STOCK PURCHASE AGREEMENT
Exhibit
10.38
Execution
Copy
This
STOCK PURCHASE AGREEMENT (the “Agreement”) is made
and entered into as of the 19th day of December, 2007, by and between OccuLogix,
Inc., a Delaware corporation (“OccuLogix”), and Solx
Acquisition, Inc., a Delaware corporation (the “Company”).
For good
and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1.
Purchase and
Sale.
(a) Authorization. The
Board of Directors of OccuLogix, on or before the Closing (as defined below),
shall have duly authorized the sale of one thousand (1,000) shares of Common
Stock, $.001 par value per share, of Solx, Inc. (“Solx”), a Delaware
corporation and wholly owned subsidiary of OccuLogix (the “Solx Stock”), which
consists of all of the issued and outstanding capital stock of Solx, and which
currently is owned by OccuLogix, to the Company pursuant to the terms and
conditions of this Agreement.
(b) Sale of
Shares. On the terms and subject to the conditions set forth
in this Agreement, at the Closing (as defined below), the Company will acquire
100% of the issued and outstanding Solx Stock (the “Transaction”).
(c) The
Closing. The closing of the Transaction shall take place at
the offices of Rackemann, Xxxxxx & Xxxxxxxx, P.C., 000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx (the “Closing”), at 11
a.m., eastern time, on December 19, 2007 or such other date and place as is
mutually agreeable to the Company and OccuLogix (the “Closing
Date”). At the Closing, OccuLogix shall deliver to the Company
a stock certificate representing the Solx Stock, duly endorsed in blank for
transfer and accompanied by all required stock transfer taxes (if
any). By making such transfer, OccuLogix (i) warrants and represents
that the Solx Stock is being sold free and clear of all liens, claims, options,
charges, encumbrances or rights of others, other than the rights established by
this Agreement, and (ii) further warrants and represents that OccuLogix is the
record and beneficial owner of such Solx Stock and that the acquisition by the
Company of the Solx Stock is in compliance with or exempt from the registration
requirements of U.S. federal and state securities laws and, if applicable, from
the prospectus and registration requirements of the securities laws of the
provinces of Canada.
(d) Purchase
Price. The consideration for the acquisition of the Solx Stock
will consist of: (i) on the Closing Date, the assumption by the
Company of all of the liabilities of OccuLogix, as they relate to Solx’s
business, incurred on or after December 1, 2007 (the “Assumed
Liabilities”), including, among other things, the payroll liabilities of
Solx incurred on and after December 1, 2007, and the obligation to make future
payments to the Participating Rights Holders under the Agreement and Plan of
Merger, dated as of August 1, 2006, by and among OccuLogix, OccuLogix Mergeco,
Inc., Solx, Inc. and Xxxx X. Xxxxx, Xxxx Xxxxxxxx and Xxxxx X. Xxxxx, as amended
(the “Merger
Agreement”) and the loan and security documents delivered pursuant to the
Merger Agreement (the “PRH Payment”); (ii)
on or prior to February 15, 2008, the payment by the Company of all of the
expenses that OccuLogix has paid to the Closing Date, as they relate to Solx’s
business during the period commencing on December 1, 2007, and as set forth in
Schedule A to
this Agreement (the “Pre-paid Expenses”);
(iii) during the period commencing on the Closing Date and ending on the date on
which Solx achieves a positive cash flow, the payment by the Company of a
royalty equal to 3% of the worldwide Net Sales (as defined in Section 6) of
Solx’s Ti-Sapphire Laser and Shunt products (as defined in Section 6) (together,
the “Royalty
Products”), to be paid on a quarterly basis and in accordance with
Section 6; and (iv) following the date on which Solx achieves a positive cash
flow, the payment by the Company of a royalty equal to 5% of Net Sales of the
Royalty Products, to be paid on a quarterly basis and in accordance with Section
6. The payments referred to in (iii) and (iv) are hereinafter
referred to as the “Royalty
Payments”.
Notwithstanding
the assumption by the Company of the Assumed Liabilities on the Closing Date,
OccuLogix will continue to cover the payroll liabilities of Solx during the
period between the Closing Date and December 31, 2007 inclusive (the “December Payroll”),
but, on or prior to January 15, 2008, the Company will reimburse OccuLogix for
the total amount of the December Payroll. Without OccuLogix’s prior
written consent, the Company shall not increase, or cause or allow to increase,
the payroll liabilities of Solx during the period between the Closing Date and
December 31, 2007. For greater certainty, the term “December Payroll”
shall be understood to include the costs of providing benefits to the
individuals on Solx’s payroll, consistent with past practice.
