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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) - JUNE 28, 1999
CAPRIUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11914 22-2457487
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
ONE PARKER PLAZA, FORT LEE, NEW JERSEY 07024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE - (201) 592-8838
46 JONSPIN ROAD, WILMINGTON,
MASSACHUSETTS 01887 (FORMER NAME OR FORMER
ADDRESS, IF CHANGED SINCE LAST REPORT)
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 28, 1999, Caprius, Inc., a Delaware corporation ("Caprius"),
acquired Opus Diagnostics Inc., a Delaware corporation ("Opus"), through a
merger (the "Merger") between Opus and Caprius' newly-formed wholly-owned
subsidiary Caprius Merger Sub Inc., a Delaware corporation ("Merger Sub"). Opus
was recently formed by George Aaron ("Aaron") and Jonathan Joels ("Joels") to
engage in the business of manufacturing and selling medical diagnostics assays
and kits. Upon the Merger, the Opus stockholders received an aggregate of
6,178,978 shares of Caprius Common Stock, par value $.01 per share. A copy of
the Merger Agreement among Caprius, Opus, Merger Sub, Aaron and Joels is filed
as Exhibit 2.1 and is incorporated herein by reference.
The Merger was consummated coincident with the closing of an Asset Purchase
Agreement (the "Purchase Agreement") between Opus and Oxis Health Products Inc.,
a Delaware corporation ("Oxis"). The purchase price paid by Opus consisted of
$500,000 in cash, a secured promissory note (the "Note") in the principal amount
of $565,000 (to be adjusted based upon the closing inventory) payable on
November 30, 1999, and a warrant granting Oxis the right to acquire up to 10%
equity interest in Opus (on a pre-Merger basis) (the "Warrant"), exercisable
after six months for a period of five years. Upon the Merger, the Warrant became
exercisable for 617,898 shares of Caprius Common Stock at an exercise price
equal to 80% of the average bid and asked prices for the Common Stock for the
five trading days immediately preceding December 28, 1999. A copy of the
Purchase Agreement, the Note and the Warrant are filed as Exhibits 2.2, 10.1,
and 10.2, respectively, and are incorporated herein by reference.
Opus produces and sells 14 diagnostic assays, controls and calibraters for
therapeutic drug monitoring which are used on the Abbott TDx instrument.
Pursuant to the Purchase Agreement, Opus acquired from Oxis the assets relating
to its reagent patent, trademark and distribution network for the therapeutic
drug monitoring assay business (the "TDM Business"). Additionally, pursuant to a
Services Agreement, Oxis will manufacture the products of the TDM Business of
Opus for 15 months commencing June 30, 1999. A copy of the Services Agreement is
filed as Exhibit 10.3 and is incorporated herein by reference.
Opus intends to expand the number of assays offered and increase product
distribution both domestically and abroad. Further, Opus intends to acquire
other therapeutic drug monitoring products and growth factors.
Upon the Merger, four members of the Caprius Board of Directors resigned,
the number of directors was decreased to six persons, and Messrs. Aaron and
Joels were elected members of the Caprius Board of Directors (the "Board"). The
Board elected Mr. Aaron as President and Chief Executive Officer, Mr. Joels as
Treasurer, Chief Financial Officer and Secretary, and Elliott Koppel as Vice
President-Sales and Marketing. From 1992 to November 1997, Mr. Aaron had served
on the Board of Caprius.
Caprius also entered into Severance and Consulting Agreements with Jack
Nelson ("Nelson") and Enrique Levy ("Levy"). Mr. Nelson's employment as the
Chairman and Chief Executive Officer of Caprius was terminated, and he will
serve as a consultant of Caprius for a period of one year and remain a Director
of Caprius until the next annual meeting of stockholders. Pursuant to his
Consulting Agreement, Mr. Nelson will receive $258,500 representing the
"termination" payment under his Employment Agreement upon the earlier of
December 28, 1999 or the consummation of a Business Transaction (as defined
therein), and he received 125,000 shares of Caprius Common Stock plus accrued
compensation. A copy of the Severance and Consulting Agreements for Messrs.
Nelson and Levy are filed as Exhibits 10.4 and 10.5, respectively, and are
incorporated herein by reference.
Mr. Levy's employment as President and Chief Operating Officer of Caprius
was terminated and he will serve as a consultant of Caprius for a period of one
year and shall remain a Director of Caprius until the next annual meeting of
stockholders. Pursuant to his Consulting Agreement, Mr. Levy will receive
$247,500 representing the "termination" payment under his Employment Agreement
upon the earlier of December 28, 1999 or the consummation of a Business
Transaction (as defined therein), and he received 100,000 shares of Caprius
Common Stock plus accrued compensation.
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<PAGE>
Caprius terminated its lease in Fort Lee, New Jersey, and moved to premises
in Fort Lee, New Jersey occupied by Opus.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Pursuant to paragraph (a)(4), the financial statements for the business
acquired will be filed within 60 days of July 13, 1999 the date that this report
was due to be filed.
(b) Pro Forma Financial Statements
Pursuant to paragraph (a)(4), the unaudited pro forma financial statements
of Caprius giving effect to the Merger will be filed within 60 days of July 13,
1999 the date that this report was due to be filed.
(c) Exhibits
2.1 Agreement and Plan of Merger among Opus, Aaron, Joels, Caprius and
Merger Sub, dated as of June 28, 1999.
2.2 Asset Purchase Agreement among Opus, Oxis and Oxis International Inc.
(solely for the purposes of Article 10 thereof), dated as of June 28,
1999.
3.1 Certificate of Merger filed on June 28, 1999 with the Secretary of
State of the State of Delaware.
10.1 Secured Promissory Note of Opus in the initial principal amount of
$565,000 to the order of Oxis, dated June 28, 1999.
10.2 Warrant issued to Oxis to Purchase Shares of Common Stock of Opus,
dated June 28, 1999.
10.3 Services Agreement between Opus and Oxis, dated as of June 30, 1999.
10.4 Severance and Consulting Agreement between Caprius and Nelson, dated
as of June 28, 1999.
10.5 Severance and Consulting Agreement between Caprius and Levy, dated as
of June 28, 1999.
99 Press Release, dated June 28, 1999.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPRIUS, INC.
By: /s/ George Aaron
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Name: George Aaron
Title: President
Dated: July 1, 1999
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<PAGE>
Exhibit Index
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Exhibit Description
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2.1 Agreement and Plan of Merger among Opus, Aaron, Joels, Caprius
and Merger Sub dated as of June 28, 1999.
2.2 Asset Purchase Agreement among Opus, Oxis and Oxis International
Inc. (solely for the purposes of Article 10 thereof) dated as of
June 28, 1999.
3.1 Certificate of Merger, filed on June 28, 1999 with the Secretary
of State of the State of Delaware.
10.1 Secured Promissory Note of Opus in the initial principal amount
of $565,000 to the order of Oxis dated June 28, 1999.
10.2 Warrant issued to Oxis to Purchase Shares of Common Stock of Opus
dated June 28, 1999.
10.3 Services Agreement between Opus and Oxis dated as of June 30,
1999.
10.4 Severance and Consulting Agreement between Caprius and Nelson
dated as of June 28, 1999.
10.5 Severance and Consulting Agreement between Caprius and Levy dated
as of June 28, 1999.
99 Press Release, dated June 28, 1999.
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
OPUS DIAGNOSTICS INC.,
GEORGE AARON,
JONATHAN JOELS,
CAPRIUS, INC.
and
CAPRIUS MERGER SUB, INC.
Dated as of June 28, 1999
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<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1. TERMS OF THE MERGER.............................................. 1
Section 1.1. The Merger................................................ 1
Section 1.2. Effective Time............................................ 2
Section 1.3. Merger Consideration...................................... 2
Section 1.4. Stockholders' Rights upon Merger.......................... 2
Section 1.5. Surrender and Exchange of Shares.......................... 3
Section 1.6. Certificate of Incorporation and Bylaws................... 4
Section 1.7. Directors and Officers.................................... 4
Section 1.8. Other Effects of Merger................................... 4
Section 1.9. Tax-Free Reorganization................................... 4
Section 1.10. Additional Actions........................................ 4
SECTION 2. REPRESENTATIONS AND WARRANTIES................................... 5
Section 2.1. Representations and Warranties of the Stockholders........ 5
Section 2.1.1. Organization of the Company............................... 5
Section 2.1.2. Authority of Stockholders................................. 5
Section 2.1.3. Title to Company Shares................................... 5
Section 2.1.4. Capitalization of the Company............................. 5
Section 2.1.5. Litigation................................................ 6
Section 2.1.6. Consents.................................................. 6
Section 2.1.7. No Violations............................................. 6
Section 2.1.8. Other Agreements.......................................... 7
Section 2.1.9. Incorporation of Representations and Warranties
from the Asset Purchase Agreement......................... 7
Section 2.1.10. Brokers................................................... 7
Section 2.1.11. Subsidiaries.............................................. 7
Section 2.1.12. Assets and Liabilities.................................... 7
Section 2.1.13. Investment Intent; Status................................. 7
Section 2.1.14. Restricted Securities..................................... 7
Section 2.2. Representations and Warranties of Purchaser............... 8
Section 2.2.1. Organization.............................................. 8
Section 2.2.2. Authorization............................................. 8
Section 2.2.3. Valid Issuance of Securities.............................. 9
Section 2.2.4. Capitalization............................................ 9
Section 2.2.5. Litigation................................................ 9
Section 2.2.6. Consents................................................. 10
Section 2.2.7. No Violations............................................ 10
Section 2.2.8. SEC Documents; Financial Statements...................... 10
Section 2.2.9. Absence of Certain Changes or Events..................... 11
Section 2.2.10. No Undisclosed Liabilities............................... 11
Section 2.2.11. Compliance with Laws..................................... 11
Section 2.2.12. Contracts................................................ 11
Section 2.2.13. Employee Matters......................................... 12
Section 2.2.14. Brokers.................................................. 12
Section 2.2.15. Fairness Opinion......................................... 12
Section 2.2.16. Takeover Statutes........................................ 12
SECTION 3. CERTAIN AGREEMENTS OF THE PARTIES............................... 13
Section 3.1. Covenants of the Sellers................................. 13
Section 3.2. Covenants of Purchaser................................... 13
Section 3.3. Approvals, Etc........................................... 13
Section 3.4. Stockholder Approval..................................... 14
Section 3.5. No Solicitation.......................................... 14
Section 3.6. Publicity................................................ 14
Section 3.7. Modification of Asset Purchase Agreements................ 14
Section 3.8. Investigation and Confidentiality........................ 14
Section 3.9. Appointment of Directors................................. 15
Section 3.10. Indemnification; Insurance............................... 15
Section 3.11. Acknowledgment Under Oxis Warrant........................ 17
SECTION 4. CLOSING CONDITIONS.............................................. 17
Section 4.1. Conditions to Obligation of the Purchaser................ 17
Section 4.1.1. Stockholder Approval..................................... 17
Section 4.1.2. Stockholders' Representations and Warranties
Complete and Correct..................................... 17
Section 4.1.3. Representations and Warranties of Oxis Complete
and Correct.............................................. 17
Section 4.1.4. Compliance with this Agreement........................... 17
Section 4.1.5. Supporting Documents..................................... 17
Section 4.1.6. Oxis Purchase Closing.................................... 18
Section 4.1.7. Material Adverse Change.................................. 18
Section 4.1.8. Illegality, Etc.......................................... 18
Section 4.1.9. Employment Agreements.................................... 18
Section 4.2. Conditions to Obligation of the Sellers.................. 18
Section 4.2.1. Compliance with this Agreement........................... 19
Section 4.2.2. Purchaser's Representations and Warranties
Complete and Correct..................................... 19
Section 4.2.3. Supporting Documents..................................... 19
Section 4.2.4. Oxis Purchase Closing.................................... 20
Section 4.2.5. Material Adverse Change.................................. 20
Section 4.2.6. Illegality, Etc.......................................... 20
Section 4.2.7. Employment Agreements.................................... 20
SECTION 5. TERMINATION..................................................... 20
Section 5.1. Termination.............................................. 20
Section 5.2. Effect of Termination.................................... 21
SECTION 6. MISCELLANEOUS................................................... 21
Section 6.1. Expenses................................................. 21
Section 6.2. Survival of Agreements....................................21
Section 6.4. Parties in Interest.......................................23
Section 6.5. Notices.................................................. 23
Section 6.6. Governing Law............................................ 24
Section 6.7. Entire Agreement......................................... 24
Section 6.8. Counterparts............................................. 24
Section 6.9. Amendments............................................... 24
Section 6.10. Severability............................................. 24
Section 6.11. Titles and Subtitles..................................... 24
Section 6.12. Further Assurances....................................... 25
<PAGE>
SCHEDULE
NUMBER SCHEDULE NAME
2.1.4 Agreements to Acquire Company Shares
2.1.12 Company Assets and Liabilities
2.2.4 Agreements to Acquire Purchaser Shares
2.2.5 Purchaser Litigation
2.2.9 Purchaser Material Changes
2.2.13 Purchaser Employee Matters
3.9 Appointed Directors
EXHIBIT EXHIBIT NAME
A Exchange of Shares
B Form of Certificate of Incorporation of the Company
Immediately Following the Effective Time
<PAGE>
This Agreement and Plan of Merger (this "Agreement") is made and entered
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into as of June 28, 1999, by and among Opus Diagnostics Inc., a Delaware
corporation (the "Company"), George Aaron ("Aaron"), Jonathan Joels ("Joels" and
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together with Aaron, the "Stockholders"), Caprius, Inc., a Delaware corporation
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("Purchaser"), and Caprius Merger Sub, Inc., a Delaware corporation and a wholly
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owned subsidiary of Purchaser ("Merger Sub").
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RECITALS:
WHEREAS, the Stockholders own an aggregate of 20,000 shares (the "Company
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Shares") of the common stock, par value $.01 per share (the "Company Stock"), of
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the Company, which Company Shares constitute all of the issued and outstanding
shares of capital stock of the Company; and
WHEREAS, the respective Boards of Directors of the Company, Merger Sub and
Purchaser, declaring its advisability, have approved the merger (the "Merger")
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of Merger Sub with and into the Company in accordance with the laws of the State
of Delaware and the provisions of this Agreement; and
WHEREAS, the Merger is intended to be consummated in connection with, and
contingent upon, the acquisition by the Company of the TDM Business (as such
term is defined in the Asset Purchase Agreement, dated as of June 28, 1999 (as
the same may be amended or supplemented in accordance with the terms of this
Agreement, the "Asset Purchase Agreement"), between the Company and Oxis Health
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Products, Inc. ("Oxis") of Oxis (the "Oxis Purchase"), all pursuant to the
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Asset Purchase Agreement; and
WHEREAS, the Stockholders, Merger Sub and Purchaser desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
SECTION 1. TERMS OF THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions of
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this Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "Delaware Code"). At the Effective Time (as defined
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in Section 1.2 hereof), upon the terms and subject to the conditions of this
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Agreement, Merger Sub shall be merged with and into the Company in accordance
with the Delaware Code and the separate existence of Merger Sub shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall continue its corporate existence under the laws
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of the State of Delaware as a subsidiary of Purchaser. The parties shall prepare
and execute a certificate of merger (the "Certificate of Merger") in order to
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comply in all respects with the requirements of the Delaware Code and with the
provisions of this Agreement.
Section 1.2. Effective Time. The Merger shall become effective at the time
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of the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the applicable provisions of the Delaware Code or at
such later time as may be specified in the Certificate of Merger. The
Certificate of Merger shall be filed as soon as practicable after all of the
conditions set forth in this Agreement have been satisfied or waived by the
party or parties entitled to the benefit of the same. The time of such filing
and the place where the closing of the Merger (the "Closing") shall occur shall
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be the date the Oxis Purchase is consummated in accordance with the terms and
conditions of the Asset Purchase Agreement at the offices of Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York 10019, respectively, or at
such other date and location as may be agreed upon between Purchaser and the
Company. The time when the Merger shall become effective is herein referred to
as the "Effective Time" and the date on which the Effective Time occurs is
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herein referred to as the "Closing Date."
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Section 1.3. Merger Consideration. (a) Subject to the provisions of this
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Agreement and any applicable backup or other withholding requirements, each of
the Company Shares, as of the Effective Time shall be converted into the right
to receive, and there shall be issued as hereinafter provided, in exchange for
each of the Company Shares, 308.9489 shares (the "Exchange Ratio") of the common
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stock, par value $.01 per share (the "Purchaser Stock"), of Purchaser (the
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"Merger Consideration").
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(b) Each share of Company Stock held in the treasury of the Company shall
be cancelled as of the Effective Time and no Merger Consideration shall be
payable with respect thereto.
(c) Subject to the provisions of this Agreement, at the Effective Time,
each share of Merger Sub common stock outstanding immediately prior to the
Merger shall be converted, by virtue of the Merger and without any action on the
part of the holder thereof, into one share of the common stock of the Surviving
Corporation (the "Surviving Corporation Common Stock"), which shares of the
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Surviving Corporation Common Stock shall constitute all of the issued and
outstanding capital stock of the Surviving Corporation and shall be owned by
Purchaser.
Section 1.4. Stockholders' Rights upon Merger. Upon consummation of the
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Merger, the certificates which theretofore represented the Company Shares (the
"Certificates") shall cease to represent any rights with respect thereto, and,
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subject to applicable law and this Agreement, shall only represent the right to
receive the Merger Consideration.
Section 1.5. Surrender and Exchange of Shares. (a) On the Closing Date and
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after the Effective Time, each Stockholder shall surrender and deliver to
Purchaser, the Certificates owned by such Stockholder, duly endorsed in blank
for transfer or accompanied by appropriate powers duly executed in blank. Upon
such surrender and delivery, each Stockholder shall receive a stock certificate
in definitive form, registered in the name of such Stockholder, representing the
number of shares of Purchaser Stock into which such Stockholder's Company Shares
have been converted pursuant to this Agreement. Unless provided otherwise in
this Agreement, each Stockholder will deliver such Certificates and receive a
certificate representing such shares of Purchaser Stock, as is set forth on
Exhibit A hereto opposite the name of such Stockholder. Until surrendered and
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exchanged pursuant to this Section 1.5(a), each outstanding Certificate after
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the Effective Time shall be deemed for all purposes to evidence the right to
receive that number of shares of Purchaser Stock into which the Company Shares
have been converted pursuant to this Agreement; provided, however, that no
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dividends or other distributions, if any, in respect of the shares of Purchaser
Stock, declared after the Effective Time and payable to holders of record after
the Effective Time, shall be paid to the holders of any unsurrendered
Certificates until such Certificates are surrendered and delivered as provided
herein. Subject to applicable law, after the surrender and exchange of
Certificates, the record holders thereof will be entitled to receive any such
dividends or other distributions without interest thereon, which theretofore
have become payable with respect to the number of shares of Purchaser Stock for
which such Certificates were exchangeable. Holders of any unsurrendered
Certificates shall not be entitled to vote Purchaser Stock until such
Certificates are exchanged pursuant to this Agreement.
(b) At the Effective Time, the stock transfer books of the Company shall be
closed and no transfer of Company Shares shall be made thereafter, other than
transfers of Company Shares that have occurred prior to the Effective Time. In
the event that, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be cancelled and exchanged for shares of
Purchaser Stock as provided in Section 1.3 hereof.
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(c) If consideration in respect of Company Shares is to be made to a person
other than the person in whose name a Certificate is registered, it shall be a
condition to such payment that such Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of such payment in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the satisfaction of
Purchaser that such tax either has been paid or is not payable.
(d) Neither the Company nor Purchaser shall be liable to any holder of
Company Shares for any such shares of Purchaser Stock (or dividends or
distributions with respect thereto), delivered to a public official pursuant to
any abandoned property, escheat or similar law, rule, regulation, statute,
order, judgment or decree.
Section 1.6. Certificate of Incorporation and Bylaws. (a) Subject to
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Section 3.10 hereof, the certificate of incorporation of the Company, as in
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effect immediately prior to the Effective Time, shall be amended in the Merger
so as to read in its entirety in the form set forth as Exhibit B hereto and, as
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so amended, shall be the certificate of incorporation of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law.
(b) Subject to Section 3.10 hereof, the Bylaws of the Company, as in effect
------------
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and applicable law.
Section 1.7. Directors and Officers. Subject to Section 3.9 hereof, the
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directors and officers of Purchaser at and after the Effective Time shall be the
directors and officers, respectively, of the Surviving Corporation. If, at the
Effective Time, a vacancy shall exist on the Board of Directors or in any office
of the Surviving Corporation, such vacancy may thereafter be filled in the
manner provided by law.
Section 1.8. Other Effects of Merger. The Merger shall have all further
-----------------------
effects as specified in the applicable provisions of the Delaware Code.
Section 1.9. Tax-Free Reorganization. The parties intend that the Merger
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qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code").
----
None of the parties will knowingly take any action that would cause the Merger
to fail to qualify as a reorganization within the meaning of Section 368(a) of
the Code.
Section 1.10. Additional Actions. If, at any time after the Effective Time,
------------------
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Merger Sub or
the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of Merger Sub or the Company, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES
Section 2.1. Representations and Warranties of the Stockholders. Each of
--------------------------------------------------
the Stockholders represents and warrants to Purchaser and Merger Sub as follows:
Section 2.1.1. Organization of the Company. The Company is a corporation
---------------------------
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified to do business as a foreign
corporation and is in good standing in every jurisdiction where the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification necessary. The Company has the corporate power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including, but not
limited to, the Merger, have been duly and validly authorized by the Company's
Board of Directors and no other corporate proceedings on the part of the Company
are necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby (other than the adoption of this
Agreement by the Stockholders in accordance with the Delaware Code).
Section 2.1.2. Authority of Stockholders. This Agreement constitutes the
-------------------------
valid and legally binding obligations of such Stockholder and the Company,
enforceable against such Stockholder and the Company in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity (whether
enforcement is sought by proceedings in equity or at law).
Section 2.1.3. Title to Company Shares. Such Stockholder has good title to
-----------------------
the Company Shares to be delivered by such Stockholder, free and clear of all
charges, claims, community property interests, conditions, equitable interests,
liens, options, pledges, security interests, rights of first refusal, or
restrictions of any kind, including any restrictions on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership
(collectively, "Liens").
-----
Section 2.1.4. Capitalization of the Company. The authorized capital stock
-----------------------------
of the Company consists of 1,000,000 shares of Company Stock, of which 20,000
shares are outstanding; the shares of capital stock described above as
outstanding being all the Company Shares. The Company Shares have been duly
authorized, validly issued, fully paid and nonassessable. The Company Shares are
the sole outstanding shares of capital stock of the Company, and except for this
Agreement and as set forth on Schedule 2.1.4, there are no outstanding options,
---------------
warrants, agreements, conversion rights, preemptive rights or other rights to
subscribe for, purchase or otherwise acquire any of the Company Shares or any
unissued or treasury shares of capital stock of the Company.
