MEMORANDUM OF INTENT
Exhibit 10.1
THIS MEMORANDUM OF INTENT (this “MOI”) is entered into as of the 12th day of September, 2007
by and among I-FLOW CORPORATION, a Delaware corporation (the “Seller”), INFUSYSTEM, INC., a
California corporation (the “Company”), HAPC, INC., a Delaware corporation (the “Buyer”), and
ICELAND ACQUISITION SUBSIDIARY, INC., a Delaware corporation (the “Acquisition Sub”).
1. Background. The parties to this MOI previously entered into that certain Stock
Purchase Agreement, dated as of September 29, 2006, and as thereafter amended (the “Agreement”).
Capitalized terms in this MOI that are not otherwise defined are intended to have the same meanings
given them in the Agreement.
2. Proposed Further Amendment. The parties currently intend to enter into a further
amendment to the Agreement (the “Price Amendment”). The Price Amendment is contemplated to amend
the Agreement as follows:
(a) The Purchase Price shall be reduced to:
(i) One Hundred Million Dollars ($100,000,000) (the “Base
Amount”), which will be adjusted subsequent to the Closing pursuant
to the provisions of Section 2.5 of the Agreement relating to a
Surplus Amount or Deficit Amount, as relevant; plus
(ii) the contingent right of the Seller to receive an
additional amount of up to Twelve Million Dollars ($12,000,000) (the
“Earn-Out”).
(b) The Base Amount will be payable at the Closing in a combination of cash and
a Promissory Note. The cash amount will equal Eighty-Five Million Dollars
($85,000,000) less the dollar amount (which amount may be zero) actually returned to
the shareholders of the Buyer voting against the Acquisition and requesting a return
of their investment in accordance with the terms of such investment (the “HAPC
Shareholder Return Amount”). The principal amount of the Promissory Note will equal
Fifteen Million Dollars ($15,000,000) plus the HAPC Shareholder Return Amount.
(c) The Earn-Out will provide that the Buyer will make an additional cash
payment (the “Additional Payment”) to the Seller of up to Twelve Million Dollars
($12,000,000) based on the audited consolidated net revenues of the Buyer for its
fiscal year ended December 31, 2010 (“FY 2010”). Specifically, the amount of the
Additional Payment shall be calculated as follows:
| Buyer’s FY 2010 | ||||
| Consolidated Net Revenues | Additional Payment | |||
Less than the “First Revenue Target” (as defined below) |
$ | 0 | ||
Greater than or equal to First Revenue
Target but less than “Second Revenue
Target” (as defined below)
|
$3 million plus the “Incremental Amount” (as defined below) | |||
Greater than or equal to Second
Revenue Target
|
$12 million | |||
The “First Revenue Target” shall be equal to the Company’s 2007 actual net revenues (excluding
all revenues related to the Seller’s ON-Q product line) for the entire calendar year 2007,
multiplied by 2.744 (representing a 40% compound average growth rate).
The “Second Revenue Target” shall be equal to the Company’s 2007 actual net revenues
(excluding all revenues related to the Seller’s ON-Q product line) for the entire calendar year
2007, multiplied by 3.375 (representing a 50% compound average growth rate).
The “Incremental Amount” shall equal $9 million multiplied by the ratio of (a) the Buyer’s
actual FY 2010 audited consolidated net revenues minus the First Revenue Target, divided by (b) the
Second Revenue Target minus the First Revenue Target.
3. Intention of Parties. It is expressly understood that this MOI constitutes an
expression of intention and is not binding upon, nor does it create any legal obligation of, any of
the parties to this MOI or their respective affiliates in any manner whatsoever. This MOI’s
exclusive purpose is to reflect the parties’ current intentions respecting certain matters to be
addressed in connection with their contemplated discussions and negotiations. The matters
discussed in this MOI are further subject to approvals by the Boards of Directors of all parties
and execution and delivery of mutually satisfactory definitive documentation. As a result, it is
the express intention of the parties that the Agreement remains in full force and effect and shall
not in any manner be deemed amended unless and until the Price Amendment is executed and delivered
by all of the parties to this MOI. The Buyer shall reimburse to the Seller, at the earlier of the
Closing or October 31, 2007, all out-of-pocket expenses incurred by the Seller associated with the
Price Amendment. This MOI may be executed in two or more counterparts, all of which shall be
considered one and the same instrument, and may be executed by electronic or facsimile signature,
and an electronic or facsimile signature shall constitute an original for all purposes.
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| HAPC, INC. | I-FLOW CORPORATION | |||||||
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||||
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇ | Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||||||
| Title: CEO | Title: CEO and President | |||||||
| ICELAND ACQUISITION | ||||||||
| SUBSIDIARY, INC. | INFUSYSTEM, INC. | |||||||
By:
|
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Name: ▇▇▇▇ ▇. ▇▇▇▇▇ | Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||||
| Title: CEO | Title: Chief Financial Officer and Secretary | |||||||
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