(e) Royalty
Payments. The Royalty Payments shall be calculated and paid as
provided in Section 6. In the event that OccuLogix believes that a
Royalty Payment received from the Company is inaccurate, OccuLogix shall inform
the Company of such issue in writing no later than fourteen (14) business days
after receipt of the Royalty Payment. In such written notice,
OccuLogix may request to review and audit the financial records of the Company
solely with regards to the payment of the Royalty Payments hereunder, and shall
request such review at a reasonable time and place. The Company shall
grant such request promptly but shall have the right to postpone OccuLogix’s
review and audit for up to fourteen (14) days if to grant OccuLogix’s request
for a review and audit, at the originally requested time, would place an undue
burden upon the Company. The parties shall work amicably to determine
the correct amounts of all Royalty Payments, and, in the event of any shortfall
in payment, the Company shall provide all additional amounts due to OccuLogix
within ten (10) days of the determination of such discrepancy. If it
is determined that the Company has overpaid any amounts for Royalty Payments,
OccuLogix shall return such overpaid amounts to the Company within ten (10) days
of the determination of such discrepancy.
(f) Great Plains
Software. No later than ten (10) days after the Closing Date,
OccuLogix shall re-assign to Solx, or otherwise return to Solx, all right, title
and interest in the Great Plains accounting software that Solx had assigned, or
otherwise transferred to, OccuLogix on or after September 1, 2006 (the “Merger Date”). In
this regard, OccuLogix shall return to Solx all materials, in OccuLogix’s
possession, in whatever form, relating to the Great Plains software to be
re-assigned or otherwise returned to Solx pursuant to this Section 1(f),
including, without limitation, but only to the extent applicable, all codes,
programs and software. The parties shall cooperate in regards to the
transition of the Great Plains Software.
(g) Discharge of Pre-December 1,
2007 Liabilities. OccuLogix agrees that it shall discharge
fully all of the outstanding liabilities of Solx and OccuLogix, as they relate
to Solx’s business, that were incurred prior to December 1, 2007, consistent
with OccuLogix’s payment practice; provided, however,
that (i) OccuLogix shall be obligated to pay only 50% of the amount stated to be
owing under the November 2007 invoice of the XxXxxxxx Group for services
rendered by the XxXxxxxx Group during the period between November 1, 2007 and
November 30, 2007 inclusive (being 50% of $37,800) and (ii) OccuLogix shall owe
no obligation to the Company in respect of the letter of OccuLogix, dated May 1,
2007, addressed to Xx. Xxxxxxx Xxxxx of Cynosure, Inc., and all related purchase
orders (collectively, the “Cynosure
PO”).
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(h) Cynosure. The
Company shall use commercially reasonable efforts to obtain Cynosure, Inc.’s
agreement to release OccuLogix from all obligations under the Cynosure PO, in
consideration of the Company’s agreement to purchase products from Cynosure,
Inc. or such other consideration as the Company and Cynosure, Inc. may
agree. For greater certainty, it is acknowledged and agreed that all
obligations under the Cynosure PO are, and shall continue to be, those of
OccuLogix solely and not those of Solx or the Company.
(i) Employees. Notwithstanding
OccuLogix’s agreement to cover the December Payroll pursuant to Section 1(d) and
to be reimbursed the total amount thereof on or prior to January 15, 2008, on
the Closing Date, the Company shall employ the individuals listed in Schedule
1(i), all of whom are employees of OccuLogix who are engaged primarily in Solx’s
business, on terms and conditions substantially equivalent, taken as a whole, to
the terms and conditions of their employment immediately prior to the
Closing. In addition, the Company hereby assumes all of the
employer’s obligations under the employment offer letter of Solx, Inc., dated on
or about February 1, 2006, addressed to Xxx Xxxxx. The Company will
not assume any liability for the accrued but unpaid vacation pay, to the Closing
Date, of the individuals listed in Schedule 1(i), which liability will remain
with OccuLogix. With respect to Xxxxx Xxxxxxxx, it is understood
that, notwithstanding the Company’s employment of Xx. Xxxxxxxx on the Closing
Date, Xx. Xxxxxxxx has informed OccuLogix and the Company, and the Company has
agreed, that he will take most of his accrued but unused vacation during
December 2007, and OccuLogix hereby agrees to cover Xx. Xxxxxxxx’x wages during
December 2007. Accordingly, the December Payroll shall not include
wages paid to Xx. Xxxxxxxx during December 2007, and the Company shall not be
obligated to reimburse OccuLogix with respect to such wages pursuant to Section
1(d).
