Document:

EXHIBIT 4.1

    Exhibit
      4.1

    
       

       

      CORONADO
        INDUSTRIES, INC.

      16857
        E. Saguaro Boulevard

      Fountain
        Hills, AZ 85268

      

      June
        1,
        2006

      

      Coronado
        Employees and Consultants, 

      

      The
        Company’s Board of Directors has decided to make available to all employees and
        consultants, shares of the Company’s common stock
        at
        a negotiated price of not less than 90% of the lowest closing trading price
        during the week prior to the compensation being due.

      

      To
        participate in this program, all you have to do is execute this letter in
        the
        space below, and indicate the amount of wages you wish to
        have
        allocated to this Plan and the pay period from which your salary will be
        credited. Your free-trading shares will be delivered to
        you
        within a few days.

       

      
         

        
          	 	 	 
	 	CORONADO
                  INDUSTRIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
                  Gary R. Smith
	 	
                  

                
	 	Gary
                  R. Smith, President

        

      

       

      
        

      

      
        	
                

              	 	
                

              
	Amount of Compensation	 	Employee/Consultant
                Signature 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
                

              	 	
                

              
	Period From 	 	
                Name
                  of Employee/Consultant 

              
	Which To Be Paid 	 	
                (Please
                  Print)Exhibit 10.1

 

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

CLARIENT, INC.,

CLRT ACQUISITION, LLC,

TRESTLE HOLDINGS INC.

AND

TRESTLE ACQUISITION CORP.

Dated as of June 19, 2006

 

  
  

 

TABLE
OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Certain Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE OF ASSETS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Purchase and Sale of Assets

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Assumption of Liabilities

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Consideration for Purchased Assets

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Allocation of Purchase Price

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Closing

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Nontransferable Assets

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Taking of Necessary Action; Further Action

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF
  SELLERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Organization, Qualification, and Corporate Power

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Authorization

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Sellers’ SEC Filings

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  3.5

  	
   

  	
  No Conflicts

  	
   

  	
   

  
	
  3.6

  	
   

  	
  Consents

  	
   

  	
   

  
	
  3.7

  	
   

  	
  Sellers’ Financial Statements

  	
   

  	
   

  
	
  3.8

  	
   

  	
  Internal Controls

  	
   

  	
   

  
	
  3.9

  	
   

  	
  Accounts Receivable

  	
   

  	
   

  
	
  3.10

  	
   

  	
  Customers and Suppliers

  	
   

  	
   

  
	
  3.11

  	
   

  	
  No Undisclosed Liabilities

  	
   

  	
   

  
	
  3.12

  	
   

  	
  No Changes

  	
   

  	
   

  
	
  3.13

  	
   

  	
  Events Subsequent to Most Recent Fiscal Period End

  	
   

  	
   

  
	
  3.14

  	
   

  	
  Legal Compliance

  	
   

  	
   

  
	
  3.15

  	
   

  	
  Tax Matters

  	
   

  	
   

  
	
  3.16

  	
   

  	
  Title of Properties; Absence of Liens and
  Encumbrances; Condition of Assets

  	
   

  	
   

  
	
  3.17

  	
   

  	
  Intellectual Property

  	
   

  	
   

  
	
  3.18

  	
   

  	
  Contracts

  	
   

  	
   

  
	
  3.19

  	
   

  	
  Commercialization of Product

  	
   

  	
   

  
	
  3.20

  	
   

  	
  Insurance

  	
   

  	
   

  
	
  3.21

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  3.22

  	
   

  	
  Product Warranty, Product Liability and Recalls

  	
   

  	
   

  
	
  3.23

  	
   

  	
  Employees

  	
   

  	
   

  
	
  3.24

  	
   

  	
  Employee Matters and Benefit Plans

  	
   

  	
   

  
	
  3.25

  	
   

  	
  Environment, Health, and Safety

  	
   

  	
   

  
	
  3.26

  	
   

  	
  Certain Business Relationships With Sellers

  	
   

  	
   

  

 

 i
 

  
  

 

	
  3.27

  	
   

  	
  No Adverse Developments

  	
   

  	
   

  
	
  3.28

  	
   

  	
  Foreign Corrupt Practices Act

  	
   

  	
   

  
	
  3.29

  	
   

  	
  Fees

  	
   

  	
   

  
	
  3.30

  	
   

  	
  Complete Copies of Materials

  	
   

  	
   

  
	
  3.31

  	
   

  	
  Board Approval

  	
   

  	
   

  
	
  3.32

  	
   

  	
  Stockholder Approval

  	
   

  	
   

  
	
  3.33

  	
   

  	
  Information

  	
   

  	
   

  
	
  3.34

  	
   

  	
  No Liquidation, Insolvency, Winding-Up

  	
   

  	
   

  
	
  3.35

  	
   

  	
  Preferences

  	
   

  	
   

  
	
  3.36

  	
   

  	
  Assets

  	
   

  	
   

  
	
  3.37

  	
   

  	
  Disclosure

  	
   

  	
   

  
	
  3.38

  	
   

  	
  No Limitation on Other Representation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Organization, Qualification, and Corporate Power

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Authorization

  	
   

  	
   

  
	
  4.3

  	
   

  	
  No Conflicts

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Consents

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Brokers’ Fees

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Availability of Funds

  	
   

  	
   

  
	
  4.7

  	
   

  	
  Litigation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V PRE-CLOSING COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Operation of Business

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Access to Information

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Notice of Developments

  	
   

  	
   

  
	
  5.4

  	
   

  	
  No Solicitation

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Stockholder Meeting

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI ADDITIONAL AGREEMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Reasonable Efforts

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Notices and Consents

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Patent Matters.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII OTHER AGREEMENTS AND COVENANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Confidentiality

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Additional Documents and Further Assurances

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Take-over Statutes

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Parent Vote

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Reasonable Cooperation of Buyer

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Agreement to Perform

  	
   

  	
   

  

 

 ii
 

  
  

 

	
  7.7

  	
   

  	
  Attorney-In-Fact

  	
   

  	
   

  
	
  7.8

  	
   

  	
  Discharge of Excluded Liabilities

  	
   

  	
   

  
	
  7.9

  	
   

  	
  Guarantee

  	
   

  	
   

  
	
  7.10

  	
   

  	
  Collection of Accounts Receivable.

  	
   

  	
   

  
	
  7.11

  	
   

  	
  Hired Employees.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII CONDITIONS TO THE CLOSING

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Conditions to Buyer’s Obligations

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Conditions to Sellers’ Obligations

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Frustration of Closing Conditions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX TAX MATTERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Tax Books and Records.

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Allocation of Taxes.

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Transfer Taxes.

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Notices.

  	
   

  	
   

  
	
  9.5

  	
   

  	
  Withholding Exemption.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Termination of the Agreement

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Effect of Termination

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Fees and Expenses

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Repayment of Bridge Loans

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Press Releases and Public Announcements

  	
   

  	
   

  
	
  11.2

  	
   

  	
  No Third-Party Beneficiaries

  	
   

  	
   

  
	
  11.3

  	
   

  	
  Entire Agreement

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Amendment

  	
   

  	
   

  
	
  11.5

  	
   

  	
  Waivers

  	
   

  	
   

  
	
  11.6

  	
   

  	
  Successors and Assigns

  	
   

  	
   

  
	
  11.7

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  11.8

  	
   

  	
  Notices

  	
   

  	
   

  
	
  11.9

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
  11.10

  	
   

  	
  Forum Selection; Consent to Jurisdiction

  	
   

  	
   

  
	
  11.11

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
   

  
	
  11.12

  	
   

  	
  Severability

  	
   

  	
   

  
	
  11.13

  	
   

  	
  Construction

  	
   

  	
   

  
	
  11.14

  	
   

  	
  Attorneys’ Fees

  	
   

  	
   

  
	
  11.15

  	
   

  	
  Nonsurvival of Representations and Warranties

  	
   

  	
   

  
	
  11.16

  	
   

  	
  Specific Performance

  	
   

  	
   

  

 

 iii
 

  
  

 

	
  11.17

  	
   

  	
  Time of Essence

  	
   

  	
   

  
	
  11.18

  	
   

  	
  Interpretation and Rules of Construction

  	
   

  	
   

  
	
  11.19

  	
   

  	
  Representation by Counsel

  	
   

  	
   

  
	
  11.20

  	
   

  	
  Disclosure Letter

  	
   

  	
   

  

 

 

INDEX
OF SCHEDULES

 

	
  Schedule

  	
  Description

  
	
  Schedule 1.1(a)

  	
  Sellers’ 2006 Operating Forecast

  
	
  Schedule 1.1(b)

  	
  Hired Employees

  
	
  Schedule 2.1(b)(i)

  	
  Assumed Contracts

  
	
  Schedule  2.1(c)(xiii)

  	
  Certain Excluded Assets

  
	
  Schedule 2.1(b)(i)

  	
  Certain Excluded Liabilities

  
	
  Schedule  2.2(b)(ii)

  	
  Deferred Revenue

  
	
  Schedule 2.2(b)(v)

  	
  Vendors

  
	
  Schedule 8.1(h)

  	
  Material Consents

  

 

 iv

EXECUTION VERSION

ASSET
PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of June 19, 2006, by and among Clarient, Inc. a Delaware
corporation (“Clarient”), CLRT Acquisition,
LLC, a Delaware limited liability company and wholly-owned subsidiary of
Clarient (“Buyer”), Trestle Holdings
Inc., a Delaware corporation (“Parent”)
and Trestle Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Parent (“Trestle Sub,”
and together with Parent, the “Sellers”). Buyer
and Clarient, on the one hand, and Sellers, on the other hand, are sometimes
referred to herein individually as a “Party” and
collectively as the “Parties.”

RECITALS

A.            Sellers desire to sell to Buyer, and Buyer desires to
purchase from Sellers, on the terms and subject to the conditions set forth
herein, certain of the assets of Sellers described herein, and Sellers desire
Buyer to assume certain of Sellers’ liabilities, which Buyer would agree to
assume on the terms and subject to the conditions set forth herein.

B.            The respective boards of directors of each of Clarient,
Buyer and Sellers believes it is in the best interests of their respective
corporations and stockholders that the transactions contemplated hereby be
consummated and, in furtherance thereof, have approved this Agreement and the
transactions contemplated hereby.

C.            Concurrently with the execution and delivery of this
Agreement, Parent and Clarient have entered into those certain Consulting
Agreements dated as of even date herewith, by and among Clarient, Parent,
Trestle Sub and the individuals named therein (the “Consulting
Agreements”) pursuant to which Parent, through certain of its
employees, shall provide consulting services to Buyer and Clarient.

D.            Parent is the borrower pursuant to that certain interest
bearing secured senior promissory note dated February 27, 2006, in the
aggregate principal amount of $250,000, made by Parent in favor of Clarient (as
amended to date, the “First
Bridge Note”).

E.             In order to facilitate the transactions contemplated in
this Agreement, concurrently with the execution and delivery of this Agreement,
Parent, Trestle Sub and Clarient are (i) entering into that certain Second
Loan and Security Agreement dated as of even date herewith (the “Second Loan and Security Agreement”)
pursuant to which Clarient will, from time to time and upon the terms and
conditions contained therein, loan additional funds to Parent in the aggregate
amount of $500,000, evidenced by a promissory note in the form attached thereto
(the “Subsequent Bridge Note”) and (ii) extending
the maturity of the First Bridge Note.

F.             Buyer and Sellers desire to make certain
representations, warranties, covenants and other agreements in connection with
the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable
consideration, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

1.1           Certain
Definitions.   As used in this Agreement, the following terms have the
following meanings (terms defined in the singular to have a correlative meaning
when used in the plural and vice versa). Certain other terms are defined in the
text of this Agreement.

“Acquisition Proposal”
shall mean any offer or proposal made by a Person other than Buyer or its
Affiliates for (i) a merger, consolidation, share exchange, business
combination or other similar transaction or series of related transactions
involving either Seller, (ii) any tender offer, exchange offer or other
offer for, or acquisition or series of related acquisitions by any Person or
group (within the meaning of Regulation 13D under the Exchange Act) of
beneficial ownership of, 20% or more of the outstanding common stock or
outstanding voting capital stock of either Seller, (iii) any issuance,
sale or other disposition of securities (or options, rights or warrants to
purchase, or securities convertible into or exchangeable for, such securities)
in each case by a Seller representing 20% or more of the voting power of such
Seller, (iv) any sale, lease, exchange, transfer or other disposition
(including by way of merger, consolidation, license or exchange), in a single
transaction or a series of related transactions, of 20% or more of the Business
or of the Purchased Assets or accounting for 20% or more of the consolidated
revenues of Parent (other than the sale by Sellers to customers of Instruments
and associated licenses and service obligations in the Ordinary Course of Business).
The term Acquisition Proposal shall also include any proposal or offer made by
a Person other than Buyer and its Affiliates with respect to any other
transaction having similar effect as any of the foregoing with respect to
either Seller, other than the transactions contemplated by this Agreement
(excluding an internal combination of one or more Sellers with each other
and/or their Subsidiaries notwithstanding the foregoing provisions).

“Adjustment Amount”
means the amount of any impairment or reduction of any of a Seller’s assets
that occurs between the Current Balance Sheet Date and the Closing Date, other
than in the Ordinary Course of Business, including any such impairment or
reduction of assets that occurs as a result of (i) theft, destruction or
loss, (ii) any write down or write off of the value of such assets or (iii) payments
outside of the Ordinary Course of Business such as the payment of any
compensation, satisfaction of liabilities or other payments prohibited by Section 5.1;
provided, however, the Adjustment Amount
shall not exceed $300,000.

“Adjustment Schedule”
has the meaning set forth in Section 2.3(b).

“Affiliate”
of a Person means any other Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with such Person.

“Agreement” has the meaning set forth in the preamble.

“Allocation” has the meaning set forth in Section 2.4.

“Ancillary Agreements”
means all agreements and instruments delivered pursuant to this Agreement,
including the Consulting Agreement.

 2
 

 

“Assumed Contracts”
has the meaning set forth in Section 2.1(b)(i).

“Assumed Liabilities”
has the meaning set forth in Section 2.2(b).

“Base Price”
means (i) cash in an amount equal to $3,000,000, less (ii) the amount
of Assumed Liabilities that are required to be reflected on the Closing Balance
Sheet, less (iii) all amounts paid for services at or prior to the time of
Closing by Clarient or Buyer to Sellers in connection with the Consulting
Agreements, less (iv) the Adjustment Amount, less (v) the Factoring
Deductible, less (vi) $150,000, if the Patent Condition shall not have
been satisfied by Sellers’ at the time of Closing.

“Bridge Notes”
means the First Bridge Note and the Subsequent Bridge Note.

“Business” means
Sellers’ and their respective Subsidiaries’ business of developing,
manufacturing and selling digital tissue imaging devices and products, image
management and workflow applications, and telemedicine applications linking
dispersed users and data primarily to the healthcare and pharmaceutical
markets, and supporting such applications, as currently conducted by Sellers
and as currently proposed to be conducted by Sellers.

“Business Day”
means any day other than a Saturday or Sunday or a day on which national
banking institutions in the City of Los Angeles, California are authorized or
obligated by law or executive order to be closed.

“Business Facility”
means is any property including the land, the improvements thereon, the
groundwater thereunder and the surface water thereon, that is or at any time
has been owned, operated, occupied, controlled or leased by Sellers or any of
their Subsidiaries in connection with the operation of its business.

“Buyer” has
the meaning set forth in the preamble.

“Buyer Material Adverse
Effect” means any circumstance, event, change in, or effect on,
Clarient and Buyer or their business that, either alone or in combination with
any other circumstances, events, changes in, or effects on, Clarient and Buyer
or their business is, or is would reasonably be expected to have a material
adverse effect on the ability of Clarient and Buyer to consummate the
transactions contemplated by this Agreement; provided,
however, that none of the following
shall be deemed to constitute or be taken into account in determining whether
there has been or will or could be a “Buyer Material Adverse Effect”:  (1) any change resulting from or arising
out of general market, economic or political conditions (including any change
arising out of acts of war, weather conditions or other force majeure events), (2) any
change in the price or trading value of Clarient’s securities, in and of itself
or (3) any change in the industries in which Clarient and Buyer conduct
their business, provided that in the case of (1) or
(3) such changes do not have a substantially disproportionate impact on
Buyer and Clarient as compared to other similarly situated participants in the
industries in which they conduct their business.

“Buyer’s Knowledge” means with respect to Buyer, and with
respect to any matter in question, the actual knowledge of any of Buyer’s and
Clarient’s officers or members of 

 3
 

 

its board of directors after reasonable inquiry, and
shall include all similar uses of the concept, including “aware,” “known to”
and “knowledge of.”

“Buyer’s Transfer Taxes”
has the meaning set forth in Section 9.3.

“Change of Recommendation”
has the meaning set forth in Section 5.4(e).

“Clarient”
has the meaning set forth in the preamble.

“Consulting Agreement”
has the meaning set forth in the recitals.

“Closing”
has the meaning set forth in Section 2.5.

“Closing Accounts Receivable
Statement” means a list of all accounts receivable of the
Sellers and their Subsidiaries as of the Closing Balance Sheet Date, which has
been prepared by Sellers in a manner consistent with the preparation of the
Current Accounts Receivable Statement and for which (i) all of the
accounts receivable set forth therein arose in the Ordinary Course of Business,
are carried at values determined in accordance with GAAP consistently applied
and are, to Seller’s Knowledge, collectible except to the extent of reserves
therefor set forth in the Closing Balance Sheet (except that unaudited interim
financial statements do not contain footnotes and other presentation items that
may be required by GAAP and are subject to normal year-end audit
adjustments, which are not material in amount or significance in the
aggregate); (ii) except as set forth in Section 3.7(b) of the
Sellers’ Disclosure Letter, no person other than Buyer or its Affiliates has
any Lien on any of the accounts receivable set forth therein, (iii) no
request or agreement for deduction or discount has been made with respect to
any of the accounts receivable set forth therein, except to the extent of
reserves therefor set forth in the Closing Balance Sheet; and (iv) the
accounts receivable set forth therein and the other debts arising therefrom are
not, to Sellers’ Knowledge, subject to any counterclaim or set-off and there
are no claims or disputes with regard to any such accounts receivable except to
the extent of the reserves reflected on the Closing Balance Sheet.

“Closing
Balance Sheet” means an unaudited consolidated balance sheet of
Parent dated as of a date that is not more than three days prior to the Closing
Date which (i) is prepared by Sellers in a manner consistent with the
preparation of the Current Balance Sheet and (ii) presents fairly and
accurately in all material respects the Sellers’ financial condition as of the
Closing Balance Sheet Date in accordance with GAAP (except that unaudited
interim financial statements do not contain footnotes and other presentation
items that may be required by GAAP and are subject to normal year-end
audit adjustments, which are not material in amount or significance in the
aggregate).

“Closing Balance Sheet Date”
means the date of the Closing Balance Sheet.

“Closing Date”
has the meaning set forth in Section 2.5.

“COBRA”
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

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

 4
 

 

“Confidential IP
Information” has the meaning set forth in Section 3.17(i)

“Confidentiality Agreement”
means the Mutual Non-Disclosure Agreement dated August 10, 2005 between
Parent and Clarient.

“Contract”
means any agreement, contract, lease, note, loan, evidence of indebtedness,
purchase order, letter of credit, indenture, security or pledge agreement,
franchise agreement, undertaking, covenant not to compete, covenant not to sue,
employment agreement, license, instrument, obligation, commitment or other
arrangement to which either Seller is a party or is bound, whether oral or
written.

“Copyrights”
means copyrights, copyright registrations, or any application therefor, in the
U.S. or any foreign country, or any other right corresponding thereto
throughout the world, including, without limitation, moral rights.

“Current Accounts
Receivable Statement” has the meaning set forth in Section 3.9.

“Current Balance Sheet”
has the meaning set forth in Section 3.7(b).

“Current Balance Sheet Date”
means March 31, 2006.

“Disposal Site” means a
location where Hazardous Materials are treated or disposed of.

“DOL” means
the Department of Labor.

“Employee”
means any current or former or retired employee, consultant or director of Sellers
or any of their respective Subsidiaries.

“Employment Statutes”
has the meaning set forth in Section 2.2(c)(xii).

“Environmental Laws”
means all applicable laws, rules, regulations, orders, treaties, statutes, and
codes promulgated by any Governmental Body which prohibit, regulate or control
any Hazardous Material or any Hazardous Material Activity, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules, regulations,
ordinances, orders, treaties, statutes, and codes of other Governmental Bodies,
the regulations promulgated pursuant to any of the foregoing, and all
amendments and modifications of any of the foregoing, all as amended to date.

“Environmental Permit”
means any approval, permit, license, clearance or consent required under
applicable Environmental Laws.

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

 5
 

 

“ERISA  Affiliate” means any other person or
entity that is a member of a “controlled group of corporations” with or under “common
control” with Sellers or any of their Subsidiaries within the meaning of Section 414(b),
(c), (m) or (o) of the Code and the regulations issued thereunder but
excluding Buyer, Clarient or their Affiliates.

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

“Excluded Assets”
has the meaning set forth in Section 2.1(c).

“Excluded Liabilities”
has the meaning set forth in Section 2.2(c).

“Expense Amount”
means the lesser of (A) $125,000 in cash or (B) the direct expenses
(including reasonable attorney’s fees and accounting and financial advisory
costs) of the terminating Party incurred in connection with the transactions
contemplated hereunder.

“Factored Accounts”
means any of Sellers’ accounts and/or receivables sold to a factor or otherwise
factored by Sellers within 60 days prior to Closing that remain uncollected by
the factor as of the Closing.

 “Factoring Deductible” means the
total face amount of the Factored Accounts.

“FDA” has
the meaning set forth in Section 3.14(c).

“FDCA” has
the meaning set forth in Section 3.14(a).

“FICA” has
the meaning set forth in Section 3.15(b).

“First Bridge Note”
has the meaning set forth in the recitals.

 “FMLA” means the Family Medical Leave
Act of 1993, as amended.

“FUTA” has
the meaning set forth in Section 3.15(b).

“GAAP” means
United States generally accepted accounting principles in effect from time to
time applied on a consistent basis throughout the periods indicated.

“Governmental Body”
means any (i) nation, province, state, county, city, town, village,
district, or other jurisdiction of any nature; (ii) federal, provincial,
state, local, municipal, foreign, or other government; (iii) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal); (iv) multi-national organization or body; or (v) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.

“Hazardous
Material” means any material or substance that is prohibited or
regulated by any Environmental Law or that has been designated by any
Governmental Body to be radioactive, toxic or hazardous, including without
limitation, asbestos, urea, formaldehyde, 

 6
 

 

PCBs, radon gas, crude oil or any fraction thereof,
all forms of natural gas, petroleum products or by-products or derivatives.

“Hazardous
Materials Activity” means the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation, release,
exposure of others to, sale, or distribution of any Hazardous Material or any
product containing a Hazardous Material.

“Hired Employees”
means each of the persons listed on Schedule 1.1(a).

“Instruments”
shall mean the following instruments, devices and applications sold by Sellers
in the Business:  MedMicro Non-Robotic
Retrofit, MedMicro Robotic Retrofit, MedMicro Non-Robotic, MedMicro Robotic,
MedMicro Robotic Plus, MedMicro Slideloader, Digital Slide Module Single Slide,
Digital Slide Module Slideloader, Grossing Standalone, Grossing Upgrade, Slide
Clip 4, 3 Chip Digital Camera Replacement, Xcellerator Digital Slide Server
(software only) and Xcellerator Edu Workbench/Desktop (software only).