Section 2.1.5. Litigation. There is no action, suit, proceeding or
----------
investigation pending or, to the knowledge of such Stockholder, currently
threatened against such Stockholder or the Company that questions the validity
of this Agreement or the right of the Stockholders or the Company to enter into,
or to consummate, the transactions contemplated hereby, or that is reasonably
likely, either individually or in the aggregate, to (i) have a material adverse
effect on the results of operations, assets, liabilities or financial condition
or (ii) impair in any material respect the ability to perform any of the
obligations or agreements hereunder or consummate the transactions contemplated
hereby, of such Stockholder or the Company (collectively, a "Company Material
----------------
Adverse Effect"), nor does such Stockholder have knowledge that there is any
- --------------
basis for any of the foregoing. Neither such Stockholder nor the Company are
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality that specifically
names such Stockholder or the Company, respectively, and as to which either
compliance or noncompliance is reasonably likely to have a Company Material
Adverse Effect.
Section 2.1.6. Consents. Assuming the accuracy of the representations and
--------
warranties of Purchaser set forth in this Agreement, no consent, approval, order
or authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority, agency or body or any other person on
the part of such Stockholder or the Company is required in connection with the
consummation of the transactions contemplated by this Agreement.
Section 2.1.7. No Violations. The execution and delivery of this Agreement,
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the consummation of the transactions contemplated hereby and compliance by such
Stockholder or the Company with any of the provisions hereof will not
(i) conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of the Company,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any material contract of such Stockholder or the Company,
(iii) result in the creation or imposition of any lien or encumbrance of any
kind upon any of the assets of the Company or (iv) contravene any law to which
the Company or its assets or properties are subject, except, in the case of
clauses (ii), (iii) and (iv) above, for any deviations from the foregoing which
would not be reasonably likely to have a Company Material Adverse Effect.
Section 2.1.8. Other Agreements. True and correct copies of the final form
----------------
of the Asset Purchase Agreement and other agreements to be executed by the
Company (or any of its affiliates) and Oxis in connection therewith (the "Asset
-----
Purchase Documents") have been furnished to Purchaser.
- ------------------
Section 2.1.9. Incorporation of Representations and Warranties from the
--------------------------------------------------------
Asset Purchase Agreement. Without qualifying any of the other representations
- ------------------------
and warranties set forth in this Agreement, the representations and warranties
of the Company set forth in Article 5 of the Asset Purchase Agreement (including
any related definitions) shall be deemed to be incorporated by reference herein
as if fully set forth herein.
Section 2.1.10. Brokers. Neither the Stockholders nor the Company has
-------
employed any investment banker, broker, finder, or intermediary in connection
with the Oxis Purchase, the Merger or the delivery of the Company Shares, and
neither the Stockholders nor the Company is under any obligation to pay any
investment banking, brokerage, finder's or similar fee or commission in
connection with such transactions.
Section 2.1.11. Subsidiaries. The Company does not own any stock of, or any
------------
equity interest in, any other entity.
Section 2.1.12. Assets and Liabilities. The Company has no assets or
----------------------
liabilities (absolute, contingent or otherwise), other than those set forth in
Schedule 2.1.12.
- ---------------
Section 2.1.13. Investment Intent; Status. The Purchaser Stock acquired by
-------------------------
such Stockholder will be acquired for investment for such Stockholder's own
account and not with a view to the resale or distribution of any part thereof,
except in compliance with the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), or an exemption therefrom. Such Stockholder is
--------------
an "accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act. Such Stockholder has not entered into any
agreement, arrangement or understanding with any other person (i) for the
purpose of acquiring, holding or disposing of the Purchaser Stock or any other
securities of Purchaser or (ii) generally in connection with the Merger or the
transactions contemplated hereby.
Section 2.1.14. Restricted Securities. Such Stockholder understands that
---------------------
the Purchaser Stock acquired by such Stockholder is characterized as "restricted
securities" under the federal securities laws inasmuch as it is being acquired
from Purchaser in a transaction not involving a public offering and that under
such laws and applicable regulations such shares may be resold without
registration under the Securities Act only in certain limited circumstances.
Such Stockholder further agrees that each certificate representing the
Purchaser Stock acquired by such Stockholder shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM REGISTRATION IS
AVAILABLE."
A certificate shall not bear such legend if the Stockholder shall have delivered
to Purchaser an opinion of counsel reasonably satisfactory to Purchaser to the
effect that the securities being sold may be publicly sold without registration
under the Securities Act.
Section 2.2. Representations and Warranties of Purchaser. Purchaser
-------------------------------------------
represents and warrants to the Stockholders that:
Section 2.2.1. Organization. Each of Purchaser and Merger Sub is a
------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Purchaser is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the character of the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified or licensed and in good standing would not be reasonably
likely to (i) have a material adverse effect on the results of operations,
assets, liabilities or financial condition or (ii) impair in any material
respect the ability to perform any of the obligations or agreements hereunder or
consummate the transactions contemplated hereby, of Purchaser and the
subsidiaries of Purchaser (each, a "Purchaser Subsidiary"), taken as a whole
--------------------
(collectively, a "Purchaser Material Adverse Effect").
---------------------------------
Section 2.2.2. Authorization. Purchaser and Merger Sub have all 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 consummation of the transactions contemplated hereby,
including, but not limited to, the Merger, have been duly and validly authorized
by the respective Boards of Directors of Purchaser and Merger Sub, as
appropriate, and no other corporate proceedings on the part of Purchaser, Merger
Sub or any Purchaser Subsidiary are necessary to authorize the execution and
delivery of this Agreement or to consummate the transactions contemplated hereby
(other than the requisite approval by the sole stockholder of Merger Sub of this
Agreement and the Merger). This Agreement has been duly and validly executed and
delivered by each of Purchaser and Merger Sub and constitutes the legal, valid
and binding agreements of Purchaser and Merger Sub, enforceable against each of
Purchaser and Merger Sub in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether enforcement is sought by proceedings in
equity or at law).
Section 2.2.3. Valid Issuance of Securities. The Purchaser Stock, when
----------------------------
issued and delivered in accordance with the terms hereof for the consideration
expressed herein, will be duly authorized, validly issued, fully paid and
nonassessable.
Section 2.2.4. Capitalization. As of the date hereof, the authorized
--------------
capital stock of Purchaser consists of 50,000,000 shares of Purchaser Stock, and
1,000,000 shares of preferred stock, par value $.01 per share. As of March 31,
1999, (a) 7,369,040 shares of Purchaser Stock were issued and outstanding, (b)
no shares of Series A Preferred Stock were issued and outstanding, (c) 27,000
shares of Series B Convertible Redeemable Preferred Stock were issued and
outstanding and (c) 22,500 shares of Purchaser Stock were issued and held in the
treasury of the Company. No other capital stock of Purchaser is authorized or
issued. All issued and outstanding shares of the capital stock of Purchaser are
duly authorized, validly issued, fully paid and non-assessable. Except as set
forth in Schedule 2.2.4 or as otherwise contemplated by this Agreement, as of
--------------
the date hereof, there are no outstanding rights, subscriptions, warrants, puts,
calls, unsatisfied preemptive rights, options or other agreements of any kind
relating to any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of Purchaser, and
there is no authorized or outstanding security of any kind convertible into or
exchangeable for any such capital stock or other security.
Section 2.2.5. Litigation. Except as set forth on Schedule 2.2.5, there is
---------- --------------
no action, suit, proceeding or investigation pending or, to the knowledge of
Purchaser, currently threatened against Purchaser that questions the validity of
this Agreement or the right of Purchaser to enter into, or to consummate, the
transactions contemplated hereby, or that is reasonably likely, either
individually or in the aggregate, to have a Purchaser Material Adverse Effect,
nor does Purchaser have knowledge that there is any basis for any of the
foregoing. Purchaser is not a party or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality that specifically names Purchaser, and as to which either
compliance or noncompliance is reasonably likely to have a Purchaser Material
Adverse Effect. Except as set forth on Schedule 2.2.5, there has not been, since
--------------
June 1, 1998, (i) any settlement by Purchaser of an action, suit, proceeding or
investigation naming Purchaser as a party, and (ii) any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality that
specifically named Purchaser.
Section 2.2.6. Consents. Assuming the accuracy of the representations and
--------
warranties of the Stockholders set forth in this Agreement, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority, agency or
body or any other person on the part of Purchaser is required in connection with
the consummation of the transactions contemplated by this Agreement.
Section 2.2.7. No Violations. Assuming the accuracy of the representations
-------------
and warranties of the Stockholders set forth in this Agreement, the execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and compliance by Purchaser or Merger Sub with any of the
provisions hereof will not (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws or other governing
instruments of Purchaser, Merger Sub or any of the Purchaser Subsidiaries, (ii)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any Purchaser Material Contract (as hereinafter defined), (iii) result in the
creation or imposition of any lien or encumbrance of any kind upon any of the
assets of Purchaser or any Purchaser Subsidiary or (iv) contravene any law to
which Purchaser or any Purchaser Subsidiary or its or any of their respective
assets or properties are subject, except, in the case of clauses (ii), (iii) and
(iv) above, for any deviations from the foregoing which would not be reasonably
likely to have a Purchaser Material Adverse Effect.
Section 2.2.8. SEC Documents; Financial Statements. (a) Purchaser has
-----------------------------------
timely filed all reports required to be filed by it with the Securities and
Exchange Commission (the "SEC") since October 1, 1997 pursuant to the Securities
---
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
------------
1933 (the "Securities Act") and the rules and regulations thereunder
--------------
(collectively, together with any other reports or filings made by Purchaser
after the date hereof and on or prior to the Closing Date with the SEC pursuant
to the requirements of the Securities Act or the Exchange Act or the rules and
regulations thereunder, the "SEC Documents"). As of their respective dates, the
-------------
SEC Documents complied (or, as to SEC Documents filed after the date hereof,
will comply) in all material respects with the requirements of the Exchange Act,
the Securities Act and the rules and regulations of the SEC promulgated
thereunder. Except to the extent that information contained in any SEC Document
has been revised or superseded by a later filed SEC Document (which was filed
prior to the date of this Agreement), none of the SEC Documents contains (or, as
to SEC Documents filed after the date hereof, will contain) any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The financial statements of Purchaser included in the SEC Documents
comply (or, as to SEC Documents filed after the date hereof, will comply) as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles, except, in
the case of unaudited statements as permitted by Form 10-Q, applied on a
consistent basis during the periods involved and fairly present the consolidated
financial position of Purchaser and its subsidiaries as of the date thereof and
the consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
Section 2.2.9. Absence of Certain Changes or Events. Except as set forth on
------------------------------------
Schedule 2.2.9 hereto, since March 31, 1999, through the date of this Agreement,
- --------------
there has not been: (i) any event that has had or would reasonably be expected
to have a Purchaser Material Adverse Effect, (ii) any declaration, payment or
setting aside for payment of any dividend or other distribution or any
redemption or other acquisition of any shares of capital stock or securities of
Purchaser by Purchaser, (iii) any material damage or loss to any material asset
or property of Purchaser, whether or not covered by insurance, or (iv) any
change by Purchaser in accounting principles or practices.
Section 2.2.10. No Undisclosed Liabilities. Except for those liabilities
--------------------------
that are fully reflected or reserved against on the consolidated balance sheet
of Purchaser included in its March 31, 1999 Form 10-Q and for liabilities
incurred in the ordinary course of business consistent with past practice, since
March 31, 1999, neither Purchaser nor any Purchaser Subsidiary has incurred any
liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that, either individually or in the
aggregate, has had or will have, a Purchaser Material Adverse Effect.
Section 2.2.11. Compliance with Laws. The business of Purchaser and each
--------------------
Purchaser Subsidiary has been operated in compliance with all laws applicable
thereto, except for any instances of non-compliance which would not be
reasonably likely to have a Purchaser Material Adverse Effect.
Section 2.2.12. Contracts. Neither Purchaser nor any Purchaser Subsidiary
---------
is a party or is subject to any material note, bond, mortgage, indenture,
contract, lease, license, agreement or instrument that is required to be
described in or filed as an exhibit to any SEC Documents ("Purchaser Material
------------------
Contract") that is not so described in or filed as required by the Securities
- --------
Act or the Exchange Act, as the case may be. All such Purchaser Material
Contracts are valid and binding and are in full force and effect and enforceable
against Purchaser or such Purchaser Subsidiary in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether enforcement is sought by proceedings in equity or at law). Neither
Purchaser nor any Purchaser Subsidiary is in violation or breach of or default
under any such Purchaser Material Contract where such violation or breach would
be reasonably likely to have a Purchaser Material Adverse Effect.
Section 2.2.13. Employee Matters. The names of all employees of Purchaser
----------------
and each Purchaser Subsidiary ("Purchaser Employees") are set forth on
-------------------
Schedule 2.2.13 hereto. Other than as set forth on Schedule 2.2.13 hereto, there
- --------------- ---------------
are no severance or other obligations of Purchaser to any employees of Purchaser
or any Purchaser Subsidiary as a result of the Merger, this Agreement or the
transactions contemplated in connection herewith.
Section 2.2.14. Brokers. Purchaser has not employed any investment banker,
-------
broker, finder, or intermediary in connection with the transactions contemplated
by this Agreement, and Purchaser is under no obligation to pay any investment
banking, brokerage, finder's or similar fee or commission in connection with
such transactions, other than pursuant to an agreement with Oscar Gruss & Son
Incorporated, the material terms of which have been disclosed to the Company.
Section 2.2.15. Fairness Opinion. Purchaser's Board of Directors has
----------------
received from its financial advisors, Oscar Gruss & Son Incorporated, a written
opinion addressed to it to the effect that the Exchange Ratio is fair to
Purchaser's stockholders from a financial point of view.
Section 2.2.16. Takeover Statutes. Assuming each of (i) the Company and its
-----------------
Associates and Affiliates (as such terms are defined herein), collectively, and
(ii) each Stockholder and each of such Stockholder's respective Associates and
Affiliates, collectively, beneficially own and have beneficially owned at all
times during the three-year period prior to the date hereof less than fifteen
percent (15%) of the shares of Purchaser Stock outstanding, Section 203 of the
Delaware Code is, and shall be, inapplicable to the Merger and this Agreement
and the transactions contemplated hereby. For the purposes of this
Section 2.2.16, "Associates" and "Affiliates" shall have the meanings ascribed
- -------------- ---------- ----------
to such terms in Section 203 of the Delaware Code.
SECTION 3. CERTAIN AGREEMENTS OF THE PARTIES
Section 3.1. Covenants of the Stockholders. Except as otherwise
-----------------------------
contemplated by this Agreement, none of the Stockholders will, without the prior
written consent of Purchaser, (w) take, or agree or commit to take, any action
that would make any representation and warranty of the Stockholders hereunder
inaccurate in any material respect at the Closing (except for representations
and warranties which speak as of a particular date, which need be accurate only
as of such date), (x) omit, or agree or commit to omit, to take any action
necessary to prevent any such representation and warranty from being inaccurate
in any material respect at the Closing (except for representations and
warranties which speak as of a particular date, which need be accurate only as
of such date); provided, however, that any of the Stockholders shall be
-------- -------
permitted to take or omit to take such action which can be cured, and in fact is
cured, at or prior to the Closing, (y) take, or agree or commit to take, any
action that would result in, or would be reasonably likely to result in, any of
the conditions set forth in Section 4 not being satisfied, or (z) omit, or agree
---------
or commit to omit, to take any action necessary to prevent any such condition
from not being satisfied.
Section 3.2. Covenants of Purchaser. Except as otherwise contemplated by
----------------------
this Agreement, Purchaser will not, without the prior written consent of the
Stockholders, (w) take, or agree or commit to take, any action that would make
any representation and warranty of Purchaser hereunder inaccurate in any
material respect at the Closing (except for representations and warranties which
speak as of a particular date, which need be accurate only as of such date), (x)
omit, or agree or commit to omit, to take any action necessary to prevent any
such representation and warranty from being inaccurate in any material respect
at the Closing (except for representations and warranties which speak as of a
particular date, which need be accurate only as of such date); provided,
--------
however, that Purchaser shall be permitted to take or omit to take such action
- -------
which can be cured, and in fact is cured, at or prior to the Closing, (y) take,
or agree or commit to take, any action that would result in, or would be
reasonably likely to result in, any of the conditions set forth in Section 4 not
---------
being satisfied, or (z) omit, or agree or commit to omit, to take any action
necessary to prevent any such condition from not being satisfied.
Section 3.3. Approvals, Etc. Subject to the terms and conditions provided
--------------
herein, each of the parties hereto agrees to use all reasonable efforts to take
all other action and to do all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and, in the case of the Stockholders and the
Company, the Asset Purchase Agreement.
Section 3.4. Stockholder Approval. Each Stockholder has executed a written
--------------------
consent which approves this Agreement, the Merger and the consummation of the
transactions contemplated hereby, and such consent shall not be revoked.
Section 3.5. No Solicitation. (a) Each of the Stockholders and the Company
---------------
hereby agrees that, prior to the Closing Date, such person shall not, directly
or indirectly, solicit, initiate or encourage or enter into negotiations or
discussions with any person (other than Purchaser or, with respect to the Oxis
Purchase, Oxis) with regard to (i) the sale of the Company Shares or any equity
interest in the Company or (ii) the purchase of any of the assets or business of
Oxis, other than as contemplated pursuant to this Agreement.
(b) Purchaser hereby agrees that, prior to the Closing Date, it shall not,
directly or indirectly, (i) solicit, initiate or encourage, or take any action
designed or reasonably likely to facilitate, any inquiries or the making of any
proposal which constitutes, or may be reasonably be expected to lead to, a
Competing Transaction (as defined below) or (ii) participate in any discussions
or negotiations regarding a Competing Transaction; provided, however, that
-------- -------
Purchaser may undertake such action if, at any time prior to the Closing Date
and following the receipt of a proposal which constitutes, or may be reasonably
be expected to lead to, a Competing Transaction, the Board of Directors of
Purchaser determines in good faith, based upon the advice of outside counsel,
that such action is consistent with the Board of Directors' fiduciary duties to
Purchaser's stockholders under applicable law. "Competing Transaction" means an
---------------------
offer from any person relating to any direct or indirect acquisition or purchase
of 25 percent or more of the assets of Purchaser and its subsidiaries or
25 percent or more of any class of equity securities of Purchaser or any
subsidiary of Purchaser, but does not include the transactions contemplated by
this Agreement.
Section 3.6. Publicity. None of the Stockholders, the Company or Purchaser
---------
shall make any public announcement concerning this Agreement or the other
transactions contemplated hereby without the prior written consent of the other,
except as may be required by law or the rules of The Nasdaq Stock Market.
Section 3.7. Modification of Asset Purchase Agreements. Without the prior
-----------------------------------------
written consent of Purchaser, neither the Company nor the Stockholders shall
amend any provision of, or waive any condition to the performance by any party
of any of its obligations under, the Asset Purchase Documents.
Section 3.8. Investigation and Confidentiality. (a) Prior to the Closing,
---------------------------------
the Company and the Stockholders shall keep Purchaser advised of all material
developments relevant to the Company's business and to consummation of the Oxis
Purchase and the delivery of the Company Shares and shall permit Purchaser to
make or cause to be made such investigation of the Company's business and
properties and of its financial and legal condition as Purchaser reasonably
requests, provided that such investigation shall be reasonably related to the
--------
transactions contemplated hereby and shall not interfere unnecessarily with
normal operations. Purchaser agrees that it will not, and will cause its
officers, employees and agents not to, use any information obtained pursuant to
this Section 3.8 for any purpose unrelated to the performance of the obligations
-----------
under, or the consummation of the transactions contemplated by, this Agreement.
(b) Prior to the Closing, Purchaser shall permit the Stockholders and the
Company to make or cause to be made such investigation of its business and
properties and of its financial and legal condition as the Stockholders or the
Company reasonably request, provided that such investigation shall be reasonably
--------
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. The Stockholders agree that they will not,
and the Company will cause its officers, employees and agents not to, use any
information obtained pursuant to this Section 3.8 for any purpose unrelated to
-----------
the performance of the obligations under, or the consummation of the
transactions contemplated by, this Agreement.
(c) Prior to the Closing, all information provided to (i) any of the
Stockholders or the Company or each of their representatives by or on behalf of
Purchaser, and (ii) Purchaser or its representatives by or on behalf of any of
the Stockholders or the Company, will be governed and protected by the
Confidentiality Agreement, dated as of May 20, 1999, between Portman Group Inc.
and Purchaser (the "Confidentiality Agreement").
-------------------------
Section 3.9. Appointment of Directors. Purchaser agrees that, on the
------------------------
Closing Date, it shall (i) cause to be appointed to Purchaser's Board of
Directors the two individuals specified on Schedule 3.9 and (ii) cause the
------------
number of Directors of Purchaser to be seven (7). The parties agree to take all
actions within their respective power to cause, effective as of the Closing
Date, the Board of Directors of the Company to be comprised of those persons
who, effective as of the Closing Date, constitute the members of the Board of
Directors of Purchaser.
Section 3.10. Indemnification; Insurance. (a) The indemnification
--------------------------
provisions contained in the Bylaws and the Certificate of Incorporation of
Purchaser shall not be amended, repealed or otherwise modified for a period of
six years after the Closing Date in any manner that would adversely affect the
rights thereunder of any individuals who immediately prior to the Closing Date
were directors, officers, agents, employees of the Company or otherwise entitled
to indemnification under the Company's Bylaws or Certificate of Incorporation
(an "Indemnified Party"). Purchaser shall, to the fullest extent permitted under
-----------------
Delaware law, indemnify, defend and hold harmless, and after the Effective Time,
Purchaser and the Surviving Corporation shall jointly and severally, to the
fullest extent permitted under Delaware law, indemnify, defend and hold
harmless, each Indemnified Party against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation with respect to the Surviving Representations
(as hereinafter defined), including, without limitation, liabilities arising out
of this Agreement, or otherwise with respect to any act or omission occurring
prior to the Closing Date. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) Purchaser or the Surviving Corporation shall pay the reasonable fees
and expenses of counsel selected by the Indemnified Parties, which counsel shall
be reasonably satisfactory to Purchaser or the Surviving Corporation, promptly
as statements therefor are received, and (ii) Purchaser and the Surviving
Corporation will cooperate in the defense of any such matter; provided, however,
-------- -------
that neither Purchaser nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld); and further, provided, that neither Purchaser nor the
------- --------
Surviving Corporation shall be obliged pursuant to this Section 3.10 to pay the
------------
fees and disbursements of more than one counsel for all Indemnified Parties in
any single action except to the extent that, in the opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action. For six years after the Effective Time,
Purchaser shall be required to maintain officers' and directors' liability
insurance covering the officers and directors of Purchaser who are currently
covered by Purchaser's officers and directors liability insurance policy on
terms not less favorable than those in effect on the date hereof in terms of
coverage and amounts; provided that in no event shall Purchaser be required to
--------
expend annually more than 150% of the amount that Purchaser spent for officers'
and directors' liability insurance in the last fiscal year prior to the date
hereof to maintain or procure insurance coverage pursuant hereto. Purchaser and
the Surviving Corporation shall reimburse all expenses, including reasonable
attorney's fees and expenses, incurred by any person to enforce the obligations
of Purchaser and the Surviving Corporation under this Section 3.10.
------------
(b) If Purchaser or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provision shall be made so that such successors and assigns assume the
obligations set forth in this Section 3.10.
