the transactions
contemplated by this Agreement or any Ancillary Agreement to which it is a
party.

 

Section 2.14           Opinion of Financial Advisor.  

 

The financial
advisor of Seller, St. Charles Capital, LLC, has delivered to Seller an opinion
dated on or about the date of this Agreement to the effect, as of such date,
that the Purchase Price is fair to Seller from a financial point of view.

 

Section 2.15           Books
and Records.

 

Seller
has made and kept (and given Buyer access to) books and records and accounts,
which, in reasonable detail, accurately and fairly reflect in all material
respects the activities of Seller pertaining to the Mammography Business and the Mammography Intellectual
Property.

 

Section 2.16           Disclosure
of Material Information.

 

To Seller’s knowledge, neither this Agreement
nor any exhibit hereto or certificate issued pursuant hereto, when taken
together, and together with all matters disclosed or set forth in the Seller
SEC Filings, contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements herein or therein not
misleading, relating to the Mammography Intellectual Property and which would
have a Mammography Intellectual Property Material Adverse Effect or would
materially adversely affect the consummation of the transactions contemplated
hereby.

 

ARTICLE III.         REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents
and warrants to Seller that the statements contained in this Article III
are true and correct, except as set forth herein or in the disclosure schedule delivered
by Buyer to Seller on or before the date of this Agreement (the “Buyer
Disclosure Schedule”).  The Buyer
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other paragraphs in this Article III
only to the extent that it is reasonably apparent from a reading of such
document that it also qualifies or applies to such other paragraphs.

 

Section 3.1             Organization of Buyer.  

 

Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite corporate power to own, lease
and operate its property and to carry on its business as now being conducted.

 

18

 

Section 3.2             Authorization
of Transaction.

 

Buyer has full right, power and authority to
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by it pursuant to, or as contemplated by, this Agreement
(including without limitation the Ancillary Agreements) and to consummate the
transactions contemplated hereby and thereby, and the execution and delivery by
the Buyer of this Agreement and each such other agreement, document and
instrument, and the performance by the Buyer of its obligations hereunder and thereunder, have been duly authorized by all necessary
corporate and other action on the part of the Buyer.  This Agreement and each agreement, document
and instrument executed and delivered by the Buyer pursuant to, or as contemplated
by, this Agreement constitute, or when executed and delivered will constitute,
valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws relating to or affecting creditors’ rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).

 

Section 3.3             No
Conflict of Transaction with Obligations and Laws.

 

Except as set forth in Schedule 3.3:

 

(a) Neither the execution and delivery
of this Agreement or any of the Ancillary Agreements by Buyer, nor the
performance of the transactions contemplated hereby and thereby will: (i) constitute a breach or violation of any provision
of the Charter or bylaws of Buyer; (ii) conflict with or constitute (with
or without the passage of time or the giving of notice) a breach of, or default
under, any debt instrument to which Buyer is a party, or give any person the
right to accelerate any indebtedness or terminate, modify or cancel any right
which could reasonably be expected to have a material adverse affect on the
Buyer’s financial condition or results or operations (a “Buyer Material Adverse
Effect”); (iii) constitute (with or without the passage of time or giving
of notice) a default under or breach of any other agreement, instrument or
obligation to which Buyer is a party which could reasonably be expected to have
a Buyer Material Adverse Effect; or (iv) result in a material violation of
any law, regulation, administrative order or judicial order applicable to the
Buyer.

 

(b) No consent, approval, order or
authorization of, or registration, declaration or filing with, any person or
any Governmental Entity, is required by or with respect to Buyer in connection
with the execution and delivery of this Agreement and each of the Ancillary
Agreements to which Buyer is a party or the consummation of the transactions
contemplated hereby, except for (i) the filing
of a Current Report on Form 8-K under the Exchange Act, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country and (iii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
be reasonably likely to have a Buyer Material Adverse Effect.

 

19

 

ARTICLE IV.         CONDUCT OF BUSINESS

 

Section 4.1             Covenants of Seller.  

 

(a) Except
as set forth in Schedule 4.1(a), or as otherwise expressly
contemplated by this Agreement or the Ancillary Agreements, during the period
from the date of this Agreement and continuing until the earlier of the termination of this Agreement or
the Closing, Seller agrees (except to the extent that Buyer shall otherwise
consent in writing): (i) to use its
commercially reasonable efforts to keep intact the Mammography Intellectual
Property and the business organization of the Mammography Business and preserve
the goodwill relating thereto; (ii) continue to perform in all material
respects in good faith each of its obligations under any IP Contract; and (iii) to pay its debts and Taxes and perform other
obligations when due in the ordinary course in substantially the same manner as
previously conducted, subject to good faith disputes over such debts, Taxes or
obligations, and, to the extent consistent with such business.

 

(b) During
the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or
the Closing, Seller shall not, without the written consent of Buyer:

 

(i)            sell,
lease, license or otherwise dispose of any of its properties or assets included
in the Mammography Business or the Mammography Intellectual Property, except
for sales of inventory or products, in each case, in the ordinary course of
business consistent with past practice;

 

(ii)           enter
into, modify, amend, extend, renew or terminate any IP Contract;

 

(iii)          enter
into any new license for any intellectual property rights to or from any third
party relating to the Mammography Business; or

 

(iv)          take,
or agree in writing or otherwise to agree to take, any of the actions described
in clauses (b)(i) through (iii) above.

 

Section 4.2             Cooperation.

 

Subject to
compliance with applicable law, from the date hereof until the Closing, Seller
shall make its officers available to confer on a regular and frequent basis
with one or more representatives of the Buyer at reasonable times and upon
reasonable advance notice to report on the general status of Mammography
Intellectual Property and to facilitate the transfer of the Mammography
Intellectual Property to the Buyer as contemplated hereby and shall promptly provide
Buyer or its counsel with copies of all filings made by such party with any
Governmental Entity in connection with this Agreement, the Ancillary Agreements
and the transactions.

 

20

 

Section 4.3             Confidentiality.

 

The parties
acknowledge that Buyer and Seller have previously executed a Confidentiality
Agreement, dated as of June 17, 2004 (the “Confidentiality Agreement”), which Confidentiality Agreement
will continue in full force and effect in accordance with its terms, except as
expressly modified herein.

 

ARTICLE V.          ADDITIONAL AGREEMENTS

 

Section 5.1             No Solicitation. 

 

(a) From and after the date of this
Agreement until the earlier of the Closing or termination of this Agreement
pursuant to its terms, Seller shall not, directly or indirectly, through any
officer, director, employee, financial advisor, representative or agent (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a proposal
or offer for a merger, consolidation, business combination, tender offer, sale
of any item of the Mammography Intellectual Property, sale of 33% or more of
its equity securities (excluding sales pursuant to existing Seller stock option
plans or warrants outstanding as of the date hereof) or any similar transaction
involving Seller, other than the transactions contemplated by this Agreement or
any transaction involving the sale of any Permitted Assets (as defined in Section 5.1(d) below)
(any of the foregoing inquiries or proposals being referred to in this
Agreement as an “Acquisition Proposal”), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal (except that Buyer expressly
acknowledges that the Seller will not be in violation of its obligations under
this Section 5.1(ii) if (X) the Seller’s financial advisor determines
in good faith that the receipt of such supplemental information is absolutely
necessary in order for Seller’s Board of Directors to clarify the terms of any
ambiguous conditions to the consummation of any unsolicited Acquisition
Proposal, Seller’s financial advisor may make one, and only one,
written request that the party submitting an unsolicited Acquisition Proposal
deliver a further written communication to the Seller for the sole purpose of
clarifying ambiguities identified by the Seller’s financial advisor in such
Acquisition Proposal, (Y) if Seller responds to an unsolicited Acquisition
Proposal by providing copies of this Agreement, any of the Ancillary Agreements
and any previously filed and publicly available Seller SEC Filings to the party
making such unsolicited Acquisition Proposal (the “Interested Acquiror”), or (Z) if in response to a specific request
made by the Interested Acquiror, the Seller’s
financial advisor discloses the existence of the Loan Agreement, the amounts
outstanding thereunder and the requirement contained
in this Section 5.1 regarding the repayment of the amounts outstanding
under the Loan Agreement, or engages in discussions with an Interested Acquiror for the sole purpose of clarifying the procedural
requirements set forth in this Agreement to be followed by the Interested Acquiror, the Seller’s Board of Directors and the Seller’s
stockholders in order to consummate the Acquiror’s
Acquisition Proposal, all of the above being referred to as “Seller Permitted
Response Actions”), or (iii) agree to or recommend any Acquisition
Proposal; provided, however, that if Seller has not breached this
Section 5.1, and has paid all amounts then due under the Loan Agreement,
nothing contained in this Agreement shall prevent Seller or its Board of
Directors, from:

 

21

 

(A)          furnishing non-public
information to, or entering into discussions or negotiations with, any person
or entity in connection with a bona fide written Acquisition Proposal by such
person or entity or agreeing to (with the terms of any such agreement being
subject to termination of this Agreement in accordance with Article VII)
or recommending a bona fide written Acquisition Proposal to the stockholders of
Seller, if and only to the extent that:

 

1)             the Board of
Directors of Seller believes in good faith (after consultation with its
financial advisor) that such Acquisition Proposal is reasonably capable of
being completed on the terms proposed and would, if consummated, result in a
transaction more favorable to Seller or its stockholders than the transaction
contemplated by this Agreement (any such more favorable Acquisition Proposal
being referred to in this Agreement as a “Superior Proposal”) and Seller’s
Board of Directors determines in good faith after consultation with outside
legal counsel that such action is necessary for such Board of Directors to
comply with its fiduciary duties to stockholders under applicable law;

 

2)             prior to furnishing
such non-public information to, or entering into discussions or negotiations
with, such person or entity, such Board of Directors receives from such person
or entity an executed confidentiality agreement with terms not materially more
favorable to such party than those contained in the Confidentiality Agreement;
and

 

3)             prior to recommending
a Superior Proposal, Seller shall provide Buyer with at least five business
days’ prior notice of its proposal to do so, during which time Buyer may make,
and in such event Seller shall consider, a counterproposal to such Superior
Proposal, and, subject to the fiduciary duties of Seller’s Board of Directors,
Seller shall itself and shall cause its financial and legal advisors to
negotiate on its behalf with Buyer with respect to the terms and

 

22

 

conditions of such counterproposal for a
reasonable period of time (not to exceed 10 business days after the Seller’s
receipt of Buyer’s counterproposal) given the terms and conditions of such
counterproposal and such Superior Proposal; or

 

(B)           complying
with Rule 14d-9 and 14e-2 promulgated under the Exchange Act with regard
to an Acquisition Proposal.

 

(b) Seller will immediately cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore of the nature described in Section 5.1(a) and
will use commercially reasonable efforts to obtain the return or destruction of
any confidential information furnished to any such parties.

