EXHIBIT 10.19
OPTION AGREEMENT
This Option Agreement (this "Agreement") is made and entered into
effective this 28th day of August 2002, (the "Effective Date"), by and between
Saigene Corporation, a Delaware corporation ("Saigene"), on the one hand, and
Pacific Biometrics, Inc. a Delaware corporation ("Parent"), and Pacific
Biometrics, Inc., a Washington corporation ("Subsidiary"), on the other hand.
RECITALS:
WHEREAS, Saigene owns certain molecular technology and has entered into
an Asset Purchase Agreement, dated as of June 27, 2002, by and among Saigene,
Parent and Subsidiary (the "Asset Purchase Agreement," to which this Agreement
is attached as Exhibit E), whereby Saigene is selling certain assets to
Subsidiary; and
WHEREAS, as part of the consideration for the Asset Purchase Agreement,
Saigene is granting Subsidiary an option to purchase certain of Saigene's other
technology and related physical assets on the terms and conditions stated in
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
AGREEMENT:
1.0 Option to Purchase.
1.1 Grant of Option. Subject to the terms and conditions of this
Agreement, Saigene hereby grants Subsidiary an option (the "Option") to purchase
the technology and assets and assume the liabilities listed in Schedule 1.1. The
technology and assets that are the subject of the Option are collectively
referred to as the "Assets." Saigene represents and warrants that at the time of
the Closing (as hereinafter defined) (i) Saigene will have good and valid title
to, or a valid and binding leasehold interest or license in, the Assets free and
clear of any encumbrance, lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, covenant
or other similar restrictions or third party rights affecting the Assets, (ii)
the Assets constitute all of the assets, interests and rights necessary to
exploit the technology and intellectual property transferred hereunder, and
(iii) Saigene has, and as of the Closing, will have, complied with all
obligations under all leases, licenses, covenants and agreements constituting or
relating to any of the Assets or assumed liabilities, and all such leases,
licenses, covenants and agreements will be in full force and effect and Saigene
is and will be unaware of any defaults or breaches thereunder or circumstances
that may give rise to any defaults or breaches thereunder.
1.2 Term of Option. The Option granted by Saigene to Subsidiary in
Section 1.1 will commence on the Effective Date and will terminate at 4:00 pm
(local time in Seattle, Washington) on the first anniversary of the Effective
Date (the "Option Period"), after which time it will be of no further force or
effect; provided, however, that if Saigene does not remove all encumbrances on
the Assets (including, without limitation, those encumbrances set forth on
Schedule 1.2 attached hereto) by October 31, 2002, then the Option Period shall
be extended by one day for each day in which said encumbrances remain on the
Assets beyond October 31, 2002. At any time during the Option Period, PBI shall
have the right, but shall not be obligated, to exercise the Option and assume
liabilities in addition to those set forth on Schedule 1.1 in the event the
encumbrances (including those set forth on Schedule 1.2) have not been removed
at the time of exercise of the Option.
1.3 Consideration for Option. The Purchase Price in the Asset Purchase
Agreement is acknowledged to be adequate consideration paid by Parent and
Subsidiary for the Option granted under this Agreement.
1.4 Exercise of Option. In order to exercise the Option, Subsidiary
must deliver written notice to Saigene during the Option Period stating
Subsidiary's exercise (without condition or qualification) of the Option (the
"Option Notice"). In order to be timely, the Option Notice must be received by
Saigene before the expiration of the
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Option Period. The Option Notice must state Subsidiary's election to pay the
Option Price (as defined in Section 1.5) in cash or PBI Stock (as defined in
Section 1.5).
1.5 Option Price. The purchase price (the "Option Price") for the
Assets is, at Subsidiary's election, either (a) Five Million One Hundred Forty
Seven Thousand One Hundred Eighteen Dollars ($5,147,118.00), or (b) Five Million
One Hundred Forty Seven Thousand One Hundred Eighteen (5,147,118) shares of
Parent's common stock ("PBI Stock"). The Option Price will also include the
assumption of all liabilities relating specifically to the Assets as set forth
on Schedule 1.1, which will be assumed pursuant to an assumption agreement
substantially in the form of Exhibit 1. The Option Price will be payable in full
upon the Closing of the purchase of the Assets as described in this Agreement.