(j) Purdue University Research
Agreement. As partial consideration for OccuLogix entering
into this Agreement and consummating the Transaction, the Company agrees to
cause Xxxx X. Xxxxx, or an entity to be organized by Xxxx X. Xxxxx, to execute
and deliver to OccuLogix, promptly following the Closing, the Term Sheet, of
even date herewith, pursuant to which, among other things, OccuLogix shall be
entitled to receive a certain royalty on the commercialization of Joint
Intellectual Property (as such term is defined in the Research Agreement, dated
as of October 30, 2006, between Solx and Purdue University).
(k) Removal of Officers and
Directors. As of the Closing, (i) Xxxxx Xxxxxxxx and Xxxxxx X.
Xxxxxx shall be removed as directors of Solx, and (ii) Xxxxx Xxxxxxxx and
Xxxxxxx X. Dumencu shall be removed from their respective offices of Chief
Executive Officer of Solx and Chief Financial Officer of Solx.
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2.
Guaranty. Xxxx
X. Xxxxx, President and sole stockholder of the Company, hereby guarantees (i)
the payment by the Company of the Prepaid Expenses and (ii) the reimbursement by
the Company to OccuLogix of the total amount of the December Payroll, as set
forth in Section 1(d), and pursuant to the terms and conditions set forth in the
Limited Guaranty by and between Xxxx X. Xxxxx and OccuLogix of even date
herewith.
3.
Security; Effect of
OccuLogix Bankruptcy. In order to induce OccuLogix to enter into the
Transaction, immediately following the Closing, the Company shall cause Solx to
grant to OccuLogix a subordinated security interest in certain existing and
future intellectual property of Solx associated with the Royalty Products as
provided in the Security Agreement of even date herewith (the “Security Agreement”),
as specifically described therein, and on the terms and conditions
thereof. In the event that OccuLogix or any successor in interest
(voluntarily or involuntarily) files for bankruptcy or similar legal and/or
administrative action in the United States or equivalent in Canada and the
Transaction is adjudicated to be a voidable preferential transaction, fraudulent
transfer, or otherwise voidable, and it is so voided, the Solx Stock, along with
all of the Assumed Liabilities of the Transaction, including, but not limited to
the PRH Payment, shall be returned to the bankruptcy estate or similar body, and
all Royalty Payments, obligations and liabilities to OccuLogix hereunder shall
immediately cease as of the date of such filing.
4.
Representations and
Warranties of the Company.
In order
to induce OccuLogix to enter into this Agreement and to sell the Solx Stock, the
Company hereby represents and warrants that the statements contained in this
Section 4 are complete and accurate as of the Closing Date.
(a) Organization. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all required power and authority
to own its property, carry on its business as presently conducted and
contemplated to be conducted, to enter into and perform this Agreement and to
carry out the transactions contemplated by this Agreement.
(b) Authorization of this
Agreement. This Agreement has been duly authorized, executed
and delivered by the Company and is the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms. The execution,
delivery and performance of this Agreement by the Company, the consummation of
the transactions contemplated hereby and the compliance with provisions of this
Agreement by the Company have been duly authorized by all corporate and
stockholder action and do not and will not result in any violation of or
conflict with, or constitute a default under, (i) the Certificate of
Incorporation or Bylaws of the Company, (ii) any contract, agreement, document
or instrument to which the Company is party or by which it or any of its
properties is bound or (iii) any law, rule, regulation, judgment or order to
which the Company or any of its properties is subject.
(c) Authorization of the
Security Agreement. Following the Closing, the Security
Agreement will have been duly authorized by Solx and, when executed and
delivered by Solx, will be the legal, valid and binding obligation of Solx,
enforceable in accordance with its terms. The execution, delivery and
performance of the Security Agreement by Solx, the consummation of the
transactions contemplated thereby and the compliance with the provisions of the
Security Agreement will be duly authorized by all corporate and stockholder
action and will not result in any violation of or conflict with, or constitute a
default under, (i) the Certificate of Incorporation or Bylaws of Solx, (ii) any
contract, agreement, document or instrument to which Solx is party or by which
it or any of its properties is bound or (iii) any law, rule, regulation,
judgment or order to which Solx or any of its properties is subject.
