STOCK PURCHASE AGREEMENT BY AND AMONG SPECTRASCIENCE, INC. AND EUCLID PARTNERS IV, L.P., EUCLIDSR PARTNERS, L.P., EUCLIDSR BIOTECHNOLOGY PARTNERS, L.P., STEPHEN L. WATSON AND ROSS FLEWELLING
Table
of
Contents
EXHIBIT
2.1
BY
AND
AMONG
SPECTRASCIENCE,
INC.
AND
EUCLID
PARTNERS IV, L.P.,
EUCLIDSR
PARTNERS, L.P.,
EUCLIDSR
BIOTECHNOLOGY PARTNERS, L.P.,
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
AND
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
This
Agreement (the “Agreement”)
is
entered into as of November 6, 2007, by and among SpectraScience, Inc., a
Minnesota corporation (the “Buyer”)
and
Euclid Partners IV, L.P., a Delaware limited partnership, EuclidSR Partners,
L.P., a Delaware limited partnership, EuclidSR Biotechnology Partners IV, L.P.,
a Delaware limited partnership (together, the “Euclid
Entities”),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (together with the Euclid Entities, each,
a “Seller”
and
collectively, the “Sellers”).
The
Buyer and the Sellers are each referred to herein individually as a
“Party”
and,
collectively, as the “Parties.”
WHEREAS,
the Sellers own all of the issued and outstanding capital stock of Luma Imaging
Corporation, a Delaware corporation (the “Company”);
WHEREAS,
this Agreement contemplates a transaction in which the Buyer will purchase
from
the Sellers, and the Sellers will sell to the Buyer, all of the outstanding
capital stock of the Company in return for the Purchase Price (as defined
below);
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 hereby agree as follows.
1. Definitions.
“Affiliate”
has
the
meaning set forth in Rule 12b-2 of the regulations promulgated under the
Securities Exchange Act.
“Buyer”
has
the
meaning set forth in the preface to this Agreement.
“Buyer
Common Stock”
means
the shares of the Common Stock, par value $0.01 per share, of the
Buyer.
“Cash”
means
cash and cash equivalents (including marketable securities and short term
investments) calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.
“Closing”
has
the
meaning set forth in Section 2(c) below.
“Closing
Date”
has
the
meaning set forth in Section 2(c) below.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Company”
has
the
meaning set forth in the preface to this Agreement.
“Company
Share”
means
any share of common stock, par value $0.0001 per share, of the Company and
any
share of preferred stock, par value $0.0001 per share, of the Company.
“Contract”
has
the
meaning set forth in Section 4(o)(i) below.
“Disclosure
Schedule”
has
the
meaning set forth in Section 4 below.
“Encumbrances”
means
all pledges, liens, charges, encumbrances, easements, encroachments, defects,
security interests, claims, options, mortgages, conditional sale or other title
retention agreements, proxies or voting trusts or other restrictions of every
kind.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended.
“Financial
Statement”
has
the
meaning set forth in Section 4(g) below.
“GAAP”
means
United States generally accepted accounting principles as in effect from time
to
time.
“Governmental
Entity”
means
any foreign, federal, state, local or other court, legislature, governmental
agency, commission or regulatory authority or instrumentality.
“Indemnified
Party”
has
the
meaning set forth in Section 7(e)(i) below.
“Indemnifying
Party” has
the
meaning set forth in Section 7(e)(i) below.
“Intellectual
Property”
has
the
meaning set forth in Section 4(l)(i)(F) below.
“Intellectual
Property Rights”
means
any and all rights in and to intellectual property, including, without
limitation, all patents, trade secrets, copyrights, trademarks and any rights
similar, corresponding or equivalent to such rights anywhere in the
world.
“Knowledge”
means,
with respect to any Person, the actual knowledge of senior management level
employees of such Person or knowledge that would have been obtained by such
Person or such employees after diligent and due inquiry of the employees of
such
person.
“Leased
Real Property”
means
all leasehold or subleasehold estates and other contractual rights to use or
occupy any land, buildings, structures, improvements, fixtures or other interest
in real property which is leased or used by the Company.
“Leases”
means
all leases, subleases, licenses, concessions and other agreements (written
or
oral), including all amendments, extensions, renewals, guaranties and other
agreements with respect thereto, pursuant to which the Company holds any Leased
Real Property.
“Losses”
has
the
meaning set forth in Section 7(b) below.
“Material
Adverse Effect”
means
any set of circumstances or events which, individually or in the aggregate,
could reasonably be expected to constitute a material adverse effect on the
assets or financial condition of the Company taken as a whole or on the ability
of the Sellers or the Company to perform their material obligations under
this
Agreement or to consummate the transactions contemplated by this
Agreement.
“Offering
Materials and Presentations”
has
the
meaning set forth in Section 4(x) below.
“Party”
has
the
meaning set forth in the preface to this Agreement.
“Person”
means
an individual, a partnership, a corporation, an 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).
“Personal
Property”
has
the
meaning set forth in Section 4(u)(i) below.
“Purchase
Price”
has
the
meaning set forth in Section 2(b) below.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Securities
Exchange Act”
means
the Securities Exchange Act of 1934, as amended.
“Security
Interest”
means
any mortgage, pledge, lien, Encumbrance, charge, or other security interest,
other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens for taxes
not yet due and payable or for taxes that the taxpayer is contesting in good
faith through appropriate proceedings, (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and (d) other liens
arising in the ordinary course of business consistent with past practice and
not
incurred in connection with the borrowing of money and which do not materially
impair the value or use of the assets or property to which such security
interest pertains.
“Sellers”
has
the
meaning set forth in the preface to this Agreement.
“Sellers’
Representative”
means
EuclidSR Partners, L.P.
“Straddle
Period”
shall
mean any taxable year or period beginning on or before and ending after the
Closing Date.
“Subsidiary”
means
any corporation, partnership, joint venture or other entity (a) in which the
Company owns, directly or indirectly, fifty percent (50%) or more of the
outstanding voting securities or equity interests, (b) of which the Company
is a
general partner, or (c) that is otherwise controlled by the
Company.
“Tax”
means
(i) any federal, state, local, or foreign income, gross 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 and (ii) any material liability of
the
Company for the payment of amounts with respect to payments of a type described
in clause (i) as a result of being a member of an affiliated, consolidated,
combined or unitary group, or as a result of any obligation of the Company
under
any Tax Sharing Arrangement or Tax indemnity arrangement. For clarification,
and
not in limitation of the foregoing, “Tax” also includes any sales tax payable by
the Company or by MediSpectra, Inc. (“MediSpectra”),
or
any other person in connection with the foreclosure on the assets of MediSpectra
or the ultimate acquisition of said assets by the Company.
“Tax
Return”
means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Tax
Sharing Arrangement”
shall
mean any written or unwritten agreement or arrangement for the allocation or
payment of Tax liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Tax Return which Tax Return includes or
included the Company.
