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Exhibit 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PERIODONTIX, INC.
AND
DEMEGEN, INC.
JULY 16, 2001
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of July 16,
2001, by and between Demegen, Inc., a Colorado corporation ("Demegen") and
Periodontix, Inc., a Delaware corporation (the "Company" or sometimes referred
to as "Seller")
RECITALS
A. Pursuant to the terms of that certain Agreement dated February
16, 2001 among Demegen and the Company (the "Option Agreement"), the Company
granted Demegen an option to purchase certain Assets (as defined in the Option
Agreement).
B. Demegen now desires to purchase the Assets and has provided the
Company with written notice of the exercise of the option to purchase the Assets
for the consideration and on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein, the parties hereto
agree as follows:
ARTICLE I
SALE AND TRANSFER OF THE ASSETS
1.1 Definitions.
All capitalized terms not otherwise defined in this Agreement shall
have the meanings ascribed to them in the Option Agreement.
1.2 Purchase and Sale.
(a) Within fifteen days of the date Demegen exercised the Option by
providing notice to the Company and executing of this Agreement and in reliance
on the representations and warranties set forth herein and in the Option
Agreement, the Company will convey, assign, transfer and deliver to Demegen, and
Demegen will purchase from the Company all right, title and interest of the
Company in and to the Assets, but excluding the assets listed on Schedule 1.2,
which shall include Seller's cash and securities (the "Excluded Assets"). Right,
title and interest to the Excluded Assets shall be retained by the Company. The
Company shall transfer good and marketable title to the Assets to Demegen, free
and clear of any Security Interest and any right, title or interest of any other
person or entity.
1.3 Assumed Liabilities.
Demegen shall not assume or be deemed to assume, or be obligated
to pay, discharge or perform or otherwise be responsible for any liability or
obligation (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether
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due or to become due) of the Company or the Assets all of which are expressly
retained by the Seller, except for the obligations identified in Schedule 1.3
(collectively the "Assumed Liabilities") and only to the extent set forth in
Schedule 1.3, which Assumed Liabilities Demegen shall assume, discharge, perform
and be responsible for in accordance with the Instrument of Assumption of
Liabilities.
1.4 The Closing.
The closing of the purchase and sale of the Assets (the "Closing")
will take place within fifteen days after Demegen shall have exercised the
Option and executed this Agreement at the offices of Hale and Dorr LLP, 60 State
Street, Boston, MA 02109, or such other time and place as the parties may
mutually agree (the "Closing Date").
1.5 Purchase Consideration.
In consideration for the Company's sale of the Assets, Demegen shall
cause to be issued and delivered to the Company the following securities (the
"Purchase Consideration"). In the event that the date of the exercise of the
Option by Demegen is on or before July 31, 2001, then at the Closing Demegen
shall deliver (i) 4,230,000 shares of Demegen Common Stock (subject to
appropriate adjustment in the event of any split, combination or
reclassification of the outstanding Demegen Common Stock after the date of the
Option Agreement) and a Warrant to purchase 4,700,000 shares of Demegen Common
Stock (subject to appropriate adjustment in the event of any split, combination
or reclassification of the outstanding Demegen Common Stock after the date of
the Option Agreement) to the Company and (ii) 470,000 shares of Demegen Common
Stock (subject to appropriate adjustment in the event of any split, combination
or reclassification of the outstanding Demegen Common Stock after the date of
the Option Agreement) to the Escrow Agent (as required by the terms of the
Option Agreement) in full payment of the Purchase Consideration. In the event
that the date of the exercise of the Option by Demegen occurs after July 31,
2001, then at the Closing Demegen shall deliver (i) 6,300,000 shares of Demegen
Common Stock (subject to appropriate adjustment in the event of any split,
combination or reclassification of the outstanding Demegen Common Stock after
the date of the Option Agreement) and a Demegen Warrant to purchase 7,000,000
shares of Demegen Common Stock (subject to appropriate adjustment in the event
of any split, combination or reclassification of the outstanding Demegen Common
Stock after the date of the Option Agreement) to the Company and (ii) 700,000
shares of Demegen Common Stock (subject to appropriate adjustment in the event
of any split, combination or reclassification of the outstanding Demegen Common
Stock after the date of the Option Agreement) to the Escrow Agent (as required
by the terms of the Option Agreement) in full payment of the Purchase
Consideration. Upon delivery of the Purchase Consideration to the Company,
Demegen will become the owner of all of the Company's right, title and interest
in the Assets.
1.6 Allocation of the Purchase Price.
The Purchase Price shall be allocated among the Assets in accordance
with Schedule 1.6 hereto (the "Allocation").