------------
Section 3.11. Acknowledgment Under Oxis Warrant. Purchaser acknowledges
---------------------------------
that as the successor issuer under the Warrant (as such term is defined in the
Asset Purchase Agreement) as of the Closing Date, Purchaser will assume, as of
the Closing Date, the obligations to deliver Purchaser Stock pursuant to the
Warrant.
SECTION 4. CLOSING CONDITIONS
Section 4.1. Conditions to Obligation of Purchaser. The obligation of
-------------------------------------
Purchaser to effect the Merger and issue the Purchaser Shares as provided herein
shall be subject to its satisfaction or waiver of the following conditions on or
before the Closing Date:
Section 4.1.1. Stockholder Approval. This Agreement, the Merger and the
--------------------
transactions contemplated by this Agreement shall have been approved at or prior
to the Effective Time by each Stockholder.
Section 4.1.2. Stockholders' Representations and Warranties Complete and
---------------------------------------------------------
Correct. The Stockholders' representations and warranties contained in
- -------
Section 2.1 of this Agreement shall be true and correct in all material respects
- -----------
when made and shall be true and correct in all material respects at and as of
the Closing Date, after giving effect to the transactions contemplated by this
Agreement, as if made on and as of such date.
Section 4.1.3. Representations and Warranties of Oxis Complete and Correct.
-----------------------------------------------------------
The representations and warranties of Oxis set forth in Article 4 of the Asset
Purchase Agreement shall be true and correct in all material respects when made
and, shall be true and correct in all material respects at and as of the Closing
Date, after giving effect to the transactions contemplated by the Asset Purchase
Agreement (in the event that the closing of the Asset Purchase Agreement occurs
prior to or simultaneously with the Closing), as if made on and as of the
Closing Date.
Section 4.1.4. Compliance with this Agreement. The Company and each of the
------------------------------
Stockholders shall have performed and complied in all material respects with all
agreements, covenants and conditions contained herein which are required to be
performed or complied with by it on or before the Closing Date.
Section 4.1.5. Supporting Documents. Purchaser shall have received copies
--------------------
of the following documents:
(i) (A) the Certificate of Incorporation of the Company, certified as
of a recent date by the appropriate authority of the Company's jurisdiction
of incorporation; and (B) a certificate of such authority dated as of a
recent date as to the due incorporation and good standing of the Company,
and listing all documents of the Company on file with said authority; and
(ii) a certificate of the Secretary or an Assistant Secretary of the
Company dated the Closing Date and certifying: (A) that attached thereto is
a true and complete copy of the Bylaws of the Company as in effect on the
date of such certification; (B) that attached thereto is a true and
complete copy of all resolutions adopted by the Board of Directors or the
stockholders of the Company authorizing the Merger, the execution, delivery
and performance of this Agreement and the delivery of the Company Shares,
and that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by
this Agreement; (C) that the Certificate of Incorporation has not been
amended since the date of the last amendment referred to in the certificate
delivered pursuant to clause (i)(B) above; and (D) that the Bylaws have not
been amended since the date of the last amendment referred to in such
certificate pursuant to subclause (ii)(A) above; and
(iii) the Certificate of Merger and evidence that the Certificate of Merger
has been filed with the Secretary of State of Delaware in accordance with
the applicable provisions of the Delaware Code.
Section 4.1.6. Oxis Purchase Closing. The closing under the Asset Purchase
---------------------
Agreement shall have occurred or shall occur simultaneously with the Closing
hereunder.
Section 4.1.7. Material Adverse Change. There shall not have occurred any
-----------------------
change, and no additional information shall have been disclosed to Purchaser,
which is reasonably likely to have a Company Material Adverse Effect or a
material adverse effect on the financial condition, results of operations,
assets or liabilities of Oxis and its subsidiaries, taken as a whole.
Section 4.1.8. Illegality, Etc. No statute, rule or regulation, or order,
----------------
decree or injunction enacted, entered, promulgated or enforced by any court or
governmental authority shall be in effect which prohibits or restricts the
consummation of the transactions contemplated hereby.
Section 4.1.9. Employment Agreements. Purchaser shall have entered into a
---------------------
Severance and Consulting Agreement with each of Jack Nelson and Enrique Levy
pursuant to which, among other things, the Amended and Restated Employment
Agreements, dated as of February 19, 1998, between Purchaser and each of Jack
Nelson and Enrique Levy, respectively, shall be terminated.
Section 4.2. Conditions to Obligation of the Stockholders. The
--------------------------------------------
Stockholders' obligation to effect the Merger and deliver the Company Shares
shall be subject to the satisfaction or waiver by them of the following
conditions on or before the Closing Date:
Section 4.2.1. Compliance with this Agreement. Purchaser shall have
------------------------------
performed and complied in all material respects with all agreements and
conditions contained herein which are required to be performed or complied with
by it on or before the Closing Date.
Section 4.2.2. Purchaser's Representations and Warranties Complete and
-------------------------------------------------------
Correct. Purchaser's representations and warranties contained in Section 2.2 of
- ------- -----------
this Agreement shall be true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the Closing
Date, after giving effect to the transactions contemplated by this Agreement, as
if made on and as of such date.
Section 4.2.3. Supporting Documents. The Stockholders shall have received
--------------------
copies of the following documents:
(i) (A) the Certificate of Incorporation of each of Purchaser and Merger
Sub, certified as of a recent date by the appropriate authority of each such
entity's jurisdiction of incorporation; and (B) a certificate of such authority
dated as of a recent date as to the due incorporation and good standing of each
such entity, and listing all documents of each such entity on file with said
authority; and
(ii) a certificate of the Chief Executive Officer or President of each of
Purchaser and Merger Sub dated the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the Bylaws of such entity as in
effect on the date of such certification; (B) that attached thereto is a true
and complete copy of all resolutions adopted by the Board of Directors or the
stockholders of such entity authorizing the Merger, the execution, delivery and
performance of this Agreement and the issuance of the Purchaser Stock provided
hereby, and that all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the transactions contemplated by this
Agreement; (C) that the Certificate of Incorporation of each entity has not been
amended since the date of the last amendment referred to in such certificate
delivered pursuant to clause (i)(B) above; and (D) that the Bylaws of each
entity have not been amended since the date of the last amendment referred to in
such certificate pursuant to subclause (ii)(A) above; and
(iii) the Certificate of Merger and evidence that the Certificate of Merger
has been filed with the Secretary of State of Delaware in accordance with the
applicable provisions of the Delaware Code.
Section 4.2.4. Oxis Purchase Closing. The closing under the Asset Purchase
---------------------
Agreement shall have occurred or shall occur simultaneously with the Closing
hereunder.
Section 4.2.5. Material Adverse Change. There shall not have occurred any
-----------------------
change, and no additional information shall have been disclosed to the
Stockholders, which is reasonably likely to have a Purchaser Material Adverse
Effect.
Section 4.2.6. Illegality, Etc. No statute, rule or regulation, or order,
----------------
decree or injunction enacted, entered, promulgated or enforced by any court or
governmental authority shall be in effect which prohibits or restricts the
consummation of the transactions contemplated hereby.
Section 4.2.7. Employment Agreements. Purchaser shall have entered into a
---------------------
Severance and Consulting Agreement with each of Jack Nelson and Enrique Levy
pursuant to which, among other things, the Amended and Restated Employment
Agreements, dated as of February 19, 1998, between Purchaser and each of Jack
Nelson and Enrique Levy, respectively, shall be terminated.
SECTION 5. TERMINATION
Section 5.1. Termination. This Agreement may be terminated as follows:
-----------
(a) by mutual written consent of the Stockholders and Purchaser;
(b) by either the Stockholders or Purchaser if the Closing shall not have
occurred by June 30, 1999 (and the failure of the Closing to occur is not due to
the breach of this Agreement by either of such parties);
(c) by either the Stockholders or Purchaser (provided that the terminating
--------
party is not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) if the Asset Purchase Agreement
is terminated;
(d) by either the Stockholders or Purchaser (provided that the terminating
--------
party is not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) in the event of a breach by the
other party of any representation or warranty contained in this Agreement which
cannot be or has not been cured within 10 days after the giving of written
notice to the breaching party of such breach and which breach would cause (i) in
the case of a breach by the Stockholders, the conditions set forth in
Section 4.1.1 not to be satisfied (assuming the Closing were to occur on the
- -------------
date of such termination), and (ii) in the case of a breach by Purchaser, the
conditions set forth in Section 4.2.2 not to be satisfied (assuming the Closing
-------------
were to occur on the date of such termination); or
(e) by either the Stockholders or Purchaser (provided that the terminating
--------
party is not then in material breach of any representation, warranty, covenant
or other agreement contained in this Agreement) in the event of a material
breach by the other party of any covenant or agreement contained in this
Agreement which cannot be or has not been cured within 10 days after the giving
of written notice to the breaching party of such breach; or
(f) by Purchaser in order to enter into a definitive agreement with respect
to a Competing Transaction in compliance with Section 3.5.
-----------
Section 5.2. Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 5.1, this Agreement shall forthwith become
-----------
void and have no effect, without any liability on the part of any party hereto,
other than the provisions of Sections 3.6, 5.2 and 6.1, which shall survive any
------------ --- ---
such termination. Nothing contained in this Section 5.2 shall relieve any party
-----------
from liability for any willful breach of this Agreement.
SECTION 6. MISCELLANEOUS
Section 6.1. Expenses. Each of the parties agrees to pay its own expenses
--------
incurred in connection with the preparation of this Agreement. In the event that
Purchaser terminates this Agreement under Section 5.1(f), Purchaser shall pay
the Stockholders at the time of such termination a cash fee equal to $50,000.
Section 6.2. Survival of Agreements. The representations and warranties
----------------------
(i) of the Stockholders set forth in Sections 2.1.1, 2.1.2, 2.1.3, 2.1.4,
-------------- ----- ----- -----
2.1.10, 2.1.13 and 2.1.14 hereof and (ii) of Purchaser set forth in
- ------ ------ ------
Sections 2.2.1, 2.2.2, 2.2.3, 2.2.4 and 2.2.14 (collectively, the "Surviving
- -------------- ----- ----- ----- ------ ---------
Representations") shall survive until the first anniversary of the Closing. None
- ---------------
of the other agreements, representations or warranties made in this Agreement,
or any certificate or instrument delivered pursuant to or in connection
therewith shall survive the Closing; provided, however, that this Section 6.2
-------- ------- -----------
shall not limit any (x) covenant or agreement of the parties hereto which by its
terms contemplates performance after the Closing Date or (y) rights or remedies
otherwise available to the parties hereto at law or in equity; provided,
--------
further, that the Confidentiality Agreement shall survive any termination of
- -------
this Agreement.
Section 6.3. Indemnification. (a) Notwithstanding the Closing and
---------------
regardless of any investigation at any time made by or on behalf of Purchaser or
of any knowledge or information that Purchaser may have, each Stockholder shall
indemnify and fully defend, save and hold Purchaser harmless if Purchaser shall
at any time or from time to time suffer any damage, liability, loss, cost,
expense, claim or cause of action (each, a "Loss") arising out of, relating to
or resulting from, or shall pay or become obligated to pay any sum on account,
of any and all Events of Breach (as hereinafter defined) of Stockholders.
(b) Notwithstanding the Closing and regardless of any investigation at any
time made by or on behalf of any Stockholder or of any knowledge or information
that such Stockholder may have, Purchaser shall indemnify and fully defend, save
and hold such Stockholder harmless if such Stockholder shall at any time or from
time to time suffer any Loss arising out of, relating to or resulting from, or
shall pay or become obligated to pay any sum on account of, any and all Events
of Breach of Purchaser.
(c) As used herein, "Event of Breach" shall be and mean any one or more of
---------------
the following:
(i) any untruth or inaccuracy in any representation by the indemnitor
or the breach of any warranty by the indemnitor contained in this Agreement
or any certificate, schedule, exhibit or annex or other document furnished
by the indemnitor to the other party pursuant to this Agreement or in
connection with the Closing; and
(ii) any failure by the indemnitor duly to perform or observe any term,
provision, covenant, agreement or condition on the part of such indemnitor
to be performed or observed under this Agreement.
(d) If an Event of Breach occurs or is alleged and the party or parties
entitled to receive the benefits of the indemnification provisions hereunder (a
"Section 6.3 Indemnified Party") asserts that a party or parties has become
-----------------------------
obligated to the Indemnified Party pursuant to Section 3.10 hereof (a
"Section 6.3 Indemnifying Party"), or if any suit, action, investigation, claim
------------------------------
or proceeding is begun, made or instituted as a result of which the Section 6.3
Indemnifying Party may become obligated to the Indemnified Party hereunder, the
Section 6.3 Indemnified Party shall give written notice to the Section 6.3
Indemnifying Party. The Section 6.3 Indemnifying Party may, and at the request
of the Section 6.3 Indemnified Party shall, participate in and defend, contest
or otherwise protect the Section 6.3 Indemnified Party against any such suit,
action, investigation, claim or proceeding by counsel of the Section 6.3
Indemnifying Party's choice at its sole cost and expense; provided, however,
-------- -------
that the Section 6.3 Indemnifying Party shall not make any settlement or
compromise without the prior written consent of the Section 6.3 Indemnified
Party, which consent shall not be unreasonably withheld. The Section 6.3
Indemnified Party shall have the right, but not the obligation, to participate
at its own expense in the defense thereof by counsel of the Section 6.3
Indemnified Party's choice and shall in any event cooperate with and assist the
Section 6.3 Indemnifying Party to the extent reasonably possible. If the
Section 6.3 Indemnifying Party fails timely to defend, contest or otherwise
protect against such suit, action, investigation, claim or proceeding, the
Section 6.3 Indemnified Party shall have the right to do so, including, without
limitation, the right to make any compromise or settlement thereof, and the
Section 6.3 Indemnified Party shall be entitled to recover the entire cost
thereof from the Section 6.3 Indemnifying Party, including, without limitation,
reasonable attorneys' fees, disbursements and amounts paid as the result of such
suit, action, investigation, claim or proceeding. Notwithstanding the provisions
of this Section 6.3, a Section 6.3 Indemnifying Party shall not pay amounts due
-----------
on behalf of a Section 6.3 Indemnified Party pursuant to suits, actions,
investigations, claims or proceedings arising under this Section 6.3 until the
-----------
aggregate of all losses, liabilities and damages (including expenses) incurred
by such Section 6.3 Indemnified Party exceeds $15,000.
Section 6.4. Parties in Interest. All representations, covenants and
-------------------
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not; provided that
Purchaser shall not assign its rights to purchase shares of Company Stock under
this Agreement to any non-affiliate without first obtaining the prior written
consent of the Stockholders, which consent may be withheld by the Stockholders
in their sole discretion. The parties hereto specifically acknowledge that the
provisions of Section 3.10 are intended to be for the benefit of, and shall be
------------
enforceable by, the current or former employees, officers and directors of
Purchaser affected thereby and their heirs and representatives.
Section 6.5. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be delivered in person or
mailed by certified or registered mail, return receipt requested, or sent by
facsimile transmission, addressed as follows:
(a) if to the Company or the Stockholders:
Opus Diagnostics Inc.
One Parker Plaza
Fort Lee, New Jersey 07024
Attention: George Aaron, President
Fax No.: (201) 944-9504
with a copy to:
Thelen Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Bruce A. Rich, Esq.
Fax No.: (212) 603-2001
(b) if to Purchaser or Merger Sub:
Caprius, Inc.
Two Executive Drive
Suite 755
Fort Lee, New Jersey 07024
Attention: Jack Nelson, Chief Executive Officer
Fax No.: (201) 592-0393
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attention: Thomas M. Cerabino, Esq.
Fax No.: (212) 728-8111
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others. All notices, requests,
consents and other communications hereunder shall be deemed to have been duly
given or served on the date on which personally delivered or on the date
actually received, if sent by mail or telex, with receipt acknowledged.
Section 6.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles thereof.
Section 6.7. Entire Agreement. This Agreement, including any Schedules and
----------------
Exhibits hereto, constitutes the sole and entire agreement of the parties with
respect to the subject matter hereof. Any Schedules and Exhibits hereto are
hereby incorporated herein by reference.
Section 6.8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Section 6.9. Amendments. This Agreement may not be amended or modified,
----------
and no provisions hereof may be waived, without the written consent of the
Stockholders and Purchaser.
Section 6.10. Severability. If any provision of this Agreement shall be
------------
declared void or unenforceable by any judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.
Section 6.11. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are for convenience only and are not to be considered in construing or
interpreting any term or provision of this Agreement. The term "date of this
Agreement" and words of similar import (such as "date hereof") shall mean and
refer to June 28, 1999.
Section 6.12. Further Assurances. From and after the date of this
------------------
Agreement, upon the request of the Stockholders, Purchaser, Merger Sub or the
Company, any of the Stockholders, Purchaser, Merger Sub or the Company shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company, the Stockholders, Purchaser
and Merger Sub have executed this Agreement as of the day and year first above
written.
OPUS DIAGNOSTICS INC.
By:
--------------------------------------
Name:
Title:
-----------------------------------------
Name: George Aaron
-----------------------------------------
Name: Jonathan Joels
CAPRIUS, INC.
By:
------------------------------------
Name:
Title:
CAPRIUS MERGER SUB, INC.
By:
------------------------------------
Name:
Title:
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of June 28,
1999, between OPUS DIAGNOSTICS, INC., a Delaware corporation ("Buyer"), and OXIS
HEALTH PRODUCTS, INC. a Delaware corporation ("Seller" or "OXIS"). Seller
desires to sell, and Buyer desires to buy, Seller's TDM Business as described
herein. OXIS International, Inc., a Delaware corporation, and the parent
corporation of OXIS ("OXIS International") is also executing this agreement for
the sole purpose of agreeing to the terms of Article 10 hereof.
NOW, THEREFORE, Buyer and Seller hereby agree as follows:
ARTICLE 1
TRANSFER OF ASSETS
1.1 AGREEMENT TO SELL. Upon the terms and subject to all of the conditions
contained herein, Seller hereby agrees to sell, assign, transfer and deliver to
Buyer on the Closing Date (as defined in Article 3), and Buyer hereby agrees to
purchase from Seller on the Closing Date, the Assets (as defined in Section 1.2)
comprising Seller's therapeutic drug monitoring assay business as described in
Schedule 1.1 hereto (the "TDM Business").
1.2 DESCRIPTION OF ASSETS. For purposes of this Agreement, the term
"Assets" shall include, without limitation, all of the following assets:
1.2.1 All rights, title and interest of Seller in and to the contracts
and agreements listed on Schedule 4.5 attached hereto (collectively, the
"Contracts") relating to the operation of the TDM Business;
1.2.2 All of Seller's finished goods inventory (but not raw materials
or work-in-process) relating solely to the TDM Business as of the Closing Date
(the "Inventory"). Schedule 4.4 sets forth a list of the Inventory as of the
date hereof;
1.2.3 All patents, patent applications, software, product designs,
trademarks, trademark applications, service marks, service mark applications,
trade and other marks and names (either registered, common law or registration
applied for), copyrights, copyright applications, mask works, inventions, trade
secrets, proprietary information, know-how, processes, manufacturing or
marketing procedures, recipes, formulae, drawings, schematics and patterns, and
all documentation and other media ("Intellectual Property") relating to the TDM
Business owned by Seller or with respect to which Seller has a license, interest
or other right to use (all such Intellectual Property, collectively, the "Seller
Intellectual Property"). The Seller Intellectual Property includes, without
limitation, the Intellectual Property listed on Schedule 4.8. Without limitation
of the foregoing, the Assets shall be deemed to further include all drawings,
documentation, schematics, labeling, manuals or other materials, whether in
written or magnetic form that describe, disclose or otherwise set forth any of
the Seller Intellectual Property, and all correspondence relating thereto (which
Seller possesses); and
1.2.4 All goodwill, marketing materials, research materials, quality
control documents used in the manufacture of the Products, licenses, permits,
FDA files and grant applications specifically relating to the TDM Business.
1.3 EXCLUDED ASSETS. The following assets of Seller are not included in the
definition of Assets for purposes of Section 1.2 and will not be purchased by
Buyer (the "Excluded Assets"): (a) all accounts receivable, and (b) all
equipment and other tangible assets (including raw materials and
work-in-process) related to the manufacturing and production of the assays and
other products comprising the TDM Business.
1.4 LIABILITIES. Any and all liabilities of or related to the TDM Business
incurred prior to the Closing shall remain liabilities of the Seller, which
shall be paid or otherwise satisfied by the Seller when such liabilities become
due. The Buyer is not assuming or otherwise becoming liable for liabilities of
or related to the TDM Business incurred prior to the Closing. Notwithstanding
the foregoing, Buyer shall be assuming the obligations under the Contracts with
respect to future performance thereunder. ARTICLE 2 PURCHASE PRICE
2.1 PURCHASE PRICE. As full consideration for the sale, assignment,
transfer and delivery of the Assets by Seller to Buyer, upon the terms and
subject to all of the conditions contained herein (and the performance by each
of the parties hereto of their respective obligations hereunder), the purchase
price will consist of the following (collectively, the "Purchase Price"):
2.1.1 Cash in the amount of Five Hundred Thousand Dollars ($500,000.00)
to be paid in immediately available funds at the Closing (the "Cash Purchase
Price");
2.1.2 A secured promissory note in the principal amount of Five Hundred
Sixty-Five Thousand Dollars ($565,000.00), (subject to (i) reduction in an
amount equal to the difference between $135,000 minus the value of the Inventory
as of Closing, in the event the value of the Inventory as of Closing is less
than $135,000 or (ii) increase in an amount equal to the difference between the
value of the Inventory as of Closing minus $135,000, in the event the value of
the Inventory as of Closing is greater than $135,000), due and payable on
November 30, 1999, subject to prepayment without penalty, executed by Buyer to
the order of Seller, substantially in the form of Exhibit A attached hereto (the
"1999 Note");
2.1.3 A warrant (the "Warrant") evidencing Seller's right to acquire up
to a ten percent (10%) equity interest in Buyer pursuant to the terms and
conditions set forth in the Warrant, a copy of which is attached hereto as
Exhibit B.
2.2 SECURITY. Repayment of the 1999 Note will be secured by a security
interest (the "Security Interest") granted by Buyer in favor of Seller in the
Assets which Security Interest will be a perfected, first priority security
interest in favor of Seller. Buyer represents and warrants that the Security
Interest when properly filed will be a first perfected security interest prior
to any and all other claims, liens, encumbrances or security interests of any
kind with respect to the Assets.
ARTICLE 3
CLOSING
3.1 CLOSING. The transactions contemplated by this Agreement shall close
(the "Closing") on June 28, 1999, at 5:01 p.m., California time (the "Closing
Date"). The Closing shall occur upon the satisfaction of all the conditions set
forth in this Article 3 and Article 8 and shall be held in the offices of
Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California 94304-1018.