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(d) Governmental
Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of the Company in connection with
the execution and delivery of this Agreement or the transactions contemplated by
this Agreement.
(e) Compliance. The
Company has, in all material respects, complied with all laws, regulations and
orders applicable to its business and has obtained all material permits,
licenses and other authorizations required thereby.
(f) Accredited Investor
Status. Each of the Company and Xxxx X. Xxxxx is an
“accredited investor” as such term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended.
(g) Pre-December 1, 2007
Liabilities. Schedule B to this
Agreement (the “Non-Assumed Liabilities
Schedule”) discloses all of the outstanding liabilities of Solx and
OccuLogix, as they relate to Solx’s business, that were incurred prior to
December 1, 2007, except for current liabilities incurred in the ordinary course
of business consistent with past practice. Other than as disclosed on
the Non-Assumed Liabilities Schedule, there are no liabilities of Solx or
OccuLogix of the type described in the immediately preceding sentence incurred
by, or under the direction or authorization of, an Excluded Individual (as
defined in Section 5).
5.
Representations and
Warranties of OccuLogix.
In order
to induce the Company to enter into this Agreement and to buy the Solx Stock,
OccuLogix hereby represents and warrants that the statements contained in this
Section 5 are complete and accurate as of the Closing Date. For
purposes of this Section 5, “Knowledge of
OccuLogix” means the actual knowledge of any of Xxxxxx X. Xxxxxx, Xxxx
Dumencu, Nozhat Choudry, Xxx Xxx and Xxxxx Xxxxxxx (being the President and
Chief Operating Officer, the Chief Financial Officer and Treasurer, the Vice
President, Clinical Research, the General Counsel and the Controller of
OccuLogix, respectively), after reasonable investigation and
inquiry. For purposes of this Section 5, a “Non-Solx
Representative” means (i) an employee of OccuLogix, other than Xxxx X.
Xxxxx and the individuals named in Schedule 1(i) (each, an “Excluded
Individual”), acting under his or her own authority or direction or under
the authority or direction of one or more other employees of OccuLogix, none of
whom is an Excluded Individual, or (ii) an agent or representative of OccuLogix
acting under the authority or direction of one or more employees of OccuLogix,
none of whom is an Excluded Individual.
(a) Organization, Good Standing
and Qualification. Solx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on its business as
now conducted. OccuLogix has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement, to perform its obligations under, and to carry out the
provisions of, this Agreement.
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(b) Capitalization. The
total number of shares of Solx Stock (all of which are held by OccuLogix) is one
thousand (1,000) shares of Common Stock, $.001 par value, and there are not
outstanding any options, warrants, instruments, rights (including conversion or
pre-emptive rights and rights of first refusal), proxy or stockholder
agreements, or other agreements or instruments of any kind, including
convertible debt instruments, for the purchase or acquisition of Solx
Stock.
(c) Authorization; Binding
Obligations; Governmental Consents. All corporate action on
the part of OccuLogix, its officers, directors and stockholders necessary for
the authorization, execution and delivery of this Agreement, and the performance
of all obligations of OccuLogix hereunder, have been taken prior to the Closing
Date. This Agreement is a valid and legally binding obligation of
OccuLogix, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. No consent, approval,
permit, order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
on the part of OccuLogix is required in connection with the execution and
delivery of this Agreement or the consummation of the Transaction contemplated
hereby, except for (i) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state and federal securities laws and the securities laws of any foreign country
in connection with the Transaction, and (ii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a change or effect that, when taken individually or
together with all other adverse changes or effects, is or is reasonably likely
to be materially adverse to the business, results of operations and financial
condition of Solx, taken as a whole (“Material Adverse
Effect”), and would not prevent, or materially alter or delay, any of the
transactions contemplated by this Agreement.
(d) Assumed
Liabilities. Schedule C to this
Agreement (the “Assumed Liabilities
Schedule”) discloses all of the outstanding liabilities of Solx and
OccuLogix, as they relate to Solx’s business, that were incurred on and after
December 1, 2007, and that either were incurred by OccuLogix or were brought to
OccuLogix’s attention by the Company. Since December 1, 2007,
OccuLogix has not incurred, on behalf of Solx, any contingent liabilities not
disclosed in the Assumed Liabilities Schedule, except current liabilities
incurred in the ordinary course of business consistent with past
practice.
