ASSET PURCHASE AGREEMENT

Exhibit 2.1

Execution Version

ASSET PURCHASE AGREEMENT

BY AND AMONG

FINANCIERE ELITECH SAS,

NANOGEN, INC.,

EPOCH BIOSCIENCES, INC.,

AND

NANOTRONICS, INC.

May 13, 2009

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (“ Agreement ”) is made as of May 13, 2009 (the “ Effective Date ”) by and among Financière Elitech SAS, a société par actions simplifiée formed under the laws of France (“ Buyer ”), Nanogen, Inc., a Delaware corporation (“ Nanogen ”), Epoch Biosciences, Inc., a Delaware corporation and wholly-owned subsidiary of Nanogen (“ Epoch ”), and Nanotronics, Inc., a California corporation and wholly-owned subsidiary of Nanogen (“ Nanotronics ” and, collectively with Nanogen and Epoch, the “ Sellers ” and each a “ Seller ”). Buyer and Sellers are sometimes referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties .” All terms used below without definition are defined in Article 1 hereof.

PRELIMINARY STATEMENTS

A. Nanogen, Epoch and Nanotronics anticipate that in the near future they will file voluntary petitions commencing cases under the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. They also anticipate that the cases will be jointly administered. Such cases are referred to in this Agreement collectively as the “ Chapter 11 Case ,” and the court in which the Chapter 11 Case will be pending is referred to as the “ Bankruptcy Court. ”

B. Sellers desire to sell, transfer, convey, assign and deliver to Buyer, in accordance with Sections 363 and 365 and the other applicable provisions of the Bankruptcy Code, all of the Purchased Assets upon the terms and subject to the conditions set forth in this Agreement.

C. Each of the Parties contemplates that the Purchased Assets will be sold pursuant to a Sale Order, and such order will authorize and direct the assumption and assignment by each Seller, as appropriate, of the Assumed Contracts under Section 365 of the Bankruptcy Code and the terms and conditions of this Agreement.

D. Subject to the Bankruptcy Court’s (1) approval of certain bid procedures (“ Bid Procedures ”) for the sale of the Purchased Assets pursuant to an auction (the “ Auction ”), (2) issuance of the Bid Procedure Order, and (3) issuance of the Sale Order, which Sale Order shall be a Final Order and, inter alia , incorporate the terms of this Agreement, Buyer will purchase from Sellers, and Sellers will sell, transfer, convey, assign and deliver to Buyer all of the Purchased Assets upon the terms and subject to the conditions set forth in this Agreement.

E. Buyer is entering into employment agreements (“ Employment Agreements ”) with the individuals listed on Exhibit A (the “ Transferred Employees ”) simultaneously with the execution and delivery of this Agreement, which, subject to the Closing and the consummation of the Contemplated Transactions, shall be effective as of the Closing Date.

F. Buyer, Nanogen and the shareholders of Buyer are entering into a mutual termination agreement and release simultaneously with the execution and delivery of this Agreement terminating that certain Share Exchange Agreement by and among Nanogen, Buyer and the shareholders of Buyer dated as of August 14, 2008.

G. In order to make a single bid for the Purchased Assets, Buyer has entered into an agreement with The Bay City Capital Fund V, L.P. (together with its Affiliates, “ BCC ”) pursuant to which BCC will finance a portion of the Purchase Price (provided that Buyer remains obligated to pay the full amount of the Purchase Price subject to the terms of this Agreement) and receive immediately subsequent to the Closing title to certain of the Purchased Assets, license to use certain of the Purchased Assets, and assignments of certain Contracts.

H. The Parties have agreed on the terms and conditions of a sale and assignment of the Purchased Assets to Buyer and the assumption of the Assumed Liabilities by Buyer on the terms and conditions set forth in this Agreement.

AGREEMENT

In consideration of the foregoing Preliminary Statements, and of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which each of the Parties hereby acknowledges, the Parties, intending to be legally bound, agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions .

Accounting terms used and not otherwise defined in this Agreement shall have the meanings given to them under GAAP. When used in this Agreement, the following terms in all of their tenses and cases shall have the meanings assigned to them below or elsewhere in this Agreement as indicated below:

“ 9.75% Convertible Notes ” means, collectively, those certain promissory notes entitled “Senior Secured Convertible Note” and “Amended and Restated Senior Secured Convertible Note”, in favor of the Investors, as applicable, dated August 14, 2008, in the aggregate original principal amount of $16,245,224.98.

“ Acquisition Proposal ” means a proposal relating to any merger, consolidation, business combination, sale, license or other disposition of any assets, rights or properties of Sellers or any of their respective assets pursuant to one or more transactions, sale of 50% or more of the outstanding shares of capital stock of any Seller (including by way of a tender offer) or similar transaction involving one or more third parties and any Seller.

“ Affiliate ” of any Person means any Person directly or indirectly controlling, controlled by or under common control with any such Person and any officer, director or controlling Person of such Person. For purposes of this definition, “control” (including “controlling,” “controlled by,” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” is defined in the Preamble.

 

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“ Allocation ” is defined in Section 4.2 .

“ Alternative Transaction ” means (i) a transaction involving the sale of all of the Purchased Assets contemplated by an Acquisition Proposal from a third party, or (ii) a plan of reorganization of any Seller not involving the sale of the Purchased Assets to Buyer or any third-party investor.