3.2 DOCUMENTS DELIVERED BY SELLER AT CLOSING. Seller will cause good and
marketable title to all of the Assets to be transferred to Buyer at the Closing,
free and clear of all liens, encumbrances, charges, security interests, claims,
restrictions or rights of others (collectively, "Liens"). Without limiting the
foregoing, Seller will take or cause to be taken any and all actions necessary
or otherwise reasonably required by Buyer to ensure that at the Closing Buyer
acquires possession of and good and marketable title to all of the Assets, free
and clear of all Liens. At the Closing, Seller will deliver to Buyer the
following documents (collectively, the "Seller Closing Documents"), executed by
Seller, where applicable, and in form satisfactory to Buyer:
(a) a Bill of Sale in substantially the form of Exhibit C attached
hereto;
(b) an Assignment of Intangible Property in substantially the form of
Exhibit D attached --------- hereto;
(c) the Services Agreement in substantially the form of Exhibit E
attached hereto;
(d) an itemization of the Inventory as of Closing (the value of such
Inventory for purposes of Section 2.1.2 hereof shall be deemed to be the book
value of such Inventory as set forth in Seller's books and records, as
determined under generally accepted accounting principles applied consistently
with Seller's past practices);
(e) a schedule of Seller's accounts receivable relating to the TDM
Business, as of the Closing Date;
(f) resolutions of the Board of Directors of Seller authorizing the
consummation of the transactions contemplated hereby, certified by the Secretary
of Seller;
(g) all third-party consents (including, without limitation, from
parties to the Contracts) necessary for the consummation of the transactions
contemplated hereby;
(h) an opinion from Morrison & Foerster LLP, counsel to the Seller
dated the Closing Date in a form reasonably acceptable to Buyer;
(i) a certificate from the Seller's President in a form reasonably
acceptable to Buyer; and
(j) any other documents reasonably required by Buyer to transfer the
Assets in accordance with the terms of this Agreement.
3.3 DOCUMENTS DELIVERED BY BUYER AT CLOSING. At the Closing, Buyer will
deliver to Seller the following executed documents or consideration ("Buyer
Closing Documents"):
(a) the Cash Purchase Price;
(b) the 1999 Note;
(c) the Warrant;
(d) resolutions of the Board of Directors of Buyer authorizing the
consummation of the transactions contemplated hereby, certified by the Secretary
of Buyer ;
(e) UCC-1 Financing Statement to be filed with the New Jersey and
Oregon Secretary of State and any other documents necessary for perfecting the
Security Interest;
(f) an Assignment of Intangible Property in substantially the form of
Exhibit D attached --------- hereto;
(g) the Services Agreement in substantially the form of Exhibit E
attached hereto;
(h) an opinion from Thelen Reid & Priest L.L.P., counsel to the Buyer
dated the Closing Date in a form reasonably acceptable to Seller;
(i) a certificate from the Buyer's President in a form reasonably
acceptable to Seller; and
(j) any other documents reasonably required by Seller to transfer the
Assets in accordance with the terms of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that the following facts and
circumstances are true and correct as of the date of this Agreement, except as
set forth on the schedule of exceptions attached hereto as Schedule 4 (the
"Seller Disclosure Schedule"):
4.1 ORGANIZATION. Seller: (a) is a corporation duly organized, validly
existing and in good corporate standing under the laws of the State of Delaware
and duly qualified as a foreign corporation in the State of Oregon; and (b) has
all necessary corporate power and authority to own and lease its properties, to
carry on its business as now being conducted and to enter into and perform this
Agreement and all of the other documents and agreements contemplated hereby.
4.2 AUTHORITY AND CONSENTS. The execution and performance of this Agreement
and the other documents to be executed by Seller pursuant to the terms hereof
will not result in a violation of Seller's Certificate of Incorporation or
Bylaws. Seller has full power and authority (corporate and otherwise) to enter
into this Agreement and the other documents to be executed by Seller pursuant to
the terms hereof and to carry out the transactions contemplated by this
Agreement and such other documents. This Agreement and the other documents to be
executed by Seller pursuant to the terms hereof and their execution and delivery
to Buyer have been duly authorized by the Board of Directors of Seller and no
further corporate action prior to the Closing is necessary on the part of Seller
or its shareholders to make this Agreement and the other documents to be
executed by Seller pursuant to the terms hereof and the transactions
contemplated by the Agreement and such other documents valid and binding upon
Seller. This Agreement and the other documents to be executed by Seller pursuant
to the terms hereof do and will constitute a legal, valid and binding obligation
of Seller, enforceable against Seller in accordance with their respective terms,
subject as to enforcement only: (a) to bankruptcy, insolvency, reorganization,
arrangement, moratorium and other similar laws of general applicability relating
to or affecting creditors' rights generally; and (b) to general principles of
equity. Unless listed on Schedule 4, no consent of any person not a party to
this Agreement and no consent of any governmental authority is required to be
obtained on the part of the Seller to permit the consummation of the
transactions contemplated by this Agreement.
4.3 TITLE TO ASSETS. Seller has good and marketable title to all of the
Assets and all of the Assets are free and clear of all Liens and upon transfer
of the Assets to Buyer, pursuant to this Agreement, the Buyer will have good and
marketable title to all of the Assets free and clear of all Liens except to the
extent provided herein or except that may arise due to Buyer's activities.
4.4 INVENTORY. Schedule 4.4 sets forth a true, correct and complete list of
the Inventory of Seller which is being sold to Buyer hereunder including an
itemization of the value thereof. All of such Inventory is in good and
merchantable condition and salable or useable in the ordinary course of the TDM
Business.
4.5 CONTRACTS. Schedule 4.5 constitutes a true, correct and complete list
of all Contracts. The Contracts comprise all contracts and agreements (written
or oral) relating to the TDM Business to which the Seller is a party or
otherwise bound. Each Contract is valid and enforceable in accordance with its
respective terms, Seller is not in default in the performance of any of its
obligations thereunder, no event of default has occurred which (whether with or
without notice, lapse of time, or both, or the happening or the occurrence of
any other event) would constitute such a default thereunder and, to Seller's
knowledge, all other parties thereto are not in default thereunder and have no
counterclaims, offsets and defenses with respect thereto and the Contracts are
assignable to Buyer under the terms thereof without the prior consent of the
other parties thereto (except as otherwise indicated on Schedule 4.5). Also set
forth on Schedule 4.5 is a list of all suppliers from which Seller has made
significant purchases of TDM raw materials since January 1, 1997. The Seller
shall make available (upon reasonable notice) to the Buyer at Seller's premises
(during business hours) copies of all correspondence received since January 1,
1998 from distributors of the products of the TDM Business (which Seller
possesses).
4.6 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Neither the execution nor
delivery of this Agreement or the other documents contemplated hereby by the
Seller, nor performance by Seller of the terms and provisions of this Agreement
or such other documents will (a) conflict with or result in a breach of or
default under any of the terms, conditions or provisions of any judgment, order,
injunction, decree, regulation or ruling of any court or governmental authority
to which Seller is subject or of any Contract or any other agreement, contract,
or commitment to which Seller is a party or by which it is bound, or (b) give
any "Person" (which term includes any individual, partnership, joint venture,
corporation, trust, unincorporated organization, any other entity and any
government or any department or agency thereof, whether acting in an individual,
fiduciary, or other capacity) the right to terminate or modify any Contract, or
accelerate any obligation or indebtedness of Seller thereunder.
4.7 FINANCIAL STATEMENTS. Seller has delivered to Buyer a statement of
revenues and expenses of the TDM Business for the years ended December 31, 1996,
1997 and 1998 and the fiscal quarters ended March 31, 1998 and 1999 (the
"Statement of Revenues and Expenses"). The Statement of Revenues and Expenses
was prepared from the accounts of the Seller and OXIS International, Inc., the
owner of the TDM Business prior to April 1, 1998, which accounts have been
prepared and maintained in accordance with generally accepted accounting
principles applied consistently during the period. Costs and expenses reported
in the Statement of Revenues and Expenses do not include amortization of
purchase price adjustments from business combinations. Cost and expenses include
all other costs directly attributable to the TDM Business and a reasonable
allocation of other costs incurred in carrying out the TDM Business. Seller is
not insolvent, bankrupt or subject to any insolvency procedure. Seller will
assist Buyer with questions or issues relating to the Statement of Revenues and
Expenses which arise after the Closing in connection with the preparation of
Buyer's financial statements, including providing access to Seller's independent
accountants, upon reasonable notice given and at the cost of Buyer.
4.8 INTELLECTUAL PROPERTY.
4.8.1 Seller owns and has good and marketable title to each item of
Seller Intellectual Property listed on Schedule 4.8, free and clear of any
Liens. No Seller Intellectual Property or product and/or technology of Seller is
subject to any outstanding decree, order, judgment, stipulation, license or
agreement restricting in any material manner the use or licensing thereof by
Seller.
4.8.2 The operation of Seller's TDM Business as it currently is
conducted, including its design, development, manufacture, use and sale of its
products and/or technology, and provision of services, does not, to the
knowledge of Seller, infringe the Intellectual Property of any other Person.
Seller has not received notice from any Person that the operation of Seller's
TDM Business, including its design, development, manufacture and sale of its
products and/or technology (including with respect to products and/or technology
currently under development) and provision of services, infringes the
Intellectual Property of any Person.
4.8.3 To the knowledge of Seller, no Person is infringing or
misappropriating any of the Seller Intellectual Property.
4.8.4 Seller has the unrestricted right to transfer and assign the
Seller Intellectual Property to Buyer.
4.8.5 To the knowledge of Seller, the Seller Intellectual Property
includes all Intellectual Property necessary to operate the TDM Business
(including the manufacture, marketing, commercialization (to the extent
necessary) and selling of the products comprising the TDM Business) to the same
extent and in the same manner as currently operated by Seller.
4.9 LITIGATION. To the best of Seller's knowledge, the Assets are not
the subject of any litigation, proceedings or controversies that are pending,
threatened or anticipated by or against Seller before any court, government
agency or any other administrative body.
4.10 ACCOUNTS RECEIVABLE. Seller's accounts receivable relating to the TDM
Business arose from valid sales in the normal course of business and are
collectible in the normal course of business at the aggregate recorded amount
thereof, less a reserve for doubtful accounts as shown in the Seller's general
ledger, and are not subject to any right of set-off by any customer of Seller.
Schedule 4.10 sets forth a complete and correct list of the top ten customers of
Seller's TDM Business for the year ended December 31, 1998 and the three months
ended March 31, 1999 showing the amount of revenues by product for each such
customer. No customer listed on Schedule 4.10 has informed Seller that it plans
to reduce or discontinue the amount of purchases of products it purchases from
Seller, although Seller makes no representation or warranty with respect to the
amount of products that such customers will purchase in the future.
4.11 COMPLIANCE WITH LAWS. All business and operations of the TDM Business
has been and is being conducted materially in accordance with all applicable
laws, rules and regulations of all Federal, state, local and governmental
authorities. Schedule 4.11 sets forth a complete and correct list of all
permits, licenses and other authorizations, including all clearances from the US
Food & Drug Administration and similar agencies in states or foreign
jurisdictions (collectively, the "Authorizations") obtained by or on behalf of
Seller in connection with the TDM Business. Seller holds all Authorizations
required by governmental authorities as may be necessary for the conduct of the
TDM Business, except where the failure to obtain any such permits, licenses or
other authorizations would not have a material adverse effect on the TDM
Business. To Seller's knowledge, Seller is not a party to any governmental
proceeding pending or threatened which might result in a suspension, limitation
or revocation of any Permit.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that the following facts and
circumstances are true and correct:
5.1 AUTHORIZATION; ETC. Buyer: (a) is a corporation duly organized, validly
existing and in good corporate standing under the laws of the State of Delaware;
and (b) has all necessary corporate power to own and lease its properties, to
carry on its business as now being conducted and to enter into and perform this
Agreement and all of the other documents and agreements contemplated hereby.
Buyer has full power and authority (corporate and otherwise) to enter into this
Agreement and the other documents to be executed by Buyer pursuant to the terms
hereof and to carry out the transactions contemplated hereby and thereby. Buyer
has taken all required action by law to authorize the execution and delivery of
this Agreement and the other documents contemplated hereby and the transactions
contemplated hereby and thereby, and this Agreement and the other documents
contemplated hereby is a valid and binding obligation of Buyer, enforceable
against it in accordance with their respective terms, subject as to enforcement
only: (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights generally; and (ii) to general principles of equity.
5.2 NO VIOLATION. Neither the execution and delivery of this Agreement or
the other documents contemplated hereby by Buyer, nor the performance by Buyer
of the terms and provisions of this Agreement or such other documents will (a)
violate any provisions of the Certificate of Incorporation of Buyer, or (b)
violate, or be in conflict with, or constitute a default under, breach of, or
cause the acceleration of the maturity of any debt or obligation pursuant to,
any agreement or commitment to which Buyer is a party or by which Buyer is
bound, or (c) violate any statute or law or any judgment, decree, order,
regulation, or rule of any court or governmental authority.
5.3 VALID ISSUANCE. The Warrant is a valid and binding obligation of Buyer
enforceable against it in accordance with its terms subject, as to enforcement
only, to: (a) bankruptcy, insolvency, reorganization, arrangement, moratorium
and other similar laws of general applicability relating to or affecting
creditors' rights generally; and (b) general principles of equity. The common
stock of Buyer to be issued upon exercise of the Warrant has been reserved for
issuance and, upon due exercise of the Warrant, will be duly authorized, validly
issued, fully paid and nonassessable.
5.4 CONSENTS AND APPROVALS OF GOVERNMENT AUTHORITIES. No consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority is required in connection with the
execution, delivery and performance of this Agreement or the other documents
contemplated hereby by Buyer and the consummation of the transactions
contemplated hereby or thereby.
5.5 CAPITALIZATION OF BUYER. Buyer has authorized 1,000,000 shares of
Common Stock, $0.01 par value, of which 20,000 shares are issued and
outstanding, and except for the Warrant, Buyer has no authorized or outstanding
options or securities convertible into or exercisable for shares of its Common
Stock.
5.6 INFORMATION. Buyer has concluded its due diligence review of the TDM
Business and acknowledges that it has had ample opportunity to visit with and
ask questions of Seller's management regarding the TDM Business and any
information Buyer has received related thereto. Notwithstanding such due
diligence review, Buyer is relying only upon the representations and warranties
of Seller herein in making its decision to purchase the TDM Business. The
foregoing due diligence review shall not limit, qualify or modify the
representations and warranties of Seller or the indemnities by Seller under this
Agreement, irrespective of the knowledge and information received by Buyer.
ARTICLE 6
COVENANTS
6.1 CONSENTS. On or prior to the Closing Date, Seller shall (a) notify all
persons required to be notified pursuant to applicable law or any of the
Contracts of the transactions contemplated hereunder, in the form and manner
required thereunder, except as set forth on Schedule 4.5, and (b) obtain the
consent of all persons whose consent is required pursuant to applicable law or
any of the Contracts in connection with the consummation of the transactions
contemplated hereby, in the form and manner required thereunder.
6.2 NOTIFICATION OF CERTAIN MATTERS. On or prior to the Closing Date,
Seller shall give prompt notice to Buyer of the occurrence or non-occurrence of
any event which would likely cause any representation or warranty made by Seller
herein to be untrue or inaccurate or any covenant, condition or agreement
contained herein not to be complied with or satisfied (provided, however, that
any such disclosure shall not in any way be deemed to (a) amend, modify or in
any way affect the representations, warranties and covenants made by such party
in or pursuant to this Agreement, or (b) alter or waive any rights of Buyer with
respect to the breach thereof).
6.3 CONTINUING OPERATION OF BUSINESS. Seller agrees to manufacture and
produce all requirements of Buyer with regard to the TDM Business, solely for
the benefit of Buyer in accordance with the Services Agreement substantially in
the form of Exhibit E attached hereto.
6.4 RIGHTS OF FIRST REFUSAL. Seller will provide Buyer a right of first
refusal for a period of one year from the Closing Date to purchase Seller's
Automated Fluorescence Technology in the event Seller determines to sell such
technology and receives a bona fide offer, or Seller makes a sale proposal to a
third party, related thereto. In such event, Seller shall notify Buyer in
writing of the terms and conditions of such offer and within fifteen (15)
business days of the receipt of such Notice, Buyer shall inform Seller in
writing whether it agrees to purchase the Automated Fluorescence Technology on
the same terms and conditions set forth in such Notice. If Buyer fails to agree
to purchase such technology within such fifteen (15) business day period, Seller
shall be free to sell such technology pursuant to the terms and conditions set
forth in the bona fide offer received. In the event the third party does not
purchase such technology or there are any changes in the terms and conditions of
such sale, this right of first refusal shall be reinstated, but in all events
expires one year from the Closing Date.
ARTICLE 7
COVENANTS
7.1 EXISTING CUSTOMERS. Until the 1999 Note is paid in full, Buyer will use
commercially reasonable efforts to continue to meet the needs of existing TDM
Business customers of Seller as of the Closing Date with regard to product
development, quality and support in accordance with good industry practices
subject to Seller fulfilling its obligations under the Services Agreement.
7.2 SELLER'S DEVELOPMENT RESOURCES. During the term of the Services
Agreement, Buyer will, whenever possible and provided that Seller is reasonably
competitive, utilize Seller's development resources for all of its development
of therapeutic drug monitoring assays using fluorescent polarization for use on
the Abbott Laboratories TDX and other technologies in which Seller has proven
skills and capabilities, provided, however, that Buyer has the right to seek
competitive bids from other providers for such assignments.
7.3 COOPERATION IN COLLECTION OF RECEIVABLES. Buyer will reasonably
cooperate and assist Seller with the collection of Seller's accounts receivable
relating to the TDM Business on the Closing Date as set forth in the schedule
referred to in Section 3.2(e) and Seller will instruct customers to make
payments to Buyer following the Closing. Buyer agrees to remit all receipts of
Seller's accounts receivable within three business days of receipt. Seller will
provide Buyer with a schedule for such accounts receivable at the Closing. Until
all of Seller's accounts receivable are paid in full excluding receivables
subject to a bona fide dispute documented in writing as of the Closing Date,
Buyer will follow Seller's existing credit policies and Seller (in connection
with its responsibilities under the Services Agreement) shall have the right to
refuse shipment of any products to any customer which has not paid an accounts
receivable on a timely basis consistent with the credit terms established by
seller relating to such accounts receivable. However, once a customer's balance
owed to Seller has been reduced to ten percent (10%) or less of that customers'
balance as of the Closing, Buyer may require Seller to ship products to that
customer regardless of any past due amount. Buyer shall have the option to
purchase any accounts receivable (at 100% of the stated amount) in order to
allow for the shipment of products to customers who have not paid accounts
receivable owed to Seller.
7.4 CHANGE OF DISTRIBUTORS. Prior to payment in full of the 1999 Note,
Buyer will not terminate any agreements with distributors that have been
assigned by Seller to Buyer without Seller's prior written approval, provided
that such approval shall not be unreasonably withheld. If Seller fails to notify
Buyer that it does not approve of the termination within seven business days of
receiving notice from Buyer that Buyer intends to terminate, Seller's approval
shall be deemed given.
7.5 PRICE INCREASES. Prior to payment in full of the 1999 Note, Buyer will
not increase prices to any former customer of Seller by more than ten percent
(10%) in the aggregate without Sellers' prior written approval, provided that
such approval shall not be unreasonably withheld.
7.6 CONTINUING OPERATION OF BUSINESS. Buyer will sublicense to Seller any
and all rights necessary to enable Seller to fulfill its obligations under the
Services Agreement.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 CONDITIONS TO BUYER'S OBLIGATIONS AT THE CLOSING. Buyer's obligations
to consummate the transactions contemplated by this Agreement shall be subject
to the full satisfaction of the following conditions, each of which conditions
may be waived in writing by Buyer:
(a) Instruments. Seller shall have delivered all of the Seller Closing
Documents at the Closing.
(b) Representations and Warranties True; Performance of Covenants. The
representations and warranties of Seller contained in this Agreement shall be
true in all material respects at the Closing as though made at such time. Seller
shall have performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it on
or prior to the Closing Date.
(c) Services Agreement. Buyer and Seller shall have entered into the
Services Agreement, in substantially the form of Exhibit E attached hereto.
(d) Consents. All consents or approvals required for the consummation
of the transactions contemplated hereby, including any required consents of the
parties to any Contract, shall have been obtained.
8.2 CONDITIONS TO SELLER'S OBLIGATIONS AT THE CLOSING. Seller's obligations
to consummate the transactions contemplated by this Agreement shall be subject
to the full satisfaction of the following conditions, each of which conditions
may be waived in writing by Seller:
(a) Instruments. Buyers shall have delivered all of the Buyer Closing
Documents at the Closing.
(b) Representations and Warranties True; Performance of Covenants. The
representations and warranties of Buyer contained in this Agreement shall be
true in all material respects at the Closing as though made at such time. Buyer
shall have performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
(c) Consents. All material consents or approvals required for the
consummation of the transactions contemplated hereby shall have been obtained
(d) Services Agreement. Buyer and Seller shall have entered into the
Services Agreement, in substantially the form of Exhibit E attached hereto.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
9.1 SURVIVAL. The representations and warranties of Seller and Buyer
contained in this Agreement or in any document, certificate or schedule or
instrument contemplated hereby or delivered pursuant hereto, shall survive the
Closing Date for a period of eighteen (18) months after the Closing Date.
9.2 INDEMNIFICATION BY SELLER. Seller agrees to indemnify Buyer and each of
its affiliates and officers, directors, employees and agents against, and agrees
to hold each of them harmless from, any and all losses, damages or expenses,
including reasonable attorney's fees, suffered or incurred by them arising out
of or relating to any of the following:
(a) any breach of any representation or warranty made by Seller in this
Agreement;
(b) any breach of or failure by Seller to perform any covenant or
obligation of Seller set out or contemplated in this Agreement or in any
schedule hereto;
(c) any products or other activities of the TDM Business produced or
services performed by Seller prior to the Closing Date;
(d) any liabilities of the TDM Business incurred by Seller prior to the
Closing Date; and
(e) any claims by or liabilities with respect to any employee of Seller
with respect to his or her employment or termination of employment on or prior
to the Closing Date by Seller.
9.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify Seller and each of
its affiliates and officers, directors, employees and agents against, and agrees
to hold each of them harmless from, any and all losses, damages or expenses,
including reasonable attorney's fees, suffered or incurred by them arising out
of or relating to any of the following;
(a) any breach of any representation or warranty made by Buyer in this
Agreement;
(b) any breach of or failure by Buyer to perform any covenant or
obligation of Buyer set out or contemplated in this Agreement;
(c) any products produced or services performed by Buyer on or after
the Closing Date relating to the TDM Business (excluding claims arising from
services performed by Seller under the Services Agreement);
(d) any liabilities of the TDM Business incurred by Buyer on or after
the Closing date; and
(e) any claims by or liabilities with respect to any employee of Buyer
with respect to his or her employment by the Buyer.
9.4 NOTICE OF CLAIMS. PROCEDURE FOR INDEMNIFICATION. Upon becoming aware of
a claim for indemnification hereunder, the indemnified party shall promptly give
notice of such claim to the indemnifying party, providing reasonable details of
how the claim has arisen and an estimate of the amount the indemnified party
reasonably anticipates that it will be entitled to on account of indemnification
by the indemnifying party. If the indemnifying party does not object to such
indemnification claim within fifteen (15) calendar days of receiving notice
thereof, the indemnified party shall be entitled to recover promptly the amount
of such claim but such recovery shall not limit the amount of any additional
indemnification to which the indemnified party may be entitled to pursuant to
Section 9.2 or 9.3 hereof. If, however, the indemnifying party advises the
indemnified party that it disagrees with the indemnified party's claim, the
parties shall, for a period of thirty (30) calendar days after the indemnifying
party advised the indemnified party of such disagreement, attempt to resolve the
difference and, failing to do so in such time, either party may unilaterally
submit the matter to dispute resolution pursuant to Section 12.5 hereof.