(e) Indebtedness. Except
as disclosed in the Non-Assumed Liabilities Schedule and the Assumed Liabilities
Schedule, Solx has no indebtedness outstanding on the date hereof that was
incurred by, or under the direction or authorization of, a Non-Solx
Representative. Except as disclosed in Schedule 5(e), neither
OccuLogix on behalf of Solx nor, to the Knowledge of OccuLogix, Solx is in
default with respect to any outstanding indebtedness or any instrument relating
thereto, nor is there any event which, with the passage of time or giving of
notice, or both, would (i) result in a default under or termination of any such
instrument, (ii) cause the indebtedness under such instrument to become due and
payable prior to its stated maturity or (iii) give rise to any other remedies by
a counterparty to any such instrument. Complete and correct copies of
all instruments (including all amendments, supplements, waivers and consents)
relating to any indebtedness of Solx incurred by a Non-Solx Representative have
been furnished to the Company.
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(f)
Litigation. Except
as disclosed on Schedule 5(f) or as may be known by an Excluded Individual,
there is no action, suit, proceeding or investigation pending with respect to
Solx which was not pending prior to the Merger Date or, to the Knowledge of
OccuLogix, currently threatened against Solx or any of its officers, directors
or employees, nor, to the Knowledge of OccuLogix, is there any basis for any of
the foregoing. Other than as may be known by an Excluded Individual,
OccuLogix (with respect to Solx) and/or Solx is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit,
proceeding or investigation by OccuLogix (with respect to Solx) currently
pending or that OccuLogix intends to initiate, and there is no action, suit,
proceeding or investigation by a Non-Solx Representative, on behalf of Solx,
currently pending.
(g) Changes. Except
as reflected in the unaudited financial statements of Solx (including balance
sheet, income statement and statement of cash flows) as of November 30, 2007
(the “Financial
Statements”), since
the date of the Financial Statements, none of the following has been caused or
effected (directly or indirectly) by a Non-Solx Representative:
(i) Any
change in the assets, liabilities, financial condition or operations of Solx
from that reflected in the Financial Statements, other than changes in the
ordinary course of business consistent with past practice, none of which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect;
(ii) Any
material change, except in the ordinary course of business consistent with past
practice, in the contingent obligations of Solx by way of guaranty, endorsement,
indemnity, warranty or otherwise;
(iii) Any
waiver by OccuLogix of a right or of a debt owed to or by Solx;
(iv) Any
indebtedness, obligation or liability incurred, assumed or guaranteed by Solx,
except those for immaterial amounts and for current liabilities incurred in the
ordinary course of business consistent with past practice and except also for
the Assumed Liabilities;
(v) Any
sale, assignment, transfer or license of any patents, trademarks, copyrights,
trade secrets or other intangible assets of Solx;
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(vi) Any
change in any material agreement to which Solx is a party, or by which it is
bound, which has had, or could reasonably be expected to have, a Material
Adverse Effect; or
(vii) Any
other event or condition of any character that, either individually or
cumulatively, has had, or could reasonably be expected to have, a Material
Adverse Effect.
(h) Disclosure. OccuLogix
has provided the Company with all the information that the Company has requested
for deciding whether to execute and deliver this Agreement. Except as
set forth in this Agreement, to the Knowledge of OccuLogix, there is no material
fact with respect to Solx that OccuLogix has not disclosed to the Company , or
that is otherwise known to the Company, and of which any of its officers or
directors is aware that could reasonably be expected to result in a Material
Adverse Effect or which could reasonably be expected to be material to the
Company.
