STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made this November 3, 2000
(the "Closing Date") by and between SELECT THERAPEUTICS INC., a Delaware
corporation ("Select"), and SIERRA DIAGNOSTICS, LLC, a California limited
liability company ("Buyer"). It is the intent of Select and Buyer to give
retroactive effect to the transactions described herein as of October 1, 2000
(the "Effective Date").
RECITALS
A. All of the issued and outstanding capital stock of SIERRA DIAGNOSTICS,
INC., a California corporation ("Sierra") consists of 1,404 shares of Sierra
common stock (the "Sierra Shares").
B. The Sierra Shares were acquired by Select in a transaction (the "1998
Transaction") pursuant to the terms of an agreement (the "1998 Agreement") dated
as of October 19, 1998 (the "1998 Closing Date").
C. Select has continued to own all of the Sierra Shares from the 1998
Closing Date through the Effective Date (the "Select Ownership Period").
D. Tony K. Baker ("Baker") was president of Sierra prior to the 1998
Closing Date, has remained as an employee and as president of Sierra since the
1998 Closing Date, and is a principal of Buyer; and
E. Select wishes to sell to Buyer, and Buyer wishes to purchase from
Select, the Sierra Shares upon the terms and conditions hereinafter set forth
(the "Acquisition"); and
F. The respective parties desire to make certain representations,
warranties and agreements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth herein and such other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
Article 1 Sale and Purchase of Sierra Shares.
1.1 Sale of Sierra Shares. Select does hereby sell and deliver to
Buyer, and Buyer does hereby purchase from Select, the Sierra Shares by
delivering to Buyer a stock certificate representing all of the Sierra
Shares, accompanied by a stock power executed by Select, together with all
applicable stock transfer tax stamps relative to said certificate.
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1.2 Consideration for Sierra Shares. In consideration of the sale of
the Sierra Shares to Buyer and the other terms set forth in this Agreement,
Buyer shall:
(a) execute and deliver, and cause Sierra to execute and deliver,
to Select a promissory note in the form attached hereto as Exhibit
1.2(a) (the "Acquisition Promissory Note"); and
(b) execute and deliver to Select a security agreement in the
form of Exhibit 1.2(b) (the "IP Security Agreement"); and
(c) execute and deliver, and cause Sierra to execute and deliver,
to Select the Royalty Agreement in the form of Exhibit 1.2(c) (the
"Royalty Agreement").
Further, on the Closing Date, Select shall execute and deliver to Buyer the IP
Security Agreement and the Royalty Agreement.
Article 2 Representations and Warranties of Select. Representations and
warranties of Select set forth in this Article 2 are made subject to: (i)
Buyer's acknowledgment that Baker has, since December 30, 1995, been an employee
of Sierra with direct managerial responsibility for the conduct of Sierra's
business, and that Baker is knowledgeable and familiar with the business; (ii)
the presumption of accuracy of all representations and warranties made by any
and all parties other than Select in the 1998 Agreement, and (iii) the
presumption of accuracy of all representations of Baker set forth in this
Agreement. The Buyer further acknowledges that any actual knowledge which Baker
has shall be imputed to Buyer. Subject to the foregoing, Select represents and
warrants to Buyer as follows:
2.1 Corporate Organization. To Select's knowledge, Sierra is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. Since the 1998 Closing Date, Select has
taken no actions to alter Sierra's form of organization, state of
organization, or qualification to do business under the laws of any state
or jurisdiction. Select has delivered to Buyer copies of all corporate
records of Sierra generated since the 1998 Closing Date, including minutes
of meetings held, and written consents adopted, by Sierra's shareholders
and board of directors, and corporate filings with government entities.
2.2 Capitalization. To Select's knowledge the Sierra Shares constitute
all of the issued and outstanding capital stock of Sierra. Since the 1998
Closing Date, Select has not (a) caused any additional shares of capital
stock of Sierra to be, and to Select's knowledge none have been, issued,
(b) authorized or caused to be granted, and to its knowledge there are no,
outstanding, subscriptions, options, warrants, agreements, convertible
securities, preemptive or other rights, calls, commitments or other rights
or agreements of any kind entered into since the 1998 Closing Date to
subscribe for, purchase or otherwise acquire any issued or unissued capital
stock or equity interests of Sierra. Select has not caused Sierra to be
obligated to, and to Select's knowledge Sierra is not obligated to,
purchase, redeem or otherwise acquire any securities of
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Sierra or of any other person or entity pursuant to any agreement or other
arrangement entered into by Select on behalf of Sierra since the 1998
Closing Date.