“Third
Party Claim”
has
the
meaning set forth in Section 7(e)(i) below.
2. Purchase
and Sale of Company Shares.
(a) Transaction.
At the
Closing
and upon
and subject to the terms and conditions of this Agreement, the Buyer agrees
to
purchase and accept from each Seller, and each Seller, severally and not
jointly, agrees to sell to the Buyer, free and clear of all Encumbrances, such
number of Company Shares as set forth opposite such Seller’s name on
Exhibit
A
attached
hereto in exchange for the number of shares of Buyer Common Stock set forth
opposite such Seller’s name on Exhibit
A
attached
hereto.
The
Buyer shall have no obligation to purchase any Company Shares if any Seller
fails to deliver its Company Shares. The parties intend that the transaction
shall qualify as, and agree to treat the transation as, a tax-free
reorganization for purposes of section 368(a)(1)(B) of the Code, and the parties
agree that this Agreement shall constitute a plan of reorganization for purposes
thereof.
(b) Purchase
Price.
The
aggregate purchase price for the Company Shares (the “Purchase
Price”)
shall
be 11,200,000 shares of Buyer Common Stock.
(c) The
Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
shall
take place at the offices of Fish
& ▇▇▇▇▇▇▇▇▇▇ P.C. in
New
York, New York, commencing at 10:00 a.m. local time on November 6, 2007 or
such
other date as the Buyer and the Sellers may mutually determine (the
“Closing
Date”).
(d) Closing
Date Payments.
At the
Closing, the Buyer agrees to pay to each Seller that portion of the Purchase
Price, less the pro rata portion of the Escrow Amount applicable to such Seller,
set forth opposite such Seller’s name on Exhibit
A
hereto.
(e) Deliveries
at the Closing.
At the
Closing, (i) each Seller will deliver to the Buyer the various agreements,
certificates, instruments, and documents referred to in Section 6(a) below,
(ii)
the Buyer will deliver to the Sellers the various agreements, certificates,
instruments, and documents referred to in Section 6(b) below, (iii) each Seller
will deliver to the Buyer stock certificates representing all of such Seller’s
Company Shares, endorsed in blank or accompanied by duly executed assignment
documents, (iv) the Buyer will deliver to the Sellers the Purchase Price,
including stock certificates representing the appropriate number of shares
of
Buyer Common Stock registered in the name of each Seller, and (v) the Sellers
will deliver to the Buyer the resignations of all officers and directors of
the
Company.
(f) Escrow.
Notwithstanding anything to the contrary contained herein, the Buyer shall
withhold from the Purchase Price otherwise payable at the Closing an amount
equal to ten percent (10%) of the shares of Buyer Common Stock to be paid by
the
Buyer as part of the Purchase Price (the “Escrow
Amount”).
On
the Closing Date, the Buyer shall cause the Escrow Amount to be delivered to
JPMorgan Chase, as escrow agent (the “Escrow
Agent”),
pursuant to an escrow agreement by and among the Buyer, the Sellers’
Representative and the Escrow Agent, substantially in the form attached hereto
as Exhibit B
(the
“Escrow
Agreement”).
The
Escrow Amount will be held by the Escrow Agent and shall be available to
indemnify the Buyer pursuant to the indemnification obligations of the Sellers
set forth in Section 7 hereto and in the Escrow Agreement. On the date one
(1)
year from the Closing Date, the Escrow Agent shall release the entire remaining
portion of the Escrow Amount to the Sellers, pursuant to the Escrow
Agreement.
(g) Lock-Up.
Each of
the Sellers hereby agrees that, for a period of one (1) year following the
Closing Date, such Seller shall not, without the prior written consent of the
Buyer (which consent shall not be unreasonably withheld), directly or indirectly
sell, offer to sell, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, any of the Buyer Common Stock received by
such
Seller as part of the Purchase Price; provided, the Sellers may transfer such
shares to their Affiliates and in the case of individuals, for estate planning
purposes if the transferee agrees in writing to be bound by the terms of the
Lock-Up Agreement attached hereto as Exhibit
D.
3. Representations
and Warranties Concerning the Transaction.
(a) Representations
and Warranties of the Sellers.
Each
Seller, severally and not jointly, represents and warrants to the Buyer that
the
statements contained in this Section 3(a) are correct and complete as of Closing
Date, except as set forth in Annex I attached hereto.
(i) Authorization
of Transaction.
The
Seller has the requisite power and authority, or, if the Seller is an
individual, the capacity, to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. In the case of a Seller that
is
an entity, the execution and delivery of this Agreement and the performance
by
the Seller of its obligations hereunder have been authorized by all requisite
corporate action on the part of the Seller. This Agreement has been validly
executed and delivered by the Seller and, assuming that this Agreement has
been
duly authorized, executed and delivered by the Buyer and each other Seller,
constitutes a valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms; except that such enforceability is
subject to and limited by the effect of bankruptcy, insolvency, reorganization,
arrangement and moratorium laws, laws relating to fraudulent transfers or
conveyances and general principles of equity (whether asserted in an action
at
law or in equity). The Seller is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated
by
this Agreement.
(ii) Noncontravention.
Neither
the execution and the delivery of this Agreement by the Seller, nor the
consummation by the Seller of the transactions contemplated hereby, will, (A)
to
the Knowledge of the Seller, violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Government Entity to which the Seller is subject, (B) 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 Seller is a party or by which it is bound
or
to which any of its assets is subject or (C) violate the articles of
organization and Certificate of Formation or any shareholder agreement of
Seller, as applicable.
(iii) Brokers’
Fees.
The
Seller 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.
(iv) Company
Shares.
The
Seller holds of record and owns beneficially the number of Company Shares set
forth next to its name on Exhibit
A,
free
and clear of any Encumbrances or restrictions on transfer (other than
restrictions under the Securities Act and state securities laws and rights
of
first refusal in favor of the Company), Taxes, options, warrants, purchase
rights, contracts, commitments, equities, claims, and demands. The Seller is
not
a party to any option, warrant, purchase right, or other contract or commitment
that could require the Seller to sell, transfer, or otherwise dispose of any
capital stock of the Company (other than this Agreement and rights of first
refusal in favor of the Company). The Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
capital stock of the Company. The Company Shares held by the Sellers and to
be
conveyed to the Buyer constitute one hundred percent (100%) of the issued and
outstanding securities of the Company.
(v) Accredited
Investors.
Each
Seller is an “accredited investor” as defined in Regulation D under the
Securities Act and is acquiring Buyer Common Stock for investment and not for
distribution.
(b) Representations
and Warranties of the Buyer.
The
Buyer represents and warrants to the Sellers that the statements contained
in
this Section 3(b) are correct and complete as of the Closing Date, except as
set
forth in Annex II attached hereto.
(i) Organization
of the Buyer.
