XTL Biopharmaceuticals Inc. Newton, Massachusetts 02466
XTL
Biopharmaceuticals Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0-000
Xxxxxx,
Xxxxxxxxxxxxx 00000
August
17, 2005
VivoQuest,
Inc.
000
Xxxxxxxxx Xxxxxxxxx
Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
VivoQuest,
Inc.
Gentlemen:
Reference
is made to the Asset Purchase Agreement dated as of August 17, 2005 (the
“Purchase
Agreement”)
between XTL Biopharmaceuticals Inc., a Delaware corporation (“Purchaser”)
and
VivoQuest, Inc. (“Seller”).
Capitalized terms used and not otherwise defined in this letter agreement
shall
have the meanings assigned to them in the Purchase Agreement.
Within
one business day of the Effective Date (as defined below), Purchaser will
make
or cause to be made to Seller a payment in the amount of $133,333.33 (the
“Initial
Payment”).
The
Purchaser will make additional payments to Purchaser of the same amount on
or
prior to each of August 25, 2005 and September 5, 2005 (each, a “Subsequent
Payment”)
if (i)
the Effective Date has occurred, (ii) Seller has provided Purchaser with
executed copies of inventor assignments satisfactory to Purchaser with respect
to all issued patents and filed patent applications of Seller, (iii) Purchaser
has been provided with properly executed inventor declarations for each of
Seller’s previously filed patent applications and the same have been properly
filed with the United States Patent and Trademark Office and (iv) Purchaser
has
also been provided with a fully executed amendment in the form attached as
Exhibit
A
to the
Employee Non-Disclosure, Non-Competition and Assignment of Intellectual Property
Agreement dated as of March 3, 2003 between Xxxxxxx Xxxxxxxxxxx and Seller
but
(v) the Closing has not occurred on or prior to such date, provided that
if the
Purchase Agreement has been terminated prior to such date, the payment to
be
made on such date will not be required. If the Purchase Agreement is terminated
by Purchaser pursuant to Section 9.4(ii) or (iii) (other than by reason of
Seller’s inability to obtain a Closing Consent), all amounts paid to Seller
pursuant hereto shall be immediately repaid to Purchaser. Seller may terminate
this letter agreement, the Purchase Agreement and the License Agreement (subject
to the proviso in the last sentence of Section 2(a) of the License Agreement)
by
written notice to Purchaser if (i) Purchaser does not deliver a fully executed
Guaranty in the form attached as Exhibit
B
on or
before August 25, 2005 (in which event the Initial Payment shall be
non-refundable but there shall be no obligation to make either Subsequent
Payment) or (ii) Purchaser does not make the Initial Payment or a Subsequent
Payment on the applicable date set forth above (after all conditions to
Purchaser’s obligation to make such payment set forth herein have been
satisfied) and such nonpayment continues for three business days after receipt
of written notice of nonpayment from Seller to Purchaser.
All
payment made pursuant to the preceding paragraph shall be used solely to
fund
ordinary course operating expenses of Seller and shall not be applied to
the
repayment of the Convertible Secured Promissory Notes of Seller held by UMPC
Health System (“UMPC”)
and
Highmark Health Ventures Investment Fund, L.P. (“Highmark”).
In
addition to any payments made pursuant to the preceding paragraph, if the
Effective Date occurs, the conditions to Purchaser’s obligation to make the
Subsequent Payments have been satisfied and this letter agreement has not
been
terminated by Seller pursuant to the last sentence of the preceding paragraph,
but the Purchase Agreement is subsequently terminated other than by reason
of
Xxxx Xxxxx, Xxxx Xxxx or Xxxxxxx Xxxxxxxxxxx ceasing to be employed by Seller
(pursuant to clause (vi) of Section 9.4 thereof), Purchaser shall pay to
Seller’s employees, allocated in accordance with Seller’s written instructions,
up to $100,000 in the aggregate as severance pay.
Purchaser
shall have no obligation to make the Initial Payment or either of the Subsequent
Payments prior to the date (the “Effective
Date”)
on
which (i) the Transaction Documents and the transactions contemplated thereby
have been approved by the Board of Directors and shareholders of Seller and
written evidence thereof has been provided to Purchaser, and (ii) Purchaser
has
been provided with a letter in the form attached as Exhibit
C
executed
by UPMC, Highmark and each other creditor of Seller having a security interest
in any of Seller’s assets . If the Effective Date has not occurred on or prior
to August 17, 2005, this letter agreement shall terminate and be of no further
force or effect.