1.6 Failure to Exercise Option. If Subsidiary does not properly and
timely exercise the Option in accordance with the terms of this Agreement, then
after the Option Period ends, Subsidiary will have no further rights under this
Agreement including, without limitation, the right to purchase the Assets.
1.7 Purchase Contract. If Subsidiary timely and properly exercises the
Option, then Saigene, Subsidiary, and Parent will immediately begin negotiating
in good faith the terms and conditions (in addition to those contained in this
Agreement which the parties hereby agree to) of an agreement (the "Purchase
Contract") whereby Subsidiary will purchase all of the Assets from Saigene for
the Option Price, payable in full at the Closing (as hereinafter defined);
provided, however, that irrespective of the parties entering into a definitive
Purchase Contract, Saigene shall be obligated to sell the Assets to Subsidiary
for the Option Price. The term "Closing" will mean the date, as specified in the
Purchase Contract, on which Saigene transfers the Assets to Subsidiary in
exchange for the payment in full of the Option Price (in cash or PBI Stock,
evidenced by stock certificate(s) issued by Parent). Upon the Closing, Saigene
will deliver a Xxxx of Sale substantially in the form of Exhibit 2.
2.0 Terms of Purchase Contract. The parties acknowledge that the terms of the
Purchase Contract set forth in this Agreement (e.g., purchase price, etc.) are
agreed upon terms that will be included in the Purchase Contract. The Purchase
Contract will also contain typical representations and warranties of the parties
concerning the sale of the Assets; however, Parent and Subsidiary acknowledge
that because they are simultaneously entering into the Asset Purchase Agreement,
which contains full representations and warranties from Saigene about its
operations and assets, and Parent and Subsidiary will have the ability to
conduct due diligence during the Option Period, the parties will negotiate in
good faith regarding the representations and warranties that Saigene will make
in the Purchase Contract concerning the Assets; provided, however, that such
representations and warranties should not be materially different from those
contained in the Asset Purchase Agreement. With regard to the Option Price, any
PBI Stock issued to Saigene as part of the Option Price must be fully-paid,
non-assessable, and free and clear of all liens and encumbrances (except those
imposed by federal and state securities laws).
3.0 General Provisions.
3.1 Integration; Modification; Waiver. This Agreement, including all
exhibits and schedules attached hereto which are incorporated herein, and the
Asset Purchase Agreement constitutes and contains the entire agreement and
understanding concerning the subject matter between the parties, sets forth all
inducements made by any party to any other party with respect to any of the
subject matter, and supersedes and replaces all prior and contemporaneous
negotiations, proposed agreements or agreements, whether written or oral. Each
of the parties acknowledges to each of the other parties that no other party nor
any agent or attorney of any other party has made any promise, representation or
warranty whatsoever, express or implied, written or oral, not contained herein
concerning the subject matter hereof to induce it to execute this Agreement, and
each of the parties acknowledges that it has not executed this Agreement in
reliance on any promise, representation or warranty not contained herein. No
supplement, modification, or amendment of this Agreement will be binding unless
executed in writing by all the parties. No action or failure to act will
constitute a waiver of any right or duty under this Agreement, nor will any
action or failure to act constitute an approval of, or acquiescence in, any
breach. No waiver of any of the provisions of this Agreement will be deemed, or
will constitute, a waiver of any other provision, whether or not similar, nor
will any waiver constitute a continuing waiver. No waiver will be binding unless
executed in writing by the party making the waiver.
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3.2 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to or shall (a) confer on any person other than the parties
hereto and their respective successors or assigns any rights (including
third-party beneficiary rights), remedies, obligations or liabilities under or
by reason of this Agreement, or (b) constitute the parties hereto as partners or
as participants in a joint venture. This Agreement will not provide third
parties with any remedy, claim, liability, reimbursement, cause of action or
other right in excess of those existing without reference to the terms of this
Agreement. No third party will have any right, independent of any right that
exists irrespective of this Agreement, under or granted by this Agreement, to
bring any suit at law or equity for any matter governed by or subject to the
provisions of this Agreement.