“Intellectual Property
Rights” means any or all of the following and all rights in,
arising out of, or associated therewith: all U.S., international or foreign (i) Patents;
(ii) trade secrets and/or nonpublic know-how, including, for example,
inventions, discoveries, improvements, concepts, ideas, methods, processes,
designs, schematics, drawings, formulae, technical data, specifications,
research and development information, technology, databases, inventions for
with patent applications have not yet been filed and other technical
information, and other rights in know-how and confidential or proprietary
information; (iii) Copyrights; (iv) rights in World Wide Web
addresses and domain names and sites and applications and registrations
therefor; (vii) Trademarks; and (viii) similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world, including,
without limitation, moral rights.

“Intellectual Property
Rights Agreements” has the meaning set forth in Section 3.17(m).

“International Employee
Plan” means any Sellers’ Employee Plan for the benefit of
Employees who perform services outside the United States.

“Invention”
means the Invention described by the Invention Patent.

“Invention Patent”
means that certain “regions of interest” patent (no. 6,993,169) held by Trestle
Sub.

“IRS” means
the Internal Revenue Service.

“Lien” means
any mortgage, pledge, lien, charge, claim, security interest, adverse claims of
ownership or use, restrictions on transfer, defect of title or other
encumbrance of any sort, other than (a) mechanic’s, materialmen’s, and
similar liens with respect to any amounts not yet due and payable, (b) liens
for taxes not yet due and payable, and other Permitted Encumbrances.

“Multiemployer Plan”
means any “Pension Plan” (as defined below) which is a “multiemployer plan,” as
defined in Section 3(37) of ERISA.

 7
 

 

“Ordinary Course of
Business” means, with respect to any Party, the usual, regular
and ordinary course of such Party’s normal operations in substantially the same
manner as heretofore conducted.

“Other Claim”
means that certain patent no. 6,466,690.

“Outside Date”
has the meaning set forth in Section 10.1(b).

“Parent” has
the meaning set forth in the preamble.

“Party” or,
collectively, “Parties” shall have the
meaning set forth in the preamble.

“Patent Condition”
has the meaning set forth in Section 6.3(b).

“Patents”
means (i) patents, utility models, design registrations, certificates of
invention, patents of addition or substitution, or other governmental grants
for the protection of inventions or industrial designs anywhere in the world,
including, without limitation, any reissues, renewals, re-examinations or
extensions thereof; and (ii) any applications for any of the foregoing,
including, without limitation, any international, provisional, divisional,
continuation, continuation-in-part, or continued prosecution applications.

“Pension Plan”
means any Sellers’ Employee Plan which is an “employee pension benefit plan,”
within the meaning of Section 3(2) of ERISA.

“Permits”
has the meaning set forth in Section 3.14(a).

“Permitted
Encumbrances” means (i) statutory liens, charges,
assessments, security interests, claims, obligations, understandings or
arrangements for governmental charges not yet due and payable or the amount or
validity of which is being contested in good faith, (ii) pledges or
deposits in connection with, or to secure, workers’ compensation, unemployment
insurance, pension or other employee benefits, (iii) restrictions on
transfer arising out of or related to securities laws, (iv) any
obligations arising under the Assumed Contracts and Liens arising out of the
acts of Buyer, and (v) any other Liens that are not, individually or in
the aggregate, material to the Business.

“Person”
means any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, Governmental Body or
other entity.

“Post-Closing Tax Period”
means any Tax Period beginning after the Closing Date and that portion of a Straddle
Period beginning after the Closing Date.

“Pre-Closing Tax Period”
means any Tax Period ending on or before the Closing Date and the portion of
any Straddle Period ending on the Closing Date.

“Proxy
Statement” means the proxy statement to be distributed to the
stockholders of Parent in connection with seeking the Stockholder Approval,
including any 

 8
 

 

preliminary proxy statement, definitive proxy
statement or supplement or amendment thereto, in each case filed with the SEC
in accordance with the terms and provisions of this Agreement.

“PTO” has
the meaning set forth in Section 3.17(a).

“Purchase Price”
means the assumption by Buyer of the Assumed Liabilities plus cash in amount
equal to the Base Price.

“Purchased Assets”
has the meaning set forth in Section 2.1(b).

“Records”
has the meaning set forth in Section 2.1(b)(iii).

“Reexamination”
means an examination by the PTO of the validity and enforceability of the
Invention Patent prompted by the ex parte request made to the PTO on or around May 18,
2006.

“Registered Intellectual
Property Rights” means any and all Intellectual Property Rights
that is or are the subject of an application, certificate, filing, registration
or other document issued by, filed with, or recorded by, any Governmental Body
or other public or private legal authority at any time.

“Representatives”
means, with respect to a Person, that Person’s officers, directors, employees,
accountants, counsel, investment bankers, financial advisors, agents and other
representatives.

“SEC”
means the United States Securities and Exchange Commission.

“SEC
Filings” has the meaning set forth in Section 3.3.

“Second Loan and Security
Agreement” has the meaning set forth in the recitals.

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

“Security Agreement”
means that certain Loan and Security Agreement, dated as of February 27,
2006 by and among Clarient and Sellers.

“Sellers”
has the meaning set forth in the preamble.

“Sellers’ Board
Recommendation” has the meaning set forth in Section 3.31.

“Sellers’ Disclosure Letter”
has the meaning set forth in the introduction to Article III.

“Sellers’
Employee Plan” means each employment, consulting, severance,
termination, retirement, profit sharing, bonus, incentive, deferred
compensation, retention, change in control, savings, life, health, disability,
accident, medical, insurance, vacation, other welfare fringe benefit or other
employee compensation stock option, restricted stock or other equity-based
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, 

 9
 

 

stock or stock-related awards, fringe benefits or
other employee benefits or remuneration of any kind, funded or unfunded,
including without limitation, each “employee benefit plan,” within the meaning
of Section 3(3) of ERISA which is maintained, contributed to, or
required to be contributed to, by Sellers or any of their Subsidiaries for the
benefit of any Employee or any dependent thereof and with respect to which
Sellers or any of their Subsidiaries has or reasonably could be expected to
have any material liability or obligation.

“Sellers’ Financial
Statements” has the meaning set forth in Section 3.7(b).

“Sellers’ Intellectual Property”
means any and all Technology and any and all Intellectual Property Rights,
including Registered Intellectual Property Rights, that is or are owned (in
whole or in part) by or exclusively licensed to Sellers or any of their
Subsidiaries.

“Sellers’ Knowledge”
means with respect to either Seller or Sellers, and with respect to any matter
in question, the actual knowledge of any of either Seller’s officers or members
of its board of directors, including without limitation Maurizio Vecchione,
Barry Hall, Jack Zeineh, Steve Barbee and Eric Stoppenhagen, after reasonable
inquiry, and shall include all similar uses of the concept, including “aware,” “known
to” and “knowledge of.”

“Sellers’ Material Adverse
Effect” means any circumstance, event, change in, or effect on,
the Business or Sellers that, either alone or in combination with any other
circumstances, events, changes in, or effects on, the Business or Sellers is,
or would reasonably be expected to have a material adverse effect on (a) the
Business, the Purchased Assets or the Assumed Liabilities or (b) the
ability of Sellers to consummate the transactions contemplated by this
Agreement; provided, however,
that none of the following shall be deemed to constitute or be taken into
account in determining whether there has been or will or could be a “Sellers’
Material Adverse Effect”:  (w) any
change resulting from or arising out of general market, economic or political
conditions (including any change arising out of acts of war, weather conditions
or other force majeure events), (x) any change in the price or trading
value of Parent’s securities, in and of itself, (y) any change in the
industries in which Sellers conduct their Business or (z) any change
resulting from any matter disclosed in (i) the SEC Filings, (ii) Sellers’
2006 operating forecast attached as Schedule 1.1(b) or
(iii) the Sellers’ Disclosure Letter; provided that
in the case of clauses (w) or (y), such changes do not have a
substantially disproportionate impact on the Business as compared to other
similarly situated participants in the industries in which Sellers conduct the
Business.

“Sellers’ Registered
Intellectual Property Rights” has the meaning set forth in Section 3.17(a).

“Sellers’ Transfer Taxes”
has the meaning set forth in Section 9.3.

“Significant Customers”
has the meaning set forth in Section 3.10.

“Significant Suppliers”
has the meaning set forth in Section 3.10.

“Stockholder Approval”
means the approval of the transactions contemplated by this Agreement by the
affirmative vote of the holders of a majority of the outstanding stock of each
of the Sellers.

 

 10

 

“Stockholder Meeting”
has the meaning set forth in Section 5.5(a).

“Straddle Period”
means any Tax Period beginning before and ending after the Closing Date.

“Subsequent Bridge Note”
has the meaning set forth in the recitals.

“Subsidiary” or “Subsidiaries”
of any Person means any corporation, partnership, limited liability company,
joint venture or other legal entity of which such Person (either alone or
through or together with any other Subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holder of which is
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity, or of which such
Person is the managing member, general partner, or which such Person is
otherwise contractually entitled to direct and control such entity.

“Superior
Proposal” means an unsolicited, bona fide written (on its most
recently amended or modified terms, if amended or modified) Acquisition
Proposal (with all of the percentages included in the definition of Acquisition
Proposal increased to 50%) made by a Person (other than Buyer or its
Affiliates) after the date hereof that did not result from a breach of Section 5.4
and that if consummated would be on terms that Parent’s board of directors in
good faith concludes (after consultation with its financial advisor and outside
counsel) (i) will result in a transaction that is more favorable to Parent’s
stockholders (in their capacities as stockholders), from a financial point of
view, than the transactions contemplated by this Agreement (including any
binding revision hereto proposed by Buyer in response to such proposal or
otherwise) and (ii) is reasonably probable of being completed in a prompt
manner.

“Superior
Proposal Notice” has the meaning set forth in Section 5.4(c).

“Takeover Statute”
has the meaning set forth in Section 7.3.

“Tangible Personal Property”
means each item or distinct group of furniture, fixtures, equipment, machinery,
computers, servers, communications and networking equipment and other tangible
personal property currently owned, leased or subleased by the Sellers and any
of their Subsidiaries for the operation of the Business.

“Tax” or,
collectively, “Taxes”, means (i) any
and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities in the nature of a
tax, including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts; (ii) any liability for the payment of any amounts of the
type described in clause (i) as a result of being or ceasing to be a
member of an affiliated, consolidated, combined or unitary group for any period
(including, without limitation, any liability under Treas. Reg. Section 1.1502-6
or any comparable provision of foreign, state or local law); and (iii) any
liability for the payment of any amounts of the type described in clause (i) or
(ii) as a result of any express or implied obligation to indemnify any
other person or as a result of any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.

 21
 

 

“Tax Period”
means any period prescribed by any Governmental Body for which a Tax Return is
required to be filed or a Tax is required to be paid.

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

“Technology”
means any or all of the following:  (i) works
of authorship including, without limitation, computer programs, source code and
executable code, whether embodied in software, firmware or otherwise,
documentation, designs, files, net lists, records, data and mask works; (ii) inventions
(whether or not patentable), improvements, and technology; (iii) proprietary
or confidential information, including technical data and customer and supplier
lists, trade secrets, discoveries, processes, formulas, and know how; (iv) databases,
data compilations and collections and technical data; (v) tools, methods
and processes; and (vi) all instantiations of the foregoing in any form
and embodied in any media.

“Termination Fee”
means cash in the amount of $90,000 in immediately available funds.

“Third Party”
has the meaning set forth in Section 5.4(c).

“Trademarks”
means trade names, trade dress, brand names, logos, common law trademarks and
service marks, trademark and service mark registrations and applications
therefor and all goodwill associated therewith throughout the world.

“Transfer Taxes”
has the meaning set forth in Section 9.3.

“Transfer Tax Returns”
has the meaning set forth in Section 9.3.

“Treasury Regulations”
means the Treasury Regulations promulgated under the Code.

“Trestle Sub”
has the meaning set forth in the preamble.

“Voting Agreements”
has the meaning set forth in the recitals.

Article II

PURCHASE AND SALE
OF ASSETS

2.1           Purchase
and Sale of Assets.

(a)           Purchase
and Sale.   Upon the terms and subject to the conditions set forth
herein, at the Closing (as defined in Section 2.5 hereof), Buyer
shall purchase from Sellers, and Sellers shall irrevocably sell, convey,
transfer, assign and deliver to Buyer, the Purchased Assets (as defined in Section 2.1(b) hereof),
free and clear of any and all Liens.

 22
 

 

(b)           Definition
of Purchased Assets.   For all purposes of and under this Agreement,
the term “Purchased Assets” shall mean,
refer to and include all of Sellers’ right, title and interest in and to all
tangible and intangible assets, properties and rights, wherever located, which
are owned, used or held (directly or indirectly) for use by Sellers to the
extent owned, used or held (directly or indirectly) for use by Sellers or their
respective Subsidiaries as of the Closing (but specifically excluding the
Excluded Assets (as defined in Section 2.1(c) hereof)) in
connection with or relating to the Business, including, without limitation, the
following:

(i)            all
rights and benefits under each of the Contracts of Sellers set forth on Schedule 2.1(b)(i) and the
unfilled customer purchase orders entered into by Sellers in the Ordinary
Course of Business from and after the execution of this Agreement and
outstanding at the Closing (a list of such purchase orders to be provided by
Sellers to Buyer at Closing) (collectively, “Assumed Contracts”);

(ii)           all
Tangible Personal Property, including but not limited to the Tangible Personal
Property (A) used or held for use by the Sellers’ and their Subsidiaries
at the locations where the Business is conducted, (B) in the possession or
control of any of Sellers’ employees or (C) otherwise owned, leased or
held by Sellers or their Subsidiaries at the Closing Date;

(iii)          to
the extent relating to the Purchased Assets or the Assumed Liabilities, all
operating data and original records (including computer files and electronic
media), including without limitation, books (other than corporate minutes, Tax
books and records, stock record books and other books relating to the
organization, maintenance, and existence of Sellers as a corporation), records
and accounts, correspondence, research and development files, drug master
files, regulatory support files, regulatory applications, correspondence and
submission files, production records, technical, accounting, manufacturing,
quality control and procedural files and manuals, customer and vendor lists,
customer complaint files, device and product operation manuals, sales and
marketing literature, purchase orders and invoices and copies of all employment
records related to the Hired Employees (collectively, the “Records”); provided that, in the case of any Records which relate to
both the Purchased Assets or the Assumed Liabilities, on the one hand, and the
other businesses or assets or liabilities of Sellers, on the other hand,
Sellers shall have the right to redact any portion of the Records solely to the
extent that they relate to such other businesses and assets; provided, further, Sellers shall have the right to retain
copies of any portion of the Records to the extent reasonably necessary,
including, in Sellers’ discretion, to effect an orderly dissolution of Sellers;

(iv)          original
sets of all lab notebooks, manufacturing procedures, equipment calibration
settings and other technical information;

(v)           all
of Sellers’ right, title and interest in and to the Sellers’ Intellectual
Property, and any and all Intellectual Property Rights that relate to or are
used or held for use in connection with the Business;

(vi)          the
current telephone and facsimile numbers used in the Business and held by
Sellers;

 23
 

 

(vii)         all
rights to the Internet website addresses used in the Business and held by
Sellers;

(viii)        all
rights, claims, causes of action, rights of recovery or set-off, warranty
rights or other similar rights of Sellers, whether known, unknown, matured or
unmatured, accrued or contingent, against third parties, including under
express or implied warranties from suppliers and claims existing at the Closing
Date under insurance policies, to the extent and in the proportion relating to
the Purchased Assets or Assumed Liabilities;

(ix)           all
transferable franchises, Permits, licenses, agreements, waivers and
authorizations issued by or obtained from any Governmental Body, to the extent
held or used by any Seller or any of its Subsidiaries in connection with, or
required for, the operation, use and exploitation of the Purchased Assets or
the assumption, payment, performance and discharge of the Assumed Liabilities;

(x)            all
customer lists used in the Business; and

(xi)           all
cash and cash equivalents and the accounts and notes receivable of the Sellers
existing as of the Closing; and

(xii)          all
other assets, properties, claims, rights and interests of Sellers which exist
on the Closing Date, of every kind and nature and description, whether tangible
or intangible, real, personal or mixed, wherever located, which relate to or
are used or held for use solely in connection with the Business, other than any
Excluded Assets (as defined below) or any items excluded in (i) through
(xi) above.

(c)           Definition
of Excluded Assets.   Notwithstanding anything to the contrary set
forth in this Section 2.1 or elsewhere in this Agreement, the term “Purchased Assets” shall not mean,
refer to or include the following (collectively, the “Excluded
Assets”) to the extent owned, used or held for use by Sellers or
any of its Affiliates as of the Closing:

(i)            the
assets of any Sellers’ Employee Plan held for the exclusive purpose of
satisfying obligations under such Sellers’ Employee Plan;

(ii)           any
Contracts to which Sellers are a party or by which Sellers are bound not
expressly assumed in Section 2.1(b) above;

(iii)          the
corporate charter and bylaws, qualifications to transact business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Sellers as a corporation;

(iv)          all
securities of any Subsidiaries of Sellers;

(v)           all
refunds of Taxes with respect to the Business and with respect to the Purchased
Assets, in either case attributable to any Pre-Closing Tax Period and similar
recoveries and benefits of Sellers and their respective Subsidiaries;

 24
 

 

(vi)          all
claims, actions, deposits, prepayments, refunds, causes of action, rights of
recovery, warranty rights, rights of set off, and rights of recoupment of any
kind or nature (including any such item relating to Taxes) to the extent not
otherwise included in the Purchased Assets;

(vii)         all
rights of Sellers under this Agreement, each Ancillary Agreement or any
agreement, certificate, instrument or other document executed and delivered by
Sellers or Buyer in connection with the transactions contemplated hereby or
thereby, or any side agreement between Sellers and Buyer or its Affiliates
entered into on or after the date hereof, including Sellers’ right to receive
the Purchase Price as contemplated herein;

(viii)        all
books, records, files, documents, data, information and correspondence of
Sellers, including without limitation Tax books and records, other than the
Records or to the extent not otherwise included in the Purchased Assets or as
otherwise provided in Section 9.1; provided
that Buyer shall be entitled to make copies of Sellers’ Tax books and records
to the extent reasonably necessary for Buyer’s operation of the Business
following the Closing, including Buyer’s compliance with Tax laws and
regulations;

(ix)           any
of Sellers’ rights with respect to claims arising out of Excluded Liabilities;

(x)            All
attorney-client privileged communications provided to Sellers by Kaye Scholer
LLP with respect to this Agreement, any Ancillary Agreement, the transactions
contemplated herein and therein, and/or to Parent, or any of Parent’s directors’
or officers’, with respect to the Securities Act, the Exchange Act or other
applicable securities laws;

(xi)           all
rights of Sellers under any insurance policies maintained by Sellers for the
benefit of their respective directors and officers in their capacities as
directors and officers including any premiums in connection therewith;

(xii)          all
rights, title and interest in and to all properties, assets and rights of
Sellers that do not relate to the Business;

(xiii)         all
assets properties or rights set forth on Schedule 2.1(c)(xiii)
hereto; and

(xiv)        the
Factored Accounts and the corresponding asset accounts (including any residual
rights to receive payments from the factor on account of the Factored
Accounts); provided that any cash amounts repaid to
Sellers by the factor or any underlying account debtor in respect of the
Factored Accounts at or prior to Closing shall not constitute Excluded Assets.

2.2           Assumption
of Liabilities.

(a)           Assumption.   Upon
the terms and subject to the conditions set forth herein, at the Closing, Buyer
shall assume from Sellers, and Sellers shall irrevocably convey, transfer and
assign to Buyer, all of the Assumed Liabilities (as defined in Section 2.2(b) hereof).
Buyer shall not assume any liabilities of Sellers pursuant hereto, other than
the Assumed Liabilities.

 25
 

 

(b)           Definition
of Assumed Liabilities.   For all purposes of and under this Agreement,
the term “Assumed Liabilities” shall
mean, refer to and include only the following liabilities of Sellers (and shall
specifically exclude the Excluded Liabilities (as defined in Section 2.2(c) hereof)):

(i)            all
obligations, duties and liabilities of Sellers continuing after the Closing
under the Assumed Contracts, to the extent such liabilities (A) were not
due to have been satisfied or discharged prior to the Closing Date and (B) do
not arise from any breach or default under such Assumed Contract occurring
prior to the Closing Date and (C) are not included on Schedule 2.2(b)(i); provided, however,
that for Instruments that were to have been delivered by Sellers to customers
pursuant to Assumed Contracts no more than seven (7) days prior to Closing
but that have not been delivered at Closing, Buyer shall also assume the
obligation of delivering such Instruments to such customers to the extent that
such Instruments to be delivered are transferred to Buyer as Purchased Assets
at the time of Closing, and Sellers shall retain all other liabilities under
the Assumed Contracts that were due to have been satisfied or discharged prior
to the Closing Date;

(ii)           all
obligations, duties, liabilities and items relating to (A) deferred
revenue shown on Schedule 2.2(b)(ii) and (B) deferred revenue provided under
customer contracts entered into by Sellers in the Ordinary Course of Business
from and after the execution of this Agreement remaining outstanding at the
Closing (a list of such customer contracts and the associated outstanding
deferred revenue to be provided by Sellers to Buyer at Closing);

(iii)          all
obligations, duties and liabilities arising as a result of the post-Closing
employment by Buyer or Clarient of any Hired Employee, other than any Excluded
Liability;

(iv)          all
obligations, duties and liabilities relating to warranties contained in written
customer agreements for Instruments sold in the Ordinary Course of Business;

(v)           all
obligations, duties and liabilities relating to vendor purchase orders
submitted by Sellers in the Ordinary Course of Business from and after the date
hereof until the Closing to any of the vendors indicated on Schedule 2.2(b)(v) for the purpose of
purchasing inventory;

(vi)          all
obligations, duties and liabilities arising as a result of the post-Closing
ownership or use by Buyer and Clarient of the Purchased Assets, other than any
Excluded Liabilities; and

(vii)         Buyer’s
Transfer Taxes.

(c)           Definition
of Excluded Liabilities.   Sellers and their Subsidiaries shall retain,
and shall be responsible for paying, performing and discharging when due, and
Buyer shall not assume or have any responsibility for, any obligations, duties
and liabilities of Sellers’ and their respective Subsidiaries other than
Assumed Liabilities, whether arising prior to, on or after the Closing Date
(collectively, “Excluded Liabilities”),
including, without limitation:

 26
 

 

 

(i)            all
obligations, duties and liabilities of Sellers under this Agreement, the Ancillary
Agreements or any other certificate, instrument or other agreement entered into
in connection with the transactions contemplated hereby;

(ii)           obligations,
duties and liabilities related to or arising out of the use or ownership of any
Excluded Asset;

(iii)          obligations,
duties and liabilities to the extent arising from or as a result of any
business of Sellers, including the Business, other than the Assumed
Liabilities, including any action, suit, claim or proceeding thereto,
regardless of when filed and regardless of whether an accrual in respect
thereof is included on the Current Balance Sheet or the Closing Balance Sheet.