The
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
(ii) Valid
Issuance.
The
shares of Buyer Common Stock that will be paid by the Buyer to the Sellers
as
part of the Purchase Price have been duly authorized, and the issuance, sale
and
delivery of the Buyer Common Stock in accordance with this Agreement have been
authorized by all necessary corporate action on the part of the Buyer (including
all necessary Board of Directors and stockholder action). The Buyer Common
Stock, when so issued, sold and delivered in accordance with this Agreement,
will be duly and validly issued, fully paid, and nonassessable and will
be
issued in compliance with all applicable federal and state securities
laws.
(iii) SEC
Documents; Buyer Financial Statements.
A true
and complete copy of each annual, quarterly and other report, registration
statement, and definitive proxy statement filed by the Buyer with the Securities
and Exchange Commission (the “SEC”)
since
January 1, 2007 (the “Buyer
SEC Documents”)
is
available on the website maintained by the SEC at ▇▇▇.▇▇▇.▇▇▇. As of their
respective filing dates, the Buyer SEC Documents complied in all material
respects with the requirements of the Securities Act or the Securities Exchange
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Buyer SEC Documents, and none of the Buyer SEC
Documents contained on their filing dates any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except to the extent corrected by a
subsequently filed Buyer SEC Document. The financial statements of the Buyer
included in the Buyer SEC Documents (the “Buyer
Financial Statements”)
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated (except
as
may be indicated in the notes thereto, except in the case of pro forma
statements, or, in the case of unaudited financial statements, except as
permitted under Form 10-Q under the Securities Exchange Act) and fairly
presented the consolidated financial position of the Buyer and its consolidated
subsidiaries as of the respective dates thereof and the consolidated results
of
the Buyer’s operations and cash flows for the periods indicated (subject to, in
the case of unaudited statements, normal and recurring year-end audit
adjustments).
(iv) Authorization
of Transaction.
The
Buyer has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the performance by the Buyer of
its
obligations hereunder have been authorized by all requisite corporate action
(including all necessary Board of Directors and stockholder action) on the
part
of the Buyer. This Agreement has been validly executed and delivered by the
Buyer and, assuming that this Agreement has been duly authorized, executed
and
delivered by the Sellers, constitutes a valid and binding obligation of the
Buyer, enforceable against the Buyer in accordance with its terms; except that
such enforceability is subject to and limited by the effect of bankruptcy,
insolvency, reorganization, arrangement and moratorium laws, laws relating
to
fraudulent transfers or conveyances and general principles of equity (whether
asserted in an action at law or in equity). The Buyer is not required to give
any notice to, make any filing with, or obtain any authorization, consent,
or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(v) Noncontravention.
Neither
the execution and the delivery of this Agreement by the Buyer, nor the
consummation of the transactions contemplated hereby by the Buyer, will (A)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any Governmental Entity
to which the Buyer is subject or (B) 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 or (C) violate the articles of incorporation or by-laws of
the
Buyer.
(vi) 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.
(vii) Investment.
The
Buyer is not acquiring the Company Shares with a view to the resale or
distribution of any part thereof within the meaning of the Securities Act.
4. Representations
and Warranties Concerning the Company.
The
Sellers jointly and severally represent and warrant to the Buyer 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 delivered by the Sellers and the Company to the
Buyer
on the date hereof (the “Disclosure
Schedule”).
(a) Organization,
Qualification, and Corporate Power.
The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. The Company is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required. The Company has full corporate power
and
authority to carry on the businesses in which it is engaged and to own and
use
the properties owned and used by it. Section 4(a) of the Disclosure Schedule
lists the directors and officers of the Company and each jurisdiction in which
the Company is duly authorized to conduct business.
The
Company has previously delivered to the Buyer true and correct copies of its
Certificate of Incorporation, as amended to the date hereof, its Bylaws and
its
stock ledger and minute books, which contain a record of all stockholder and
director actions that is accurate and complete in all material
respects.
(b) Capitalization. Immediately
prior to the consummation of the transactions contemplated by this Agreement,
the entire authorized capital stock of the Company consists of (A) 102 shares
of
common stock, par value $0.0001 per share, of which 11.1236 shares are issued
and outstanding, and (90 shares of preferred stock, par value $0.0001 per share,
all of which are designated as Series A Convertible Preferred Stock and all
of
which are issued and outstanding. All of the issued and outstanding Company
Shares have been duly authorized, are validly issued, fully paid, and
nonassessable, are held of record by the Sellers and were not issued in
violation of any preemptive or similar rights. There are no outstanding or
authorized agreements, arrangements, options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or
commitments that could require the Company to issue, sell, or otherwise
cause to become outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to the Company.
(c) Brokers’
Fees.
The
Company has no liability or obligation to pay any fees or commissions to any
broker, finder, or agent other than legal fees and expenses with respect to
the
transactions contemplated by this Agreement.
(d) Title
to Tangible Assets.
The
Company has good and marketable title to the material tangible assets (listed
on
Section 4(q) of the Disclosure Schedule) used by the Company in the conduct
of
its business free and clear of all Security Interests and
Encumbrances.
(e) Subsidiaries.
The
Company has no Subsidiaries and is neither a partner in any partnership nor
a
co-venturer in any joint venture or other business enterprise.
(f) Financial
Statements.
Attached hereto as
Exhibit
C
are the
following financial statements (collectively the “Financial
Statements”):
(i)
statements of profit and loss for the period of incorporation through November
5, 2007 for the Company; and (ii) balance sheets as of the Closing Date
(the “Closing
Date Financial Statements”)
for
the Company. The Financial Statements (including the notes thereto) present
fairly the financial condition of the Company as of such dates and the results
of operations of the Company for such periods; provided
that the
Closing Date Financial Statements are subject to normal year-end adjustments
and
lack footnotes and other presentation items.
Except
as set forth in Section 4(g) of the Disclosure Schedule, the Company is not
subject to any liability, whether absolute, contingent, accrued or otherwise,
other than (i) as set forth in the Financial Statements and (ii) liabilities
of
the same nature as those set forth in the Financial Statements and reasonably
incurred in the ordinary course of business of the Company consistent with
past
practice.
The
Company has not engaged in any material business activity since inception and
currently has no active business.
(g) No
Material Change.
Except
as set forth in Section 4(g) of the Disclosure Schedule, since the date of
the
Company’s formation to and including the date hereof, the Company has not
experienced a material adverse change in
its
assets.
(h) Absence
of Change or Event.