 

(c) Seller shall notify Buyer promptly,
but in any event no more than 24 hours, after receipt by Seller (or its
advisors) of any Acquisition Proposal or any request for non-public information
in connection with an Acquisition Proposal or for access to the properties,
books or records of Seller by any person or entity that informs Seller that it
is considering making, or has made, an Acquisition Proposal.  Such notice shall be made in writing and
shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact.  Seller shall continue to keep Buyer informed,
on a current basis, of all material developments with respect to the status of
any such discussions or negotiations and the terms being discussed or
negotiated.

 

(d) Nothing in this Section 5.1
shall (i) permit Seller to terminate this
Agreement (except as specifically provided in Section 7.1 hereof), (ii) permit
Seller to enter into any agreement with respect to an Acquisition Proposal
during the term of this Agreement (it being agreed that during the term of this
Agreement, Seller shall not enter into any agreement with any person that
provides for an Acquisition Proposal (other than a confidentiality agreement of
the type referred to in Section 5.1(a) above)) or (iii) affect
any other obligation of Seller under this Agreement.  For purposes of this Section 5.1, the
term “Permitted Assets” shall mean any assets used exclusively (i) in connection with the Seller’s RE&S
Activities, (ii) in connection with fulfilling the Seller’s Service and
Warranty Obligations (as defined in Section 5A.1 below) to the extent
expressly permitted to be undertaken by the Seller after the Closing Date
pursuant to the license granted under Section 5A.1(a)(iii), or (iii) in
connection with providing Upgrades to the extent the provision of such Upgrades
is expressly permitted to be undertaken by the Seller after the Closing Date
pursuant to the license granted under Section 5A.1(a)(iv).  The parties agree that to the extent the
Permitted Assets include any item of Mammography Intellectual Property or any
rights to use any item of Mammography Intellectual Property, the Seller will
not enter into any such agreement to dispose of any such Permitted Assets prior
to the Closing Date without the prior written consent of the Buyer.

 

23

 

Section 5.2             Proxy Statement. 

 

(a) As promptly as practical after the
execution of this Agreement, Buyer and Seller shall prepare and Seller shall
file with the SEC a proxy statement (the “Proxy
Statement”) to be sent to the stockholders of Seller in connection with the
meeting of Seller’s stockholders to consider this Agreement and the
transactions contemplated thereby (the “Seller Meeting”).  Seller will promptly respond to any comments
of the SEC and will use its respective commercially reasonable efforts to have
the Proxy Statement cleared by the SEC as practicable after such filing and
Seller will cause the Proxy Statement to be mailed to its stockholders at the
earliest practicable time after both the Proxy Statement is cleared by the SEC.  Each of Buyer and Seller will notify the
other promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or
any other government officials for supplements to the Proxy Statement or any
filing pursuant to Section 5.2(d) or for additional information and
will supply the other with copies of all correspondence between such party or
any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Proxy
Statement, or any filing pursuant to Section 5.2(d).  Each of Buyer and Seller will cause all
documents that it is responsible for filing with the SEC or other regulatory
authorities under this Section 5.2 to comply in all material respects with
all applicable requirements of law and the rules and regulations
promulgated thereunder.  Whenever any
event occurs which is required to be set forth in a supplement to the Proxy
Statement, or any filing pursuant to Section 5.2(d), Buyer or Seller, as
the case may be, will promptly inform the other of such occurrence and
cooperate in filing with the SEC or its staff or any other government
officials, and/or mailing to stockholders of Seller, such supplement.

 

(b) Seller hereby
covenants and agrees that (i) the information to be supplied by Seller for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to stockholders of Seller, at the time of the Seller Meeting and
at the Closing, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Proxy Statement not false or misleading, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Seller Meeting which has become false or misleading; and (ii) if at any
time prior to the Closing any event relating to Seller or any of its
affiliates, officers or directors should be discovered by Seller which should
be set forth in a supplement to the Proxy Statement, Seller shall promptly
inform Buyer.

 

(c) Buyer
hereby covenants and agrees that (i) the information (except for
information to be supplied by Seller for inclusion in the Proxy Statement, as
to which Buyer makes no representation) in the Proxy Statement shall not, on
the date the Proxy Statement is first mailed to stockholders of Seller, at the
time of the Seller Meeting and at the Closing, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Proxy
Statement not false or misleading, or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Seller Meeting which has become false or
misleading, and (ii) if at any time prior to the

 

24

 

Closing any event relating to
Buyer or any of its affiliates, officers or directors should be discovered by
Buyer which should be set forth in a supplement to the Proxy Statement, Buyer
shall promptly inform Seller.

 

(d) Buyer and Seller shall make all
necessary filings with respect to the transaction under the Securities Act, the
Exchange Act, applicable state blue sky laws and the rules and regulations
thereunder.

 

Section 5.3             Access to Information.  

 

Upon reasonable
notice, Seller shall afford to Buyer’s officers, employees, accountants,
counsel and other representatives, reasonable access, during normal business
hours during the period prior to the Closing, to all its properties, books,
contracts, commitments and records relating to the Mammography Intellectual
Property and, during such period, Seller shall furnish promptly to Buyer (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Buyer may reasonably request.  Unless otherwise required by law, Buyer will
and shall cause its officers, employees, accountants, counsel and other
representatives or persons who have access to such information to hold any such
information which is non-public in confidence in accordance with the
Confidentiality Agreement.  No
information or knowledge obtained in any investigation pursuant to this Section 5.3
or otherwise shall affect or be deemed to modify any representation or warranty
contained in this Agreement or the conditions to the obligations of the parties
to consummate the transactions contemplated hereby.

 

Section 5.4             Seller Meeting.  

 

The Seller, acting through its Board of
Directors, shall, subject to and in accordance with applicable law and its Charter
and bylaws, promptly and duly call, give notice of, convene and hold as soon as
practicable following the date on which the Registration Statement becomes
effective the Seller Meeting for the purpose of voting to approve this
Agreement and the sale of substantially all the assets of Seller as
contemplated hereby (the “Seller Voting Proposal”).  The Board of Directors of the Seller shall (i) recommend
approval of the Seller Voting Proposal by the stockholders of the Seller and
include in the Proxy Statement such recommendation and (ii) take all
reasonable and lawful action to solicit and obtain such approval.  Notwithstanding the foregoing, the Board of
Directors of Seller may withdraw or modify its recommendation in order to
respond to, or otherwise facilitate the consummation of an Acquisition
Proposal, if, and only if, (A) the Board of Directors of Seller has
received a Superior Proposal, (B) such Board of Directors determines after
consultation with its outside legal counsel that it is necessary to withdraw or
modify such recommendation, in order to comply with its fiduciary duties under
applicable law, to recommend such Superior Proposal to the stockholders of
Seller and (C) Seller has complied with the provisions of Section 5.1,
in all other instances the Board of Directors of Seller may withdraw or modify
such recommendation if, and only if, such Board of Directors determines after

 

25

 

consultation with its outside legal counsel
that it is necessary to withdraw or modify such recommendation, in order to
comply with its fiduciary duties under applicable law.

 

Section 5.5             Legal Conditions to Closing. 

 

(a) Subject to the terms hereof, Seller
and Buyer shall use their respective commercially reasonable efforts to (i) take,
or cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary and proper under applicable law to consummate and make
effective the transactions contemplated hereby as promptly as practicable, (ii) obtain
from any Governmental Entity or any other third party any consents, licenses,
permits, waivers, approvals, authorizations, or orders required to be obtained
or made by Seller or Buyer in connection with the authorization, execution and
delivery of this Agreement, the Ancillary Agreements and the consummation of
the transactions contemplated hereby, (iii) as promptly as practicable,
make all necessary filings, and thereafter make any other required submissions,
with respect to this Agreement required under (A) the Securities Act and
the Exchange Act, and any other applicable federal or state securities laws,
and (B) any other applicable law and (iv) execute or deliver any
additional instruments necessary to consummate the transactions, and to fully
carry out the purposes of, this Agreement. 
Seller and Buyer shall cooperate with each other in connection with the
making of all such filings prior to filing and, if requested, consider in good
faith all reasonable additions, deletions or changes suggested in connection
therewith.  Seller and Buyer shall use
their respective commercially reasonable efforts to furnish to each other all
information required for any application or other filing to be made by the
other party pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Proxy Statement and
the Registration Statement) in connection with the transactions.

 

(b) Subject to the terms hereof, Buyer
and Seller agree to cooperate and to use their respective commercially
reasonable efforts to obtain any government clearances or approvals required
for Closing under any federal, state or foreign law or, regulation or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively “Antitrust Laws”); provided,
however, that neither Buyer nor any of its subsidiaries shall be required to (i) divest
any of their respective businesses, product lines or assets, or to take or
agree to take any other action or agree to any limitation, that could
reasonably be expected to have a Buyer Material Adverse Effect or a material
adverse effect on Buyer after the Closing or (ii) take any action under
this Section 5.5 if the United States Department of Justice or the United
States Federal Trade Commission or any foreign governmental agency responsible
for enforcement of applicable Antitrust Laws authorizes its staff to seek a
preliminary injunction or restraining order to enjoin consummation of the
transactions contemplated hereby.

 

(c) Each of Seller and Buyer shall give
any notices to third parties, and use their commercially reasonable efforts to
obtain any third party consents related to or required in connection with the
transactions contemplated hereby that are (i) Intellectual Property
Authorizations, (ii) necessary to consummate the transactions contemplated
hereby, (iii) disclosed or required to be disclosed in the Seller
Disclosure Schedule or the Buyer

 

26

 

Disclosure Schedule, as the case may be, or (iv) required
to prevent a Mammography Intellectual Property Material Adverse Effect or a
Buyer Material Adverse Effect from occurring prior to or after the Closing.

 

Section 5.6             Public Disclosure.  

 

Buyer and Seller
shall use commercially reasonable efforts to consult with each other before
issuing any press release or otherwise making any public statement with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any such press release or make any such public statement prior to using such
efforts, except as may be required by law. 
The initial press release relating to this Agreement shall be in a form
agreed by the parties.

 

Section 5.7             Notification of Certain Matters. 

 

Buyer will give
prompt notice to Seller, and Seller will give prompt notice to Buyer, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate
in any material respect at any time from the date of this Agreement to the
Closing, or (b) any material failure of Buyer or Seller, as the case may
be, or of any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement. 
Notwithstanding the above, the delivery of any notice pursuant to this section will
not limit or otherwise affect the remedies available hereunder to the party
receiving such notice or the conditions to such party’s obligation to
consummate the transactions contemplated hereby.  Seller will promptly provide Buyer with
copies of all correspondence with its customers regarding the Mammography
Products.

 

Section 5.8             Employment
Arrangements and Employee Benefits. 

 

(a) Buyer will not assume any of Seller’s
employee benefit plans or take on any liability relating to any of Seller’s
employee benefit plans.

 

(b) Buyer may offer employment to such
Mammography Employees who are sales representatives or otherwise spend
substantially all of their business time selling the Mammography Products to
the Seller’s customers as Buyer shall elect in its sole discretion.  Buyer shall have the sole discretion to
establish the wages, salary, benefits and other employment terms and conditions
of any such employees which the Seller elects to offer employment.  Those employees who shall accept said offer
of employment with Buyer and who shall actually commence active employment with
Buyer shall collectively be referred to as the “Transferred Employees.”