2.3 Ownership of Sierra Shares. Select is the true and lawful owner of
the Sierra Shares and has all necessary power and authority to sell the
Sierra Shares to Buyer, free and clear of all claims, liens, equities,
covenants, restrictions, security interest or other encumbrances, except
for the security interest created by the IP Security Agreement.
2.4 Subsidiaries; Joint Ventures. Since the 1998 Closing Date, Select
has not caused Sierra to acquire any capital stock or other interest in any
corporation, partnership, joint venture or other business entity.
2.5 Select Advances.
(a) During the Select Ownership Period, Select has advanced or
paid funds to Sierra and on behalf of Sierra to support Sierra's
operations (the "Select Advances"). Attached to this Agreement as
Schedule 2.5(a) is a full listing of the Select Advances through and
including the Closing Date, and no Select Advances have been made
which are not listed on Schedule 2.5(a).
(b) Except to the extent Select Advances are included or
includable in the Acquisition Promissory Note pursuant to the terms of
this Agreement, Sierra is not liable to Select for return, refund,
interest, repayment, reimbursement, or payment of or with respect to
the Select Advances.
2.6 Sierra Liabilities.
(a) Select has no knowledge of any books of account of Sierra
since the 1998 Closing Date other than the Sierra Books of Account as
dfined in Section 3.8.
(b) As of the Closing Date, except for the amount of Select
Advances included in the Acquisition Promissory Note, and obligations
which may arise in the future under the terms of the Acquisition
Promissory Note, the IP Security Agreement and the Royalty Agreement,
Sierra is not indebted to Select for any amount, and no contract or
other obligation currently exists which will result in any future
liability in any amount of Sierra to Select.
2.7 Intellectual Property.
(a) Schedule 2.7 has been prepared by Baker pursuant to Section
3.7 of this Agreement and purports to be a list of all patents issued,
assigned to or licensed by, and trademarks registered to, Sierra and
all pending applications therefor of which Baker has knowledge (the
"Scheduled IP"). Except as provided for in this Agreement, the IP
Security Agreement the Acquisition Promissory Note and the Royalty
Agreement, Select has taken no
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action to encumber Sierra's rights to the Scheduled IP. Select has not
granted, and has not caused Sierra to grant, to others any licenses of
or rights to any intellectual property of Sierra.
(b) Since the 1998 Closing Date, Select has not received, and has
no knowledge that Sierra has received, any notice of, nor has it been
(and Select has no knowledge that Sierra has been), a defendant or
plaintiff in any suit, action or proceeding which involves, any claim
that Sierra has infringed or is infringing any intellectual property
rights of others. Since the 1998 Closing Date, Select has taken no
actions, and has not caused Sierra to take any actions, which could
reasonably be expected to breach the confidentiality of the process
and formulae, research and development results and other know-how of
Sierra.
2.8 Taxes.
(a) For the purposes of this Agreement, "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means, for any entity, (i)
any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding on amounts paid to or by such entity or any
subsidiary thereof, payroll, employment, excise, severance, stamp,
occupation, property, environmental or windfall profit tax, or other
tax, together with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority responsible
for the imposition of any such tax (domestic or foreign) (a "Taxing
Authority"), and (ii) liability of such entity or any subsidiary
thereof for the payment of any amounts of the type described in (i) as
a result of being a member of an affiliated, consolidated, combined or
unitary group for any taxable period, and (ii) liability of such
entity or any subsidiary thereof for the payment of any amounts of the
type described in clauses (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
(b) For purposes of this Agreement, "Income Tax" (and, with
correlative meaning, "Income Taxes" and "Income Taxable") means only
those Taxes which are imposed upon, measured by, or assessed or
imposed with respect to net income, or alternative or add-on minimum
taxable income of Sierra by any Taxing Authority, including those
Taxes imposed under the federal corporate income tax laws or the
corporate income or franchise tax laws of any state or locality.