“ Assignment and Assumption Agreement ” means the Assignment and Assumption Agreement executed by Buyer and Sellers, substantially in the form attached to this Agreement as Exhibit B .

“ Assumed Contracts ” is defined in Section 2.1(j) .

“ Assumed Liabilities ” is defined in Section 3.1 .

“ Auction ” is defined in the Preliminary Statements.

“ Bankruptcy Code ” means Title 11 of the United States Code, as amended, 11 U.S.C. §§ 101, et seq .

“ Bankruptcy Court ” is defined in the Preliminary Statements.

“ BCC ” is defined in the Preliminary Statements.

“ Bid Letter ” or “ Bid Letters ” means those certain letter agreements entered into on August 14, 2008 between Buyer and each initial holder of Nanogen’s senior secured convertible bridge notes, pursuant to which Buyer agreed that upon an event of default under any such convertible bridge note or certain other senior convertible notes of Nanogen and the request of specified parties, Buyer would deliver a firm, binding irrevocable bid to acquire all of the NAD Quotas in an amount of at least seven million Euros (€7,000,000).

“ Bid Procedures ” is defined in the Preliminary Statements.

“ Bid Procedures Order ” means an order of the Bankruptcy Court substantially in the form attached as Exhibit C , which authorizes and approves, among other things: (i) the Break-up Fee and all other payments to Buyer arising under Section 9.3 as obligations of Sellers having super-priority as administrative expenses under Section 364(c)(1) of the Bankruptcy Code in the Chapter 11 Case; (ii) Buyer’s designation as the stalking horse bidder; (iii) the setting of a deadline for the filing of objections to the entry of the Sale Order; (iv) scheduling the Auction; (v) scheduling the sale hearing; (vi) providing for competitive bidding procedures pursuant to which competing offers may be solicited, made and accepted, including, without limitation, the bid protections and procedures set forth in Article 11 of this Agreement; and (vii) approving and implementing the provisions of Section 4.3 .

“ Bill of Sale ” means a bill of sale executed by each Seller, substantially in the form attached to this Agreement as Exhibit D .

“ Break-up Fee ” is defined in Section 9.3(b) .

 

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“ Business ” means all the operations carried on by Sellers up to the date hereof and all assets including products, components, regulatory filings, Contracts and Intellectual Property associated with the business of the Sellers, including the Molecular Diagnostics Business and the Point of Care Business.

“ Business Day ” means any day other than a Saturday, Sunday or any other day that banks located in Wilmington, Delaware, San Diego, California, or Paris, France are authorized or required by law to close.

“ Buyer ” is defined in the Preamble.

“ Buyer Bridge Note ” means that certain promissory note of Nanogen in favor of Buyer dated August 14, 2008 in the original principal amount of $3,000,000.

“ Chapter 11 Case ” is defined in the Preliminary Statements.

“ Claim ” means any claim, Lien, indenture, escrow, right of first refusal, Order or other Liability (whether arising by Contract or by operation of Law).

“ Closing ” and “ Closing Date ” are defined in Section 9.1 .

“ Contemplated Transactions ” means all of the transactions contemplated by this Agreement, including the Chapter 11 Case.

“ Contract ” means any written commitment, understanding, instrument, lease, pledge, mortgage, indenture, license, agreement, purchase or sale order, promise or similar arrangement evidencing or creating any legally binding obligation.

“ Convertible Notes Investors ” means, collectively, those certain lenders named as “Holder” on the 9.75% Convertible Notes.

“ Cure Costs ” means (i) all amounts necessary to cure any default on the part of any Seller under an Assumed Contract, which amounts must be paid to the nondebtor under such Assumed Contract, or with respect to which adequate assurance of prompt delivery by such Seller must be provided in accordance with Section 365(a) of the Bankruptcy Code, and (ii) all amounts which must be paid to a nondebtor as a prerequisite for such nondebtor’s consent to the assumption and assignment of an Assumed Contract, all as identified on Schedule 8.7 , or in any Order of the Bankruptcy Court.

“ Delta Point ” means Delta Point Cardiac Diagnostic, Inc., an international business company formed under the laws of Barbados.

“ Effective Date ” is defined in the Preamble.

“ Employee Benefit Plan ” means any “employee pension benefit plan” (as defined in Section 3(2) of ERISA), any “employee welfare benefit plan” or other employee benefit plan (as defined in Sections 3(1) or 3(3) of ERISA), and any other written or oral plan, agreement or arrangement involving direct or indirect compensation or benefits to any employees, including insurance coverage,

 

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cafeteria plan benefits, severance benefits, change of control, retention, performance, holiday pay, vacation pay, fringe benefit, disability benefits, pension, retirement plans, profit sharing, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation, that any Seller or its ERISA Affiliates maintains or to which any of them contributes.

“ Employment Agreements ” is defined in the Preliminary Statements.

“ Epoch ” is defined in the Preamble.

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

“ ERISA Affiliate ” means any other corporation or trade or business under common control with Seller as determined under Section 414(b), (c) or (m) of the Internal Revenue Code.

“ Final Order ” means an Order of the Bankruptcy Court that has not been stayed and as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or motion for reargument, rehearing or relief from judgment is then pending and, in the event that any appeal, writ for certiorari, or reargument or rehearing thereof has been sought, such Order of the Bankruptcy Court shall have been upheld by the highest court to which such Order was appealed, or from which certiorari, reargument or rehearing was sought and the time to take any further appeal, petition for certiorari, or motion for reargument or rehearing shall have expired; provided , however , that merely because Rule 9024 of the Federal Rules of Bankruptcy Procedure provides that a motion under Rule 60 of the Federal Rules of Civil Procedure can be filed after such date shall not prevent such Order from being a Final Order.