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Demegen as follows:
2.1 Authority.
The Company has all requisite corporate power and authority and
capacity to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement, the performance of this
Agreement, and the consummation of the transactions contemplated hereby and
thereby by the Company have been duly and validly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly and
validly executed and delivered by the Company and constitute valid and binding
obligations of the Company, enforceable against it in accordance with its terms
2.2 Noncontravention.
Neither the execution and delivery or performance of this Agreement,
or any other agreement or instrument executed and delivered by Demegen pursuant
to this Agreement, nor the consummation by the Company of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the articles of incorporation or bylaws of the Company, (b) conflict with,
result in breach of, constitute (with or without due notice or lapse of time or
both) a default under, result in the acceleration of, create in any party any
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which the Company is a
party or by which it is bound or to which any of its assets are subject, or (c)
violate any order, writ, injunction, or (d) result in the imposition of any
Security Interest upon the Assets.. For purposes of this Agreement, "Security
Interest" means any mortgage, pledge, security interest, hypothecation,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (i) mechanic's, materialmen's, and similar liens, (ii) liens
for taxes not yet due and payable or for taxes that the taxpayer is contesting
in good faith through appropriate proceedings, (iii) liens arising under
worker's compensation, unemployment insurance, social security, retirement and
similar legislation, (iv) liens on goods in transit incurred pursuant to
documentary letters of credit, and (v) purchase money liens and liens securing
rental payments under capital lease arrangements.
2.3 Assets.
The Company has good and marketable title to all of the Assets, free
and clear of any Security Interest and any right, title or interest of a third
party.
2.4 Legal Compliance.
The Company is in compliance in all material respects with each
applicable law (including without limitation rules and regulations thereunder)
of any federal, state or local
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government of the United States or of any foreign government, or any
Governmental Entity, currently in effect, which (a) affects or relates to this
Agreement or the transactions contemplated hereby or (b) is applicable to the
Assets.
2.5 Absence of Broker or Finder.
Other than Adams Harkness & Hill, no person or entity is acting or
has acted for the Company or the Company's stockholder as broker or finder in
connection with the transactions contemplated by this Agreement.
2.6 Fees and Expenses.
The Company has borne or shall bear all costs and expenses of
attorneys, accountants and financial advisors representing the Company in
connection with the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DEMEGEN
Demegen represents and warrants to the Company as follows:
3.1 Organization.
Demegen is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. Demegen has all requisite
corporate power and corporate authority to own, lease and operate its properties
and conduct its business as it is presently being conducted. Demegen is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under the applicable
law as a result of the conduct of its business or the ownership of its
properties except where the failure to be so qualified would not have a Material
Adverse Effect on Demegen.
3.2 Authorization of Transaction.
Demegen has all requisite corporate power and authority to execute
and deliver this Agreement and all other agreements or instruments to be
executed and delivered by Demegen in connection herewith hereunder and to
perform its obligations hereunder and thereunder 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. The execution and delivery of this Agreement
and such other agreements or instruments, the performance of this Agreement and
such other agreements and instruments, and the consummation of the transactions
contemplated hereby and thereby by Demegen have been duly and validly authorized
by all necessary corporate action on the part of Demegen. This Agreement and
such other agreements or instruments have been duly and validly executed and
delivered by Demegen, constitute valid and binding obligations of Demegen,
enforceable against it in accordance with their respective terms.
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3.3 Noncontravention.
Neither the execution and delivery or performance of this Agreement,
or any other agreement or instrument executed and delivered by Demegen pursuant
to this Agreement, nor the consummation by Demegen of the transactions
contemplated hereby or thereby, will (a) conflict or violate any provision of
the articles of incorporation or bylaws of Demegen, (b) conflict with, result in
breach of, constitute (with or without due notice or lapse of time or both) a
default under, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which Demegen is a party
or by which it is bound or to which any of its assets are subject, or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Demegen or any of its respective properties or assets.
3.4 Securities.
The Demegen Common Stock and the Demegen Warrants constituting the
Purchase Consideration when issued and delivered and the Demegen Common Stock
issuable upon exercise of the Demegen Warrants, will be legally and validly
authorized and issued, fully paid and nonassessable, will not have been issued
in violation of the preemptive rights of any person, and will be free of all
encumbrances.
3.5 Consents and Approvals.
Other than certain forms which may be required to be filed by
Demegen with the SEC or state securities commissioners, no consent, approval or
authorization or declaration, filing or registration with any governmental or
regulatory authority, or any other person or entity, is required to be made or
obtained by Demegen in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
3.6 No Broker's or Finder's Fees.
There are no broker's or finder's expenses, commissions, fees or
other forms of compensation which are due or payable from or by Demegen, or may
have been earned by any third party acting on behalf of Demegen in connection
with the negotiation and execution hereof and the consummation of the
transactions contemplated hereby.