(iv)          other
than Buyer’s Transfer Taxes, any liabilities for Taxes of the Sellers, or any
member of any consolidated, affiliated, combined or unitary group of
corporations of which any Seller is or has been a member, for Taxes and any
liabilities for Taxes attributable to the Purchased Assets for any Pre-Closing
Tax Period arising from the operation of the Business prior to the Closing;

(v)           all
accounting, consulting, finders, investment banking, legal and similar fees and
expenses incurred by Sellers in connection with the negotiation of this
Agreement or any Ancillary Agreement, and the consummation of the transactions
contemplated hereby and thereby;

(vi)          any
liabilities or obligations of Sellers under any Contracts other than the
Assumed Contracts;

(vii)         any
and all warranty liabilities or obligations of Sellers and their respective
Subsidiaries to the extent not Assumed Liabilities;

(viii)        the
liabilities and obligations set forth on Schedule
2.2(b)(i);

(ix)           any
infringement or alleged infringement of any Intellectual Property Rights of any
other Person, including but not limited to Sellers’ Intellectual Property,
arising out of any action of Sellers on or prior to the Closing or any
misappropriation or misuse of any Technology or any other right of another
Person arising out of any action of Sellers prior to the Closing;

(x)            any
liability of Sellers arising by reason of any violation or alleged violation of
any judgment, order, decree, statute, law, rule of common law, code and
regulations to the extent such liability results from or arises out of events,
facts or circumstances occurring or existing prior to the Closing;

(xi)           any
liabilities or obligations of Sellers or their ERISA Affiliates or respective
Subsidiaries arising out of or in connection with (A) any Sellers’
Employee Plan at any time maintained, sponsored, contributed to or required to
be contributed to by or with respect to Sellers or their ERISA Affiliate or
respective Subsidiaries or (B) any employment practices of Sellers or
their ERISA Affiliates or respective Subsidiaries;

 27
 

 

(xii)          all
liabilities and obligations of Sellers and their ERISA Affiliates and
respective Subsidiaries to any current, former or prospective Employees or any
of their spouses, beneficiaries or other dependents (including the Hired
Employees during the period employed by Sellers through their termination by
Sellers) including without limitation, any liabilities or obligations under any
federal, state or municipal employment, labor or employment discrimination law,
including without limitation, the National Labor Relations Act, Title VII of
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities Act
of 1990, the Fair Labor Standards Act, ERISA, the Worker Adjustment and
Retraining Notification Act, the Family and Medical Leave Act, the Immigration
Reform and Control Act of 1986, the California Fair Employment and Housing Act,
the California Family Rights Act, and the California Labor Code, and all
amendments to each such Act as well as the regulations issued thereunder
(together, the “Employment
Statutes”); and

(xiii)         all
obligations and liabilities, whether absolute or contingent, other than Assumed
Liabilities.

2.3           Consideration
for Purchased Assets.

(a)           On
the terms and subject to the conditions set forth in this Agreement, the
consideration for the Purchased Assets shall be Buyer’s payment to Sellers of
the Purchase Price as provided herein.

(b)           On
the second Business Day prior to the Closing, Sellers shall deliver to Buyer (i) the
Closing Balance Sheet, (ii) the Closing Accounts Receivable Statement,
together with an aging schedule indicating a range of days elapsed since
invoice, (iii) a schedule reflecting Sellers’ calculation of the
Adjustment Amount, if any (the “Adjustment
Schedule”), and (iv) all work papers and back-up materials
(including a schedule of inventory) used in the preparation of the Closing
Balance Sheet, the Closing Accounts Receivable Statement and the Adjustment
Schedule. Following delivery of such items, Buyer shall have the right to make
reasonable inquiries with respect thereto and, during regular business hours or
by other arrangement with Sellers, conduct a physical inventory and inspection
of Buyer’s financial records, assets, inventory and facilities for the purpose
of verifying and validating the information set forth in the Closing Balance
Sheet, the Closing Accounts Receivable Statement, and the Adjustment Schedule. Sellers
shall provide Buyer with answers to such queries and such additional
information as Buyer may reasonably request.

2.4           Allocation
of Purchase Price.   No later than 60 days following the Closing Date,
the Buyer will submit to the Sellers its allocation of the Base Price (plus
Assumed Liabilities to the extent properly taken into account under the Code
and the applicable Treasury Regulations) among the Purchased Assets subject to
the approval of the Sellers, which approval shall not be unreasonably withheld (the “Allocation”).
The Allocation will be made in accordance with Section 1060 of the Code
and the Treasury regulations promulgated thereunder. The Sellers and the Buyer agree to (i) be bound
by the Allocation, (ii) act in accordance with the Allocation in the
preparation of financial statements and filing of all Tax Returns (including,
without limitation, filing Form 8594 with their United States federal
income Tax Return for the taxable year that includes the date of the Closing)
and in the course of any Tax audit, Tax review or Tax 

 28
 

 

litigation relating thereto and (iii) take
no position and cause their Affiliates to take no position inconsistent with
the Allocation for income Tax purposes, including United States federal and
state income Tax and foreign income Tax, unless otherwise required
pursuant to a “determination” within the meaning of Section 1313(a) of
the Code. Not later than thirty (30) days
prior to the filing of their respective Forms 8594 (and analogous state law
forms) relating to this transaction, each Party shall deliver to the other
party a copy of its Form 8594 (and any analogous state law forms).

2.5           Closing.

(a)           Closing
Place, Time and Date.   Unless this Agreement is earlier terminated
pursuant to Article X hereof, the closing of the transactions contemplated
by this Agreement (the “Closing”)
shall be held at the offices of Latham & Watkins LLP, 650 Town Center
Drive, 20th Floor, Costa Mesa, California, at 11:00 a.m.
on the date which is two (2) Business Days following the satisfaction or
waiver of the conditions to Closing set forth in Article VIII hereof, or
at such other place and such other time and/or date as the Parties hereto shall
mutually agree (the actual date on which the Closing shall occur being referred
to herein as the “Closing
Date”).

(b)           Closing Deliveries.

(i)            At
the Closing, unless otherwise provided, Buyer shall deliver, or cause to be
delivered, to Sellers, as applicable, the following, dated as of the Closing
Date and executed for and on behalf of Buyer by a duly authorized officer
thereof:

(1)           the
Purchase Price, which shall be delivered in the form of a wire transfer to
Seller’s designated account of immediately available funds in an amount equal
to the Base Price minus the unpaid principal and interest on all of the Bridge
Notes;

(2)           the
original of each of the Bridge Notes for cancellation in accordance with the
terms thereof, together with a termination of the Security Agreements in
accordance with their terms, and any UCC termination statements and other
filings relating thereto;

(3)           one
or more instruments of assumption, in customary form and substance reasonably
satisfactory to Buyer and Sellers and their respective counsel;

(4)           the
certificates and other documents required to be delivered pursuant to Section 8.2;
and

(5)           any
and all other instruments, certificates and agreements contemplated by Article VIII
or Article IX hereof or as Sellers may reasonably request in order to
effectively make Buyer responsible for all Assumed Liabilities pursuant hereto
to the fullest extent permitted by applicable law.

(ii)           At
the Closing, Sellers shall deliver, or cause to be delivered, to Buyer the
following, dated as of the Closing Date and executed for and on behalf of
Sellers by duly authorized officers thereof:

 29

 

(1)           a
bill of sale, in customary form and substance reasonably satisfactory to Buyer
and Sellers and their respective counsel;

(2)           one
or more instruments of assumption, in customary form and substance reasonably
satisfactory to Buyer and Sellers and their respective counsel;

(3)           an
instrument of assignment of Patents, in customary form and substance reasonably
satisfactory to Buyer and Sellers and their respective counsel;

(4)           an
instrument of assignment of Copyrights, in customary form and substance reasonably
satisfactory to Buyer and Sellers and their respective counsel;

(5)           an
instrument of assignment of Trademarks, in customary form and substance
reasonably satisfactory to Buyer and Sellers and their respective counsel;

(6)           the
certificates and other documents required to be delivered pursuant to Section 8.1;
and

(7)           any
and all other instruments, certificates and agreements contemplated by Article VIII
hereof or as Buyer may reasonably request in order to effectively transfer to
Buyer all of the Purchased Assets pursuant hereto to the fullest extent
permitted by applicable law.

2.6           Nontransferable
Assets.   To the extent that any Purchased Asset or Assumed Liability
to be sold, conveyed, assigned, transferred, delivered or assumed to or by
Buyer pursuant hereto, or any claim, right or benefit arising thereunder or
resulting therefrom, is not capable of being sold, conveyed, assigned,
transferred or delivered without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any third person (including a
Governmental Body), or if such sale, conveyance, assignment, transfer or
delivery or attempted sale, conveyance, assignment, transfer or delivery would
constitute a breach or termination right thereof or a violation of any law, decree,
order, regulation or other governmental edict, except as expressly otherwise
provided herein, this Agreement shall not constitute a sale, conveyance,
assignment, transfer or delivery thereof, or an attempted sale, conveyance,
assignment, transfer or delivery thereof absent such approvals, consents or
waivers. If any such approval, consent or waiver shall not be obtained, or if
an attempted assignment of any such Purchased Asset or the assumption of any
Assumed Liability by Buyer would be ineffective so that Buyer would not in fact
receive all such Purchased Assets or assume all such Assumed Liabilities
pursuant hereto, Sellers and Buyer shall cooperate in a mutually agreeable
arrangement under which Buyer would obtain the benefits and assume the obligations
of such Purchased Assets and Assumed Liabilities in accordance with this
Agreement, including subcontracting, sub-licensing, or sub-leasing to Buyer, or
under which Sellers, as Buyer shall reasonably request, would enforce for the
benefit of Buyer, with Buyer assuming all of Sellers’ obligations thereunder,
any and all rights of Sellers against a third party thereto.

2.7           Taking
of Necessary Action; Further Action.   From time to time after the
Closing Date, the Parties shall execute and deliver such other instruments of
sale, transfer, conveyance, assignment and confirmation and take such action as
the other Party may reasonably determine is necessary to transfer, convey and
assign to Buyer, and to confirm Buyer’s title to or interest in, 

 20
 

 

the Purchased Assets, to put Buyer in actual
possession and operating control thereof, to assist Buyer in exercising all
rights with respect thereto and to assist in hiring and transferring the Hired
Employees to Buyer’s employ, to hold Buyer harmless with respect to the
Excluded Liabilities, and for Buyer to assume the Assumed Liabilities and hold
Seller’s harmless with respect thereto. Sellers hereby constitute and appoint
Buyer and its successors and assigns as its true and lawful attorney in fact in
connection with the transactions contemplated by this instrument, with full
power of substitution, in the name and stead of Sellers but on behalf of and
for the benefit of the Buyer and its successors and assigns, to demand and
receive any and all of the assets, properties, rights and business hereby
conveyed, assigned, and transferred or intended so to be, and to give receipt
and releases for and in respect of the same and any part thereof, and from time
to time to institute and prosecute, in the name of Sellers or otherwise, for
the benefit of the Buyer or its successors and assigns, proceedings at law, in
equity, or otherwise, which the Buyer or its successors or assigns reasonably
deem proper in order to collect or reduce to possession or endorse any of the
Purchased Assets and to do all acts and things in relation to the Purchased
Assets which the Buyer or its successors or assigns reasonably deem desirable.

ARTICLE III

REPRESENTATIONS
AND WARRANTIES OF SELLERS

Subject to such exceptions as are specifically
disclosed in the disclosure letter (referencing the appropriate section
numbers) supplied by Sellers to Buyer (the “Sellers’
Disclosure Letter”), Sellers hereby represent and warrant to
Buyer that the statements contained in this Article III are true and
correct as of the date of this Agreement and will be true and correct as of the
Closing (as though made at the Closing); provided, that
representations and warranties made as of a specified date will be true and
correct as of such date.

3.1           Organization,
Qualification, and Corporate Power.   Sellers are corporations duly
organized, validly existing, and in good standing under the laws of the State
of Delaware, and each of Sellers’ Subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of incorporation.
Sellers and each of their Subsidiaries are duly authorized to conduct business
and  in good standing under the laws of
each jurisdiction where such qualification or good standing is required and in
which the failure to be so qualified would not reasonably be expected to have a
Sellers’ Material Adverse Effect. There is no state other than California in
which Sellers or any of their Subsidiaries own any material property or in
which Sellers or any of their Subsidiaries have any employees, offices or
material operations. Sellers and each of their Subsidiaries have full corporate
power and authority to carry on their businesses as they have been and are
currently conducted and to own and use the properties and assets owned and used
by them. Section 3.1 of the Sellers’ Disclosure Letter lists the directors
and officers of each of Sellers. The operations now being conducted by Sellers
and their Subsidiaries in connection with the Business have not been conducted
under any other name since Sellers’ inception. The copies of Sellers’ and each
of their respective Subsidiaries’ Certificates of Incorporation, Bylaws and
other corporate records which have been delivered to Buyer are true, correct
and complete as of the date hereof and shall be as of the Closing.

3.2           Authorization.   Sellers
have full corporate power and authority to execute and deliver this Agreement
and the Ancillary Agreements to which they are a party, and, subject to receipt
of the Stockholder Approval to consummate the transactions contemplated
hereunder and 

 21
 

 

thereunder and to perform their obligations hereunder
and thereunder. No other proceedings on the part of Sellers, their stockholders
or any of their Subsidiaries are necessary to authorize the execution, delivery
and performance of this Agreement and the Ancillary Agreements to which Sellers
are a party. This Agreement and the Ancillary Agreements to which Sellers are a
party and the transactions contemplated hereby and thereby have been approved
by the unanimous vote of the board of directors of each Seller. Assuming the
due and valid authorization, execution and delivery thereof by Buyer, this
Agreement and each of the Ancillary Agreements constitute the valid and legally
binding obligations of Sellers, enforceable against Sellers in accordance with
their respective terms and conditions, except as such enforceability may be
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. Parent owns, beneficially and of
record, all of the outstanding voting and capital shares of Trestle Sub.

3.3           Sellers’
SEC Filings.   Since January 1, 2005, Parent has timely filed all
reports, documents, schedules, forms, statements and other documents required
to be filed by them with the Securities and Exchange Commission pursuant to the
Securities Act and the Exchange Act, as applicable (“SEC Filings”). As of their
respective filing dates, except as noted therein or to the extent corrected by
Parent’s subsequently filed SEC Filings that were filed prior to the Closing
Date, Parent’s SEC Filings complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and the
rules and regulations of the SEC promulgated thereunder applicable to
Parent’s SEC Filings, and except as noted therein or to the extent corrected by
Parent’s subsequently filed SEC Filings that were filed prior to the Closing
Date, none of the Parent’s SEC Filings contained on their filing dates any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.

3.4           Subsidiaries.   The
Sellers’ Disclosure Letter contains a description of each Subsidiary of Sellers
and their respective jurisdictions of incorporation and qualification.

3.5           No
Conflicts.   Neither the execution, delivery or performance of this
Agreement or any Ancillary Agreement by Sellers, nor, subject to the receipt of
the Stockholder Approvals, the consummation of the transactions contemplated
hereby and thereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any Governmental Body to which Sellers or any of their
Subsidiaries are subject, (B) violate or conflict with any provision of
the Certificate of Incorporation or Bylaws (or other charter documents) of
either Seller or any of their respective Subsidiaries, or (C) violate,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, suspend, revoke or cancel, or require any notice or consent under, any
Assumed Contract (or result in the imposition of any Lien upon any of the
Purchased Assets).

3.6           Consents.   Except
as set forth on Section 3.6 of the Sellers’ Disclosure Letter, no consent,
notice, waiver, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body or any third party, including
a party to any Contract with Sellers or any of their Subsidiaries, is required
by or with respect to Sellers or any of their Subsidiaries 

 22
 

 

in connection with the execution and delivery of this
Agreement and the Ancillary Agreements or the consummation of the transactions
contemplated hereby or thereby or for any Assumed Contract to remain in full
force and effect without limitation or modification after the Closing, except
for (i) the Stockholder Approvals and (ii) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws.

3.7           Sellers’
Financial Statements.

(a)           As
of their respective dates, the consolidated financial statements of Sellers and
their Subsidiaries included in the Sellers’ SEC Filings since January 1,
2006 complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC applicable
with respect thereto. Such financial statements are in accordance with the
books and records of Sellers and have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated and consistent
with each other (except that unaudited interim financial statements do not
contain footnotes and other presentation items that may be required by GAAP and
are subject to normal year-end audit adjustments, which are not material
in amount or significance in the aggregate). Such financial statements present
fairly and accurately in all material respects Sellers’ financial condition,
operating results as of the dates and during the periods indicated therein all
in accordance with GAAP (except that unaudited interim financial statements do
not contain footnotes and other presentation items that may be required by GAAP
and are subject to normal year-end audit adjustments, which are not
material in amount or significance in the aggregate).

(b)           Section 3.7(b) of
the Sellers’ Disclosure Letter sets forth the unaudited consolidated balance
sheet of Sellers and their Subsidiaries as of March 31, 2006 (the “Current Balance Sheet”), and
the related unaudited consolidated statement of income, cash flow and
stockholders’ equity for the three-month period then ended (together with the
Current Balance Sheet, the “Sellers’
Financial Statements”). The Sellers’ Financial Statements are in
accordance with the books and records of Sellers and their Subsidiaries and
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated and consistent with each other and with the
consolidated financial statements of Sellers and their Subsidiaries included in
the Sellers’ SEC Filings (except that unaudited interim financial statements do
not contain footnotes and other presentation items that may be required by GAAP
and are subject to normal year-end audit adjustments, which are not
material in amount or significance in the aggregate). The Sellers’ Financial
Statements present fairly and accurately in all material respects the Sellers’
financial condition and operating results as of the dates and during the
periods indicated therein all in accordance with GAAP (except that unaudited
interim financial statements do not contain footnotes and other presentation
items that may be required by GAAP and are subject to normal year-end
audit adjustments, which are not material in amount or significance in the
aggregate).

3.8           Internal
Controls. Sellers maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in 

 23
 

 

accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

3.9           Accounts Receivable.   The
Sellers have made available to Buyer a list of all accounts receivable of the
Sellers and their Subsidiaries as of the Current Balance Sheet Date (the “Current  Accounts
Receivable Statement”), together with an aging schedule
indicating a range of days elapsed since invoice. All of such accounts
receivable listed on the Current Accounts Receivable Statement arose in the
Ordinary Course of Business, are carried at values determined in accordance
with GAAP consistently applied (except that unaudited interim financial
statements do not contain footnotes and other presentation items that may be
required by GAAP and are subject to normal year-end audit adjustments,
which are not material in amount or significance in the aggregate), and are to
Sellers’ Knowledge, collectible except to the extent of reserves therefor set
forth in the Current Balance Sheet for receivables arising subsequent to the
Current Balance Sheet Date as reflected on the books and records of the Sellers
and their Subsidiaries (which are prepared in accordance with GAAP, except that
unaudited interim financial statements do not contain footnotes and other
presentation items that may be required by GAAP and are subject to normal year-end
audit adjustments, which are not material in amount or significance in the
aggregate), in each case, except as otherwise set forth in Sellers’ Disclosure
Letter. No Person other than Buyer and its affiliates has any Lien on any of
such accounts receivable and no request or agreement for deduction or discount
has been made with respect to any of the accounts receivable. To the Knowledge
of Seller, the accounts receivable set forth in the Current Accounts Receivable
Statement and other debts arising therefrom are not subject to any counterclaim
or set-off and there are no claims or disputes with regard to any such
accounts receivable except to the extent of the reserves reflected on the
Current Balance Sheet. Since the Current Balance Sheet Date, Sellers have not
made any change in their credit policies, nor have they materially deviated
therefrom.

3.10         Customers
and Suppliers.   The Sellers’ Disclosure Letter sets forth a complete
and accurate list of (i) the customers of the Sellers on the basis of
orders booked in excess of $50,000 during the last twelve (12) calendar months
prior to the date of this Agreement (the “Significant Customers”) and the amount for
which each customer was invoiced during such period, and (ii) the
suppliers of the Sellers with respect to the Business on the basis of cost of
goods or services purchased by the Sellers in excess of $50,000 during the last
twelve (12) calendar months prior to the date of this Agreement (the “Significant Suppliers”)
and the amount for which each such supplier invoiced the Sellers during such
period. To Sellers’ Knowledge, no Significant Customer has ceased to use the
products, equipment, goods or services of Sellers, or has substantially reduced
the use of such products, equipment, goods or services at any time. Buyer
acknowledges that Sellers’ Significant Customers are on a purchase order basis.
To Sellers’ Knowledge, no Significant Supplier will not sell materials,
supplies, merchandise and other goods after the Closing on terms and conditions
substantially similar to those used in its current sales to the Business,
subject only to general and customary price increases. None of the materials,
supplies, merchandise or other goods supplied to the Business are such that
they are not generally available in the market from more than one source. To
the Sellers’ Knowledge, no such Significant Customer or Significant Supplier is
threatened with bankruptcy or insolvency.

 24
 

 

3.11         No
Undisclosed Liabilities.   Sellers do not have any material liabilities
or obligations of any nature relating to any Purchased Assets or Assumed
Liabilities except for liabilities or obligations (i) adequately reflected
or reserved against in the Current Balance Sheet in accordance with GAAP
(except that unaudited interim financial statements do not contain footnotes
and other presentation items that may be required by GAAP and are subject to
normal year-end audit adjustments, which are not material in amount or
significance in the aggregate), (ii) that are current liabilities that
were incurred in the Ordinary Course of Business that are not required to be
reflected on the Current Balance Sheet in accordance with GAAP (except that
unaudited interim financial statements do not contain footnotes and other
presentation items that may be required by GAAP and are subject to normal year-end
audit adjustments, which are not material in amount or significance in the
aggregate), or (iii) incurred since the Current Balance Sheet Date in the
Ordinary Course of Business.

3.12         No
Changes.   Since March 31, 2006, except with respect to the
transactions contemplated hereby, (a) the Business has been conducted in
the Ordinary Course of Business and consistent with past practices, and (b) there
has not been any destruction of, damage to, or loss of any Purchased Assets or
Business, or any Significant Customer or Significant Supplier with respect to
the Business (whether or not covered by insurance) that would reasonably be
expected to have a Sellers’ Material Adverse Effect.