“ Former Nanogen Employee ” is defined in Section 8.4(a) .

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

“ Governmental Approvals ” means any approval, consent, permit, license, waiver, or other authorization issued, granted, given or otherwise made available by or under any Governmental Authority or pursuant to any Law.

“ Governmental Authority ” means any foreign, federal, state, regional or local authority, agency, body, court or instrumentality, regulatory or otherwise, which, in whole or in part, was formed by or operates under the auspices of any foreign, federal, state, regional or local government.

“ Harmful Code ” means any computer code or other mechanism of any kind designed to disrupt, disable or harm in any manner the operation of any software or hardware or other business processes or to misuse, gain unauthorized access to or misappropriate any business or personal information, including worms, bombs, backdoors, clocks, timers, or other disabling device code, or designs or routines that cause software or information to be erased, inoperable, or otherwise incapable of being used, either automatically or with passage of time or upon command.

 

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“ Intellectual Property ” means any and all (i) trade names, trademarks, service marks, mask works and all registrations and applications for any of the foregoing; (ii) works of authorship, all copyrights related thereto and all registrations and applications therefor; (iii) inventions, formulations, discoveries, designs, industrial models, and all United States and foreign patent rights covered by, disclosed in, or otherwise related thereto, all registrations and applications therefor, and all reissues, divisions, continuations-in-part, re-examinations and extensions thereof, (iv) goodwill associated with the foregoing, and (v) undocumented intellectual property, including know-how, trade secrets, processes, technology, discoveries, unpatented inventions and designs, software, formulae, procedures and other intellectual property, documentation relating to any of the foregoing, shop rights and the right to apply for patent, design or similar protection therefor anywhere in the world.

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

“ Inventory ” means all inventory of either Seller, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by such Seller in the production of finished goods related to the Business.

“ Investor Bridge Notes ” means those certain promissory notes in favor of the Investors, as applicable, dated August 14, 2008, in the aggregate original principal amount of $5,000,000.

“ Investors ” means, collectively, those certain lenders named as “Holder” on the Investor Bridge Notes.

“ Knowledge ” of a Person or any similar phrase means, with respect to any fact or matter, the knowledge of such Person or the directors and executive officers of such Person and, with respect to the Knowledge of Sellers, also means the knowledge of Messrs. Merl Hoekstra, Walter Mahoney and Fabrizio Gatti.

“ Law ” means any federal, state, regional, local or foreign law, rule, statute, ordinance, rule, Order or regulation.

“ Legal Proceeding ” means any action, suit, litigation, arbitration proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation threatened, commenced, brought, conducted or heard by or before, or otherwise involving any court or other Governmental Authority or any arbitrator or arbitration panel.

“ Liability ” means any liability, debt, responsibility or obligation of any kind (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).

 

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“ Lien ” means any lien, charge, mortgage, covenant, easement, adverse claim, encumbrance, restriction, security interest, pledge, or title defect, whether arising by Contract or by operation of Law.

“ Limited Guaranty ” means that certain limited guaranty dated August 14, 2008, pursuant to which Buyer agreed to guarantee certain of Nanogen’s obligations under the Investor Bridge Notes, including payment of principal amount not to exceed five million dollars ($5,000,000) and certain interest payments.

“ Material Adverse Effect ” means any result, occurrence, condition, fact, change, violation, event or effect that, individually or in the aggregate with any such other results, occurrences, conditions, facts, changes, violations, events or effects, is or could reasonably be expected to be (whether or not such result, occurrence, condition, fact, change, violation, event or effect has, during the period or at any time in question, manifested itself in the historical financial statements of Nanogen or Epoch) materially adverse to (A) the business, operations, assets, liabilities, condition (financial or other) or results of operations of the Business taken as a whole, or (B) the ability of any Seller to perform its obligations under this Agreement or consummate the Contemplated Transactions; provided , however , that none of the following shall be deemed either alone or in combination to constitute, and none of the following shall be taken into account in determining whether there has been or would be, a Material Adverse Effect on any Seller: (i) any changes affecting the industry in which the Business operates that do not have a disproportionate impact in any material respect on the Business, (ii) any changes in general economic conditions or the capital markets that do not disproportionately impact in any material respect the Business, (iii) the taking of any action required by this Agreement or to which Buyer has given its written consent, (iv) any changes or effects that Sellers can demonstrate are primarily attributable to the commencement, announcement or the pendency of the Contemplated Transactions, including disruption or loss of customers, business partners, suppliers or employee relations, (v) any noncompliance with the terms of the Nanogen Convertible Notes, (vi) any change in the cash reserves of Nanogen or (vii) any noncompliance with the terms of the Nanogen Convertible Notes.

“ Material Assumed Contracts ” is defined in Section 2.1(j) .

“ Mirina ” means Mirina Corporation, a Delaware corporation.

“ Mirina Stock ” is defined in Section 2.1(b) .

“ Molecular Diagnostics Business ” means all the operations carried on by Sellers up to the Effective Date and assets including products, components, regulatory filings, Contracts and Intellectual Property associated with the development, production, distribution and sale of products relating to research and diagnostic testing based on amplification and detection of nucleic acid carried out by Nanogen, NAD and Epoch, including the product lines Q-PCR Alert and PCR Alert.