(c) During the Select Ownership Period, Select has been
responsible for filing of Income Tax returns for Sierra in all
applicable jurisdictions and for payment of any tax liabilities with
respect to such period. Select represents and warrants that, as of the
Closing Date, and except as stated in Section 5.1, Sierra has no
unpaid obligation or liability for Income Taxes as of the Closing Date
based on the information contained in the Sierra Books of Account.
(d) Select further represents and warrants that, except as stated
in Section 5.1:
(i) all Income Tax returns, statements, reports and forms
(including estimated Income Tax returns and reports and
information returns and reports)
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required to be filed with any Taxing Authority with respect to
any Income Taxable period which includes any portion of the
Select Ownership Period by or on behalf of Sierra (the "Sierra
Income Tax Returns") have been or will be filed when due (subject
to any extensions of such due date) and, to Select's knowledge,
based on the information contained in the Sierra Books of
Account, each Sierra Income Tax Return is materially correct and
complete as filed;
(ii) Since the 1998 Closing Date, Select has not granted any
extension or waiver of the limitation period applicable to any
Sierra Income Tax Returns;
(iii) Select does not have knowledge of any claim, audit,
action, suit, proceeding, or investigation now pending or
threatened since the 1998 Closing Date against or with respect to
Sierra in respect of any Income Tax or assessment;
(iv) Select does not have knowledge of any liens for Income
Taxes upon the assets of Sierra except liens for current Income
Taxes not yet due;
(v) To Select's knowledge, Sierra will not be required to
include any adjustment in income for any Income Tax period (or
portion thereof) ending after the Closing Date as a result of a
change in method of accounting for any Income Tax period (or
portion thereof) which includes any portion of the Select
Ownership Period or pursuant to the provisions of any agreement
entered into since the 1998 Closing Date with any Taxing
Authority with regard to the Income Tax liability of Sierra for
any Income Tax period (or portion thereof) ending on or including
the Effective Date;
(vi) Select has not caused Sierra to become, and to Select's
knowledge Sierra has not been, a member of an affiliated group
other than one of which Select was the parent, or filed or been
included in a combined, consolidated or unitary Tax return other
than one filed by Select, or a return for a group consisting
solely of its predecessors, or participated in any other similar
arrangement whereby any income, revenues, receipts, gains,
losses, deductions, credits or other Tax items of Sierra was
determined or taken into account for Tax purposes with reference
to or in conjunction with any such items of another person other
than Sierra or any such predecessor;
(vii) Select has no knowledge of any contractual obligation
entered into since the 1998 Closing Date requiring Sierra to pay
to a Taxing Authority the Income Tax obligations of, or with
respect to transactions relating to, any other person or to
indemnify any other person with respect to any Income Tax; and
(viii) Since the 1998 Closing Date, Select has not, either
directly or on behalf of Sierra, signed any letter or entered
into any agreement or arrangement in writing consenting to the
surrender or sharing of any deductions, credits or other Tax
attributes with any other person or transferred or assigned to
any other person for Tax purposes any such items.
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(e) Except as expressly set forth in this Section 2.8, Select
makes no representations or warranties with respect to Taxes other
than Income Taxes.
2.9 Agreements, etc. The term "Sierra Material Contracts" means (a)
all material agreements and other commitments of Sierra or binding on
Sierra for the purchase of any materials, supplies or inventory; (b) all
notes and agreements relating to any outstanding indebtedness of Sierra for
borrowed money, (c) all leases or other rental agreements under which
Sierra is either lessor or lessee which call for annual lease payments in
excess of U.S.$5,000 individually, (d) all other agreements (including
employment agreements, commitments and understandings, written or oral) to
which Sierra is a party or by which it or its assets or properties is bound
which require payment by Sierra of more than U.S.$5,000 in any calendar
year and which cannot be terminated by Sierra, without liability, on notice
of 30 days or less, and (e) all product liability, fire, commercial and
other insurance carried by Sierra with respect to its business and
properties. Pursuant to Section 3.6 of this Agreement, Baker has presented
Select with a list, attached hereto as Schedule 3.6, of all Sierra Material
Contracts of which Baker has knowledge (the "Known Sierra Material
Contracts"). Except for the Known Sierra Material Contracts, Select has not
entered into or caused Sierra to enter into any Sierra Material Contracts.