3.13         Events
Subsequent to Most Recent Fiscal Period End.   Since March 31,
2006 to the date of this Agreement, neither the Business nor any of the
Purchased Assets has suffered any adverse change that would reasonably be
expected to result in a Sellers’ Material Adverse Effect. Without limiting the
generality of the foregoing, since such date except as provided in this
Agreement, the Ancillary Agreements, the Bridge Notes and the transactions
contemplated hereby and thereby, neither the Sellers nor any Subsidiary of a
Seller have, as it relates to the Business, any of the Purchased Assets or any
of the Assumed Liabilities:

(a)           sold,
leased, transferred, or assigned any assets or properties, tangible or
intangible, outside the Ordinary Course of Business;

(b)           except
as otherwise set forth in Section 3.13(b) of the Sellers’ Disclosure
Letter, assumed or become bound under or obligated by any Contract or extended
or modified the terms of any Contract of the type required to be listed in Section 3.18
of the Sellers’ Disclosure Letter;

(c)           had
any party accelerate, terminate, make modifications to, or cancel any Assumed
Contract to which Sellers or any of their Subsidiaries is a party or by which
any of them are bound, and neither Sellers nor any of their Subsidiaries has
modified, canceled or waived or settled any debts or claims held by them,
outside the Ordinary Course of Business, or waived or settled any rights or
claims of a substantial value, whether or not in the Ordinary Course of
Business;

(d)           permitted
any of the Purchased Assets of Sellers or any of their respective Subsidiaries,
tangible or intangible, to become subject to any Lien and no Lien held for the
benefit of Sellers or their Subsidiaries related to the Business has been
released or discharged;

 25
 

 

(e)           made
any capital expenditures except in the Ordinary Course of Business and not
exceeding $50,000 in the aggregate of all such capital expenditures, other than
in connection with the purchase of inventory held for sale;

(f)            made
any capital investment in, or any loan to, any Person other than a Seller in an
amount in excess of $50,000;

(g)           created,
incurred, assumed, prepaid or guaranteed any indebtedness for borrowed money
and capitalized lease obligations, or extended or modified any existing
indebtedness;

(h)           experienced
a change in relations with their employees or any of their Subsidiaries as a
group that would reasonably be expected to result in a Sellers’ Material
Adverse Effect;

(i)            authorized
or permitted any change in the Certificate of Incorporation or Bylaws of
Sellers or any of their respective Subsidiaries;

(j)            experienced
any damage, destruction, or loss (whether or not covered by insurance) to any
Purchased Assets or any of Sellers or any of their respective Subsidiaries’
other property in excess of $50,000 in the aggregate of all such damage, destruction
and losses whether or not covered by insurance;

(k)           cancelled,
amended or renewed any insurance policy that provides coverage with respect to
the Purchased Assets, the Business or any Hired Employee;

(l)            suffered
any repeated, recurring or prolonged shortage, cessation or interruption of
communications, customer access, supplies or utility services which has had or
would reasonably be expected to have a Sellers’ Material Adverse Effect;

(m)          except
as otherwise set forth in Section 3.13(m) of the Sellers’ Disclosure
Letter, (i) adopted, entered into or modified any Sellers’ Employee Plan, (ii) entered
into any collective bargaining agreement, 
or (iii) paid, announced, promised or granted, whether orally or in
writing, any increase in the wages, salaries, compensation, bonuses,
incentives, pensions, severance or termination payments, fringe benefits or
other benefits to any Employees, including without limitation any increase or
change pursuant to any Sellers’ Employee Plan (except as required by law or,
with respect to non-executive Employees only, in the Ordinary Course of
Business);

(n)           except
in connection with the sale of Sellers’ regular products in the Ordinary Course
of Business, entered into a sale, lease, license, transfer or other disposition
of any products in connection with which, or entry into, renewal of, or
modification or amendment in any material respect of any Contract under which
Sellers or any of their Subsidiaries provided or is obligated to provide any (i) warranties
or indemnities relating to products or the Business, (ii) service level
guarantees or assurances, or commitments under which Sellers would be required
to deliver any future product or upgrade, or (iii) pricing, discounting,
service or maintenance terms or provisions;

 26
 

 

(o)           revalued
any of their respective assets or properties (whether tangible or intangible),
including writing off notes or accounts receivable;

(p)           changed
any of the accounting principles followed by them or the method of applying
such principles;

(q)           entered
into any transaction other than in the Ordinary Course of Business;

(r)            made
or changed any material election with respect to Taxes, adopted or changed any
material accounting method with respect to Taxes, amended any Tax Return,
entered into any Tax allocation agreement, Tax sharing agreement, Tax indemnity
agreement or closing agreement, settled or compromised on any claim, notice,
audit report or assessment with respect to Taxes, or consented to any extension
or waiver of the limitation period applicable to any claim or assessment with
respect to Taxes, in each case, to the extent related to any Purchased Asset;
and

(s)           become
obligated to do any of the foregoing.

3.14         Legal
Compliance.

(a)           Sellers and their Subsidiaries (i) are and have been
operated at all times in material compliance with all federal, state or local statutes, laws, rules, regulations, ordinances,
codes or any other requirements or rules of law applicable to the
Sellers or any of the Sellers’ Subsidiaries or by which any property, business,
product or asset of the Sellers or any of the Sellers’ Subsidiaries is bound or
affected, including, but not limited to, the federal Food, Drug and Cosmetic
Act (“FDCA”) (21 U.S.C.
§ 321 et seq.), the federal Anti-kickback
Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn), the civil False Claims Act (31 U.S.C. §§ 3729 et seq.), the administrative False Claims Law (42 U.S.C. §
1320a-7b(a)), the Anti-Inducement Law (42 U.S.C. § 1320a-7a(a)(5)),
the Health Insurance Portability and
Accountability Act of 1996 (42 U.S.C. § 1320d et seq.),
the exclusion laws, SSA § 1128 (42 U.S.C. § 1320a-7), Medicare (Title
XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security
Act), or the regulations promulgated pursuant to such laws, and comparable
state laws, accreditation standards and all other state and federal laws,
regulations, manual provisions, policies and administrative guidance relating
to the regulation of the business of the Sellers and their Subsidiaries,
and (ii) are not in material default or material violation of any federal
or state governmental licenses, registrations, approvals, authorizations,
clearances, exemptions, filings, permits or franchises (collectively, “Permits”) to which the
Sellers or any of their Subsidiaries is a party or by which the Sellers or any
of their Subsidiaries or any property, product or asset of the Sellers or any
of their Subsidiaries is bound or affected.

(b)           Sellers and their Subsidiaries have in effect all material
Permits necessary for the conduct of their business and the use of their
properties, products and assets, as presently conducted and used; and neither
the Sellers nor any of their respective Subsidiaries have received any notice
or communication from any Governmental Body regarding (i) any actual or
possible violation of applicable law or any Permit or any failure to comply
with any applicable law or the requirements of any Permit, or (ii) any
actual or possible revocation, withdrawal, suspension, cancellation, limitation,
termination or modification of any Permit.

 27
 

 

 

(c)           Sellers
and each of their Subsidiaries, as well as the Sellers’ and their Subsidiaries’
third party manufacturers, suppliers, distributors or other third party
contractors, develop, test, manufacture, label, store, market, promote and
distribute their products in material compliance with all applicable federal
statutes, and rules and regulations promulgated by the United States Food
and Drug Administration (“FDA”)
and with applicable laws, rules, regulations, and standards of any comparable
Governmental Body, including, but not limited to, the FDCA and its implementing
regulations at 21 C.F.R. Parts 801, 803, 806, 807, 812, 814 and 820. All of the
products currently marketed by the Sellers and each of their Subsidiaries have,
where required by the FDCA and its implementing regulations or other applicable
statutes, rules and regulations, been approved or cleared for sale by the
FDA and all other applicable Governmental Bodies. For all of the products currently
marketed by the Company and its Subsidiaries outside the United States, the
Company and its Subsidiaries have obtained all necessary regulatory approvals
from all applicable foreign regulatory authorities. Except as set forth in Section 3.14
of the Sellers’ Disclosure Letter, neither the Sellers nor any their
Subsidiaries have received any notice from, or otherwise have knowledge of, the
FDA or any other Governmental Body, threatening to limit, suspend, or revoke
any product marketing clearance or approval, change the marketing
classification or labeling of, or otherwise require market removal or
withdrawal of any of the Sellers’ or their Subsidiaries’ products.

(d)           All
information, claims, reports and statistics and other data and conclusions
derived therefrom, utilized as the basis for or submitted in connection with
any and all requests for Permits of the FDA relating to the Sellers and their
Subsidiaries and their respective products, when submitted to the FDA were
true, complete and correct in all material respects as of the date of
submission and any necessary or required updates, changes, corrections or
modification to such information, claims, reports, statistics and other data
have been submitted to the FDA.

(e)           Except
as set forth on Section 3.14(e) of the Sellers’ Disclosure Letter,
the Sellers and their Subsidiaries have not received, nor have knowledge of any
facts that furnish any basis for, any Form FDA-483 inspectional
observations or untitled or warning letters from the FDA, or any other similar
communications from the FDA or any applicable Governmental Body; and there have
been no voluntary or involuntary recalls, corrective actions, removals, field
notifications, import alerts, product detentions, product seizures,
governmental investigations, or civil or criminal enforcement action initiated,
or, to Sellers’ Knowledge, proposed, requested, or threatened relating to the
products or the Sellers or any of their Subsidiaries.

(f)            All
pre-clinical trials and clinical trials conducted by or on behalf of the
Sellers and their Subsidiaries have been, and are being conducted in material
compliance with experimental protocols, procedures and controls pursuant to
accepted professional scientific standards and all applicable federal statutes
and rules and regulations promulgated by the FDA relating thereto,
including without limitation the FDCA and its applicable implementing
regulations at 21 C.F.R. Parts 50, 54, 56 and 812.

(g)           Except
as set forth on Section 3.14(g) of the Sellers’ Disclosure Letter, no
officer or, to Sellers’ Knowledge, any employee or agent of the Sellers of any
their Subsidiaries has committed any act, made any statement, or failed to make
any statement, that would reasonably be expected to cause the FDA to invoke its
policy respecting “Fraud, Untrue 

 28
 

 

Statements of Material Facts, Bribery, and Illegal
Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any
amendments thereto in a manner affecting the Business.

(h)           Except
as set forth on Section 3.14(h) of the Sellers’ Disclosure Letter,
none of the Sellers and their Subsidiaries, the officers of Sellers or, to
Sellers’ Knowledge, the employees and agents of the Sellers and their
Subsidiaries, have been convicted of any crime or engaged in any conduct that
would reasonably be expected to result in a material debarment or exclusion (i) under
21 U.S.C. Section 335a, or (ii) any similar state law, rule or
regulation. As of the date hereof, to Sellers’
Knowledge, no claims, actions or proceedings that would reasonably be expected
to result in such a material debarment or exclusion are pending or threatened
against the Sellers or any of their Subsidiaries, or the officers, employees or
agents of the Sellers or any of their Subsidiaries.

(i)            Neither
the Sellers nor any of their Subsidiaries are enrolled as a supplier or
provider under Medicare, Medicaid, or any other governmental health care
program or third party payment program or is a party to any participation
agreement for payment by any such governmental health care program and third
party payment program.

3.15         Tax Matters.   The
representations of Sellers under this Section 3.15 are limited to Taxes (i) for
which Buyer would be liable, as a transferee or otherwise, or (ii) that
have or would create a Lien on the Purchased Assets.

(a)           Sellers
and each of their Subsidiaries have timely filed all Tax Returns that they were
required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by Sellers and each of their Subsidiaries
(whether or not shown on any Tax Return) were paid in full when due or are
being contested in good faith and are supported by adequate reserves on the
Sellers’ Financial Statements. No Seller nor any of their Subsidiaries is
currently the beneficiary of any extension of time within which to file any Tax
Return. To Sellers’ Knowledge, no claim has ever been made by an authority in a
jurisdiction in which a Seller or any of its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction.

(b)           Sellers
and each of their Subsidiaries have withheld and paid when due all Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, including without limitation, with respect to its employees, all
federal, state and municipal income and employment Taxes, including without
limitation, Taxes pursuant to the Federal Insurance Contribution Act (“FICA”), and Taxes pursuant to
the Federal Unemployment Tax Act (“FUTA”).
Neither Seller is a “foreign person” as defined in Section 1445(f)(3) of
the Code. Sellers are not required to withhold with respect to the transactions
contemplated herein pursuant to the tax withholding provisions of Section 3406
of the Code or of Subchapter A of Chapter 3 of the Code.

(c)           There
are no Liens upon any property or assets of Sellers or any Subsidiary relating
to or attributable to Taxes, except for Liens for Taxes not yet due and
payable.

 29

 

(d)           No
deficiencies for Taxes have been claimed, proposed in writing or assessed by
any taxing or other Governmental Body against the Sellers or their Subsidiaries
that have not otherwise been paid, settled or contested in good faith. There
are no investigations, disputes or claims or other actions for or relating to
any additional liability for or relating to any liability for Taxes with
respect to the Sellers or their Subsidiaries for which Sellers have received
written notice, or to Sellers’ Knowledge is currently threatened. Neither
Seller nor any of their Subsidiaries has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.

(e)           Sellers
have made available to Buyer all federal and state income and all state sales
and use Tax Returns requested by Buyer for all periods since January 1,
2004.

(f)            All
material elections with respect to Taxes affecting the Purchased Assets as of
the date hereof, to the extent such elections are not shown on or in the Tax
Returns of the Sellers or their Subsidiaries that have been delivered to the
Buyer by the Sellers prior to the date hereof, are set forth in Section 3.15(f) of
the Sellers’ Disclosure Letter.

(g)           Neither
Seller nor any of their Subsidiaries has been a member of an affiliated group
of corporations within the meaning of Section 1504 of the Code (other than
the affiliated group of which Parent is the common parent) or has any liability
for the Taxes of any other Person (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract or (iv) otherwise.

(h)           There
are no, and at the Closing Date there will be no, Tax-sharing agreements or
similar arrangements (including indemnity agreements) with respect to or
involving the Sellers, their Subsidiaries or the Purchased Assets.

3.16         Title of
Properties; Absence of Liens and Encumbrances; Condition of Assets.

(a)           Neither
Sellers nor any of their Subsidiaries own any real property, nor have any of
them ever owned any real property. All current leases of Sellers and their
respective Subsidiaries relating to the Purchased Assets or Assumed Liabilities
are in full force and effect, are valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) on the part of any of them and, to the Knowledge
of the Sellers, on the part of any other party thereto.

(b)           Except
as set forth in Section 3.16(b) of
Sellers’ Disclosure Letter, Sellers have the necessary power and right to sell,
assign, transfer, convey and deliver the Purchased Assets to Buyer. Except as
set forth in Section 3.16(b) of
Sellers’ Disclosure Letter, following the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements and the execution
of the instruments of transfer contemplated by this Agreement and the Ancillary
Agreements, Buyer will own, with good, valid and marketable title, or lease,
under valid and subsisting leases, or otherwise acquire the interests of
Sellers and their Subsidiaries in the Purchased Assets, free and clear of any
Liens without any increase in rentals, royalties, or license or other fees
imposed on Buyer as a result of, or arising from, the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements.

 30
 

 

(c)           Section 3.16(c) of
Sellers’ Disclosure Letter lists each material item of equipment with a value
of $50,000 or more owned or leased by Sellers or any of their respective
Subsidiaries and used primarily in connection with the Business.

(d)           At
all times since the Balance Sheet Date, Sellers or their Subsidiaries have
caused the Purchased Assets to be maintained in accordance with good business
practice, and all the Purchased Assets are in good operating condition and
repair, subject to normal wear and tear.

3.17         Intellectual
Property.

(a)           Section 3.17(a) of Sellers’ Disclosure Letter
lists all rights to Sellers’ Intellectual Property, including but not limited
to, Registered Intellectual Property Rights owned by, filed in the name of, or
applied for, by Sellers or any of their Subsidiaries (the “Sellers’ Registered Intellectual Property
Rights”) and lists any proceedings or actions before any court,
tribunal (including the United States Patent and Trademark Office (the “PTO”) or equivalent authority
anywhere in the world) related to Sellers’ Intellectual Property. Other than
the Sellers’ Intellectual Property listed in Section 3.17(a) of
Sellers’ Disclosure Letter, (i) no provisional applications,
nonprovisional applications, substitutions, extensions, reissues,
reexaminations, renewals, divisions, continuations, continuations-in-part,
parents or other related applications have been filed or issued with respect to
Technology used in and/or necessary to the conduct of the business of Sellers
as currently conducted, and, to the Knowledge of Sellers, as currently planned
or contemplated to be conducted by, and (ii) no counterpart applications
of the Sellers’ Intellectual Property listed have been filed or issued in any
country.

(b)           Except to the extent that would not reasonably be expected
to result in a Sellers’ Material Adverse Effect, each item of Sellers’
Registered Intellectual Property Rights are valid and subsisting, and all
necessary registration, maintenance and renewal fees in connection with Sellers’
Registered Intellectual Property Rights have been paid and all necessary
documents and certificates in connection with Sellers’ Registered Intellectual
Property Rights have been filed with the relevant patent, copyright, trademark
or other authorities in the United States or foreign jurisdictions, as the case
may be, for the purposes of maintaining such Registered Intellectual Property
Rights. Except as set forth on Section 3.17(b) of the Sellers’
Disclosure Letter, there are no actions that must be taken by Sellers or any of
their Subsidiaries within one hundred twenty (120) days of the Closing Date,
including the payment of any registration, maintenance or renewal fees or the
filing of any responses to PTO office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Registered Intellectual Property Rights. Sellers own
all right, title and interest in and to, or have the valid right or license to,
Sellers’ Intellectual Property free and clear of all encumbrances. In each case
in which Sellers or any of their Subsidiaries have acquired any Technology or
Intellectual Property Right from any person, Sellers or such Subsidiary have
obtained a valid and enforceable assignment or license sufficient to transfer
to Buyer such rights in such Technology and Intellectual Property Rights
(including the right to seek past and future damages with respect thereto) as
are necessary or useful for the conduct of the Business as currently conducted.
To the maximum extent provided for by, and in accordance with, applicable laws
and regulations, Sellers and each of their Subsidiaries have recorded each such
assignment of a Registered Intellectual Property Right assigned to Sellers with
the relevant 

 31
 

 

Governmental Body, including the PTO, the U.S.
Copyright Office, or their respective equivalents in any relevant foreign
jurisdiction, as the case may be. Except as set forth on Section 3.17(b) of
the Sellers’ Disclosure Letter, Sellers have not claimed a particular status,
including “Small Business Status,” in the application for any Intellectual
Property Rights, which claim of status was at the time made, or which has since
become, inaccurate or false or that will no longer be true and accurate as a
result of the Closing.

(c)           Sellers have no Knowledge of any facts or circumstances
that would render Sellers’ Intellectual Property invalid or unenforceable.
Without limiting the foregoing, Sellers and each of their Subsidiaries know of
no information, materials, facts, or circumstances, including any information
or fact that would constitute prior art, that would render any of Sellers’
Intellectual Property invalid or unenforceable, or would adversely effect any
pending application for Sellers’ Registered Intellectual Property Right and
neither Sellers nor any of their Subsidiaries have misrepresented, or failed to
disclose, and have no Knowledge of any misrepresentation or failure to
disclose, any fact or circumstances in any application for Sellers’ Registered
Intellectual Property Right that would constitute fraud or a misrepresentation
with respect to such application or that would otherwise affect the validity or
enforceability of Sellers’ Registered Intellectual Property Right. To Sellers’
Knowledge, there is no unauthorized use, disclosure, infringement, or
misappropriation, or notice of invalidity or unenforceability, of any Sellers’
Intellectual Property, by any third party, including for example any employee
or former employee of the Sellers. The Sellers have not sought or received any opinion of counsel, oral or
written, regarding any intellectual property right of a third party. To Sellers’
Knowledge, there is no substantial basis for a claim that Sellers, in the
operation of the business of the Sellers, are infringing or have infringed on
or misappropriated any intellectual property right of any third party.

(d)           Each item of Sellers’ Intellectual Property is free and
clear of any Liens (1) except as set forth in Section 3.17(d) of
the Sellers’ Disclosure Letter and (2) except for non-exclusive licenses
granted to end-user customers in the Ordinary Course of Business. Except as set
forth in Section 3.17(d) of the Sellers’ Disclosure Letter, to
Sellers’ Knowledge, Sellers are the exclusive owner or exclusive licensee of
all Sellers’ Intellectual Property. Without limiting the foregoing:  (i) Sellers and each of their
Subsidiaries are the exclusive owner of all Trademarks used in connection with
the operation or conduct of the business of Sellers, including the sale,
licensing, distribution or provision of any products or services by Sellers; (ii) Sellers
and each of their Subsidiaries own exclusively, and has good title to, all
Copyrights that are products of Sellers or which Sellers otherwise purports to
own; and (iii) to the extent that any Patents would otherwise be infringed
by any product or services of Sellers, such Patents constitute Sellers’
Intellectual Property.

(e)           Except as set forth in Section 3.17(e) of the
Sellers’ Disclosure Letter, all of Sellers’ Intellectual Property will be fully
transferable, alienable or licensable by Buyer without restriction and without
payment of any kind to any third party. The Sellers have not transferred any
portion of ownership of any Sellers’ Intellectual Property to any third party
or knowingly permitted any Sellers’ Intellectual Property to enter the public
domain or, with respect to any Sellers’ Intellectual Property for which any of
the Sellers has submitted an application or obtained a registration, to lapse
(other than (i) through the expiration of a registered Sellers’
Intellectual Property at the end of its maximum statutory term or (ii) applications
abandoned and 

 32
 

 

listed in Section 3.17(e) of the Sellers’
Disclosure Letter). After the Closing, all Sellers’ Intellectual Property will
be fully transferable, alienable or licensable by Buyer without restriction and
without payment of any kind to any third party.

(f)            Except
as set forth in Section 3.17(f) of the Sellers’ Disclosure Letter, to
the extent that Sellers’ Technology has been developed or created by a third
party for Sellers, Sellers have a written agreement with such third party with
respect thereto and Sellers thereby either (i) have obtained ownership of,
and are the exclusive owner of, or (ii) have obtained a license
(sufficient for the conduct of its business as currently conducted and as
proposed to be conducted) to all such third party’s Intellectual Property
Rights in such Technology, to the fullest extent it is legally possible to do
so. To Sellers’ Knowledge, to the extent that any third party intellectual
property is incorporated into, integrated or bundled with, or used by Sellers
in the development, manufacture or compilation of any product under Sellers’
Intellectual Property, or any of Sellers’ Intellectual Property relates to any
development by Sellers that involves the derivation or use of specifications or
technical information derived from the products of third parties, Sellers have
a written agreement with such third party with respect thereto pursuant to
which Sellers either have obtained complete, unencumbered and unrestricted
ownership of, and are the exclusive owners of, or have obtained perpetual,
nonterminable licenses sufficient for the conduct of its business as currently
conducted by Sellers and as presently proposed to be conducted by Sellers to
all such third party intellectual property.

(g)           Except
as set forth on Section 3.17(g) of the Sellers’ Disclosure Letter and
with exception of “shrink-wrap” or similar widely available commercial end-user
licenses, all Technology used in or necessary to the conduct of Sellers and
each of their Subsidiaries’ business as presently conducted or currently
contemplated to be conducted by Sellers were written and created solely by
either (i) employees of Sellers acting within the scope of their
employment who have assigned all of their rights in such Technology, including
Intellectual Property Rights therein, to Sellers or (ii) by third parties
who have validly and irrevocably assigned all of their rights, including
Intellectual Property Rights therein, to Sellers, and no third party owns or
has any rights to any Sellers’ Intellectual Property.

(h)           Except
as set forth in Section 3.17(h) of the Sellers’ Disclosure Letter,
all employees and consultants of Sellers and their Subsidiaries have entered
into a valid and binding written agreement with Sellers sufficient to vest
title in Sellers of all Technology and Intellectual Property Rights created by
such employee or consultant in the scope of his or her services or employment
for Sellers. No current or former employee, consultant or independent
contractor of Sellers has any right, license, claim or interest whatsoever in,
to or under any Sellers’ Intellectual Property. To Sellers’ Knowledge, no
current or former employee, consultant or independent contractor of
Sellers:  (i) is in violation of any
term or covenant of any Contract relating to employment, invention disclosure,
invention assignment, nondisclosure or noncompetition or any other Contract
with any other party by virtue of such employee, consultant or independent
contractor being employed by, or performing services for, Sellers or using
trade secrets or proprietary information of others without permission; or (ii) has
developed any technology, software or other copyrightable, patentable or
otherwise proprietary work for Sellers that is subject to any agreement under
which such employee, consultant or independent contractor has assigned or
otherwise granted, or is obligated to assign or otherwise grant, to any
third party any 

 33
 

 

rights (including Sellers’ Intellectual Property) in
or to such technology, software or other copyrightable, patentable or otherwise
proprietary work.