(i)
FDA and
Regulatory Matters. From and after the Merger
Date:
(i) Other
than as may be known by an Excluded Individual, Solx is in compliance with all
requirements of the U.S. Food and Drug Administration (the “FDA”) and non-United
States equivalent agencies and similar state and local laws applicable to the
maintenance, compilation and filing of reports, including medical device
reports, with regard to any products currently under development by Solx
(collectively, the “Products”);
(ii) Other
than as may be known by an Excluded Individual, neither Solx nor OccuLogix has
received any written notice or other written communication from the FDA or any
other governmental authority (i) contesting the pre-market clearance or approval
of, the uses of or the labeling and promotion of any of the Products or (ii)
otherwise alleging any violation of any laws by Solx or OccuLogix;
(iii) Other
than as may be known by an Excluded Individual, each of Solx and OccuLogix, on
behalf of Solx, has conducted, and is continuing to conduct, all clinical trials
sponsored by Solx with reasonable care and in accordance with all applicable
laws and the stated protocols for such clinical trials; and
(iv) Subject
to the statement made in the immediately following sentence, all filings with
and submissions to the FDA and any corollary entity in any other jurisdiction
made by each of Solx and OccuLogix with regard to the Products, whether oral,
written or electronically delivered, were true, accurate and complete as of the
date made and, to the extent required to be updated, as so updated, remain true,
accurate and complete as of the date hereof and do not materially misstate any
of the statements or information included therein or omit to state a material
fact necessary to make the statements therein not misleading. The
statement made in the immediately preceding sentence, with respect to those of
Solx’s filings and submissions made by, or under the direction or authorization
of an Excluded Individual, is qualified entirely to the Knowledge of
OccuLogix.
(j) Taxes.
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(i) Filing of Tax Returns and
Payment of Taxes. With respect to Solx, OccuLogix has timely
filed all tax returns required to be filed by it for all periods subsequent to
the Merger Date, each such tax return has been prepared in compliance with all
applicable laws and regulations, and all such tax returns are true, accurate and
complete in all material respects. All taxes that have become due and
payable by OccuLogix with respect to Solx have been timely paid, and Solx is not
and will not be liable for any additional taxes in respect of any taxable period
or any portion thereof, beginning on the Merger Date and ending on or before the
date of the Financial Statements and any taxes of Solx arising after such date
have been or will be incurred in the ordinary course of Solx’s
business. OccuLogix has delivered to the Company true, correct and
complete copies of all tax returns with respect to income taxes filed by, or
with respect to, Solx subsequent to the Merger Date and has delivered or made
available to the Company all relevant documents and information with respect
thereto.
(ii) Liens. There
are no liens for taxes (other than current taxes not yet due and payable), for
any period subsequent to the Merger Date, on any of the assets of
Solx.
(iii) Pending
Proceedings. There is no action, suit, proceeding or audit
with respect to any tax related to Solx, for any period subsequent to the Merger
Date, now in progress, pending or, to the Knowledge of OccuLogix, threatened
against or with respect to Solx.
(iv) Withholding
Taxes. OccuLogix has timely withheld and timely paid all taxes
which are required to have been withheld and paid by it in connection with Solx
and with amounts paid or owing to any employee, independent contractor, creditor
or other person.
(k) Insurance. OccuLogix
agrees to work in good faith with the Company and its insurers to separate the
policies related to Solx from the policies related to OccuLogix and its
affiliates and subsidiaries so that such Solx-related policies may be provided
to the Company as soon as reasonably possible, but in any event, no later than
January 15, 2008.
(l)
No
Default. Other than as disclosed on Schedule 5(l), Solx is not
in default, nor, to the Knowledge of OccuLogix, is any third party in default,
under or with respect to any contract, agreement, lease or other instrument to
which it is a party with respect to Solx.
6.
Royalty
Payments; Calculation. As provided in Section 1(d), the
Company shall make Royalty Payments, which will consist
of: (i) during the period commencing on the Closing Date and
ending on the date on which Solx achieves a positive EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization), adjusted for items considered
to be non-cash items under generally accepted accounting principles in the U.S.