 

(c) Seller shall retain all
responsibility and liability for providing COBRA continuation coverage, in
accordance with Code Section 4980B and Sections 601 through 608 of ERISA,
to Qualified Beneficiaries (within the meaning of Code Section 4980B(g)(1))
or to M&A Qualified Beneficiaries (within the meaning of Treasury
Regulation 54.4980B-9) in connection with, the transactions contemplated
herein.

 

27

 

(d) Seller shall be solely responsible
for compliance with any federal, state or local laws and regulations,
including, but not limited to, the Worker Adjustment and Retraining
Notification Act (“WARN”), relating to a plant closing or a substantial layoff
of personnel and for all severance expenses and other costs, at Seller’s
facility at 12300 North Grant Street, Denver, Colorado whether prior to,
concurrent with, or after the Closing, and Seller shall be solely responsible
for all Seller’s employees who are not Transferred Employees.

 

(e) It is expressly agreed that the
provisions of this Section 5.8 are not intended to be for the benefit of
or otherwise enforceable by any third person, including, without limitation,
any employee of Seller, or any collective bargaining unit or employee
organization.  Without limiting the
foregoing, nothing contained in this Agreement shall create or imply any
obligation on the part of Buyer to provide any continuing employment right to
any individual on or after the Closing. 
Nothing contained in this Agreement shall be construed to restrict or
otherwise limit the Buyer’s ability to hire the employees or former employees
of the Seller.

 

Section 5.9             Post-Closing
Contractual Arrangements.  From and
after the Closing Date, except as set forth on Schedule 5.9:

 

(a)  Seller will not take any action to
permit any party to an IP Contract to continue to use any of the Mammography
Intellectual Property after the termination of such IP Contract without the
express prior written consent of Buyer.

 

(b)  Seller will comply in all material
respects with its Obligations under the Philips Supply Agreement and the EES
Agreements as such terms are defined in Section 5A.1.  Buyer hereby acknowledges that pursuant to
the EES Distributor Agreement, EES has the exclusive right to sell the Products
in the Exclusive Territory (as such terms are defined in the EES Distributor
Agreement) until the EES Termination Date (as such term is defined in Section 5A.1(a)).  Buyer agrees that during the period from and
after the Closing Date until the EES Termination Date it will not sell any
Products in the Exclusive Territory in violation of the EES Distributor
Agreement.  Notwithstanding
the foregoing, nothing contained herein shall limit in any way the sale of the
Buyer’s Multi-Care system and related systems and products.

 

(c)  If requested by Buyer and EES
Seller shall take all necessary action to amend, modify or terminate, as so
requested, the EES Agreements, provided that any amendment or modification will
not result in any additional liability or obligation on the part of the Seller.

 

(d)  If requested by Buyer and Philips ,
Seller shall take all necessary action to amend, modify or terminate, as so
requested, the Philips Agreements, provided that any amendment or modification
will not result in any additional liability or obligation on the part of the
Seller.

 

(e)  Without the express prior written
consent of Buyer, Seller will not take any action to amend, modify, waive
compliance with any of the agreements or conditions or

 

28

 

extend the time for the performance of any of
the obligations under the Philips Supply Agreement or any of the EES
Agreements.

 

(f)  Seller will comply in all material
respects with its Service and Warranty Obligations as contemplated pursuant to Section 5A.1(iii).

 

Section 5.10           Loan to Seller.

 

Buyer shall make
funds available to Seller in accordance with the terms and conditions set forth
in the Loan Agreement, and Seller and Buyer shall comply with their respective
agreements, obligations and covenants under the Loan Agreement.

 

ARTICLE VA.  LICENSE AGREEMENT

 

Section 5A.1.        License.

 

(a) Subject
to the terms and conditions set forth in this Agreement, Buyer grants to Seller
a non-exclusive limited license to use the items of the Mammography
Intellectual Property necessary in order to enable Seller to (i) fulfill
its obligations to supply Mammography Products to Philips Medical Systems DMC
GmbH (together with its parent corporation, its subsidiaries and affiliates and
their respective successors and assigns, “Philips”) in accordance with the
terms and conditions of that certain Master Purchasing Agreement between the
Seller and Philips dated October 14, 2004 (the “Philips Supply Agreement”) during the period following the Closing
Date until the earlier to occur of the date such agreement is terminated
pursuant to the terms thereof or October 14, 2007 (such date, the “Philips
Termination Date”), (ii) fulfill its obligations to supply Mammography
Products to Ethicon Endo-Surgery (EES) Europe, a subsidiary of Johnson &
Johnson, Inc. (together with its parent corporation, its subsidiaries and
affiliates and their respective successors and assigns, “EES”), in accordance
with the terms and conditions of that certain Agreement dated October 10,
1997, between the Seller and EES with Addendum dated January 28, 1998, and
Addendum dated February 2, 2002 (collectively, the “EES Purchase Agreement”),
that certain Distributor Agreement dated December 9, 1998, between the
Seller and EES with Addendum dated December 8, 2000 and Addendum dated February 21,
2003 (collectively the “EES Distributor Agreement”), and that certain
Non-Exclusive Distributorship Agreement dated October 10, 2002, between
the Seller and EES (the “EES Distributorship Agreement” and together with the
EES Purchase Agreement and the EES Distributor Agreement, the “EES Agreements”)
during the period following the Closing Date until the earlier to occur of the
date such agreement is terminated pursuant to the terms thereof or October 10,
2006 (such date, the “EES Termination Date”), ....(iii) fulfill existing
agreements or renew, extend or enter into new agreements, relating exclusively
to the Seller’s service business with respect to the previously installed
Mammography Products (collectively, the “Service and Warranty Obligations”),
provided however, that the license granted pursuant to this Section 5A(a)(iii) shall
not be construed to permit the Seller to perform any Upgrades to the
Mammography Products, and (iv) perform any Permitted Upgrades, and (v) carry
out the RE&S Activities.  For
purposes of the foregoing, the term “RE&S Activities” means the Seller’s
business of researching,

 

29

 

designing, developing, manufacturing, distributing, servicing,
licensing and selling radiology, electrophysiology, and surgery systems and
products and technology related to such systems and products, including without
limitation, its VersaRAd, EPX/SPX and Bloom product lines or components
thereof; provided, that RE&S Activities shall not include any aspects of
the Mammography Business, Mammography Products or Mammography Intellectual
Property, except as specifically covered by the license set forth in Section 5A(a)(v) and
specifically enumerated on Schedule 5A.1.  For purposes of the foregoing, the term
Permitted Upgrades Permitted Upgrades shall mean (i) any Upgrade, the
provision of which does not result, directly or indirectly, in any remuneration
or payment to the Seller or any affiliates of Seller, (ii) any Upgrade
which the Seller reasonably determines to be necessary to ensure the safe
operation of such products in accordance with applicable health and safety standards,
(iii) any Upgrade which is offered or performed by the Seller for the
purpose of correcting any identified bugs in the software products underlying
the Mammography Products, provided that any such software bug fix merely
corrects a problem and does not provide additional functionality or significant
feature enhancements, (iv) with respect to the Seller’s MammoTest product
line, the sale and installation of replacement cameras (whether or not
manufactured by Seller) and other spare parts comprising the Seller’s MammoTest
products that are primarily designed to improve the image quality, cost
effectiveness and/or reliability of such products which may result from Seller’s
sustaining engineering activities after the date hereof but which do not result
from any product development activities performed by Seller after the Closing
Date , (v) with respect to the Seller’s SenoScan product line, the sale or
transfer of any spare parts which may result from Seller’s sustaining
engineering activities after the date hereof but which do not result from any
product development activities performed by Seller after the Closing Date, (vi) with
respect to the Seller’s SenoScan product line, from and after the Closing Date
until June 30, 2006, any Upgrades which are required to performed by the
Seller pursuant to the SenoScan Upgrade Contract as set forth on Schedule 2.10(j)
as such contracts are in effect on the date hereof and (vii) with respect
to the Seller’s SenoScan product line, the sale and installation to any of the
Seller’s installed customer base existing as of the Closing Date of the
Senoview (the Fischer Imaging workstation) or Cedara radiologist review
workstations on any SenoScan products sold prior to the Closing Date.  In the event that Seller wishes to perform
any Upgrade which does not otherwise fall under the foregoing definition of
Permitted Upgrades, Buyer agrees to discuss the scope of such Upgrade and to
reasonably consider amending the definition of Permitted Upgrades to allow
Seller to perform such Upgrade. The items of the Mammography Intellectual
Property necessary to enable the Seller to satisfy the foregoing purposes shall
be referred to herein as the “Licensed Intellectual Property”.  Schedule 5A.1 sets forth each of
the items of the Mammography Intellectual Property necessary to enable the
Seller to satisfy the obligations described in (iii), (iv) and (v) above
and no other items of the Mammography Intellectual Property shall be licensed
hereunder to the Seller pursuant to (iii), (iv) and (v) above.

 

(b)  The license granted by Buyer to
Seller to carry out the purposes enumerated in subsections (iii) and (iv) in
Section 5A.1(a) may be transferred or sublicensed by Seller to no
more than 10 third parties with the prior written consent of Buyer, which shall
not

 

30

 

be unreasonably withheld (it being agreed
that absent other substantive reasons for withholding its consent, it would be
unreasonable for Buyer to withhold its consent solely because the proposed
transferee or sublicense is a competitor of Buyer).  In the event Seller proposes to transfer or
sublicense such license in connection with the receipt of a written offer to
sell or otherwise transfer all or a portion of the Seller’s continuing service
and upgrade obligations as contemplated under Section 5A.1(iii) and (iv) above
(the portion of the Seller’s continuing service and upgrade obligations being
offered for sale by the Seller being referred to herein as the “Offered
Business”), Seller shall deliver a written notice to Buyer in accordance with Section 10.1
hereof at least 20 business days prior to the consummation of the proposed sale
of the Offered Business which notice shall set forth the price and principal
terms and conditions of the proposed sale of the Offered Business and the
identity of the proposed transferee or sublicensee (the “Seller’s Notice”).  Upon receipt of the Seller’s Notice, the
Buyer shall have 15 business days (the “Buyer’s Purchase Period”) to elect to
purchase the Offered Business on the terms and subject to the conditions set
forth in the Seller’s Notice.  The Buyer
may exercise its right to purchase the Offered Business by delivering a written
notice to Seller in accordance with Section 10.1 prior to the expiration
of the Buyer’s Purchase Period (the “Buyer’s Notice”).  Upon receipt of the Buyer’s Notice, Seller
and Buyer shall use their commercially reasonable efforts to consummate the
sale by Seller to Buyer of the Offered Business on terms and conditions at
least as favorable to the Seller as those set forth in the Seller’s
Notice.  If the Buyer fails to deliver
the Buyer’s Notice prior to the expiration of the Buyer’s Purchase Period, the
Seller may, during the 45-day period following the expiration of the Buyer’s Purchase
Period, offer and sell the Offered Business to the proposed transferee or
sublicense identified in the Seller’s Notice on terms and conditions at least
as favorable to the Seller as those set forth in the Seller’s Notice. As a
condition precedent to any transfer or sublicense of such license rights, Buyer
shall be provided with a written agreement in form and substance reasonably
acceptable to Buyer and executed by the proposed transferee or sublicensee
containing, at a minimum, terms and conditions relating to the use of the
Mammography Intellectual Property at least as restrictive as those set forth in
this Section 5A and acknowledging Buyer’s right to enforce the obligations
of the transferee and sublicense under such agreement.  Notwithstanding the foregoing, Seller shall
remain fully liable for the performance of all of the obligations of its
transferee or sublicense pursuant to this Section 5A.1(b).

