FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
EXHIBIT 2.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this “Amendment”) is made and entered into
effective as of this 4th day of February, 2009, by and between XXXXXX MEDICAL TECHNOLOGIES, INC., a
Delaware corporation (“Buyer”) and SUTURA, INC., a Delaware corporation (“Seller”).
RECITALS
WHEREAS, Buyer and Seller are parties to that certain Asset Purchase Agreement dated as of
December 12, 2008 (“Purchase Agreement”), whereby Seller agreed to sell to Buyer and Buyer agreed
to purchase from Seller certain assets, as more fully set forth in the Purchase Agreement; and
WHEREAS, Seller and Buyer desire to amend the terms of the Purchase Agreement as more fully
set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable
consideration, the receipt, adequacy and sufficiency of which is mutually acknowledged, the parties
hereby agree as follows:
1. Interpretation. Any capitalized terms used in this Amendment which are not
otherwise defined in this Amendment shall have the meaning given to them in the Purchase Agreement.
Unless otherwise specified, section references used in this Amendment refer to sections of the
Purchase Agreement.
2. Adjustment to Purchased Cash and Securities. Section 1.1(a)(i) of the Purchase
Agreement is hereby amended and restated in its entirety as follows:
(i) Cash and Securities of Seller with a value as of Closing equal to three
million dollars ($3,000,000) less the amount of the Excess Operating Expenses; and
3. Adjustment to Purchase Price Escrow Provisions. Sections 3.1 of the Purchase
Agreement is hereby amended to restate in its entirety Section 3.1(b) and to include a Section
3.1(c), as follows:
(b) on each date that Buyer is to receive funds from Seller pursuant to Section
8.1(b)(iii), as a conditions to receiving such funds, an amount equal to the amount of funds
to be received from Buyer; and
(c) upon the mailing of the definitive proxy statement, or final information statement,
to the stockholders of Seller regarding approval of the transactions contemplated by this
Agreement, an amount such that immediately following such deposit, the aggregate balance of
the Buyer Escrow Fund is not less than six million seven hundred fifty thousand dollars
($6,750,000).
4. Delivery of Purchased Cash and Securities. Section 4.3 of the Purchase Agreement
is amended to restate in their entirety Sections 4.3(d) and (e) and to include a Section 4.3(f),
all as follows:
(d) deliver to Buyer a Waiver and Release of Buyer by Seller in the form of Exhibit
D hereto;
(e) deliver to Buyer Cash and Securities with a value as of Closing equal to three
million dollars ($3,000,000) less the amount of the Estimated Excess Operating Expenses as
of Closing; and
(f) deliver to Buyer copies of all necessary corporate resolutions, including any
required resolutions of the stockholders of Seller, authorizing the execution, delivery and
performance by Seller of this Agreement, the other Transaction Agreements and the
transactions contemplated hereby and thereby, certified to be true, correct, complete,
unchanged and in full force and effect on the Closing Date by the Secretary or an Assistant
Secretary of Seller, accompanied by such other certifications by such Secretary or Assistant
Secretary as are requested by Buyer, in a form acceptable to Buyer.
5. Excess Operating Expenses True-Up. Section 4 of the Purchase Agreement is hereby
amended to include the following Section 4.4:
4.4 Post-Closing Excess Operating Expenses True-Up.
(a) Within 60 days after the Closing or termination of this Agreement, Seller shall
prepare and deliver to Buyer, a written statement (the “Excess Operating Expenses
Calculation Statement”) setting forth the Seller’s calculations (the “Seller’s Proposed
Calculations”) of the amount of the Excess Operating Expenses, which calculations shall be
made in accordance with Section 8.2.
(b) Within 30 days after its receipt of the Excess Operating Expenses Calculation
Statement, Buyer shall notify Seller in writing of any disagreement with the Excess
Operating Expenses Calculation Statement and the accuracy of any of the Seller’s Proposed
Calculations (and during such 30 day period, Seller shall grant Buyer and its accountants
reasonable access to all work papers, facilities, schedules and calculations used in the
preparation of the Excess Operating Expenses Calculation Statement). If Buyer does not
dispute any aspect of the Excess Operating Expenses Calculation Statement or the amount of
any of the Seller’s Proposed Calculations within such 30 day period, then the Excess
Operating Expenses Calculation Statement and the Seller’s Proposed Calculations shall be
conclusive and binding upon Buyer and Seller.
(c) If Buyer disputes any aspect of the Excess Operating Expenses Calculation Statement
or the amount of any of the Seller’s Proposed Calculations within such 30 day period, then
Buyer shall have the right, and shall have the right to direct its accountants, at the
expense of Buyer, to review and verify the accuracy of the Excess Operating Expenses
Calculation Statement. Buyer and its accountants shall complete
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their review and verification of the Excess Operating Expenses Calculation Statement within
45 days after Buyer’s receipt thereof and, if Buyer or its accountants, after such review
and verification, still disagree with Seller’s Proposed Calculations, Buyer shall submit its
proposed alternative calculations (the “Buyer’s Proposed Calculations”) of the amount of the
Excess Operating Expenses to Seller in writing within 45 days after Buyer’s receipt of the
Excess Operating Expenses Calculation Statement.