(i)            Sellers have taken all steps that are reasonably required
to protect Sellers’ rights in confidential information and trade secrets of
Sellers or provided by any other person to Sellers and to protect and preserve
the confidentiality of all confidential or nonpublic information included in
the Sellers’ Intellectual Property (“Confidential
IP Information”). Without limiting the foregoing, Sellers and
each of their Subsidiaries have, and enforce, a policy requiring each employee,
consultant and contractor to execute a proprietary information, confidentiality
and assignment agreement, substantially in the form(s) attached as Section 3.17(i) of
the Sellers’ Disclosure Letter, and all current and former employees,
consultants and contractors of Sellers and their Subsidiaries have executed
such an agreement. To Sellers’ Knowledge, all use, disclosure or appropriation
of Confidential IP Information owned by Sellers by or to a third party has been
pursuant to the terms of a written agreement between Sellers and such third
party. To Sellers’ Knowledge, all use, disclosure or appropriation of
Confidential IP Information not owned by Sellers has been pursuant to the terms
of a written agreement or other legal binding arrangement between Sellers and
the owner of such Confidential IP Information, or is otherwise lawful.

(j)            Except as set forth on Section 3.17(j) of the
Sellers’ Disclosure Letter, to Sellers’ Knowledge, no Person who has licensed
Technology or Intellectual Property Rights to Sellers has ownership rights or
license rights to improvements made by Sellers in such Technology or
Intellectual Property Rights.

(k)           Except as set forth in Section 3.17(k) of the
Sellers’ Disclosure Letter, neither Sellers nor any of their Subsidiaries have
transferred ownership of, granted any exclusive license of or right to use, or
authorized the retention of any exclusive rights to use or joint ownership of,
any Sellers’ Intellectual Property to any other Person.

(l)            Other than inbound “shrink-wrap” and similar publicly
available commercial binary code end-user licenses and outbound “shrink-wrap”
licenses substantially in the form set forth on Section 3.17(l)(A) of
the Sellers’ Disclosure Letter, the Contracts listed in Section 3.17(l)(B) of
the Sellers’ Disclosure Letter lists all material Contracts to which Sellers
are parties with respect to any Technology or Intellectual Property Rights. Except
as set forth in Section 3.17(l)(C) of the Sellers’ Disclosure Letter,
neither Sellers nor any of their Subsidiaries are in breach of nor has any of
them failed to perform under, any of the foregoing Contracts, and, to Sellers’
Knowledge, no other party to any such Contract is in breach thereof or has
failed to perform thereunder. Sellers do not have an explicit or implied legal
obligation, absolute or contingent, to any Person to sell, transfer or assign
any of the Sellers’ Intellectual Property. Sellers have not made any assignment
or granted any license, and are not under any obligation to grant any such
license or rights, including any or all of the Sellers’ Intellectual Property,
to any Person, under any of the Sellers’ Intellectual Property. None of the
licenses, sublicenses, assignments or other Contracts listed in Section 3.17(l)(B) of
the Sellers’ Disclosure Letter grants, or sets forth or creates an obligation
to grant, any third party exclusive rights in, to or under any Sellers’
Intellectual Property, or grants, or sets forth or creates an obligation to
grant, any third party the right to sublicense any Sellers’ Intellectual
Property.

 34
 

 

 

(m)          Sellers
are not and shall not be as a result of the execution or effectiveness of this
Agreement, or the performance of its obligations under this Agreement, in
material breach of any Contract to which Sellers are a party relating to any
Sellers’ Intellectual Property (the “Intellectual
Property Rights Agreements”). The consummation of the
transactions contemplated by this Agreement will neither result in the
modification, cancellation, termination, suspension of, or acceleration of any
payments with respect to the Intellectual Property Rights Agreements, nor give
any non-Sellers party to any Intellectual Property Rights Agreement the right
to do any of the foregoing. Following the Closing, Buyer will be permitted to
exercise all of the rights of the Sellers under the Intellectual Property
Rights Agreements to the same extent Sellers would have been able had the
transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments that Sellers would otherwise be required to pay. Neither
the execution or effectiveness of this Agreement nor the performance of the
obligations of the Sellers under this Agreement will cause the forfeiture or
termination of, or give rise to a right of forfeiture or termination of any
Sellers’ Intellectual Property, or impair the right of Buyer to use, possess,
sell or license any Sellers’ Intellectual Property or portion thereof.

(n)           Section 3.17(n) of
the Sellers’ Disclosure Letter lists all material contracts, licenses and
agreements between Sellers and any other person wherein or whereby Sellers or
any of their Subsidiaries have agreed to, or assumed, any obligation or duty to
warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or liability or provide a right of rescission with respect
to the infringement or misappropriation by Sellers or any of their Subsidiaries
or such other Person of the Intellectual Property Rights of any Person other
than Sellers or any of their Subsidiaries.

(o)           Except
as set forth in Section 3.17(o) of the Sellers’ Disclosure Letter, to
the Sellers’ Knowledge, there are no contracts, licenses or agreements between
Sellers or any of their Subsidiaries and any other person with respect to
Sellers’ Intellectual Property under which there is any dispute regarding the scope
of such agreement, or performance under such agreement, including with respect
to any payments to be made or received by Sellers or any of their Subsidiaries
thereunder.

(p)           Except
as otherwise set forth in Section 3.17(p) of the Sellers’ Disclosure
Letter, to Sellers’ Knowledge, the operation of the business of Sellers as
currently conducted or as contemplated to be conducted by Sellers, including
but not limited to the design, development, use, import, branding, advertising,
promotion, marketing, manufacture and sale of the products, technology or
services (including products, technology or services currently under
development) of Sellers do not and will not when conducted by Buyer in
substantially the same manner following the Closing, infringe or misappropriate
any Intellectual Property Right of any Person, violate any right of any Person
(including any right to privacy or publicity) or constitute unfair competition
or trade practices under the laws of any jurisdiction, and Sellers have not
received notice from any Person claiming that such operation or any act,
product, technology or service (including products, technology or services
currently under development) of Sellers infringe or misappropriate any
Intellectual Property Right of any Person or constitutes unfair competition or
trade practices under the laws of any jurisdiction (nor do Sellers have any
Knowledge of any basis therefor).

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(q)           To
Sellers’ Knowledge, no Person is infringing or misappropriating Sellers’
Intellectual Property. Except as otherwise set forth in Section 3.17(q) of
the Sellers’ Disclosure Letter, Sellers have not obtained a legal opinion
analyzing or assessing the validity or scope of any Sellers’ Intellectual
Property. To Sellers’ Knowledge or reasonably suspected by Sellers, there have
been no instances of infringement and/or misappropriation of Sellers’
Intellectual Property. Sellers have not brought any action, suit or proceeding
for infringement or misappropriation of, or declaration regarding, any Sellers’
Intellectual Property, breach of any Intellectual Property Rights Agreement, or
violation of any covenant not to compete.

(r)            No
Sellers’ Intellectual Property or service of Sellers is subject to any
proceeding or outstanding decree, order, judgment or settlement agreement or
stipulation that restricts in any manner the use, transfer or licensing thereof
by Sellers or may affect the validity, use or enforceability of Sellers’
Intellectual Property.

(s)           With
respect to Sellers’ Intellectual Property, except as set forth in Section 3.17(s) of
the Sellers’ Disclosure Letter no claim has been asserted or suggested, no
threat or inquiry has been made, no notification has been received regarding
third party intellectual property rights, including an offer to license or
grant any other rights or immunities under any Intellectual Property Rights of
any third party, and no litigation, arbitration or other adversary proceeding
is pending, or, to Sellers’ Knowledge, is threatened. To Sellers’ Knowledge,
none of the Sellers’ Intellectual Property is subject to any pending or
threatened outstanding order, contract, stipulation, proceeding, or
notification, including without limitation any pending interference,
opposition, cancellation, reissue, reexamination, or other challenge or adversarial
proceeding, restricting in any manner the use, transfer, or licensing by
Sellers of any Intellectual Property Rights, or which may affect the validity,
use or enforceability of any Sellers’ Intellectual Property. No freedom to
operate, patent clearance, right to market or right to use studies or analyses
have been performed by or on behalf of Sellers with respect to the Intellectual
Property Rights of third parties.

(t)            Except
as set forth on Section 3.17(t) of the Sellers’ Disclosure Letter,
Sellers’ Intellectual Property constitutes all the Technology and Intellectual
Property Rights used in and/or necessary to the conduct of the business of
Sellers as currently conducted, and, to the Knowledge of Sellers, as currently
planned or contemplated to be conducted by Sellers, including, without
limitation, the design, development, manufacture, use, import and sale of
products, technology and performance of services (including products,
technology or services currently under development).

(u)           Neither
this Agreement nor the transactions contemplated by this Agreement, including
the assignment to Buyer, by operation of law or otherwise, of any Contracts to
which Sellers are a party, will result in (i) Buyer’s granting to any
third party any right to or with respect to any Technology or Intellectual
Property Right owned by, or licensed to, either of them, (ii) Buyer’s
being bound by, or subject to, any non-compete or other restriction on the
operation or scope of their respective businesses, or (iii) Buyer’s being
obligated to pay any royalties or other amounts to any third party in excess of
those payable by Seller, prior to the Closing.

 36
 

 

(v)           Except
as set forth in Section 3.17(v) of the Sellers’ Disclosure Letter,
there are no royalties, fees, honoraria or other payments payable by Sellers to
person or entity by reason of the ownership, development, use, license, sale or
disposition of Sellers’ Intellectual Property, other than salaries and sales
commissions paid to employees and sales agents in the Ordinary Course of
Business.

3.18         Contracts.   Section 3.18
of the Sellers’ Disclosure Letter lists the following Contracts under which
Sellers or any of their respective Subsidiaries are obligated or by which
Sellers or any of their assets are bound (other than Contracts with Buyer or
Clarient):

(a)           any Contract (or group of related Contracts) that (i) involves
the future payment of greater than $50,000 per annum or which extends for more
than one (1) year, (ii) involves any payment or obligation to any
Affiliate of Sellers or any of their Subsidiaries other than in the Ordinary
Course of Business, (iii) involves the sale, lease, license or other
disposition of any material assets (including intangible property) or (iv) involves
any license of Sellers’ Intellectual Property (other than in connection with
sales of products and services in the Ordinary Course of Business);

(b)           any Contract under which the consequences of a default or
termination would reasonably be expected to have a Sellers’ Material Adverse
Effect;

(c)           any Contract (or group of related Contracts) for the
purchase or sale of commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of
which will involve consideration in excess of $50,000;

(d)           any Contract concerning a partnership or joint venture;

(e)           any Contract (or group of related Contracts) under which
Sellers have created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or any capitalized lease obligation in excess of $50,000 or
under which a Lien has been imposed on any of the Purchased Assets;

(f)            any Contract to which Sellers or any of their
Subsidiaries are a party or otherwise bound and which contains covenants of
Sellers or any Subsidiary not to compete or engage in the Business, in any
geographic area or with any Person or covenants of any other person not to
compete with Sellers or any of their Subsidiaries or engage in the Business;

(g)           any executory Contract under which Sellers or any of their
Subsidiaries have advanced or loaned any amount to any of their respective
Employees;

(h)           any executory Contract pursuant to which Sellers or any of
their Subsidiaries are obligated to provide maintenance, service, support or training for its
services or products, together with the amounts of deferred revenue associated
with the executory support and service obligations under such Contracts, all of
which has been accrued in the Current Balance Sheet in accordance with GAAP,
consistently applied or has arisen since the date of the Current Balance Sheet in
the Ordinary Course of Business;

(i)            any revenue or profit participation Contract;

 37
 

 

 

(j)            any
license or Contract under which Sellers or any of their respective Subsidiaries
(i) have granted to any Person rights with respect to any Sellers’
Intellectual Property (other than end user licenses in connection with sales of
products and services in the Ordinary Course of Business), (ii) have
agreed to encumber, not assert, transfer or sell rights in or with respect to
any Sellers’ Intellectual Property, (iii) are parties or otherwise bound
and which provides for the development of any Technology or Sellers’
Intellectual Property, independently or jointly or (iv) are parties or
otherwise bound and pursuant to which Sellers or any of their respective
Subsidiaries acquired or are authorized to use any Intellectual Property Rights
of any current or former employee or other Person;

(k)           any
Contract for the purchase or sale of materials, supplies, equipment,
merchandise or services that contains an escalation clause or that obligates
Sellers or any of their Subsidiaries to purchase all or substantially all of
its requirements of a particular product or service from a supplier or to make
periodic minimum purchases of a particular product or service from a supplier,
which is not terminable on not more than 30 days notice (without penalty or
premium);

(l)            any
Contract with customers or suppliers for the sharing of fees, the rebating of
charges or other similar arrangements;

(m)          any
Contract obligating Sellers or any of their Subsidiaries to deliver maintenance
services or future product enhancements (in each case other than agreements
with end users in connection with sales of products and services in the
Ordinary Course of Business) or containing a “most favored nation” pricing
clause;

(n)           any
Contract obligating Sellers to provide source code to any third party for
Sellers’ Intellectual Property;

(o)           any
Contract granting exclusive distribution rights with respect to any part of the
Business;

(p)           any
Contract relating to the acquisition by Sellers of any operating business or
the capital stock of any other person;

(q)           any
Contract requiring the payment to any Person of a brokerage or sales commission
or a finder’s or referral fee (other than to Burnham Hill Partners and arrangements
to pay commissions or fees to employees in the Ordinary Course of Business);

(r)            any
Contract material to Sellers for which performance has not been completed that
is not listed in clauses (a) through (q) and not made in the Ordinary
Course of Business.

Sellers have delivered to Buyer a correct and complete
copy of each written Contract (as amended to date) listed in Section 3.18
of the Sellers’ Disclosure Letter and a written summary setting forth the terms
and conditions of each oral Contract referred to in Section 3.18 of the
Sellers’ Disclosure Letter. With respect to each such Contract that constitutes
an Assumed Contract:  (A) the
agreement, with respect to Sellers or any of their Subsidiaries and, to Sellers’
Knowledge, all other parties thereto, is legal, valid, binding, enforceable,
and in full force and 

 38
 

 

effect in all respects; (B) none of Sellers, any
of their respective Subsidiaries nor, to Sellers’ Knowledge, any other party is
in material breach or default, and no event has occurred, which with notice or
lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the Contract; and (C) neither
Sellers nor any of their Subsidiaries have received notice that any party has
repudiated any provision of the Contract. Except as set forth on Section 3.6
of the Sellers’ Disclosure Letter, Sellers have obtained or will obtain prior
to the Closing Date, all necessary consents, waivers and approvals of parties
to any such Contract as are required thereunder in connection with the
transactions contemplated by this Agreement or, with respect to any Assumed
Contract, necessary for such Assumed Contract to remain in effect without
modification after the Closing. Except as set forth on Section 3.6 or Section 3.18
of the Sellers’ Disclosure Letter, following the Closing, Buyer will be
permitted to exercise all of Sellers’ and any of its Subsidiaries’ rights under
the Assumed Contracts to the same extent Sellers would have been able to had
the transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which Sellers or such Subsidiary would otherwise be
required to pay.

3.19         Commercialization
of Product.   To Sellers’ Knowledge, there are no facts or
circumstances that, when taken together with all other relevant facts and
circumstances known to Sellers, management of the Company has determined would
reasonably be expected to adversely affect the commercialization of any product
of the Business in a manner that would reasonably be expected to result in a
Seller Material Adverse Effect.

3.20         Insurance.   Sellers
have delivered to Buyer copies of each insurance policy (including policies
providing property, casualty, liability, and workers’ compensation coverage and
bond and surety arrangements) with respect to which Sellers or any of their
Subsidiaries are a party and which relate to the Purchased Assets, any employee
of Sellers or the Business. With respect to each such insurance policy, except
to the extent such failure to be true would not reasonably be expected to have
a Sellers’ Material Adverse Effect:  (A) the
policy is legal, valid, binding, enforceable, and in full force and effect (and
there has been no notice of cancellation or nonrenewal of the policy received);
(B) neither Sellers nor any of their Subsidiaries are in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default by Sellers, or permit termination,
modification, or acceleration, under the policy; (C) neither Sellers nor
any of their Subsidiaries have received notice that any party to the policy has
repudiated any provision thereof; and (D) there has been no failure by
Sellers or any of their Subsidiaries to give any notice or present any claim
under the policy in due and timely fashion. There is no claim by Sellers or any
of their Subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed or that Sellers or any of
their Subsidiaries has a reason to believe will be denied or disputed by the
underwriters of such policies or bonds. In addition, there is no pending claim
of which its total value (inclusive of defense expenses) will exceed the policy
limits. All premiums due and payable under all such policies and bonds have
been paid (or if installment payments are due, will be paid if incurred prior
to the Closing Date) and Sellers and any of their Subsidiaries are otherwise in
material compliance with the terms of such policies and bonds. Section 3.20
of the Sellers’ Disclosure Letter describes any material self-insurance
arrangements presently maintained or contributed to by Sellers or any of their
Subsidiaries.

 39

 

 

3.21         Litigation.   Section 3.21
of the Sellers’ Disclosure Letter sets forth each instance as of the date
hereof in which Sellers or any of their Subsidiaries, any of their respective
assets or any of the officers or directors (in a manner related to the Business)
(i) are subject to any outstanding injunction, judgment, order, decree,
ruling, or charge or (ii) are or have been, or, to the Sellers’ Knowledge,
are threatened to be made a party, to any action, suit, claim, proceeding,
hearing, arbitration, or investigation of, in, or before any Governmental Body
or before any arbitrator, which in any case would reasonably be expected to
have a Sellers’ Material Adverse Effect. None of the matters set forth in Section 3.21
of Sellers’ Disclosure Letter has had a Sellers’ Material Adverse Effect or
would reasonably be expected to affect the legality, validity or enforceability
of this Agreement, any Ancillary Agreement or the consummation of the
transactions contemplated hereby or thereby.

3.22         Product
Warranty, Product Liability and Recalls.   The technologies or products
licensed, sold, leased, and delivered and all services provided by Sellers or
any of their Subsidiaries have conformed in all material respects with all
applicable contractual commitments and all express and implied warranties, and
neither Sellers or any of their Subsidiaries have any liability (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due) for replacement or modification thereof or other damages
(including for product liability) in connection therewith, other than in the
Ordinary Course of Business in an aggregate amount not exceeding $25,000. Except
for (i) the warranties and indemnities contained in those Contracts set
forth in the Sellers’ Disclosure Letter, (ii) warranties to end users in
connection with sales of products and services in the Ordinary Course of
Business which are substantially in the form previously provided to Buyer, and (iii) warranties
implied by law, neither Sellers nor any of their Subsidiaries have given any
warranties or indemnities relating to products or Technology sold or services
rendered by the Sellers or any of their Subsidiaries. Except as set forth on Section 3.22
of Sellers’ Disclosure Letter, neither Sellers nor any of their Subsidiaries
have, during the past five (5) years, (x) recalled any products
produced by Sellers or any of their Subsidiaries, nor (y) received any
warranty claims that individually exceed $25,000, or in the aggregate exceed
$250,000, in any calendar year.

3.23         Employees.

(a)           To
Sellers’ Knowledge as of the date hereof, no Hired Employee plans to terminate
employment with Sellers or any of their Subsidiaries. None of Sellers nor any of
their Subsidiaries is or ever has been a party to or bound by any collective
bargaining or similar agreement, nor has any of them experienced any strike,
slowdown or work stoppage, and to the Knowledge of Sellers, no such work
disruption is threatened. To Sellers’ Knowledge as of the date hereof, there is
no organizational effort presently being made or threatened by or on behalf of
any labor union or similar organization and no such organization represents or
purports to represent any employees of Sellers or any of their Subsidiaries.

3.24         Employee
Matters and Benefit Plans.

(a)           Plans.   Section 3.24
of the Sellers’ Disclosure Letter contains an accurate and complete list of
each Sellers’ Employee Plan. None of Sellers nor any of their Subsidiaries has
any commitment to establish, adopt or enter into any new Sellers’ Employee
Plan, or to 

 40
 

 

modify any existing Sellers’ Employee Plan in any
material respect prior to the Closing (except to the extent required by law or
to conform any Sellers’ Employee Plan to the requirements of any applicable
law). With respect to each Sellers’ Employee Plan, the Company has made
available to Buyer complete copies of (i) each Sellers’ Employee Plan (or,
if not written, a written summary of its material terms) and all amendments
thereto, (ii) all summary plan descriptions including any summary of
material modifications, and (iii) all filings made with any governmental
entities, including but not limited any filings under the Employee Plans
Compliance Resolution System or the  Department
of Labor Delinquent Filer Program concerning any issue or matter that could
reasonably be expected to result in any material liability.

(b)           Employee Plan
Compliance.   Except as set forth in Section 3.24 of the Sellers’
Disclosure Letter, (i) there are no actions, suits or claims pending, or,
to the Knowledge of Sellers, threatened or reasonably anticipated (other than
routine claims for benefits) against any Sellers’ Employee Plan or against the
assets of Sellers’ Employee Plan, and (ii) there are no audits, inquiries
or proceedings pending or, to the Knowledge of Sellers, threatened by the IRS
or DOL with respect to any Sellers’ Employee Plan, which in either case  reasonably could be expected to result in
material liability to any of Sellers or their Subsidiaries.

(c)           Pension Plans.   Neither
Seller nor any ERISA Affiliate sponsors, maintains, contributes to or has an
obligation to contribute to, or has, during the past six years, sponsored,
maintained, contributed to or had an obligation to contribute to any Pension
Plan subject to Title IV of ERISA or Section 412 of the Code, any
Multiemployer Plan or any multiple employer plan (within the meaning of Section 413
of the Code).

(d)            Effect of Transactions.   Except
as set forth on Section 3.24 of the Sellers’ Disclosure Letter, with
respect to the Hired Employees, neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, either
alone or in combination with another event (whether contingent or otherwise)
will (i) entitle any Hired Employee to any material payment; (ii) materially
increase the amount of compensation or benefits due to any Hired Employee; (iii) accelerate
the vesting, funding or time of payment of any compensation, equity award or
other benefit to any Hired Employee; or (iv) result in any “parachute
payment” under Section 280G of the Code.

(e)             No
Post-Employment Obligations.   Neither Sellers nor any of their
Subsidiaries has any obligation to provide health, accident, disability, life
insurance or death benefits with respect to any current or former Employees, or
the spouses, dependents or beneficiaries of any current or former Employees,
beyond the termination of employment or service of such Employee, except as may
be required by COBRA or other applicable law (the “Continuation Coverage
Requirements”).

(f)            COBRA Compliance.   All
group health plans of the Sellers and their Subsidiaries have been operated in
compliance with all applicable Continuation Coverage Requirements in all
material respects.

(g)           International
Employee Plans.   None of Sellers nor any of their Subsidiaries maintains,
sponsors, participates in, contributes to or has any obligation to 

 41
 

 

contribute to any International Employee Plan, or has
incurred any material liability with respect to any such plan that has not been
satisfied in full.

3.25         Environment,
Health, and Safety.

(a)           Condition
of Property.   As of the Closing, except in compliance with
Environmental Laws in a manner that could not reasonably be expected to subject
Buyer or Clarient to liability, no Hazardous Materials are present on any
Business Facility currently owned, operated, occupied, controlled or leased by
Sellers or any Subsidiary.