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ARTICLE IV
CLOSING DOCUMENTS
4.1 Deliveries by the Company.
The obligation of Demegen to consummate the transactions
contemplated by this Agreement shall be subject to the condition that the
Company deliver or cause to be delivered at the Closing the following to
Demegen:
(a) an Assignment and Bill of Sale, in a form reasonably
satisfactory to Demegen;
(b) a Patent assignment and a Trademark assignment from the Company,
each in a form reasonably acceptable to Demegen;
(c) a good standing certificate dated within 10 days of the date
hereof regarding the good standing of the Company in Delaware and in
Massachusetts; and
(d) a certificate of the corporate secretary of the Company
certifying the resolutions adopted its Board of Directors and stockholders with
respect to the Agreement and the incumbency of its officers.
4.2 Deliveries by Demegen at Closing.
The obligation of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the condition that Demegen
deliver at the Closing the following to the Company:
(a) the Purchase Consideration;
(b) a certificate of the corporate secretary of Demegen certifying
the resolutions adopted by Demegen's Board of Directors with respect to the
Agreement and the incumbency of Demegen's officers and certifying that no
approval by Demegen's shareholders is necessary; and
(c) an Instrument of Assumption of Liabilities, in a form reasonably
satisfactory to the Company.
ARTICLE V
INDEMNIFICATION; TRANSFER OF SECURITIES
5.1 Indemnification.
Each party shall be entitled to indemnification from the other in
accordance with Article IX of the Option Agreement which shall be incorporated
herein by reference. Except in
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the case of fraudulent misrepresentation, the rights of the parties to this
Agreement to indemnification under Article IX of the Option Agreement shall be
the sole and exclusive remedies of the parties to this Agreement, for any
misrepresentation, breach or warranty or failure to perform any covenant or
agreement contained in this Agreement or otherwise relating to the transactions
that are subject to this Agreement. In no event shall either party, its
successor or permitted assigns be entitled to claim or seek rescission of the
transactions consummated under this Agreement, except in the case of fraudulent
misrepresentation.
5.2 Transfer of Securities.
Demegen acknowledges and agrees that upon receipt of any shares of
Demegen Common Stock and/or Demegen Warrants, the Company may distribute such
shares of Demegen Common Stock and/or Demegen Warrants to holders of outstanding
notes of the Company and stockholders of the Company that have executed and
delivered to Demegen an Investor Representation Letter, and that, upon any such
distribution and at the request of the Company and delivery of any certificates
representing Demegen Common Stock and Demegen Warrants to Demegen, Demegen shall
cause new certificates and new Demegen Warrants to be issued and delivered in
accordance with the Company's instructions.
ARTICLE VI
MISCELLANEOUS
6.1 No Third Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any
person other than the parties and their respective heirs, successors and
permitted assigns.
6.2 Rule 144 Reporting.
With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of restricted securities to
the public without registration, Demegen agrees to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act ("Rule 144"), at all
times;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of Demegen under the Securities Act and
the Securities Exchange Act of 1934 (the "Exchange Act"); and
(c) so long as Periodontix owns any Demegen Common Stock, furnish
to it upon request, a written statement by Demegen as to its compliance with the
reporting requirements of Rule 144, and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of Demegen, and such
other reports and documents so filed as
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the Periodontix may reasonably request in availing itself of any rules rule or
regulation of the Commission allowing the Holder to sell such Demegen Common
Stock without registration.
6.3 Termination.
(a) Generally. This Agreement may be terminated at any time prior
to Closing:
(i) By mutual written consent of Demegen and the Company;
(ii) By Demegen or Periodontix if the Closing shall not have
occurred within fifteen (15) business days after the exercise of the
Option by Demegen.
6.4 Further Assurances.
Each party to this Agreement shall, upon the request of the other
party hereto, at any time and from time to time execute, acknowledge, deliver
and perform all such further acts, deeds, assignments, transfers, conveyances,
and instruments of further assurances as may reasonably be necessary or
appropriate to carry out the provisions and intent of this Agreement.
6.5 Entire Agreement.
This Agreement and the Option Agreement, including the Exhibits and
Schedules attached hereto and thereto and the documents referred to herein and
therein, constitute the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, with respect to the subject matter hereof, except for that
certain confidentiality agreement between Demegen and the Company, dated
September 14, 2000, which shall remain in full force and effect, except as may
be amended hereby.