(d) If Seller does not reject the Buyer’s Proposed Calculations by written notice given
to Buyer within 21 days after the Seller’s receipt of Buyer’s Proposed Calculations, then
the Excess Operating Expenses Calculation Statement and the Seller’s Proposed Calculations
contained therein, as modified by the Buyer’s Proposed Calculations, shall be conclusive and
binding upon Buyer and Seller. If the Seller rejects Buyer’s Proposed Calculations by
written notice given to Buyer within 21 days after Buyer’s receipt of the Buyer’s Proposed
Calculations, then, within 15 days after the date that Seller delivers its written notice of
rejection to Buyer, Buyer and Seller shall select a mutually acceptable and nationally
recognized independent accounting firm (such firm, the “Independent Accounting Firm”) to
resolve the remaining disputed items (the “Remaining Disputed Items”) by conducting the
Independent Accounting Firm’s own review and verification of the Excess Operating Expenses
Calculation Statement, and thereafter selecting either Buyer’s Proposed Calculations of the
Remaining Disputed Items or Seller’s Proposed Calculations of the Remaining Disputed Items
or an amount in between the two. Seller and Buyer shall be bound by the determination of
the Remaining Disputed Items by the Independent Accounting Firm. Each of Seller and Buyer
agrees to execute, if requested by the Independent Accounting Firm, an engagement letter
containing reasonable and customary terms. The Independent Accounting Firm shall act as an
arbitrator to determine only the Remaining Disputed Items and the determination of each
amount of the Remaining Disputed Items shall be no less than the lesser of the amount
claimed by Seller or Buyer, and shall be no greater than the greater of the amount claimed
by Seller or Buyer.
(e) Buyer and Seller shall each pay their own costs and expenses incurred under this
Section 4.4. The costs and expenses of the Independent Accounting Firm shall be borne
one-half by Buyer and one-half by the Seller.
(f) If the Excess Operating Expenses Calculation Statement is delivered following the
Closing, upon the determination, in accordance with this Section 4.4, of the final Excess
Operating Expenses Calculation Statement and the final calculation of the amount of the
Excess Operating Expenses, an adjustment of Cash and Securities of Seller included in the
Purchased Assets will be made as follows:
(i) If the Excess Operating Expense is greater than the Estimated Excess
Operating Expense at Closing, then Buyer shall promptly pay to Seller the amount of
such excess.
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(ii) If the Excess Operating Expense is equal to the Estimated Excess Operating
Expense at Closing, then no further payment shall be payable by Buyer or Seller
under this Section 4.4.
(iii) If the Excess Operating Expense is less than the Estimated Excess
Operating Expense at Closing, then Seller shall promptly remit to Seller the
difference between the Estimated Excess Operating Expense and the Excess Operating
Expense.
(g) If the Excess Operating Expenses Calculation Statement is delivered following
termination of this Agreement, the relevant provisions of Section 14 shall apply.
6. Operations Funding. Section 8.1(b) of the Purchase Agreement is hereby amended and
restated in its entirety as follows:
(b) For the operations and day-to-day business of Seller following February 15, 2009,
Seller shall make available to Buyer the following amounts upon the following conditions:
(i) five hundred thousand dollars ($500,000) on February 15, 2009;
(ii) five hundred thousand dollars ($500,000) on March 30, 2009; and
(iii) following March 30, 2009, such amount not to exceed $500,000 per month as
Buyer may reasonably request in writing from time to time; provided that as a
condition to receipt of such funds Buyer shall have made a deposit of the same
amount requested into the Buyer Escrow Fund as required by Section 3.1(b).
7. Heading of Section 8.2. The heading of Section 8.2 is hereby amended and restated
in its entirety as follows: “Expenses and Expenditures During Buyer Management
Period.“
8. Responsibility for Expenses During Buyer Management Period. Section
8.2(a) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
(a) If the transactions contemplated by this Agreement are consummated, to the extent
that (i) the cash expenditures made by Seller during the period from November 3, 2008 to the
earlier of the Closing Date or the termination of this Agreement (the “Buyer Management
Period”), and (ii) expenses incurred by Seller during the Buyer Management Period,
determined in accordance with generally accepted accounting principles, for which
Liabilities remain outstanding as of the end of the Buyer Management Period (together the
“Actual Expenses”) exceed one million, five hundred thousand dollars ($1,500,000) (such
excess is referred to as the “Excess Operating
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Expenses”), Buyer will reimburse Seller for the amount of the Excess Operating Expenses.
The Excess Operating Expenses will be deducted from the amount of Cash and Securities of
Seller included in the Purchased Assets, in accordance with Sections 1.1(a)(i) and 4.4.
9. Limitations on Actual Expenses. Section 8.2(c) of the Purchase Agreement is hereby
amended and restated in its entirety as follows:
(c) Notwithstanding any other provision of this Agreement, Buyer will cause the Company
(i) not to incur Actual Expenses in excess of one million, five hundred thousand dollars
($1,500,000) for the period from November 3, 2008 to February 15, 2009 and (ii) not to incur
Actual Expenses in excess of five hundred thousand dollars ($500,000) for each one-month
period beginning February 15, 2009.
