Exhibit 10.40
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ASSET PURCHASE OPTION AGREEMENT
BY AND BETWEEN
PROTEIN POLYMER TECHNOLOGIES, INC.
and
SURGICA CORPORATION
November 23, 2005
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EXECUTION COPY
ASSET PURCHASE OPTION AGREEMENT
THIS ASSET PURCHASE
OPTION
AGREEMENT
(this
"Agreement") is made and
entered
into as of
November
23, 2005 by and between
Surgica
Corporation,
a
Delaware corporation (the "Company") and Protein Polymer
Technologies,
Inc., a
Delaware
corporation (the
"Optionee").
Unless otherwise
defined herein,
all
capitalized
terms used
herein
shall
have the
respective
meanings
ascribed
thereto in the Purchase Agreement (defined below).
R E C I T A L S
WHEREAS,
the
Company
and the
Optionee
propose
to enter
into that
certain
License
Agreement
and that
certain
Supply and
Services
Agreement,
attached
hereto as Exhibit A and
Exhibit B,
respectively
(collectively,
the
"License Agreement"),
pursuant to which the Company,
among other things, would
license to Optionee certain
intellectual
property (including patent and patent
applications), as well as marketing and distribution rights;
WHEREAS,
in order to induce the
Optionee
to enter
into the
License
Agreement
and to advance funds to the Company,
pursuant to this
Agreement and
subject to the terms herein,
the Optionee shall have the right to purchase from
the
Company
substantially
all of the assets of the
Company
now
existing or
hereafter
acquired
through
the date of the
exercise
of the Option
(defined
below) (the
"Assets") for the purchase
price
described in Section 1.4 of this
Agreement.
NOW,
THEREFORE,
in consideration of the premises and mutual covenants
and agreements
herein set forth and for other good and valuable
consideration,
the receipt and adequacy of which are hereby
acknowledged,
each of the parties
hereto (individually,
a "Party",
collectively,
the "Parties") hereby agree as
follows:
ARTICLE I
OPTION TO PURCHASE
Section 1.1.
Option to Purchase Assets.
---------------------------------------
Subject to the
satisfaction
or waiver of the
conditions set forth in
Article V hereof,
the Company
hereby grants to Optionee the option to purchase
substantially
all of the Assets
(the
"Option")
during the Option
Period (as
defined in Section 1.2 of this Agreement),
as the same may be extended pursuant
to the terms
hereof,
or such later date as the Parties
shall
mutually
agree
upon.
The date on which the Option
becomes
effective is referred to herein as
the "Option Effective Date."
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Section 1.2.
The Option Period.
-------------------------------
The "Option
Period" shall commence on the date hereof and extend until
One (1) year from the Effective
Date,
provided that,
upon written notice from
Optionee to the Company not more than 60 days and not less than 30
days prior to
such
date,
the
Option
Period
may be
extended
until Two (2) years from the
Effective Date, in the sole and absolute discretion of Optionee.
Section 1.3.
Exercise of Option.
--------------------------------
(a) During the Option
Period,
Optionee
may
exercise the Option only
upon written
notice (the "Option
Notice") to the Company,
in accordance
with
Section 7.7 herein.
(b) Within 10 days after the Optionee
delivers the Option Notice,
the
Optionee,
Optionee's wholly-owned subsidiary and the Company, must enter into
a
definitive asset purchase agreement in substantially the form
attached hereto as
Exhibit C (the "Purchase Agreement").
Section 1.4.
Option Payment.
----------------------------
The
consideration
which
shall be paid by Optionee to the Company for
the
Assets
shall be equal to that set
forth in
Section
2.6 of the
Purchase
Agreement.
Section 1.5.
Option Closing.
----------------------------
The Option shall become effective (the "Option
Closing") on the Option
Effective Date, which shall be one Business Day after
satisfaction or waiver of
all the
conditions
set forth in Article V hereof,
but in no event
later than
December
17,
2005.
At the Option
Closing,
the parties
shall enter into the
License
Agreement
and Supply and
Services
Agreement
and shall
execute
and
deliver such other instruments and documents contemplated by
Article V hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company
represents
and
warrants to the
Optionee for its benefit
that the statements
contained in this Article II are true and correct,
subject
to such
exceptions as are
specifically
disclosed in writing in the Disclosure
Schedule provided by the Company to the Optionee (the "Disclosure
Schedule").
Section 2.1.
Organization, Qualification and Corporate Power.
-------------------------------------------------------------
The Company is a corporation
duly organized,
validly
existing and in
corporate good standing under the laws of the State of Delaware.
The Company is
duly
qualified to conduct
business and is in corporate good standing under the
-2-
laws of each jurisdiction in which the nature of its businesses or
the ownership
or leasing of its
properties
requires
such
qualification,
except
where the
failure to be so qualified or in good standing would not have a
Material Adverse
Effect on the
Company.
The Company has the
corporate
power and
authority to
carry on the businesses in which it is engaged and to own and use
the properties
owned
and used by it.
The
Company
has
furnished
or made
available
to the
Optionee
true and
complete
copies of its
Certificate
of
Incorporation
and
Bylaws,
each as amended
and/or
restated
and as in effect on the date
hereof
(hereinafter
the "Charter" and "Bylaws,"
respectively).
The Company is not in
default under or in violation of any provision of its Charter or
Bylaws, each as
amended to date.
Section 2.2.
Representations and Warranties in Purchase Agreement.
------------------------------------------------------------------
The representations
and warranties
regarding the Company set forth in
Article
III of the
Purchase
Agreement
are
true and
correct
as of the date
hereof.
Section 2.3.
Authorization of Transaction.
------------------------------------------
Subject to the
Requisite
Stockholder
Approval (as defined
below) of
this Agreement, the Company has the corporate power and authority
to execute and
deliver this Agreement and to perform its obligations
hereunder.
The execution
and delivery of this Agreement and,
subject to the adoption of this
Agreement,
the proper notice or waiver thereof to the Company's
preferred
stockholders as
provided
in the
Charter
and Bylaws of the
Company
and the
approval
of the
transaction by a majority of the votes represented by the
outstanding
shares of
stock entitled to vote on this
Agreement,
which is a majority of the Company's
common stock and preferred
stock voting as a single
class,
with the preferred
voting on an "as converted" basis,
voting in accordance with the corporate laws
of the
State of
Delaware
and the
Charter
and
Bylaws
of the
Company
(the
"Requisite
Stockholder
Approval"),
the
performance
by the
Company
of this
Agreement and the consummation by the Company of the
transactions
contemplated
hereby have been duly and validly
authorized by all necessary
corporate action
on the part of the Company.
This
Agreement has been duly and validly
executed
and delivered by the Company and, assuming the due authorization,
execution and
delivery by the
Optionee,
constitutes
a valid and binding
obligation
of the
Company, enforceable against the Company in accordance with its
terms, except as
enforcement
may be limited by bankruptcy,
insolvency,
fraudulent
conveyance,
reorganization,
moratorium and other similar laws affecting the
enforcement of
creditors'
rights
generally,
and except that the
availability
of
equitable
remedies,
including specific
performance,
is subject to the discretion of the
court before which any proceeding therefor may be brought.
Section 2.4.
Noncontravention.
------------------------------
Subject
to
receipt
of the
Requisite
Stockholder
Approval
and the
consent
of
AngioDynamics,
Inc.,
substantially
in the
form as set
forth on
Exhibit
D,
attached
hereto,
except as set forth on
Schedule
2.4,
attached
hereto, neither the execution and delivery of this Agreement by the
Company, nor
the consummation by the Company of the transactions
contemplated
hereby, will:
(a)
conflict
with or violate
any
provision
of the
Charter or Bylaws of the
Company;
(b) require on the part of the Company any filing with, or any
permit,
authorization, consent or approval of, any Governmental Body; (c)
conflict with,
-3-
result in a breach of,
constitute
(with or without due notice or lapse of time
or both) a default under, result in the acceleration of, create in
any party the
right to accelerate, terminate, modify or cancel, or require any
notice, consent
or waiver under, any contract, lease, sublease, license,
sublicense,
franchise,
permit,
indenture,
agreement
or mortgage for borrowed
money,
instrument
of
indebtedness,
Lien or other
arrangement
to which the Company is a party or by
which the Company is bound or to which any of its Assets is
subject;
(d) result
in the imposition of any Lien upon any Assets of the Company; or
(e) violate any
order, writ, injunction,
decree,
statute, rule or regulation applicable to the
Company, any of its properties or Assets.
Section 2.5.
Subsidiaries.
--------------------------
The Company
does not have any direct or indirect
subsidiaries
or any
other
equity
interest
in any
other
firm,
corporation,
partnership,
joint
venture, association or other business organization.
Section 2.6.
Absence of Certain Changes.
----------------------------------------
Since June 30,
2005,
the Company has
conducted
its
business in the
Ordinary
Course of Business
and there has not
occurred
any change,
event or
condition
(whether or not covered by insurance)
that has resulted in, or might
reasonably be expected to result in any material
adverse
change in the Assets,
business, financial condition or results of operations of the
Company.
Section 2.7.
Powers of Attorney.
--------------------------------
There are no outstanding
powers of attorney
executed on behalf of the
Company.
Section 2.8.
Fees.
------------------
Except as
disclosed
in Schedule
2.8, the Company has no liability or
obligation
to pay any fees or
commissions
to any broker,
investment
banking
firm,
finder or agent with
respect to the
transactions
contemplated
by this
Agreement.
Section 2.9.
Books and Records.
-------------------------------
The minute books and other similar
records of the Company contain true
and
complete
records of all
material
actions
taken at any
meetings
of the
stockholders of the Company,
Board of Directors or any committee thereof and of
all written consents executed in lieu of the holding of any such
meeting.
Section 2.10.
Company Action.
-----------------------------
The Board of
Directors
of the
Company,
at a meeting duly called and
held,
has by the
unanimous
vote of all
directors
(i)
determined
that
the
transaction contemplated herein is fair and in the best interests
of the Company
and its
stockholders,
(ii)
adopted
this
Agreement
in
accordance
with the
provisions of the corporate
laws of the State of Delaware,
and (iii)
directed
that this
Agreement be submitted to the
stockholders
of the Company for their
-4-
adoption and approval and
resolved to recommend
that the
stockholders
of the
Company vote in favor of the adoption of this Agreement.
Section 2.11.
Disclosure.
-------------------------
No
representation
or
warranty
by
the
Company
contained
in
this
Agreement,
and no statement
contained in the Disclosure
Schedule or any other
document,
certificate or other instrument delivered to or to be delivered by
or
on behalf
of the
Company
pursuant
to this
Agreement,
contains
any
untrue
statement of a material fact or omits to state any material fact
necessary,
in
light
of the
circumstances
under
which
it was
made,
in
order to make the
statements herein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE
The Optionee represents and warrants to the Company as follows:
Section 3.1.