3.3 Assignment; Binding Effect; Severability. This Agreement may not be
assigned by any party hereto without the other party's written consent;
provided, that after the Closing Date a party may transfer its rights and
obligations hereunder in connection with a merger or sale of all or
substantially all of its assets. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the successors, legal representatives
and permitted assigns of each party hereto. The provisions of this Agreement are
severable, and in the event that any one or more provisions are deemed illegal
or unenforceable the remaining provisions shall remain in full force and effect
unless the deletion of such provision shall cause this Agreement to become
materially adverse to either party, in which event the parties shall use
reasonable commercial efforts to arrive at an accommodation that best preserves
for the parties the benefits and obligations of the offending provision.
3.4 Time of the Essence. All times stated in this Agreement are of the
essence.
3.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt if (1) mailed
by certified or registered mail, return receipt requested, (2) sent by Federal
Express or other express carrier, fee prepaid, (3) sent via facsimile with
receipt confirmed, or (4) delivered personally, addressed as follows or to such
other address or addresses of which the respective party shall have notified the
other.
If to Saigene, to: Saigene Corporation
Attn: Xx. Xxxxxx X. Xxxx
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Burkhalter, Michaels, Xxxxxxx
& Xxxxxx LLP
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Parent or Subsidiary, to: Pacific Biometrics, Inc.
Attn: Xx. Xxxx Xxxxx
00000 Xxxxxx Xxxxxxx #000
Xxxxxxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxx Ball Xxxxxx Xxxxxx &
Xxxxxxxxxx LLP
Attn: Xxxx X. Xxxxxxx, Esq.
000 Xxx Xxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
3.6 Headings. The subject headings of the sections and subsections of
this Agreement are included for convenience of reference only, do not form a
part of this Agreement and will not in any way affect the meaning or
interpretation of this Agreement or any of its provisions.
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3.7 Authority. The undersigned individuals execute this Agreement on
behalf of the respective parties, and represent that they are authorized to
enter into and execute this Agreement on behalf of such parties.
3.8 Further Assurances. The parties agree to execute all instruments
and documents of further assurance and will do any and all such acts as may be
reasonably required to carry out their obligations and to consummate the
transactions contemplated herein.
3.9 Governing Law; Jurisdiction; Venue. This Agreement will be
construed, interpreted, and enforced in accordance with, and governed by, the
laws of the State of Delaware without regard to conflicts of laws provisions
thereof.
3.10 Interpretation; Gender. In the event an ambiguity or question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring
or disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. Whenever in this Agreement the context may so require, the
masculine gender will be deemed to refer to and include the feminine and neuter,
and the singular will refer to and include the plural, and vice versa.
3.11 Attorneys' Fees. If any party brings an action, arbitration or
other proceeding arising out of or relating to this Agreement (whether founded
in tort, contract or equity, or to declare rights hereunder), the Prevailing
Party (as hereinafter defined) will be entitled to recover its reasonable
attorneys' fees and other costs incurred in the arbitration, action or
proceeding (including all appeals and re-trials), in addition to any other
relief to which the Prevailing Party may be entitled. The term "Prevailing
Party" will include, without limitation, a party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other party of its claim or
defense. The attorneys' fees award will not be computed in accordance with any
court fee schedule, but will be such as to fully reimburse all attorneys' fees
reasonably incurred.
3.12 Cumulative Rights and Remedies. The rights and remedies in this
Agreement will be cumulative, and in addition to, any duties, obligations,
rights and remedies otherwise provided by law.
3.13 Counterparts/Facsimile Signatures. This Agreement may be executed
in any number of counterparts, using facsimile signatures, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
3.14 Advice of Counsel. Each party acknowledges and agrees that it has
given mature and careful thought to this Agreement and that it has been given
the opportunity to independently review this Agreement with its own independent
legal counsel.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on
the day and year first above written.
SAIGENE: Saigene Corporation, a Delaware
corporation
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
PARENT: Pacific Biometrics, Inc., a
Delaware corporation
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, President
SUBSIDIARY: Pacific Biometrics, Inc., a
Washington corporation
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, President
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