9.5 THIRD PARTY'S CLAIMS. Claims asserted by a third party, which Buyer or
Seller has determined may give rise to claim indemnification pursuant to Section
9.2 or 9.3 hereof, shall be subject to the following additional procedure and
conditions:
(a) The indemnified party shall give notice to the indemnifying party
of the occurrence of any event or the institution of any claim, action,
investigation, suit or proceeding asserted by a third party which the
indemnified party has determined has given, or may give, rise to claim
indemnification under Section 9.2 or 9.3 hereof. Such notice shall be given
promptly after the indemnified party becomes aware of the event or claim so as
to allow the indemnifying party to present to the indemnified party any argument
that the indemnifying party may wish to raise in connection with the defense of
such claim, provided, however, that where a defense or answer to the asserted
claim must be submitted within a specified period, failing which shall preclude
the indemnified party from asserting such defense or giving such answer, notice
of the claim shall be given to the indemnifying party no later than at the
expiration of one-half (1/2) of such specified period. Any failure by an
indemnified party to give notice of a third party claim shall not affect its
right to indemnification hereunder except to the extent the indemnifying party
can show it was adversely affected by the failure to receive timely notification
and such limitation shall be only to the extent it was so adversely affected.
(b) The indemnifying party shall, upon receipt of the notice referred
to in Section 9.5(a) above, be entitled to conduct the defense, appeal or
settlement of such claim, with counsel elected by it, by giving notice to the
indemnified party of its election to do so within ten (10) calendar days
following receipt by it of the notice of the claim, and the indemnified party
shall thereupon provide the indemnifying party access to the documents relevant
to such defense, appeal or settlement. In the event that the indemnifying party
elects not to conduct the defense, appeal or settlement of such claim, the
indemnified party shall have the right to conduct the defense thereof or reach a
settlement in connection therewith on behalf of and on the account and risk of
the indemnifying party.
9.6 LIMITATIONS. Notwithstanding any provision of this Agreement to the
contrary, an indemnifying party shall not be liable for indemnification to the
other party until the aggregate of all losses, liabilities and damages
(including expenses) incurred by such other party exceed US $25,000, and then
the obligation of the indemnifying party shall be for all such losses of the
indemnified party. In no event shall Seller's liability hereunder exceed the
amount of the Purchase Price that Seller has received in cash (including cash
amounts received under the 1999 Note).
ARTICLE 10
NON-COMPETITION
10.1 NON-COMPETE. Each of Seller and OXIS International agrees that it will
not, directly or indirectly (including, but not limited to, through any parent
company, subsidiary or affiliate), for a period of three (3) years from the
Closing Date, own, operate, engage in (which includes consulting and
manufacturing) or, except as provided below, have any interest, financial or
otherwise, in any person, firm, partnership, association, cooperative,
corporation, company, entity or business that engages or is involved in
(including researching, manufacturing, producing or selling) the therapeutic
drug monitoring assay business (except as necessary to fulfill obligations under
the Services Agreement). Notwithstanding the foregoing, Seller and/or OXIS
International may own, directly or indirectly, not more than a five percent (5%)
beneficial interest in the outstanding stock of any such entity. Seller shall
also not use for its own purposes the names related to the products being sold
as part of the Assets, including but not limited to "Innofluor". Buyer and
Seller agree that Seller is not selling to Buyer, and Buyer is not buying from
Seller, hereunder the name "OXIS" (or any derivation thereof); provided, however
that Buyer shall have a limited, non-exclusive, royalty-free license to use the
name "OXIS" in connection with the sale to customers of the products being sold
hereunder as part of the Assets for a period of 12 months following the Closing.
10.2 INJUNCTIVE RELIEF. Seller acknowledges it would be difficult to
compensate Buyer fully for damages for any violation of this Article 10.
Accordingly, Seller agrees that Buyer shall be entitled to temporary and
permanent injunctive relief to enforce the provisions of this Article in
addition to the right of Buyer to claim damages. Buyer acknowledges it would be
difficult to compensate Seller fully for damages for any violation of this
Article 10. Accordingly, Buyer agrees that Seller shall be entitled to temporary
and permanent injunctive relief to enforce the provisions of this Article in
addition to the right of Seller to claim damages.
ARTICLE 11
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 NONDISCLOSURE AGREEMENT. Representatives of Seller and Buyer have
previously signed an agreement dated November 10, 1998, limiting the
distribution of confidential information. Except as otherwise provided in the
Services Agreement, all information not previously disclosed to the public or
generally known to persons engaged in the respective businesses of Buyer and
Seller which shall have been furnished by Buyer to Seller or by Seller to Buyer
as provided in this Agreement or otherwise in connection with the transactions
contemplated hereby, shall not be disclosed by the party receiving such
information to any person, other than its employees, legal counsel, financial
advisers, accountants or agents in confidence, or used for any purpose other
than as contemplated herein. In the event that the transactions contemplated by
this Agreement shall not be consummated, all such information which shall be in
writing shall promptly be returned to the party furnishing the same, including,
to the extent reasonably practicable, all copies or reproductions thereof which
may have been prepared.
ARTICLE 12
MISCELLANEOUS
12.1 AMENDMENT, WAIVERS AND CONSENTS. This Agreement and the schedules and
Exhibits hereto and that certain side letter between Buyer and Seller dated June
28, 1999 ("Side Letter") constitute the entire agreement between Seller and
Buyer as to the subject matter herein, and supersedes all prior negotiations,
proposals and representations (written or oral). To the extent any terms of this
Agreement or Exhibits hereto are inconsistent or conflict with the terms of the
Side Letter, the terms of the Side Letter shall govern. This Agreement shall not
be changed or modified, in whole or in part, except by supplemental agreement
signed by the parties. Any party may waive compliance by any other party with
any of the covenants or conditions of this Agreement, but no waiver shall be
binding unless executed in writing by the party granting the waiver. No waiver
of any provision of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. Any consent under this Agreement shall be in
writing and shall be effective only to the extent specifically set forth in such
writing.
12.2 SUCCESSORS AND ASSIGNS. Neither Seller nor Buyer may assign this
Agreement except to their respective affiliates, or if they are acquired or
merged with another party the assignment of this Agreement to the new successor
entity shall be permitted. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
12.3 GOVERNING LAW. The rights and obligations of the parties shall be
governed by, and this Agreement shall be construed and enforced in accordance
with, the laws of the State of Oregon, excluding its conflict of laws rules to
the extent such rules would apply the law of another jurisdiction.
12.4 ATTORNEYS' FEES. If any party brings any suit, action, counterclaim,
or arbitration proceeding to enforce the provisions of this Agreement (including
without limitation enforcement of any award or judgment obtained with respect to
this Agreement), the prevailing party shall be entitled to recover a reasonable
allowance for attorneys' fees and litigation expenses in addition to court
costs.
12.5 DISPUTE RESOLUTION. Any dispute, controversy or claim between the
parties relating to, or arising out of or in connection with, this Agreement (or
any subsequent agreements or amendments thereto), including as to its existence,
enforceability, validity, interpretation, performance, breach or damages,
including claims in tort, whether arising before or after the termination of
this Agreement, shall be settled only by binding arbitration pursuant to the
Commercial Arbitration Rules, as then amended and in effect, of the American
Arbitration Association (the "Rules"), subject to the following:
12.5.1 There shall be one arbitrator, who shall be selected under the
normal procedures prescribed in the Rules.
12.5.2 Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.
12.5.3 At the arbitration hearing, each party may make written and
oral presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
12.5.4 The arbitrator's decision shall be in writing, shall be binding
and final and may be entered and enforced in any court of competent
jurisdiction.
12.5.5 No party shall be eligible to receive, and the arbitrator shall
not have the authority to award, exemplary or punitive damages.
12.5.6 Each party to the arbitration shall pay one-half of the fees and
expenses of the arbitrators and the American Arbitration Association.
12.5.7 The arbitrator shall not have the power to amend this
Agreement.
12.6 PAYMENT OF FEES AND EXPENSES. Except as otherwise set forth in this
Agreement, each of Seller and Buyer shall bear their own costs and expenses,
including without limitation, attorneys' fees, incurred in connection with the
negotiation and execution of this Agreement. Seller shall pay any applicable
sales and income taxes on Assets being sold.
12.7 RULES OF CONSTRUCTION. The parties acknowledge that each party has
read and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
12.8 ADDITIONAL DOCUMENTS. Each of the parties agree, without further
consideration, to execute and deliver such other documents and take such further
action as may be reasonably required to effectuate the provisions of this
Agreement.
12.9 SEVERABILITY. If any provision of this Agreement, as applied to either
party or to any circumstance, is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision.
12.10 EXHIBITS. All Exhibits and Schedules attached hereto shall be deemed
to be a part of this Agreement and are fully incorporated in this Agreement by
this reference.
12.11 NOTICES. All notices or other communications required or permitted
hereunder shall be made in writing and shall be deemed to have been duly given
and effective immediately if delivered by hand, or three (3) business days after
being mailed, postage prepaid, by first class or certified or registered mail,
return receipt requested, and addressed as follows:
To Buyer at: Opus Diagnostics, Inc.
One Parker Plaza
Fort Lee, New Jersey 07024
Attn: President
To Seller at: OXIS Health Products, Inc.
6040 N. Cutter Circle, Suite 317
Portland, OR 97217
Attn: President
A notice of change of address shall be effective only when done in accordance
with this Section 12.11.
12.12 RIGHTS OF PARTIES. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
12.13 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first written above.
SELLER BUYER
OXIS HEALTH PRODUCTS, INC. OPUS DIAGNOSTICS, INC.
By: _________________________ By: _________________________
Title: ______________________ Title: ______________________
OXIS INTERNATIONAL, INC.*
By: _________________________
Title: ______________________
*Solely for purpose of making the agreement set forth in Article 10. No other
provision of the Agreement applies to OXIS International, Inc.
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
SCHEDULE NAME
1.1 Description of Seller's Therapeutic Drug Monitoring
Assay Business
4 Seller Disclosure Schedule
4.4 Inventory
4.5 Contracts
4.8 Seller Intellectual Property
4.10 Top Ten Customers
4.11 Compliance with Laws
EXHIBIT NAME
A Form of 1999 Note
B Form of Warrant
C Form of Bill of Sale
D Form of Assignment of Intangible Property
E Form of Services Agreement
<PAGE>
SCHEDULE 1.1
Description of Seller's
Therapeutic Drug Monitoring Assay Business
OXIS' Therapeutic Drug Monitoring Assay Business consists of manufacturing,
marketing and selling fourteen therapeutic drug monitoring ("TDM") assays,
related calibrator sets and control sets for two of the assays (collectively,
the "Products"). The Products, which are designed to run on Abbott Laboratories'
TDx and TDxFLx instruments, are used by customers to test patient samples for
the following therapeutic drugs:
- Amikacin
- Carbamazepine
- Digitoxin
- Digoxin
- Gentamicin
- Phenobarbital
- Phenytoin
- Quinidine
- Teicoplanin
- Theophylline
- Topiramate
- Tobramycin
- Valproic Acid
- Vancomycin
The Products are sold under the trademark "Innofluor".
<PAGE>
SCHEDULE 4.5
Contracts
Contracts relating to OXIS' TDM Business:
Type of Contract Name Date
Development agreement Ortho Pharmaceutical Corporation** 04/1/94
Distribution: BioStat Diagnostics, Limited* 08/27/98
BDS Diagnostics 04/27/95
BioMedical Diagnostics Belgium* 12/28/98
BioMedical Diagnostics, France 09/01/91
DeBiase, Robert** 01/04/94
Dispolab AG 11/01/92
Immuno Diagnostics 11/01/91
Infolab 09/01/91
Innogenetics Tecnologia, S.A. 04/01/96
Immucor Canada, Inc. 01/01/96
J&S Medical Associates 12/01/91
Labsco 01/01/92
Medial AG 10/14/97
New Zealand Diagnostics Limited 09/01/95
Quatro Biosystems Limited 09/01/93
Rolf Greiner Biochemica GmbH 07/01/94
Schoeller Pharma 06/01/96
Sentinal Chemicals 09/01/95
Tema Ricerca S.R.L. 11/01/92
Federal Supply Schedule Dept. of Veterans' Affairs**
- latest amendment 01/13/99
*Contract includes distribution of OXIS' research products. This portion of the
contract is not included in the transaction. The contract will be terminated and
two new contracts will be entered into.
**Consent of other party is required to transfer the contract to Buyer. The
consents of DeBiase, Ortho and the Dept. of Veterans' Affairs will not be
obtained prior to Closing.
Significant Suppliers
AC Label Company
Aldrich Chemical
Alliance Plastics Finish Products Beckman
Binding Site BioCell Laboratories Dana Labels
Diagraph/Westmark Donray Division Embassy Labels
Fisher Scientific Fitzgerald Industries Fluka
Chemical Grigsby Brothers High Purity Chemical
Intergen Company Orbis Division Pierce Chemical
Poly-tainer Product Packaging Plus Scientific
Supply & Equipment Sigma Chemical Superprinters
Technapack Tharco Thinking Plastics Tursso
Company VWR Scientific West Company Wheaton
Scientific
<PAGE>
SCHEDULE 4.8
Seller's Intellectual Property
Trademark - OXIS' TDM assays are sold using the registered trademark "INNOFLUOR"
(U.S. registration no. 2,005,698).
Patent - A patent protecting OXIS' Topiramate assay has been allowed, but not
yet issued (U.S. application no. 08/565,143).
<PAGE>
SCHEDULE 4.10
Seller's Top 10 Customers
Year ended December 31, 1998:
Customer Name 1998 Sales
Bio-Stat Limited $308,571
BioMedical Diagnostics, France $260,631
Rolf Greiner Biochemica GMBH $129,670
Immuno-Biological Laboratories Co., Ltd. $91,630
BioMedical Diagnostics, Belgium $41,938
Medical Sales Associates $37,910
Tema Ricerca SRL $36,709
SmithKline Beecham $33,160
Ral Tecnia Para el Laboratorio $32,533
Sanova Diagnostik $32,072
Three months ended March 31, 1999:
Q1 1999
Customer Name Sales
BioMedical Diagnostics, France $76,833
Bio-Stat Limited $52,499
Alexon Trend (Seradyn) $50,710
BioMedical Diagnostics, Belgium $49,769
Rolf Greiner Biochemica GMBH $45,905
Immuno-Biological Laboratories Co., Ltd. $34,260
SmithKline Beecham $15,705
Ral Tecnia Para el Laboratorio $12,506
Medical Sales Associates $12,050
Tema Ricerca SRL $10,222
<PAGE>
SCHEDULE 4.11
Compliance with Laws
510(k) Clearance Letters
Gentamicin Reagent August 1, 1997
Phenobarbital Reagent July 14, 1998
Phenytoin Reagent January 24, 1996
Theophylline Reagent March 15, 1985
Tobramycin Reagent August 17, 1987
Vancomycin Reagent August 17, 1987
Digoxin Reagent October 30, 1989
Amikacin Reagent February 9, 1996
Quinidine Reagent April 4, 1996
Carbamazepine Reagent August 10, 1989
Valproic Acid Reagent July 15, 1991
Digitoxin Reagent September 23, 1991
Topiramate Reagent May 12, 1997
Gentamicin Calibrator July 21, 1987
Phenobarbital Calibrator July 21, 1987
Phenytoin Calibrator July 21, 1987
Theophylline Calibrator July 21, 1987
Tobramycin Calibrator July 21, 1987
Vancomycin Calibrator July 21, 1987
Digoxin Calibrator October 30, 1989
Amikacin Calibrator August 22, 1990
Quinidine Calibrator June 9, 1989
Carbamazepine Calibrator August 15, 1989
Valproic Acid Calibrator May 23, 1991
Digitoxin Calibrator August 30, 1991
Topiramate Calibrator May 12, 1997
Topiramate Control May 12, 1997
CERTIFICATE OF MERGER
OF
CAPRIUS MERGER SUB, INC.
WITH AND INTO
OPUS DIAGNOSTICS INC.
(Under Section 251 of the General
Corporation Law of the State of Delaware)
Opus Diagnostics Inc., a Delaware corporation, hereby
certifies that:
1. The name and state of incorporation of each of the
constituent corporations to the merger (the "Merger") is as
follows:
(a) Caprius Merger Sub, Inc., a Delaware corporation
("Merger Sub");
(b) Opus Diagnostics Inc., a Delaware corporation
("Opus").
2. The Agreement and Plan of Merger dated as of June
23, 1999, by and among Opus, George Aaron, Jonathan Joels,
Caprius, Inc. and Merger Sub (the "Agreement and Plan of Merger")
has been approved, adopted, certified, executed and acknowledged
by each of the constituent corporations in accordance with the
requirements of Section 251 (and by the written consent of the
stockholders of the constituent corporations in accordance with
the requirements of Section 228) of the General Corporation Law
of the State of Delaware.
3. The name of the surviving corporation is Opus
Diagnostics Inc.
4. Pursuant to the Agreement and Plan of Merger, the
Certificate of Incorporation of Opus as in effect immediately
prior to the effective time of the Merger shall be the
Certificate of Incorporation of the surviving corporation, except
that Article FOURTH shall be amended to read in its entirety as
follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is One thousand (1,000)
shares of common stock, $.01 par value per share (the "Common
Stock").
5. The executed Agreement and Plan of Merger is on
file at an office of the surviving corporation at One Parker
Plaza, Fort Lee, New Jersey 07024.
6. A copy of theAgreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost,
to any stockholder of any constituent corporation.
IN WITNESS WHEREOF, Opus has caused this Certificate of
Merger to be signed by George Aaron, its authorized officer, as
of the 23rd day of June, 1999.
OPUS DIAGNOSTICS INC.
By __________________________
Name: George Aaron
Title: President
Execution Copy
EXHIBIT A
SECURED PROMISSORY NOTE
$565,000* June 28, 1999
FOR VALUE RECEIVED, OPUS DIAGNOSTICS, INC., a Delaware corporation
("Payor"), promises to pay to the order of OXIS HEALTH PRODUCTS, INC., a
Delaware corporation ("Payee"), the principal sum of Five Hundred Sixty-Five
Thousand Dollars ($565,000*), which amount will be due and payable on November
30, 1999 (the "Maturity Date"), in accordance with this Secured Promissory Note
(the "Note").
1. Purchase Agreement. This Note is delivered pursuant to that certain
Asset Purchase Agreement of even date herewith (the "Purchase Agreement")
between Payor and Payee.
2. Interest. No interest will accrue on the principal sum of this Note
unless and until a Default (as defined below) shall have occurred and be
continuing, in which case interest shall immediately begin to accrue on the
unpaid principal sum at the lesser of (i) the rate of two percent (2%) per
month, or any part of a month or (ii) the maximum rate permitted by law, until
such time as all amounts owed hereunder are paid in full.
3. Prepayment. Payor reserves the right to prepay the outstanding principal
amount of this Note in full or in part at any time during the term of this Note
without notice and without premium or penalty.
4. Payment. All payments of principal and interest, if any (and any costs
and expenses owed hereunder, if any), shall be in lawful money of the United
States of America to Payee, at Payee's principal office as set forth in the
Purchase Agreement, or at such other office as may be specified from time to
time by Payee as provided in the Purchase Agreement. All payments, including,
without limitation, any prepayments, shall be applied first to any costs and
expenses owed hereunder, then to accrued interest, if any, and thereafter to
principal.
5. Security Agreement.
(a) Grant and Security Interest. Payor hereby grants to Payee a first
priority security interest in all of Payor's interests whether presently
existing or hereafter created or acquired, wherever located, in the following
described property of the Payor (referred to collectively as the "Collateral"):
(i) the Assets as such term is defined in the Purchase Agreement;
* Principal amount to be increased or decreased pursuant to the terms of Section
2.1.2 of the Asset Purchase Agreement entered into by the Payor and Payee. This
Note will be amended and restated in its entirety to incorporate such increase
or decrease.
(ii) all accounts, accounts receivable, contract rights, choses in
action, money, deposit accounts, certificates of deposit and general intangibles
including tax refund claims, trademarks, trade names, trade styles, patents,
copyrights, licenses, and rights thereunder and registrations thereof;
(iii) all inventory whether raw materials, work in process, or
finished goods including materials used or usable in the manufacturing,
processing, packaging, shipping, or advertising or promotion of inventory, and
including all returns and repossessions;
(iv) all goods, including, but not limited to, machinery,
equipment, farm products, furniture, furnishings, fixtures, all motor vehicles,
and all accessories, tools, fittings, and parts therefor;
(v) all documents, instruments, chattel paper, and letters of
credit; and
(vi) all products thereof and all proceeds of the above whether
due to voluntary or involuntary disposition, including insurance proceeds.
The terms used to describe such Collateral shall have the meanings assigned by
the Uniform Commercial Code as presently enacted in Oregon (hereinafter called
the "UCC"); provided, that the use of terms which represent only a broader
category of collateral (or use of terms which are not defined in the UCC) shall
not be deemed to directly or indirectly reduce the more expansive meaning of the
terms used in the UCC to define broader categories of Collateral (referred to
collectively as the "Collateral").
(b) Obligations Secured. The security interest granted hereby secures
all indebtedness and obligations of Payor to Payee now existing or hereafter
arising under this Note (the "Obligations").
(c) Perfection of Security Interest. Payor shall execute such financing
statements and other documents necessary to perfect Payee's security interests
in the Collateral including any filings required by the U.S. Patent and
Trademark Office. Payor shall promptly notify Payee if Payor moves its principal
place of business or the place where it keeps its records from the State of New
Jersey.
(d) Representations, Warranties and Covenants. Payor represents,
warrants and covenants that:
(i) Title. Apart from the security interest in the Collateral
granted to Payee hereunder, Payor has good and valid title to the Collateral,
free and clear of any and all liens, charges, claims, security interests or
encumbrances of any kind whatsoever.
(ii) Transfer of Collateral. Payor shall not sell, assign,
transfer, encumber or otherwise dispose of any of the Collateral or any interest
therein without the prior written consent of Payee (provided, however, Payor may
sell Collateral comprising inventory in the ordinary course of business). If any
such encumbrance is imposed, Payor shall give Payee immediate written notice.
(iii) Insurance. Payor shall keep the Collateral insured at all
times against such risks, with such carriers, in such amount, as is customary
for businesses similar to those of Payor.
(iv) Notice of Third Party Actions. Payor shall promptly notify
Payee of any levy against the Collateral or any other event that affects the
Collateral.
(e) Power of Attorney. Payor hereby appoints Payee as attorney-in-fact
to execute and file financing statements in connection with the Collateral and,
after the occurrence of an event of Default, to take any other actions that are
appropriate to collect any proceeds of the Collateral. Payee is not obligated to
take any such action.
