EXHIBIT 10.22
ASSET PURCHASE AGREEMENT
AMONG
INTERPORE ORTHOPAEDICS, INC., a Delaware corporation,
QUANTIC BIOMEDICAL, INC., a California corporation,
QUANTIC BIOMEDICAL PARTNERS, a California general partnership,
XXXX X. XXXXX,
AND
XXXXXX X. XXXX
December 8, 1999
TABLE OF CONTENTS
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1. Definitions...........................................................1
2. Basic Transaction.....................................................4
(a) Purchase and Sale of Assets..................................4
(b) No Liabilities...............................................4
(c) Purchase Price...............................................4
(d) The Closing..................................................5
(e) Deliveries at the Closing....................................5
3. Representations and Warranties of the Sellers and Principals..........6
(a) Organization of the Sellers..................................6
(b) Authorization of Transaction.................................6
(c) Noncontravention.............................................6
(d) Brokers' Fees................................................7
(e) Title to Assets..............................................7
(f) Intellectual Property........................................7
(g) Product Liability............................................9
(h) Disclosure...................................................9
(i) Investment...................................................9
4. Representations and Warranties of the Buyer..........................10
(a) Organization of the Buyer...................................10
(b) Parent Documents............................................10
(c) Issuance of Parent Stock....................................10
(d) Authorization of Transaction................................10
(e) Noncontravention............................................10
(f) Brokers' Fees...............................................11
5. Covenants After the Closing Date.....................................11
(a) Full Access.................................................11
(b) Further Assurances..........................................11
(c) Litigation Support..........................................11
(d) Confidentiality.............................................11
(e) Covenant Not to Compete.....................................12
(f) Sales Tax...................................................12
6. Remedies for Breaches of this Agreement..............................12
(a) Survival of Representations and Warranties..................12
(b) Indemnification Provisions for Benefit of the Buyer.........12
(c) Indemnification Provisions for Benefit of the Sellers and
Principals..................................................14
(d) Matters Involving Third Parties.............................14
(e) Other Indemnification Provisions............................15
(f) Optional Recovery Methods...................................15
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7. Miscellaneous........................................................16
(a) No Third-Party Beneficiaries................................16
(b) Entire Agreement............................................16
(c) Succession and Assignment...................................16
(d) Counterparts................................................16
(e) Headings....................................................16
(f) Notices.....................................................16
(g) Governing Law...............................................17
(h) Waivers.....................................................17
(i) Severability................................................17
(j) Expenses....................................................17
(k) Construction................................................17
(l) Incorporation of Exhibits and Schedules.....................18
(m) Submission to Jurisdiction..................................18
Exhibit A -- Quantic Termination Agreement
Exhibit B -- Registration Rights Agreement
Exhibit C -- Royalty Agreement
Exhibit D -- Stock Option Agreement
Exhibit E -- Termination Agreement
Disclosure Schedule -- Exceptions to Representations and Warranties
Schedule A -- Items Not Included in Acquired Assets
Schedule B -- Shares held by Principals
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
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December 8, 1999, by and among Interpore Orthopaedics, Inc. a Delaware
corporation (the "Buyer"), Quantic Biomedical, Inc., a California corporation
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("QBI"), Quantic Biomedical Partners, a California general partnership ("QBP")
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(QBI and QBP, collectively the "Sellers"), Xxxx X. Xxxxx ("Xxxxx") and Xxxxxx X.
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Hood ("Hood") (Xxxxx and Hood, collectively the "Principals"). The Buyer, the
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Sellers and the Principals may be referred to herein individually as a "Party,"
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and collectively as the "Parties."
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RECITALS
A. The Buyer desires to purchase from the Sellers, and the Sellers
desire to sell to the Buyer, substantially all of the Sellers' assets (as
described more thoroughly herein) for a combination of cash, stock in Interpore
International, Inc., a Delaware corporation and parent corporation of the Buyer
("Parent") and options to acquire additional stock in Parent.
B. In connection with its purchase hereunder, the Buyer desires to
obtain certain representations, warranties and indemnities from both the Sellers
and the Principals.
C. The Buyer, the Sellers and the Principals agree to consummate this
transaction pursuant to the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, IN CONSIDERATION of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
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"Acquired Assets" means all right, title, and interest in and to all
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of the Sellers' Intellectual Property, including goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions.