“ NAD ” means Nanogen Advanced Diagnostics S.r.l., a società a responsabilità limitata formed under the laws of Italy.

 

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“ NAD Intercompany Receivable ” means the accumulated intercompany debt associated with the purchase of Intellectual Property and operational activities between NAD and Nanogen, as reflected in the Nanogen/Epoch March 31 Balance Sheet and the Nanogen/Epoch Closing Date Balance Sheet.

“ NAD Quotas ” is defined in Section 2.1(a) .

“ Nanogen ” is defined in the Preamble.

“ Nanogen Convertible Notes ” means, collectively, Nanogen’s senior secured convertible bridge notes, 9.75% senior secured convertible notes, 6.25% senior convertible notes, and 9.75% amended and restated senior secured convertible notes.

“ Nanotronics ” is defined in the Preamble.

“ New Bidder ” is defined in Section 4.3(a).

“ Nexus Real Property Lease ” means that certain real property lease agreement dated February 25, 2000, by and between Nexus Canyon Park LLC (“ Nexus ”), and Epoch f/k/a Epoch Pharmaceuticals, Inc., a Delaware corporation, as amended by the First Amendment to Lease dated April 15, 2003 between Nexus and Epoch.

“ Order ” means any order, judgment, injunction, award, decree or writ rendered or issued by, or emanating from, any Governmental Authority.

“ Party ” and “ Parties ” are defined in the Preamble.

“ Periodic Taxes ” is defined in Section 10.3 .

“ Permitted Liens ” means easements and other non-material encumbrances on real property that run with the land.

“ Person ” means any individual, corporation, partnership, limited liability company, association or any other entity or organization.

“ PGx Interest ” is defined in Section 2.1(n).

“ Point of Care Business ” means all the operations carried on by Sellers up to the Effective Date and assets including products, components, regulatory filings, Contracts and Intellectual Property associated with the development, production, distribution and sale (whether such activities are being carried out by Sellers at a Sellers’ facilities located in Toronto, Canada, San Diego, California or elsewhere) of rapid qualitative tests for cardiac markers, rapid quantitative tests for cardiac markers, rapid tests for infectious disease, or other rapid testing, including Intellectual Property associated with stroke, traumatic brain injury and other diseases; the Vyent, Cardiac STATus and Decision Point product lines; and the NeXus Dx platform.

“ Proration Periods ” is defined in Section 10.3 .

 

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“ Purchase Price ” is defined in Section 4.1 .

“ Purchased Assets ” is defined in Section 2.1 .

“ Purchased Intellectual Property ” is defined in Section 2.1(c) .

“ Recognomics ” means Nanogen Recognomics GmbH, a majority-owned subsidiary of Nanogen formed under the laws of Germany.

“ Registered Intellectual Property ” means Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued by, filed with, or recorded by any Governmental Authority or quasi-governmental agency or non-governmental registrar (whether provisional, supplemental, or otherwise), anywhere in the world.

“ Retained Contracts ” means all Contracts to which any Seller is a party and which are not specifically defined as Assumed Contracts, including the Toronto Lease and the San Diego Lease.

“ Sale Date ” means the date that the Sale Order is entered on the Bankruptcy Court’s docket.

“ Sale Order ” means the Order of the Bankruptcy Court substantially in the form of Exhibit E (with only such material changes as are approved by Buyer and Sellers, which approval shall not be unreasonably withheld), to be issued by the Bankruptcy Court pursuant to Sections 363 and 365 of the Bankruptcy Code (i) approving this Agreement and the Contemplated Transactions, (ii) approving the sale of the Purchased Assets to Buyer free and clear of all Liens other than Permitted Liens pursuant to Section 363(f) of the Bankruptcy Code, (iii) approving the assumption and assignment to Buyer of any Assumed Contracts, effective upon the Closing of the Contemplated Transactions and subject to Buyer’s rights in Section 2.2 , and finding that all Cure Costs have been satisfied, (iv) finding that Buyer is a good faith purchaser entitled to the protections of Section 363(m) of the Bankruptcy Code, (v) finding that Buyer is relying on having, immediately after Closing, ownership of the Purchased Assets free and clear of all Liens, other than Permitted Liens, and that Buyer would not pay the Purchase Price if it were not receiving for such consideration all of the Purchased Assets free and clear of all Liens, other than Permitted Liens, and (vi) finding that if the Purchased Assets are not free and clear of all Liens, other than Permitted Liens, upon Closing, then the consideration for the Contemplated Transactions will fail, and the Purchase Price, if paid, will be returned to Buyer.

“ San Diego Lease ” means the Standard Industrial/Commercial Single-Tenant Lease-Net between Nanogen, Inc. and LMP Properties LTD., dated June 29, 1994 as amended by First Amendment to Lease between Kilroy Realty, L.P. and Nanogen, Inc., dated March 14, 2001.

“ SEC ” is defined in Section 5.15 .

“ Sellers ” is defined in the Preamble.

“ Tangible Personal Property ” is defined in Section 2.1(e) .

 

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“ Tax ” or “ Taxes ” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Internal Revenue Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

“ Tax Returns ” means any return, report or declaration filed with or submitted to any Governmental Authority in connection with the assessment, collection or payment of any Tax.

“ Third-Party Intellectual Property ” is defined in Section 5.4(b) .