2.10 Resignations of Officers and Directors. All officers and
directors other than Baker have resigned from Sierra effective as of the
Closing Date, and copies of their resignations are attached as Exhibit
2.17.
2.11 Absence of Defaults. Select has received no written notice of any
material existing default by any party under any Known Sierra Material
Contract.
2.12 Compliance with Laws. Select has received no written notice that
Sierra is in violation of or has violated, in any material respect, any
applicable provisions of any laws, statutes, ordinances or regulations or
any term of any judgment, decree, injunction or order binding against it.
2.13 Questionable Payments. Since the 1998 Closing Date, Select has
not expended, or directed expenditure of, funds on behalf of Sierra for:
(i) illegal contributions, entertainment or gifts for purposes of
influencing the activities or decision making of a political official; or
(ii) illegal payments, bribes or kickbacks to any United States government
official or employee or foreign government official or employee or other
third party. No director, officer or other employee or agent of Select,
acting on behalf of Sierra, has, since the 1998 Closing Date: (i) made any
payments or provided services or other favors in the United States of
America or in any other country in order to obtain preferential treatment
or consideration by any governmental entity with respect to any aspect of
the business of Sierra; or (ii) made any political contributions which
would not be lawful under the laws of the United States and the foreign
country in which such payments were made.
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2.14 Litigation. Select has recevied no notice of any litigation,
proceeding or governmental investigation commenced or threatened, nor of
any order, injunction, decree or judgment entered, against or relating to
Sierra or its properties or business.
2.15 Finders' Fees. Neither Select nor Sierra has employed or utilized
the services of any broker, finder or other intermediary in connection with
this Agreement or the transaction contemplated by this Agreement.
2.16 Restrictions on Business Activities. No agreement, judgment,
injunction, order or decree entered into by Select or, to the knowledge of
Select binding upon Select or Sierra, has been entered since the 1998
Closing Date which has or could reasonably be expected to have the effect
of prohibiting or materially impairing (a) the ability of Sierra to conduct
its business in any geographic area or field of use, (b) any acquisition of
property by Sierra, or (c) the conduct of business by Sierra as currently
conducted or as currently proposed to be conducted by Sierra.
2.17 Accuracy of Representations and Warranties. No representation or
warranty by Select in this Agreement, and no written statement made to
Buyer by Select or Sierra or contained in any certificate or instrument
delivered or to be delivered to Buyer by Select or Sierra pursuant to this
Agreement, or in connection with the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading.
Article 3 Representations and Warranties of Buyer and Baker. Buyer and
Baker represent and warrant to Select as follows:
3.1 Organization. Buyer is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of
California and is duly authorized to carry on its business where and as now
conducted and to own, lease and operate properties as it now does.
3.2 Legal Authority, Etc.
(a) Buyer has full power and authority to enter into this
Agreement and to perform this Agreement in accordance with Its terms;
the execution, delivery and performance of this Agreement by Buyer and
the consummation of the Acquisition have been duly authorized by its
members and Buyer is not bound by any contractual or other obligation
that would be violated by the execution or performance of this
Agreement; and this Agreement is a valid and binding obligation of
Buyer enforceable in accordance with its terms; and
(b) Neither the execution and delivery of this Agreement nor the
consummation by Buyer of any of the transactions contemplated herein
nor compliance by Buyer with the terms, conditions and provisions
hereof or of any agreement or instrument contemplated hereby will (i)
conflict with, result in a breach of, or constitute an event of
default under the
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articles of organization or operating agreement of Buyer, or any
material instrument, agreement, lease, license, franchise, permit,
judgment, order, award, decree or other authorization, right, or
obligation to which Buyer is a party or any of its properties is
subject or by which they are bound, or any statute, ordinance, rule or
regulation applicable to Buyer, or (ii) require the approval, consent
or authorization of, or the making of any declaration, filing or
registration with, any third party or any foreign, federal, state or
local court, governmental authority or regulatory body.