6. Default. Upon the occurrence of any of the following events, Payor shall
be deemed to be in default hereunder (a "Default"):
(a) commencement of any bankruptcy, insolvency, arrangement,
reorganization or other debtor-relief proceedings by or against Payor, or the
dissolution or termination of the existence of Payor;
(b) any material breach by Payor of its obligations, warranties and/or
representations under the Purchase Agreement or under this Note (except for the
payment of Obligations which are addressed below in this Section 6) which
remains uncured for a period of ten (10) business days after notice of such
breach has been given;
(c) failure by Payor to pay any of the Obligations (as defined in
Section 5) or any other amounts due hereunder when such amounts become due and
payable in accordance with the terms hereof; or
(d) Payor sells any of the Collateral other than permitted by the terms
of this Note.
Upon a Default, Payee may (i) upon written notice to Payor, declare the
entire principal sum and all accrued and unpaid interest hereunder immediately
due and payable, and (ii) exercise any and all rights, powers and remedies
provided under the Purchase Agreement, this Note and otherwise under applicable
law, including the UCC.
In addition to exercising any other rights and remedies Payee may have
under any agreement with Payor or applicable law, Payee may (a) enter Payor's
premises and take possession of the Collateral, render it unusable, or complete
any work in process secured by this Agreement using the employees and property
of Payor, and store any Collateral all at Payor's expense; (b) upon written
notice, require Payor to assemble the Collateral and make it available at a
mutually convenient place designated by Payee; (c) operate, consume, sell or
dispose of the Collateral as Payee deems appropriate for the purposes of paying
or performing the Obligations; (d) declare immediately due and payable all of
the Obligations owing to the Payee; (e) apply any Collateral to the Obligations
in such order as Payee may determine; (f) enter into any agreement relating to
the Collateral; (g) make any settlement that Payee deems appropriate in respect
to any of the Collateral; (h) collect all sums payable in connection with the
Collateral; and (i) make, adjust and receive payment under insurance claims,
claims for breach of warranty and the like in connection with the Collateral.
7. Invalidity. If any provision of this Note, or the application of such
provision to any person or circumstance, is held invalid or unenforceable, the
remainder of this Note, or the application of such provisions to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.
8. No Waiver. No failure on the part of either party to exercise, and no
delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
9. Miscellaneous.
(a) Waiver. Payor waives diligence, presentment, protest and demand and
also notice of protest, demand, dishonor and nonpayment of this Note. No
extension of time for the payment of this Note shall affect the original
liability under this Note of Payor. The pleading of any statute of limitations
as a defense to any demand against Payor is expressly waived by Payor to the
full extent permitted by law.
(b) Setoff. The obligation to pay Payee shall be absolute and
unconditional and the rights of Payee shall not be subject to any defense,
setoff, counterclaim or recoupment or by reason of any indebtedness or liability
at any time owing by Payee to Payor whether pursuant to the Purchase Agreement,
this Note or otherwise; provided, however, notwithstanding the foregoing, if the
Payor has made a claim under Article 9 of the Purchase Agreement which either
(i) Payee has not objected to on a timely basis as set forth in Section 9.4 of
the Purchase Agreement or (ii) is arbitrated and the arbitrator finds in the
favor of Payor, then Payor may setoff amounts owed hereunder equal to the amount
of such claim.
(c) Amendment. This Note may be modified or amended only by a written
agreement executed by Payor and Payee.
(d) Governing Law; Venue. This Note shall be governed by the internal,
substantive laws of the State of Oregon without regard to conflict of laws
provisions. Any dispute arising hereunder shall be resolved pursuant to the
terms of Section 12.5 of the Purchase Agreement (except that the non-prevailing
party shall pay all costs and expenses of the arbitration consistent with the
terms of Section 9(h) hereof).
(e) Successors. This Note shall not be assignable by Payor except with
the prior written consent of Payee. The terms of this Note shall inure to the
benefit of Payee and its successors and assigns.
(f) Time of Essence. Time is of the essence with respect to all matters
set forth in this Note.
(g) Replacement. If this Note is destroyed, lost or stolen, Payor will
deliver a new note to Payee on the same terms and conditions as this Note with a
notation of the unpaid principal and accrued and unpaid interest in substitution
of the prior Note. Payee shall furnish to Payor reasonable evidence that the
Note was destroyed, lost or stolen and any security or indemnity that may be
reasonably required by Payor in connection with the replacement of this Note.
(h) Attorney's Fees. The prevailing party shall be entitled to recover
a reasonable allowance for attorneys' fees and litigation expenses in addition
to court costs in any suit, action, counterclaim or arbitration to enforce the
Obligations or this Note. "Prevailing party" within the meaning of this
paragraph includes without limitation a party who agrees to dismiss an action or
proceeding upon the other's payment of the sums allegedly due or performance of
the covenants allegedly breached, or who obtains substantially the relief sought
by it.
(i) Additional Actions and Documents. The parties shall execute and deliver such
further documents and instruments and shall take such other further actions as
may be required or appropriate to carry out the intent and purposes of this
Note.
By:
----------------------
Title:
-------------------
Execution Copy
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON
ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
SOLD OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE
SECURITIES LAWS, OR AN OPINION OF COUNSEL OR SUCH OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAW IS NOT REQUIRED.
--------------------------------------
WARRANT TO PURCHASE SHARES OF COMMON STOCK
The Transferability of this Warrant is
Restricted as Provided in Section 1
Void after June 28, 2004
Right to Purchase Shares of Common Stock
(subject to adjustment)
No. 1
PREAMBLE
OPUS DIAGNOSTICS, INC., a Delaware corporation (the "Company"), hereby
certifies that, for value received, OXIS HEALTH PRODUCTS, INC. (hereinafter, the
"Registered Holder"), is entitled, subject to and in accordance with the terms
set forth below, to purchase from the Company at any time after December 28,
1999 and before 5:00 P.M. Oregon time, on June 28, 2004 (the "Expiration Time"),
the number of shares of Common Stock, $0.01 par value (the "Shares") of the
Company at the purchase price per Share (the "Purchase Price") as set forth in
Section 17 hereof. The number and character of such Shares and the Purchase
Price are subject to adjustment as provided herein. This Warrant may be
exercised at any time, or from time to time, prior to the Expiration Time.
This Warrant is issued pursuant to an Asset Purchase Agreement (the
"Purchase Agreement"), dated as of June 28, 1999, between the Company and the
Registered Holder. The Purchase Agreement contains certain additional terms that
are binding upon the Company and the Registered Holder of this Warrant. A copy
of the Purchase Agreement may be obtained by any registered holder of this
Warrant from the Company upon written request. Capitalized terms used but not
defined herein shall have the meanings set forth in the Purchase Agreement.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" includes any entity which shall succeed to or assume
the obligations of the Company hereunder.
(b) The term "Other Securities" refers to any class of interests (other
than Shares) and other securities of the Company or any other person (corporate
or otherwise) which the holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to the Shares, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of the Shares or Other
Securities pursuant to Section 5 or otherwise.
(c) The term "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(d) The term "Share" means a Share of Company's Common Stock.
1. RESTRICTED SHARES; TRANSFER RESTRICTIONS.
If at the time of any transfer or exchange of this Warrant, such Warrant
shall not be registered under the Securities Act, the Company may require, as a
condition of allowing such transfer or exchange, that the Registered Holder or
transferee of such Warrant furnish to the Company an opinion of counsel
reasonably acceptable to the Company to the effect that such transfer or
exchange may be made without registration under the Securities Act, or other
evidence satisfactory to the Company. In the case of such transfer or exchange,
and in any event upon exercise of this Warrant (unless the Shares issued
thereupon are registered under the Securities Act), the Company may require a
written statement that such Warrant or Shares, as the case may be, are being
acquired for investment and not with a view to the distribution thereof. The
certificates evidencing the Shares issued upon exercise of this Warrant shall
bear a legend to the effect that the Shares evidenced by such certificates have
not been registered under the Securities Act.
2. EXERCISE OF WARRANT.
2.1. Exercise. This Warrant is exercisable on and after December 28, 1999
with respect to all Shares issuable hereunder (less any Shares purchased upon
any partial exercise hereof) and may be exercised at any time and from time to
time. This Warrant may not be exercised while the Registered Holder is in
material breach of the Purchase Agreement or the Services Agreement (as defined
in the Purchase Agreement).
2.2. Partial Exercise. The Registered Holder may exercise this Warrant by
surrendering this Warrant with the form of Election to Purchase attached as
Annex A hereto (the "Election to Purchase"), duly executed by such holder, to
the Company at its principal office. The surrendered Warrant shall be
accompanied by payment, by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying (a) the number of Shares
as shall be designated by the Registered Holder in the Election to Purchase by
(b) the Purchase Price. On any partial exercise, the Company at its expense will
forthwith issue and deliver to the Registered Holder a new Warrant of like
tenor, in the name of the Registered Holder, calling on the face thereof for the
number of Shares (after giving effect to any adjustment herein) equal to the
number of such Shares called for on the face of this Warrant minus the number of
such Shares designated by the Registered Holder in the applicable Election to
Purchase.
2.3. Company Acknowledgment. The Company will, at the time of the exercise,
exchange or transfer of this Warrant, upon the request of the Registered Holder,
acknowledge in writing its continuing obligation to afford to such Registered
Holder any rights to which such Registered Holder shall continue to be entitled
after such exercise, exchange or transfer in accordance with the provisions of
this Warrant, provided that if the Registered Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Registered Holder any such rights.
3. DELIVERY OF SHARE CERTIFICATES UPON EXERCISE.
Following the exercise of this Warrant, in full or in part, within the time
periods and in the manner provided hereby, the Company, at its expense
(including the payment by it of any applicable issue taxes), will cause to be
issued in the name of and delivered to the Registered Holder hereof a
certificate or certificates for the number of fully paid and nonassessable
Shares to which such Registered Holder shall be entitled on such exercise.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
4.1. The Purchase Price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall at any time after the Calculation Date
(i) subdivide its outstanding shares of capital stock or (ii) combine its
outstanding shares of capital stock into a smaller number of shares of capital
stock, then, in such an event, the Purchase Price in effect immediately prior
thereto shall be adjusted proportionately so that the adjusted Purchase Price
will bear the same relation to the Purchase Price in effect immediately prior to
any such event as the total number of shares of capital stock outstanding
immediately prior to any such event shall bear to the total number of shares of
capital stock outstanding immediately after such event. An adjustment made
pursuant to this Section 4.1(a) shall become effective immediately after the
effective date in the case of a subdivision or combination. The Purchase Price,
as so adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein.
(b) In case the Company shall at any time after the Calculation Date
distribute to any or all holders of its Shares, Other Securities, evidences of
its indebtedness or assets (excluding cash dividends and distributions) or
purchase rights, options or warrants to subscribe for or purchase Other
Securities, then in each such case, the Purchase Price in effect thereafter
shall be determined by multiplying the Purchase Price in effect immediately
prior thereto by a fraction, of which the numerator shall be the total number of
outstanding Shares multiplied by the current market price per Share (as
determined in accordance with the provisions of subdivision (c) below) on the
record date mentioned below, less the fair market value as determined by the
directors of the Company (which determination must be acceptable to the
Registered Holder) of the Other Securities, assets or evidences of indebtedness
so distributed or of such rights or warrants, and of which the denominator shall
be the total number of outstanding Shares multiplied by such current market
price per Share. Such adjustment shall be made whenever any such distribution is
made and shall become effective retroactively immediately after the record date
for the determination of holders of Shares entitled to receive such
distribution.
(c) For the purpose of any computation under subdivision (b) above, the
current market price per Share shall be deemed to be, if Shares are publicly
traded, the average closing bid and asked prices for the then five (5)
immediately preceding trading days, or if the Shares are not publicly traded,
then the average fair market value shall be as determined by the directors of
the Company (which determination must be reasonably acceptable to the Registered
Holder).
(d) No adjustment of the Purchase Price shall be made if the amount of
such adjustment shall be less than $.01 per Share but, in such case, any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than $.01 per Share. In case the Company shall at any time subdivide
or combine the outstanding Shares, said amount of $.01 per Share (as theretofore
increased or decreased, if the same amount shall have been adjusted in
accordance with the provisions of this subparagraph) shall forthwith be
proportionately increased in the case of a combination or decreased in the case
of such a subdivision so as to appropriately reflect the same.
4.2. Upon each adjustment of the Purchase Price pursuant to subdivisions
(a) or (b) (in the case of an issuance of Other Securities) of Section 4.1, the
number of Shares purchasable upon exercise of this Warrant shall be adjusted to
the number of Shares, calculated to the nearest one hundredth of a Share,
obtained by multiplying the number of Shares purchasable immediately prior to
such adjustment upon the exercise of this Warrant by the Purchase Price in
effect prior to such adjustment and dividing the product so obtained by the new
Purchase Price.
4.3. At any time after the Calculation Date, in the event of any capital
reorganization of the Company, or of any reclassification of the Shares, this
Warrant shall be exercisable after such capital reorganization or
reclassification upon the terms and conditions specified in this Warrant, for
the number of shares of Common Stock or Other Securities which the Shares
issuable (at the time of such capital reorganization or reclassification) upon
exercise of this Warrant would have been entitled to receive upon such capital
reorganization or reclassification if such exercise had taken place immediately
prior to such action. The subdivision or combination of Shares at any time
outstanding into a greater or lesser number of Shares shall not be deemed to be
a reclassification of the Shares for the purposes of this Section 4.3.
4.4. Whenever the Purchase Price is adjusted as herein provided, the
Company shall compute the adjusted Purchase Price in accordance with Section 4.1
and the number of Shares in accordance with Section 4.2 and shall prepare a
certificate signed by the Chief Financial Officer of the Company setting forth
the adjusted Purchase Price, and showing in reasonable detail the method of such
adjustment and the fact requiring the adjustment and upon which such calculation
is based, and such certificate shall forthwith be forwarded to the Registered
Holder.
4.5. The form of this Warrant need not be changed because of any change in
the Purchase Price or number of Shares pursuant to this Section 4.
5. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
5.1. In case at any time or from time to time after the date of issuance of
this Warrant and after the Calculation Date, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person or (c)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company within one (1) year from the date of such transfer (any such transaction
being hereinafter sometimes referred to as a "Reorganization"), then, in each
such case, the Registered Holder of this Warrant, upon the exercise hereof as
provided in Section 2 at any time after the consummation or effective date of
such Reorganization (the "Effective Date"), shall receive, in lieu of the Shares
issuable on such exercise prior to such consummation or such Effective Date, the
stock and other securities and property (including cash) to which such
Registered Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Registered Holder
had so exercised this Warrant, immediately prior thereto. The Company shall not
effect a transaction of the type described in clause (a), (b) or (c) above
unless upon or prior to the consummation thereof, the Company's successor
entity, or if the Company shall be the surviving company in any such
Reorganization but is not the issuer of the shares of stock, securities or other
property to be delivered to the holders of the Company's outstanding Shares at
the effective time thereof, then such issuer, shall assume in writing the
obligation hereunder to deliver to the Registered Holder of this Warrant such
shares of stock, securities, cash or other property as such holder shall be
entitled to purchase in accordance with the provisions hereof.
5.2. Except as otherwise expressly provided in Section 5.1, upon any
Reorganization referred to in this Section 5, this Warrant shall continue in
full force and effect and the terms hereof shall be applicable to the shares of
stock and other securities and property receivable on the exercise of this
Warrant after the consummation of such Reorganization, and shall be binding upon
the issuer of any such shares of stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
6. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Certificate of Incorporation, or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Registered Holders hereof, as specified herein.
7. NOTICE OF RECORD DATE.
In case of:
(a) any taking by the Company of a record of the holders of any class of
its securities for the purpose of determining the holders thereof who are
entitled to purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or any voluntary or involuntary dissolution, liquidation or winding
up of the Company, or
(c) any events which shall have occurred resulting in the voluntary or
involuntary dissolution, liquidation or winding up of the Company;
then and in each such event the Company will mail or cause to be mailed to the
Registered Holder of this Warrant a notice specifying (i) the date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, right to purchase or acquire, dissolution, liquidation or
winding up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Shares (or Other Securities) shall be entitled to
exchange their Shares (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up, and
(ii) the amount and character of any shares of stock or other securities, or
rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant is to be offered or made. Such notice shall be
mailed at the same time as notice is sent to the Company's stockholder, but in
no event less than ten (10) business days prior to the date on which any such
action is to be taken.
8. EXCHANGE OF WARRANTS.
On surrender or exchange of this Warrant, properly endorsed, to the
Company, the Company at its expense will issue and deliver to the holder thereof
a new Warrant of like tenor, in the name of such holder or as such holder (on
payment by such holder or any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of Shares called for
on the face or faces of the Warrant so surrendered.
9. REPLACEMENT OF WARRANTS.
On receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction of any Warrant, on delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of such Warrant, the
Company, at its expense, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.
10. WARRANT AGENT.
The Company may, by written notice to each holder of this Warrant, appoint
an agent for the purpose of issuing Shares on the exercise of this Warrant
pursuant to Section 2, exchanging this Warrant pursuant to Section 8, and
replacing this Warrant pursuant to Section 9, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
11. NEGOTIABILITY, ETC.
This Warrant is issued upon the following terms, to all of which each
Registered Holder or owner hereof by the taking hereof consents and agrees:
(a) this Warrant may be transferred by endorsement (by the Registered
Holder hereof executing the form of assignment attached as Annex B hereto) and
delivery in the same manner as in the case of a negotiable instrument
transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is empowered to
transfer absolute title hereto by endorsement and delivery hereof to a bona fide
purchaser hereof for value; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona fide
purchaser, and each such bona fide purchaser shall acquire absolute title hereto
and to all rights represented hereby; and
(c) until this Warrant is transferred on the books of the Company, the
Company may treat the Registered Holder hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary.
12. WAIVER, AMENDMENT.
Neither this Warrant nor any provisions hereof shall be modified, changed,
discharged or terminated except by an instrument in writing, signed by the party
against whom any waiver, change, discharge or termination is sought.
13. APPLICABLE LAW; VENUE.
This Warrant shall be governed by and construed in accordance with the laws
of the State of Delaware applicable to contracts made and to be performed
entirely within such State. Any dispute arising out of or relating to this
Warrant or any transactions contemplated hereby shall be resolved pursuant to
the terms of Section 12.5 of the Purchase Agreement.
14. ATTORNEYS' FEES.
If any party brings any suit, action, counterclaim, or arbitration
proceeding to enforce the provisions of this Warrant (including, without
limitation, enforcement of any award or judgment obtained with respect to this
Warrant), the prevailing party shall be entitled to recover a reasonable
allowance for attorneys' fees and litigation expenses in addition to arbitration
or court costs. "Prevailing party" shall mean herein to include a party who
agrees to dismiss an action or proceeding upon the other's payment of the sums
allegedly due or performance of the covenants allegedly breached, or who obtains
substantially the relief sought by it.
15. SECTION AND OTHER HEADINGS.
The section and other headings contained in this Warrant are for reference
purposes only and shall not affect the meaning or interpretation of this
Warrant.
16. NOTICES.
All notices and other communications provided for herein shall be in
writing and shall be effective upon personal delivery, via facsimile (upon
receipt of confirmation of actual receipt) or one business day following deposit
of such notice with a recognized courier service, with postage prepaid and
addressed, if to the Registered Holder of this Warrant, to OXIS HEALTH PRODUCTS,
INC., 6040 N. Cutter Circle, Suite 317, Portland, OR 97217, Attn: President, or
such other address as may have been furnished to the Company in writing by such
Registered Holder or, until any such Registered Holder furnishes to the Company
an address, then to, and at the address of, the last Registered Holder of this
Warrant who has so furnished an address to the Company, and if to the Company,
to OPUS DIAGNOSTICS, INC., One Parker Plaza, Fort Lee, New Jersey 07024, Attn:
President.
17. ESTABLISHING THE PURCHASE PRICE AND NUMBER OF SHARES
The number of Shares purchasable hereunder shall be 2,000 Shares
(representing 10% of the issued and outstanding Common Stock of the Company),
subject to adjustment pursuant to the terms hereof. The Purchase Price (or
"exercise price") shall be calculated six (6) months after issuance of this
Warrant (the "Calculation Date") as follows:
(i) If the Company's Common Stock is not publicly traded on the Calculation
Date, the exercise price shall be equal to the per share purchase price on a
placement (the "Placement") of the Company's Common Stock (or the conversion
price on the sale of other securities of the Company convertible into Common
Stock) where the placement proceeds first aggregate (aggregating all proceeds
from the date hereof) $250,000.
(ii) In the event that the Company closes an initial public offering (an
"IPO") of its equity securities at any time prior to the Calculation Date, the
exercise price shall be equal to 80% of the per share offering price in the IPO.
(iii) If as of the Calculation Date the Company has not consummated a
Placement or IPO, the exercise price shall equal the price per share paid by
George Aaron and Jonathan Joels for the shares of Common Stock of the Company
which they purchased nearest to the Calculation Date.
(iv) In the event that prior to the Calculation Date the Company is
acquired (whether by merger, consolidation, stock purchase, asset purchase or
other acquisition transaction) (an "Acquisition Transaction"), by another
corporation, in a cash transaction, the exercise price shall be equal to 80% of
the per share cash acquisition price received by the Company stockholders and
the Warrant shall become exercisable at least five (5) business days prior to
the closing date of the Acquisition Transaction.
(v) In the event that prior to the Calculation Date the Company is acquired
in an Acquisition Transaction by another corporation for securities which are
publicly traded, the Warrant shall become the obligation of the acquiring
corporation exercisable for securities of the acquiring corporation based upon
the exchange ratio received by the Company stockholders for their shares of
Company Common Stock and the exercise price shall be equal to 80% of the average
bid and asked prices or the closing price per share of the acquiring
corporation's common stock on the securities market (national securities market,
Nasdaq, DTC Bulletin Board or "pink sheets") on which such common stock is so
listed or traded for the five (5) trading days immediately preceding the
Calculation Date. In the event that prior to the Calculation Date the Company is
acquired in an Acquisition Transaction by another corporation for securities
which are not publicly traded, the Warrant shall become the obligation of the
acquiring corporation exercisable for securities of the acquiring corporation
based upon the exchange ratio received by the Company stockholders for their
shares of Company Common Stock and the exercise price shall be equal to the fair
market value of the shares of the acquiring corporation which shall equal the
price per share paid by a third party investor in the most recent financing
transaction of such acquiring corporation within the last six months and if no
such financing transaction took place, then the exercise price shall be agreed
to by the acquiring corporation and Registered Holder.
18. EXPIRATION.
The right to exercise this Warrant shall expire at the Expiration Time.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of June
28, 1999.
By: _______________________
Name:
Title:
Attest:
By: _______________________
Name:
Title:
<PAGE>
Annex A
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase ____________ Shares and herewith
tenders in payment for such securities a certified or official bank check
payable to the order of __________________________, in the amount of U.S.
$____________, all in accordance with the terms hereof. The undersigned requests
that a certificate for such Shares be registered in the name of
___________________, whose address is ______________ ____________________ and
that such Certificate be delivered to ___________________, whose address is
_________________________.
Dated:
Name:__________________________
Signature:_____________________
(Signature must conform in all respects to the name of the Registered Holder, as
specified on the face of the Warrant.)
------------------------------------
(Insert Social Security or Other
Tax Identification Number of Holder)
<PAGE>
Annex B
FORM OF ASSIGNMENT
(To be executed by the Registered Holder if such Holder desires to transfer
the Warrant.)