Organization.
--------------------------
The Optionee is a corporation
duly organized,
validly existing and in
good
standing
under the laws of the state of
Delaware.
The
Optionee is duly
qualified to conduct
business and is in corporate
good standing under the laws
of each
jurisdiction
in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification,
except where the failure
to be so qualified or in good standing would not have a Material
Adverse Effect
on it.
Section 3.2.
Authorization of Transaction.
------------------------------------------
The Optionee has all corporate requisite power and authority to
execute
and
deliver
this
Agreement
and to
perform
its
obligations
hereunder
and
thereunder.
The execution and delivery of this Agreement and the performance of
this Agreement and the consummation of the transactions
contemplated hereby and
thereby by the Optionee
have been duly and validly
authorized by all necessary
corporate
action on the part of the Optionee.
This Agreement has been duly and
validly
executed
and
delivered
by
the
Optionee
and,
assuming
the
due
authorization,
execution
and delivery by the Company,
constitutes a valid and
binding
obligation of the Optionee,
enforceable
against it in accordance with
its terms,
except as enforcement
may be limited by
bankruptcy,
insolvency or
other similar laws affecting the enforcement of creditors' rights
generally, and
except
that
the
availability
of
equitable
remedies,
including
specific
performance,
is
subject
to the
discretion
of the
court
before
which
any
proceeding therefor may be brought.
Section 3.3.
Noncontravention.
------------------------------
Neither
the
execution
and
delivery
of
this
Agreement,
nor
the
consummation by the Optionee of the transactions
contemplated
hereby, will (a)
conflict or violate any provision of the Certificate of
Incorporation or Bylaws
-5-
of the Optionee,
(b) conflict with,
result in breach of,
constitute
(with or
without
due
notice
or lapse of time or both) a default
under,
result in the
acceleration of, create in any party any right to accelerate,
terminate, modify
or cancel, or require any notice, consent or waiver under, any
contract,
lease,
sublease,
license,
sublicense,
franchise,
permit,
indenture,
agreement
or
mortgage for borrowed money,
instrument of indebtedness,
security
interest or
other
arrangement
to which the Optionee is a party or by which either is bound
or to which any of their
assets are
subject,
or (c) violate any order,
writ,
injunction,
decree,
statute,
rule or regulation applicable to the Optionee or
any of its properties or assets.
Section 3.4.
Company Action.
----------------------------
The Board of
Directors of the
Optionee,
at a meeting duly called and
held, have (i) determined that the transaction
contemplated
herein is fair and
in the best
interests of the Optionee
and each of its
stockholders,
and (ii)
adopted this Agreement in accordance with the provisions of the
Delaware General
Corporation Law.
Section 3.5.
Brokers' Fees.
---------------------------
The
Optionee
has no
liability
or
obligation
to pay
any
fees
or
commissions
to any
broker,
finder or agent with
respect to the
transactions
contemplated by this Agreement.
Section 3.6.
Financial Reports and SEC Documents.
-------------------------------------------------
The
Optionee's
Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004,
as amended by Form 10-KSB/A
filed on May 18, 2005,
and all
other reports, definitive proxy statements or information
statements filed or to
be filed by it subsequent to December 31, 2004 under Section 13(a),
13(c), 14 or
15(d) of the Exchange Act in the form filed or to be filed
(collectively,
"SEC
Documents")
with the SEC, as of the date filed or to be filed,
(A) complied or
will comply in all material respects as to form with the applicable
requirements
under the Exchange Act and (B) as of the time filed, or to be
filed, did not and
will not
contain
any untrue
statement
of a material
fact or omit to state a
material fact required to be stated
therein or necessary to make the statements
therein,
in the light of the
circumstances
under
which they were
made,
not
misleading;
and each of the balance
sheets
contained
in or
incorporated
by
reference into any such SEC Document
(including the related notes and schedules
thereto)
fairly
presents,
or will fairly present,
the financial
position of
Optionee
and
its
subsidiaries,
if
any,
as of its
date,
and
each
of the
statements
of income
and
changes
in
shareholders'
equity and cash flows or
equivalent
statements
in such SEC Documents
(including
any related notes and
schedules
thereto)
fairly
presents,
or will fairly
present,
the results of
operations,
changes in
shareholders'
equity and changes in cash flows, as the
case may be, of Optionee and its subsidiaries,
if any, for the periods to which
they relate,
in each case in
accordance
with U.S. GAAP
consistently
applied
during
the
periods
involved,
except
in each
case as may be noted
therein,
subject to the absence of footnotes and to normal
year-end
adjustments
in the
case of unaudited statements.
-6-
ARTICLE IV
COVENANTS BY THE OPTIONEE AND THE COMPANY
The Optionee and the Company covenant as follows:
Section 4.1.
Satisfaction of Conditions.
----------------------------------------
Each of the Parties shall use its
commercially
reasonable
efforts to
take all actions and to do all things necessary,
proper or advisable to satisfy
the conditions set forth in Article V of this Agreement.
Section 4.2.
Notices and Consents.
----------------------------------
Each of the
Optionee
and the
Company
shall use
their
commercially
reasonable
efforts
to
obtain,
at its
expense,
all such
waivers,
permits,
consents,
approvals or other authorizations from third parties and
Governmental
Bodies,
and to effect all such
registrations,
filings and notices
with or to
third parties and Governmental
Bodies, as may be required by or with respect to
the Optionee or the Company,
respectively,
in connection with the transactions
contemplated by this Agreement.
Section 4.3.
Operation of Business.
-----------------------------------
Except as contemplated
by this
Agreement,
during the period from the
date of this
Agreement
up until the Closing
Date (as defined in the
Purchase
Agreement),
the Company shall conduct its operations in the Ordinary
Course of
Business and in compliance with all applicable laws and regulations
and, to the
extent consistent
therewith,
use all reasonable efforts to preserve intact its
current
business
organization,
keep
its
physical
Assets
in
good
working
condition, keep available the services of its current officers and
employees and
preserve its relationships with customers,
suppliers and others having business
dealings with it to the end that its goodwill and ongoing
business shall not be
impaired
in any
material
respect.
Without
limiting
the
generality
of the
foregoing, prior to the Closing Date, the Company shall not,
without the written
consent of the Optionee:
(a) issue,
sell,
deliver or agree or commit to issue, sell or deliver
(whether
through the
issuance or granting of options,
warrants,
commitments,
subscriptions,
rights to purchase or otherwise) or authorize the issuance, sale
or
delivery
of, or redeem or
repurchase,
any stock of any class or any other
securities or any rights, warrants or options to acquire any such
stock or other
securities
(except
pursuant
to the
conversion
or
exercise
of
convertible
securities, options or warrants outstanding on the date hereof), or
amend any of
the terms of any such convertible securities, options or warrants;
(b) split,
combine or
reclassify
any
shares of its
capital
stock;
declare,
set aside or pay any
dividend,
special
bonus or other
distribution
(whether in cash,
stock or property or any
combination
thereof) in respect of
its capital stock;
-7-
(c)
create,
incur
or
assume
any
debt
not
currently
outstanding
(including obligations in respect of capital leases); assume,
guarantee, endorse
or otherwise
become liable or responsible
(whether
directly,
contingently or
otherwise) for the obligations of any other person or entity; or
make any loans,
advances or capital
contributions to, or investments in, or increase the amount
of any existing loan to any other person or entity;
(d) enter into, adopt or amend any Plans or any employment or
severance
agreement or
arrangement or increase in any manner the
compensation
or fringe
benefits
of, or modify the
employment
terms of, its
directors,
officers
or
employees,
generally
or
individually,
or pay any benefit not required by the
terms in effect on the date hereof of any existing Plan;
(e)
acquire,
sell,
transfer,
lease,
sublease,
license,
abandon,
encumber,
transfer or
otherwise
dispose of any
properties
or assets,
real,
personal
or mixed
(including
leasehold
interests
and
intangible
property)
related to the Operations, except in the Ordinary Course of
Business
(f) amend and/or restate its Charter or Bylaws;
(g) change in any material respect its accounting
methods,
principles
or practices,
or make any change in depreciation
or
amortization
policies or
lives adopted by it except insofar as may be required by a
generally
applicable
change in GAAP or as required by Optionee;
(h)
discharge or satisfy any Lien or pay any
obligation
or liability
other than in the Ordinary Course of Business;
(i) settle,
compromise,
materially modify or amend, waive, terminate,
cancel, release or assign any rights or Claims concerning,
affecting or relating
to any Contract relating to the Operations (including,
without limitation,
any
Assigned Agreement), or otherwise relating to the Operations;
(j)
mortgage
or pledge any of its
property
or Assets or subject any
such Assets to any Lien;
(k) sell, assign, license, grant or transfer any rights under, or
enter
into any settlement
regarding the breach or infringement
of, any
Intellectual
Property, or modify any existing rights with respect thereto;
(l) enter into, amend, terminate,
take or omit to take any action that
would
constitute a violation of or default under,
or waive,
release or assign
any rights under, any contract or agreement;
(m) enter
into,
amend,
modify or consent to the
termination
of any
Assigned Agreement;
-8-
(n) make or commit to make any
capital
expenditure
in excess of Five
Thousand Dollars ($5,000) per item;
(o)
take
any
action
or fail to take any
action
permitted
by this
Agreement
with the
knowledge
that such action or failure to take action would
result in (i) any of the representations and warranties of the
Company set forth
in this Agreement or the Purchase
Agreement
becoming untrue or (ii) any of the
conditions to the transaction set forth in Article V, not being
satisfied;
(p) make any material charitable contribution;
(q) engage or terminate any consultant;
(r) enter into,
materially
amend or (except in
conjunction
with the
completion of the term thereof)
terminate any Contract or transaction
with any
director or officer,
stockholder
or Affiliate of Seller (or with any relative,
beneficiary, spouse or Affiliate of such Person) relating to the
Operations;
(s) terminate,
discontinue,
close or dispose of any facility or other
business operation,
or lay off any employees or implement any early retirement,
separation or program
providing early retirement window benefits or announce or
plan any such action or program for the future;
(t) allow any Permit
that was issued or relates to the
Operations
to
lapse or
terminate
or fail to renew any
insurance
policy
or Permit
that is
scheduled
to terminate or expire
within forty five (45)
calendar
days of the
Effective
Date,
except to the extent that such failure would not be reasonably
expected to cause a Material Adverse Effect on the ability of the
Company to own
and operate the Operations as now conducted;
(u) enter
into any
contract,
other
than in the
Ordinary
Course of
Business and as provided to the Optionee, or any amendment or
termination of, or
default
under,
any
contract
that is or was
material
to the
Operations
or
Seller's rights thereunder;
(v) commence any litigation
other than (i) for the routine
collection
of bills or (ii) in such cases where the Company in good faith
determines
that
failure to commence
suit would result in the material
impairment of a valuable
aspect of the
Company's
business,
provided
that
Company
consults
with the
Optionee prior to the filing of such a suit;
(w) make or change any material election in respect of Taxes,
adopt or
change any accounting
method in respect of Taxes,
file any material
return or
any amendment to a material return, enter into any closing
agreement, settle any
claim or
assessment
in respect of Taxes (except
settlements
effected
solely
through
payment of
immaterial
sums of money),
or consent to any extension or
waiver of the limitation period applicable to any claim or
assessment in respect
of Taxes;
-9-
(x)
write
down or
write
up (or
fail to
write
down or write up in
accordance
with
U.S.