3.3 Litigation. There is no litigation, proceeding or governmental
investigation pending or, so far as is known to Buyer, threatened, or any
order, injunction or decree outstanding, against or relating to Buyer or
any of its properties or businesses.
3.4 Finders' Fee. Buyer has not employed or utilized the services of
any broker, finder or other intermediary in connection with this Agreement
or the transactions contemplated by this Agreement.
3.5 Sierra Material Contracts. To the best of Baker's knowledge,
Schedule 3.5 sets forth a complete list of all Sierra Material Contracts
(as defined in Section 2.9) which have been in force at any time during the
Select Ownership Period (the "Known Sierra Material Contracts").
3.6 [reserved]
3.7 Sierra Intellectual Property. To the best of Baker 's knowledge,
Schedule 2.7 sets forth a complete list of all Scheduled IP.
3.8 Books of Account. All the books of account of Sierra since the
1998 Closing Date known to Baker (the "Sierra Books of Account") have been
exhibited or made available to Select and to Baker's knowledge accurately
record all material transactions of Sierra during the periods covered by
them.
Article 4 Indemnification.
4.1 Buyer Indemnification. Buyer does hereby agree to indemnify,
defend and hold Select harmless from and against any and all claims,
demands, damages, losses, injuries, liabilities, penalties, costs, expenses
(including reasonable attorneys' fees) suits, actions, investigations,
judgments and fees which may be imposed upon, incurred or suffered by or
asserted against it arising out of or in connection with any one or more of
the following:
(i) any failure to perform or comply with any covenants,
agreements, obligations or undertakings to be performed by Buyer
pursuant to this Agreement; and
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(ii) any breach of any representation or warranty made in
this Agreement, or in respect of the facts associated therewith,
by Buyer or by Baker.
4.2 Select Indemnification. Select does hereby agree to indemnify,
defend and hold harmless Buyer from and against any and all claims,
demands, damages, losses, injuries, liabilities, penalties, costs, expenses
(including reasonable attorneys' fees), suits, actions, investigations,
judgments and fees which may be imposed upon, incurred or suffered by or
asserted against it arising out of or in connection with any one or more of
the following:
(i) any failure to perform or comply with any covenants,
agreements, obligations or undertakings to be performed by Select
pursuant to this Agreement; and
(ii) any breach of any representation or warranty made in
this Agreement, or in respect of the facts associated therewith,
by Select.
4.3 Limitations.
(a) Notwithstanding any other term of this Article 4, (i) an
indemnifying party shall have no liability to any indemnified party
for any claim made under this Article 4 (a "Claim") unless a written
notice specifying the Claim in r easonable detail is provided by the
indemnified party to the indemnifying party within three months after
the Closing Date (except for any Claim arising with respect to
Select's representations pursuant to (x) Section 2.8, which Claims may
be made at any time within five years after the Closing Date, and (y)
Section 2.6 or 2.9, which claims may be made at any time within one
year after the Closing Date), and (ii) Select shall have no liability
to any indemnified party for any Claim made in respect of Article 2 of
this Agreement unless either (x) such Claim is for more than
U.S.$5,000 or (y) the sum of the aggregate amount of all prior Claims
made against Select in respect of Article 2 plus the amount of the
subject Claim exceeds U.S.$5,000; provided, however, that Select shall
only have liability under clauses (ii)(x) and (ii)(y) to the extent,
and for the amount by which, such Claim or Claims exceed U.S.$5,000.
(b) In no event shall the cumulative liability of Select as an
indemnifying party under Section 4.2 exceed the principal balance of
the Acquisition Promissory Note as of the Closing Date.