"Adverse Consequences" means all actions, suits, proceedings,
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hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
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promulgated under the Securities Exchange Act.
"Basis" means any past or present fact, situation, circumstance,
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status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
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"Buyer" has the meaning set forth in the preface above.
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"Cash" has the meaning set forth in Section 2(c).
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"Closing" has the meaning set forth in Section 2(d).
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"Closing Date" has the meaning set forth in Section 2(d).
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Commission" means the Securities and Exchange Commission.
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"Confidential Information" means any information concerning the
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business and affairs of the Sellers related to the Acquired Assets that is not
already generally available to the public, including, but not limited to,
corporate information, including contractual arrangements, plans, locations,
strategies, tactics, potential acquisitions or business combinations or joint
venture possibilities, policies and negotiations; marketing information,
including sales, purchasing and inventory plans, strategies, tactics, methods,
customers, advertising, promotion or market research data; financial
information, including operating results and statistics, cost and performance
data, projections, forecasts, investors, and holdings; and operational
information, including trade secrets, secret formulae, control and inspection
practices, accounting systems and controls, computer programs and data,
personnel lists, resumes, personal data, organizational structure and
performance evaluations.
"Disclosure Schedule" has the meaning set forth in Section 3.
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"GAAP" means United States generally accepted accounting principles as
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in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 6(d).
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"Indemnifying Party" has the meaning set forth in Section 6(d).
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"Intellectual Property" means (a) all inventions (whether patentable
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or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
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"Knowledge" means actual knowledge after reasonable investigation.
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"Liability" means any liability (whether known or unknown, whether
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asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Market Price" means, as of any date, the average of the Quoted Prices
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of the common stock of Parent for the 15 consecutive trading days immediately
prior to the date in question. The "Quoted Price" of the common stock of Parent
is the last reported sales price of the common stock of Parent as reported on
the NASDAQ National Market System, or if the common stock of Parent is listed on
a securities exchange, the last reported sales price of the common stock of
Parent on such exchange which shall be for consolidated trading if applicable to
such exchange, or if neither so reported or listed, the last reported bid price
of the common stock of Parent. In the absence of one or more such quotations,
the Board of Directors of Parent shall determine the Market Price on the basis
of such quotations as it in good faith considers appropriate.
"Ordinary Course of Business" means the ordinary course of business
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consistent with past custom and practice (including with respect to quantity and
frequency).
"Parent" has the meaning set forth in the Recitals.
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"Parent Stock" has the meaning set forth in Section 2(c).
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"Party" has the meaning set forth in the preface hereto.
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"Person" means an individual, a partnership, a corporation, an
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association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Principals" has the meaning set forth in the preface hereto.
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"Prior Payments" has the meaning set forth in Section 2(c).
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"Purchase Price" has the meaning set forth in Section 2(c).
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"Quantic Termination Agreement" means that certain Termination
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Agreement by and between QBP and QBI entered into concurrently herewith and
attached hereto as Exhibit A.
"Registration Rights Agreement" means that certain Registration Rights
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Agreement by and between Parent and QBI dated concurrently herewith and attached
hereto as Exhibit B.
"Remaining Assets" means all assets of the Sellers except the Acquired
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Assets.
"Royalty Agreement" means that certain Royalty Agreement by and
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between Buyer and QBI entered into concurrently herewith and attached hereto as
Exhibit C.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Securities Exchange Act" means the Securities Exchange Act of 1934,
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as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
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charge, or other security interest, other than (a) mechanic's, materialmen's,
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and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
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"Subsidiary" means any corporation with respect to which a specified
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Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
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receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Termination Agreement" means that certain Termination Agreement by
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and between Buyer and QBI dated concurrently herewith and attached hereto as
Exhibit E.
"Third Party Claim" has the meaning set forth in Section 6(d).
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"Warrant Agreements" means those several Common Stock Purchase
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Warrants granted to QBI by Parent, dated concurrently herewith. A form of the
Warrant Agreement is attached hereto as Exhibit D.
"Warrants" has the meaning set forth in Section 2(c).
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2. Basic Transaction.
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(a) Purchase and Sale of Assets. On and subject to the terms and
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conditions of this Agreement, the Buyer hereby purchases from the Sellers, and
the Sellers hereby sell, transfer, convey, and deliver to the Buyer, all of the
Acquired Assets for the consideration specified below in this Section 2.
(b) No Liabilities. Buyer is not assuming any Liabilities of
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Sellers or the Principals as part of its purchase of the Acquired Assets.