 

(c)  The license granted by Buyer to
Seller to carry out the purpose enumerated in subsection (v) in Section 5A.1(a) (the
“RE&S License”) may be transferred by Seller to no more than 10 third
parties and may be transferred only in connection with the sale of the Seller’s
RE&S business or any portion thereof. 
As a condition precedent to any transfer, Buyer shall be provided with a
written agreement in form and substance reasonably acceptable to Buyer and
executed by the proposed transferee containing, at a minimum, terms and
conditions relating to the use of the Mammography Intellectual Property at least
as restrictive as those set forth in this Section 5A and acknowledging the
Buyer’s right to enforce the obligations of the transferee under such
agreement.

 

(d)  The RE&S License shall include
the right to have products used in the Seller’s RE&S business as set forth
on Schedule 5A.1.(d) (collectively, the “RE&S Products”)
made for Seller by a third party for sale or distribution (directly or
indirectly)

 

31

 

by Seller; only to the extent that in each
such case that all of the following conditions are met:

 

(i)            the designs,
specifications, and working drawings for the manufacture of such RE&S
Products are furnished by, and originate with, Seller;

 

(ii)           such designs,
specifications and working drawings are in sufficient detail that no material
additional design by the manufacturer is required other than adaptation to the
production processes and standards normally used by the manufacturer, which in
each case do not materially change the characteristics of the RE&S
Products; and

 

(iii)          the production of the
RE&S Products is solely for the sale or distribution (directly or
indirectly) by Seller.

 

Upon written request, Seller agrees to inform
Buyer whether, and if so to what extent, any manufacturer is operating under
the rights authorized under this Section 5A.1(d). Seller shall remain
fully liable for any manufacturer’s compliance with the terms and conditions of
this Section 5A.

 

(e) The license granted pursuant to Section 5A.1(a)(i) shall
include the right to have the Seller’s SenoScan Products manufactured directly
by Philips during the period from the Closing Date to the Philips Termination
Date, provided that as a condition precedent to the exercise of any such right,
(i) Buyer shall be provided with a written agreement in form and substance
reasonably acceptable to Buyer and executed by Philips containing, at a
minimum, terms and conditions relating to the use of the Mammography
Intellectual Property at least as restrictive as those set forth in this Section 5A,
and acknowledging Buyer’s right to enforce the obligations of Philips under
such agreement, and (ii) Philips and Buyer shall have entered into an
amendment of the Philips Supply Agreement (and shall not have entered into any
other agreements relating to the Mammography Intellectual Property except as
expressly contemplated by this Section 5A.1(e)) in form and substance
reasonably satisfactory to the Buyer that specifically provides that as of the
Philips Termination Date the Philips Supply Agreement will be terminated
without any further action, payment or penalty on the part of Philips or Seller
and that after the Philips Termination Date Philips will have no continuing
right whatsoever in the Mammography Intellectual Property.  Notwithstanding the foregoing, Seller shall
remain fully liable for the performance of all of the obligations of Philips
pursuant to this Section 5A.1(e).

 

(f)  Buyer does not grant Seller any
other rights with regard to the Licensed Intellectual Property and Seller shall
only use the Licensed Intellectual Property as necessary to satisfy the
foregoing specifically enumerated purposes. Without limiting the generality of
the foregoing, except in compliance with the terms and conditions of Sections
5A.1(a)(iii), (iv) and (v), and Sections 5.A.1(b), (c), (d) and
(e),Seller shall not sell, market, distribute or otherwise transfer or provide
any items of the Licensed

 

32

 

Intellectual Property to any party except for
Philips pursuant to the Philips Supply Agreement, or any successor-in-interest
thereto as permitted by the terms of the Philips Supply Agreement, and EES
pursuant to the EES Agreements, or any successor-in-interest thereto, as
permitted by the terms of the EES Agreements.

 

Section 5A.2         Additional
Limitations and Restrictions.

 

Except as otherwise specifically provided in this Agreement, Seller
shall not, without the express written consent of Buyer: (i) copy all or
any portion of the Licensed Intellectual Property licensed hereunder; (ii) disclose,
provide, distribute or otherwise make available any item of the Licensed
Intellectual Property licensed hereunder to any other person or entity or
permit others to use it; (iii) rent, lease, encumber, sublicense, sell,
assign or otherwise transfer any item of the Mammography Intellectual Property
licensed hereunder or enter into any agreement obligating the Seller to do any
of the foregoing with respect to the Mammography Intellectual Property licensed
hereunder; (iv) use the Licensed Intellectual Property for any development
or analysis purposes whatsoever, or (v) permit any third party to engage
in any acts set forth in subsections (i) through (iv), above. Nothing in
this Agreement shall be construed as granting Seller, or any customer of
Seller, any right or license under any intellectual property right of Buyer by
implication, estoppel or otherwise, except as expressly set forth in this
Agreement.  Buyer shall retain sole and
exclusive ownership of the Licensed Intellectual Property. Seller acknowledges
that by virtue of this Article VA it has and shall acquire no rights in
the Licensed Intellectual Property, other than the limited rights expressly
granted hereunder. Seller understands and agrees that from and after the
Closing Date Buyer may alter, modify, improve, adapt, further develop, enhance
or create derivative works from, any items of the Mammography Intellectual
Property acquired hereunder (collectively, the “Buyer’s Modifications”).
Nothing contained in this Agreement gives Seller any rights with respect to any
of the Buyer’s Modifications.  The
parties agree that a breach by Seller of any of the covenants set forth in this
Section 5A.2 could cause irreparable harm to Buyer, that Buyer’s remedies
at law in the event of such breach would be inadequate, and that, accordingly,
in the event of such breach, a restraining order or injunction or both may be
issued against any Seller and/or any of the subsidiaries, in addition to any
other rights and remedies that are available to Buyer.  In connection with any such action or
proceeding for injunctive relief, Seller, on behalf of itself and each of its
subsidiaries, hereby waives the claim or defense that a remedy at law alone is
adequate and agrees, to the maximum extent permitted by law, to have each
provision of this Section 5A.2 specifically enforced against such person
and consents to the entry of injunctive relief against such person enforcing or
restraining any breach or threatened breach of this Section 5A.2.  Any alteration, modification, improvement,
adaptation, further development, enhancement or derivative works of the
Licensed Intellectual Property created by the Seller or any of its transferees
or sublicensees in the course of satisfying the purposes set forth in subsections
(i)-(v) of Section 5A.1 shall be exclusively owned by the Buyer and
Seller shall take all necessary actions and execute all relevant

 

33

 

documentation (including executing any assignments thereof or granting
powers of attorney to the Buyer to do so) in order to transfer ownership
thereof to the Buyer as shall be reasonably requested by Buyer.

 

Section 5A.3         Confidentiality.

 

The Licensed Intellectual Property is the
confidential and proprietary information of Buyer.  Seller agrees that it shall not disclose,
provide or otherwise make available any item of the Licensed Intellectual
Property, in whole or in part, to any third party and that it shall not make
any use whatsoever of the Licensed Intellectual Property, in each case, except
as expressly authorized hereunder. Seller shall use all reasonable efforts and
exert every reasonable degree of care to protect the Licensed Intellectual
Property, and shall secure agreements from all employees, agents and contractors
having access to the Licensed Intellectual Property, at least as protective of
the Licensed Intellectual Property as the provisions of this Section 5A.3,
to maintain the Licensed Intellectual Property in confidence. Buyer shall be
permitted to enforce the provisions of such agreements directly against these
individuals. Any breach of the provisions set forth in this Section 5A.3
by Seller’s employees, agents, or contractors, shall be deemed to be a breach
by Seller itself. Upon termination of this Agreement, Seller’s right to use the
Licensed Intellectual Property shall immediately terminate. In addition, upon
such termination, or upon demand by Buyer at any time, or upon expiration of
this Agreement, Seller shall return promptly to Buyer or destroy, at Buyer’s
option, all materials, in written or electronic form, that disclose or embody
the Licensed Intellectual Property. The parties agree that a breach by Seller
of any of the covenants set forth in this Section 5A.3 could cause
irreparable harm to Buyer, that Buyer’s remedies at law in the event of such
breach would be inadequate, and that, accordingly, in the event of such breach,
a restraining order or injunction or both may be issued against any Seller
and/or any of the subsidiaries, in addition to any other rights and remedies
that are available to Buyer.  In
connection with any such action or proceeding for injunctive relief, Seller, on
behalf of itself and each of its subsidiaries, hereby waives the claim or defense
that a remedy at law alone is adequate and agrees, to the maximum extent
permitted by law, to have each provision of this Section 5A.3 specifically
enforced against such person and consents to the entry of injunctive relief
against such person enforcing or restraining any breach or threatened breach of
this Section 5A.3.

 

Section 5A.4         Proprietary Notices.

 

Seller shall not remove, alter
or obscure any copyright, trademark or other proprietary notice or marking on
or within the Licensed Intellectual Property.

 

Section 5A.5         Maintenance
of Records; Audit

 

During the term of the license granted pursuant to this Article 5A
and for a period of two years thereafter Seller shall maintain accurate records
relating to its use of the Licensed Intellectual Property.  Within 15 days of the end of each calendar
quarter during the term of the license granted pursuant to this Article 5A,
Seller shall provide Buyer with a summary of Seller’s use of the Licensed
Intellectual Property. Buyer may from

 

34

 

time to time, upon reasonable written notification to Seller, perform
an audit of Seller’s use of the Licensed Intellectual Property and Seller’s
compliance with the provisions of the license to the Licensed Intellectual
Property granted pursuant to Article 5A. Any such audit shall be made
during Seller’s normal business hours. Buyer shall notify Seller in writing, at
least ten business days prior to such audit. Such audit shall not unreasonably
interfere with Seller’s business operations.

 

Section 5A.6         No
Warranty.

 

SELLER RECEIVES NO WARRANTIES OR CONDITIONS,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND BUYER SPECIFICALLY DISCLAIMS ANY CONDITION OF QUALITY AND ANY IMPLIED
WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE FOR ANY OF
THE ITEMS COMPRISING THE LICENSED INTELLECTUAL PROPERTY.

 

Section 5A.7         Limitation
of Liability.