(c) Each party hereto acknowledges and agrees that, from and
after the Closing Date, its sole and exclusive remedy with respect to
any and all claims against another party hereto relating to the
subject matter of this Agreement shall be pursuant to the
indemnification provisions set forth in this Article 4, except that
nothing in this Agreement shall be deemed to constitute a waiver of
any tort claims of, or causes of action arising from, fraudulent
misrepresentation or deceit. In furtherance of the foregoing, each
party hereto hereby waives, from and after the Closing Date, to the
fullest extent permitted under applicable law, any and all rights,
claims and causes of action (other than tort claims of, or causes of
action arising from, fraudulent misrepresentation or deceit or claims
arising under Article 4 of this Agreement)
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it may have relating to the subject matter of this Agreement arising
under or based upon any federal, state, local or foreign statute, law,
ordinance, rule or regulation or otherwise.
4.4 Procedure. A party seeking indemnification shall notify the
indemnifying party within a reasonable time in writing of any action, claim
or liability in respect of which it intends to claim such indemnification,
provided that, except as provided in Section 4.3(a), the failure to give
timely notice shall not release the indemnifying party from any liability
to the extent the indemnifying party is not prejudiced thereby. The
indemnifying party shall have the right, by prompt notice to the party
seeking indemnification to assume the defense of such claim with counsel
reasonably satisfactory to the party seeking indemnification, and at the
sole cost of the indemnifying party. If the indemnifying party does not so
assume the defense of such claim, the party seeking indemnification may
assume such defense with counsel of its choice and at the sole cost of the
indemnifying party. If the indemnifying party so assumes such defense, the
party seeking indemnification may participate therein through counsel of
its choice, but at its sole cost. The party not assuming the defense of any
such claim shall render all reasonable assistance to the party assuming
such defense, and all out-of-pocket costs of such assistance shall be for
the account of the indemnifying party. No such claim shall be settled other
than by the party defending the same, and then only with the consent of the
other party, which shall not be unreasonably withheld; provided that the
party seeking indemnification shall have no obligation to consent to any
settlement of any such claim which imposes on the party seeking
indemnification any liability or obligation which cannot be assumed and
performed in full by the indemnifying party.
Article 5 Post Closing Covenants.
5.1 Tax Returns.
(a) Pre-Closing Date Returns. The parties acknowledge that Sierra
Income Tax Returns for periods after December 31, 1999 have not yet
been filed with California, federal or other Taxing Authorities.
Select agrees that it shall file Sierra Income Tax Returns for the
period from January 1, 2000 through June 30, 2000 with California,
federal and any other applicable Taxing Authorities (the "Outstanding
Select Returns"). Select at its sole cost and expense shall be
responsible for timely filing the Outstanding Select Returns and
paying all Taxes that may be owing with respect to such returns. Buyer
shall provide Select with access to books and records of Sierra, and
otherwise cooperate with Select, as reasonably necessary for Select to
satisfy its obligations under this Section.
(b) Post-Closing Date Returns. The parties acknowledge that
Sierra Tax Returns for periods after June 30, 2000 and including the
Closing Date will need to be filed with the California and United
States federal Taxing Authorities (the "Future Returns"). Buyer at its
sole cost and expense shall be responsible for timely filing the
Future Returns, which Future Returns will be filed on a stand-alone
basis (i.e., there will be no consolidated or combined reporting with
the financial results of Select or Select affiliates). Buyer shall be
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responsible for paying all Taxes that may be owing with respect to the
Future Returns, based upon the assumption that the Future Returns are
permitted to be filed on a stand-alone basis. Select shall indemnify,
defend and hold Buyer and Sierra harmless from any and all Taxes,
claims and other liabilities which may arise as a result of or in
connection with any finding that the Future Returns are not permitted
to be filed on a stand-alone basis or that, with respect to periods
prior to the Closing Date, the Future Returns are required to be filed
with any Taxing Authorities other than California or the United States
federal government. Select shall cooperate with Buyer as reasonably
necessary for Buyer to satisfy its obligations under this Section.
5.2 Patent Matters.
(a) Until payment in full by Buyer of all amounts owing under the
Acquisition Promissory Note, Select shall be entitled to pay costs and
expenses, and require Buyer and Sierra to undertake actions, which
Select reasonably determines are necessary to protect or further
Sierra' s patent rights with respect to RNA/DNA Protect (Patent No.