Except
as disclosed in Section 4(h) of the Disclosure Schedule, since the date of
the
Company’s formation to and including the date hereof, the Company has conducted
no business except maintaining the value of its Intellectual Property in the
ordinary course and consistent with past practice and has not:
(i) incurred
any obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due, except liabilities or obligations incurred in the ordinary
course of business and consistent with prior practice;
(ii) mortgaged,
pledged or subjected to, or suffered to be imposed, any lien, restriction or
other Encumbrance on, any of its property or assets, tangible or intangible;
(iii) sold,
transferred, licensed, leased to others or otherwise disposed of any of its
properties or assets, real, personal, or mixed, tangible or intangible (or
committed to do any of the foregoing), including the payment of any loans owed
to any affiliate, except for inventory sold to customers (to the extent the
same
has been replaced with equivalent property) or returned to vendors and payments
to any non-affiliates on account of accounts payable or scheduled payments
in
respect of indebtedness for money borrowed disclosed in the Financial Statements
or the Disclosure Schedules, in each case in the ordinary course of business
and
consistent with prior practice, or canceled, waived, released or otherwise
compromised any debt or claim, or any right of significant value, except in
the
ordinary course of business and consistent with prior practice;
(iv) suffered
any damage, destruction or loss (whether or not covered by insurance) which
has
had or could have a Material Adverse Effect;
(v) made
or
committed to make any capital expenditures or capital additions or betterments;
(vi) instituted
any litigation, action or proceeding before any Governmental Entity or
arbitration tribunal relating to it or its property;
(vii) declared
or paid any dividend or made any other payment or distribution in respect of
its
capital stock, or directly or indirectly redeemed, purchased or otherwise
acquired any of its capital stock;
(viii) prepared
or filed any Tax Return materially inconsistent with past practice, made or
changed any election concerning Taxes or Tax Returns, changed an annual
accounting period, adopted or changed any accounting method, filed any amended
return, entered into any closing agreement with respect to Taxes, settled any
Tax claim or assessment, surrendered any right to claim a refund of Taxes or
obtained or entered into any Tax ruling, agreement, contract, understanding,
arrangement or plan;
(ix) amended
or terminated any of the Contracts;
(x) permitted
to lapse any rights to the Intellectual Property; or
(xi) agreed
in
writing or otherwise to take any action with respect to any of the matters
described in this Section 4(h).
(i) Legal
Compliance.
The
Company has complied and is in compliance with all applicable laws (including
rules, regulations, codes, injunctions, final judgments, final orders, decrees,
and rulings thereunder) of all Governmental Entities, except where the failure
to comply would not have a Material Adverse Effect.
Each
Seller has complied, and is in compliance, with all applicable laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of all Governmental Entities (and all agencies
thereof) which affect the Company, except where the failure to comply would
not
have a Material Adverse Effect.
(j) Taxes.
The
Company has filed all material Tax Returns required to be filed prior to the
Closing Date and has paid or established an adequate reserve for the payment
of
all material Taxes required to be paid prior to the Closing Date. No
deficiencies for any Taxes have been proposed, asserted or assessed against
The
Company by any Governmental Entity. No audit or other examination of any Tax
Return of the Company by any Governmental Entity is in progress, nor has the
Company been notified by any Governmental Entity of any request for such an
audit or other examination.
(k) Real
Property. The
Company is not party to any Lease, does not have any Leased Real Property and
does not own any real property.
(l) Intellectual
Property.
(i) Section
4(l) of the Disclosure Schedule sets forth:
(A) all
patents and patent applications held by the Company;
(B) all
material trademarks, material service marks, trademark registrations, service
▇▇▇▇ registrations, applications for trademark registrations, applications
for
service ▇▇▇▇ registrations, trade names, brand names, product names and material
common law marks, and the renewals thereof, of the Company;
(C) all
material copyright registrations, and the renewals thereof, of the Company;
(D) all
trademark licenses, service ▇▇▇▇ licenses, copyright licenses, royalty
agreements, patent licenses, assignments, grants and contracts with employees
or
others relating in whole or in part to disclosure, assignment, registering
or
patenting of any trademarks, service marks, copyrights, inventions, discoveries,
improvements, processes, formulae, trade secrets or other know-how of the
Company;
(E) all
material computer software programs and software systems and/or modifications
thereof, including all databases, compilations, tool sets, compilers, higher
level or “proprietary” languages, related documentation and materials, whether
in source code, object code or human readable form owned by, licensed to,
developed by or for the Company; provided
that the
Disclosure Schedule does not need to list any such software that is available
in
consumer retail stores and subject to “shrink-wrap” license agreements;
(F) to
the
extent that any of the following have been reduced to writing, all other trade
secrets, formulae, proprietary processes and inventions for which no patent
applications are pending and all other industrial property rights presently
owned, in whole or in part by the Company (the items described in Section 4(l)
being collectively referred to as “Intellectual
Property”).
(ii) Each
material item of Intellectual Property (i) is valid, subsisting and in full
force and effect, (ii) has not been abandoned or passed into the public domain
and (iii) is free and clear of any Encumbrances.
(iii) Each
item
of Intellectual Property is exclusively owned by the Company.
(iv) The
Sellers have no Knowledge of any facts, circumstances or information that
(i) would render any Intellectual Property invalid or unenforceable,
(ii) would adversely affect any pending application for any Intellectual
Property, or (iii) would adversely affect or impede the ability of the
Company to use any Intellectual Property. The Sellers and the Company have
not
misrepresented, or failed to disclose, any fact or circumstances in any
application for any Intellectual Property that would constitute fraud or a
misrepresentation with respect to such application or that would otherwise
affect the validity or enforceability of any Intellectual Property or
Intellectual Property Right.
(v) All
commercially reasonable registration, maintenance and renewal fees in connection
with each item of Intellectual Property have been paid and all commercially
reasonable documents and certificates in connection with such Intellectual
Property that consists of patents or trademarks have been filed with the
relevant patent, copyright, trademark or other authorities in the United States,
for the purposes of maintaining such Intellectual Property. There are no actions
that must be taken by the Company within one hundred twenty (120) days following
the Closing Date, including the payment of any registration, maintenance or
renewal fees or the filing of any responses to office actions, documents,
applications or certificates for the purposes of obtaining, maintaining,
perfecting, preserving or renewing any Intellectual Property or Intellectual
Property Rights that consist of patents or trademarks. To the maximum extent
provided for by, and in accordance with, applicable laws and regulations, the
Company has recorded in a timely manner each such assignment of Intellectual
Property or an Intellectual Property Right assigned to it with the relevant
governmental authority, including the United States Patent and Trademark Office,
the U.S. Copyright Office or their respective counterparts in any relevant
foreign jurisdiction, as the case may be.
(vi) The
Company has taken all commercially
reasonable
action to maintain and protect the Intellectual Property.
(vii) To
the
Knowledge of each of the Sellers, (A) no Person is violating, infringing or
misappropriating any of Intellectual Property Rights of the Company, and (B)
the
Company is not infringing or misappropriating any Intellectual Property rights
of any other Person.