 

BUYER SHALL UNDER NO CIRCUMSTANCES BE LIABLE TO SELLER FOR ANY LOSS OF
DATA, PROFITS, SAVINGS, USE OR BUSINESS; FOR DELAYS, INCONVENIENCE OR BUSINESS
INTERRUPTION; OR FRUSTRATION OF ECONOMIC OR BUSINESS EXPECTATIONS AND SHALL NOT
BE LIABLE TO SELLER FOR ANY SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY,
CONTINGENT, PUNITIVE OR CONSEQUENTIAL DAMAGES IN EACH CASE ARISING OUT OF OR IN
CONNECTION WITH THE PROVISIONS OF THIS SECTION VA, REGARDLESS OF WHETHER
BUYER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

Section 5A.8         Term and Termination.

 

The license granted by Buyer to Seller pursuant to Section 5A.1(i) shall
be in effect from and after the Closing Date until the earlier to occur of the
Philips Termination Date or such earlier date as Buyer may exercise its
termination rights pursuant to this Section 5A.8.  The license granted by Buyer to Seller
pursuant to Section 5A.1(ii) shall be in effect from and after the
Closing Date until the earlier to occur of the EES Termination Date or such
earlier date as Buyer may exercise its termination rights pursuant to this Section 5A.8.  The license granted by Buyer to Seller
pursuant to Section 5A.1(iii) shall be in effect from and after the
Closing Date until the earlier to occur of the first date upon which the Seller
has no continuing Service or Warranty Obligations or such earlier date as Buyer
may exercise its termination rights pursuant to this Section 5A.8.  The license granted by Buyer to Seller
pursuant to Section 5A.1(iv) shall be in effect from and after the
Closing Date until the earlier to occur of the first date upon which each of
the SenoScan Upgrade Contracts has been terminated or such earlier date as
Buyer may exercise its termination rights pursuant to this Section 5A.8.  The license granted by Buyer to Seller
pursuant to Section 5A.1(v) shall be in effect from and after the
Closing Date until the earlier to occur of the sale of all or substantially all
of the assets of the Seller’s RE&S business as they exist as of the date
hereof (unless transferred

 

35

 

by Seller concurrently with such sale in accordance with the terms of Section 5A.1(c))
or such earlier date as Buyer may exercise its termination rights pursuant to
this Section 5A.8.  The licenses
granted by Buyer to Seller pursuant to Section 5A.1 are each referred to
herein individually as a “License” and collectively as the “Licenses”.  The period of time during which each such
License shall remain in effect pursuant to this Section 5A.8 is referred
to herein as the “License Term” of such License.  If Seller materially breaches any of its
obligations contained in this Agreement, Buyer may terminate any or all of the
Licenses upon written notice to Seller and the expiration of a reasonable cure
period allowing Seller to correct such breach. Notwithstanding the foregoing
upon any material breach by Seller of any of its obligations contained in this
Agreement, which is due to Seller’s gross negligence or intentional misconduct,
Buyer may immediately terminate any or all of the Licenses upon written notice
to Seller. In no event shall Buyer be required to provide a cure period
pursuant to this Section 5A.8 in excess of forty-five (45) days.

 

Section 5A.9         Effect of Termination.

 

Upon the expiration of the License Term of any License, Seller shall
return to Buyer all physical copies of the Licensed Intellectual Property and
certify in writing the destruction of any soft copies of any software
comprising the Licensed Intellectual Property, unless such copies are still
being used by the Seller pursuant to any other License the term of which has
not then expired. The provisions
of Article VA, other than Section 5A.1(a) shall survive the
termination or expiration of the License Term of each License.

 

ARTICLE VI.         CONDITIONS TO CLOSING

 

Section 6.1             Conditions to Each Party’s Obligation To Close.  

 

The obligations
of each party to this Agreement to complete the transactions contemplated by
this Agreement shall be subject to the satisfaction prior to the Closing Date
of the following conditions:

 

(a) Stockholder Approval.  The Seller Voting Proposal shall have been
approved at the Seller Meeting, at which a quorum is present, by the
affirmative vote of the holders of a majority of the shares of Seller Common
Stock outstanding on the record date for the Seller Meeting.

 

(b) Governmental Approvals.  All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Entity, shall have been filed, been
obtained or occurred.

 

(c) No Injunctions.  No Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
order, executive order, stay, decree, judgment or injunction or statute, rule or
regulation which is in effect and which has the effect of making the
transactions contemplated hereby illegal or otherwise prohibiting consummation
of the transactions contemplated hereby.

 

36

 

Section 6.2             Additional Conditions to Obligations of Buyer.  

 

The obligation
of Buyer to complete the transactions contemplated by this Agreement is subject
to the satisfaction of each of the following conditions, any of which may be
waived in writing exclusively by Buyer:

 

(a) Representations and Warranties.  Except for the representations and warranties
contained in Section 2.3, Section 2.9 and Sections 2.10(m) and (n),
each of the other representations and warranties of the Seller contained in
this Agreement or in the Seller Disclosure Schedule or any certificate
delivered pursuant hereto shall be true and correct as of the Closing Date
except with respect to such matters that could not reasonably be expected to
have a Mammography Intellectual Property Material Adverse Effect.  The representation set forth in Section 2.9
shall be true and correct in all material respects as of the Closing Date.  The representations set forth in Section 2.3
and Section 2.10(m) and (n) shall be true and correct as of the Closing
Date. Buyer shall have received at the Closing a certificate, signed by the
president and chief financial officer of Seller to such effect.

 

(b) Performance of Obligations of
Seller.  Seller shall have taken all
necessary corporate or other actions to consummate the transactions
contemplated hereby and shall have performed and complied in all material
respects with each covenant, agreement and condition required by this Agreement
or any Ancillary Agreement to be performed or complied with by it at or prior
to the Closing; and Buyer shall have received a certificate signed on behalf of
Seller by the president and chief financial officer of Seller to such effect.

 

(c) Third Party Consents.  The Seller shall have obtained (i) all
consents and approvals of third parties referred to in Schedule 6.2(c) and
(ii) any other consent or approval of any third party (other than a
Governmental Entity), the failure of which to obtain, individually or in the
aggregate, is reasonably likely to have a Mammography Intellectual Property
Material Adverse Effect.

 

(d) Absence of Certain Litigation.  There shall not be any suit, action or other
proceeding, investigation or inquiry brought by any Governmental Entity that
could result in (i) the restraint or prohibition of the consummation of
any material transaction contemplated by this Agreement or asserts the
illegality thereof or (ii) a Mammography Intellectual Property Material
Adverse Effect.  There shall not be any
suit, action or other proceeding brought by any third party (other than a
Governmental Entity) before a Governmental Entity that could reasonably be
expected to result in (i) the restraint or prohibition of the consummation
of any material transaction contemplated by this Agreement or asserts the
illegality thereof or (ii) a Mammography Intellectual Property Material
Adverse Effect.

 

(e) No Bankruptcy.  Seller shall not (i) have commenced a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
substantially all of its property, or have consented to any such relief or to
the

 

37

 

appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or have made a general assignment for the benefit of its creditors, or (ii) have
an involuntary case or other proceeding commenced against it which remains
pending seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now or
hereinafter in effect or seeking the appointing of a trustee, receiver,
liquidator, custodian or similar official of it or substantially all of its
property or (iii) have an attachment placed on any item of the Mammography
Intellectual Property.

 

(f) Instruments of Transfer.  Seller shall have executed and delivered to
Buyer good and sufficient instruments of transfer of title to all of
Mammography Intellectual Property including the Bill of Sale, Intellectual
Property Assignment, and such other instruments of transfer as may be required
and as contemplated by Section 1.6 hereof.

 

(g) Delivery of Mammography
Intellectual Property.  Seller shall
have delivered to Buyer’s reasonable satisfaction all tangible embodiments in
whatever form of the Mammography Intellectual Property to the Buyer including,
without limitation:

 

(i)            applications for and
registrations of patents, trademarks, trade names, service marks and
copyrights;

 

(ii)           computer disks or hard
drives containing computer software programs and applications (in source code
and object code) (other than the Excluded Software);

 

(iii)          Customer Information;

 

(iv)          Vendor Lists;

 

(v)           written research
materials, technical information, designs, drawings, formulae, processes, and
procedures; and

 

(vi)          all Regulatory Data.

 

and Seller shall have taken all requisite
steps to put Buyer in actual possession and control of the Mammography
Intellectual Property.

 

(h) Release of Liens, Security
Interests and Other Encumbrances. 
Seller shall have delivered to Buyer evidence satisfactory to Buyer and
its counsel that Seller is able to deliver the Mammography Intellectual
Property free and clear of all Encumbrances; including without limitation, if
applicable, such Tax lien waivers from the applicable Governmental Entities as
may be customary or appropriate for a transaction of this type.

 

(i) Ancillary Agreements.  The Buyer shall have received the Ancillary
Agreements required to be executed and delivered by the Seller or any of its
subsidiaries on or before the Closing, including without limitation the Bill of
Sale, the Intellectual Property Assignments, and such other instruments of
transfer as may be required pursuant to Section 1.6 of this Agreement.

 

38

 

(j) Notice of Termination.  Prior to the Closing, Seller shall have
delivered a notice in proper form and content to Philips setting forth the
Seller’s intention to terminate the Philips Supply Agreement as of October 14,
2007.

 

(k) Opinion of Counsel.  Seller shall have delivered to Buyer
opinions of Davis Graham & Stubbs LLP, and Faegre and Benson, legal
counsel to Seller, dated as of the Closing Date, which, in the aggregate, will
be substantially in the form of Exhibit D.

 

Section 6.3             Additional Conditions to Obligations of Seller.  

 

The obligation
of Seller to complete the transactions contemplated by this Agreement is
subject to the satisfaction of each of the following conditions, any of which
may be waived, in writing, exclusively by Seller:

 

(a) Representations and Warranties.  The representations and warranties of the
Buyer contained in this Agreement or in the Buyer Disclosure Schedule or
any certificate delivered pursuant hereto shall be complete and correct in all
material respects as of the Closing Date (except that any such representation
or warranty qualified as to materiality or a Buyer’s Material Adverse Effect
shall continue to be complete and correct in all respects as of the Closing Date);
and Seller shall have received at the Closing a certificate, signed by the
president or chief financial officer of Buyer, to such effect.

 

(b) Performance of Obligations of
Buyer.  Buyer shall have taken all
necessary corporate actions to consummate the transactions contemplated hereby
and shall have performed and complied in all material respects with each
covenant, agreement and condition required by this Agreement to be performed or
complied with by them at or prior to the Closing; and Seller shall have
received at the Closing a certificate, signed by the president or chief
financial officer of Buyer, to such effect.

 

(c) Assumption Document.  Buyer shall have executed and delivered all
Ancillary Agreements to be executed and delivered by Buyer on or before the
Closing.

 

(d) Opinion of Counsel.  Buyer shall have delivered to Seller an
opinion of Brown Rudnick Berlack Israels LLP, legal counsel to Buyer, dated as
of the Closing Date, in substantially the form of Exhibit E.