09/185,402) (the "Patent Work"). The parties agree to use patent
counsel at the firm of Lahive & Cockfield LLP or such other counsel as
may be mutually agreed upon by the parties, to perform the Patent
Work. Select shall reasonably advise Buyer of the undertaking of any
material Patent Work, and shall keep Buyer regularly advised of the
status of Patent Work undertaken by it.
(b) Actual out of pocket costs and expenses paid to third parties
by Select for Patent Work pursuant to Section 5.2(a), including those
paid to patent counsel and amounts paid to defend or prosecute
infringement actions ("Patent Work Advances"), may be added to the
principal balance of the Acquisition Promissory Note by Select in
accordance with the terms of that note. All Patent Work shall be
undertaken by and in the name of Sierra. All patent rights granted,
infringement action recoveries, and other rights and benefits received
with respect to any Patent Work shall be for the account of Sierra;
provided, however, that in the event Select has paid a portion of any
amount expended to prosecute or defend an infringement action and such
action results in a recovery, Select shall be entitled to that
percentage of the recovery represented by the portion of the total
amount expended on such defense or prosecution which was advanced by
Select; but further provided that Sierra or Buyer shall be given the
first opportunity to advance such expenses.
5.3 Royalty Agreement. Select shall execute, and Buyer shall cause
Sierra to execute, the Royalty Agreement.
5.4 Liquidation of Sierra. Buyer anticipates liquidation of Sierra
following the Closing Date. Select hereby consents to, and agrees to
cooperate to the extent reasonably required to effect, the assignment of
Sierra's assets to Buyer, and the assumption by Buyer of Sierra's
contractual obligations, including any obligations of Sierra to Select
created under or contemplated by this Agreement. In the event such
liquidation of Sierra has not occurred by December 31, 2000, Buyer shall
cause Sierra to execute and deliver to Select, in form acceptable to
Select's counsel, Sierra's guarantee of Buyer's payment of the Acquisition
Promissory Note.
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5.5 Tax Election. Buyer anticipates filing an election under Section
338 of the Internal Revenue Code to treat the purchase of the Sierra Shares
as a purchase of assets. Select hereby consents to, and agrees to report
the Acquisition in a manner consistent with Buyer's election under Section
338.
Article 6 Survival of Representations and Indemnity.
6.1 Survival. The representations, warranties, covenants and
indemnification agreements by the parties shall survive the Closing Date
for a period of three (3) months, provided that the representations and
warranties of Select (x) with respect to Income Taxes shall survive until
expiration of applicable statute of limitation with respect to Income Taxes
of any Taxing Authority, and (y) made in Sections 2.6 and 2.9 shall survive
the Closing Date for a period of one year.
Article 7 Miscellaneous.
7.1 Schedules. Any information furnished in a schedule to this
Agreement shall be deemed to be furnished under any other schedule which
calls for the furnishing of the same information whether or not that
information is separately stated in such other schedule.
7.2 Expenses. Each party shall bear its own expenses incurred in
connection with the negotiation and preparation of this Agreement and,
except as otherwise expressly provided in this Agreement, in connection
with all duties and obligations required to be performed by it under this
Agreement.
7.3 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instructions, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the
transactions described herein and contemplated hereby and to carry into
effect the intents and purposes of this Agreement.
7.4 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed given when
delivered personally or by reputable overnight courier or mailed by
registered or certified mail, return receipt requested, to the parties at
the following addresses (or to such other address as a party may have
specified by notice to the other parties pursuant to this provision):
(a) if to Buyer, at:
Sierra Diagnostics, LLC
21109 Longeway, #C
Sonora, California 95370
Attn: Mr. Tony K. Baker
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with a copy to:
Jeffrey B. Detwiler, Esq.
Dudnick Detwiler, Rivin & Stikker, LLP
351 California Street, 15th Floor
San Francisco, California 94104
(b) if to Select, at:
Select Therapeutics Inc.
50 O'Connor Street - Suite 300
Ottawa, Ontario KlP 6L2
CANADA
Attn: Mr. Robert Bender, Chairman
with a copy to:
Richard G. Klein, Esq.
Hofheimer Gartlir & Gross, LLP
530 Fifth Avenue
New York, New York 10036
7.5 Assignment. This Agreement is personal to each of the parties and,
except as provided in Section 5.4, may not be assigned without the written
consent of the other party.