10. Termination Provisions.
Section 14.1(d) and (g) of the Purchase Agreement are hereby amended and restated in their
entirety as follows:
(d) Buyer or Seller if the Closing has not occurred on or prior to May 15, 2009;
provided that the right to terminate this Agreement pursuant to this Section 14.1(d) shall
not be available to any party whose breach of any provision of this Agreement results in the
failure of the Closing to occur on or prior to such date.
(g) Buyer if the (i) Seller Board shall have withdrawn its authorization and approval
of this Agreement and the transactions contemplated hereby based upon receipt by the Seller
Board of an Acquisition Proposal, and (ii) the Closing has not occurred on or prior to May
14, 2009; and
11. Buyer Break-Up Fee. Section 14.2(a) of the Purchase Agreement is hereby amended
and restated in its entirety as follows:
(a) If Seller terminates this Agreement under Section 14.1(b), (i) Buyer will be liable
to Seller for an amount (the “Buyer Break-Up Fee”) equal to the Actual Expenses, and (ii)
Seller will immediately join Buyer in delivering written instructions to the Escrow Agent,
jointly executed by Buyer and Seller, instructing the Escrow Agent to pay to Buyer from the
Buyer Escrow Fund, in accordance with the Buyer Escrow Agreement, the amount of the Buyer
Escrow Fund in excess of the sum of the Estimated Excess Operating Expenses at the time of
such termination plus one million, five hundred thousand dollars ($1,500,000). Promptly
following determination of the final Excess Operating Expenses Calculation Statement in
accordance with Section 4.4:
(A) Seller and Buyer will deliver written instructions to the Escrow Agent,
jointly executed by Buyer and Seller, instructing the Escrow Agent to pay, in
accordance with the Buyer Escrow Agreement, to Seller the amount of the Actual
Expenses (as reflected on the final Excess Operating Expenses Calculation Statement)
(or the balance of the Buyer Escrow Fund, if less), and to
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pay, in accordance with the Buyer Escrow Agreement, to Buyer the remaining amount,
if any, of the Buyer Escrow Fund after making such payment to Seller; and
(B) if the amount paid to Seller pursuant to Section 14.2(a)(A) is less than
the full amount of the Actual Expenses (as reflected on the final Excess Operating
Expenses Calculation Statement), Buyer shall promptly remit to Seller payment of the
difference between the Actual Expenses and the amount paid to Seller pursuant to
Section 14.2(a)(A).
12. Payment of Buyer Escrow Fund Upon Termination. Section 14.2(c) of the Purchase
Agreement is hereby amended and restated in its entirety as follows:
(c) If this Agreement is terminated other than by Seller under Section 14.1(b), (i)
Seller and Buyer will immediately deliver written instructions to the Escrow Agent, jointly
executed by Buyer and Seller, instructing the Escrow Agent to pay to Buyer, in accordance
with the Buyer Escrow Agreement, the amount of the Buyer Escrow Fund.
13. Surviving Provisions. Section 14.2(f) of the Purchase Agreement is hereby amended
and restated in its entirety as follows:
(f) Upon any termination of this Agreement pursuant to Section 14.1, no party hereto
shall thereafter have any further liability or obligation hereunder, except (i) as provided
in this Section 14.2 and Section 4.4, and (ii) the obligations under Section 10.1 shall
continue through and until the date that is two (2) years subsequent to the date hereof.
14. Definitions. The Section 16 of the Purchase Agreement is hereby amended to
eliminate the defined term “Expense Limitation” and the related cross reference, and to include, in
alphabetical order, the following defined terms:
“Additional Funding” is defined in the definition of Estimated Excess Operating Expenses.
“Buyer’s Proposed Statement” is defined in Section 4.4(c).
“Estimated Excess Operating Expenses” means an amount equal to the aggregate of the amounts
made available to Buyer pursuant to Section 8.1(b) (the “Additional Funding”), less any
Additional Funding returned to Seller at the time of Closing or termination.
“Excess Operating Expenses” is defined in Section 8.2(a).
“Excess Operating Expenses Calculation Statement” is defined in Section 4.4(a).
“Independent Accounting Firm” is defined in Section 4.4(d).
“Remaining Disputed Items” is defined in Section 4.4(d).
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“Seller’s Proposed Statement” is defined in Section 4.4(a).
15. Counterparts. This Amendment may be executed in counterparts, each of which will
cause to be an original, and all of which together shall constitute one in the same instrument.
Further, all facsimile signatures shall be deemed original signatures.
16. Continued Effectiveness. Except as expressly amended hereby, the terms and
conditions of the Purchase Agreement shall remain in full force and effect.
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The parties have caused this Amendment to be executed and delivered by their duly authorized
officers as of the date and year first above written.
| XXXXXX MEDICAL TECHNOLOGIES, INC. |
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| By: | /s/ Xxxxxxx Xxxxxx | |||
| Its: | President and CEO | |||
| SUTURA, INC. |
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| By: | /s/ Xxxxx Xxxxxxx | |||
| Its: | CEO | |||
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