(viii) There
are
no Proceedings (as defined in Section 4(n) below) before any Governmental Entity
(excluding those before the United States Patent and Trademark Office or foreign
patent offices for related foreign patent and trademark applications) anywhere
in the world related to any of the Intellectual Property, including any of
Intellectual Property Rights of the Company.
(ix) No
Intellectual Property or any product or service of the Company is subject to
any
Proceeding or any outstanding decree, order, judgment, office action or
settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or that may affect the validity,
use or enforceability of such Intellectual Property.
(x) Section
4(l) of the Disclosure Schedule sets forth all Contracts (as defined in Section
4(m) below) affecting any Intellectual Property Rights. The Company is not
in
breach of any material provision thereof, nor has either failed to perform
any
material obligation under, any such Contracts and, to the Knowledge of the
each
of the Sellers, no other party to any such Contracts, is in breach thereof
or
has failed to perform thereunder.
(xiv) Section
4(l) of the Disclosure Schedule sets forth a list of all Contracts under which
the Company has agreed to, or assumed, any obligation or duty to warrant,
indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur
any
obligation or liability, or provide a right of rescission, with respect to
the
infringement or misappropriation by the Company or such other person of the
Intellectual Property Rights of any Person other than the Company.
(xv) There
is
no Contract affecting any Intellectual Property under which there is any dispute
regarding the scope of such Contract, or performance under such Contract,
including with respect to any payments to be made or received by the Company
thereunder.
(m) Contracts.
(i) Except
as
set forth in Section 4(m) of the Disclosure Schedule (each, a “Contract”),
the
Company is not a party to any:
(A) collective
bargaining agreement;
(B) consignment,
distributor, dealer, manufacturer’s representative, sales agency, advertising or
public relations contract;
(C) employment
or consulting agreement, or contract or agreement concerning confidentiality,
non-competition or non-solicitation of employees;
(D) agreement
relating to the borrowing of money or the guaranty of any obligation of others
for the borrowing of money;
(E) guarantee,
indemnity or suretyship of the obligations of customers, suppliers, officers,
directors, employees, stockholders or Affiliates;
(F) license
or other similar agreement (other than (x) governmental permits or governmental
licenses used in connection with the operation of its business; and (y)
off-the-shelf software licenses which are not material to the operation of
its
business);
(G) contract
or agreement for the purchase, sale or lease of real property; or
(H) contract
or agreement with any director or officer of the Company, or any entity in
which
any director or officer of the Company has a twenty percent (20%) or more direct
or indirect interest.
The
Company has delivered to the Buyer a correct and complete copy of each Contract.
(ii) Except
as
set forth on Section 4(m) of the Disclosure Schedule, each Contract (A)
constitutes a valid and binding obligation the Company, and to the Knowledge
of
each of the Sellers, the other parties thereto, (B) is in full force and effect,
and (C) except for those Contracts which by their terms will expire prior to
the
Closing Date or are otherwise terminated prior to the Closing Date in accordance
with the provisions hereof, will continue in full force and effect after the
Closing, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party. Neither
the Company, nor to the Knowledge of any of the Sellers, any third party to
any
Contract is in breach of or default under any Contract and no event has occurred
and no condition or state of facts exists which, with the passage of time or
the
giving of notice or both, would constitute such a default or breach by the
Company, any other party thereto, or by any other party.
(n) Litigation.
The
Company is not (i) subject to any outstanding injunction, final judgment, final
order, decree, or ruling, (ii) a party to any action, suit, proceeding, hearing,
or investigation of, in, or before any Governmental Entity or quasi-judicial
or
administrative agency of any federal, state, local, or foreign jurisdiction
(collectively, a “Proceeding”). No Seller is subject to any outstanding
injunction, final judgment, final order, decree, or ruling related to the
Company, or is a party to any Proceeding related to the
Company.
There
are no (i) Proceedings pending or, to the Knowledge of each of the Sellers,
threatened against or related to the Company or (ii) Proceedings pending or,
to
the Knowledge of each of the Sellers, threatened against any Seller related
to
the Company or which could affect such Seller’s ability to consummate the
transactions contemplated by this Agreement.
(o) Employee
Matters.
(i) The
Company does not presently have, and since its formation, has not had, any
employees.
(ii) The
Company has not made any representations regarding equity incentives to any
officer, employees, director or consultant that are inconsistent with the
amounts and terms set forth in the Company’s board minutes.
(iii) The
Company does not have and has never maintained or sponsored any Employee Benefit
Plan.
(p) Certain
Business Relationships with the Company.
The
Company does not have any written or oral agreement or arrangement between
any
Seller or any of its Affiliates (other than the Company), including any director
or officer of any Seller, the Company or any of their Affiliates, on the one
hand, and the Company on the other hand, including all data processing,
software, technology services, accounting, tax, insurance, banking, personnel,
payroll, legal, security, trademark and patent services, sales and
communications agreements and arrangements. None of
the
Sellers or any of its Affiliates owns any material asset, tangible or
intangible, which is used in the business of the Company.
(q) Personal
Property.
(i) Section
4(q) of the Disclosure Schedule sets forth (A) the tangible physical assets
of
the Company that do not constitute land (including without limitation machinery,
equipment, tools, dies, furniture, furnishings, leasehold improvements,
vehicles, buildings and fixtures), (B) individual refundable deposits, prepaid
expenses, deferred charges and “other assets,” (C) all loans or advances made by
the Company to any Person and (D) all personal property leased to the Company
(“Personal
Property”).
(ii) Except
as
disclosed in Section 4(q) of the Disclosure Schedule, the Company has good
and
marketable title to all of the Personal Property, free and clear of all
Encumbrances. Except as disclosed in Section 4(q) of the Disclosure Schedule,
the Company owns, and has valid leasehold interests in or valid contractual
rights to use, all of the assets, tangible and intangible, used by, or necessary
to conduct its business.
(r) Bank
Accounts, Powers of Attorney.
Schedule
4(r) of the Disclosure Schedule sets forth a complete and correct list of all
bank accounts and safe deposit boxes of the Company and persons authorized
to
sign or otherwise act with respect thereto as of the date hereof and a complete
and correct list of all persons holding a general or special power of attorney
granted by the Company and a complete and correct copy thereof.
The
Company and the Sellers will cooperate with the Buyer in changing such
authorized persons on and after the Closing Date.
(s) Disclaimer
of Other Representations and Warranties; Disclosure.