FOR VALUE RECEIVED, ________________
hereby sells, assigns and transfers unto
-----------------------------------
(Please print name and address of transferee)
this Warrant, together with all right, title and interest therein, and does
so hereby irrevocably constitute and appoint _______________________ Attorney,
to transfer the within Warrant on the books of the within-named Company, with
full power of substitution.
Dated:
Name:_______________________
Signature:__________________
(Signature must conform in all respects to the name of the
Registered Holder, as specified on the Warrant.)
--------------------------------
(Insert Social Security or Other Tax Identification Number of
Assignee).
Execution Copy
EXHIBIT E
SERVICES AGREEMENT
This SERVICES AGREEMENT (the "Agreement"), effective as of June 30, 1999
(the "Effective Date"), is made by and between OPUS DIAGNOSTICS, INC., a
Delaware corporation ("OPUS"), and OXIS HEALTH PRODUCTS, INC., a Delaware
corporation ("OXIS").
RECITALS
1. Contemporaneously with the execution of this Agreement, OPUS is
purchasing from OXIS, and OXIS is selling to OPUS, OXIS' therapeutic drug
monitoring assays business (the "TDM Business") as described in that
certain Asset Purchase Agreement (the "Purchase Agreement") entered into by
the parties and dated the date hereof.
2. In connection with the purchase and sale of the TDM Business, OPUS
and OXIS wish to provide for certain covenants and agreements relating to
manufacturing and other services to be provided by OXIS to OPUS with
respect to the TDM Business.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
PROVISION OF SERVICES
1.1 Manufacturing Services to be Provided by OXIS. During the term of this
Agreement, or for such shorter period as is specified on Article V, OXIS shall
provide to OPUS, the OXIS manufacturing services described herein and in Exhibit
A hereto (the "Manufacturing Services"); provided, however, that (a) OPUS
provides a reasonable advance notice of its requirements for such Manufacturing
Services specifying the type and amount of products OPUS requests OXIS to
manufacture, and (b) OXIS shall have the right to designate and select its
employees and facilities which will be used to provide such Manufacturing
Services. Set forth on Exhibit C hereto is a list of the products which OXIS
will manufacture for OPUS (the "Products"). OPUS shall provide the notice set
forth in this Section 1.1 for each calendar quarter (commencing with the quarter
starting on October 1, 1999) and shall deliver such notice to OXIS no later than
thirty (30) days prior to the commencement of the calendar quarter to which such
notice relates. Upon confirmation of such order (which shall be given within ten
(10) business days of receipt thereof or the order shall not be deemed
confirmed), OXIS will provide OPUS with information concerning the manufacturing
and delivery schedule. Prior to the quarter starting on October 1, 1999, the
parties shall endeavor to agree on the amounts, types and timing of the products
to be manufactured hereunder.
1.2 Administrative Services to be Provided by OXIS. During the term of this
Agreement, or for such shorter period as is specified on Exhibit B hereto, OXIS
shall provide to OPUS the administrative services described in Exhibit B hereto
(the "Administrative Services" and, collectively with the Manufacturing
Services, the "Services"); provided, however, that OXIS shall have the right to
designate and select its employees and facilities which will be used to provide
such Administrative Services. All OPUS' requests for Administrative Services
shall be made in a reasonably detailed writing to OXIS. OXIS shall notify OPUS
within thirty (30) days whether it accepts or rejects OPUS' request for such
Services.
1.3 Charges for Manufacturing Services. During the first year of the term
of this Agreement, OPUS shall pay to OXIS a manufacturing fee per Product
manufactured as set forth on Exhibit C hereto. It is intended that the fees set
forth on Exhibit C will equal 115% of (i) all salary and benefits (excluding
bonuses and other incentive payments) incurred by OXIS for personnel (which
shall not include purchasing managers or persons occupying similar positions who
are paid $50,000 or more in annual salary) time spent in providing Manufacturing
Services to OPUS that are reasonably attributable to the Manufacturing Services,
and (ii) all materials and other costs and expenses, (including but not limited
to third-party charges, occupancy costs, supplies, insurance, equipment repairs
and maintenance and depreciation of existing (and OPUS approved future acquired)
equipment and leasehold improvements, but excluding any of OXIS' corporate
overhead) incurred by OXIS in providing the Manufacturing Services to OPUS that
are reasonably attributable to the Manufacturing Services, based on such
methodologies consistent with generally accepted accounting principles and
consistent with OXIS' past practices (the methodologies of calculating such
costs and expenses are set forth on Exhibit D hereto). If during each of the
first two six-month periods of the Agreement the total fees paid hereunder to
OXIS (i) do not equal the amount set forth in the immediately preceding sentence
calculated for such period (the "Period Shortfall"), then OPUS shall within
thirty (30) days of conclusion of the applicable period pay to OXIS an amount
equal to the Period Shortfall; or (ii) exceed the amount set forth in the
immediately preceding sentence calculated for such period ("Period Excess"),
then OXIS shall within thirty (30) days of conclusion of the applicable period
pay to OPUS an amount equal to the Period Excess for the applicable six-month
period. If there is a Period Shortfall or Period Excess for the first six-month
period, the parties agree that they shall adjust the fee schedule set forth on
Exhibit C for the second six-month period so that the total fees paid for the
second six-month period shall be consistent with the intent set forth in the
second preceding sentence. After the first year of this Agreement, the process
set forth above shall be repeated (with the fee schedule being adjusted to
reflect necessary changes) and at the conclusion of this Agreement or the
delivery of Products ordered under Section 5.4, the parties shall calculate a
Period Shortfall or Excess, as the case may be, and payments shall be made
accordingly. OXIS agrees that it shall, during the term of this Agreement,
continue to manufacture research assays at its Portland facility. Title and risk
of loss shall pass to OPUS upon the completion and release of Products to OPUS'
finished goods inventory (which OXIS may hold on behalf of OPUS). OXIS will, on
behalf of OPUS, ensure that such Products held in OPUS' finished goods inventory
are insured by third party insurers in amounts equal to the value of such
Products with Opus named as a loss payee. Upon the request of OPUS, OXIS shall
provide OPUS a copy of the endorsement of such insurance policy.
1.4 Charges for Administrative Services. During the term of this Agreement,
OPUS shall pay to OXIS an amount equal to 115% of (i) all salary and benefits
(less bonuses and other incentive payments), incurred by OXIS for personnel time
spent in providing Administrative Services to OPUS that are separately
identifiable, (ii) all salary and benefits (less bonuses and other incentive
payments), incurred by OXIS for personnel time spent in providing Administrative
Services to OPUS that are not separately identifiable, but are reasonably
attributable to the Administrative Services, based on such methodology
(consistent with generally accepted accounting principles and consistent with
OXIS' past practices) as OXIS determines to be appropriate, and (iii) all other
costs and expenses (including, but not limited to, third-party charges,
occupancy costs, supplies, insurance, equipment repairs, and maintenance and
depreciation of equipment and leasehold improvements, but excluding any of OXIS'
corporate overhead) incurred by OXIS in providing Administrative Services to
OPUS that are separately identifiable or are reasonably attributable to the
Administrative Services, based on such methodology (consistent with generally
accepted accounting principles and, OXIS' past practices) as OXIS determines to
be appropriate.
1.5 Independent Contractor. OXIS will provide Services to OPUS under this
Agreement as an independent contractor and not as an agent or employee.
Employees of OXIS providing Services shall at all times remain employees of
OXIS. OXIS shall have the exclusive right to determine and shall be solely
responsible for the salaries, wages and benefits of its employees providing
Services under this Agreement.
1.6 Limitation on Costs. For purposes of Sections 1.3 and 1.4 above, any
increases in salary rates incurred by OXIS from one billing period to the next
will be limited to the actual increase in such costs experienced by OXIS,
provided OPUS was given notice of such increases.
ARTICLE II
PAYMENTS
2.1 Invoices and Payment. OXIS shall submit to OPUS monthly an invoice for
all charges associated with Services for the preceding month and any adjustments
for prior months. All invoices shall describe in reasonable detail (a) the
Services provided during the preceding month and the charges (including
third-party charges) associated therewith and (b) any prior months' adjustments.
OPUS shall remit payment to OXIS in full within thirty (30) days after the date
on which the invoice is received. OPUS shall pay to OXIS a penalty of one and
one-half percent (1-1/2%) per month, or any part thereof, for which a payment is
past due. Any payment that is sixty (60) days or more past due will be
considered a breach of this Agreement, and such breach will give OXIS the right
to terminate or suspend its services pursuant to this Agreement.
2.2 Method of Payment. Transfer of funds pursuant to this Agreement shall
be made in U.S. dollars by wire transfer of immediately available funds to an
account or accounts specified by the party receiving such payment.
2.3 Books and Records. OXIS shall keep complete and accurate books, records
and accounts of all transactions pertaining to Services provided to OPUS
pursuant to this Agreement, including the identity of employees providing
Services, the amount of time devoted by such employees in performing such
services, directly assignable expenses incurred in providing such Services and
other matters reasonably necessary to calculate amounts to be paid for such
Services pursuant to this Agreement, and OPUS shall have the right to inspect at
OXIS' facilities such books, records and accounts relating to the provision of
the Services upon reasonable notice and during reasonable business hours.
ARTICLE III
PERFORMANCE OF SERVICES
3.1 Degree of Care. OXIS shall perform the Services hereunder with the same
degree of care, skill and prudence customarily exercised by it in respect of its
own business, operations and affairs. All manufacturing services provided
hereunder shall be performed in material conformance with all applicable
regulations of the U.S. Food and Drug Administration (the "FDA") and other
regulatory agencies covering Good Manufacturing Practices and Exhibit A.
3.2 Certain Information. OPUS shall provide any information, and access to
such facilities, reasonably needed by OXIS to perform the Services pursuant
hereto. If the failure to provide such information renders the performance of
any requested Service impossible or unreasonably difficult, OXIS may, upon
reasonable notice to OPUS, refuse to provide such Services. 3.3 Proprietary
Information.
(a) "Proprietary Information" means any and all information and
material disclosed by either OPUS or OXIS (each a "Discloser," if disclosing) to
the other party (each a "Recipient," if receiving) (whether in writing, or in
oral, graphic, electronic or any other form) that is marked as (or provided
under circumstances reasonably indicating it is) confidential or proprietary, or
if disclosed orally or in other intangible form or in any form that is not so
marked, that is identified as confidential at the time of such disclosure and
summarized in writing and transmitted to the Recipient within thirty (30) days
of such disclosure. Proprietary Information, includes, without limitation, any
trade secret, know-how, idea, invention, process, technique, algorithm, program,
design, schematic, drawing, formula, data, plan, strategy, forecast, and any
technical, engineering, manufacturing, product, marketing, servicing, financial,
personnel and other information and materials of Discloser and its employees,
consultants, investors, affiliates, licensors, suppliers, vendors, customers,
clients and other third parties.
(b) Recipient shall hold all Proprietary Information in strict
confidence and shall not disclose any Proprietary Information to any third
party. Recipient shall disclose the Proprietary Information only to its
employees and agents who need to know such information and who are bound in
writing by restrictions regarding disclosure and use comparable to those set
forth herein. Recipient shall not use any Proprietary Information for the
benefit of itself or any third party or for any purpose other than the purposes
contemplated by this Agreement or related hereto. Recipient shall take the same
degree of care that it uses to protect its own confidential and proprietary
information and materials of similar nature and importance (but in no event less
than reasonable care) to protect the confidentiality and avoid the unauthorized
use, disclosure, publication, or dissemination of the Proprietary Information.
The obligations of this Section 3.3 with respect to any item of Proprietary
Information shall survive and continue for five (5) years from the date of
Recipient's receipt of such Proprietary Information.
(c) The foregoing restrictions on disclosure and use shall not apply
with respect to any Proprietary Information to the extent such Proprietary
Information: (i) was known by Recipient before receipt from Discloser; (ii)
becomes known to Recipient without confidential or proprietary restriction from
a source other than Discloser that does not owe a duty of confidentiality to
Discloser with respect to such Proprietary Information; or (iii) is
independently developed by Recipient without the use of the Proprietary
Information of Discloser. In addition, Recipient may use or disclose Proprietary
Information to the extent (a) approved by Discloser or (b) Recipient is legally
compelled to disclose such Proprietary Information, provided, however, that
prior to any such compelled disclosure, Recipient will give Discloser reasonable
advance notice of any such disclosure and shall cooperate with Discloser in
protecting against any such disclosure and/or obtaining a protective order
narrowing the scope of such disclosure and/or use of the Proprietary
Information. This Section 3.3 will survive any termination or expiration of this
Agreement.
3.4 Certain Representations. OXIS represents and warrants to OPUS, which
representations and warranties shall remain in effect during the term of this
Agreement, that:
(a) The Products to be supplied to OPUS, including the containerization
and packaging therefor, shall at the time of delivery be of merchantable
quality, free from material manufacturing defects and conform with the Product
Specifications and the Manufacturing Specifications set forth in Exhibit A
annexed hereto, and the requirements of the FDA and other regulatory agencies,
in force at that time.
(b) OXIS shall notify OPUS on OXIS becoming aware of any intellectual
property rights relevant to the manufacture and sale of the Products owned by
OXIS which were inadvertently not included as part of the intellectual property
included in the sale of the TDM Business under the Purchase Agreement.
(c) The Products to be supplied to OPUS and its customers shall,
subject to any damage to the Products subsequent to delivery of the Products to
OPUS' customers (including, without limitation, damage by reason of improper
storage), conform in all material respects with the Product Specifications.
(d) OXIS shall not change the manufacturing process with respect to any
Product if such change could affect the performance or registration of such
Product, without the prior written consent of OPUS given after prompt notice to
OPUS and consultation between the parties.
(e) The manufacturing of the Products by OXIS shall be performed in its
facility which is an FDA approved facility.
(f) At the time finished Products are transferred to OPUS, such
Products shall have a minimum shelf life (i.e., expiration date) of six months.
ARTICLE IV
LIMITATIONS ON LIABILITY
4.1 Limitations on Liability. OXIS shall not have any liability under this
Agreement (including any liability for its own negligence) for damages, losses
or expenses suffered by OPUS or its subsidiaries as a result of the performance
or non-performance of OXIS' obligations hereunder, unless such damages, losses
or expenses are caused by or arise out of the willful misconduct or gross
negligence of OXIS or a breach by OXIS of any of the express provisions hereof;
notwithstanding the foregoing to the extent OXIS has delivered non-conforming
goods, or failed to deliver goods properly ordered hereunder, OXIS shall be
responsible for promptly delivering conforming goods. Notwithstanding the
foregoing, neither party shall be liable for, or considered to be in breach or
default hereunder on account of, any delay or failure to perform as required by
this Agreement as a result of any causes or conditions which are beyond such
party's reasonable control (including acts of God, earthquakes, labor strife,
and the ability to obtain necessary raw materials from suppliers). IN NO EVENT
SHALL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY FOR INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES THAT SUCH OTHER PARTY OR ITS SUBSIDIARIES OR
ANY THIRD PARTY MAY INCUR OR EXPERIENCE ON ACCOUNT OF THE PERFORMANCE OR
NON-PERFORMANCE OF SUCH PARTY'S OBLIGATIONS HEREUNDER. Furthermore, neither
party shall be liable to the other party or to any third party with respect to
obligations or liabilities incurred by either party in connection with their
separate businesses unrelated to the matters related to this Agreement.
4.2 Product Recalls. In the event that any Product must be recalled from
customers because of any error in manufacturing or quality control by OXIS, then
OXIS will replace the Product and carry out the entire recall at OXIS' expense.
In the event that any Product must be recalled from customers for any other
reason, then the cost of carrying out the recall and replacing the Product shall
be borne by OPUS.
ARTICLE V
TERM AND TERMINATION
5.1 Terms of Agreement. This Agreement shall become effective on the
Effective Date and shall terminate on September 30, 2000; provided, however,
that the term of this Agreement may be extended with respect to one or more
Services with the mutual written agreement of the parties. During the term of
this Agreement, OXIS shall be the exclusive provider of the Services hereunder
to OPUS and OPUS shall not engage any other party to perform such Services
subject to Exhibit A.
5.2 Termination for Default. Either party may terminate this Agreement and
its obligations hereunder if the other party has failed to perform a material
obligation under this Agreement and has not corrected such failure within ninety
(90) days after receipt of written notice from the non-defaulting party
describing such failure.
5.3 Termination for Bankruptcy. Either party may terminate this Agreement
upon written notice to the other party if the other party becomes involved in
any voluntary or involuntary bankruptcy or other insolvency proceeding
(including an assignment for the benefit of creditors) and such proceeding is
not dismissed within sixty (60) days following its commencement.
5.4 Effect of Termination. Any termination of this Agreement shall not
affect or discharge the obligation of any party to pay amounts owed to the other
party prior to such termination. Nothing in this Agreement shall limit any
remedies which either party may have concerning the default of the other, except
in no event shall either party be liable to the other for any incidental or
consequential damages or lost profits with respect to any failure to perform
obligations pursuant to this Agreement. Upon termination, provided, that OPUS is
not in default or breach of the terms of this Services Agreement, OXIS shall
continue to provide OPUS with sufficient Products to honor all Product orders
for up to one hundred twenty (120) days after the effective date of termination.
5.5 Survival or Provisions. The rights and obligations of the parties
pursuant to Article IV and Section 3.3 shall survive termination of this
Agreement.
ARTICLE VI
MISCELLANEOUS
This Agreement shall be subject to the terms and provisions of Article 12
of the Purchase Agreement, which are hereby incorporated into this Agreement to
the extent applicable; provided, however, that OXIS' obligations with regard to
the Manufacturing Services may not be assigned.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Services Agreement
to be executed by their duly authorized representatives.
OXIS HEALTH PRODUCTS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
OPUS DIAGNOSTICS, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<PAGE>
Exhibit A
Manufacturing Specifications
OXIS will procure materials, assemble, manufacture, test and release
fully-assembled (or as otherwise directed) therapeutic monitoring assays,
calibrators and controls (the "Products") as described in Exhibit C in
accordance with the specifications set forth herein to fulfill OPUS'
requirements.
OXIS will ship the Products to OPUS' customers in accordance with orders
received from OPUS. Each Product will be in finished and packaged form in
containers suitable for shipping as OPUS requires for marketing and will bear a
label designed or approved by OPUS. OPUS will provide to OXIS on a quarterly
basis, a twelve-month rolling unit forecast by Product and by month. The first
three months of each quarterly forecast will be a firm purchase commitment from
OPUS to OXIS. Quarterly forecasts will be submitted to OXIS as set forth in
Section 1.1 of the Services Agreement to assure adequate time for production
scheduling. In addition to the direct manufacturing activity, OXIS will perform
the following direct support functions:
- Supervision of Manufacturing and Support Functions
OPUS and its representatives shall have reasonable access, during
normal business hours, to the OXIS facilities to review and audit OXIS's
manufacturing and quality control practices and procedures as they relate to the
Products. OXIS shall cooperate with OPUS and its representatives in conducting
the foregoing reviews and audits. OXIS agrees to consider all reasonable
recommendations made by OPUS with respect to such practices and procedures.
- Materials Planning
- Purchasing
- Production Scheduling
OXIS shall notify OPUS as soon as possible if OXIS is unable or
anticipates it will be unable to provide a sufficient quantity of Products as
specified in the notice of Product requirements given by OPUS or of Products
complying in all respects to the representations and warranties set forth in
this Agreement because of problems encountered by OXIS in the manufacturing of
such Products. Upon receipt of such notification, OPUS shall work with OXIS to
resolve such manufacturing problems. If such manufacturing problems have not
been resolved in the reasonable good faith judgment of OPUS within thirty (30)
days from the date OPUS receives notice under this item, then OPUS shall
automatically have the right to manufacture or have manufactured for it such
Products, without liability of OPUS to OXIS hereunder.
- Receiving
- Material Storage
The Products and ingredients therein shall be placed, as necessary, in
cold storage.
- Shipping
With respect to each lot of any Product, OXIS shall notify OPUS in
advance of such delivery. Accompanying the notification shall be a Certificate
of Analysis in a form agreed upon by the parties and in which OXIS certifies
that the Products to be delivered have been analyzed and meet the applicable
Product Specifications and Manufacturing Specifications. Such Certificate of
Analysis shall also set forth the batch number of the Products, the date of
manufacture, the date on which the shelf-life for such Products expires, and the
finished product lot-to-lot test data.
- In-process quality testing
- Final product release testing
- Document control
OXIS shall also provide OPUS all current technical documentation, data
and information pertaining to use of the Products, handling instructions or
manuals, that are used by OXIS in connection with the use of the Products.
- Quality Assurance and Regulatory Affairs
(a) OXIS shall reasonably comply with GMP and other regulatory
compliance.
(b) Each party shall inform the other party of any material complaints
it receives from customers or from any government or regulatory authority in
respect of the Products, their manufacture or constituents, and any findings in
respect thereof. Such data, information and copies of any relevant
correspondence in relation thereto shall be supplied to the other party as soon
as practicable after receipt or issuance by the party receiving such complaint.
(c) OPUS shall promptly notify OXIS of the discovery and nature of any
material non-conformance of any Product to the Product Specifications or to any
claims contained in authorized package inserts. OXIS shall keep OPUS informed of
the progress of corrective actions undertaken by OXIS, with OPUS' prior consent.
- Insurance
OXIS will maintain comprehensive insurance from carriers with policies
and in amounts customary in the industry with respect to its manufacture of the
Products, and upon the request of OPUS to furnish to OPUS a summary of such
policies.
- Improvements
If OPUS requests OXIS to make any improvements to any of the Products
during the term of this Agreement, OXIS shall, once such improvements are
completed, include such improvements in the Products.
Product Specifications
Product specifications will be delivered by OXIS on or before sixty
(60) days following the date of this Agreement.
<PAGE>
Exhibit B
Administrative Services
Certain functions that are not directly linked to product manufacturing
will be provided by OXIS to support the production process and related
activities. These functions include, but are not limited to, the following
activities:
- Cost Accounting, to the extent requested by OPUS
- Inventory control and costing, including lot tracking of raw materials
and finished goods
- Customer Service: Processing orders; responding to customer inquiries,
etc.
- Regulatory Affairs: Complying with GMP's and other regulatory
requirements. In addition, OXIS shall render all assistance reasonably
requested by OPUS, including provision of all technical and other data
developed by OXIS, to enable OPUS to obtain any necessary or desirable
regulatory approvals. (Services required to maintain any regulatory
approvals shall be provided pursuant to Exhibit A.) All technical and
other data disclosed by OXIS to OPUS on or after the date hereof shall
be subject to the confidentiality provisions set forth in Section 3.3
of this Agreement and shall be so treated by OPUS. OPUS agrees that if
any regulatory submission contains manufacturing or technical
information relating to Product manufacturing, know-how or process
valuation studies, OPUS will obtain OXIS's consent to such submission
prior to submitting it to the appropriate regulatory authority, and
OXIS shall not unreasonably withhold such consent.
- Research & Development: Provision of technical support to manufacturing
and in response to customer inquiries.
- General Administration: Management direction and support for the
manufacturing and administrative support functions.
- Training: OXIS shall train the OPUS technical Product and customer
support force in the service and use of the Products. The first such
training session shall take place as mutually agreed, but no more than
thirty (30) days after the Closing Date of the Purchase Agreement.