(c) Purchase Price. The purchase price for the Acquired Assets
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shall be a combination of (i) $500,000 in cash, payable by wire transfer or
delivery of other immediately
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available funds (the "Cash"), (ii) 100,000 shares of common stock of Parent (the
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"Parent Stock"), (iii) warrants (the "Warrants") to purchase up to 200,000
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additional shares of common stock in Parent at various prices and subject to the
terms set forth in the Warrant Agreements, and (iv) all license fees paid on or
prior to the Closing Date by Parent to QBI pursuant to the Amended and Restated
License and Development Agreement, dated as of April 14, 1998, as amended,
between Parent and QBI (the "Prior Payments") (collectively, the Cash, the
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Parent Stock, the Options and the Prior Payments, the "Purchase Price"). At
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the request of the Sellers and the Principals, the entire Purchase Price will be
(or in the case of (iv) will have been) delivered to QBI at Closing.
(d) The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place concurrently with the execution here
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of at the offices of Xxxxxx & Xxxxxxx, 000 Xxxx Xxxxxx Xxxxx, Xxxxx Xxxx,
Xxxxxxxxxx 00000, commencing at 9:00 a.m. local time on the date of this
Agreement (the "Closing Date").
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(e) Deliveries at the Closing.
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(i) At the Closing, the Sellers shall deliver to the Buyer each of
the following:
(A) duly executed assignment documents (including Intellectual
Property transfer documents) necessary to transfer and convey ownership of
the Acquired Assets to the Buyer;
(B) such other instruments of sale, transfer, conveyance and
assignment as Buyer and its counsel may request;
(C) the Termination Agreement;
(D) the Royalty Agreement;
(E) the Quantic Termination Agreement;
(F) an opinion from Sellers' counsel in form and substance
satisfactory to Buyer, addressed to Buyer and dated as of the Closing
Date; and
(G) a letter from Sellers in form and substance satisfactory to
Buyer whereby Sellers consent to the representation, after the Closing
Date, by McCutchen, Doyle, Xxxxx & Enersen, LLP, of Buyer and any of
Buyer's Affiliates.
(ii) At the Closing, the Buyer shall deliver to Sellers each of the
following:
(A) the Termination Agreement;
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(B) the Royalty Agreement;
(C) the Registration Rights Agreement; and
(D) the Purchase Price.
3. Representations and Warranties of the Sellers and Principals. Each Seller
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and Principal represents and warrants to the Buyer that the statements contained
in this Section 3 are correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule will be
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arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) Organization of the Sellers. QBI is a corporation duly organized,
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validly existing, and in good standing under the laws of the State of
California. QBP is the sole stockholder of QBI and holds of record the number
and class of shares of QBI set forth next to its name on Schedule B. QBP is a
general partnership duly organized, validly existing and in good standing under
the laws of the State of California. Xxxxx and Hood are the only general
partners of QBP. Each Principal holds the partnership ownership percentage of
QBP set forth next to his or its name on Schedule B.
(b) Authorization of Transaction. Each Seller and Principal has full
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power and authority (including, as applicable, full corporate or general
partnership power and authority), and has taken all action necessary, including,
as applicable, all corporate or general partnership action, to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, (i) the board of directors of QBI and
the shareholder of QBI have duly authorized the execution, delivery, and
performance of this Agreement by QBI; and (ii) the partners of QBP have duly
authorized the execution, delivery and performance of this Agreement by QBP.
This Agreement constitutes the valid and legally binding obligation of the
Sellers and the Principals, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments referred to in Section 2 above), will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any Seller or Principal is subject, any provision of the charter
or bylaws of QBI or any provision of the General Partnership Agreement of QBP or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any Seller or Principal is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Except as set forth on Schedule 3(c), no Seller or Principal needs to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments referred to in Section 2 above).
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(d) Brokers' Fees. No Seller or Principal has any Liability or
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obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
(e) Title to Assets. The Sellers have good and marketable title to all
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of the Acquired Assets, free and clear of any Security Interest or restriction
on transfer.
(f) Intellectual Property.