7.6 Entire Agreement. This Agreement (with its schedules and exhibits)
contains, and is intended as, a complete statement of all the terms of the
agreements among the parties with respect to the matters provided for,
supersedes any previous agreements and understanding among the parties with
respect to those matters, and cannot be changed or terminated except by a
writing signed by the parties.
7.7 Governing Law; Consent to Jurisdiction and Service of Pro-cess.
This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of New York applicable to contracts entered
into and to be performed entirely within New York. Any legal action, suit
or proceeding arising out of or relating to this Agreement, the Acquisition
Promissory Note, the Royalty Agreement or the IP Security Agreement or the
transactions contemplated hereby and thereby may be instituted in the
federal courts of the State of New York and each party waives any objection
which such party may now or hereafter have to the laying of venue of any
such action, suit or proceeding and irrevocably submits to the jurisdiction
of any such court in any such action, suit or proceeding. Any and all
service of process and any other notice in any such action, suit or
proceeding shall be effective against any party if given by registered or
certified mail, return re-ceipt requested, or by any other means of mail
that requires a signed receipt, postage prepaid, mailed to such party as
herein provided. If for any reason such service of process by mail is
ineffective, then each party shall be deemed to
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have appointed its attorney designated in Section 7.4 as such party's
authorized agent to accept and acknowledge on such party's behalf service
of any and all process which may be served in any such action, suit or
proceeding. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or to commence
legal proceedings or otherwise proceed against any other party in any
jurisdiction other than New York.
7.8 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
7.9 Facsimile/Counterparts. This Agreement may be executed by
facsimile, and may be executed in two or more counterparts, each of which
shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
7.10 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns, and nothing in this Agreement, express
or implied, is intended
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to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
7.11 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms or provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
7.12 Attorneys' Fees. In the event of a dispute arising under this
Agreement or with respect to the Acquisition, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and court costs, with
any such fees and costs incurred in enforcing any judgement or award and
upon appeals recoverable as a separate item of costs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELECT THERAPEUTICS INC. SIERRA DIAGNOSTICS, LLC
By: By:
Robert Bender, President Tony K. Baker, Manager
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LIST OF SCHEDULES AND EXHIBITS
Exhibit 1.2(a) Acquisition Promissory Note
Exhibit 1.2(b) IP Security Agreement
Exhibit 1.2(c) Royalty Agreement
Schedule 2.5(a) Select Advances
Schedule 2.7 Scheduled IP
Schedule 3.5 Known Sierra Material Contracts
Schedule 3.6 Effective Date Liabilities
<PAGE>
SCHEDULE 2.5(a)
SELECT ADVANCES
U.S.$1,394,400.00
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SCHEDULE 2.7
SCHEDULED IP
1. Methods and reagents for Preservation of DNA in bodily Fluids
Inventor: Tony Baker
Patent Application Serial Number 09/185,402 United States
Patent Application Number 98962024.0-2116 European Patent Office
2. Rapid assay for Neisseria Gonorrhea
Inventor: Tony Baker
Patent Application Serial Numbers 60/130,818 and 60/131,330 United States
3. Test Method for the Laboratory Diagnosis and Test Strain of Neisseria
Gonorrhea
Inventor: Leonard Zubrzycki
Patent Number 4,446,230 United States
Patent Number 0081078 European Patent Office
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SCHEDULE 3.5
KNOWN SIERRA MATERIAL CONTRACTS
<TABLE>
<S> <C>
Outstanding indebtedness
______ Temple University - annual royalty payment for 2000 $10,000.00
Sanofi Settlement $45,901.46
Leases
______ Rent - H&H Properties $4,611.00/month
Lease expires 2/01
Insurance
______ Liability Insurance - Chubb Policy #6965 7463 6962 $846.10/month
Effective 5/6/00 - total policy amount $8,461.00
Distribution Agreement
______ Genelabs (Kenya) Ltd executed 10/26/99
</TABLE>
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SCHEDULE 3.6
EFFECTIVE DATE LIABILITIES
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