“ Toronto Lease ” means the Lease between 1159006 Ontario Limited and Nanogen, Inc. (o/a Point of Care Diagnostics Division), dated April 19, 2007.

“ Transaction Taxes ” is defined in Section 10.2 .

“ Transferred Employees ” is defined in the Preliminary Statements.

“ Treasury Regulations ” means temporary and final regulations promulgated under the Internal Revenue Code by the United States Department of the Treasury (including corresponding provisions of succeeding regulations).

1.2 Interpretation . When a reference is made in this Agreement to a Section, Schedule or Exhibit, such reference shall be to a Section, Schedule or Exhibit of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “included,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the phrase “without limitation.” Unless otherwise indicated, all references to dollars refer to United States dollars. The Parties acknowledge that all Parties have participated in the drafting and preparation of this Agreement and agree that any rule of construction to the effect that ambiguities are to be construed against the drafting party shall not be applied to the construction or interpretation of this Agreement.

ARTICLE 2

PURCHASE AND SALE OF ASSETS

2.1 Purchased Assets . Subject to the terms and conditions of this Agreement and the approval of this Agreement by the Bankruptcy Court and the entry of a Sale Order that is a Final Order, and pursuant to Sections 363 and 365 of the Bankruptcy Code, effective as of the Closing, Sellers shall sell, transfer, convey, assign and deliver to Buyer or Buyer’s designee, free and clear of all Liens except the Permitted Liens, and Buyer shall purchase, all of Sellers’ respective right, title and interest in and to all of the assets owned by Sellers and used in the Business, including the following assets owned by Sellers (collectively, the “ Purchased Assets ”):

(a) NAD Quotas . All of the quotas representing the entire outstanding capital stock of fifty thousand Euros (€ 50,000) of NAD (the “ NAD Quotas ”);

 

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(b) Mirina Stock . One million three hundred thousand (1,300,000) shares of common stock, par value $0.001 per share, of Mirina issued to Nanogen as partial consideration for that certain License and Supply Agreement dated August 5, 2008 by and among Nanogen, Epoch and Mirina (the “ Mirina Stock ”).

(c) Intellectual Property . All Intellectual Property owned by, or licensed to, the respective Sellers that is used in the Business, including the Intellectual Property listed and described in Schedule 2.1(c) (collectively, the “ Purchased Intellectual Property ”);

(d) Names . Web sites and contact information to the extent relating to the Business; all corporate and trade names used at any time by Sellers relating to the Business, including the name “Nanogen”; all Internet domain names in all forms that include in whole or in part any words consisting of or similar to the names set forth in Schedule 2.1(d) and all content in electronic and other forms with respect to Sellers’ Internet web sites relating to the Business; and all telephone and facsimile numbers and post office boxes used by Sellers relating to the Business;

(e) Tangible Personal Property . All design, manufacturing, laboratory, test, and other tools; all machinery, equipment, furniture, fixtures, tools, spare parts, supplies, maintenance equipment and materials; all computers, servers, routers, and other computer networking components; and all other items of tangible personal property of every description that are used in the Business (collectively, the “ Tangible Personal Property ”), other than as set forth on Schedule 2.1(e) ;

(f) Inventory and Supplies . To the extent relating to the Business, all Inventory and supplies of Sellers including all hardware, software, devices, tools, and other products of every kind held for sale, license or other form of distribution to customers in whatever form and media, work-in-progress, office supplies, and goods shipped from vendors on or prior to the Closing Date but not yet received by Sellers;

(g) Receivables and Prepaids . To the extent relating to the Business, all accounts receivable, the NAD Intercompany Receivable, general intangibles, deposits (including the deposit for the Nexus Real Property Lease), refunds, unbilled costs and fees, any items prepaid by any Seller, rights of set-off, promissory notes and other obligations of any kind payable to Sellers, coverage and other rights under any insurance policies, and other receivables of any kind;

(h) Records . All of the charters, minute books and any qualifications to conduct business as a foreign corporation for NAD, customer, supplier and accounting records, catalogues and sales literature, marketing material (including design, graphics, and artwork), forms, technical, production and customer manuals, correspondence, production records, employment records of Former Nanogen Employees (to the extent permitted by Law), financial statements and information, and any other files, records, or information possessed by Sellers, wherever located and whether in paper, electronic or other form, to the extent they relate to any or all of the assets otherwise described in this Section 2.1 or the Business;

 

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(i) Leased Real Property . All of Sellers’ respective interests as tenant in the Nexus Real Property Lease;

(j) Contracts and Licenses . To the extent relating to the Business, and to the extent transferable by their terms or pursuant to any consent or notice obtained in connection with this Agreement or the Sale Order, all rights and benefits under all Contracts, Governmental Approvals, and other documents, commitments, arrangements, undertakings, or authorizations, including the Nexus Real Property Lease, and Contracts listed in Schedule 2.1(j) (collectively, the “ Assumed Contracts ”) (such Contracts listed in Sections 5.4(b), 5.4(h), and 5.10(c) of Sellers’ Disclosure Schedule , as well as the Nexus Real Property Lease, are collectively referred to in this Agreement as the “ Material Assumed Contracts ”);

(k) Litigation Claims . Other than (x) as set forth in Schedule 2.1(k) and (y) the avoidance actions described in Section 2.3(d) , any and all claims, demands, rights defenses, actions, causes of action, suits, Contracts, obligations, accounts, defenses, offsets, powers, privileges, licenses and franchises of any kind or character whatsoever, known or unknown, suspected or unsuspected, whether arising prior to, on or after the date on which the Chapter 11 Case is commenced, in contract or in tort, at law or in equity, or under any other theory of law, held by Sellers or their estates against any Person, including (i) rights of setoff, counterclaim, or recoupment, and claims on contracts or for breaches of duties imposed by Law and (ii) such claims and defenses as fraud, mistake, duress and usury.