GAAP
consistent
with past
practice)
the value of any
receivables
or revalue any of the
Company's
assets other than in the Ordinary
Course of Business and in accordance with U.S. GAAP;
(y) issue any purchase orders or otherwise agreed to make any
purchases
involving
exchanges in value in excess of Two Thousand Five Hundred Dollars
and
Zero Cents
($2,500.00)
individually
or Five
Thousand
Dollars and Zero Cents
($5,000.00) in the aggregate, except in the Ordinary Course of
Business;
(z) merge with, enter into a consolidation
with or acquire an interest
of 5% or more in any
Person or acquire a
substantial
portion of the assets or
business of any Person or any division or line of business
thereof engaged in a
business
relating to the Operations,
or otherwise
acquire any material assets
relating to the Operations except in the Ordinary Course of
Business;
(aa)
(i)
grant,
announce,
or
make
any
change
in
the
rate
of
compensation,
wages, salaries,
commission,
bonuses,
incentives,
pensions or
other direct or indirect
remuneration or benefits
payable,
or pay or agree or
orally
promised
to pay,
conditionally
or
otherwise,
any bonus,
incentive,
retention
or other
compensation,
retirement,
welfare,
fringe
or
severance
benefit or vacation
pay, to or in respect of any director,
officer,
employee,
distributor,
contractor, or agent of the Company relating to or involved in the
Operations,
including any increase or change pursuant to any Plan or (ii) enter
into,
establish,
increase
or
promise to
increase,
amend or
terminate
any
benefits under any Plan or any
employment or severance
agreement or commitment
or
collective
bargaining
agreement
with any
employee or
contractor
of the
Company
relating
to or involved
in the
Operations,
in either case except as
required by Law or any collective
bargaining
agreement,
such exceptions being
disclosed in the Disclosure Schedules;
(bb) fail to pay any creditor any material amount owed to such
creditor
when due;
(cc) change in any manner the character or scope of the Operations;
or
(dd)
agree,
whether
in
writing
or
otherwise,
to take any
action
described in this Section 4.3 or grant any options to purchase,
rights of first
refusal,
rights of first offer or any other similar rights or commitments
with
respect to any of the actions specified in this Section 4.3, except
as expressly
contemplated by this Agreement.
Section 4.4.
Full Access.
-------------------------
The Company shall permit
representatives
of the Optionee to have full
access (upon reasonable
notice and at all reasonable
times, and in a manner so
as not to interfere with the normal
business
operations of the Company) to all
-10-
premises, properties, financial and accounting records, contracts,
other records
and
documents,
and
personnel,
of or
pertaining
to the Company,
subject to
compliance with applicable confidentiality obligations of the
Company.
Section 4.5.
Notice of Breaches.
--------------------------------
The Company shall
promptly
deliver to the Optionee
written notice of
any event or development of which the Company is aware and that
would (a) render
any
statement,
representation
or warranty
of the
Company in this
Agreement
(including
the
Disclosure
Schedule)
inaccurate or incomplete in any material
respect, or (b) constitute or result in a breach by the Company of,
or a failure
by the Company to comply
with,
any
agreement
or
covenant in this
Agreement
applicable to such Party.
The Optionee
shall
promptly
deliver to the Company
written
notice of any event or
development of which the Optionee is aware that
would (i) render any
statement,
representation
or warranty of the Optionee in
this
Agreement
inaccurate
or
incomplete
in any
material
respect,
or (ii)
constitute
or
result
in a breach by the
Optionee
of,
or a
failure
by the
Optionee to comply with, any agreement or covenant in this
Agreement
applicable
to such
Party.
No such
disclosure
shall be
deemed to avoid or cure any such
misrepresentation or breach.
Section 4.6.
Exclusivity.
-------------------------
The Company
agrees that from the date of execution
of this
Agreement
until the earlier of (a) the Closing Date or (b)
termination
of this Agreement
in
accordance
with Article VI hereof,
the Company
shall not, and the Company
shall use its best efforts to cause each of its officers,
directors,
employees,
representatives
and
agents
not
to,
directly
or
indirectly,
(a)
solicit,
initiate,
engage
or
participate
in or
knowingly
encourage
discussions
or
negotiations with any person or entity (other than the Optionee)
concerning any
merger,
consolidation,
sale
of
assets,
tender
offer,
recapitalization,
accumulation
of
stock,
proxy
solicitation
or
other
business
combination
involving
the Company or any
division of the Company,
(b) solicit,
initiate,
entertain or encourage any proposal or offer related to such an
acquisition, (c)
provide any non-public information concerning the business,
properties or Assets
of the Company to any person or entity
(other than the
Optionee)
or (d) enter
into any
understanding,
letter of
intent or
agreement,
whether
binding
or
non-binding,
in connection
with the foregoing.
The Company shall
immediately
notify the Optionee
of, and shall
disclose to the Optionee all details of, any
inquiries,
discussions
or
negotiations
of the nature
described in the first
sentence of this Section 4.6. The term
"indirectly"
shall include,
but not be
limited to, through Company representatives.
Section 4.7.
Reasonable Commercial Efforts and Further Assurances.
------------------------------------------------------------------
Each
of
the
Parties
shall
use
reasonable
commercial
efforts
to
effectuate
the
transactions
contemplated
hereby
and to fill and cause to be
fulfilled the
conditions to closing under this
Agreement.
Each Party,
at the
reasonable
request of another
Party,
shall
execute
and
deliver
such other
instruments and do and perform such other acts and things as may be
necessary or
desirable for effecting
completely the
consummation
of this Agreement and the
transactions contemplated hereby.
-11-
Section 4.8.
Funding of Business Plan.
--------------------------------------
If the Closing occurs prior to June 30, 2007, absent a Material
Adverse
Effect, as determined by and in the sole discretion of Optionee,
Optionee shall
provide
support,
as more fully described in Schedule 4.8, to the Operations to
be
transferred
from Seller to Optionee as provided
herein in order to, in the
reasonable
judgment of Optionee,
enable the Minimum Revenue Trigger to be met.
It is currently
anticipated that such support, if any, will be reflected in the
approval budgets for the Operations to be transferred from Seller
to Optionee as
further described in the Supply and Services Agreement.
ARTICLE V
CONDITIONS TO CONSUMMATION OF TRANSACTION
Section 5.1.
Conditions to Each Party's Obligations.
----------------------------------------------------
The
respective
obligations
of
each
Party
to
the
Option
Closing
hereunder are subject to the following conditions:
(a) The Company shall have received the Requisite
Stockholder Approval
from the stockholders of the Company.
(b) Any required notice to the Company's
preferred
stockholders shall
have been given or waived; and
(c)
Subject to the
Requisite
Stockholder
Approval,
Company and the
Optionee shall have entered into the License Agreement.
Section 5.2.
Conditions to Obligations of the Optionee.
-------------------------------------------------------
The
obligation
of the
Optionee to the Option
Closing
hereunder
is
subject to the satisfaction of the following additional conditions:
(a) the Company
shall have
performed or complied with in all material
respects its agreements and covenants
required to be performed or complied with
under this Agreement as of or prior to the Option Closing;
(b) the
representations
and
warranties
of the
Company set forth in
Article II shall be true and
correct as of the date
hereof,
and shall be true
and correct as of the Option Closing,
except for representations and warranties
made as of a specific date, which shall be true and correct as of
such date;
(c) the Company
shall have
delivered
to the
Optionee a
certificate
(without
qualification
as to knowledge or
materiality
or
otherwise)
to the
effect
that each of the
conditions
specified
in clauses
(a) and (b) of this
Section 5.2 is satisfied in all respects;
-12-
(d) The Company shall have received the consent of AngioDynamics,
Inc.,
substantially in the form of Exhibit D, attached hereto, to assign
the Company's
rights and obligations
under that certain
Distributor
Agreement,
dated as of
June 28, 2002, between the Company and AngioDynamics, Inc.
(e)
Louis R.
Matson
shall
have
entered
into a
Voting
Agreement,
substantially in the form attached hereto as Exhibit E; and
(f)
Louis
R.
Matson
and the
Company
shall
have
entered
into an
Employment
Agreement
substantially
in the form set forth on Exhibit F hereto;
and
(g) Louis R. Matson and the
Optionee
shall have
entered
into a Side
Letter Agreement substantially in the form set forth on Exhibit G
hereto.
Section 5.3.
Conditions to Obligations of the Company.
------------------------------------------------------
The
obligation
of
the
Company
to
consummate
the
Option
Closing
hereunder is subject to the satisfaction of the following
additional conditions:
(a) The Optionee
shall have performed or complied with in all material
respects its agreements and covenants
required to be performed or complied with
under this Agreement as of or prior to the Option Closing;
(b) the
representations
and
warranties
of the Optionee set forth in
Article III shall be true and correct as of the date
hereof,
and shall be true
and correct as of the Option Closing,
except for representations and warranties
made as of a specific date, which shall be true and correct as of
such date; and
(c) the
Optionee
shall have
delivered
to the Company a
certificate
(without
qualification
as to knowledge or
materiality
or
otherwise)
to the
effect
that each of the
conditions
specified
in
clause
(a) and (b) of this
Section 5.3 is satisfied in all respects.
ARTICLE VI
TERMINATION
Section 6.1.
Termination of Agreement.
--------------------------------------
The Parties may terminate this
Agreement
prior to the Closing Date as
provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) any Party may terminate
this Agreement by giving written notice to
the other Parties upon the entry of any permanent injunction or
other order of a
court
or
other
competent
authority
preventing
the
consummation
of
the
transaction that has become final and nonappealable;
-13-
(c) The Optionee may terminate
this Agreement if any of the conditions
set forth in Section 5.1 or 5.2 is not
satisfied
on or prior to
December
17,
2005 and the Optionee is not then in breach of this Agreement;
(d) the Company may terminate
this
Agreement if any of the conditions
set forth in Section 5.1 or 5.3 are not
satisfied
on or prior to December
17,
2005 and the Company is not then in breach of this Agreement; and
(e) the Optionee may terminate
this
Agreement for any reason prior to
the Closing Date.
Section 6.2.
Effect of Termination.