6.6 Survival.
All representations, warranties, agreements, covenants and
obligations made or undertaken by the parties in this Agreement or in any
exhibit or schedule hereto, or in any instrument, certificate or other writing
delivered at Closing and provided for in this Agreement (including the
exceptions to any representations or warranties) shall survive the Closing
hereunder and shall not merge in the performance of any obligation by any party
hereto, and will remain in full force and effect unless, in respect of any
agreement or covenant, some specified period is set forth in this Agreement or
in any document or instrument executed and delivered pursuant hereto. All
representations and warranties made by the Company and contained herein or in
any exhibit, schedule, instrument or certificate delivered under or in
connection with this Agreement shall remain in effect only until the Anniversary
Date. If written notice of a claim for breach of a representation or warranty
has been given prior to the Anniversary Date, then the relevant representation
or warranty shall survive as to such claim until the claim has been finally
resolved.
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6.7 No Presumption Against Draftsman.
There shall be no presumption against either party hereto on the
ground that such party or its counsel was responsible for preparing this
Agreement on any part hereof.
6.8 Succession and Assignment.
This Agreement shall be binding upon and inure to the benefit of
the parties named herein and their respective heirs, successors and permitted
assigns. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other party.
6.9 Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
6.10 Headings.
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
6.11 Effect of Investigation.
Any inspection, preparation, or compilation of information or
schedules, or audit of the inventories, properties, financial condition, or
other matters relating to the Company or Shielding conducted by or on behalf of
Demegen pursuant to this Agreement shall in no way limit, affect, or impair the
ability of Demegen to rely upon the representations, warranties, covenants and
agreements of the Company set forth herein and in the Option Agreement.
6.12 Notices.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered (i) two (2) business days
after it is sent by registered or certified mail, return receipt requested,
postage prepaid, (ii) when received if it is sent by facsimile communication
during normal business hours on a business day or one (1) business day after it
is sent by facsimile and received if sent other than during business hours on a
business day, (iii) one (1) business day after it is sent via a reputable
overnight courier service, or (iv) when received if it is delivered by hand, in
each case to the intended recipient as set forth below:
If to the Company: Copy to:
Periodontix, Inc. Hale and Dorr LLP
29 Babe Ruth Drive 60 State Street
Sudbury, MA 01406 Boston, MA 02109
Fax: (413) 513-2023 Fax: (617) 526-5000
Attn: Bob Linke Attn: Stuart Falber
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If to Demegen: Copy to:
Demegen, Inc. Buchanan Ingersoll Professional
1051 Brinton Road Corporation
Pittsburgh, PA 15221 One Oxford Centre, 20th Floor
Fax: (412) 241-2161 301 Grant Street
Attn: Richard Ekstrom Pittsburgh, PA 15219-1410
Fax: (412) 562-8453
Attn: Amy Pandit, Esq.
Any party may change the address to which notices, requests, demands,
claims or other communications are to be delivered by giving the other
parties to this Agreement notice thereof in the manner set forth in this
Section.
6.13 Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
6.14 Amendments and Waivers.
The parties may mutually amend any provision of this Agreement at
any time. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the parties. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
6.15 Severability.
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
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6.16 Expenses.
The Company and Demegen shall each bear the cost and expense of
their own attorneys, accountants and financial advisors.
6.17 Construction.
The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction shall be applied against any party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
6.18 Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
6.19 Termination of License Agreement.
Upon the closing of the transactions contemplated by this Agreement,
the License Agreement shall be terminated and be of no further force or effect,
except as provided therein.
6.20 Taxes.
Any and all federal, state, county, local or foreign sales, use,
value added, excise, stamp, transfer and other Taxes not in the nature of income
taxes, fees and duties (including any interest, additions to tax and penalties
with respect thereto) and any and all transfer, recording or similar fees and
charges imposed in connection with the consummation of the transactions
contemplated by this Agreement shall be borne by the Buyer.
6.21 Sharing of Data.
The Company shall have the right for a period of five years (or
such longer time as applicable law requires the Company to maintain such
records) following the Closing Date, to have reasonable access to such books,
records and accounts, including financial and tax information, correspondence,
production records, employment records and other similar information as are
transferred to Buyer pursuant to this Agreement for the limited purpose of
complying with its obligations under applicable laws and Buyer agrees to use
practices and procedures identical to that which it applies to its books and
records generally to maintain such books and other documents for such period of
time.
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IN WITNESS WHEREOF, the parties have executed this ASSET PURCHASE AGREEMENT as
of the date first above written.
DEMEGEN, INC.
By: /s/ Richard D. Ekstrom
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Title: President
PERIODONTIX, INC.
By: /s/Robert Linke
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Title: President
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