(l) Protective Rights . To the extent relating to the Business, all assignable rights (but no Liabilities) conferred in favor of Sellers by Sellers’ predecessors, stockholders, employees, or other Persons, which rights (i) impose obligations of confidentiality, non-disclosure, or assignment of Intellectual Property rights to or for the benefit of Sellers, (ii) provide any term of express or implied indemnity, warranty, guaranty or similar rights arising from or relating to any of the assets listed in this Section 2.1 , or (iii) limit competition or non-solicitation of Sellers’ respective employees or customers;

(m) Insurance Policies . Other than as set forth in Schedule 2.1(m) , all insurance policies of each Seller and all rights thereunder (including any and all insurance refunds owed or claims made under such policies on or before the Closing Date relating to the Purchased Assets);

(n) Other Equity Interests . All equity interests owned by the Sellers in (i) Recognomics, (ii) Pharmacogenetics Diagnostics Laboratory LLC (the “ PGx Interest ”), and (iii) Delta Point; and

(o) General . All other tangible and intangible personal property wherever located to the extent used by Sellers in connection with any or all of the assets listed above or the Business; provided , however , that in no event shall Purchased Assets include Retained Assets.

 

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2.2 Deletion of Purchased Assets . At any time prior to the Closing Date, and upon giving at least five (5) Business Days’ prior written notice to Sellers, Buyer shall have the right, in its sole discretion, to delete in whole or part any of the Purchased Assets and not acquire such deleted Purchased Assets at Closing; provided , however , that no adjustment shall be made to the Purchase Price as a result of any such deletion unless such deletion is a result of Buyer’s purchase of the NAD Quotas due to any Person’s exercise of rights under the Bid Letters, in which case the Purchase Price shall be reduced dollar for dollar by the amount of the purchase price bid and paid by Buyer for the NAD Quotas pursuant to an agreement other than this Agreement. If required pursuant to the Bid Letters, for purposes of converting the purchase price for the NAD Quotas from Euros to Dollars, the Parties will use the exchange rate as published in The Wall Street Journal on the Business Day immediately preceding the date on which such purchase price is actually paid by Buyer.

2.3 Retained Assets . Notwithstanding anything to the contrary in this Agreement, Sellers shall not sell, transfer, convey, assign or deliver and Buyer shall not purchase or acquire any assets of Sellers other than the Purchased Assets as described in this Agreement and the related schedules, including the assets set forth in Schedule 2.3 . Without limiting the generality of the foregoing, Buyer shall not acquire any assets of Sellers that do not relate to the Business, including the following:

(a) Retained Contracts . All rights of Sellers under or pursuant to this Agreement (including the Purchase Price) and the Schedules attached to this Agreement, any other Contracts entered into by Sellers with Buyer pursuant to this Agreement, and the Retained Contracts;

(b) Certain Records . The charter, minute book, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, personnel records, stock records and Tax Returns of Nanogen and other similar books and records, financial records, books of account, bank and brokerage records and statements for Affiliates of Nanogen other than Epoch and NAD;

(c) Equity Interests . Any equity interests or other ownership interests in Sellers and their Affiliates (including Nanogen Point of Care, Inc.) other than the NAD Quotas, the Mirina Stock, Recognomics, the PGx Interest and Delta Point;

(d) Avoidance Actions . All of Sellers’ claims or causes of action under Chapter 5 of the Bankruptcy Code;

(e) Cash and Cash Equivalents . All of Sellers’ cash and cash equivalents (it being agreed that (i) cash or cash equivalents held by NAD, and (ii) cash received by any Seller from and after the Effective Date and prior to the Closing as (y) a prepayment of royalties related to any Purchased Intellectual Property made outside the ordinary course of business and specifically excluding any proceeds of the License Agreement with Life Technologies or (z) a prepayment relating solely to work to be performed by Buyer or its designee subsequent to Closing, shall not be considered a Retained Asset);

(f) Receivables; Deposits . All of Sellers’ accounts receivable from employees of the Sellers other than Former Nanogen Employees, and all deposits related to the San Diego Lease and the Toronto Lease; and

 

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(g) Tax Claims . All Tax Claims which any Seller or any Affiliate of any Seller may have against any Governmental Authority for refund or credit of any type with respect to Taxes applicable to the Business for periods ending on or prior to the Closing Date, including any Tax refund due to Sellers with respect to periods ending on or prior to the Closing Date.