-----------------------------------
If any Party
terminates
this
Agreement
pursuant to Section 6.1, all
obligations of the Parties shall terminate without any liability of
any Party to
any other Party.
Notwithstanding the foregoing, the following obligations shall
survive
termination of this Agreement:
(i) liability of any Party for breaches
of this Agreement;
(ii) confidentiality,
as provided in Section 7.1; and (iii)
each Party's obligation to bear its own fees and expenses incurred
in connection
with the
preparation
and
negotiation of this
Agreement and the
transactions
contemplated herein as provided in Section 7.11.
Section 6.3.
Amendment.
-----------------------
The
Parties
may cause
this
Agreement
to be
amended at any time by
execution of an instrument in writing signed on behalf of each of
the Parties.
Section 6.4.
Extension; Waiver.
-------------------------------
At any time prior to the
Closing
Date,
any Party may,
to the extent
legally
allowed
(i)
extend
the
time
for
the
performance
of
any
of the
obligations or other acts of the other Parties;
(ii) waive any
inaccuracies in
the representations and warranties made to such Party contained
herein or in any
document
delivered
pursuant hereto and (iii) waive
compliance with any of the
agreements or conditions
for the benefit of such Party
contained
herein.
Any
agreement on the part of a Party to any such
extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of
such Party.
ARTICLE VII
MISCELLANEOUS
Section 7.1.
Press Releases and Announcements.
----------------------------------------------
No Party
shall issue any press
release or make any public
disclosure
relating to the subject matter of this
Agreement
without the prior approval of
the
other
Parties;
provided,
however,
that any
Party
may make any
public
disclosure it believes in good faith is required by law or
regulation
(in which
case the disclosing Party
shall advise the other Parties and provide them
with
-14-
a
copy
of
the
proposed
disclosure
prior
to
making
the
disclosure).
Notwithstanding
the
foregoing,
the
Parties
acknowledge
that
Optionee is a
reporting
company under the
Securities
Exchange Act of 1934, as amended,
and
will be
required to
publicly
disclose
this
Agreement
and the
transactions
contemplated
hereby in the form of press releases,
Current Reports on Form 8-K
and such other means as Optionee determines.
Section 7.2.
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.
Section 7.3.
Entire Agreement.
------------------------------
This Agreement,
the Disclosure Schedule, the Schedules,
the documents
and
instruments
and other
agreements
among the
Parties
referred
to herein
constitute
the entire
agreement
among the
Parties and
supersedes
any prior
understandings,
agreements or representations by or among the Parties,
written
or oral, with respect to the subject matter hereof.
Section 7.4.
Succession and Assignment.
---------------------------------------
This
Agreement
shall be binding
upon and inure to the benefit of the
Parties 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
Optionee
may assign
some or all of its rights
hereunder
to a
wholly owned subsidiary.
Section 7.5.
Counterparts.
--------------------------
This
Agreement
may be executed in two or more
counterparts,
each of
which shall be deemed an original but all of which together shall
constitute one
and the same instrument.
Section 7.6.
Headings.
----------------------
The section
headings
contained
in this
Agreement
are
inserted for
convenience
only and shall not affect in any way the meaning or
interpretation
of this Agreement.
Section 7.7.
Notices.
---------------------
All
notices,
requests,
demands,
claims,
and
other
communications
hereunder
shall be in writing.
Any notice,
request,
demand,
claim, or other
communication
hereunder
shall be deemed duly delivered two business days after
it is sent by registered or certified mail,
return receipt
requested,
postage
prepaid,
or one
business
day
after
it is sent
via a
reputable
nationwide
overnight courier service or sent via facsimile (with
acknowledgment of complete
transmission)
with a confirmation copy by registered or certified mail, in each
case to the intended recipient as set forth in the Purchase
Agreement.
-15-
Any
Party
may give
any
notice,
request,
demand,
claim,
or other
communication
hereunder
using any other means
(including
personal
delivery,
expedited
courier,
messenger
service,
telecopy,
telex,
ordinary
mail,
or
electronic
mail),
but
no
such
notice,
request,
demand,
claim,
or
other
communication
shall be
deemed
to have been
duly
given
unless
and until it
actually is received by the Party for whom it is intended.
Any Party may change
the
address
to
which
notices,
requests,
demands,
claims,
and
other
communications
hereunder are to be delivered by giving the other Parties notice
in the manner herein set forth.
Section 7.8.
Governing Law.
---------------------------
This
Agreement
shall be governed by and construed in accordance
with
the internal laws (and not the law of conflicts) of the State of
California.
Section 7.9.
Amendments and Waivers.
------------------------------------
The Parties may mutually
amend any provision of this
Agreement at any
time prior to Closing
Date.
No
amendment of any
provision of this
Agreement
shall be valid
unless
the same
shall be in
writing
and signed by all of the
Parties. No waiver by any Party of any default,
misrepresentation
or breach of
warranty or covenant
hereunder,
whether intentional or not, shall be deemed to
extend
to any
prior or
subsequent
default,
misrepresentation
or
breach of
warranty or covenant hereunder or affect in any way any rights
arising by virtue
of any prior or subsequent default,
misrepresentation,
breach of such warranty
or covenant.
Section 7.10.
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.
If the
final
judgment
of a court
of
competent
jurisdiction
declares
that
any
term
or
provision
hereof
is
invalid
or
unenforceable,
the Parties
agree that the court
making the
determination
of
invalidity
or
unenforceability
shall
have the
power to
reduce
the
scope,
duration, or area of the term or provision, to delete specific
words or phrases,
or to replace
any invalid or
unenforceable
term or
provision
with a term or
provision that is valid and enforceable and that comes closest to
expressing the
intention of the invalid or unenforceable term or provision,
and this Agreement
shall be
enforceable
as so modified
after the
expiration
of the time within
which the judgment may be appealed,
provided that this Agreement shall not then
substantially deprive either Party of the bargained-for performance
of the other
Party.
Section 7.11.
Expenses.
-----------------------
All fees and
expenses
(including
all legal and
accounting
fees and
expenses and all other
expenses)
incurred by Optionee in connection
with this
Agreement
and the
transactions
contemplated
hereby shall be paid by Optionee
whether or not the transaction is consummated. All transaction
costs incurred by
the Company in connection with this Agreement and the transactions
contemplated
hereby
shall
be
paid
by the
Company
whether
or
not
the
transaction
is
consummated.
-16-
Section 7.12.
Other Remedies.
-----------------------------
Except
as
otherwise
provided
herein,
any and all
remedies
herein
expressly
conferred
upon a
Party
will be
deemed
cumulative
with,
and not
exclusive
of, any other remedy
conferred
hereby or by law or equity upon such
Party,
and the
exercise
by a Party of any one remedy
will not
preclude
the
exercise of any other remedy.
Section 7.13.
Construction.
---------------------------
The Parties agree that they have been represented by counsel during
the
negotiation,
preparation and execution of this Agreement and, therefore,
waive
the
application
of any
law,
regulation,
holding
or
rule
of
construction
providing
that
ambiguities in an agreement or other document will be construed
against the Party
drafting
such
agreement or document.
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.
Section 7.14.
Incorporation of Schedules and Disclosure Schedule.
-----------------------------------------------------------------
The Exhibits,
Schedules
and
Disclosure
Schedule
identified in this
Agreement are incorporated herein by reference and made a part
hereof.
[Signature page to follow]
-17-
EXECUTION COPY
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as
of the date first above written.
SURGICA CORPORATION
By:
/s/ Louis R. Matson
---------------------------------
Name:
Louis R. Matson
Title: President and Chief Executive
Officer
PROTEIN POLYMER TECHNOLOGIES, INC.
By:
/s/ William N. Plamondon, III
---------------------------------
Name:
William N. Plamondon, III
Title: Chief Executive Officer
[Signature Page to the Asset Purchase Option Agreement]
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
by and between
[_____________ ACQUISITION, LLC],
PROTEIN POLYMER TECHNOLOGIES, INC.,
and
SURGICA CORPORATION,
Dated as of [______], 200[_]
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
Article I
DEFINITIONS....................................................................................1
Section 1.1
Definitions.......................................................................1
Article II
TRANSFER OF ASSETS AND
LIABILITIES............................................................10
Section 2.1
Acquired
Assets..................................................................10
Section 2.2
Excluded
Assets..................................................................12
Section 2.3
Assumed
Liabilities..............................................................12
Section 2.4
Excluded
Liabilities.............................................................13
Section 2.5
Transfer of Acquired Assets and Assumed
Liabilities..............................13
Section 2.6
Consideration....................................................................14
Section 2.7
Earnout..........................................................................15
Section 2.8
Closing..........................................................................16
Section 2.9
Deliveries by
Seller.............................................................16
Section 2.10
Deliveries by
Purchaser..........................................................17
Section 2.11
Non-Assignable Acquired
Assets...................................................17
Article III
REPRESENTATIONS AND WARRANTIES OF
SELLER......................................................18
Section 3.1
Organization and Qualification of
Seller.........................................18
Section 3.2
Authority of Seller to Execute and Perform
Agreement.............................19
Section 3.3
Subsidiaries.....................................................................19
Section 3.4
Financial
Statements.............................................................19
Section 3.5
Absence of Certain Changes or
Events.............................................20
Section 3.6
Litigation and
Liabilities.......................................................23
Section 3.7
Title and Condition to Properties; Absence of Liens;
etc.........................23
Section 3.8
Licenses and Registrations; Compliance with Laws;
etc............................24
Section 3.9
Intellectual
Property............................................................24
Section 3.10
Non-Contravention................................................................27
Section 3.11
Consents and
Approvals...........................................................27
Section 3.12
Acquired
Assets..................................................................27
Section 3.13
Employee Benefit Plans;
ERISA....................................................27
Section 3.14
Insurance
Policies...............................................................28
Section 3.15
Contracts........................................................................28
Section 3.16
Environmental
Matters............................................................29
Section 3.17
Taxes............................................................................30
Section 3.18
Liabilities......................................................................30
Section 3.19
Real
Estate......................................................................31
Section 3.20
Tangible Personal
Property.......................................................31
Section 3.21
Labor
Matters....................................................................32
Section 3.22
Certain
Interests................................................................33
Section 3.23
Brokers..........................................................................33
Section 3.24
Sufficiency of
Assets............................................................33
Section 3.25
No Untrue
Statements.............................................................33
-i-
TABLE OF CONTENTS
(continued)
Page
Article IV
REPRESENTATIONS AND WARRANTIES OF
PURCHASER...................................................33
Section 4.1