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(i) Schedule 3(f) is a true and complete list of all Intellectual
Property owned by the Sellers. The Sellers own all right, title and
interest in the Intellectual Property, free from any Security Interest and
free from any requirement of any past, present or future royalty payments,
license fees, charges or other payments, conditions or restrictions. The
Intellectual Property comprises all of the Intellectual Property necessary
or desirable for the operation of the business of Sellers as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Sellers immediately prior to the
Closing hereunder will be owned or available for use by the Buyer on
identical terms and conditions immediately subsequent to the Closing
hereunder on the same terms and conditions as in effect prior to the
Closing. Each Seller has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or
uses. The Principals do not, directly or indirectly, own or have any
interest in any Intellectual Property related to the business of Sellers as
presently conducted and as presently proposed to be conducted, other than
by virtue of their ownership interest in Sellers.
(ii) No Seller or Principal has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Principals or any of the
shareholders, directors or officers (and employees with responsibility for
Intellectual Property matters) of the Sellers has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that any
of the Sellers must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of the Principals and any of
the shareholders, directors or officers (and employees with responsibility
for Intellectual Property matters) of the Sellers, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Sellers.
(iii) The Sellers have delivered to the Buyer correct and complete
copies of all patents, registrations, applications, licenses, agreements,
and permissions (as amended to date) relating to the Intellectual Property
and has made available to the Buyer correct and complete copies of all
other written documentation evidencing ownership and prosecution (if
applicable) of each such item. With respect to each item of Intellectual
Property owned or used by each Seller:
(A) such Seller possesses all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or
other restriction;
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(B) the item has been duly registered with, filed in or
issued by, as the case may be, the United States Patent and Trademark
Office, United States Copyright Office of such other filing offices,
domestic or foreign, and such registrations, filings, issuances and
other actions remain in full force and effect, without challenge;
(C) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(D) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Principals and any of the shareholders, directors or officers (and
employees with responsibility for Intellectual Property matters) of the
Sellers, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(E) such Seller has never agreed to indemnify any Person for
or against any interference, infringement, misappropriation, or other
conflict with respect to the item.
(iv) Section 3(f)(iv) of the Disclosure Schedule identifies each item
of Intellectual Property that any third party owns and that any of the
Sellers uses pursuant to license, sublicense, agreement, or permission. The
Sellers have delivered to the Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be
identified in Section 3(f)(iv) of the Disclosure Schedule;
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(B) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable, and in full force
and effect on identical terms following the consummation of the
transactions contemplated hereby (including the assignments and
assumptions referred to in Section 2 above);
(C) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and
correct with respect to the underlying license;
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(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling,
or charge; and
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of
the Principals and any of the shareholders, directors or officers (and
employees with responsibility for Intellectual Property matters) of the
Sellers, is threatened which challenges the legality, validity, or
enforceability of the underlying item of Intellectual Property.
(v) To the Knowledge of the Principals and any of the shareholders,
directors or officers (and employees with responsibility for Intellectual
Property matters) of the Sellers, the Sellers will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continued
operation of their businesses as presently conducted and as presently
proposed to be conducted.
(vi) Except as set forth on Schedule 3(f)(vi), none of the Principals
or any of the shareholders, directors or officers (and employees with
responsibility for Intellectual Property matters) of the Sellers has any
Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties
have developed which reasonably could be expected to supersede or make
obsolete any product or process of the Sellers.
(g) Product Liability. No Seller has any Liability (and there is no
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Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability) arising out of any injury to individuals or property as a
result of the ownership, possession, or use of any of the Acquired Assets.
(h) Disclosure. The representations and warranties contained in this
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Section 3 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 3 not misleading.