(b)           Hazardous
Materials Activities.   Sellers and each of their Subsidiaries have
conducted all Hazardous Material Activities relating to the Business in
compliance in all material respects with all applicable Environmental Laws.
Except as set forth in Section 3.25(b) of the Sellers’ Disclosure
Letter, the Hazardous Materials Activities of Sellers and each of their
Subsidiaries prior to the Closing have not resulted in the exposure of any
person to a Hazardous Material in a manner which has caused or could reasonably
be expected to cause a significant adverse health effect to any such person.

(c)           Permits.   Section 3.25(c) of
Sellers’ Disclosure Letter accurately describes all of the Environmental
Permits currently held by Sellers and their Subsidiaries and relating to its
business and the listed Environmental Permits are all of the Environmental
Permits necessary for the continued conduct of any Hazardous Material Activity
of Sellers and each of their Subsidiaries relating to its business as such
activities are currently being conducted. All such Environmental Permits are
valid and in full force and effect. Sellers and each of their Subsidiaries have
complied in all material respects with all covenants and conditions of any
Environmental Permit which is or has been in force with respect to its
Hazardous Materials Activities. To Sellers’ Knowledge, no circumstances exist
which could cause any Environmental Permit to be revoked, modified, or rendered
non-renewable upon payment of the permit fee.

(d)           Environmental
Litigation.   Except as set forth in Section 3.25(d) of the
Sellers’ Disclosure Letter, no action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending, or to Sellers’
Knowledge, threatened, concerning any Environmental Permit or any Hazardous
Materials Activity of Sellers or any of their Subsidiaries relating to its
business, or any Business Facility.

(e)           Hazardous
Material Disposal.   No action, proceeding, liability or claim is
pending or, to Sellers’ Knowledge, is threatened against Sellers or any of
their Subsidiaries with respect to any transfer or release of Hazardous
Materials relating to the Business to a Disposal Site which could reasonably be
expected to subject Sellers or any of their Subsidiaries to material liability.

(f)            Environmental
Liabilities.   Sellers are not aware of any fact or circumstance, which
could result in any environmental liability which would reasonably be expected
to result in a Sellers’ Material Adverse Effect.

(g)           Reports
and Records.   Sellers have delivered to Buyer or made available for
inspection by Buyer and their agents, representatives and employees all records
in Sellers’ and its Subsidiaries’ possession concerning the Hazardous Materials
Activities of Sellers or any 

 42
 

 

of their Subsidiaries relating to their respective
businesses and all environmental audits and environmental assessments of any
Business Facility in the possession of Sellers or any of their Subsidiaries. Sellers
have complied with all environmental disclosure obligations imposed by
applicable law with respect to this transaction.

3.26         Certain
Business Relationships With Sellers.   To Sellers’ Knowledge, no
director, officer or holder of greater than 10% of the capital stock of
Sellers, nor any member of their immediate families, nor any Affiliate of any
of the foregoing, owns, directly or indirectly, or has an ownership interest (excluding
any direct or indirect ownership by a stockholder of Sellers of up to 5% of the
outstanding capital stock of a publicly traded entity) in (a) any business
(corporate or otherwise) which is a party to, or in any property which is the
subject of, any business arrangement or relationship of any kind with Sellers
or any of their Subsidiaries, or (b) any business (corporate or otherwise)
which conducts the same business as, or a business similar to, that conducted
by Sellers or any of their Subsidiaries.

3.27         No
Adverse Developments.   Since the Current Balance Sheet Date there is
no development that (i) has had or would reasonably be expected to have a
Sellers’ Material Adverse Effect, or (ii) would prevent Buyer from using
the Purchased Assets and conducting the Business of Sellers following the
Closing in the manner in which they are currently used or  was conducted by Sellers and their
Subsidiaries.

3.28         Foreign
Corrupt Practices Act.   Neither Seller nor any of their Subsidiaries (including
any of their officers, directors, agents, employees or other Person associated
with or acting on their behalf) has, directly or indirectly, taken any action
which would cause it to be in violation of the Foreign Corrupt Practices Act of
1977, as amended, or any rules or regulations thereunder, used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, made any unlawful payment to
foreign or domestic government officials or employees or made any bribe,
rebate, payoff, influence payment, kickback or other similar unlawful payment.

3.29         Fees.   Sellers
have no liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
other than to Burnham Hill Partners.

3.30         Complete
Copies of Materials.   To Sellers’ Knowledge, Sellers have delivered or
made available true and complete copies of each document (or summaries of same)
that has been requested by Buyer, or Buyer’s counsel.

3.31         Board
Approval.   The board of directors of each Seller has unanimously (i) approved
this Agreement and the transactions contemplated hereby, (ii) determined
that the transactions contemplated hereby are in the best interests of the
stockholders of each of Sellers and are on terms that are fair to such
stockholders, and (iii) subject to Section 5.4, recommended
that the stockholders of each Seller approve this Agreement and the
transactions contemplated hereby (the foregoing (i) — (iii) being
collectively referred to as the “Sellers’ Board
Recommendation”).

 43
 

 

3.32         Stockholder
Approval.   The only vote of holders of any class or series of the
capital stock or debt of Sellers necessary to approve the transactions
contemplated by this Agreement is the Stockholder Approval. Parent has approved
the transactions contemplated by this Agreement in its capacity as sole
stockholder of Trestle Sub.

3.33         Information.   None
of the information included or incorporated by reference in the Proxy Statement
will, at the date it is first mailed to Parent’s stockholders and at the time
of the Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading which is not corrected by any subsequent
amendment or supplement mailed to the stockholders of Parent not less than 10
days prior to the Stockholders Meeting or such shorter period as is permitted
by law. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. No representation is made by Sellers in this Section 3.33
with respect to statements made based on information supplied by Buyer in
writing specifically for inclusion or incorporation by reference in the Proxy
Statement.

3.34         No
Liquidation, Insolvency, Winding-Up.

(a)           As
of the date of this Agreement and as of the Closing Date, no judgment, order or
decree has been made, or petition presented, or resolution passed for the
winding- up or liquidation of the Sellers or their Subsidiaries or the
Business, and there is not outstanding:

(i)            any
petition or judgment, order or decree for the winding up of Sellers or their
Subsidiaries;

(ii)           any
appointment of a receiver over the whole or part of the undertaking of assets
of Sellers or their Subsidiaries;

(iii)          any
petition or order for administration of Sellers or their Subsidiaries;

(iv)          any
voluntary arrangement between Sellers and any of their creditors;

(v)           any
assignment for the benefit of the Sellers’ creditors or similar creditor
arrangement or remedy;

(vi)          any
voluntary petition, involuntary petition or order for relief with respect to
the Sellers under the Bankruptcy Code, 11 U.S.C. Section 101, et seq.;

(vii)         any
distress or execution or other process levied in respect of Sellers which
remains undischarged; and

(viii)        any
unfulfilled or unsatisfied judgment or court order against Sellers or their
Subsidiaries.

 44
 

 

(b)           Neither
Seller has been deemed unable to pay its debts as they come due within the
meaning of applicable law.

(c)           The
operations of Sellers have not been terminated.

(d)           Buyer
acknowledges and consents that following the Closing, Sellers may wind up,
liquidate or dissolve in accordance with applicable law.

3.35         Preferences.   To
Sellers’ Knowledge the following statements are, after giving effect to the
transactions contemplated hereby, true and correct:

(a)           The
aggregate value of all assets and properties of Sellers and their Subsidiaries,
at their respective then present fair saleable values, exceeds the amount of
all the debts and liabilities (including, without limitation, contingent,
subordinated, unmatured and unliquidated liabilities) of Sellers and their
Subsidiaries. Sellers understand that, in this context, “present fair saleable
value” means the amount which may be realized within a reasonable time through
a sale within such period by a capable and diligent businessperson from an
interested buyer who is willing to purchase under ordinary selling conditions. In
determining the present fair saleable value of Sellers’ and their Subsidiaries’
contingent liabilities (such as litigation, guarantees and pension plan
liabilities), Sellers have considered such liabilities that could possibly
become actual or matured liabilities.

(b)           The
consideration received by Sellers in connection with the transactions
contemplated hereby constitutes reasonably equivalent consideration for the
Purchased Assets. Immediately after giving effect to the transactions
contemplated by this Agreement, Sellers shall have adequate capital to carry on
and to perform their obligations under the Excluded Liabilities.

3.36         Assets.   The
Purchased Assets and the Excluded Assets constitute all the properties, assets
and rights forming a part of, used or held, and all such properties, assets and
rights as are adequate for, the conduct of the Business as currently conducted
and, with respect to contract rights, Sellers or their Subsidiaries are a party
to and enjoy the right to the benefits of all Assumed Contracts, all of which
properties, assets and rights constitute Purchased Assets except for the
Excluded Assets.

3.37         Disclosure.   Sellers
have delivered or made available to Buyer true, correct and complete copies of
all documents, including all amendments, supplements and modifications thereof
or waivers currently in effect thereunder, described in the Sellers’ Disclosure
Letter.

3.38         No
Limitation on Other Representation.   Except as otherwise expressly
provided in this Agreement, nothing in any representation or warranty in this
Agreement shall in any way limit or restrict the scope, applicability or
meaning of any other representation or warranty made by Sellers herein.

ARTICLE IV

REPRESENTATIONS
AND WARRANTIES OF BUYER

Buyer and Clarient, jointly and severally, hereby
represent and warrant to Sellers that the statements contained in this Article IV
are true and correct as of the date of this Agreement and 

 45
 

 

will be true and correct as of the Closing (as though
made at the Closing); provided, that
the representations and warranties made as of a specified date will be true and
correct as of such date.

4.1           Organization,
Qualification, and Corporate Power.   Buyer is a limited liability
company duly organized, validly existing, and in good standing under the laws
of the State of Delaware. Buyer is duly qualified or authorized to conduct
business and is in good standing under the laws of the State of California. Clarient
is a corporation duly organized and in good standing under the laws of the
State of Delaware.

4.2           Authorization.   Each
of Buyer and Clarient has full power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is a party, and to
consummate the transactions contemplated hereunder and to perform its
obligations hereunder, and no other proceedings on the part of Buyer are
necessary to authorize the execution, delivery and performance of this
Agreement and the Ancillary Agreements to which it is a party. This Agreement
and the Ancillary Agreements to which Buyer is a party and the transactions
contemplated hereby and thereby have been approved by Clarient, the Managing
Member of Buyer. The consummation of the transactions contemplated hereby does
not require the approval or consent of the stockholders of Clarient. This
Agreement and the Ancillary Agreements to which Buyer is a party constitute the
valid and legally binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms and conditions, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive
relief or other equitable remedies.

4.3           No
Conflicts.   Neither the execution and the delivery of this Agreement
nor the consummation of the transactions contemplated hereby, will (A) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any Governmental Body to which
Buyer or Clarient is subject, (B) violate or conflict with any provision
of the organizational documents of Buyer or Clarient, or (C) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under, any agreement, contract, lease,
license, instrument, or other arrangement to which Buyer is a party or by which
it is bound or to which its assets are subject, other than any of the foregoing
which would not in the aggregate have a Buyer Material Adverse Effect.

4.4           Consents.   No
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body or any third party, including
a party to any agreement with Buyer or Clarient, is required by or with respect
to Buyer or Clarient in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and (ii) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings in
which the failure of which to obtain would not in the aggregate have a Buyer
Material Adverse Effect.

 46
 

 

4.5           Brokers’
Fees.   Neither Buyer nor Clarient have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.

4.6           Availability
of Funds.   Buyer shall at the Closing have sufficient, immediately
available funds, in cash, to pay all amounts payable pursuant to this Agreement
and to consummate the transactions contemplated hereby, including, but not
limited to, payment of the Purchase Price and performance of the Assumed
Liabilities.

4.7           Litigation.   There
is no action, suit, inquiry, proceeding or investigation by or before any
Governmental Body pending, or to Buyer’s Knowledge, overtly threatened against
or involving Buyer or Clarient that could have a Buyer Material Adverse Effect
or that questions or challenges the validity of this Agreement or any action
taken or to be taken by Buyer or Clarient pursuant to this Agreement or in
connection with the transactions contemplated hereby.

ARTICLE V

PRE-CLOSING COVENANTS

With respect to the period between the execution of
this Agreement and the earlier of the termination of this Agreement and the
Closing, unless otherwise provided or contemplated herein:

5.1           Operation
of Business.   During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement and the
Closing, Sellers agree (except to the extent (i) Buyer shall otherwise
consent in writing, (ii) this Agreement, including Section 5.4(c),
shall otherwise permit or require, (iii) contemplated by the Ancillary
Agreements or the Bridge Notes or (iv) set forth in Section 5.1 of
the Sellers’ Disclosure Letter), to carry on the Business and use and maintain
the Purchased Assets in the Ordinary Course of Business, to pay debts and Taxes
when due, to pay or perform other obligations when due, and, to use all
reasonable efforts consistent with past practice and policies to preserve
intact the Business, present organization, keep available the services of the
Hired Employees and preserve intact in all material respects their
relationships with customers, suppliers, distributors, licensors, licensees,
and others having business dealings with them, all with the goal of preserving
unimpaired the goodwill and ongoing Business at the Closing. Sellers shall
promptly notify Buyer of any event or occurrence or emergency not in the
Ordinary Course of Business, and any material event involving it to the extent
any of the foregoing had or would reasonably be expected to have a Sellers’
Material Adverse Affect. Except (i) as contemplated or permitted by this
Agreement, including Section 5.4(c), (ii) as contemplated by the
Ancillary Agreements or the Bridge Notes, or (iii) as set forth in Section 5.1
of the Sellers’ Disclosure Letter, Sellers and each of their Subsidiaries shall
not, without the prior written consent of Buyer, which consent shall not be
unreasonably withheld, conditioned or delayed, do any of the following:

(a)           Enter into any commitment or transaction involving an
amount in excess of $50,000 other than sales of products and services in the
Ordinary Course of Business or obtaining renewals or extensions of the Sellers’
existing policies of insurance (including director or officer liability
insurance) on substantially the same terms as currently in effect;

 47
 

 

(b)           (i) Sell or enter into any license agreement with
respect to Sellers’ Intellectual Property with any person or entity other than
in connection with sales of products and services in the Ordinary Course of
Business or (ii) buy or enter into any license agreement with respect to
the Intellectual Property of any person or entity;

(c)           Transfer
to any person or entity any rights to Sellers’ Intellectual Property (other
than pursuant to non-exclusive licenses to customers in connection with sales
of products and services in the Ordinary Course of Business);

(d)           Enter
into or amend any Contracts outside the Ordinary Course of Business pursuant to
which any other party is granted marketing, distribution or similar rights of
any type or scope with respect to any products or technology of Sellers or any
of their respective Subsidiaries;

(e)           Amend,
cancel or otherwise modify (or agree to do so) or violate the terms of, any of
the Assumed Contracts;

(f)            Permit
any of the Purchased Assets to become subject to any Lien;

(g)           Modify,
cancel or waive or settle any debts or claims held by Sellers, outside the
Ordinary Course of Business, or waive or settle any rights or claims of a
substantial value, whether or not in the Ordinary Course of Business;

(h)           Commence
or settle any litigation relating to the Purchased Assets, Assumed Liabilities
or the Business other than any litigation between the Parties that is related
to the transactions contemplated by this Agreement or any Ancillary Agreement;

(i)            Cause
or permit any amendments to its certificate of incorporation or bylaws or other
organizational documents except as contemplated in Section 6.1;

(j)            Acquire
or agree to acquire by merging or consolidating with, or by purchasing any
assets or equity securities of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the Business;

(k)           Sell,
lease, license or otherwise dispose of any assets or properties that would
otherwise be Purchased Assets (other than sales to customers of products and
services in the Ordinary Course of Business, and non-exclusive licenses granted
to customers in connection therewith);

(l)            Incur
any indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities of Sellers or guarantee any debt securities of
others, other than in connection with the sale of accounts and/or receivables
to a factor in the Ordinary Course of Business;

 48
 

 

(m)          Grant
any loans to others or purchase debt securities of others or amend the terms of
any outstanding loan agreement except for advances to employees for travel and
business expenses in the Ordinary Course of Business;

(n)           Grant
any severance or termination pay to any employee outside the Ordinary Course of
Business;

(o)           Revalue
any of its assets, including without limitation writing down the value of
inventory or writing off any of the notes or accounts receivable except in each
case, as required by GAAP;

(p)           Pay,
discharge or satisfy, in an amount in excess of $50,000 individually (or, in
the case of any Person or group of related Persons, $100,000 in the aggregate
for all payments to such Person or Persons), any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the Ordinary Course of Business
of liabilities reflected or reserved against in the Financial Statements or
obligations arising in the Ordinary Course of Business after the date of the
Financial Statements.

(q)           Make
or change any material election in respect of Taxes, adopt or change any
material accounting method in respect of Taxes, enter into any Tax sharing
agreement, Tax indemnity agreement, Tax allocation agreement or closing
agreement, settle any claim or assessment in respect of Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;

(r)            Enter
into any strategic or joint marketing arrangement or agreement involving the
Business or any of the Purchased Assets, other than the renewal of agreements
with distributors of Sellers’ products on substantially the same terms as those
in existence on the date hereof;

(s)           (i) adopt,
enter into or modify any Sellers’ Employee Plan, (ii) enter into any
collective bargaining agreement,  or (iii) pay,
announce, promise or grant, whether orally or in writing, any increase in the
wages, salaries, compensation, bonuses, incentives, pensions, severance or
termination payments, fringe benefits or other benefits to any Employees,
including without limitation any increase or change pursuant to any Sellers’
Employee Plan (except as required by law or, with respect to non-executive
Employees only, in the Ordinary Course of Business);

(t)            Declare
or pay any dividend or distribution (whether in cash or other assets) to any
stockholder of either Seller other than distributions from Trestle Sub to
Parent;

(u)           Take,
or agree in writing or otherwise to take, any of the actions described in Sections 5.1(a) through
5.1(t) above, or any other action that would prevent Sellers from
performing or cause Sellers not to perform its covenants hereunder.

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5.2           Access
to Information.

(a)           Sellers
will permit Buyer, and its Representatives to have access at all reasonable
times, and in a manner so as not to unreasonably interfere with its normal
business operations, to its business and operations. Neither such access,
inspection and furnishing of information to Buyer and its Representatives, nor
any investigation by Buyer and its Representatives, shall in any way diminish
or otherwise affect Buyer’s right to rely on any representation or warranty
made by Sellers hereunder. As of the date hereof, Buyer is not aware of any
breach by Sellers of any representation or warranty herein.

(b)           In
addition to any other notices or access required by this Agreement, Sellers
shall on a weekly basis provide Buyer with a report that identifies Sellers’
cash transactions occurring during the previous week and contains (i) an
updated trial balance sheet of Sellers, (ii) an updated trial accounts
receivable statement of Sellers, (iii) an updated trial accounts payable
statement of Sellers, and (iv) a schedule of changes to Sellers’
management estimates, reserves and accruals since the date of the last Seller
trial balance sheet.

5.3           Notice
of Developments.   Each Party shall give prompt notice to each other
Party of (i) the occurrence or non-occurrence of any event, the occurrence
or non-occurrence of which is likely to cause any representation or warranty of
such Party contained in this Agreement to be untrue or inaccurate at or prior
to the Closing and (ii) any failure of such Party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.3 shall not limit
or otherwise affect any remedies available to each other Party. No disclosure
by Sellers pursuant to this Section 5.3, however, shall be deemed
to amend or supplement the Sellers’ Disclosure Letter or prevent or cure any
misrepresentations, breach of warranty or breach of covenant without the
written consent of Buyer.

5.4           No
Solicitation.

(a)           Each of the Sellers agrees that it shall, and shall cause
each of its Subsidiaries and its and their Representatives to, cease
immediately and cause to be terminated all existing activities, discussions or
negotiations, if any, with any Persons with respect to, or that could
reasonably be expected to result in any Acquisition Proposal. Except as
provided in this Section 5.4, from the date of this Agreement until
the earlier of termination of this Agreement or the Closing, Sellers shall not,
and will cause its Subsidiaries and its and their Representatives to not,
directly or indirectly:

(i)            initiate, solicit or knowingly encourage or induce any
inquiry, or take any action intended to facilitate the making or announcement
of, any offer or proposal which constitutes or is reasonably likely to lead to
any Acquisition Proposal;

(ii)           participate or engage in any discussions or negotiations
regarding an Acquisition Proposal or furnish or disclose any non-public
information relating to either Seller or any of their Subsidiaries, or their
businesses, assets, liabilities or prospects or afford access to the
properties, books or records of either Seller or any of their Subsidiaries to,
any Person regarding an Acquisition Proposal except as provided in Section 5.4(c);

 50
 

 

(iii)          enter into any letter of intent, agreement in principle,
acquisition agreement, understanding or similar agreement contemplating or
relating to an Acquisition Proposal (other than a confidentiality and standstill
agreement as contemplated in this Section 5.4); or

(iv)          approve,
endorse or recommend any Acquisition Proposal (except to the extent
specifically permitted by this Section 5.4).

(b)           Sellers
shall promptly notify Buyer (but in no event later than the end of the next
Business Day) after receipt by a Seller of any Acquisition Proposal or any
request for information or inquiry which could reasonably be expected to lead
to an Acquisition Proposal. Such notice shall identify the Person or group
making such Acquisition Proposal, request or inquiry and include a copy of all
written materials provided in connection with such Acquisition Proposal,
request or inquiry or, if such Acquisition Proposal, request or inquiry is not
in writing, provide a summary of the material terms and conditions of any such
Acquisition Proposal, request or inquiry. After receipt of the Acquisition
Proposal, request or inquiry, Sellers shall promptly keep Buyer informed in all
material respects of the status and details (including material amendments or
proposed material amendments) of any such Acquisition Proposal, request or
inquiry.

(c)           If,
prior to obtaining the Stockholder Approval either Seller receives an
Acquisition Proposal that was not solicited in violation of Section 5.4(a) that
the board of directors of Sellers determines in good faith, after consultation
with outside counsel and its financial advisor (1) constitutes a Superior
Proposal or (2) could reasonably be expected to result in a Superior
Proposal, Sellers shall promptly provide to Buyer written notice that shall
state expressly (A) that such Seller has received an Acquisition Proposal
that constitutes a Superior Proposal or that could reasonably be expected to
result in a Superior Proposal, and (B) the identity of the Person (the “Third Party”) making such
Acquisition Proposal and the material terms and conditions of the Acquisition
Proposal (the “Superior Proposal Notice”)
and may then take the following actions (either directly or through its
Subsidiaries or any of their Representatives) if the board of directors of
Sellers determines, after consultation with outside counsel, that to do so is
necessary to comply with its fiduciary obligations to Sellers’ stockholders
under applicable law:

(i)            furnish
nonpublic information to the Third Party, provided, that (A) prior
to so furnishing, Sellers receive from the Third Party an executed
confidentiality agreement containing customary standstill provisions and other
terms and conditions that are no less restrictive to such Third Party than the
terms and conditions of the Confidentiality Agreement, and (B) on the date
of the provision of any non-public information to such Third Party, Sellers
furnish a copy of such non-public information of Sellers to Buyer (to the
extent such non-public information has not been previously so furnished); and

(ii)           participate
or engage in any discussions or negotiations with the Third Party with respect
to the Acquisition Proposal.