None of
the Sellers makes or has made any representations or warranties relating to
the
Company, any Seller or otherwise in connection with the transactions
contemplated hereby other than those expressly set out here in which are made by
the Sellers. Without limiting the generality of the foregoing, none of the
Sellers has made, or shall be deemed to have made, any representations or
warranties in any presentation made in connection with the transactions
contemplated hereby, or in any other written materials delivered to the Buyer
in
connection with any other such presentation (collectively, the “Offering
Materials and Presentations”),
and
no statement contained in the Offering Materials and Presentations shall be
deemed a representation or warranty hereunder or otherwise. It is understood
that any cost estimates, projections or other predictions, any data, any
financial information (except to the extent expressly provided herein) or any
memoranda of offering materials or presentations, including but not limited
to
the Offering Materials and Presentations, are not and shall not be deemed to
be
or to include representations or warranties of any Seller. Except as set forth
in this Agreement, no Person has been authorized by any Seller to make any
representation or warranty relating to any Seller or the Company or otherwise
in
connection with the transactions contemplated hereby and, if made, such
representation or warranty must not be relied upon as having been authorized
by
a Seller.
5. Tax
Matters.
(a) Tax
Returns.
(i) The
Company shall file or cause to be filed when due (taking into account all
extensions properly obtained) all Tax Returns that are required to be filed
by
or with respect to the Company for taxable years ending on or before the Closing
Date and (ii) the Buyer shall have the sole and exclusive authority to file
or
cause to be filed when due all Tax Returns that are required to be filed by
or
with respect to the Company for taxable years or periods ending after the
Closing Date. Buyer shall remit (or cause to be remitted) any Taxes due in
respect of all Tax Returns described in the previous sentence.
(ii) Prior
to
the filing of any Tax Return in Section 5(a)(i) that relates to a Tax period
(or
portion thereof) that ends on or prior to the Closing Date that was not filed
before the Closing Date, the Buyer shall provide the Sellers with a
substantially final draft of such tax Return at least fifteen (15) business
days
prior to the due date for such Tax Return. The Sellers shall notify the Buyer
of
any objections that the Sellers may have to any items set forth in any such
draft tax Return, and the Buyer and the Sellers shall agree to consult and
attempt to resolve in good faith any such objection and to mutually consent
to
the filing of such Tax Return. All Tax Returns filed in accordance with this
Section 5(a) that
relate to a Tax period prior to the Closing Date shall
be
prepared and filed in a manner consistent with past practice and, on such Tax
Returns, no position shall be taken, election made or method adopted that is
inconsistent with positions taken, elections made or methods used in preparing
and filing similar Tax Returns in prior periods, except as otherwise required
by
applicable law or otherwise agreed to by the Sellers prior to the filing
thereof. Without limiting the generality of the foregoing, the parties expressly
agree that no party shall make an election under section 338 of the Code in
respect of the Company, and the Sellers shall not be liable for any Taxes
arising in respect of any such election.
(iii) The
Sellers shall pay any sales tax incurred as a result of (A) the acquisition
of
all of the assets of MediSpectra by the Company, and (B) the transactions
contemplated by this Agreement.
(b) Assistance
and Cooperation.
After
the Closing Date, each of the Sellers and the Buyer shall (and shall cause
their
respective Affiliates to):
(i) assist
the other party in preparing any Tax Returns which such other party is
responsible for preparing and filing in accordance with paragraph (b) of this
Section 5.
(ii) cooperate
fully in preparing for and conducting any audits of, or disputes with taxing
authorities regarding, any Tax Returns of the Company;
(iii) make
available to the other and to any taxing authority as reasonably requested
all
information, records, and documents relating to Taxes of the Company; and
(iv) timely
furnish the other with copies of all correspondence received from any taxing
authority in connection with any Tax audit or information request with respect
to any such taxable period.
The
parties shall retain, and the Buyer shall cause the Company to retain, all
Tax
Returns, schedules and work papers, and all material records and other documents
relating thereto with respect to the Company, until the expiration of the
statute of limitation (and, to the extent notified by any party, any extensions
thereof) with respect to the taxable years to which such Tax Returns and other
documents relate and, unless such Tax Returns and other documents are offered
and delivered to the Sellers or Buyer, as applicable, until the final
determination of any Tax in respect of such years. Any information obtained
under this Section 5 shall be kept confidential, except as may be otherwise
necessary in connection with filing any Tax Return, determining any Tax
liability or right to refund of Taxes, or in conducting or defending any audit
or other proceeding in respect of Taxes. Notwithstanding the foregoing, no
party
shall be unreasonably required to prepare any document, or determine any
information, not then in its possession in response to a request under this
Section 5(b).
6. Conditions
to Obligation to Close.
(a) Conditions
to Obligation of the Buyer.
The
obligation of the Buyer to consummate the transactions to be performed by each
of them, respectively, in connection with the Closing is subject to satisfaction
of the following conditions:
(i) the
representations and warranties set forth in Section 3(a) and Section 4 above
shall be true and correct in all material respects at the Closing Date (other
than representations and warranties made as of a specified date, which shall
be
true and correct in all material respects as of the specified date);
(ii) the
Sellers shall have performed and complied with all of their covenants hereunder
in all material respects through the Closing;
(iii) there
shall not be any final injunction, judgment, order, decree, or ruling in effect
preventing consummation of any of the transactions contemplated by this
Agreement;
(iv) the
Sellers shall have delivered to the Buyer a certificate to the effect that
each
of the conditions specified above in Section 6(a)(i)-(iii) is satisfied in
all
respects;
(v) the
Company shall have received consents, in form and substance reasonably
satisfactory to the Buyer, to the transactions contemplated hereby from the
other parties to all contracts, leases, agreements and permits to which the
Company is a party or by which the Company or any of its assets or properties
is
affected and which are specified in Section 6(a)(v) of the Disclosure Schedule
or are otherwise necessary to prevent a Material Adverse Effect;
(vi) the
Buyer
shall have received from the Sellers the following documents, certificates
and
agreements:
(A) a
certificate of good standing of the Company, issued as of a recent date by
the
Secretary of State of the State of Delaware; and
(B) a
certificate of the secretary of the Company, dated the Closing Date, in form
and
substance reasonably satisfactory to the Buyer, as to (i) no amendments to
the
Certificate of Incorporation of the Company since a specified date; (ii) the
by-laws of the Company; and (iii) the incumbency and signatures of the
authorized representatives of the Company executing this Agreement;
(vii) the
Buyer
and the Sellers shall have entered into a Lock-Up Agreement, in the form
attached hereto as Exhibit
D
(the
“Lock-Up
Agreement”);
(viii) the
Buyer
and EuclidSR Partners, L.P. shall have entered into an Observation Rights
Agreement, in the form attached hereto as Exhibit
E
(the
“Observation
Rights Agreement”);
(ix) the
Buyer, the Sellers’ Representative and the Escrow Agent shall have entered into
the Escrow Agreement;
(x) the
Sellers shall have delivered to the Buyer a “freedom-to-operate” opinion from
the Sellers’ patent counsel, in a form reasonably acceptable to the Buyer with
respect to the “LUMA” device as it relates to US Patent 5,582,168;
(xi) each
Seller shall have delivered to the Escrow Agent five (5) stock powers to endorse
the return of shares of Buyer Common Stock from the Escrow Amount, in the event
that any such shares from the Escrow Amount shall be returned to the
Buyer;
(xii) no
Seller
shall be in default under this Agreement; and
(xiii) all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
The
Buyer
may waive any condition specified in this Section 6(a) if it executes a writing
so stating at or prior to the Closing.