Organization.....................................................................33
Section 4.2
Authority to Execute and Perform Agreement; Ability to
Perform...................34
Section 4.3
Consents and
Approvals...........................................................34
Section 4.4
Non-Contravention................................................................34
Section 4.5
Financial Reports and SEC
Documents..............................................34
Section 4.6
Purchaser
Litigation.............................................................35
Section 4.7
Brokers..........................................................................35
Section 4.8
Validity of
Shares...............................................................35
Article V
ADDITIONAL AGREEMENTS OF THE
PARTIES..........................................................35
Section 5.1
Conduct of
Operations............................................................35
Section 5.2
Further
Assurances...............................................................36
Section 5.3
Certain
Notifications............................................................36
Section 5.4
Access to Records and Facilities;
Confidentiality................................36
Section 5.5
Preservation of
Records..........................................................36
Section 5.6
Non-Competition and Non-Solicitation Covenant of
Seller..........................37
Section 5.7
Employees........................................................................38
Section 5.8
Satisfaction of Conditions
Precedent.............................................38
Section 5.9
Expenses and Apportioned
Obligations.............................................38
Section 5.10
Bulk Sales
Compliance............................................................38
Section 5.11
Public
Announcements.............................................................38
Section 5.12
Use of Name and
Logo.............................................................39
Section 5.13
Excluded
Liabilities.............................................................39
Section 5.14
Competing Offers; Merger or
Liquidation..........................................39
Section 5.15
Exemption from Registration or Securities Act Registration;
Preparation
of Notice of Meeting and Proxy Statement or Information
Statement................39
Section 5.16
Support of
Operations............................................................41
Article VI
CONDITIONS TO
CLOSING.........................................................................42
Section 6.1
Conditions to Obligations of
Seller..............................................42
Section 6.2
Conditions to Obligations of
Purchaser...........................................42
Article VII
TERMINATION...................................................................................44
Section 7.1
Termination......................................................................44
Section 7.2
Effect of
Termination............................................................45
Article VIII
INDEMNIFICATION...............................................................................45
Section 8.1
Indemnification by
Seller........................................................45
Section 8.2
Indemnification by
Purchaser.....................................................46
Section 8.3
Defense of
Claims................................................................46
-ii-
TABLE OF CONTENTS
(continued)
Page
Section 8.4
Survival of Representations and
Warranties.......................................48
Section 8.5
Offset...........................................................................48
Article IX
MISCELLANEOUS.................................................................................49
Section 9.1
Amendments; Non-Contractual Remedies; Preservation of
Remedies...................49
Section 9.2
Waiver...........................................................................49
Section 9.3
Governing
Law....................................................................49
Section 9.4
Submission of Jurisdiction; Waiver of Jury
Trial.................................49
Section 9.5
Specific
Performance.............................................................50
Section 9.6
Notices..........................................................................50
Section 9.7
Section
Headings.................................................................51
Section 9.8
Construction.....................................................................51
Section 9.9
Counterparts.....................................................................51
Section 9.10
Assignments......................................................................52
Section 9.11
Entire Agreement, Enforceability and
Miscellaneous...............................52
Section 9.12
Interpretation...................................................................52
-iii-
TABLE OF CONTENTS
(continued)
Page
EXHIBITS
Exhibit A
Bill of Sale and Assignment
Exhibit B
Patent Assignment
Exhibit C
Copyright Assignment
Exhibit D
Trademark Assignment
Exhibit E
Lease Assignment
Exhibit F
Allocation Method
Exhibit G
Certificate of Secretary of Seller
Exhibit H
Employment Agreement
Exhibit I
Non-Competition Agreement
Exhibit J
Side Letter Agreement
SCHEDULES
Schedule 1.1
Persons with Knowledge
Schedule 2.1(b)
Equipment
Schedule 2.1(c)
Inventory
Schedule 2.1(d)
Assigned IP Assets
Schedule 2.1(f)
Assigned Agreements
Schedule 2.1(g)(i)
Material Permits
Schedule 2.1(g)(ii)
Other Permits
Schedule 2.1(h)
Insurance Policies
Schedule 2.1(o)
Transferred Bank Accounts
Schedule 2.2(f)
Excluded Assets
Schedule 3.1
Organization and Qualification of Seller
Schedule 3.3
Subsidiaries
Schedule 3.4
Reference Statement
Schedule 3.4(c)
Accounts Receivable
Schedule 3.5
Absence of Certain Changes or Events
Schedule 3.6
Litigation and Liabilities
Schedule 3.7
Liens
Schedule 3.8
Licenses and Registrations; Compliance with Laws
Schedule 3.9(a)(i)
Owned Intellectual Property
Schedule 3.9(a)(ii)
IP Licenses and Licensed IP
Schedule 3.9(b)
Exceptions to Title to Intellectual Property
Schedule 3.9(e)(i)
Intellectual Property Claims
Schedule 3.9(e)(ii)
Third Party Indemnification Obligations
Schedule 3.9(f)
Persons Waiving Rights to Intellectual Property
Schedule 3.10
Non-Contravention
Schedule 3.11
Consents and Approvals
Schedule 3.13
Employee Benefits; ERISA
Schedule 3.14
Insurance
Schedule 3.15(a)
Contracts
-iv-
TABLE OF CONTENTS
(continued)
Page
Schedule 3.15(c)
Defaults Under Contracts
Schedule 3.15(d)
Open Bids
Schedule 3.16
Environmental Contracts
Schedule 3.17
Taxes
Schedule 3.18
Liabilities
Schedule 3.19(a)
Leased Real Property and Ancillary Leased Real Property Documents
Schedule 3.20(a)
Tangible Personal Property
Schedule 3.20(b)
Tangible Personal Property Leases
Schedule 3.22
Certain Interests
Schedule 3.23
Brokers
Schedule 4.2
Authorizations and Consents
Schedule 4.6
Brokers
Schedule 5.1
Conduct of Operations
Schedule 6.2(a)
Consents
-v-
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT, dated as of [__________], 200[_] (the
"Agreement"), by and between SURGICA CORPORATION, a Delaware
corporation
("Seller"), PROTEIN POLYMER TECHNOLOGIES, INC., a Delaware
corporation ("PPT")
and [_____________ ACQUISITION, LLC], a [________] limited
liability company
("Acquisition Co.") and wholly-owned subsidiary of PPT
(collectively, PPT and
Acquisition Co. are referred to herein as "Purchaser").
R E C I T A L S
- - - - - - - -
WHEREAS, Seller wishes to sell to Purchaser, and Purchaser wishes
to
purchase from Seller, substantially all of the property, assets and
rights owned
or leased by Seller relating to the Operations (as defined herein),
and in
connection therewith Purchaser is willing to assume certain
obligations and
liabilities of the Seller relating thereto, all upon the terms and
subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
premises,
representations, mutual agreements, covenants and conditions
hereinafter set
forth, and intending to be legally bound hereby, the parties hereto
hereby agree
as follows:
Article I
DEFINITIONS
Section
1.1
Definitions.
As
used in
this
Agreement,
the
following terms have the meanings indicated:
"Accountant" shall mean [________]
"Acquired Assets" shall have the meaning set forth in Section
2.1.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act
of 1934, as
amended.
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Allocation Method" shall have the meaning set forth in
Section 2.6(c).
"Ancillary Leased Real Property Documents" shall have the
meaning set forth in Section 3.19(a).
"Annualized First Quarter Revenue" shall mean the product of
(i) four (4) multiplied by (ii) the revenue for the first (1st)
quarter of 2007
derived from the Operations to be transferred from Seller to
Purchaser as
provided herein and as evidenced in regularly prepared financial
statements in a
manner consistent with those historically provided by Seller.
"Assigned Agreements" shall have the meaning set forth in
Section 2.1(f).
"Assigned IP Assets" shall have the meaning set forth in
Section 2.1(d).
"Assumed Liabilities" shall have the meaning set forth in
Section 2.3.
"Balance Sheet" shall have the meaning set forth in Section
3.4(a).
"Balance Sheet Date" shall have the meaning set forth in
Section 3.4(a).
"Bill of Sale and Assignment" shall have the meaning set forth
in Section 2.5(a)(i).
"Books and Records" shall have the meaning set forth in
Section 2.1(i).
"Business Day" shall mean any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by
Law to be
closed in the State of California.
"Claim" shall have the meaning set forth in Section 8.3.
"Closing" shall have the meaning set forth in Section 2.8.
"Closing Date" shall have the meaning set forth in Section
2.8.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Common
Stock" shall mean the common stock,
$0.01 par value,
of PPT.
"Common Stock Equivalent A" shall mean the number of shares of
Common Stock equal to the quotient of (i) Fifty Cents ($0.50)
divided by (ii)
the price per share of Common Stock based on the ninety- (90) day
prior average
price of the Common Stock as of April 1, 2007.
"Common Stock Equivalent B" shall mean the number of shares of
Common Stock equal to the quotient of (i) One Dollar and Zero Cents
($1.00)
divided by (ii) the price per share of Common Stock based on the
ninety- (90)
day prior average price of the Common Stock as of April 1, 2007.
"Consent" shall have the meaning set forth in Section 3.11.
"Contracts" shall have the meaning set forth in Section
2.1(f).
"Copyright Assignment" shall have the meaning set forth in
Section 2.5(a)(iii).
"Copyrights" shall have the meaning set forth in the
definition of Intellectual Property in this Section 1.1.
"Debt" shall mean, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for
borrowed money, (b)
all obligations of such Person for the deferred purchase price of
property or
services, (c) all indebtedness created or arising under any
conditional sale or
other title retention agreement with respect to property acquired
by such
-2-
Person (even though the rights and remedies of the seller or lender
under such
agreement in the event of default are limited to repossession or
sale of such
property), (d) all obligations of such Person as lessee under
leases that have
been or should be, in accordance with U.S. GAAP, recorded as
capital leases, (e)
all obligations, contingent or otherwise, of such Person under
acceptance,
letter of credit or similar facilities, (f) all obligations of such
Person to
purchase, redeem, retire, defease or otherwise acquire for value
any capital
stock of such Person or any warrants, rights or options to acquire
such capital
stock, valued, in the case of redeemable preferred stock, at the
greater of its
voluntary or involuntary liquidation preference plus accrued and
unpaid
dividends, (g) all indebtedness of others referred to in clauses
(a) through (f)
above guaranteed directly or indirectly in any manner by such
Person, or in
effect guaranteed directly or indirectly by such Person through an
agreement (i)
to pay or purchase such indebtedness or to advance or supply funds
for the
payment or purchase of such indebtedness, (ii) to purchase, sell or
lease (as
lessee or lessor) property, or to purchase or sell services,
primarily for the
purpose of enabling the debtor to make payment of such indebtedness
or to assure
the holder of such indebtedness against loss, (iii) to supply funds
to or in any
other manner invest in the debtor (including any agreement to pay
for property
or services irrespective of whether such property is received or
such services
are rendered) or (iv) otherwise to assure a creditor against loss,
and (h) all
indebtedness referred to in clauses (a) through (f) above secured
by (or for
which the holder of such Indebtedness has an existing right,
contingent or
otherwise, to be secured by) any Lien on property (including
accounts and
contract rights) owned by such Person, even though such Person has
not assumed
or become liable for the payment of such indebtedness.