 

ARTICLE VII.       TERMINATION AND AMENDMENT

 

Section 7.1             Termination.  

 

This Agreement
may be terminated at any time prior to the Closing (with respect to Sections
7.1(b) through 7.1(h), by written notice by the terminating party to the
other party), whether before or after approval of the transactions contemplated
hereby by the stockholders of Seller:

 

(a) by mutual written consent of Buyer
and Seller; or

 

39

 

(b) by either Buyer or Seller if the
Closing shall not have been consummated by November 15, 2005, or such
later date as has been agreed upon in writing by Buyer and Seller (the “Outside
Date”); provided that the right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose failure to fulfill any obligation under
this Agreement has been a principal cause of or resulted in the failure of the
Closing to occur on or before such date; or

 

(c) by Buyer if there shall have been
instituted any suit, action, proceeding, brought by any third party (other than
a Governmental Entity) against the Seller and/or the Buyer (each a “Pending
Action”) that would reasonably be expected to result in (i) the restraint
or prohibition of the consummation of any material transaction contemplated by
this Agreement or asserts the illegality thereof or (ii) a Mammography
Intellectual Property Material Adverse Effect and which has been pending for at
least 45 days without being dismissed, settled, terminated, withdrawn or
finally adjudicated; or by Buyer if there shall have been instituted any suit,
action, proceeding, or other Material Investigation or Inquiry brought by an
Governmental Entity that would reasonably be expected to result in (i) the
restraint or prohibition of the consummation of any material transaction
contemplated by this Agreement or asserts the illegality thereof or (ii) a
Mammography Intellectual Property Material Adverse Effect and which has been
pending for at least 15 days without being dismissed, settled, terminated,
withdrawn or finally adjudicated. For purposes of this Section 7.1(c), a “Material
Investigation or Inquiry” shall mean any investigation or inquiry brought or
initiated by any Governmental Entity, other than an informal investigation
or inquiry that would not reasonably be expected to require significant
time or effort to comply with, or which has not previously required Buyer to
incur more than $100,000 in expenses to comply with.

 

(d) by either Buyer or Seller, if at the
Seller Meeting (including any adjournment or postponement) the requisite vote
of the stockholders of Seller in favor of the Seller Voting Proposal shall not
have been obtained (provided that the right to terminate this Agreement under
this Section 7.1(d) shall not be available to the Seller where the
failure to obtain Seller stockholder approval shall have been caused by the
action or failure to act of Seller in breach of this Agreement and shall not be
available to Buyer where such failure is caused by a breach of this Agreement
by Buyer); or

 

(e) by Buyer, if: (i) the Board of
Directors of Seller shall have failed to recommend approval of the Seller
Voting Proposal in the Proxy Statement or shall have withdrawn or modified its
recommendation of the Seller Voting Proposal; (ii) after the receipt by
Seller of an Acquisition Proposal, Buyer requests in writing that the Board of
Directors of Seller reconfirm its recommendation of this Agreement or the
transactions contemplated hereby and the Board of Directors of Seller fails to
do so within ten business days after its receipt of Buyer’s request; (iii) the
Board of Directors of Seller shall have approved or recommended to the
stockholders of Seller an Alternative Transaction (as defined in Section 7.3(e));
or (iv) for any reason Seller fails to call and hold the Seller Meeting by
the Outside Date; or

 

(f) by either Buyer or Seller, if there
has been a breach of any representation, warranty, covenant or agreement on the
part of the other party set forth in this Agreement,

 

40

 

which breach (i) causes the conditions
set forth in Section 6.2(a) or (b) (in the case of termination
by Buyer) or 6.3(a) or (b) (in the case of termination by Seller) not
to be satisfied, and (ii) shall not have been cured within 20 days
following receipt by the breaching party of written notice of such breach from
the other party;  provided, however, that
the terminating party may not then be in breach of its material obligations
under this Agreement; or

 

(g) by Buyer, if Seller shall have
breached its obligations set forth in Section 5.1 or Seller shall furnish
non-public information to any person or entity in connection with an
Acquisition Proposal, or enter into discussions or negotiations with any person
or entity in connection with an Acquisition Proposal unless such discussions
constitute Seller Permitted Response Actions; or

 

(h) by Seller at any time prior to the
approval of the Seller Voting Proposal, if Seller has received a Superior
Proposal and Seller’s Board of Directors shall have withdrawn or modified its
recommendation of the Seller Voting Proposal in accordance with Section 5.4,
provided, however, that Seller may not terminate this Agreement pursuant to
this Section 7.1(h) unless (A) Seller shall have complied with Section 5.1,
(B) Seller shall have complied with Section 7.3, including without
limitation having repaid all amounts due under the Loan Agreement prior to such
termination and (C) Seller is not otherwise then in breach of its material
obligations under this Agreement.

 

Section 7.2             Effects of Termination.  

 

In the event of
termination of this Agreement as provided in Section 7.1, this Agreement
shall immediately become void and there shall be no liability or obligation on
the part of Buyer or Seller or their respective officers, directors, stockholders
or affiliates, except as set forth in Section 7.3 of this Agreement or in
the Loan Agreements as provided in the following sentence and except that
nothing herein shall relieve any party from liability for any breach of this
Agreement.  Notwithstanding anything to
the contrary in the foregoing, the parties understand and agree that the terms
and conditions of the Loan Agreement and the parties respective rights and
obligations thereunder shall be governed by the terms thereof, and shall not be
affected by the termination of this Agreement except to the extent expressly
provided herein or therein.  Without
limiting the foregoing, the parties understand and agree that for purposes of
the Loan Agreement the representations and warranties set forth in this
Agreement and incorporated by reference in the Loan Agreement shall survive the
termination of this Agreement until all amounts due under the Loan Agreement
are fully paid or discharged.

 

Section 7.3             Fees, Expenses, Loan Repayment. 

 

(a)           Except
as set forth in this Section 7.3 or otherwise expressly provided in this
Agreement or any Ancillary Agreement, all fees and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the transaction is
consummated.

 

41

 

(b) Seller shall pay Buyer up to
$800,000 (or $1,280,000 in the case of a termination described in Section 7.3(c) below)
as reimbursement for reasonable out-of-pocket expenses of Buyer actually
incurred relating to the transactions contemplated by this Agreement prior to
termination (including, but not limited to, reasonable fees and expenses of
Buyer’s counsel, accountants and financial advisors, but excluding any
discretionary fees paid to such financial advisors; such expenses to be
referred to as “Buyer Reimbursable Expenses”), (i) upon termination of
this Agreement by Buyer pursuant to Section 7.1(g), (ii) upon the
termination of this Agreement by Buyer pursuant to Section 7.1(b) if
Seller’s failure to fulfill any obligation under this Agreement has been a
principal cause of or resulted in the failure of the Closing to occur on or
before the Outside Date, or (iii) upon termination of the Agreement by
Buyer or Seller pursuant to Section 7.1(d).  Buyer shall promptly provide Seller with
invoices or other reasonable evidence of such expenses upon written request by
Seller.  Any amount paid by Seller to
Buyer in respect of Buyer Reimbursable Expenses shall offset on a
dollar-for-dollar basis any fees payable by Seller to Buyer pursuant to Section 7.3(c).

 

(c) Seller shall pay Buyer a termination
fee of $1,280,000 upon the earliest to occur of the following events: (i) the termination of this Agreement by
Seller pursuant to Section 7.1(h); (ii) the termination of this
Agreement by Buyer or Seller pursuant to Section 7.1(d) as a result
of the failure to receive the requisite vote for approval of the Seller Voting
Proposal by the stockholders of Seller at the Seller Meeting if, at the time of
such failure, there shall have been announced (and not unconditionally
withdrawn) an Alternative Transaction relating to Seller; (iii) the
termination of this Agreement by Buyer pursuant to Section 7.1(e); (iv) the
termination of this Agreement by Buyer pursuant to Section 7.1(f); and (iv) the
termination of this Agreement by Buyer pursuant to Section 7.1(g) and
within twelve months thereafter, Seller shall have entered into an agreement to
engage in an Alternative Transaction or shall have engaged in an Alternative
Transaction.

 

(d) The expenses and fees, if
applicable, payable pursuant to Section 7.3(b), and 7.3(c) shall be
paid within two business days after demand therefor following the first to
occur of the events giving rise to the payment obligation described in Section 7.3(b) and
7.3(c); provided, however, that such amount shall be required to be paid prior
to the taking of any action to the extent expressly set forth in this Section 7.3
or elsewhere in this Agreement.  If
Seller fails to promptly pay to Buyer any expense reimbursement or fee due
hereunder, Seller shall pay the costs and expenses (including legal fees and
expenses) in connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of Bank of
America (or successor thereto) plus five percent per annum, compounded
quarterly, from the date such expense reimbursement or fee was required to be
paid.

 

(e) Seller
shall repay all outstanding amounts of principal and interest due under the
Loan Agreement upon the earliest to occur of the following events: (i) immediately prior to Seller, or
any officer, director, employee, financial advisor, representative or agent of
Seller furnishing non-public information to any person or entity in connection
with an Acquisition Proposal, or entering into discussions or negotiations with
any person or entity in connection with an Acquisition Proposal unless such
discussions constitute

 

42

 

Seller Permitted Response Actions; (ii) the
date upon which Buyer terminates this Agreement in accordance with Section 7.1(e),
Section 7.1(f) or Section 7.1(g); (iii) the date upon which
Seller terminates this Agreement in accordance with Section 7.1(h); (iv) the
date upon which Buyer terminates this Agreement pursuant to Section 7.1(b) if
Seller’s failure to fulfill any obligation under this Agreement has been a
principal cause of or resulted in the failure of the Closing to occur on or
before the Outside Date, (v) the date upon which Lender or Maker
terminates the Asset Purchase Agreement pursuant to Section 7.1(d) of
the Asset Purchase Agreement, (vi) 30 days after the date upon which this
Agreement is terminated by Buyer or Seller pursuant to Section 7.1(a), or
7.1(b) provided that neither party’s failure to fulfill any obligation
under this Agreement has been a principal cause of or resulted in the failure
of the Closing to occur on or before the Outside Date, (vii) 180 days
after the date upon which this Agreement is terminated by Buyer pursuant to Section 7.1(c);
or (viii) 180 days after the date upon which this Agreement is terminated
by the Seller pursuant to Section 7.1(f) or 7.1(b) if, in the
case of the Seller’s termination pursuant to Section 7.1(b), Buyer’s
failure to fulfill any obligation under this Agreement has been a principal
cause of or resulted in the failure of the Closing to occur on or before the
Outside Date.

 

(f)  As used in this Agreement, “Alternative
Transaction” means either (i) a transaction pursuant to which any person
(or group of persons) other than Buyer or its affiliates (a “Third Party”),
acquires more than 25% of the outstanding shares of Seller Common Stock
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger
or other business combination involving Seller pursuant to which any Third
Party acquires more than 25% of the outstanding shares of Seller Common Stock
or of the entity surviving such merger or business combination, (iii) any
other transaction pursuant to which any Third Party acquires control of the
Mammography Intellectual Property, or (iv) any public announcement by a
Third Party of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing; provided, however, an Alternative
Transaction shall not include any transaction which, by its express terms,
permits and does not otherwise materially interfere with the transactions to be
consummated as contemplated hereby.