In
consideration for the foregoing payments, during the period from the date
hereof
until the earlier of (x) the Closing Date and (y) the termination of the
Purchase Agreement, Seller shall, and shall cause its employees, directors,
agents and Affiliates to, immediately suspend any existing negotiations or
discussions relating to any sale, joint venture or other transfer of actual
or
beneficial ownership of any securities of Seller or any of its operations
or any
assets associated therewith (other than goods and services of such Seller
sold
in the ordinary course of business) (collectively, an “Acquisition
Transaction”),
and
Seller shall not, and shall cause its employees, directors, agents and
Affiliates not to, (i) solicit any proposals or offers relating to
an
Acquisition Transaction, or (ii) negotiate or engage in discussions
with
any third party concerning any proposal or offer for an Acquisition
Transaction.
Purchaser
shall have no liability under or in connection with this letter agreement
in
excess of any defaulted payment hereunder. In no event shall Seller be entitled
to claim any special, punitive or consequential damages as a consequence
of any
breach of this letter agreement.
2
This
letter agreement shall be governed by and constructed in accordance with
the
laws of the State of New York without regard to conflicts of law principles
of
such State.
Very
truly yours,
| XTL BIOPHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
| ACCEPTED: | ||||
| VIVOQUEST, INC. | ||||
| By: | /s/ | |||
|
|
||||
| Name: Title: |
||||
3
EXHIBIT
C
[form
of standstill letter]
[ ],
2005
Kiryat
Xxxxxxxxx Science Park
0
Xxxxxxx
Xxxxxx, Xxxxxxxx 0
X.X.
000
Xxxxxxx
00000, Xxxxxx
XTL
Biopharmaceuticals Inc.
000
Xxxxx
Xxxxxx, Xxxxx 0-000
Xxxxxx,
Xxxxxxxxxxxxx 00000
Gentlemen:
Reference
is made to the Asset Purchase Agreement dated as of August 11, 2005 (the
“Purchase
Agreement”)
between XTL Biopharmaceuticals, Inc., a Delaware corporation (“Purchaser”),
and
VivoQuest, Inc. (“Seller”),
the
License Agreement dated as of August 11, 2005 (the “License
Agreement”)
between XTL Biopharmaceuticals Ltd., an Israeli corporation (“Parent”),
and
Seller and the letter agreement dated August 11, 2005 (together with the
Asset
Purchase Agreement and the License Agreement, the “Transaction
Documents”)
between Purchaser and Seller.
In
order
to induce Purchaser and Parent to enter into the Transaction Documents, the
undersigned agrees (i) that if the closing under the Purchase Agreement occurs
on or prior to September 22, 2005, the undersigned will release any and all
liens or security interests held by the undersigned in any of Seller’s assets
simultaneously with such closing, (ii) that prior to September 22, 2005,
unless
the Purchase Agreement has been terminated, the undersigned will not (a)
take
any action to collect or enforce the [name
debt instrument]
(the
“Seller
Indebtedness”)
or the
[name
instruments creating security interests or liens]
or (b)
transfer any of the Seller Indebtedness or any interest therein unless the
transferee agrees in writing to be bound by this letter and (iii) that the
undersigned shall, upon the consummation of the closing under the Asset Purchase
Agreement, be deemed to have irrevocably waived any and all claims the
undersigned might otherwise have against Purchaser and Parent and any of
their
officers, directors, employees or agents based upon, arising from, or related
to
the Seller Indebtedness, including without limitation any such claim based
on
fraudulent conveyance, fraudulent transfer or any similar theory of recovery.
The undersigned covenants not to bring or attempt to bring any claim described
in clause (iii) of the preceding sentence.
This
letter shall be governed by and construed in accordance with the laws of
the
State of New York.
4
Very
truly yours,
| By: | /s/ | |
|
Name: |
||
| Title | ||
5
EXHIBIT
A
[form
of
Sandrasagra amendment]
Amendment
dated as of August 12, 2005 (this “Amendment”)
to the
Employee Non-Disclosure, Non-Competition and Assignment of Intellectual Property
Agreement dated as of March 3, 2003 (the “Agreement”)
between Xxxxxxx Xxxxxxxxxxx and VivoQuest, Inc.
For
mutual consideration, the receipt and adequacy of which are hereby acknowledged,
the parties agree as follows:
1.
The
fifth sentence of the first paragraph of Section 6 is hereby amended and
restated in its entirety to read as follows:
Employee,
however, shall not be prohibited from seeking and/or obtaining employment
with
any entity which engages in the aforementioned research (the development
of
small molecule therapeutics from natural products or natural product-derived
compounds) as long as such employment does not directly compete with the
Company’s major areas of business and/or research.
and
the
following is hereby added as the sixth sentence of the first paragraph of
Section 6:
The
Employee’s subsequent employment will be considered directly competitive if it
would give the subsequent employer a significant competitive advantage in
one of
the Company’s major areas of business and/or research that the subsequent
employer would not otherwise have.
2. Except
as
set forth herein, the Agreement shall remain unmodified and in full force
and
effect.
3. This
Amendment 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.
| VIVOQUEST, INC. | ||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
|
Name: Xxxxxxx Xxxxxxxxxxx |
||
6