(b) Conditions
to Obligation of the Sellers.
The
obligation of the Sellers to consummate the transactions to be performed by
the
Sellers in connection with the Closing is subject to satisfaction of the
following conditions:
(i) the
representations and warranties set forth in Section 3(b) above shall be true
and
correct in all material respects at the Closing Date;
(ii) the
Buyer
shall have performed and complied with all of its respective covenants hereunder
in all material respects through the Closing;
(iii) there
shall not be any final injunction, judgment, order, decree, or ruling in effect
preventing consummation of any of the transactions contemplated by this
Agreement;
(iv) the
Buyer
shall have delivered to the Sellers a certificate to the effect that each of
the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in all
respects;
(v) the
Parties shall not have received any notice that any action, suit, investigation
or proceeding shall have been instituted or threatened to restrain or prohibit
or otherwise challenge the legality or validity of the transactions contemplated
hereby;
(vi) the
Sellers shall have received from the Buyer the following documents, certificates
and agreements:
(A) a
certificate of good standing of the Buyer issued as of a recent date by the
Secretary of State of the State of Minnesota; and
(B) a
certificate of the secretary of the Buyer, dated the Closing Date, in form
and
substance reasonably satisfactory to the Buyer, as to (i) no amendments to
the
Articles of Incorporation of the Buyer since a specified date; (ii) the by-laws
of the Buyer; (iii) the resolutions of the Board of Directors of the Buyer
authorizing the execution and performance of this Agreement and the transactions
contemplated hereby; and (iv) the incumbency and signatures of the authorized
representatives of the Buyer executing this Agreement;
(vii) the
Buyer
and the Sellers shall have entered into the Lock-Up Agreement;
(viii) the
Buyer
and EuclidSR Partners, L.P. shall have entered into the Observation Rights
Agreement;
(ix) the
Buyer, the Sellers’ Representative and the Escrow Agent shall have entered into
the Escrow Agreement; and
(x) all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Sellers.
The
Sellers may waive any condition specified in this Section 6(b) if the Sellers
execute a writing so stating at or prior to the Closing.
7. Survival
of Representations, Warranties and Covenants; Indemnification.
(a) Representations,
Warranties and Covenants.
The
representations, warranties and covenants contained in this Agreement shall
survive the Closing Date for a period of eighteen (18) months; provided,
the
representations and warranties set forth in Sections 4(d) and 4(l)(iii) and
the
covenants set forth in Section 8(a) hereof shall survive for the statutes of
limitation applicable thereto. Any matter as to which a claim has been asserted
by notice to the other party received before the expiration of such survival
period that is pending or unresolved at the end of such period shall continue
to
be covered by this Section 7 notwithstanding any applicable statute of
limitations (which the parties hereby waive) until such matter is finally
terminated or otherwise resolved by the parties or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and
paid.
(b) Indemnification
by the Sellers. In
the
event any Seller breaches or has breached any of its representations and
warranties or any of its covenants contained herein, and provided that the
Buyer
makes a written claim for indemnification against such Seller pursuant to
Section 8(g) below within the survival period, subject to the limitations set
forth below, such Seller shall indemnify, defend and hold harmless the Buyer
from and against any and all liabilities, penalties, demands, claims, actions
and causes of actions, suits, obligations, encumbrances, losses, damages, costs,
and expenses (including reasonable attorneys’ fees), whether or not involving a
third-party claim (collectively, “Losses”),
arising out of, relating to or resulting from (a) any breach of a
representation or warranty of such Seller contained in this Agreement or (b)
any
failure by such Seller to perform or otherwise fulfill any covenant, provision,
undertaking or other agreement or obligation hereunder and any and all actions,
suits, proceedings, claims, or demands incident thereto or to such
indemnification.
(c) Indemnification
by Buyer.
In the
event the Buyer breaches or has breached any of its representations and
warranties contained herein, and provided that the Sellers make a written claim
for indemnification against the Buyer pursuant to Section 8(g) below within
the
survival period, subject to the limitations set forth below, the Buyer
shall
indemnify, defend and hold harmless the Sellers from and against any and all
Losses, arising out of, relating to or resulting from (a) any breach of a
representation or warranty of the Buyer contained in this Agreement; or (b)
any
failure by the Buyer to perform or otherwise fulfill any covenant, provision,
undertaking or other agreement or obligation hereunder and any and all actions,
suits, proceedings, claims, or demands incident thereto or to such
indemnification.
(d) Certain
Limitations.
The
indemnification provided for in Sections 7(a) and 7(b) shall be subject to
the
following limitations:
(i) The
aggregate of the sum of indemnification obligations of the Sellers under Section
7(b) shall be limited to the Buyer Common Stock constituting the Escrow Amount;
provided,
however,
that in
the case of fraud or a breach of the representations and warranties set forth
in
Sections 3(a)(i), 3(a)(ii), 3(a)(iv), 4(a), 4(b),4(d) and 4(l)(iii) the
indemnification obligations of the Sellers under Section 7(b) shall be limited
to the value of the entire Purchase Price as of the Closing Date.
(ii) The
aggregate of the sum of indemnification obligations of the Buyer under Section
7(c) shall be limited to the value of the Buyer Common Stock constituting the
Escrow Amount, valued as of the Closing Date; provided,
however,
that in
the case of fraud or a breach of the representations and warranties set forth
in
Sections 3(b)(i) - (v), the indemnification obligations of the Buyer under
Section 7(c) shall be limited to the entire value of the Purchase Price as
of
the Closing Date.
(iii) Notwithstanding
anything to the contrary, with respect to any representation, warranty,
undertaking, agreement or obligation of the Company, each Seller’s liability in
respect of any Losses out of any breach or failure indemnified hereunder in
respect thereof shall be limited to such Seller’s proportionate share of such
Losses determined according to the amount of Purchase Price actually received
by
such Seller. The Buyer hereby covenants not to make a claim against any Seller
for Losses with respect to any breach or failure in respect of any
representation, warranty, undertaking, agreement or obligation of the Company
indemnified hereunder in excess of such Seller's proportionate share determined
according to the amount of Purchase Price actually received by such Seller.
(iv) No
Party
shall be entitled to recover from any other Party hereunder for the same Loss
more than once.
(v) Neither
the
Buyer nor a Seller, as the case may be, shall be entitled to indemnification
for
any breach of a representation or warranty hereunder if Buyer or Seller, as
applicable, had actual knowledge of such breach on or before Closing.