ARTICLE 3

ASSUMPTION OF LIABILITIES

3.1 Assumed Liabilities . Notwithstanding anything to the contrary in this Agreement, Sellers shall not sell, transfer, convey, assign or deliver and Buyer shall not purchase, acquire or assume any Liabilities or other obligations of any Seller or of any Seller’s respective Affiliates (other than NAD) other than the Assumed Liabilities as specifically described in this Agreement. Without limiting the generality of the foregoing, upon the terms and subject to the conditions of this Agreement, Buyer shall assume, pay, perform and discharge when due, effective as of the Closing Date and thereafter, only the following Liabilities (collectively, the “ Assumed Liabilities ”):

(a) Assumed Contracts . All of the Liabilities under the Assumed Contracts arising from and after the Closing Date, but only after any and all Cure Costs have been paid or adequately reserved for by Sellers pursuant to Section 4.1 of this Agreement. Sellers shall be responsible for the payment, performance and discharge when due of the Liabilities under the Assumed Contracts arising prior to the Closing Date; and

(b) Former Nanogen Employee Liabilities . All Liabilities for accrued vacation of the Former Nanogen Employees, subject to the limits set forth in Sellers’ Employee Benefit Plans and Section 8.4(a) , but expressly excluding any Liabilities for bonuses accrued and payable to any Former Nanogen Employees or any other employees of Sellers.

3.2 Excluded Liabilities . Each Seller shall retain all Liabilities not specifically included in the Assumed Liabilities, and Buyer shall have no obligation whatsoever to pay, perform or discharge when due such Excluded Liabilities.

ARTICLE 4

CONSIDERATION

4.1 Purchase Price . The total consideration to be paid by Buyer to Sellers for the Purchased Assets is twenty-five million six hundred eighty-five thousand dollars ($25,685,000) (the “ Purchase Price ”), which shall be in the following form: (i) the payment to Sellers in cash in an amount equal to twenty-one million five hundred nine thousand thirteen dollars ($21,509,013), (ii) the credit bid amount of four million one hundred seventy-five thousand nine hundred eighty-seven dollars ($4,175,987) based on debt owed by Nanogen to Buyer as of the Effective Date, and (iii) the assumption by Buyer of the Assumed Liabilities. Notwithstanding the foregoing, if any Person exercises its rights under the Limited Guaranty between the Effective Date and the Closing, then the cash portion of the Purchase Price as set forth in clause (i) of the preceding sentence shall be reduced dollar for dollar by the amount that

 

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Buyer is required to pay under the Limited Guaranty, and the credit bid portion of the Purchase Price as set forth in clause (ii) of the preceding sentence shall be increased dollar for dollar by any such amount. Sellers shall be responsible for paying any Cure Costs under the Assumed Contracts on or prior to the Closing Date.

4.2 Allocation of Purchase Price . (a) Within 90 days following the Closing Date, Sellers and Buyer shall each prepare, in accordance with Internal Revenue Code Section 1060 and the applicable Treasury Regulations and any comparable provisions of Law, as appropriate, their proposed allocation, including Internal Revenue Service Form 8594 (the “ Allocation ”), in respect of the Purchased Assets that such Party intends to use in connection with its Tax Returns, and shall provide the other Party with a copy of same. Each Party agrees to consider any comments received within the following 30-day period from any other Party regarding such Party’s proposed Allocation, and shall furnish the other Parties with such cooperation and existing information as is reasonably requested by the other Parties in connection therewith. Notwithstanding the foregoing, nothing herein shall require the Parties to agree upon their respective Allocations, and the Parties specifically acknowledge that, to the extent that they cannot agree, the Allocations submitted to the Internal Revenue Service on their respective Forms 8594 may in fact be inconsistent.

(b) Notwithstanding anything herein or in any credit document relating to Buyer to the contrary, Sellers shall apply the Purchase Price proceeds as follows, and Buyer agrees to support Sellers’ application of, and not to contest the receipt by the Persons referred to below of, the Purchase Price in the manner set forth below:

(i) First, the portion of the Purchase Price relating to the assets of the U.S. subsidiaries of Nanogen shall be applied (A) first, to satisfy the obligations of Nanogen (and Epoch/Nanotronics under that certain Guaranty dated August 14, 2008) to the Investors under the Investor Bridge Notes, and (B) second, to satisfy the obligations of Nanogen (and Epoch/Nanotronics under that certain Guaranty dated August 14, 2008) to Buyer under the Buyer Bridge Note (which allocation, if any, shall take the form of a credit bid, as described in Section 4.1);

(ii) Second, the portion of the Purchase Price relating to the NAD Quotas shall be applied (A) first, to satisfy the obligations of Nanogen (and Epoch/Nanotronics under that certain Guaranty dated August 14, 2008) to the Investors under the Investor Bridge Notes, if any, and (B) second, to satisfy the obligations of Nanogen (and Epoch/Nanotronics under that certain Guaranty dated August 14, 2008) to Buyer under the Buyer Bridge Note (which allocation, if any, shall take the form of a credit bid, as described Section 4.1), and (C) third, to satisfy the obligations of Nanogen to the Convertible Notes Investors under the 9.75% Convertible Notes; and

(iii) Third, the portion of the Purchase Price relating to the assets of Nanogen other than the NAD Quotas shall be applied (A) first, to satisfy the obligations of Nanogen to the Convertible Notes Investors under the 9.75% Convertible Notes, if any, and (B) second, to satisfy the obligations of Nanogen (and Epoch/Nanotronics under that certain Guaranty dated August 14, 2008) to Buyer and the Investors in respect of the Buyer Bridge Note and the Investor Bridge Notes, if any, each as applicable, which shall be applied pro rata among any such remaining obligations to Investors and Buyer.

 

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4.3 Alternative Transaction Provisions .