 

Section 7.4             Amendment.  

 

This Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the transactions contemplated hereby by
the stockholders of Seller, but, after any such approval, no amendment shall be
made which by law requires further approval by such stockholders without such
further approval.  This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.

 

Section 7.5             Extension; Waiver.  

 

At any time
prior to the Closing, the parties hereto, by action taken or authorized by
their respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto,

 

43

 

(ii) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. 
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party.

 

ARTICLE VIII.      INDEMNIFICATION

 

Section 8.1             Definitions
and Rules.

 

For purposes of this Article 8:

 

“Losses” means all losses, damages (including, without limitation,
punitive and consequential damages), liabilities, payments and obligations, and
all expenses related thereto.  Losses
shall include any reasonable legal fees and costs incurred by any of the
Indemnified Persons subsequent to the Closing in defense of or in connection
with any alleged or asserted liability, payment or obligation for which
indemnity is forthcoming under Section 8.2 or Section 8.3 below,
whether or not any liability or payment, obligation or judgment is ultimately
imposed against the Indemnified Persons and whether or not the Indemnified
Persons are made or become parties to any such action.

 

“Buyer’s Indemnified Persons” means Buyer, subsidiaries and affiliated
corporations, and their respective directors, officers, employees, stockholders
and agents.

 

“Indemnified Person” means any person entitled to be indemnified under
this Article 8.

 

“Indemnifying Person” means any person obligated to indemnify another
person under this Article 8.

 

“Seller Indemnified Persons” means Seller.

 

“Third Party Action” means any written assertion of a claim, or the
commencement of any action, suit, or proceeding, by a third party as to which
any person believes it may be an Indemnified Person hereunder.

 

Section 8.2             Indemnification
by Seller.

 

Subject to this Article 8, Seller agrees
to defend, indemnify and hold harmless Buyer’s Indemnified Persons from and
against all Losses directly or indirectly incurred by or sought to be imposed
upon any of them:

 

(a) resulting from or arising out of any
breach of the representations or warranties set forth in Section 2.3
(Authorization of Transaction), Section 2.9 (Title to the Mammography
Intellectual Property) or Section 2.10(m) or (n);

 

44

 

(b) resulting from or arising out of any
breach of any covenant or agreement made by Seller in or pursuant to this
Agreement relating to confidentiality or to be performed by Seller on or after
the Closing, including, without limitation, the covenants and agreements of
Seller contained in Section 5.09 and Article VA;

 

(c) resulting from or arising out of any
liability, payment or obligation in respect of any Taxes owing by Seller of any
kind or description (including interest and penalties with respect thereto) for
all periods or portions of periods ending on or before the Closing Date;

 

(d) resulting from or arising out of any
Retained Liabilities;

 

(e) resulting from or arising out of any
Pending Actions;

 

(f) resulting from or arising out of the
fraud of Seller, including without limitation any breach of Seller’s covenants
or agreements set forth in Section 5.2(b).

 

Section 8.3             Indemnification
by Buyer.

 

From and after the Closing Date, Buyer shall
indemnify and hold harmless Seller Indemnified Persons from any and all Losses
directly or indirectly incurred by or sought to be imposed upon them:

 

(a) resulting from or arising out of any
breach of any of the representations or warranties made by Buyer in Section 3.2
(Authorization of Transaction) hereof;

 

(b) resulting from or arising out of any
breach of any covenant or agreement made by Buyer in or pursuant to this
Agreement to be performed by Buyer on or after the Closing including, without
limitation, the covenants and agreements of Buyer contained in Article VA;

 

(c) resulting from or arising out of any
Assumed Liabilities; or

 

(d) resulting from or arising out of the
fraud of Buyer, including without limitation any breach of Buyer’s covenants or
agreements set forth in Section 5.2(c).

 

Section 8.4             Notice.

 

The Indemnified Person shall give prompt
written notice to the Indemnifying Person of each claim for indemnification
hereunder, specifying the amount and nature of the claim, and of any matter
which in the opinion of the Indemnified Person is likely to give rise to an
indemnification claim.  The omission to
give such notice to the Indemnifying Person will not relieve the Indemnifying
Person of any liability hereunder unless it was prejudiced thereby under this Article 8.

 

45

 

Section 8.5             Defense
of Third Party Actions.

 

(a) Promptly after receipt of notice of
any Third Party Action, any person who believes he, she or it may be an
Indemnified Person will give notice to the potential Indemnifying Person of
such action.  The omission to give such
notice to the Indemnifying Person will not relieve the Indemnifying Person of
any liability hereunder unless, and to the extent, it was prejudiced thereby,
nor will it relieve it of any liability which it may have other than under this
Article 8.

 

(b) Upon receipt of a notice of a Third
Party Action, the Indemnifying Person shall have the right, at its option and
at its own expense, to participate in and be present at the defense of such
Third Party Action, but not to control the defense, negotiation or settlement
thereof, which control shall remain with the Indemnified Person, unless the
Indemnifying Person makes the election provided in paragraph (c) below.

 

(c) By written notice within twenty (20)
days after receipt of a notice of a Third Party Action, an Indemnifying Person
may elect to assume control of the defense, negotiation and settlement thereof,
with counsel reasonably satisfactory to the Indemnified Person; provided,
however, that the Indemnifying Person agrees (i) to promptly indemnify the
Indemnified Person for its reasonable expenses to date, and (ii) to hold
the Indemnified Person harmless from and against any and all indemnified
Losses, caused by or arising out of any settlement of the Third Party Action or
any judgment in connection with that Third Party Action.  The Indemnifying Persons shall not in the
defense of the Third Party Action enter into any settlement which does not
include as a term thereof the unconditional release by the third party claimant
of the Indemnified Person, or consent to entry of any judgment, except with the
consent of the Indemnified Person.

 

(d) Upon assumption of control of the
defense of a Third Party Action under paragraph (c) above, the
Indemnifying Person will not be liable to the Indemnified Person hereunder for
any legal or other expenses subsequently incurred by the Indemnified Person in
connection with the defense of the Third Party Action, other than reasonable
expenses of investigation.

 

(e) If the Indemnifying Person does not
elect to control the defense of a Third Party Action under paragraph (c), the
Indemnifying Person shall promptly reimburse the Indemnified Person for
expenses incurred by the Indemnified Person in connection with defense of such
Third Party Action, as and when the same shall be incurred by the Indemnified
Person.

 

(f) In the event an Indemnifying Person
successfully demonstrates that the party seeking indemnification is responsible
and the Indemnifying Person is in fact the party entitled to indemnity
hereunder, the Indemnifying Party shall be entitled to recover its Losses with
respect to such matter from the party initially seeking indemnification
hereunder.

 

(g) Any person who has not assumed
control of the defense of any Third Party Action shall have the duty to
cooperate with the party which assumed such defense.

 

46

 

Section 8.6             Miscellaneous.

 

(a) Buyer’s Indemnified Persons shall be
entitled to indemnification under Section 8.2 and Seller’s Indemnified
Persons shall be entitled to indemnification under Section 8.3, regardless
of whether the matter giving rise to the applicable liability, payment,
obligation or expense may have been previously disclosed to any such person
unless disclosed in writing herein on the Schedules hereto unless otherwise
indicated to the contrary thereon.  The
waiver by any party of a condition to Closing which is based upon the accuracy
of any representation or warranty, or on the performance of or compliance with
any covenant or obligation, will not affect that or any other person’s right to
indemnification of Losses hereunder or other remedy.

 

(b) If any Loss is recoverable under
more than one provision hereof, the Indemnified Person shall be entitled to
assert a claim for such Loss until the expiration of the longest period of time
within which to assert a claim for Loss under any of the provisions which are
applicable.

 

Section 8.7             Payment
of Indemnification.

 

Claims for
indemnification under this Article 8 shall be paid or otherwise satisfied
by the Indemnifying Persons within thirty (30) days after notice thereof is
given by the Indemnified Person.

 

ARTICLE IX.        ADDITIONAL POST-CLOSING AGREEMENTS

 

Section 9.1             Books
and Records; Tax Matters.  

 

(a) Books and Records.  Each party agrees that it will fully cooperate
with and make available to the other party, during normal business hours, all
Books and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with (i) any Tax inquiry, audit,
investigation or dispute, any litigation or investigation, (ii) any
financial statements or financial statement audits required to be provided
and/or filed by the Buyer pursuant to any federal or state securities laws, or (iii) any
other matter requiring any such Books and Records, information or employees for
any reasonable business purpose.  The party requesting any such Books and
Records, information or employees shall bear all of the out-of-pocket costs and
expenses (including without limitation reasonable attorneys’ fees, but
excluding reimbursement for salaries and employee benefits) reasonably incurred
in connection with providing such Books and Records, information or
employees.  All information received
pursuant to this Section 9.1(a) shall be subject to the terms of the
Confidentiality Agreement.

 

(b) Cooperation and Records Retention.  Seller and Buyer shall (i) each
provide the other with such assistance as may reasonably be requested by any of
them in connection with the preparation of any return, audit, or other
examination by any taxing authority or judicial or administrative proceedings
relating to liability for Taxes, (ii) each provide the other with any
records or other information then in the possession of such party that may be
relevant to such return, audit or examination, proceeding or determination, and
(iii) each provide the other with any final determination of any such
audit or examination,

 

47

 

proceeding, or determination that affects any
amount required to be shown on any Tax Return of the other for any period.  Without limiting the generality of the
foregoing, Buyer and Seller shall each retain, until the applicable statutes of
limitations (including any extensions) have expired, copies of all Tax Returns,
supporting work schedules, and other records or information used in the
preparation of such returns for all tax periods or portions thereof ending on
or before the Closing Date and shall not destroy or otherwise dispose of any
such records without first providing the other party with a reasonable
opportunity to review and copy the same.

 

(c) Payment
of Liabilities.  Following the
Closing Date, Seller shall pay promptly when due all of the debts and
Liabilities of Seller, including any liability for Taxes.

 

Section 9.2             Nonsurvival of Representations, Warranties and
Agreements. 

 

Except for the
representations and warranties contained in Section 2.3 (Authorization
of Transaction), Section 2.9 (Title to
the Mammography Intellectual Property), Sections 2.10(m) and (n) and Section 3.2
(Authorization of Transaction) of
this Agreement or as otherwise provided in the Loan Agreement (for purposes
thereof), none of the representations or warranties in this Agreement, any Ancillary Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing, but
shall expire with and be terminated and extinguished upon the Closing;
provided, however that nothing herein shall relieve any party from any
indemnification obligations arising under Article VIII or out of such
party’s fraud.

 

Section 9.3             Covenant Not to Compete.  