(“GAAP”),
consistently applied, an amount equal to 3% of the worldwide Net Sales (as
defined below) of the Royalty Products; and (ii) following the date on which
Solx achieves a positive cash flow (determined in accordance with GAAP,
consistently applied), an amount equal to 5% of worldwide Net Sales of the
Royalty Products. The Company shall make the Royalty Payments on a
quarterly basis, on the forty-fifth (45th) day following the end of Solx’s
preceding fiscal quarter (and, in the event that the forty-fifth (45th) day
following the end of Solx’s preceding fiscal quarter is not a business day, the
next succeeding business day). “Net Sales” means the
aggregate dollar amounts recorded as having been received by the Company or Solx
from the sales of Royalty Products to unaffiliated third parties, either
directly or through one or more affiliates, in accordance with GAAP,
consistently applied, in connection with the preparation of the Company’s
financial statements, less 2% of such
amounts to compensate the Company for possible returns and bad debt
deductions. “Net Sales” shall not include any amounts received by the
Company or Solx in connection with (i) sales taxes, tariff duties and/or use or
excise taxes, value added taxes, custom or import duties, imposed with reference
to sales or (ii) outbound transportation prepaid or allowed and transportation
insurance. All Royalty Payments will be paid in United States
Dollars, and the rate of exchange to be used in computing the amount of currency
equivalent to the United States Dollars due as a Royalty Payment, if necessary,
shall be the commercial exchange rate in effect in New York, New York on the
last business day of the calendar quarter for which payment is being
made. As used herein, the term “Royalty Products” shall be limited:
(i) with respect to the “Ti-Sapphire Laser”, to Solx’s titanium sapphire
flashlamp pumped laser intended for use in treatment of glaucoma, whether alone
or in combination with other devices or drugs, including, without limitation, in
the performance of laser trabeculoplasty and the titration of the Shunt (defined
below); and (ii) with respect to the “Shunt”, to Solx’s implantable device
intended for use in the reduction and/or management of intraocular
pressure. For greater certainty, the term “Royalty Products” includes
next-generation or future models or versions of the Ti-Sapphire Laser and the
Shunts that are in existence on the Closing Date. Without derogating
from the generality of the foregoing, the parties acknowledge and agree that a
titratable version of the Shunt is being contemplated to be developed and that
such version would be considered a “Royalty Product” when and if it ever comes
into existence.
9
7.
Strategic
Transaction. In the event of any proposed transaction (an
“Acquisition
Transaction”), the consummation of which would be reasonably likely to
result in any person or entity, other than the Company, assuming control or
exerting influential decision-making authority over the manufacture and sale of
the Royalty Products (the “Acquiror”)
(including, but not limited to, (i) a sale or transfer of the Company or Solx,
(ii) a sale, transfer or license of the business, or all or substantially all of
the assets, of the Company or Solx or (iii) a sale, transfer or license of the
business, or all or substantially all of the assets, of the Company or Solx as
they relate only to Royalty Products), the Company shall not consummate such
Acquisition Transaction unless and until the Acquiror assumes all of the
Company’s outstanding obligations under this Agreement as though the Acquiror
were the Company hereunder, including, without limitation, the obligation to
make the Royalty Payments pursuant to Section 6. This Section 7 shall
apply regardless of the form and structure of the Acquisition Transaction in
question, whether it may consist of a single transaction or a related series of
transactions or whether it may be effected by merger, consolidation, sale or
other transaction or whether it may be for valuable consideration or
not.
8.
Indemnification;
Set-Off. Each of the parties (the “Indemnifying Party”)
agrees to indemnify and hold harmless the other party (the “Indemnified Party”)
and each of the Indemnified Party’s officers, directors, employees, stockholders
and agents, from and against all liabilities, damages, claims, actions, suits,
proceedings, demands, judgments, losses, costs and expenses (including
reasonable attorneys’ fees) (“Claims”) arising from
or in connection with any breach of, or inaccuracy in, any representation or
warranty of the Indemnifying Party set forth in this Agreement or (ii) any
breach or non-fulfillment of any agreement on the part of the Indemnifying Party
contained herein. In a case where OccuLogix is the Indemnifying
Party, any amounts judicially determined to be due and payable to the Company
pursuant to this Section 8 may be set off and deducted by the Company, at the
sole discretion of the Company, from any Royalty Payments due to OccuLogix as
set forth herein. Each of the parties shall provide the other party
with timely written notice of all Claims and reasonable cooperation and further
assurances with regards to all Claims. The indemnification
obligations under this Section 8 shall survive the Closing Date for a period of
eighteen (18) months.
10
9.
Arbitration. All
controversies and/or disputes arising under or in connection with, or relating
to any dispute under, or alleged breach of, this Agreement shall be decided by
arbitration in the City of Boston, Massachusetts in accordance with the
Commercial Arbitration Rules of the American Arbitration Association by a single
arbitrator selected in accordance with the guidelines of the American
Arbitration Association. Such arbitrator shall be selected by the
parties or, failing agreement within one month of the demand for arbitration, by
the American Arbitration Association. The arbitrator shall be a
qualified U.S. lawyer, law professor or retired judge experienced in U.S.
corporate and commercial matters. The findings and decision of the
arbitrator shall be conclusive and binding on the parties hereto and may be
entered before and enforced by any court of competent
jurisdiction. Each party shall bear its own costs, expenses and fees,
including, without limitation, attorneys’ fees and expert fees with respect to
any such arbitration; provided, that the
final decision of the arbitrator shall assign such costs to one or more or the
parties in proportions as the arbitrator deems fair and reasonable in the
circumstances.