(a) No Solicitation Before Entry of Bid Procedures . From and after the Effective Date and until such time as the entry of the Bid Procedures Order on the Bankruptcy Court’s docket, Sellers shall not, and shall cause their respective Affiliates not to:

(i) directly or indirectly, (A) solicit, initiate, seek, entertain or knowingly encourage, or take any action to solicit, initiate, seek, entertain or knowingly encourage any inquiries or communications from any New Bidder (as hereinafter defined) relating to, or the making of any proposal or offer that constitutes or may constitute, an Acquisition Proposal, (B) participate in any discussions or negotiations relating to any Acquisition Proposal with any New Bidder, (C) furnish to any New Bidder any information that could reasonably be expected to be used by such New Bidder for the purposes of formulating any inquiry, expression of interest, proposal or offer relating to an Acquisition Proposal, or (D) accept any Acquisition Proposal or enter into any agreement, arrangement or understanding (whether written or oral) with any Person providing for the consummation of any transaction contemplated by any Acquisition Proposal or otherwise relating to any Acquisition Proposal;

(ii) release any Person from any confidentiality and/or standstill provisions of any Contract to which any Seller, NAD or any of their respective Affiliates is a party in connection with an Acquisition Proposal;

(iii) fail to notify Buyer in writing promptly after receipt by any Seller or NAD (or any of their respective officers, directors, advisors or agents) at any time on or before the Closing of any Acquisition Proposal, and such notice to Buyer shall indicate in reasonable detail the identity of the Person making such proposal and the terms and conditions of such proposal, and any written material (including in electronic form) embodying or concerning such proposal; and

(iv) make any Person other than Buyer the “stalking horse bidder”.

As used herein, “New Bidder” shall mean any Person who has not been provided access to the Sellers’ electronic data room prior to the Effective Date.

(b) Solicitation After Entry of Bid Procedures . Sellers shall be entitled to consider proposals for Alternative Transactions involving only the Purchased Assets as a whole from third parties consistent with their fiduciary obligations as debtors-in-possession in the Chapter 11 Case. Furthermore, Buyer acknowledges that after entry of the Bid Procedures Order on the Bankruptcy Court’s docket, Sellers may solicit bids from other prospective purchasers for the sale of all, but not less than all, of the Purchased Assets in accordance with the procedures set forth in the Bid Procedures Order and Article 11 .

 

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ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers represent and warrant to Buyer on the Effective Date and as of the Closing Date that the statements contained in this Article 5 are true and correct, except as set forth in Sellers’ Disclosure Schedule attached as Exhibit F (“ Sellers’ Disclosure Schedule ”). Sellers agree to prepare and arrange Sellers’ Disclosure Schedule in sections and paragraphs corresponding to the Sections contained in this Article 5 , and the disclosure in any section or paragraph of Sellers’ Disclosure Schedule qualifies other Sections in this Article 5 only to the extent it is clear that a given disclosure is applicable to other Sections.

5.1 Organization; Corporate Power of Sellers . Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was formed. NAD is a società a responsibilità limitata duly organized, validly existing and in good standing under the laws of Italy. Delta Point is a corporation duly organized, validly existing and in good standing under the laws of Barbados. Each Seller has full corporate power to: (a) own, lease and operate the Purchased Assets and carry on the Business as and where such assets are now owned or leased and as the Business is presently being conducted; and (b) execute, deliver and perform this Agreement and all other agreements and documents to be executed and delivered by it in connection with this Agreement, subject to and after giving effect to the approval of the Bankruptcy Court as reflected by a Sale Order that is a Final Order (including satisfying any conditions imposed by the Bankruptcy Court) and compliance with all requirements of the Bankruptcy Code. Each of NAD and Delta Point has full corporate power and authority and all material licenses, permits, and authorizations necessary to carry on the business in which it is engaged and to own and use the assets owned and used by it.

5.2 Enforceability . All requisite corporate action to approve, execute, deliver and perform this Agreement and consummate the Contemplated Transactions has been taken by each Seller, subject to the entry of the Sale Order becoming a Final Order with respect to each Seller. This Agreement and each other agreement and document delivered by any Seller in connection with this Agreement have been duly executed and delivered by such Seller and, assuming due authorization, execution and delivery by Buyer, constitute the binding obligation of such Seller, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other Laws affecting creditors’ rights generally, and by principles of equity.

5.3 No Conflicts; Consents .

(a) No Conflicts . Except as set forth in Section 5.3(a) of Sellers’ Disclosure Schedule , each Seller’s execution, delivery, and performance of this Agreement and/or the consummation by such Seller of the Contemplated Transactions do not:

(i) Conflict with or violate any provision of the formation or corporate governance documents, each as amended to date, of such Seller, NAD or Delta Point;

 

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(ii) Require such Seller or any of its respective subsidiaries to make any filing with, or obtain any permit, authorization, consent or approval of, any Governmental Authority or other Person, other than as contemplated by this Agreement and the Contemplated Transactions, including the Chapter 11 Case and the motion and related pleadings necessary to seek and obtain the approval of this Agreement;

(iii) Result in a breach or default under, create in any Person the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any Contract, Governmental Approval, indebtedness, Lien or other agreement or obligation to which such Seller, NAD or Delta Point is a party or to which any of their respective assets is subject, in any case with or without due notice or lapse of time or both;

(iv) Result in the imposition of any Claim upon any assets of such Seller, NAD or Delta Point other than Permitted Liens; or

(v) Violate any Law, Order, writ, or injunction applicable to such Seller, NAD or Delta Point or any of their respective assets or subsidiaries;

except, in the case of (ii), (iii), (iv) and (v), as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(b) Consents . Section 5.3(b) of Sellers’ Di