(d)           For
a period of not less than three Business Days prior to Sellers accepting a
definitive Superior Proposal, Sellers shall, if requested by Buyer, negotiate
in good faith with 

 51
 

 

Buyer to revise this Agreement so that the Acquisition
Proposal that constituted a Superior Proposal no longer constitutes a Superior
Proposal. The terms and conditions of this Section 5.4(d) shall again apply to any subsequent Superior Proposal after
any changes made to this Agreement.

(e)           Except
as expressly permitted by Section 5.4(f), neither Sellers board of
directors nor any committee of Sellers board of directors shall (i) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Buyer, Sellers’ Board Recommendation or (ii) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal (any action
described in the foregoing (i) or (ii) being referred to as a “Change of Recommendation”). Any
such Change of Recommendation or the entry by a Seller into any letter of
intent, agreement in principle, acquisition agreement, understanding or similar
agreement contemplating or relating to an Acquisition Proposal shall not change
the approval of Sellers board of directors for purposes of causing any state
takeover statute or other state law to be applicable to the transactions
contemplated hereunder.

(f)            In
the event that prior to obtaining the Stockholder Approval, Sellers board of
directors determines in good faith, after consultation with its financial
advisor and outside counsel, that an Acquisition Proposal not solicited in
violation of Section 5.4(a) has not been withdrawn and
continues to constitute a Superior Proposal following the expiration of the
three Business Day period referenced in Section 5.4(d), Sellers may
effect a Change of Recommendation and/or terminate this Agreement in accordance
with Section 10.1(d)(i); provided
that Sellers board of directors has concluded in good faith, following
consultation with outside legal counsel, that, in light of such Superior
Proposal, the failure of Sellers board of directors to effect a Change of
Recommendation or to terminate this Agreement is necessary to comply with its
fiduciary obligations to either of Sellers stockholders under applicable law; provided further, however that
Sellers shall not terminate this Agreement pursuant to Section 10.1(d)(i),
and any purported termination pursuant to Section 10.1(d)(i) shall
be void and of no force or effect, unless Sellers shall have complied in all
material respects with all of the provisions of this Section 5.4,
including the notification provisions in this Section 5.4, and with
all applicable requirements of Section 10.3 (including the payment
of the Termination Fee prior to or concurrently with such termination).

(g)           Sellers
shall provide Buyer with three Business Days prior notice (or such lesser prior
notice as is provided to the members of Sellers board of directors) of any
meeting of Sellers board of directors or committee of Sellers board of
directors at which the Sellers board of directors or committee thereof is
reasonably expected to discuss any Acquisition Proposal.

Nothing contained in this Section 5.4 or
elsewhere in this Agreement shall prohibit Parent from (x) taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a) under
the Exchange Act, or (y) making any disclosure to the stockholders of the
Sellers if Parent’s board of directors determines in good faith (after
consultation with its outside legal counsel) that the failure to make such
disclosure would be reasonably expected to be a breach of its duty of candor under
applicable law; provided, however,
that any action taken or disclosure made under this Section 5.4
shall not limit or modify the effect that any such action or disclosure may
have under any other provision of this Agreement.

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5.5           Stockholder
Meeting.

(a)           Parent
shall, as promptly as reasonably practicable following the execution of this
Agreement and subject to Section 5.4(f), establish a record date
for, duly call, give notice of convene and hold a meeting of its stockholders
solely for the purpose of seeking the Stockholder Approval (“Stockholder Meeting”). In
connection with the Stockholder Meeting, Parent, acting through the Parent
board of directors, will (i) subject to Section 5.4(f) make
the Sellers’ Board Recommendation, (ii) use its commercially reasonable
efforts (including postponing or adjourning the Stockholder Meeting to solicit
additional proxies) to obtain and shall take all other reasonable action
necessary or advisable to secure, the Stockholder Approval and (iii) otherwise
comply with Parent’s Certificate of Incorporation, bylaws and applicable law in
connection with such meeting.

(b)           As
promptly as reasonably practicable after the date of this Agreement, Parent
shall prepare and file with the SEC, and shall use its commercially reasonable
efforts to have cleared by the SEC, the Proxy Statement (together with any
amendments thereof or supplements thereto) to be distributed in connection with
the Stockholder Meeting. Buyer and Sellers each shall promptly and timely
provide all information relating to its respective businesses or operations
necessary for inclusion in the Proxy Statement to satisfy all requirements of
applicable state and United States federal securities laws and neither the
Proxy Statement nor any amendment or supplement to the Proxy Statement, will be
filed or made by the Sellers, in each case without providing Buyer a reasonable
opportunity to review and comment thereon.

(c)           Sellers
shall notify Buyer of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide a copy of
such comments or requests to Buyer promptly after receipt, and shall promptly
provide to Buyer copies of all correspondence between Sellers or any
Representative Sellers and the SEC. Sellers shall give Buyer and its counsel
the reasonable opportunity to review and comment on any proposed responses to
comments, which review shall be concluded as promptly as possible after the
receipt by Buyer of Sellers proposed responses to SEC comments or other
correspondence to the SEC. If at any time after the date the Proxy Statement is
mailed to Parent’s stockholders and prior to the Stockholder Meeting any
information relating to the Sellers or Buyer, or any of their respective
Affiliates, directors, or officers, should be discovered by the Sellers or
Buyer which should be set forth in an amendment or supplement to the Proxy
Statement, so that either such document would not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the Party that discovers such information shall promptly notify
the other Parties hereto and Parent shall promptly file an amendment or
supplement describing such information promptly with the SEC and, to the extent
required by applicable law or the SEC, disseminated to Parent’s stockholders.

As promptly as reasonably practicable after the Proxy
Statement has been cleared by the SEC, Parent shall mail the Proxy Statement to
the holders of Parent’s common stock as of the record date established for the
Stockholder Meeting. Unless the board of directors of Parent shall have effected
a Change in Recommendation, the Proxy Statement shall include the Seller 

 53
 

 

Board recommendation, provided
that nothing herein shall prohibit Parent from supplementing or amending the
Proxy Statement if there has been a Change in Recommendation.

ARTICLE VI

ADDITIONAL
AGREEMENTS

6.1           Reasonable
Efforts.   Each of the Parties will use their reasonable efforts to
take all action and to do all things necessary, proper, or advisable, subject
to the terms of this Agreement in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VIII below and
including defending all lawsuits or other legal, regulatory or other
proceedings to which it is a party challenging or affecting this Agreement or
any Ancillary Agreement or the transactions contemplated hereby or thereby and
having lifted or rescinded any injunction or restraining order which may
adversely affect the Parties’ ability to consummate the transactions
contemplated hereby or thereby). Such action on the part of Sellers shall
include amending the charter documents of Sellers and, as necessary, each of
its Subsidiaries to remove the name “Trestle” and each variation thereof,
assisting Buyer in hiring and transferring the Hired Employees and completing
all necessary financial audits and securities filings with the utmost urgency.

6.2           Notices
and Consents.

(a)           Sellers
will give any notices to third parties and will use their respective reasonable
best efforts to obtain any third party consents that are required in connection
with the relevant matters identified in the Sellers’ Disclosure Letter or
otherwise required in connection with the transactions contemplated by this
Agreement so as to preserve all material rights of or benefits to Buyer relating
to the Purchased Assets, the Assumed Liabilities or the Business. Each of the
Parties will give any notices to, make any filings with, and use its reasonable
best efforts to obtain any authorizations, consents, and approvals of
Governmental Bodies in connection with the relevant matters identified in the
Sellers’ Disclosure Letter or as otherwise required in connection with the
transactions contemplated by this Agreement.

(b)           Subject
to applicable laws relating to the exchange of information and the preservation
of any applicable attorney-client privilege, work-product doctrine, self-audit
privilege or other similar privilege, Buyer and Sellers shall have the right to
review and reasonably comment on in advance, and to the extent practicable each
will consult the other on, all the information relating to Buyer or Sellers, as
the case may be, and any of their respective Subsidiaries, that appear in any
filing made or oral communication with, or written materials submitted to, any
Person and/or any Governmental Body in connection with the transactions
contemplated hereby or by the Ancillary Agreements; provided,
however, that Buyer and Sellers may, as each deems advisable and
necessary, (x) redact any information concerning Buyer’s valuation of
Buyer, and (y) designate any competitively sensitive material provided to
the other under this Section 6.2 as “outside counsel only,” in
which case, such materials and the information contained therein shall be given
only to the outside legal counsel of the recipient and will not be disclosed by
such outside counsel to employees, officers, or directors of the recipient
unless express permission is obtained in advance from the source of the
materials (Buyer or Sellers, as the case may be) or its legal counsel. In
exercising the foregoing right, each of Buyer and Sellers shall act reasonably
and as promptly as practicable. Notwithstanding anything to the 

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contrary in this Agreement, Buyer shall not be
required to offer or commit to divest any business or assets or agree to any
limitation on the conduct of its or any of its Subsidiaries’ businesses, and
Sellers shall not enter into any such agreement, or make any such commitment,
or offer to enter into any such agreement or to make any such commitment, with
respect to its or any of its Subsidiaries’ assets or businesses, without the
prior written consent of Buyer.

(c)           Subject
to applicable law and the preservation of any applicable attorney-client
privilege, Buyer and Sellers each shall, upon request by the other, furnish the
other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement or any other statement,
filing, notice or application made by or on behalf of Buyer, Sellers or any of
their respective Subsidiaries to any Person in connection with the transactions
contemplated hereby or by the Ancillary Agreements.

(d)           Subject
to any confidentiality obligations and the preservation of any attorney-client
privilege, Buyer and Sellers each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby or by
the Ancillary Agreements, including promptly furnishing the other with copies
of notices or other communications received by Buyer or Sellers, as the case
may be, or any of its Subsidiaries, from any Person with respect to the
transactions contemplated hereby or by the Ancillary Agreements. Each of Buyer
and Sellers agree not to participate, or to permit its Subsidiaries to
participate, in any substantive meeting or discussion, either in person or by
telephone, with any Governmental Body in connection with the transactions
contemplated hereby or by the Ancillary Agreements unless it consults with the
other Party in advance and, to the extent not prohibited by such Governmental
Body, gives the other Party the opportunity to attend and participate.

6.3           Patent Matters.

(a)           Sellers
shall use their reasonable efforts to satisfy the Patent Condition prior to
Closing, including but not limited to providing Buyer with instruments and
documents that will allow Sellers (or Buyer, as its successor in interest) to
successfully withstand the Reexamination. From and after the date hereof until
the Closing, Sellers shall use their reasonable efforts to take all actions and
to do all things necessary, proper, or advisable in order to defend all
lawsuits or other legal, regulatory or other proceedings to which either Seller
is a party challenging or affecting the validity or enforceability of Sellers’
Registered Intellectual Property Rights and shall cooperate with Buyer
following the Closing in Buyer’s efforts in doing the same.

(b)           For
the purposes of this Agreement, the “Patent
Condition” shall be deemed to have been satisfied by Sellers if,
prior to the Closing, Sellers have provided Buyers with (1) a letter from
the PTO informing Sellers that it has elected to not pursue further the
Reexamination regarding the Invention Patent or (2) appropriate affidavits
sworn by either the Inventors identified in the Invention Patent or, to the
extent allowed by the PTO, by Sellers, in either case supported by documentary
or other evidence that Buyer has determined in its sole but reasonable
discretion is sufficient to demonstrate with reasonable certainty that the
Invention was conceived by the inventors set forth in the Invention Patent
prior to the effective date of the reference cited in the Other Claim. To be
useful in satisfying the Patent Condition, the technical 

 55
 

 

disclosure contained in any such evidence must make
the showing of facts, in character and weight, to establish reduction to
practice of the Invention as claimed in the Invention Patent prior to the
effective date of the reference cited in the Other Claim, or conception of the
Invention as claimed in the Invention Patent prior to the effective date of the
reference cited in the Other Claim coupled with due diligence from prior to
said date to a subsequent reduction to practice or to the filing of the
application for the Invention Patent. The documentary or other evidence
provided by the Sellers may include, without limitation: (a) inventor
notebooks, notes, and other electronic records maintained by the inventors
with respect to the Invention (b) internal discussions (e-mails, memos,
etc.) regarding the Invention, (c) drafts of patent applications with
respect to the Invention or the Invention Patent, (d) interview of a
patent attorney (or a colleague or team member) regarding the Invention, (e) any
contemporaneous disclosures to a patent attorney or company’s legal department,
(f) any drafts of presentations or articles for conferences, lectures,
trade-shows or other internal peer-review, (g) any disclosure materials
given to investors, third-party collaborators, partners, manufacturers
regarding the Invention, (h) any bill-of-materials for prototype,
manufacture, design of the Invention, (i) any internal funding or project
proposals with respect to the Invention, (j) any milestones or
project-progress reports with respect to the Invention and (k) minutes
from team meetings (during relevant time period) discussing the Invention;
provided, however, that the provision of any document or any other evidence
shall not be deemed to have satisfied the Patent Condition unless and until
Buyer has determined in its sole but reasonable discretion that the Patent
Condition has been satisfied.

ARTICLE VII

OTHER AGREEMENTS
AND COVENANTS

7.1           Confidentiality.   Each
of the Parties hereto hereby agrees to keep such information or knowledge
obtained in any due diligence or other investigation pursuant to the
negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby, in confidence to the extent required by, and
in accordance with, the provisions of the Confidentiality Agreement, provided that either Party may disclose such information as
may be necessary in connection with seeking any necessary consent, approval,
authorization, qualification, or order of, or any exemption by, or the making
of any material declaration, filing or registration with, any Governmental Body
that is required to be obtained or made by such Party or any of its
Subsidiaries in connection with the consummation of the transactions
contemplated by this Agreement.

7.2           Additional
Documents and Further Assurances.   Contemporaneously, with the
execution of this Agreement, Parent shall deliver each Ancillary Agreement to
Buyer and Buyer shall extend the maturity date of the First Bridge Note to September 30,
2006.

7.3           Take-over
Statutes.   If any Takeover Statute is or may become applicable to the
transactions contemplated by this Agreement or by the Ancillary Agreements,
each of Buyer and Sellers and their respective board of directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable hereafter on the terms
contemplated hereby or by the Ancillary Agreements and otherwise act to
eliminate or minimize the effects of such statute or regulation on such
transactions. “Takeover Statute” shall mean any restrictive provision of any applicable “fair
price,” “moratorium,” “control share acquisition,” “interested stockholder” or
other similar anti-takeover law, including Section 203 

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of the Delaware General Corporation Law. Prior to the
termination of this Agreement, neither the board of directors of either Seller
nor any committee thereof shall exempt any Person from, or otherwise grant a
waiver with respect to, any of the provisions of Section 203 of the
Delaware General Corporation Law.

7.4           Parent
Vote.   Promptly following receipt of the Stockholder Approval, Trestle
Sub shall seek Parent’s consent to the transactions contemplated by this
Agreement in its capacity as sole stockholder of Trestle Sub and Parent shall
vote (or consent with respect to) or cause to be voted (or a consent to be
given with respect to) any shares of capital stock of Trestle Sub beneficially
owned by it or any of its Affiliates (as such term is defined under the
Exchange Act) or with respect to which it or any of such Affiliates has the
power (by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the transactions contemplated by this Agreement at any
meeting of stockholders of Trestle Sub at which such matters shall be submitted
for approval and at all adjournments or postponements thereof (or, if
applicable, by any action of stockholders by consent in lieu of a meeting).

7.5           Reasonable
Cooperation of Buyer.   Buyer shall cooperate with Sellers to the
extent reasonable with Sellers’ efforts to obtain any third party consents,
waivers and releases necessary for the consummation of the transactions
contemplated by this Agreement; provided, however,
that this Section 7.5 shall not obligate Buyer (in the aggregate)
to incur any additional expense or liability.

7.6           Agreement
to Perform.   From and after the Closing, Sellers shall promptly pay to
Buyer when received all monies received by Sellers under any Purchased Asset or
any claim or right or any benefit arising thereunder, except to the extent the
same represents an Excluded Asset hereunder, and Buyer shall promptly pay to
Parent or its designee all monies received by Buyer with respect to any
Excluded Asset (including but not limited to accounts and notes receivables
that have been identified as Excluded Assets) or any claim or right or benefit
arising thereunder and shall promptly pay, perform and discharge when due all
Assumed Liabilities.

7.7           Attorney-In-Fact.   Effective
on and after the Closing, Sellers hereby constitutes and appoints Buyer the
true and lawful attorney of Sellers, with full power of substitution, in the
name of Sellers or Buyer, but on behalf of and for the benefit of Buyer to
demand and receive from time to time any and all of the Purchased Assets and to
make endorsements and give receipts and releases for and in respect of the same
and any part thereof. Seller hereby acknowledges that the appointment hereby
made and the powers hereby granted are coupled with an interest and are not and
shall not be revocable by it in any manner or for any reason. Sellers shall
deliver to Buyer at the Closing an acknowledged power of attorney to the
foregoing effect executed by each Seller.

7.8           Discharge
of Excluded Liabilities.   Sellers shall pay and discharge or reserve
sufficient assets to pay and discharge all Excluded Liabilities, including all
Sellers’ Employee Plans and all obligations under the Excluded Contracts, as
and when the same become due and payable.

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7.9           Guarantee.

(a)           Clarient hereby irrevocably and unconditionally guarantees
to Sellers, as primary obligor and not merely as surety, the performance of all
obligations hereunder of Buyer and the due and punctual payment by Buyer in
full of any amounts payable by Buyer pursuant to this Agreement.

(b)           To
the fullest extent permitted by applicable law, Clarient waives presentment to,
demand of payment from and protest to Sellers, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of Clarient
hereunder shall not be affected by (i) the failure of Sellers to assert
any claim or demand or to exercise or enforce any right or remedy against Buyer
under the provisions of this Agreement or otherwise, or (ii) any
rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions, of this Agreement.

(c)           Clarient
agrees that the guarantee pursuant to this Section 7.9 constitutes
an absolute, unconditional, present and continuing guarantee of payment and not
of collection, and waives any right to require that any resort be had by
Sellers to (i) Sellers’ rights against any other person, including Buyer,
or (ii) any other right or remedy available to Sellers by contract,
applicable law or otherwise. It is the intent of the guarantee pursuant to this
Section 7.9 that Sellers shall have resort to Clarient without
asserting or resorting to any remedy against Buyer and without demand to it, as
though Clarient were primarily liable for any payment due hereunder.

7.10         Collection
of Accounts Receivable.

(a)            Subject to subsections (b) and (c) below,
no later than five business days following the 90th day following the Closing Date, Buyer shall
remit to Parent an amount equal to 57% of all amounts received by Buyer in
payment of accounts receivable existing at the Closing Date, to the extent such
payments (i) are received by Buyer within 90 days following the invoice of
such amount by a Seller and (ii) reflect payment due by customers in
respect of Instruments sold by a Seller prior to the Closing Date (such amount,
the “Remittance Amount”); provided,
however, that the Remittance Amount shall not exceed the amount of Sellers’
accounts payable assumed by Buyer at Closing pursuant to this Agreement.

(b)            All amounts received by Buyer and
its Affiliates from a customer during the time period described in subsection (a) shall
be first applied to the oldest debt owed by such customer (i.e. by due date),
unless (i) such oldest debt has been disputed by the customer, in which
case the payment will be allocated to the next oldest undisputed debt owed by
such customer or (ii) the payment refers to an invoice number, in which
case the payment will be allocated to the invoiced debt notwithstanding clause (i) above.

(c)            Buyer shall use its commercially
reasonable efforts to collect payment of such accounts receivable consistent
with Clarient’s efforts to collect Clarient’s other accounts receivable of like
type and amount; provided however
that neither Buyer nor Clarient shall be under any obligation to (i) institute
any legal proceedings to collect such accounts receivable or (ii) take any
action Clarient determines in its sole discretion to be adverse to either Buyer
or Clarient. Sellers shall not, except upon Buyer’s prior written consent,
institute collection proceedings with respect to such accounts receivable. Notwithstanding
the foregoing, to the 

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extent that Buyer reasonably determines in good faith
that due to oversight or otherwise, amounts that should have been considered in
calculating the Adjustment Amount or amounts by which the Assumed Liabilities
were underaccrued for by Sellers on the Closing Balance Sheet were excluded
from such calculations, Buyer shall be permitted to offset such amounts against
the remittance of the Remittance Amount.

7.11                           Hired Employees.

(a)           No later than immediately prior to the Closing, Parent
shall terminate, or shall cause to be terminated, each Hired Employee’s
employment with Parent and its Subsidiaries and Parent shall satisfy, or shall
cause to be satisfied, all Parent’s obligations to such Hired Employees arising
in connection with such Hired Employees’ employment with Parent and its
Subsidiaries and the termination thereof.

(b)           Immediately
after the Closing, Clarient shall offer employment with Clarient or Buyer to
each of the Hired Employees, (i) at a salary level substantially
comparable to that in effect with respect to each such Hired Employee as of the
date hereof, and (ii) with employee benefits which are, with respect to
each such Hired Employee, no less favorable in the aggregate than the benefits
provided to similarly situated employees of Clarient.

(c)           No
provision of this Section 7.11 shall create any third-party beneficiary or
other rights in any Hired Employee, including without limitation in respect of
continued employment with Buyer or its Affiliates for any period of time. No
provision of this Section shall obligate Buyer or any of its Affiliates to
adopt or maintain any employee benefit plan or arrangement at any time.

ARTICLE VIII

CONDITIONS TO THE
CLOSING

8.1           Conditions
to Buyer’s Obligations.   The obligations of Buyer to consummate the
transactions contemplated hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived in writing by Buyer):

(a)           Representations
and Warranties.   The representations and warranties of Sellers set
forth in Article III shall be true and correct, without giving effect to
any qualification as to materiality or Sellers’ Material Adverse Effect
contained in any specific representation or warranty, as of the Closing with
the same force and effect as if made on and as of the Closing except (i) to
the extent expressly made as of a particular date, in which case as of such
date and (ii) where any failures of any such representations and
warranties to be true and correct would not reasonably be expected to have,
individually or in the aggregate, a Sellers’ Material Adverse Effect.

(b)           Covenants.   Sellers
shall have performed or complied in all respects with all agreements and
covenants required by this Agreement to be performed or complied with by
Sellers on or prior to the Closing, except where any failure to so perform or
comply would not reasonably be expected to have, individually or in the
aggregate, a Sellers’ Material Adverse Effect.

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(c)           No
Actions.   No unfavorable injunction, judgment, order, decree, ruling,
or charge has been issued by any Governmental Body or before any arbitrator
which would restrain, enjoin or otherwise prohibit or prevent consummation of
any of the material transactions contemplated by this Agreement.

(d)           Closing
Balance Sheet; Closing Accounts Receivable Statement.   Sellers shall
have delivered to Buyer, and Buyer shall be reasonably satisfied with the
preparation of (i) the Closing Balance Sheet, which shall have been
prepared in the manner described in Section 1.1 hereof, and (ii) the
Closing Accounts Receivable Statement, which shall have been prepared in the
manner described in Section 1.1 hereof.

(e)           No
Material Adverse Effect.   From the date of the Current Balance Sheet,
there shall not have been any event or development which has resulted in a
Sellers’ Material Adverse Effect nor shall there have occurred any event or
development which would reasonably be expected to result in the future in a
Sellers’ Material Adverse Effect.

(f)            Certificates.   The
Presidents of Sellers shall have delivered to Buyer a certificate to the effect
that each of the conditions specified above in Sections 8.1(a) to
8.1(e) is satisfied in all respects.