10. General
Provisions.
(a) Further
Actions. The parties hereto agree to execute such further
instruments and to take such further actions as may reasonably be necessary to
carry out the intent of this Agreement.
(b) Notices. All
notices in connection with this Agreement shall be in writing and shall be
personally delivered or sent by recognized overnight delivery service or
facsimile transmission:
|
|
to
the Company at:
|
Solx
Acquisition, Inc.
c/o
Xxxx X. Xxxxx
000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX
Tel:
(000) 000-0000
Fax: (000)
000-0000
Email: xxxx@xxxx.xxx
|
|
|
||
|
with
a copy to:
|
Xxxxx
X. Xxxxxx
Rackemann,
Xxxxxx & Xxxxxxxx
000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Tel:
(000) 000-0000
Fax: (000)
000-0000
Email: xxxxxxx@xxxxxxxxx.xxx
|
|
|
to
OccuLogix at:
|
Xxxxx
Xxxxxxxx
0000
Xxxxxxx Xxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxx
X0X
0X0
Tel: (000)
000-0000
Fax: (000)
000-0000
Email: xxxxx.xxxxxxxx@xxxxxxxxx.xxx
|
|
|
with
a copy to:
|
Xxxxxx
X. Xxxx
Torys
LLP
000
Xxxx Xxxxxx
Xxx
Xxxx, XX 00000-0000
Tel: (000)
000-0000
Fax: (000)
000-0000
Email: xxxxx@xxxxx.xxx
|
11
All such
notices shall be deemed delivered (i) upon personal delivery, (ii) three (3)
business days after being deposited with a recognized overnight delivery
service, or (iii) upon receipt of confirmation of facsimile
transmission.
(c) Expenses. Each
party to the Agreement will pay its own expenses in connection with the
transactions contemplated by this Agreement, whether or not the transactions are
consummated.
(d) Assignment; Binding
Effect. This Agreement may not be assigned by either party
without the prior written consent of the other party. This Agreement
shall inure to the benefit of and shall be binding upon the parties and their
respective successors and permitted assigns.
(e) Jurisdiction. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without regard to any conflicts of laws
principles that would require application of the laws of another
jurisdiction.
(f)
Entire
Agreement; Amendment. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings with respect to the subject
matter hereof.
(g) Survival of Representations
and Warranties. The representations and warranties of the
parties contained herein shall survive the Closing and shall not be affected
thereby.
(h) Exhibits. Any
Exhibits or Schedules to this Agreement are incorporated herein by reference and
made a part hereof.
(i)
Captions. The
section and paragraph headings used herein are for convenience only and shall
not affect the interpretation hereof.
(j)
Gender. For
purposes of this Agreement, the singular shall include the plural, and the
masculine gender shall include the feminine and neuter, and vice versa, as the
context requires.
12
(k) Counterparts. This
Agreement may be executed in counterparts, including by facsimile copy and copy
communicated by e-mail, all of which together shall constitute one and the same
instrument.
11.
Further
Assurances. The parties shall execute, acknowledge and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purpose of this Agreement and
the Transaction.
[Signatures to
follow]
13
IN
WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement
under seal as of the day and year first above written.
|
SOLX
ACQUISITION, INC.
|
|||||
|
By:
|
“Xxxxx Xxxxxxxx”
|
By:
|
“Xxxx X. Xxxxx”
|
||
|
Name:
|
Xxxxx
Xxxxxxxx
|
Name:
|
Xxxx
X. Xxxxx
|
||
|
Title:
|
Chief
Executive Officer
|
Title:
|
President
|
||
|
ACKNOWLEDGED
AND AGREED BY XXXX X. XXXXX SOLELY WITH RESPECT TO SECTIONS 1(g) and
2:
|
|||
|
Witness:
|
|||
|
“Xxxx X. Xxxxx”
|
|||
|
Xxxx
X. Xxxxx
|
|||
|
Print
Name of Witness
|
|||
14