(i) Investment. Each Seller and Principal (i) understands that the
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Parent Stock, the Warrants and the stock underlying the Warrants have not been,
and will not be, registered under the Securities Act, or under any state
securities laws, and is being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, (ii) is
acquiring the Parent Stock and the Warrants solely for its own account for
investment purposes, and not with a view to the distribution thereof, (iii) is a
sophisticated investor with knowledge and experience in business and financial
matters, (iv) acknowledges receipt of those reports and other documents
described in Section 4(b) concerning the Parent and has had the opportunity to
review such reports and documents and to obtain additional information as
desired in order to evaluate the merits and the risks inherent in holding the
Parent Stock, (v) has had the opportunity to ask and have answered any questions
relating to the Parent and the Parent's business in order to evaluate the merits
and risks inherent in owning Parent Stock, and (vi) is able to bear the economic
risk and lack of liquidity inherent in holding the Parent Stock. Each Seller and
Principal further acknowledges that the Parent Stock and the
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Warrants will be issued to QBI, and each Seller and Principal represents that it
has been advised that since the Parent Stock, the Warrants and the stock
underlying the Warrants have not been registered under the Securities Act, the
Parent Stock, the Warrants and the stock underlying the Warrants must be held
indefinitely by QBI unless (a) the sale, transfer or other distribution of the
Parent Stock, the Warrants or the stock underlying the Warrants, as applicable,
has been registered under the Securities Act or (b) in the opinion of counsel
reasonably acceptable to the Parent, an exemption from such registration is
available with respect to the sale, transfer or other disposition of Parent
Stock or stock underlying the Warrants. Notwithstanding the foregoing, the
Parent Stock, Warrants or stock underlying the Warrants may be transferred or
distributed (1) by QBI to QBP (so long as the Principals are the sole general
partners of QBP at the time of such transfer) or (2) by QBI or QBP to one or
both of the Principals in their individual capacities, assuming in the case of
any such transfer that (x) such transfer is not deemed to be a sale under
federal or state securities laws and (y) any such transferee agrees to be bound
by the foregoing restrictions on transfer.
4. Representations and Warranties of the Buyer. The Buyer represents and
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warrants to the Sellers (and to the Principals) that the statements contained in
this Section 4 are correct and complete as of the Closing Date, except as set
forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization of the Buyer. The Buyer is a corporation duly
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organized, validly existing, and in good standing under the laws of the State of
Delaware.
(b) Parent Documents. The Parent has duly filed and submitted all
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reports required to be filed or submitted by it with the Commission under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Parent has delivered to the Seller copies of the most
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recent annual report on Form 10-K filed by the Parent under the Exchange Act and
the most recent annual report to shareholders of the Parent and the definitive
proxy statement filed with such report, along with all quarterly reports on Form
10-Q and current reports on Form 8-K filed by the Parent since the date of such
annual report. The financial statements included in such reports have been
prepared in accordance with GAAP consistently applied throughout the periods
indicated and present fairly the consolidated financial position of the Parent
and its subsidiaries, and the consolidated results of its operations for the
periods ended, on the dates indicated.
(c) Issuance of Parent Stock. The Parent Stock, when issued pursuant
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hereto, will be legally and validly authorized and issued, fully paid and non-
assessable, and will not have been issued in violation of the preemptive rights
of any person.
(d) Authorization of Transaction. The Buyer has full power and authority
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(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Buyer, enforceable in accordance
with its terms and conditions.
(e) Noncontravention. Neither the execution and the delivery of this
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Agreement, nor the consummation of the transactions contemplated hereby
(including the
10
assignments referred to in Section 2 above), will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
the Buyer is subject or any provision of Buyer's charter or bylaws or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject. The Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments referred to in Section 2 above).
(f) Brokers' Fees. The Buyer 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 for which the Seller could become
liable or obligated.
5. Covenants After the Closing Date. The Buyer, the Seller and the
--------------------------------
Principals, as applicable, covenant as follows for the period from and after the
Closing Date.
(a) Full Access. Each Seller and each Principal, if either of the
-----------
Sellers ceases to exist or conduct substantial business operations, will permit
representatives of the Buyer to have full access at all reasonable times, and in
a manner so as not to interfere with the normal business operations of such
Seller, to all premises, properties, personnel, books, records (including Tax
records), contracts, and documents of or pertaining to each of the Sellers.
(b) Further Assurances. In case at any time after the Closing any
------------------
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Section 6(b)-6(d) below). The Sellers acknowledge and agree that from and after
the Closing the Buyer will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to the Acquired Assets.
(c) Litigation Support. In the event and for so long as Buyer actively
------------------
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with the
Business or any transaction contemplated under this Agreement, each of the other
Parties will cooperate with the Buyer and his or its counsel in the contest or
defense, make available his or its personnel, and provide such testimony and
access to his or its books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the Buyer (unless
Buyer is entitled to indemnification therefor under Sections 6(b)-6(e) below).
(d) Confidentiality. Each Seller and each Principal will, and will cause
---------------
the officers, directors, other shareholders and employees of each Seller to,
treat and hold as such all of the Confidential Information, refrain from using
any of the Confidential Information except in connection with this Agreement,
and deliver promptly to the Buyer or destroy, at the request and
11
option of the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in his or its possession. In the event that a
Seller, a Principal, or any officer, director, partner, other shareholder or
employee of a Seller, is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, such party will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 5(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, any of the Sellers, a
Principal, or any officer, director, partner, other shareholder or employee of a
Seller, is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, such person may
disclose the Confidential Information to the tribunal; provided, however, that
-------- -------
the disclosing person shall use his or its best efforts to obtain, at the
request of the Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate.