(g)           Delivery
of Documents.   Sellers shall have executed and delivered to Buyer the
assignment and conveyance instruments described in Section 2.5(b)(ii) hereof.

(h)           Consents
and Authorizations.   The Parties shall have received all
authorizations, consents, orders and approvals of all Governmental Bodies
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, and all third party consents set forth
on Schedule 8.1(h) (the “Material Consents”).

(i)            Stockholder
Approval.   Parent shall have received the Stockholder Approval.

8.2           Conditions
to Sellers’ Obligations.   The obligations of Sellers to consummate the
transactions contemplated hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be in writing waived by Sellers):

(a)           Representations
and Warranties.   The representations and warranties of Buyer set forth
in Article IV shall be true and correct, without giving effect to any
qualification as to materiality or Buyer Material Adverse Effect contained in
any specific representation or warranty, as of the Closing with the same force
and effect as if made on and as of the Closing except (i) to the extent
expressly made as of a particular date, in which case as of such date and (ii) where
any failure of any such representations and warranties to be true and correct
would not reasonably be expected to have, individually or in the aggregate, a
Buyer Material Adverse Effect.

(b)           Covenants.   Buyer
shall have performed or complied in all respects with all agreements and
covenants required by this Agreement to be performed or complied with by them
on or prior to the Closing, except where any failures to so perform or comply
would not 

 60
 

 

reasonably be expected to have, individually or in the
aggregate, a Buyer Material Adverse Effect.

(c)           No
Actions.   No unfavorable injunction, judgment, order, decree, ruling,
or charge has been issued by any Governmental Body or before any arbitrator
which (A) would restrain, enjoin or otherwise prohibit or prevent
consummation of any of the material transactions contemplated by this Agreement
or (B) would reasonably be expected to result in a Buyer Material Adverse
Effect.

(d)           Certificate.   The
Chief Executive Officer of Clarient shall have delivered to Sellers a
certificate to the effect that each of the conditions specified above in Sections 8.2(a) to
8.2(c) (inclusive) is satisfied in all respects.

(e)           Payment
of Purchase Price.   Buyer shall have paid the entire Purchase Price as
contemplated hereby.

(f)            Stockholder
Approval.   Parent shall have received the Stockholder Approval.

(g)           Consents
and Authorizations. The Parties shall have received all
authorizations, consents, orders and approvals of all Governmental Bodies
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements.

8.3           Frustration
of Closing Conditions.   Neither Sellers nor Buyer may rely on the
failure of any condition set forth in Section 8.1 or 8.2, as the case may
be, if such failure was caused by such party’s failure to comply with any
provision of this Agreement.

ARTICLE IX

TAX MATTERS

9.1           Tax Books and Records.   The
Buyer and the Sellers agree to furnish or cause to be furnished to the other,
upon request, as promptly as practicable, such information and assistance
relating to the Purchased Assets, including, without limitation, access to
books and records, as is reasonably necessary for the filing of all Tax Returns
by the Buyer or the Sellers, the making of any election relating to Taxes, the
preparation for any audit by any taxing authority, and the prosecution or
defense of any claim, suit or proceeding relating to any Tax. The Buyer and
each of the Sellers shall retain all books and records with respect to Taxes
pertaining to the Purchased Assets for a period of at least six (6) years
following the Closing Date. Prior to or at the end of such period, if a party
desires to transfer, destroy or discard any such books and records, such party
shall provide the other with at least ten (10) days prior written notice,
during which period the party receiving such notice can elect to take
possession, at its own expense, of such books and records. The Buyer and the
Sellers shall cooperate fully with each other in the conduct of any audit,
litigation or other proceeding relating to Taxes involving the Purchased Assets.
The Buyer and the Sellers upon written request of the other further agree, upon
request, to use their commercially reasonable efforts to obtain any certificate
or other document from any Governmental Body or any other Person as may be
necessary to 

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mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the transactions
contemplated hereby).

9.2           Allocation
of Taxes.   To the extent not allocated in this Agreement, the Sellers
shall be responsible for and shall promptly pay when due all Taxes levied with
respect to the Purchased Assets attributable to the Pre-Closing Tax Period. All
Taxes levied against Sellers with respect to the Purchased Assets for the
Straddle Period shall be apportioned between the Pre-Closing Tax Period and the
Post-Closing Tax Period, as follows: (i)  in the case of any Taxes other
than Taxes based upon or related to income or receipts, the portion allocable
to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for
the entire Straddle Period multiplied by a fraction the numerator of which is
the number of days in the Tax period ending on the Closing Date and the
denominator of which is the number of days in the entire Straddle Period, and (ii) 
in the case of any Tax based upon or related to income or receipts, the portion
allocable to the Pre-Closing Tax Period shall be deemed equal to the amount
which would be payable if the relevant Straddle Period ended on the Closing
Date. The Sellers shall be liable for the proportionate amount of such Taxes
attributable to the Purchased Assets that is attributable to the Pre-Closing
Tax Period, and the Buyer shall be liable for the proportionate amount of such
Taxes that is attributable to the Post-Closing Tax Period. Upon receipt of any
bill for such Taxes relating to the Purchased Assets, the Buyer and the Sellers
shall present a statement to the other setting forth the amount of
reimbursement to which each is entitled under this Section 9.2
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within ten (10) days after delivery of such statement. In the
event that the Buyer or the Sellers shall make any payment for which it is
entitled to reimbursement under this Section 9.2, the applicable
party shall make such reimbursement promptly but in no event later than ten (10) days
after the presentation of a statement setting forth the amount of reimbursement
to which the presenting party is entitled along with such supporting evidence
as is reasonably necessary to calculate the amount of reimbursement.

9.3           Transfer
Taxes.   All transfer, stamp, documentary, sales, use, registration,
value-added and other similar Taxes (including all applicable real estate
transfer Taxes) and related fees (including any penalties, interest and
additions to Taxes) (collectively, “Transfer
Taxes”) incurred in connection with this Agreement and
the transactions contemplated hereby will be borne equally by the Sellers and
Buyer, with Sellers paying 50% of such Taxes (“Sellers’
Transfer Taxes”) and Buyer paying 50% of such Taxes (“Buyer’s Transfer Taxes”). Notwithstanding
the foregoing, in no event shall Sellers’ collective tax liability for Transfer
Taxes exceed $10,000 in the aggregate. All Tax Returns or other documentation
related to Transfer Taxes (“Transfer Tax Returns”)
shall be filed by the Party required to file each such Transfer Tax Return
under applicable law. The Party required to file a Transfer Tax Return shall
submit such Transfer Tax Return (with copies of any relevant schedules, work
papers and other documentation) to the non-filing Party for such Party’s
review, comment, and approval not less than 30 days before the due date
(including extensions) for the filing of such Transfer Tax Return. The filing
Party shall pay all Transfer Taxes shown as due on such Transfer Tax Return,
and the non-filing Party shall promptly pay its portion of such Transfer Taxes
(pursuant to this Section 9.3) to the filing Party following
receipt of a written request from the filing Party for such payment. If either
Party receives notice of an audit or other investigation with respect to any
Transfer Tax Return, such Party shall control the conduct of such audit or
other proceeding, 

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provided that the other Party shall be entitled to
participate in such audit or other proceeding at its own expense. The
controlling Party shall not resolve or settle such audit or other investigation
without the other Party’s written consent, which consent shall not be
unreasonably withheld or delayed, and Sellers and Buyer shall bear and pay any
additional Transfer Taxes payable as a result thereof pursuant to this Section 9.3.

9.4           Notices.   The
Sellers shall promptly notify the Buyer in writing upon receipt by the Sellers
of notice of any pending or threatened federal, state, local or foreign Tax
audits or assessments relating to the income, properties or operations of the
Sellers that reasonably may be expected to relate to the Purchased Assets and
for which Buyer could be liable. Each Party shall promptly notify the other in
writing upon receipt of notice of any pending or threatened Tax audits or
assessments relating to the Transfer Taxes payable in accordance with the terms
of this Agreement.

9.5           Withholding
Exemption.   The Sellers shall deliver to the Buyer at the Closing all
necessary forms and certificates complying with applicable law and reasonably
acceptable to Buyer, duly executed and acknowledged, certifying that the
transactions contemplated hereby are exempt from withholding under Section 1445
of the Code.

ARTICLE X

TERMINATION

10.1         Termination
of the Agreement.   The Parties may terminate this Agreement as
provided below:

(a)           by
mutual written consent of Buyer and the Sellers at any time prior to the
Closing;

(b)           By
either Sellers or Buyer upon written notice to the other Parties:

(i)            if,
prior to the Closing, a court of competent jurisdiction or other Governmental
Body shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, executive order, decree, judgment, injunction or other order,
in any case that is in effect and that permanently prevents or prohibits
consummation of the material transactions contemplated in this Agreement or the
Ancillary Agreements, provided that
the Party seeking to terminate this Agreement pursuant to this Section 10.1(b)(i) shall
have used its commercially reasonable efforts to prevent such prohibition and
to cause any such prohibition to be vacated or otherwise rendered of no effect;
or

(ii)           if
the Closing has not occurred by September 30, 2006 (such date, as the same
may be extended as set forth in the following clause the “Outside Date”); provided, however, that the Outside Date may be extended by
Buyer or Sellers (by providing written notice thereof to the other Party within
five Business Days prior to and including September 30, 2006 up to and
including October 31, 2006), in the event all conditions to effect the transactions
contemplated by this Agreement, other than the Stockholder Approval, have been
obtained; provided, further, that the right to
terminate this Agreement pursuant to this Section 10.1(b)(ii)

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shall not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur by the Outside Date, or

(iii)          if
the Stockholder Approval shall not have been obtained following a vote at the
Stockholder Meeting (or any adjournment or postponement thereof) at which the
required number of shares to approve the transactions contemplated by this
Agreement were present and entitled to vote and the vote to approve the
transactions contemplated by this Agreement was taken; provided,
that no termination by a Party pursuant to this Section 10.1(b)(iii) shall
be effective unless (A) such failure was not due to a breach by such Party
of its obligations hereunder and (B) concurrently therewith such Party has
fulfilled its obligations, if any, under Section 10.3;

(c)           By
Buyer, at any time prior to the Closing, upon written notice to Sellers, if:

(i)            (A) the
board of directors of Parent or any committee thereof shall have effected a
Change of Recommendation, (B) the board of directors of Parent or any
committee thereof shall have resolved to effect a Change of Recommendation, (C) the
board of directors of Parent or any committee thereof shall have failed to
affirm its recommendation in respect of the transactions contemplated hereunder
within five Business Days of a request to do so by Buyer, or (D) for any
reason Parent fails to call or hold the Stockholder Meeting by the fifth
Business Day prior to the Outside Date;

(ii)           if
either Seller shall have breached in any material respect any of its
representations, warranties, covenants or agreements contained in this
Agreement or the Ancillary Agreements, such that any of the conditions to Buyer’s
obligation to effect the Closing would fail to be satisfied at the time of
termination and such breach cannot be cured or has not been cured, in all
material respects, within 30 days after notice of such breach from Buyer or, if
sooner, the day prior to the Outside Date; or

(iii)          if
since the date of this Agreement, there shall have been any event, development
or change of circumstance that constitutes, has had or would reasonably be expected
to have, individually or in the aggregate, a Sellers’ Material Adverse Effect
and such Sellers’ Material Adverse Effect is not cured in all respects, or
cannot be cured, within 30 days of notice thereof from Buyer (or, if sooner,
the day prior to the Outside Date)

(d)           By
Sellers, at any time prior to the Closing, upon written notice to Buyer:

(i)            pursuant
to and in compliance with Section 5.4(f); or

(ii)           if
Buyer shall have breached in any material respect any of the representations,
warranties, covenants or agreements contained in this Agreement or the
Ancillary Agreements, such that any of the conditions to Sellers’ obligations
to effect the Closing would fail to be satisfied at the time of termination and
such breach cannot be or has not been cured, in all material respects, within
10 days after notice of such breach from Sellers or, if sooner, the day prior
to the Outside Date.

 64
 

 

10.2         Effect
of Termination.   In the event of the termination of this Agreement as
provided in Section 10.1, written notice thereof shall forthwith be
given to the other Party or Parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void (except for the provisions of this Section 10.2, Section 10.3
and Article XI which shall survive such termination) and there shall be no
liability on the part of Buyer or Sellers, except (i) as set forth in Section 10.3,
and (ii) for damages resulting from any breach by such Party of this
Agreement.

10.3         Fees and Expenses.

(a)           Each
Party will bear its own costs and expenses (including legal and accounting fees
and expenses) incurred in connection with this Agreement and the transactions
contemplated hereby.

(b)           If
this Agreement is terminated pursuant to Section 10.1(c)(i)(A) — (C) at
any time, then Sellers shall jointly and severally pay the Termination Fee to
Buyer within two Business Days after the termination of this Agreement.

(c)           If
(i) this Agreement is terminated pursuant to Section 10.1(b)(iii),
and (ii) prior to the Stockholder Meeting, an Acquisition Proposal has
been made by any Third Party, and (iii) such Acquisition Proposal was
outstanding at the time of the Stockholder Meeting then the Sellers shall
jointly and severally pay to Buyer the Termination Fee within two Business Days
after the termination of this Agreement.

(d)           If
this Agreement is terminated by either Seller pursuant to Section 10.1(d)(i),
then Sellers shall jointly and severally pay to Buyer the Termination Fee prior
to or concurrently with such termination.

(e)           If
this Agreement is terminated (i) by Buyer pursuant to Section 10.1(c)(ii),
(ii) by Buyer pursuant to Section 10.1(c)(i)(D), or (iii) by
Sellers pursuant to Section 10.1(d)(ii), then the non-terminating
Party shall pay to the terminating Party the Expense Amount within two Business
Days after the termination of this Agreement.

(f)            Any
payments made under this Section 10.3 shall be made by wire
transfer of immediately available funds to an account designated by the Party
entitled to receive payment. Buyer and Sellers acknowledge and agree that the
agreements contained in this Section 10.3 are an integral part of
the transactions contemplated by this Agreement, and that, without these
agreements, neither Buyer nor Sellers would enter into this Agreement. Accordingly,
if Buyer or Sellers fail promptly to pay any amount due pursuant to this Section 10.3,
and, in order to obtain such payment, Buyer or Sellers, as the case may be,
commences a suit that results in a judgment against the other Party for the
Termination Fee or other amounts due pursuant to this Section 10.3,
such defaulting Party shall pay to the prevailing Party its costs and expenses
(including attorneys’ fees and expenses) in connection with such suit, together
with interest on the amount due pursuant to this Section 10.3 from
the date such payment was required to be made until the date of payment at the
prime rate of Citibank, N.A. in effect on the date such payment was required to
be made.

 65
 

 

10.4         Repayment
of Bridge Loans.   If this Agreement is terminated prior to Closing for
any reason other than by Sellers pursuant to Section 10.1(d)(ii), then
Parent shall repay to Clarient the unpaid principal and accrued and unpaid
interest under the Bridge Notes within two Business Days after the termination
of this Agreement; provided, however that
if (a) the board of directors of Parent or any committee thereof shall not
have effected or resolved to effect a Change of Recommendation and (b) Sellers
shall not have willfully and materially breached this Agreement prior to such
termination, the time for Parent’s repayment pursuant to this Section 10.4
shall be extended and Parent shall repay to Clarient the unpaid principal and
accrued and unpaid interest under the Bridge Notes within 30 days after the
termination of this Agreement (or, if earlier, by the then-applicable maturity
date of the Bridge Notes).

ARTICLE XI

MISCELLANEOUS

11.1         Press
Releases and Public Announcements.   No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the other
Party; provided, however, that (a) Buyer
or Parent may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the Party making such public
announcement will use its reasonable best efforts to advise the other Party
prior to making the disclosure) and (b) Sellers may correspond with third
parties in writings in form and substance reasonably satisfactory to Buyer with
respect to obtaining consents from such parties pursuant to Sections 3.6,
3.18 and 6.2. In furtherance of the foregoing sentence, the
Parties agree and acknowledge that Buyer and Parent will issue a joint press
release following the execution and delivery of this Agreement by the Parties
in the form previously agreed to by the Parties.

11.2         No
Third-Party Beneficiaries.   This Agreement shall not confer any rights
or remedies upon any Person other than the Parties, and their respective
successors and permitted assigns, other than as specifically set forth herein.

11.3         Entire
Agreement.   This Agreement (including the exhibits hereto) and the
Ancillary Agreements constitute the entire agreement among the Parties with
respect to the subject matter hereof and thereof and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof and
thereof.

11.4         Amendment.   This
Agreement may not be amended except by a written agreement executed by all
Parties.

11.5         Waivers.   The
rights and remedies of the Parties to this Agreement are cumulative and not
alternative; provided that the rights and
remedies granted herein are exclusive of any rights and remedies which the
Parties would otherwise have at law and in equity. Neither the failure nor any
delay by any Party in exercising any right, power or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
such right, power, or privilege will 

 66
 

 

preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (i) no claim or right
arising out of this Agreement or the documents referred to in this Agreement
can be discharged by one Party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
Parties; (ii) no waiver that may be given by a Party will be applicable
except in the specific instance for which it is given; and (iii) no notice
to or demand on one Party will be deemed to be a waiver of any obligation of
such Party or of the right of the Party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.

11.6         Successors
and Assigns.   This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Parties; provided, however,
that so long as Buyer remains liable for all obligations under this Agreement,
Buyer may assign any or all of its rights and interests hereunder to a
wholly-owned Subsidiary.

11.7         Counterparts.   This
Agreement may be executed in counterparts, including by facsimile transmission,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.

11.8         Notices.   All
notices and other communications required or permitted hereunder shall be in
writing, shall be effective when given, and shall in any event be deemed to be
given upon receipt or, if earlier, (a) five (5) days after deposit
with the U.S. Postal Service or other applicable postal service, if delivered
by certified or registered first class mail, postage prepaid, return receipt
requested, (b) upon delivery, if delivered by hand, (c) one Business
Day after the Business Day of deposit with Federal Express or similar overnight
courier, freight prepaid or (d) upon facsimile, if delivered by facsimile
transmission with copy by certified or registered first class mail, postage
prepaid, return receipt requested and shall be addressed to the intended
recipient as set forth below unless sent by facsimile on a day which is not a
Business Day, in which case on the next Business Day thereafter:

If to Buyer:

Clarient, Inc.

31 Columbia

Aliso Viejo, CA 92656

Attn:  Chief Financial Officer

Facsimile:  (949) 425-5701

Copy to:

Latham &
Watkins, LLP

Attn:  Alex Voxman, Esq.

633 West
Fifth Street, Suite 4000

Los Angeles, CA 90071-2007

Facsimile: (213) 891-8763

 67
 

 

If to Sellers:

c/o Trestle
Holdings, Inc.

199 Technology Drive #105

Irvine, California 92618

Attention:  Maurizio Vecchione

Facsimile:  (949) 673-1058

Copy to:

Kaye Scholer LLP

1999 Avenue of the Stars, Suite 1700

Los Angeles, California 90067

Attn:  Barry L. Dastin, Esq.

Facsimile:  (310) 788-1200

Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving seven (7) days’ advance written notice to the other
Party pursuant to the provisions above.

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

11.10       Forum
Selection; Consent to Jurisdiction.   All disputes arising out of or in
connection with this Agreement (other than matters subject to arbitration
pursuant to the terms of this Agreement or the other agreements delivered by
the Parties pursuant hereto) shall be solely and exclusively resolved by a
court of competent jurisdiction in the County of Orange, State of California or
the United States District Courts of the Central District of California. The
Parties hereby consent to the jurisdiction of the courts of the County of
Orange, State of California and the United States District Courts of the
Central District of California and waive any objections or rights as to forum
nonconvenience, lack of personal jurisdiction or similar grounds with respect
to any dispute relating to this Agreement.

11.11       Waiver
of Jury Trial.   EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO 

 68
 

 

ENFORCE EITHER OF SUCH WAIVERS, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 11.11.

11.12       Severability.   Any
term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse
to any Party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the greatest
extent possible.

11.13       Construction.   The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.

11.14       Attorneys’
Fees.   If any legal proceeding or other action relating to this
Agreement is brought or otherwise initiated, the prevailing Party shall be
entitled to recover reasonable attorney’s fees, costs and disbursements (in
addition to any other relief to which the prevailing Party may be entitled).

11.15       Nonsurvival
of Representations and Warranties.   None of the representations and
warranties in this Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the Closing.

11.16       Specific
Performance.   The parties hereto agree that irreparable damage would
occur in the event any of the provisions of this Agreement were not to be
performed in accordance with the terms hereof and that the Parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedies at law or in equity. Each Party agrees to waive any requirement for
the posting of, or securing of, a bond in connection with any such remedy.

11.17       Time
of Essence.   With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.

11.18       Interpretation
and Rules of Construction.   In this Agreement, except to the
extent otherwise provided or that the context otherwise requires:

 69
 

 

(a)           when
a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or a
Schedule or Exhibit to, this Agreement;

(b)           the
table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this
Agreement;

(c)           whenever
the words “include,” “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation”;

(d)           the
words “hereof,” “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;

(e)           all
terms defined in this Agreement have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein;

(f)            the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms;

(g)           any
law defined or referred to herein or in any agreement or instrument that is
referred to herein means such law or statute as from time to time amended,
modified or supplemented, including by succession of comparable successor laws;

(h)           references
to a Person are also to its successors and permitted assigns;

(i)            the
use of “or” is not intended to be exclusive unless expressly indicated
otherwise;

(j)            the
titles, captions or headings of the Articles and Sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.

11.19       Representation
by Counsel.   Each Party hereto represents and agrees with each other
that it has been represented by or had the opportunity to be represented by,
independent counsel of its own choosing, and that it has had the full right and
opportunity to consult with its respective attorney(s), that to the extent, if
any, that it desired, it availed itself of this right and opportunity, that it
or its authorized officers (as the case may be) have carefully read and fully
understand this Agreement in its entirety and have had it fully explained to
them by such Party’s respective counsel, that each is fully aware of the
contents thereof and its meaning, intent and legal effect, and that it or its
authorized officer (as the case may be) is competent to execute this Agreement
and has executed this Agreement free from coercion, duress or undue influence.

11.20       Disclosure
Letter.   It is expressly understood and acknowledged that any
information disclosed in the Sellers’ Disclosure Letter under any numbered or
lettered part shall be deemed to relate to and qualify representations and
warranties set forth in one or more other parts of the Sellers’ Disclosure
Letter, but only where the relevance of such disclosure to such 

 70
 

 

other part or parts is clear from the text of such
disclosure; provided, however,
the mere listing (or inclusion of a copy) of a document or other item shall not
by itself be deemed adequate to disclose an exception to a representation or
warranty made herein.

[Remainder
of page intentionally left blank.]

 71
 

 

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

	
  Buyer:

  	
  CLRT ACQUISITION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ron Andrews

  
	
   

  	
  Name:

  	
  Ron Andrews

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Clarient:

  	
  CLARIENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Ron Andrews

  
	
   

  	
  Name: 

  	
  Ron Andrews

  
	
   

  	
  Title: 

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Parent:

  	
  TRESTLE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maurizio Vecchione

  
	
   

  	
  Name:

  	
  Maurizio Vecchione

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Trestle
  Sub:

  	
  TRESTLE ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maurizio Vecchione

  
	
   

  	
  Name:

  	
  Maurizio Vecchione

  
	
   

  	
  Title:

  	
  CEO

  

 

 72

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