"Disclosure Schedule" shall have the meaning specified in the
preamble to Article III.
"Earnout Amount" shall mean the aggregate amount of (i) the
Common Stock Equivalent A for every One Dollar and Zero Cents
($1.00) in
Annualized First Quarter Revenue up to, and including, Two Million
Dollars and
Zero Cents ($2,000,000.00) plus (ii) the Common Stock Equivalent B
for every One
Dollar and Zero Cents ($1.00) in Annualized First Quarter Revenue
in excess of
Two Million Dollars and Zero Cents ($2,000,000.00).
"Earnout Payment Date" shall mean shall have the meaning set
forth in Section 2.7(a).
"Environment" shall mean surface waters, groundwaters,
sediment, soil, subsurface strata and outdoor or indoor ambient
air.
"Environmental Action" shall mean any investigation,
monitoring, notification, clean-up, containment, response, removal,
remedial
compliance or other action relating to any Environmental Laws for
which Seller
is, or as a result of Seller's being, obligated to defend,
indemnify and hold
Purchaser harmless pursuant to Section 8.1.
"Environmental Laws" shall mean all applicable Laws, now or
hereafter in effect and as amended, and any judicial or
administrative
interpretation thereof, including any judicial or administrative
order, consent
decree or judgment, or other agency requirement having the force
and effect of
law and relating to the Environment, pollution, Hazardous
Substances, protection
of the environment, protection of natural resources, or health and
safety,
including the
-3-
Comprehensive Environmental Response, Compensation and Liability
Act; the
Resource Conservation and Recovery Act; the Hazardous Materials
Transportation
Act; the Clean Water Act, the Toxic Substances Control Act; the
Clean Air Act;
the Safe Drinking Water Act; the Atomic Energy Act; the Federal
Insecticide,
Fungicide and Rodenticide Act; the Occupational Safety and Health
Act; and the
Federal Food, Drug and Cosmetic Act.
"Equipment" shall have the meaning set forth in Section
2.1(b).
"ERISA" shall have the meaning set forth in Section 3.13(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning set forth in Section
2.2.
"Excluded Liabilities" shall have the meaning set forth in
Section 2.4.
"Financial Statements" shall have the meaning set forth in
Section 3.4(a).
"U.S. GAAP" shall mean United States generally accepted
accounting principles consistently applied.
"Governmental Bodies" shall have the meaning set forth in
Section 3.8.
"Governmental Body" shall have the meaning set forth in
Section 3.8.
"Hazardous Substance" shall mean any toxic, hazardous,
chemical, material, explosive, dangerous, flammable or radioactive
substance
that is regulated by or under authority of any Environmental Laws,
including,
without limitation, (i) petroleum and petroleum products and
compounds
containing them, including gasoline, diesel fuel and oil; urea
formaldehyde foam
insulation; polychlorinated biphenyls and transformers, other
equipment, or
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become
friable; radon
gas; underground or above-ground storage tanks, whether empty or
containing any
substance; any substance the presence of which is prohibited or
regulated by any
federal, state or local authority; any substance that requires
special handling;
(ii) in the United States, all substances defined as Hazardous
Substances, Oils,
Pollutants or Contaminants in the Natural Oil and Hazardous
Substances Pollution
Contingency Plan; and (iii) any other material or substance now or
in the future
defined as a "hazardous substance", "hazardous material",
"hazardous waste",
"extremely hazardous waste", "restricted hazardous wastes", "toxic
substance",
"toxic pollutant", "contaminant", or pollutant", or words of
similar import,
under any applicable Environmental Law.
"Indemnified Party" shall mean a Purchaser Indemnified Party
pursuant to Section 8.1 or a Seller Indemnified Party pursuant to
Section 8.2,
as the case may be.
"Indemnifying Party" shall mean Seller pursuant to Section 8.1
or Purchaser pursuant to Section 8.2, as the case may be.
-4-
"Instruments of Assignment" shall have the meaning set forth
in Section 2.5(a)(vi).
"Intellectual Property" shall mean all of the following as
they exist in any jurisdictions throughout the world, in each case,
to the
extent owned by or licensed to Seller:
(i) patents, patent applications, industrial rights and the
inventions, designs and improvements described and claimed therein,
patentable
inventions, and other patent rights (including any divisionals,
continuations,
continuations-in-part, renewals, substitutions, reexaminations or
reissues
thereof, whether or not patents are issued on any such applications
and whether
or not any such applications are amended modified, withdrawn or
refiled)
(collectively, "Patents");
(ii) trademarks, service marks, trade dress, trade names,
brand names, designs, logos, slogans, corporate names and other
identifiers of
source or goodwill (including, in each case, the goodwill
associated therewith),
whether registered or unregistered, and all registrations and
applications for
registration thereof, including, without limitation, the name
"Surgica
Corporation" and all variants of Surgica Corporation the
registrations of which
are owned by Seller (collectively, "Trademarks");
(iii) copyrights, including any renewals and extensions
thereof, copyright registrations and applications for registration
thereof, and
non-registered copyrights (collectively, "Copyrights");
(iv) trade secrets, confidential business information and
other proprietary information including, without limitation,
designs, research
and development information, technical information, specifications,
operating
and maintenance manuals, methods, engineering drawings, know-how,
data, data
rights, mask works, discoveries, inventions, industrial designs and
other
proprietary rights (whether or not patentable or subject to
copyright, mask work
or trade secret protection)
(v) advertising and promotional rights and rights to privacy
and publicity;
(vi) all domain names, web sites and web pages and related
rights and items;
(vii) computer software programs and software systems,
including, without limitation, all databases, compilations, tool
sets,
compilers, higher level or "proprietary" languages, and all related
material
documentation and information, whether in source code, object code
or human
readable form, other than software used by Seller that is
commercially available
pursuant to "shrink-wrap," "click-through" or other standard form
license
agreements and software that is embedded as part of commercially
available
products or services (collectively, "Software"); and
(viii) all common rights thereto.
"intellectual property", if used in lower case, shall mean all
of the foregoing, without restriction as to identity of ownership,
licensor or
licensee.
-5-
"Inventory" shall have the meaning set forth in Section
2.1(c).
"IP Licenses" shall mean all permits, licenses, sublicenses
and other agreements or permissions including, without limitation,
agreements
between Seller and third parties relating to the development or use
of
Intellectual Property, the development or transmission of data, or
the use,
modification, framing, linking advertisement, or other practices
with respect to
Internet web sites under which Seller is a licensee or otherwise
authorized to
use or practice, or under which Seller is a licensor of any
Intellectual
Property.
"Knowledge" shall mean the actual knowledge of the Persons
listed on Schedule 1.1, after reasonable investigation sufficient
to express an
informed view and such knowledge that would be imputed to such
Persons in the
normal exercise of their duties.
"Laws" shall have the meaning set forth in Section 2.11(a).
"Lease Assignment" shall have the meaning set forth in Section
2.5(a)(v).
"Leased Real Property" shall have the meaning set forth in
Section 3.19(a).
"Liabilities" shall have the meaning set forth in Section
3.18.
"Liens" shall mean any pledges, liens (including environmental
and Tax liens), charges, encumbrances, transfer restrictions,
options, rights of
first refusal, mortgages, deeds of trust, easements, leases,
servitudes,
security interests, hypothecations, violations, licenses,
reversions, reverters,
preferential arrangements, restrictive covenants, conditions or
restrictions and
Claims of any kind or other encumbrances of any nature whatsoever,
including any
restriction on the use, voting, transfer, receipt of income or
other exercise of
any attributes of ownership.
"Losses" shall have the meaning set forth in Section 8.1.
"Material Adverse Effect" shall mean any circumstance, change
in or effect on the Operations or Seller that, individually or in
the aggregate
with all other circumstances, changes in or effects on the
Operations or Seller:
(a) is or is reasonably likely to be materially adverse to the
business,
operations, assets or liabilities (including contingent
liabilities), employee
relationships, customer or supplier relationships, results of
operations, the
condition (financial or otherwise) or prospects of the Operations,
in each case
taken as a whole (other than changes, effects or circumstances that
are the
result of economic factors affecting the economy as a whole or that
are the
result of factors generally affecting the industry or specific
markets in which
the Operations operate), or (b) is reasonably likely to materially
adversely
affect the ability of the Purchaser to operate or conduct the
Operations in the
manner in which it is currently or currently contemplated to be
operated or
conducted by Seller, or (c) could prevent, or materially impair or
materially
delay, Purchaser from consummating the transactions contemplated by
the
Transaction Documents; provided, that a "Material Adverse Effect"
shall not
include any adverse change, effect or event (a) arising out of or
resulting
primarily from actions contemplated by the parties hereto in
connection with
this Agreement or the other Transaction Documents or (b) that is
attributable to
the announcement or performance of this
-6-
Agreement or the other Transaction Documents or the transactions
contemplated by
this Agreement or the other Transaction Documents.
"Material Permits" shall have the meaning set forth in Section
2.1(g).
"Minimum Revenue Trigger" shall mean average sales per quarter
from the Operations to be transferred from Seller to Purchaser as
provided
herein for the first (1st) quarter of 2007 and second (2nd) quarter
of 2007
which are equal to or greater than Four Hundred Fifty Thousand
Dollars and Zero
Cents ($450,000.00).
"Operations" shall mean all business and operations of Seller
as currently conducted, and as conducted on the Closing Date,
including, without
limitation, all research, development, manufacturing, marketing,
sales, service
and other activities of Seller (including its predecessors, if any)
relating
thereto or in connection therewith.
"Options" shall have the meaning set forth in Section 3.19(a).
"Order" shall have the meaning set forth in Section 6.1(a).
"Ordinary Course of Business" shall have the meaning set forth
in Section 3.5.
"Other Instruments" shall have the meaning set forth in
Section 2.5(a)(vi).
"Patent Assignment" shall have the meaning set forth in
Section 2.5(a)(ii).
"Patents" shall have the meaning set forth in the definition
of Intellectual Property in this Section 1.1.
"Permits" shall have the meaning set forth in Section 3.8.
"Permitted Liens" shall have the meaning set forth in Section
3.7.
"Person" shall mean and include an individual, a partnership,
a joint venture, a limited liability company, a corporation, a
trust, a firm, an
association, an unincorporated organization and a government or any
department
or agency thereof or any other entity, as well as any syndicate or
group that
would be deemed to be a person under Section 13(d)(3) of the
Securities Exchange
Act of 1934, as amended.
"Plans" shall have the meaning set forth in Section 3.13.
"Pre-Closing Tax Period" shall mean (i) any Tax period ending
on or before the Closing Date and (ii) with respect to a Tax period
that
commences before but ends after the Closing Date, the portion of
such period up
to and including the Closing Date.