(e) Covenant Not to Compete. Without the written consent of Buyer or
-----------------------
Parent, for a period of five years from and after the Closing Date, each Seller
and each Principal will not, and will cause the officers, directors, other
shareholders and employees of the Sellers to not, engage directly or indirectly
in any business of any type relating to or involving the Acquired Assets;
provided, however, that no owner of less than 1% of the outstanding stock of any
-------- -------
publicly traded corporation shall be deemed to engage solely by reason thereof
in any of its businesses. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 5(e) 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.
(f) Sales Tax. Seller shall pay all sales and use taxes, if any,
---------
imposed on or in connection with the purchase, sale or transfer of the Acquired
Assets pursuant to this Agreement.
6. Remedies for Breaches of this Agreement.
----------------------------------------
(a) Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the Buyer, the Sellers and the Principals
contained in this Agreement shall survive the Closing (even if the damaged Party
knew or had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect for a period of three
years thereafter, except for the representations and warranties set forth in
Sections 3(a), 3(b), 3(c), 3(e) and 3(i), which shall survive indefinitely.
(b) Indemnification Provisions for Benefit of the Buyer.
---------------------------------------------------
(i) In the event a Seller breaches (or in the event any third party
alleges facts that, if true, would mean such Seller has breached) any of
its representations,
12
warranties, or covenants contained in this Agreement, provided that the
Buyer makes a written claim for indemnification against such Seller
pursuant to Section 7(f) below within the survival period set forth in
Section 6(a), then each Seller and each of the Principals agree, jointly
and severally, to indemnify, save and hold harmless the Buyer, Parent and
each of their respective directors, officers, employees and affiliates
(collectively, the "Buyer Indemnitees" or, individually, a "Buyer
Indemnitee") from and against the entirety of any Adverse Consequences the
Buyer Indemnitees may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyer Indemnitees
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
(ii) In the event a Principal breaches (or in the event any third
party alleges facts that, if true, would mean such Principal has breached)
any of his or its representations, warranties, and covenants contained in
this Agreement, provided that the Buyer makes a written claim for
indemnification against the breaching Principal pursuant to Section 7(f)
below within the survival period set forth in Section 6(a), then each
Seller and each of the Principals agree, jointly and severally, to
indemnify, save and hold harmless the Buyer Indemnitees from and against
the entirety of any Adverse Consequences the Buyer Indemnitees may suffer
through and after the date of the claim for indemnification (including any
Adverse Consequences the Buyer Indemnitees may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach).
(iii) In the event any third party, including without limitation,
current or former spouses or other family members of the Principals,
asserts any claim against any Buyer Indemnitee for any liability arising
out of or related to the payment of the Purchase Price to Sellers or any
payments made by Buyer pursuant to the Royalty Agreement, then each Seller
and each of the Principals agree, jointly and severally, to indemnify, save
and hold harmless the Buyer Indemnitees from and against the entirety of
any Adverse Consequences the Buyer Indemnitees may suffer through and after
the date of the claim for indemnification resulting from, arising out of,
relating to, in the nature of, or caused by such claim. The indemnification
obligations contained in this Section 6(b)(iii) shall survive the Closing
indefinitely.
13
(c) Indemnification Provisions for Benefit of the Sellers and
---------------------------------------------------------
Principals. In the event the Buyer breaches (or in the event any third party
----------
alleges facts that, if true, would mean the Buyer has breached) any of its
representations, warranties, and covenants contained in this Agreement, provided
that the Sellers and Principals make a written claim for indemnification against
the Buyer pursuant to Section 7(f) below within the survival period set forth in
Section 6(a), then the Buyer agrees to indemnify, save and hold harmless each
Seller and each Principal from and against the entirety of any Adverse
Consequences the Sellers and Principals may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Sellers
and Principals may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
(d) Matters Involving Third Parties.