(vi) Notwithstanding
anything to the contrary, with respect to any representation, warranty,
undertaking, agreement or obligation of a particular Seller hereunder, as
opposed to the Company, the Seller making such representation or warranty,
or subject to such undertaking, agreement or obligation, shall be solely
liable in respect of any Losses indemnified hereunder in respect of any
Losses arising out of any breach or failure. Buyer hereby covenants, with
respect to any representation, warranty, undertaking, agreement or obligation
of
a particular Seller hereunder, as opposed to the Company, not to make a
claim against any Seller for Losses with respect to any breach or failure in
respect thereof other than against the particular Seller making such
representation or warranty, or subject to such undertaking, agreement or
obligation.
(vii) In
no
event shall Losses include any special, punitive, indirect, incidental or
consequential damages whatsoever.
(e) 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 7, 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 is actually and materially
prejudiced thereby.
(ii) Any
Indemnifying Party will have the right to participate in and, if it so chooses,
assume the defense of the Third Party Claim with counsel of his, her or its
choice reasonably satisfactory to the Indemnified Party at any time within
fifteen (15) days after the Indemnified Party has given notice of the Third
Party Claim; provided,
however,
that
the Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and provided
further
that the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim. The Indemnifying Party
shall be liable for the fees and expenses of counsel employed by the Indemnified
Party for any period during which the Indemnifying Party has failed to assume
the defense thereof.
(iii) So
long
as the Indemnifying Party has assumed and is conducting the defense of the
Third
Party Claim in accordance with Section 7(e)(ii) above, (A) the Indemnifying
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
Indemnified Party (not to be withheld unreasonably) unless the judgment or
proposed settlement involves only the payment in full of money damages by one
or
more of the Indemnifying Parties, does not impose an injunction or other
equitable relief upon the Indemnified Party, there is no finding or admission
of
any violation of applicable laws or any violation of the rights of any Person
and the Indemnified Party shall have no liability with respect to such
settlement and (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.
(f) Exclusive
Remedy and Recourse.
(1)
Except in the case of fraud or willful misconduct, the Buyer and each Seller
acknowledges and agrees that the foregoing indemnification provisions in this
Section 7 shall be the exclusive remedy of the Buyer and each Seller with
respect to the Company, this Agreement and the transactions contemplated by
this
Agreement and (2) in the case of fraud or a breach of the representations and
warranties set forth in Sections 3(a)(i), 3(a)(ii), 4(a) and 4(b), the Buyer’s
recourse for any indemnification claim under Section 7(b) hereunder shall be
to
(x) first reduce the amount of the Escrow Amount and then (y) to the extent
such
indemnification claim exceeds the value of the Escrow Amount, Buyer shall
collect directly from the Sellers, severally and not jointly for the difference
between the indemnification claim and the value of the Escrow Amount.
(g) Recovery.
The
amount of any and all Losses under this Article 8 shall be determined net of
any
amounts recovered or recoverable by the Indemnified Party under insurance
policies with respect to such Losses.
8. Miscellaneous.
(a) Covenant
to Pay MediSpectra Obligations.
In the
event that any third party makes a claim against MediSpectra, and MediSpectra
does not, in good faith, have a basis for disputing such claim, each of the
Sellers, except for ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, shall, severally and not jointly, be
obligated, and do hereby covenant, to cause such claim to be paid on behalf
of
MediSpectra.
(b) Press
Releases and Public Announcements.
No Party
shall issue any press release or
make
any public announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of each of the other Parties
which consent shall not be unreasonably withheld.
(c) No
Third-Party Beneficiaries.
Except
as expressly provided herein, this Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
(d) Entire
Agreement.
This
Agreement (including the documents referred to herein) constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements,
or representations by or among the Parties, written or oral, to the extent
they
have related in any way to the subject matter.
(e) 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 either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the Buyer and the
Sellers; provided
that the
Buyer may assign any or all of its rights duties and obligations hereunder
to
one or more of its Affiliates so long as the Buyer remains liable for all of
its
obligations hereunder.
(f) 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.
(g) 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.
(h) 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 when delivered if 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 the
Sellers, to the address set forth on Exhibit
A
hereto.
With
a
copy (which shall not constitute notice) to:
Fish
& ▇▇▇▇▇▇▇▇▇▇ P.C.
Citigroup
Center, 52nd
Floor
▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Company:
Luma
Imaging Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone:
Facsimile:
With
a
copy (which shall not constitute notice) to:
Fish
& ▇▇▇▇▇▇▇▇▇▇ P.C.
Citigroup
Center, 52nd
Floor
▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
If
to the
Buyer:
SpectraScience,
Inc.
▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
With
a
copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, P.A.
1800
5th
St.
Towers, ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇.
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
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 Parties notice
in the manner herein set forth.
(i) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York without giving effect to any choice or conflict
of
law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
(j) Jurisdiction.
Each
Party hereby irrevocably submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York or the New York
State Court sitting in New York, New York, in respect of any claim relating
to
the interpretation and enforcement of the provisions of this Agreement and
of
the documents referred to in this Agreement, or otherwise in respect of the
transactions contemplated hereby and thereby, and hereby waives, and agrees
not
to assert, as a defense in any action, suit or proceeding in which any such
claim is made that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts or that
the
venue thereof may not be appropriate or that this Agreement or any such document
may not be enforced in or by such courts.
(k) Waiver
of Jury Trial.
EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY
IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(l) Amendments
and Waivers.
No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by the Buyer and the Sellers. 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.
(m) 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.
(n) Expenses.
Except
as otherwise provided herein, the Buyer and the Sellers will each bear their
own
costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby,
and the
Sellers shall bear the costs and expenses (including legal fees and expenses)
incurred prior to the Closing by the Company in connection with this Agreement
and the transactions contemplated hereby.
(o) 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
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.
(p) Further
Assurances. Each party agrees (i) to furnish upon request to each other party
such further information, (ii) to execute and deliver to each other party such
other documents, and (iii) to do such other acts and things, all as another
party may reasonably request for the purpose of carrying out the intent of
this
Agreement.
[signature
page follows]
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date
first above written.
| BUYER: | ||
| SPECTRASCIENCE, INC. | ||
| |
|
|
| By: | ||
|
Name: ▇▇▇ ▇▇▇▇▇▇▇ |
||
| Title: CEO | ||
| SELLERS: | ||
| EUCLID PARTNERS IV, L.P. | ||
| |
By: |
Euclid Associates IV, L.P., its General Partner |
| BY: | ||
|
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||
| Title: General Partner | ||
| EUCLIDSR PARTNERS, L.P. | ||
| |
|
|
| BY: | EuclidSR Associates, L.P., its General Partner | |
|
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
||
| Title: General Partner | ||
| EUCLIDSR BIOTECHNOLOGY PARTNERS, L.P. | ||
| |
|
|
| BY: | EuclidSR Biotechnology Associates, L.P., its General Partner | |
|
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇
|
||
|
Title:
General Partner
|
||
| |
|
|
| Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ | ||
| |
|
|