"Private Placement Alternative" shall have the meaning set
forth in Section 5.15(a).
"Private Placement Documents" shall have the meaning set forth
in Section 5.15(a).
-7-
"Proceedings" shall have the meaning set forth in Section 3.6.
"Purchase Price" shall have the meaning set forth in Section
2.6(a).
"Purchaser" shall have the meaning set forth in the preamble
to this Agreement.
"Purchaser Indemnified Party" shall have the meaning set forth
in Section 8.1.
"Remedial Action" shall mean all action to (a) clean up,
remove, treat or handle in any other way Hazardous Substances in
the
Environment; (b) prevent the Release of Hazardous Substances so
that they do not
migrate, endanger or threaten to endanger public health or the
Environment; or
(c) perform remedial investigations, feasibility studies,
corrective actions,
closures and post-remedial or post-closure studies, investigations,
operations,
maintenance and monitoring.
"Release" shall mean disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping,
placing and the like into or upon any land or water or air or
otherwise entering
into the Environment.
"Restricted Period" shall have the meaning set forth in
Section 5.6(a).
"Revenue Trigger Report" shall have the meaning set forth in
Section 2.7(b).
"S-4 Alternative" shall have the meaning set forth in Section
5.15(b).
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section
4.5.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller" shall have the meaning set forth in the preamble to
this Agreement.
"Seller Indemnified Party" shall have the meaning set forth in
Section 8.2.
"Seller Special Meeting" shall have the meaning set forth in
Section 5.15(d).
"Shares" shall have the meaning set forth in Section 2.6(a).
"Software" shall have the meaning set forth in the definition
of Intellectual Property in this Section 1.1.
"Statement" shall have the meaning set forth in Section
5.15(c).
"Tangible Personal Property" shall have the meaning set forth
in Section 3.20(a).
"Tax" shall mean all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax
whatsoever,
including but not limited to any income,
-8-
alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad
valorem, value added, transfer, franchise, profits, license,
registration,
recording, documentary, conveyance, gains, withholding, payroll,
employment,
excise, severance, stamp, occupation, premium, property,
environmental or
windfall profit tax, custom duty or other tax, governmental fee or
other like
assessment or charge of any kind whatsoever, whether or not
measured in whole or
in part by net income, together with any interest, deficiency
penalty, addition
to tax or additional amount imposed by any Governmental Body
responsible for the
imposition of any such tax (domestic or foreign) and obligations
under any tax
sharing, tax allocation or similar agreement to which Seller is a
party.
"Tax Returns" shall mean all returns, declarations, reports,
estimates, information returns and statements required to be filed
in respect to
any Taxes.
"Third Party Claims" shall have the meaning set forth in
Section 8.3.
"Trademark Assignment" shall have the meaning set forth in
Section 2.5(a)(iv).
"Trademarks" shall have the meaning set forth in the
definition of Intellectual Property in this Section 1.1.
"Transaction Documents" shall mean this Agreement and the
Instruments of Assignment all Schedules and Exhibits hereto and
thereto,
together with any other agreements, instruments, certificates and
documents
executed by the parties hereto in connection herewith or therewith.
"Transfer Taxes" shall have the meaning set forth in Section
5.9.
"Transferred Bank Accounts" shall have the meaning set forth
in Section 2.1(o).
"Treasury Regulations" shall mean the Treasury Regulations
(including Temporary Treasury Regulations) promulgated by the
United States
Department of Treasury with respect to the Code or other federal
tax statutes.
"WARN Act" means the Worker Adjustment and Retraining
Notification Act (Pub. L. 100-379, 102 Stat. 890 (1988)), as
amended.
Article II
TRANSFER OF ASSETS AND LIABILITIES
Section 2.1 Acquired Assets. Upon the terms and subject to the
conditions
of this
Agreement,
at the Closing
provided for in Section 2.8, in
each case subject to Section 2.11, Seller, shall sell, convey,
assign,
transfer
and deliver to Purchaser,
and Purchaser shall purchase and acquire from Seller,
free and clear of all Liens, all of Seller's right, title and
interest in and to
all of the
property,
assets and rights
owned,
goodwill and business of every
kind,
character
and
description,
leased
or
licensed,
whether
tangible,
intangible,
real, personal or mixed and wheresoever located, whether carried on
the books of Seller or not carried on the books of Seller due to
expense,
full
depreciation or otherwise, relating to or used in the Operations
(other than
-9-
the Excluded
Assets) as the same may exist on the Closing
Date
(collectively,
the
"Acquired
Assets"),
expressly
subject
to the
Assumed
Liabilities
and
Permitted Liens.
Such Acquired Assets shall include,
without
limitation,
the
following (except to the extent that they are Excluded Assets):
(a) the Operations as a going concern;
(b) All of Seller's
right,
title and
interest in and to all tangible
personal
property
owned
or
leased
by
Seller
relating
to or
used
in the
Operations,
including,
without limitation, all furniture,
fixtures,
computer
equipment, furnishings, tools, machinery, spare parts, motor
vehicles, leasehold
improvements
and
equipment,
and any
prepaid
deposits
for
any of the
same
(collectively,
the "Equipment"),
and all manufacturers'
warranties associated
with such items, including,
without limitation, the list of Equipment set forth
on Schedule 2.1(b).
(c) All of Seller's right,
title and interest in and to all inventory,
work-in-process,
components, finished goods, parts, supplies, raw materials and
other items owned or leased by Seller
relating to or used in the Operations and
any prepaid deposits for any of the same
(collectively,
the
"Inventory"),
as
well as all
manufacturers'
warranties
associated with such items,
including,
without limitation, the list of Inventory set forth on Schedule
2.1(c);
(d)
All
of
Seller's
right,
title
and
interest
in
and
to
all
Intellectual
Property and all IP Licenses, in both cases relating to or used in
the
Operations
(collectively,
the "Assigned IP Assets"),
including,
without
limitation, the list of Assigned IP Assets set forth on Schedule
2.1(d);
(e) All of
Seller's
right,
title and
interest in and to all claims,
deposits,
prepayments,
warranty and guarantee rights,
refunds and rebates and
similar items relating to the Operations;
(f) All of Seller's
rights
under,
and interest
in, all
agreements,
arrangements,
contracts
(including
contracts
governing
relationships
with
exhibitors),
notes, bonds, loans, instruments,
mortgages,
indentures,
leases
(including any and all leases, subleases,
sale/leaseback agreements,
operating
leases
or
similar
arrangements),
conditional
sales
contracts,
licenses
(including,
without limitation, all IP Licenses),
franchises,
understandings,
commitments, sales and purchase orders, and under all bids, offers
and contracts
under
negotiation
as of the
Closing
Date
(to the
extent
such
offers
are
transferable)
and
other
binding
arrangements
(collectively,
"Contracts")
relating
to the
Operations
to which
Seller
is a party or by or to which the
Acquired Assets are bound or subject (collectively,
the "Assigned Agreements"),
including,
without
limitation,
the list of Assigned
Agreements
set forth on
Schedule 2.1(f);
(g) To the extent
transferable
under
applicable Law, all of Seller's
right,
title and interest in and to all Permits,
municipal,
state and federal
franchises, licenses, agreements, waivers and authorizations
relating to or used
in the
Operations,
including,
without
limitation,
(i) the list of
Material
Permits set forth on Schedule
2.1(g)(i) (the
"Material
Permits") and (ii) any
other Permits set forth on Schedule 2.1(g)(ii);
(h) All of Seller's
right,
title and interest in and to all insurance
policies
for the
benefit of Seller in respect of the
Operations
or
Acquired
Assets and all rights of every nature
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and
description
under or
arising
out of such
policies,
including,
without
limitation, the list of such policies set forth on Schedule 2.1(h);
(i) All of Seller's right, title and interest in and to all
original or
copies (in
accordance
with Section
2.2(a)) of all books,
records,
and other
documents
(whether on paper,
computer
diskette,
tape or other storage media)
used in the Operations (collectively,
the "Books and Records"),
including, but
not limited to, tax
records,
property
records,
purchase
and sales
records,
credit data, marketing,
advertising and promotional materials,
personnel files
and payroll records,
accounting records,
financial reports, fixed asset lists,
customer lists,
customer records and information,
supplier lists, parts lists,
manuals,
technical
and repair data,
invoices,
correspondence,
files and any
similar items;
(j) All of
Seller's
right,
title and
interest in and to all rights,
Claims,
causes of action,
choses in action,
rights of recovery
and rights of
setoff of any kind against third parties relating to the
Operations,
including,
but not
limited
to,
all rights to
insurance
proceeds
and rights
under and
pursuant to all warranties,
representations and guarantees made by suppliers of
products,
materials,
or equipment,
or components
thereof covering any of the
Acquired Assets;
(k) All of Seller's right, title and interest in and to all
stationery,
forms, labels, shipping materials, brochures, art work,
photographs, advertising
materials and any similar items relating to or used in the
Operations
(l) All of Seller's right, title and interest in and to all Leased
Real
Property,
including,
without
limitation,
such real
properties
set forth in
Schedule
3.20(a),
together
with any and all rights to easements
for ingress,
egress
and
utilities
which
are
attendant
to such
property
and all
other
appurtenances thereto;
(m) All of Seller's
right,
title and
interest in and to all accounts
receivable,
notes and other amounts
receivable from third parties,
including,
without limitation,
customers and employees,
and any amounts designated on the
Balance Sheet as
prepayments,
advances and deposits of Seller
relating to the
Operations as of the Closing Date (including rights to payment for
services that
have been performed but have not been billed prior to the Closing
Date), whether
or not in the ordinary
course of business,
together with any unpaid
financing
charges accrued thereon;
(n) All of Seller's
right,
title and
interest in and to all goodwill
associated with the Operations;
(o) All of Seller's right,
title and interest in the bank accounts set
forth on Schedule 2.1(o) (the "Transferred Bank Accounts");
(p) All of Seller's right, title and interest in all cash on hand,
cash
equivalents, bank accounts and short-term instruments (including
restricted cash
in respect of the items set forth in Section
2.1(e)) and all
similar
types of
investments,
such
as
certificates
of
deposit,
treasury
bills
and
other
marketable
securities,
relating
to
the
Operations
as of the
Closing
Date
(whether or not such cash is held in a Transferred Bank Account);
and
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(q) All of Seller's and its
Affiliates'
right,
title and interest to
and under all other assets,
rights and claims of every kind and nature relating
to the Operations as of the Closing Date.
Section
2.2
Excluded
Assets.