-------------------------------
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
----------------- -----------------
which may give rise to a claim for indemnification against any other Party
(the "Indemnifying Party") under this Section 6, then the Indemnified
------------------
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
-------- -------
notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party provides the
Indemnified Party with evidence acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to defend against
the Third Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief, (D) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 6(d)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim, (B)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the entry
of any judgment or enter into any
14
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 6(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), (B) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and expenses), and
(C) the Indemnifying Parties will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in and Section 6(b)-6(c).
(e) Other Indemnification Provisions. The foregoing indemnification
--------------------------------
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant. Each Seller and each Principal hereby agrees that he or
it will not make any claim for indemnification against any of the Buyer and its
Subsidiaries by reason of the fact that he or it was a director, officer,
employee, or agent of any of the Sellers or was serving at the request of any
such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such claim is for judgments, damages, penalties, fines,
costs, amounts paid in settlement, losses, expenses, or otherwise and whether
such claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim, or
demand brought by the Buyer against any of the Sellers (whether such action,
suit, proceeding, complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
(f) Optional Recovery Methods.
-------------------------
(i) The Buyer shall have the option of recovering all or any
portion of any Adverse Consequences it may suffer by notifying the Seller
and the Principals that it is reducing the number of Warrants, which under
the Warrant Agreements have not vested, by such amount that the value of
the Warrants withdrawn is equivalent to the Adverse Consequences suffered
by Buyer. For purposes of this section, the value of the Warrants withdrawn
shall be determined as follows:
(A) If the per share exercise price of a Warrant is less
than the Market Price on the last business day prior to the delivery
of the notice referred to in subsection (i) above, the per share value
of such Warrant shall be equal to the difference between the Market
Price and the exercise price of such Warrant; or
(B) If the per share exercise price of a Warrant is
greater than the Market Price on the last business day prior to the
delivery of the notice referred to in subsection (i) above, the per
share value of such Warrant shall be determined using the Black-
Scholes option-pricing model.
15
(ii) The Buyer also has the option of recovering all or any
portion of any Adverse Consequences it may suffer by holding back payments
otherwise due and payable by the Buyer to Xxxxx and Hood under the Royalty
Agreement in an amount equal to the Adverse Consequences.
7. Miscellaneous.
--------------
(a) 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.
(b) Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon
-------------------------
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign any of its rights,
interests, or obligations hereunder without the prior written approval of the
other Party; provided, however, that the Buyer may assign any or all of its
-------- -------
rights and interests hereunder to one or more of its Affiliates.
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) 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.
(f) Notices. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to QBI; QBP or Xxxxx: Xxxx Xxxxx
----------------------- 000 X. Xxxxxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
If to QBI; QBP or Hood: Xxxxxx Xxxx
---------------------- 000 Xxx Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
16
If to the Buyer: Interpore Orthopaedics, Inc.
--------------- 000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Facsimile:(000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx
Copy to: Xxxxxx & Xxxxxxx
------- 000 Xxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above 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 intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule (whether of the State
of California or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of California.
(h) Waivers. 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 such
occurrence.
(i) 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.
(j) Expenses. Each of the Buyer, the Sellers and the Principals will
--------
bear his or its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that it has not paid any amount to any third party,
and will not pay any amount to any third party until after the Closing, with
respect to any of the costs and expenses of the Seller and the Principals
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
(k) Construction. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation
17
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean including
without limitation. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(l) Incorporation of Exhibits and Schedules. The Exhibits and
---------------------------------------
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(m) Submission to Jurisdiction. Each of the Parties submits to the
--------------------------
jurisdiction of any state or federal court sitting in County of Orange, the
State of California, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court. Each Party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto. Any Party may make service on the other Party by sending or delivering
a copy of the process to the Party to be served at the address and in the manner
provided for the giving of notices in Section 7(f) above. Nothing in this
Section 7(m), however, shall affect the right of any Party to bring any action
or proceeding arising out of or relating to this Agreement in any other court or
to serve legal process in any other manner permitted by law or in equity. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or in equity.
(Signature page follows)
18
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
INTERPORE ORTHOPAEDICS, INC., a
Delaware corporation
By:_________________________________
Xxxxxxx X. Xxxxxxxx
Its: Sr. Vice President and Secretary
QUANTIC BIOMEDICAL, INC., a California
corporation
By:_________________________________
Its:________________________________
QUANTIC BIOMEDICAL PARTNERS, a California
general partnership
By:_________________________________
Its:________________________________
XXXX X. XXXXX
_________________________________________
XXXXXX X. XXXX
_________________________________________