There shall be additional training sessions available to OPUS personnel
or its customers' personnel at reasonable intervals thereafter.
- Telemarketing: OXIS shall provide telemarketing services to market and
sell the Products. Initially, the telemarketing staff shall consist of
two persons. Additional telemarketing staff may be added, or
telemarketing staff may be reduced at the request of OPUS, but any such
reductions will require one month's notice to OXIS. Telemarketing staff
will be under the direct supervision of OXIS' President or his
designee. OPUS will be responsible for the direction of the
telemarketing effort, such direction to be given to OXIS' President or
his designee. As requested by OPUS, OXIS will provide marketing
materials, attend trade shows and perform other marketing functions
customary in the industry.
<PAGE>
Exhibit C
Transfer Prices
Initial
OXIS Transfer
Product No. Description Price
REAGENTS KITS:
11012 Gentamicin Reagent $ 40.05
11013 Phenobarbital Reagent 40.05
11014 Phenytoin Reagent 40.05
11015 Theophylline Reagent 40.05
11016 Tobramycin Reagent 40.05
11017 Vancomycin Reagent 53.81
11018 Digoxin Reagent 40.05
11019 Amikacin Reagent 40.05
11026 Quinidine Reagent 40.05
11027 Carbamazepine Reagent 40.05
11037 Teicoplanin Reagent 223.31
11050 Valproic Acid Reagent 40.05
11051 Digitoxin Reagent 40.05
11055 Topiramate Reagent 197.02
CALIBRATOR SETS:
41017 Gentamicin Calibrator 35.00
41018 Phenobarbital Calibrator 35.00
41019 Phenytoin Calibrator 35.00
41020 Theophylline Calibrator 35.00
41021 Tobramycin Calibrator 35.00
41022 Vancomycin Calibrator 35.00
41023 Digoxin Calibrator 35.00
41024 Amikacin Calibrator 35.00
41027 Teicoplanin Calibrator 35.00
41029 Quinidine Calibrator 35.00
41030 Carbamazepine Calibrator 35.00
41050 Valproic Acid Calibrator 35.00
41051 Digitoxin Calibrator 35.00
41055 Topiramate Calibrator 35.00
CONTROL SETS:
41032 Teicoplanin Control 35.00
41056 Topiramate Control 35.00
<PAGE>
Exhibit D
Charges for Manufacturing Services
Pursuant to Section 1.3 of the Services Agreement, charges for
manufacturing services are to equal 115% of OXIS' costs. Those costs (the
"Costs") are comprised of costs of three OXIS departments - Manufacturing,
Quality Control ("QC"), and Quality Assurance/Regulatory Affairs ("QA/RA"). The
costs of OXIS' Manufacturing, QC and QA/RA departments are to be allocated to
the TDM Products using a methodology consistent with that used for 1998 and
previously presented to OPUS. This memorandum specifies more precisely how the
Costs shall be determined.
MANUFACTURING
The cost of raw materials used in the manufacture of the TDM Products (the
"Products") is specifically identified by OXIS and will be included in the
Costs.
The cost of raw materials for other products manufactured by OXIS will be
excluded from the Costs. No portion of OXIS' amortization of intangible
technology assets resulting from previous business acquisitions will be included
in the Costs. No depreciation of equipment or leasehold improvements will be
included except for depreciation of assets already owned by OXIS or for
purchases approved by OPUS. Bonuses and other incentive payments will not be
included in the Costs.
Costs reported in OXIS' manufacturing department include salaries and
benefits, occupancy costs, supplies, insurance, repairs and maintenance,
freight, other third-party charges, depreciation and amortization. Occupancy
costs and depreciation are allocated to OXIS' departments based on the relative
portion of OXIS' facility occupied by each department. Costs and expenses of
OXIS' manufacturing department other than raw materials and those costs
identified in the immediately preceding paragraph will be allocated to the
Products and other products manufactured by OXIS' manufacturing department based
on the relative sales of the Products and other products manufactured by OXIS in
its Portland facility. The sales value to be used for the Products will be the
sales to OPUS' customers.
QC AND QA/RA DEPARTMENTS
Costs and expenses of OXIS' QC and QA/RA departments will be allocated to
the Products based on estimated percentage of the time of QC personnel relating
to the Products. Bonuses and other incentive payments will not be included in
the Costs. For 1998 OXIS estimated that 52.5% of the QC and QA/RA personnel time
was devoted to the Products.
CAPRIUS, INC.
2 EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
As of June 28, 1999
Jack Nelson
281 East Linden Avenue
Englewood, NJ 07631
Dear Jack:
This letter sets forth our agreement (the "Agreement") regarding the termination
of your employment with Caprius, Inc. (the "Company") in connection with the
merger (the "Merger") of Caprius Merger Sub, Inc. with and into Opus Diagnostics
Inc. ("Opus") under the employment agreement dated as of February 19, 1998,
between you and the Company (the "Employment Agreement"). This Agreement
supersedes any previous agreement or arrangement between us in all respects,
except as otherwise provided herein.
1. Your employment with the Company shall be terminated effective as of
the close of business on June 28, 1999 (the "Termination Date"). You
shall remain a Director of the Company and serve at this position in
accordance with the Certificate of Incorporation and Bylaws of the
Company.
2. On the Termination Date, (i) the Company shall pay you an amount of
$45,000 in cash plus all amounts and benefits that have accrued or
were earned but remain unpaid through the Termination Date, including
salary ($10,439.47), unreimbursed expenses ($6,305.07) and accrued and
unused vacation ($39,263), and (ii) the Company shall deliver to you a
stock certificate issued to you representing 125,000 shares of its
Common Stock registered under the Securities Act of 1933, as amended.
If the Company does not have a sufficient number of registered shares
available for delivery to you pursuant to the preceding sentence, the
Company agrees to use its best efforts to file promptly a form S-8
with the Securities and Exchange Commission to register a number of
shares sufficient to enable the Company to satisfy its obligation
pursuant to this Section 2.
3. The Company shall make all premium payments for a period of twelve
(12) months following the Termination Date (the "Severance Term") on
your behalf for health care benefits for which you are eligible
(including dependent coverage) in accordance with the federal
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), provided you make a timely election to continue such
benefits through COBRA. You shall continue to receive during the
Severance Term, at the Company's cost, any welfare benefits provided
to you as of the Termination Date (other than COBRA). The Company
shall not be required to provide you with the welfare benefits
described in this Section in the event you accept employment with any
corporation or other entity (other than the Company) and such
corporation or other entity provides you with health care coverage or
other benefits on terms that are substantially similar to the benefits
provided by the Company.
4. The payments and benefits to be provided to you as set forth in
sections 2 and 3 above shall be in lieu of (i) any and all payments to
which you may have been entitled in connection with the Merger or your
termination as an employee of the Company under the Employment
Agreement, or otherwise, and (ii) any and all other benefits otherwise
provided under any severance pay policy, plan or program maintained
from time to time by the Company for its employees. You shall not be
required to seek other employment or to attempt in any way to reduce
amounts payable to you pursuant to this Agreement. Except as otherwise
provided in Section 3 above, no amount payable hereunder shall be
reduced by any compensation earned by or other benefits provided to
you as a result of employment by another employer or otherwise.
5. During the period from the Termination Date until June 28, 2000 (the
"Consulting Period"), you shall provide consulting and advisory
services with respect to all aspects of the Company's business
including, without limitation, the completion by the Company of a
Business Transaction, and such other consulting and advisory services
as may be mutually agreed upon by you and the Company. Until the
expiration of the Consulting Period, you shall make yourself available
whenever reasonably necessary to perform the services hereunder for
the Company. In performing these services, you shall act as an
independent contractor, and not an employee of the Company.
6. You shall be entitled to keep and to use in your performance of
services hereunder at the Company's expense during the Consulting
Period, the Company credit card and the mobile phone which you have
been using to date. Until the expiration of the Consulting Period, the
Company shall pay you a monthly allowance of $1,350 for miscellaneous
expenses incurred by you in your performance of services hereunder. In
addition, the Company shall reimburse you for any itemized business
expenses incurred by you in your performance of services hereunder,
including the costs of travel at the Company's request, upon proper
submission of all related receipts relating to such expenses.
7. Upon the earlier to occur of (i) the consummation of a Business
Transaction (as defined below), or (ii) December 28, 1999, the Company
shall pay you an amount of $258,500 in cash. For purposes of this
Agreement, the term "Business Transaction" shall mean any of the
following: (1) the acquisition by any individual, entity or group of
beneficial ownership of 50% or more of either (a) the then outstanding
shares of common stock of the Company or (b) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors; (2) Jonathan Joels and
George Aaron cease for any reason to be members of the Board of
Directors of the Company; (3) the consummation of a recapitalization
or exchange of equity for debt or debt for equity for an amount in
excess of $1,000,000, restructuring, reorganization, merger or
consolidation of the Company or the Strax Center, or any sale or other
disposition of the Strax Center or all or substantially all of the
Company's assets, or (4) the liquidation or dissolution of the
Company.
8. Sections 5.1, 5.6 (with the exception of subsection (iii) thereof) and
5.7 of the Employment Agreement shall continue in full force and effect
and are hereby incorporated by reference to this Agreement.
9. You shall use your best judgment in the performance of your duties
hereunder. You shall not be liable for any acts or omissions or any
error of judgment or for any loss suffered by the Company in
connection with this Agreement except loss resulting from your willful
misfeasance, bad faith or gross negligence or by reason of reckless
disregard of your obligations and duties under this Agreement. The
Company shall indemnify you against any and all losses, claims,
damages, liabilities or expenses (including counsel fees and expenses)
arising from your past employment with the Company, any consulting
services you may provide to the Company hereunder, or by reason of the
fact that you were or are an officer or Director of the Company,
except those resulting from your willful misfeasance, gross
negligence, bad faith or reckless disregard in the performance of your
obligations and duties. You shall be entitled to advances from the
Company for payment of reasonable expenses incurred by you in
connection with the matter as to which you are seeking indemnification
in advance of the final disposition of such matter upon receipt by the
Company of your written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not
been met. Your right of indemnification hereunder shall continue after
the expiration of the Consulting Period and shall inure to the benefit
of your heirs and personal representatives.
10. In consideration of the payments contemplated hereunder and other
consideration provided to you pursuant to this Agreement, you, for
yourself and your heirs, executors, administrators, and their
respective successors and assigns, hereby release and forever
discharge the Company, and any of its subsidiaries, affiliates,
officers, directors, employees, agents, successors and assigns, and
all plan administrators and trustees of employee benefit plans
maintained by any of them (collectively "Company Entities"), from all
rights, claims or demands you may have based on your employment with
any Company Entity or the termination of that employment including,
without limitation, any claim for wrongful discharge ("Claims"). The
Company hereby agrees to release you and your heirs, executors,
administrators, and their respective successors and assigns, from all
rights, claims or demands the Company may have based on your
employment with any Company Entity or the termination of that
employment. The foregoing mutual release covers both known and unknown
claims. Each party hereby agrees never individually or with any person
to file, commence or aid in any fashion the filing of, any charges,
lawsuits or complaints with any governmental agency, or against the
other party, with respect to any of the matters covered by this
Section 10. Anything herein to the contrary notwithstanding, the
provisions of this Section 10 shall not apply to limit the rights of
either party to enforce the terms of this Agreement against the other
party.
11. You agree that the payments and deliveries provided in Sections 2 and 3
hereunder are a full and fair payment for the release of any Claims you
may have. Except as provided in this Agreement, you also agree that the
Company does not owe you anything in addition to what you will be
receiving.
12. Each party hereto expressly acknowledges that this Agreement does not
constitute an admission by such party of any violation of any law,
regulation, ordinance, or administrative procedure, or any other
federal, state, or local law, common law, regulation or ordinance,
liability for which is expressly denied.
13. This Agreement is personal to you and shall not be assignable by you
without the written consent of the Company. This Agreement shall inure
to the benefit of and be binding upon the Company and its successors or
assigns.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of
conflict of laws.
15. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors or legal representatives.
16. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
17. The failure of the Company at any time to enforce performance by you of
any provisions of this Agreement shall in no way affect the Company's
rights thereafter to enforce the same, nor shall the waiver by the
Company of any breach of any provision hereof be held to be a waiver of
any other breach of the same or any other provision.
18. The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
If the foregoing terms meet with your approval, please acknowledge you
acceptance as indicated below.
Sincerely,
CAPRIUS, INC.
By:
----------------------------------
AGREED:
------------------------------ ------------
Jack Nelson Date
CAPRIUS, INC.
2 EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
As of June 28, 1999
Enrique Levy
436 Cape May Street
Englewood, NJ 07631
Dear Enrique:
This letter sets forth our agreement (the "Agreement") regarding the termination
of your employment with Caprius, Inc. (the "Company") in connection with the
merger (the "Merger") of Caprius Merger Sub, Inc. with and into Opus Diagnostics
Inc. ("Opus") under the employment agreement dated as of February 19, 1998,
between you and the Company (the "Employment Agreement"). This Agreement
supersedes any previous agreement or arrangement between us in all respects,
except as otherwise provided herein.
1. Your employment with the Company shall be terminated effective as of
the close of business on June 28, 1999 (the "Termination Date"). You
shall remain a Director of the Company and serve at this position in
accordance with the Certificate of Incorporation and Bylaws of the
Company.
2. On the Termination Date, (i) the Company shall pay you an amount of
$43,000 in cash plus all amounts and benefits that have accrued or
were earned but remain unpaid through the Termination Date, including
salary ($9,995.10), unreimbursed expenses ($2,100) and accrued and
unused vacation ($39,340), and (ii) the Company shall deliver to you a
stock certificate issued to you representing 100,000 shares of its
Common Stock registered under the Securities Act of 1933, as amended.
If the Company does not have a sufficient number of registered shares
available for delivery to you pursuant to the preceding sentence, the
Company agrees to use its best efforts to file promptly a form S-8
with the Securities and Exchange Commission to register a number of
shares sufficient to enable the Company to satisfy its obligation
pursuant to this Section 2.
3. The Company shall make all premium payments for a period of twelve
(12) months following the Termination Date (the "Severance Term") on
your behalf for health care benefits for which you are eligible
(including dependent coverage) in accordance with the federal
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), provided you make a timely election to continue such
benefits through COBRA. You shall continue to receive during the
Severance Term, at the Company's cost, any welfare benefits provided
to you as of the Termination Date (other than COBRA). The Company
shall not be required to provide you with the welfare benefits
described in this Section in the event you accept employment with any
corporation or other entity (other than the Company) and such
corporation or other entity provides you with health care coverage or
other benefits on terms that are substantially similar to the benefits
provided by the Company.
4. The payments and benefits to be provided to you as set forth in
sections 2 and 3 above shall be in lieu of (i) any and all payments to
which you may have been entitled in connection with the Merger or your
termination as an employee of the Company under the Employment
Agreement, or otherwise, and (ii) any and all other benefits otherwise
provided under any severance pay policy, plan or program maintained
from time to time by the Company for its employees. You shall not be
required to seek other employment or to attempt in any way to reduce
amounts payable to you pursuant to this Agreement. Except as otherwise
provided in Section 3 above, no amount payable hereunder shall be
reduced by any compensation earned by or other benefits provided to
you as a result of employment by another employer or otherwise.
5. During the period from the Termination Date until June 28, 2000 (the
"Consulting Period"), you shall provide consulting and advisory
services with respect to all aspects of the Company's business
including, without limitation, the completion by the Company of a
Business Transaction, and such other consulting and advisory services
as may be mutually agreed upon by you and the Company. Until the
expiration of the Consulting Period, you shall make yourself available
whenever reasonably necessary to perform the services hereunder for
the Company. In performing these services, you shall act as an
independent contractor, and not an employee of the Company.
6. You shall be entitled to keep and to use in your performance of
services hereunder at the Company's expense during the Consulting
Period, the Company credit card and the mobile phone which you have
been using to date. Until the expiration of the Consulting Period, the
Company shall pay you a monthly allowance of $700 for miscellaneous
expenses incurred by you in your performance of services hereunder. In
addition, the Company shall reimburse you for any itemized business
expenses incurred by you in your performance of services hereunder,
including the costs of travel at the Company's request, upon proper
submission of all related receipts relating to such expenses.
7. Upon the earlier to occur of (i) the consummation of a Business
Transaction (as defined below), or (ii) December 28, 1999, the Company
shall pay you an amount of $247,500 in cash. For purposes of this
Agreement, the term "Business Transaction" shall mean any of the
following: (1) the acquisition by any individual, entity or group of
beneficial ownership of 50% or more of either (a) the then outstanding
shares of common stock of the Company or (b) the combined voting power
of the then outstanding voting securities of the Company entitled to
vote generall in the election of directors; (2) Jonathan Joels and
George Aaron cease for any reason to be members of the Board of
Directors of the Company; (3) the consummation of a recapitalization
or exchange of equity for debt or debt for equity for an amount in
excess of $1,000,000, restructuring, reorganization, merger or
consolidation of the Company or the Strax Center, or any sale or other
disposition of the Strax Center or all or substantially all of the
Company's assets, or (4) the liquidation or dissolution of the
Company.
8. Sections 6.1, 6.2, 6.3(i) and (ii) and 6.4 of the Employment Agreement
shall continue in full force and effect and are hereby incorporated by
reference to this Agreement.
9. You shall use your best judgment in the performance of your duties
hereunder. You shall not be liable for any acts or omissions or any
error of judgment or for any loss suffered by the Company in
connection with this Agreement except loss resulting from your willful
misfeasance, bad faith or gross negligence or by reason of reckless
disregard of your obligations and duties under this Agreement. The
Company shall indemnify you against any and all losses, claims,
damages, liabilities or expenses (including counsel fees and expenses)
arising from your past employment with the Company, any consulting
services you may provide to the Company hereunder, or by reason of the
fact that you were or are an officer or Director of the Company,
except those resulting from your willful misfeasance, gross
negligence, bad faith or reckless disregard in the performance of your
obligations and duties. You shall be entitled to advances from the
Company for payment of reasonable expenses incurred by you in
connection with the matter as to which you are seeking indemnification
in advance of the final disposition of such matter upon receipt by the
Company of your written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not
been met. Your right of indemnification hereunder shall continue after
the expiration of the Consulting Period and shall inure to the benefit
of your heirs and personal representatives.
10. In consideration of the payments contemplated hereunder and other
consideration provided to you pursuant to this Agreement, you, for
yourself and your heirs, executors, administrators, and their
respective successors and assigns, hereby release and forever
discharge the Company, and any of its subsidiaries, affiliates,
officers, directors, employees, agents, successors and assigns, and
all plan administrators and trustees of employee benefit plans
maintained by any of them (collectively "Company Entities"), from all
rights, claims or demands you may have based on your employment with
any Company Entity or the termination of that employment including,
without limitation, any claim for wrongful discharge ("Claims"). The
Company hereby agrees to release you and your heirs, executors,
administrators, and their respective successors and assigns, from all
rights, claims or demands the Company may have based on your
employment with any Company Entity or the termination of that
employment. The foregoing mutual release covers both known and unknown
claims. Each party hereby agrees never individually or with any person
to file, commence or aid in any fashion the filing of, any charges,
lawsuits or complaints with any governmental agency, or against the
other party, with respect to any of the matters covered by this
Section 10. Anything herein to the contrary notwithstanding, the
provisions of this Section 10 shall not apply to limit the rights of
either party to enforce the terms of this Agreement against the other
party.
11. You agree that the payments and deliveries provided in Sections 2 and 3
hereunder are a full and fair payment for the release of any Claims you
may have. Except as provided in this Agreement, you also agree that the
Company does not owe you anything in addition to what you will be
receiving.
12. Each party hereto expressly acknowledges that this Agreement does not
constitute an admission by such party of any violation of any law,
regulation, ordinance, or administrative procedure, or any other
federal, state, or local law, common law, regulation or ordinance,
liability for which is expressly denied.
13. This Agreement is personal to you and shall not be assignable by you
without the written consent of the Company. This Agreement shall inure
to the benefit of and be binding upon the Company and its successors or
assigns.
14. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of
conflict of laws.
15. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors or legal representatives.
16. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
17. The failure of the Company at any time to enforce performance by you of
any provisions of this Agreement shall in no way affect the Company's
rights thereafter to enforce the same, nor shall the waiver by the
Company of any breach of any provision hereof be held to be a waiver of
any other breach of the same or any other provision.
18. The Company may withhold from any amounts payable under this Agreement
such federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
If the foregoing terms meet with your approval, please acknowledge you
acceptance as indicated below.
Sincerely,
CAPRIUS, INC.
By:
----------------------------------
AGREED:
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Enrique Levy Date
CAPRIUS, INC.
One Parker Plaza
Fort Lee, NJ 07024-3308
Phone: 201.592.8838/Fax: 201.592.0393
DRAFT
FOR IMMEDIATE RELEASE
Company Contact:
Beverly Tkaczenko 201.592.8838
CAPRIUS, INC. ANNOUNCES ACQUISITION OF OPUS DIAGNOSTICS, INC.
Fort Lee, NJ, June XX, 1999 - Caprius, Inc. (OTCBB: CAPR) announced today it had
acquirted Opus Diagnostic, Inc., a private company engaged in the business of
medical diagnostics. Simultaneous with the closing of the acquisition, Opus
acquired assets from Oxis Health Products, Inc. relating to their reagent
patents and distribution network for theraputic drug monitoring. George Aaron
and Jonathan Joels, the shareholders of Opus, received approximately 6,000,000
Caprius shares of Caprius common stock on a pro forma basis.
As part of the transaction, the Caprius Board has been reconstituted to be
comprised of six members including two new Directors. The Board has appointed
Mr. Aaron as President & CEO. Mr. Joels shall serve as a Director and as CFO of
the Company. Mr. Aaron has extensive experience in financing and managing
medical diagnostic companies including serving as President and CEO of
Technogenetics, a public company, which was successfully merged with Recordati
of Italy. Mr. Aaron had served on the Board of Advanced NMR Systems, Inc., the
predecessor to Caprius. Jack Nelson, past Chairman and CEO, and Enrique Levy,
past President and COO, have entered into one year consulting agreements that
terminate all prior contractual agreements with Caprius. Both Mr. Nelson and Mr.
Levy shall continue to serve on the Board of Directors of Caprius.
"I am delighted to have concluded this transaction with Caprius. I am convinced
that we can introduce a new direction for the Company. The therapeutic drug
monitoring industry is poised for dramatic growth in which we expect Caprius to
participate. With access to the assets of Caprius and our experience in this
niche market in medical diagnostics, we believe that the shareholders of Caprius
will benefit," stated George Aaron, President and CEO of Caprius.
Jack Nelson, past Chairman and CEO of Caprius, added, "I am excited about the
Company's prospects. With the experienced guidance of George Aaron and his team,
I am confident that we have taken the right steps to enhance shareholder value.
I applaud the wisdom of our Board in approving this transaction and I thank our
shareholders for their patience during this difficult time. I look forward to
working with management to bring value to our shareholders."
SAFE HARBOR STATEMENT:
- ----------------------
The statements made in this press release that are not historical fact are
"forward-looking statements" which are based upon surrent expectations that
include a number of risks and uncertainties. Additional factors that could
potentially affect the Company's financial results may be found on the Company's
filings with the Securities and Exchange Commission.