Notwithstanding
any
other
provision of this
Agreement,
the Acquired
Assets shall not include any of the
following assets and properties of Seller (collectively, the
"Excluded Assets"),
which assets shall not be transferred, conveyed, set over,
delivered or assigned
to Purchaser:
(a) All original Books and Records (i) that would otherwise
constitute
Acquired Assets but for the fact that Seller is required to retain
such original
Books and
Records
pursuant
to
applicable
Laws (in which case copies of such
Books and
Records
shall be
included
in the
Acquired
Assets
to the
extent
permitted by applicable Laws) or (ii) that constitute
documents relating to the
corporate
organization,
qualification to do business or corporate existence of
Seller;
(b) All claims, rights,
interests and proceeds with respect to any Tax
refunds
and other
refunds of charges or
assessments
by a
Governmental
Body
arising from or pertaining to the conduct of the Operations for any
Pre-Closing
Tax Period;
(c) All rights,
Claims,
causes of action and documents relating to an
Excluded Asset or an Excluded Liability;
(d) All of Seller's rights, title and interest under this Agreement
and
the Transaction Documents to which Seller is a party; and
(e) All of Seller's
right,
title and interest in and to all Contracts
to which Seller is a party exclusively relating to Seller's
internal governance,
including,
without
limitation,
the
Seller's
Certificate
of
Incorporation,
Bylaws,
in each case as amended
and/or
restated,
or any other Contract among
Seller and its stockholders relating to Seller's internal
governance.
Section 2.3 Assumed Liabilities. Upon the terms and subject to
the conditions of this
Agreement,
at the Closing,
Purchaser
shall assume and
thereafter pay,
perform and discharge only the following
Liabilities of Seller
relating to the Operations (collectively, the "Assumed
Liabilities"):
(a) All
liabilities or
obligations
arising out of or relating to the
Operations
and
Acquired
Assets for all
periods
commencing
on and after the
Closing Date; and
(b) All
liabilities or
obligations
of Seller
relating to or arising
under
the
Assigned
Agreements
set
forth
in
Schedule
2.1(f)
(other
than
liabilities or obligations
attributable to any failure by Seller to comply with
the terms thereof).
Section 2.4 Excluded Liabilities.
Notwithstanding Section 2.3
above, Seller shall retain, and shall be responsible for paying,
performing and
discharging when due, and Purchaser shall not assume or have any
responsibility
for, any Liabilities of Seller
whatsoever,
whether Known or unknown,
fixed or
contingent,
obsolete
or
otherwise,
other than the Assumed
Liabilities
(the
"Excluded Liabilities"), including without limitation, those set
forth below:
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(a) Debt;
(b) All
obligations
or
Liabilities
arising
from or relating to any
Excluded Asset;
(c) All obligations or Liabilities of Seller pursuant to
Environmental
Laws arising from or relating to any action,
event,
circumstance
or condition
related to the Operations or the Leased Real Property;
(d) Except with respect to the Assigned Agreements described in
Section
2.3(b), all obligations or liabilities
arising from or relating to the Seller's
officers, directors, employees, independent contractors and
consultants, and the
Plans; and
(e) Any liability or obligation for Taxes of Seller or
attributable to
the Acquired Assets or the Operations for any Pre-Closing Tax
Period
(including
all liabilities of Seller for Taxes related to the transactions
contemplated by
this Agreement).
Section
2.5
Transfer
of
Acquired
Assets
and
Assumed
Liabilities.
(a) At the
Closing,
Seller
shall
effectuate
the sale,
conveyance,
assignment,
transfer
and
delivery
of the
Acquired
Assets to
Purchaser
by
delivering
to
Purchaser
(or its
designees
with
respect
to any or all such
assets) each of the following:
(i) A duly
executed bill of sale and
assignment
relating to
the
Assigned
Agreements,
Permits and other
Acquired
Assets,
in the form of
Exhibit A hereto (the "Bill of Sale and Assignment");
(ii) A duly
executed
assignment
of Patents,
in the form of
Exhibit B hereto (the "Patent Assignment");
(iii) A duly executed assignment of Copyrights, in the form of
Exhibit C hereto (the "Copyright Assignment");
(iv) A duly executed assignment of Trademarks,
in the form of
Exhibit D hereto (the "Trademark Assignment");
(v) A duly executed
assignment
and estoppel of real property
leases, in the form of Exhibit E hereto (the "Lease Assignment");
and
(vi) Such
other
documents
of title and good and
sufficient
instruments of conveyance and transfer
(collectively,
the "Other
Instruments"
and, together with the Bill of Sale and Assignment,
the Patent Assignment,
the
Copyright Assignment,
the Trademark Assignment,
and the Lease Assignment,
the
"Instruments
of
Assignment")
as
are
reasonably
necessary
to
transfer
to
Purchaser (or its
designees)
Seller's
right and title to and interests in the
Acquired Assets free and clear of all Liens, other than the Assumed
Liabilities
and Permitted Liens.
Section 2.6 Consideration.
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(a) Upon the terms and subject to the conditions of this Agreement,
the
aggregate
purchase price (the "Purchase
Price") payable by Purchaser to Seller
in full and complete payment for the sale, conveyance,
assignment, transfer and
delivery of the Acquired Assets by Seller shall consist of (i) the
assumption of
the
Assumed
Liabilities
by
Purchaser
at
the
Closing;
(ii)
Two
Million
(2,000,000) shares of Common Stock (the "Shares"); and (iii) the
Earnout Amount,
if any. The Shares,
and the shares comprising the Earnout Amount, if any, shall
constitute "restricted
securities" as that term is defined in Section 144(a)(3)
of the Securities Act and shall be restricted as to their resale,
as more fully
described below.
(b) Seller hereby
agrees that it shall not,
without the prior written
consent of
Purchaser,
sell,
contract to sell,
sell any option or contract to
purchase,
purchase any option or contract to sell,
grant any option,
right or
warrant to
purchase,
pledge,
lend or
otherwise
transfer
or dispose of, any
Shares, shares comprising the Earnout Amount or any securities
convertible into
or exercisable or exchangeable
for the Shares or shares
comprising the Earnout
Amount
held by
Seller,
or
enter
into any
swap or
other
arrangement
that
transfers to another,
in whole or in part, any of the economic
consequences of
ownership of such securities, for a period of one hundred eighty
(180) days from
the Closing
Date with
respect to the Shares and one hundred
eighty (180) days
from the Earnout Payment Date with respect to the shares
comprising the Earnout
Amount; provided,
however, that if Purchaser exercises the option granted to it
by Seller pursuant to that certain Asset Purchase Option Agreement,
dated as of
November [_], 2005 by and between PPT and Seller (the "Option
Agreement"),
more
than one hundred
eighty (180) days prior to July 30, 2007,
the
aforementioned
restrictions
shall
apply
for a period of
thirty
(30) days from the
Earnout
Payment Date with respect to the shares
comprising the Earnout Amount. In order
to
enforce
the
foregoing
covenant,
Purchaser
may
impose
stop
transfer
instructions with respect to the Shares and shares comprising the
Earnout Amount
held by Seller until the end of such period(s).
(c) The Purchase Price shall be allocated among the Acquired Assets
and
the covenants
contained in Section 5.6 of this Agreement as of the Closing Date
in
accordance
with
Exhibit
F
(the
"Allocation
Method").
Any
subsequent
adjustments
to the sum of the
Purchase
Price shall be
allocated
in a manner
consistent
with the
Allocation
Method
and
Section
1060 of the Code and the
Treasury
Regulation
issued
thereunder.
For all Tax
purposes,
Purchaser and
Seller
agree that the
transactions
contemplated
in this
Agreement
shall be
reported
in a manner
consistent
with the
terms
of this
Agreement
and that
neither
Seller nor Purchaser will take any position
inconsistent
therewith in
any Tax Return, in any refund claim, in any litigation or
otherwise.
Seller and
Purchaser
agree to
cooperate
in good faith with each other in filing IRS Form
8594 in the form prepared by Purchaser.
Section
2.7
Earnout.
As
additional
consideration
for the
transactions set forth herein:
(a) If,
on the
later of (i)
July 30,
2007 or (ii) the date on which
Purchaser
exercises the option
granted to it by Seller
pursuant to the Option
Agreement, the Minimum Revenue Trigger has been achieved,
Purchaser shall issue
shares of Common
Stock to Seller no later
than ten (10)
Business
Days
after
Purchaser's
receipt of
confirmation
that Seller
accepts the Revenue
Trigger
Report, subject to the resolution of any dispute pursuant to
Section 2.7(c) (the
"Earnout Payment Date"), the Earnout Amount.
Notwithstanding the foregoing,
no
fractional
shares of
-14-
Common
Stock shall be issued in
conjunction
with any payment by
Purchaser to
Seller of the Earnout
Amount.
In lieu of any fractional
share to which Seller
would
otherwise be entitled,
Purchaser
shall pay cash equal to the product of
such
fraction
multiplied
by the price per share of Common
Stock based on the
ninety- (90) day prior average price of the Common Stock as of
April 1, 2007.
(b) Whether
the Minimum
Revenue
Trigger has been
achieved,
and the
Annualized
First Quarter
Revenue,
shall be determined by Purchaser within (i)
thirty (30) days after the close of the second
quarter of 2007 or (ii) the date
on which Purchaser
exercises the option granted to it by Seller pursuant to the
Option Agreement, whichever is later. Copies of Purchaser's report
(the "Revenue
Trigger Report") setting forth Purchaser's
determination of whether the Minimum
Revenue
Trigger has been achieved,
and the Annualized
First Quarter
Revenue,
shall be submitted by Purchaser in writing to Seller and, unless
Seller notifies
Purchaser within thirty (30) Business Days after receipt of such
Revenue Trigger
Report
that it objects to the
computations
set forth
therein,
such
Revenue
Trigger
Report
shall
be
binding
and
conclusive
for the
purposes
of this
Agreement. Following delivery to Seller of the Revenue Trigger
Report, Purchaser
shall give Seller and its accountants reasonable access to
Purchaser's personnel
as well as any books, records,
work-papers,
documents,
and reports created or
prepared
by
Purchaser
in
connection
with the
determination
of the Minimum
Revenue Trigger and the Annualized
First Quarter Revenue and the preparation of
the
corresponding
Revenue
Trigger
Report on
reasonable
prior notice during
regular business hours in order to verify the computations set
forth therein.
(c) If Seller
disagrees with the computations set forth in the Revenue
Trigger
Report,
Seller
may,
within
thirty
(30) days after
delivery of the
Revenue
Trigger
Report,
deliver a notice to Purchaser
disagreeing
with such
computation and the basis for its disagreement, and thereafter the
parties shall
in good faith attempt to resolve any dispute, in which event the
Revenue Trigger
Report
and the
computations
set
forth
therein,
as
amended
to the
extent
necessary to reflect the
resolution
of the dispute,
shall be
conclusive
and
binding on the
parties.
If the parties do not reach
agreement
resolving
the
dispute within ten (10) days after notice is given by Seller,
the parties shall
submit the dispute to the
Accountant to review this
Agreement and the disputed
items or amounts
for the
purpose of making the
appropriate
calculations
(it
being
understood that t