 

(a) Seller agrees that, after the
Closing, Buyer shall be entitled to the goodwill and going concern value of the
Mammography Intellectual Property and to protect and preserve the same to the
maximum extent permitted by law.  Seller
also acknowledges that its and its subsidiaries respective contributions to the
Mammography Intellectual Property have been uniquely valuable and involve
proprietary information that would be competitively unfair to make available to
any competitor of the Mammography Business. 
For these and other reasons and as an inducement to Buyer to enter into
this Agreement, Seller, on behalf of itself and its subsidiaries, agrees that
for a period of five years following the Closing Date neither Seller nor the
subsidiaries will, directly or indirectly, for its own benefit or as agent for
another, carry on or participate in the ownership, management or control of, or
the financing of, or be employed by, or consult for or otherwise render
services to, or allow its name or reputation to be used in or by any other
present or future business enterprise that competes with Buyer for so long as
Buyer or any person entitled to or acquiring ownership of the goodwill of the
Mammography Intellectual Property through Buyer carries on a like business
therein, but in no event more than the said five-year period; provided however
that the foregoing covenants shall not prohibit, or be interpreted as
prohibiting, Seller or the subsidiaries from: 
(i) continuing anywhere in the world in any type of business
conducted by the Seller or the subsidiaries on the date hereof, which is not
competitive with the business of the Buyer; (ii) entering into any
relationship with a person not owned, managed, operated or controlled by Seller
or the subsidiaries for purposes unrelated to the Mammography

 

48

 

Business; and (iii) making equity
investments in publicly owned companies which may compete with the business of
the Buyer, provided such investments do not exceed 5% of the voting securities
or otherwise confer control of any such competitive business upon the Seller or
the subsidiaries.  Notwithstanding the
foregoing, nothing herein shall limit the ability of the Seller or its
subsidiaries to sell Consumables as defined on Schedule 9.3(a) exclusively
for use with any MammoTest Product.

 

(b) Restrictions on Soliciting
Employees.  In addition, to protect
Buyer against any efforts by Seller or the subsidiaries to cause the
Transferred Employees to terminate their employment, Seller, on behalf of
itself and its subsidiaries, agrees that for a period of five years following
the Closing Date, such person will not directly or indirectly (i) induce
any Transferred Employee to leave Buyer or to accept any other employment or
position (including with Seller or any of the subsidiaries), or (ii) assist
any other entity in hiring any Transferred Employees.

 

(c) Special Remedies and Enforcement.  The parties agree that a breach by Seller or
any of the subsidiaries of any of the covenants set forth in this Section 9.3
could cause irreparable harm to Buyer, that Buyer’s remedies at law in the
event of such breach would be inadequate, and that, accordingly, in the event
of such breach, a restraining order or injunction or both may be issued against
any Seller and/or any of the subsidiaries, in addition to any other rights and
remedies that are available to Buyer.  In
connection with any such action or proceeding for injunctive relief, Seller, on
behalf of itself and each of the subsidiaries, hereby waives the claim or
defense that a remedy at law alone is adequate and agrees, to the maximum
extent permitted by law, to have each provision of this Section 9.3
specifically enforced against such person and consents to the entry of
injunctive relief against such person enforcing or restraining any breach or
threatened breach of this Section 9.3.

 

(d) Severability.  If this Section 9.3 is more restrictive
than permitted by the laws of any jurisdiction in which Buyer seeks enforcement
hereof, this Section 9.3 shall be limited to the extent required to permit
enforcement under such laws.  In
particular, the parties intend that the covenants contained in Section 9.3(a) shall
be construed as a series of separate covenants, one for each county and city in
which the Mammography Business has been carried on and in which Buyer conducts
a similar business after the Closing Date. 
Except for geographic coverage, each such separate covenant shall be
deemed identical in terms.  If, in any
proceeding, a court or arbitrator shall refuse to enforce any of the separate
covenants, then such unenforceable covenant shall be deemed eliminated from
this Section 9.3 for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants to be enforced.  If the provisions of this Section 9.3
shall ever be deemed to exceed the duration or geographic limitations or scope
permitted by applicable law, then such provisions shall be reformed to the
maximum time or geographic limitations in scope, as the case may be, permitted
by applicable regulations.

 

(e) Successors and Assigns. The
provisions of this Section 9.3 shall be binding upon the successors and
assigns of the remaining business of Seller and its subsidiaries.

 

49

 

Section 9.4             Financial Statements.  

 

Following the
Closing, Seller shall fully cooperate with and assist Buyer in obtaining timely
the audited and other financial statements to the extent required
to be filed by Buyer to report the acquisition of the Mammography Intellectual
Property and any necessary accountants consents, including without limitation
providing any management letters or other assurances reasonably requested by
such accountants in connection therewith.

 

ARTICLE X.          MISCELLANEOUS

 

Section 10.1           Notices.  

 

All notices,
requests, demands, claims and other communications hereunder shall be in
writing.  Any notice, request, demand,
claim or other communication hereunder shall be deemed duly delivered three
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a
reputable nationwide overnight courier service for next business day delivery,
in each case to the intended recipient as set forth below:

 

(a)           if to Buyer, to

 

Hologic, Inc.

35 Crosby Drive

Bedford, MA 
01730-1401

Attn: Jack Cumming

Telecopy: (781) 276-0580

 

with a copy to:

 

Brown Rudnick Berlack Israels LLP

One Financial Center

Boston, MA 02111

Attn: Philip J. Flink, Esq.

Telecopy: (617) 526-5000

 

(b)           if to Seller, to

 

Fischer Imaging Corporation

12300 North Grant Street

Denver, Colorado 80241

Attn:  Harris Ravine

Telecopy: (303)
450-4335

 

50

 

with a copy to:

 

Davis Graham & Stubbs LLP

1550 Seventeenth Street

Suite 500

Denver, Colorado 80202
Attn: Ronald R. Levine, II, Esq.

Telecopy: (303) 893-1379

 

Notwithstanding the foregoing, any party may
send any notice, request, demand, claim or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including, without limitation, personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail); provided, however, that no such notice, request, demand, claim or
other communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. 
Any party may change the address to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other parties notice in the manner herein set forth.

 

Section 10.2           Interpretation.  

 

(a) The parties hereto acknowledge and
agree that: (i) each party and its counsel reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its revision; (ii) the
rule of construction to the effect that any ambiguities are resolved
against the drafting party shall not be employed in the interpretation of this
Agreement; and (iii) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party, regardless of which party was generally responsible for the preparation
of this Agreement.

 

(b) Further,
when a reference is made in this Agreement to Articles or Sections, such
reference shall be to an Article or Section of this Agreement unless
otherwise indicated.  The table of
contents, table of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  The
phrases “the date of this Agreement,”  “the
date hereof,” and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to June 22, 2005.  The words “include,” “includes” and “including”
when used herein shall be deemed in each case to be following by the words “without
limitation.”

 

Section 10.3           Counterparts.  

 

This Agreement
may be executed in two or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when two or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.

 

Section 10.4           Entire Agreement; No Third Party Beneficiaries.  

 

This Agreement
(including the documents and the instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject

 

51

 

matter hereof, and (b) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder; provided that the Confidentiality Agreement shall remain
in full force and effect until the Closing. 
Each party hereto agrees that, except for the representations and
warranties contained in this Agreement, neither Seller nor Buyer makes any
other representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to the other or the other’s representatives of any documentation or
other information with respect to any one or more of the foregoing.

 

Section 10.5           Governing Law and Venue.  

 

THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN, AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE APPLICABLE TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE.  The parties hereby (a) irrevocably
submit to the jurisdiction of the Chancery Court of the State of Delaware and
the federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and the transactions contemplated hereby and (b) waive,
and agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject to such
jurisdiction or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement may not be enforced in or by such courts,
and the parties irrevocably agree that all claims with respect to such action
or proceeding shall be heard and determined in such courts.  The parties hereby consent to and grant any
such court’s jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section 10.1,
or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.

 

Section 10.6           Waiver of Jury Trial.  

 

EACH OF BUYER
AND SELLER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER OR SELLER
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

 

Section 10.7           Assignment.  

 

Neither this
Agreement, any agreement, document or instrument executed and delivered
pursuant hereto or in connection with the Closing, nor any of the rights,
interests or obligations hereunder or thereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the

 

52

 

other party; provided,
however, that Buyer may assign any of its rights under this Agreement or in any
agreement, document or instrument executed and delivered pursuant hereto or in
connection with the Closing (a) to one or more banks or other lenders
which provide financing to Buyer from time to time, (b) to any successor
to all or substantially all of its business and assets relating to the subject
matter of this Agreement and (c) to one or more subsidiaries (including
subsidiaries of subsidiaries) of Buyer. 
Any assignment in violation of this Agreement shall be deemed a breach
hereof for which Buyer shall be entitled to retain all amounts that would otherwise
be payable by Buyer hereunder as liquidated damages and not as a penalty.  Subject
to the foregoing, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.

 

Section 10.8           Severability.  

 

In the event that
any provision of this Agreement or the application thereof, becomes or is
declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties
hereto.  The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

 

Section 10.9           Subsidiaries.  

 

To the extent that any of the Mammography
Intellectual Property is owned by a subsidiary of Seller, Seller hereby
represents and warrants that it has so indicated in the applicable Seller
Disclosure Schedule, and that all representations, warranties, covenants and
agreements set forth herein (other than Section 2.1 or if the context
otherwise requires) shall refer to Seller and such subsidiaries taken as a
whole.  Seller further covenants and
agrees that all such items of the Mammography Intellectual Property shall be
sold to the Buyer hereunder as if owned by Seller and that Seller shall cause
each such subsidiary to execute and deliver such bills of sale and other
instrument of transfer as Buyer may reasonably request to transfer title to
such items of the Mammography Intellectual Property as contemplated by this
Agreement.

 

[Remainder of page intentionally
blank]

 

53

 

IN WITNESS
WHEREOF, Buyer and Seller have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date first written
above.

 

	
   

  	
  FISCHER IMAGING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Harris Ravine

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLOGIC, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn P. Muir

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President

  
				

 

54

 

LIST OF EXHIBITS

 

Exhibit A-Bill o Sale

Exhibit B-1 Patent Assignment

Exhibit B-2 Trademark Assignment

Exhibit C-Loan Agreement

Exhibit C-1 Security Agreement

Exhibit C-2 Patent Security Agreement

Exhibit C-3 Trademark Security Agreement

Exhibit C-4 Promissory Note

Exhibit D-Opinions to be given by Graham, Davis and Faegre &
Benson

Exhibit E-Opinions to be given by Brown Rudnick Berlack Israels LLP

 

LIST OF
SCHEDULES

 

Schedule 1.1(iii)-Excluded Software

Seller Disclosure Schedules-Schedules 2.02-2.16

Schedule 4.1(a)-Covenants Regarding Maintenance of Mammography
Intellectual Property

Schedule 5.9-Post Closing Contractual Arrangements

Schedule 5A.1-Licensed Intellectual Property

Schedule 5A.1(d)-RE&S Products

Schedule 6.2(c)-Third Party Consents

Schedule 9.3(a)-Definition of Consumables

 

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