Exhibit 10.1





Exhibit 10.1




 



 


 




    ASSET
    PURCHASE AGREEMENT

    By and Among

    WA 32609, Inc., a Delaware corporation,

    and

    ImaRx Therapeutics, Inc., a Delaware corporation

    June 15, 2009



 



    

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    ASSET
    PURCHASE AGREEMENT



 



    THIS ASSET PURCHASE AGREEMENT (this
    “Agreement”) is dated as of the 15th day
    of June, 2009, by and among WA 32609, Inc., a Delaware
    corporation (“Buyer”) and ImaRx Therapeutics,
    Inc., a Delaware corporation (“Seller”). Each
    of Buyer and Seller are a “Party”, and
    collectively, the “Parties”.



 



    WHEREAS, Seller wishes to sell to Buyer the Acquired Assets and
    Assumed Liabilities (each as defined below), and Buyer wishes to
    purchase such assets from Seller and to assume such liabilities
    subject to the terms and conditions set forth herein.



 



    NOW, THEREFORE, in consideration of the mutual promises and
    agreements set forth herein, Buyer and Seller hereby agree as
    follows:



 


			
	 	    1.  
	
    DEFINED TERMS




 



    “Acquired Assets” has the meaning set forth in
    Section 2.1.



 



    “Affiliates” means, with respect to any
    specified Person, any other Person that directly, or indirectly
    through one or more intermediaries, controls, is controlled by,
    or is under common control with, such specified Person.



 



    “Agreement” means this Asset Purchase Agreement.



 



    “Allocation” means Buyer’s and
    Seller’s allocation of the Purchase Price and the Assumed
    Liabilities among the Acquired Assets.



 



    “Assumed Contracts” means the Contracts set
    forth on Schedule 2.1(b).



 



    “Assigned Intellectual Property” has the
    meaning set forth in Section 2.1(a)(i).



 



    “Assumed Liabilities” has the meaning set forth
    in Section 3.1.



 



    “Audited Balance Sheets” means the audited
    consolidated balance sheets of Seller and its subsidiaries as of
    December 31, 2007 and 2008.



 



    “Audited Financials” means the Audited Balance
    Sheets and related consolidated statements of operations and
    cash flows of Seller and its subsidiaries for the fiscal years
    ended December 31, 2007, and 2008.



 



    “Bill of Sale” means the Bill of Sale in
    substantially the form attached hereto as Exhibit A.



 



    “Business Day” means a day other than a
    Saturday, a Sunday or a day on which commercial banking
    institutions in the State of Washington are authorized or
    obligated by law to close.



 



    “Closing” means the consummation of the
    transactions contemplated by this Agreement in accordance with
    the provisions of Section 5.



 



    “Closing Date” means the date of the Closing
    specified in Section 5.



 



    “Code” means the Internal Revenue Code of 1986,
    as amended, and the regulations thereunder, or any subsequent
    legislative enactment thereof, as in effect from time to time.



 



    “Contract” or “contract” means
    and includes every material agreement or understanding of any
    kind, written or oral, enforceable or not and specifically
    includes (i) contracts and other agreements for the
    provision of products or services by Seller; (ii) contracts
    and other agreements for the sale of any of Seller’s assets
    or properties other than in the Ordinary Course of Business or
    for the grant to any person of any preferential rights to
    purchase any of Seller’s assets or properties;
    (iii) joint venture agreements relating to the Program or
    by or to which any of the Acquired Assets are affected or
    subject; and (iv) any other contract or other agreement not
    made in the Ordinary Course of Business.



 



    “Domain Name Assignment” means the domain name
    assignment to be entered into between Seller and Buyer in
    substantially the form attached hereto as Exhibit B.




    

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    “Employee Benefit Plans” means any pension,
    retirement, profit sharing, deferred compensation, vacation,
    severance, bonus, stock option, share appreciation right,
    incentive, medical, vision, dental, disability, life insurance
    or other employee benefit plan whether formal or informal,
    written or oral, for the benefit of any director, officer,
    consultant or employee, whether active or terminated, that
    provides benefits to employees of Seller.



 



    “Encumbrances” has the meaning set forth in
    Section 6.9.



 



    “Environmental Laws” means the Resource
    Conservation and Recovery Act (“RCRA”), the
    Comprehensive Environmental Response, Compensation and Liability
    Act of 1980 as amended (“CERCLA”), the
    Superfund Amendments and Reauthorization Act of 1986
    (“SARA”), the Federal Water Pollution Control
    Act, the Solid Waste Disposal Act, as amended, the Federal Clean
    Water Act, the Federal Clean Air Act, the Toxic Substances
    Control Act, or any state or local statute, regulation,
    ordinance, order or decree relating to health, safety or the
    environment.



 



    “ERISA” means the Employee Retirement Income
    Security Act of 1974, as amended, and the regulations
    thereunder, as in effect from time to time.



 



    “Excluded Assets” has the meaning set forth in
    Section 2.2.



 



    “Excluded Liabilities” has the meaning set
    forth in Section 3.2.



 



    “Financial Statements” means collectively, the
    Audited Balance Sheets, the Audited Financials, the Interim
    Balance Sheet and the Interim Financials.



 



    “Governmental Authorization” means all
    licenses, permits, certificates, waivers, amendments, consents,
    franchises, exemptions, variances, expirations and terminations
    of any waiting period requirements, other actions by, and
    notices, applications, filings, registrations, qualifications,
    declarations and designations with, and other authorizations and
    approvals issued by or obtained from a Governmental Body or
    pursuant to any Legal Requirement that are related to or
    necessary for the conduct of the Program.



 



    “Governmental Body” means any domestic,
    foreign, federal, territorial, state or local governmental
    authority, quasi-governmental authority, instrumentality, court,
    government or self-regulatory organization, commission, tribunal
    or organization, or any regulatory, administrative or other
    agency or any political or other subdivision, department or
    branch of any of the foregoing with competent jurisdiction.



 



    “Hazardous Substances” means any toxic
    substance, oil or hazardous material or other chemical or
    substance (including, without limitation, asbestos in any form,
    urea formaldehyde or polychlorinated biphenyls) regulated by any
    Environmental Laws.



 



    “Indebtedness” of any Person means, without
    duplication, (i) the principal of, accrued interest of,
    premium (if any) in respect of and prepayment and other
    penalties, premiums, charges, expenses and fees associated with
    (A) indebtedness of such Person for money borrowed and
    (B) indebtedness evidenced by notes, debentures, bonds or
    other similar instruments for the payment of which such Person
    is responsible or liable; (ii) all obligations of such
    Person issued or assumed as the deferred purchase price of
    property, all conditional sale obligations of such Person (but
    excluding trade accounts payable and other accrued current
    Liabilities arising in the Ordinary Course of Business);
    (iii) all obligations of such Person under leases required
    to be capitalized in accordance with GAAP; (iv) all
    obligations of such Person for the reimbursement of any obligor
    on any letter of credit, banker’s acceptance or similar
    credit transaction; (v) all obligations of such Person
    under interest rate or currency swap transactions (valued at the
    termination value thereof); (vi) the liquidation value,
    accrued and unpaid dividends; prepayment or redemption premiums
    and penalties (if any), unpaid fees or expenses and other
    monetary obligations in respect of any redeemable preferred
    stock of such Person; (vii) all obligations of the type
    referred to in clauses (i) through (vi) of any other
    Persons for the payment of which such Person is responsible or
    liable, directly or indirectly, as obligor, guarantor, surety or
    otherwise, including guarantees of such obligations; and
    (viii) all obligations of the type referred to in
    clauses (i) through (vii) of other Persons secured by
    (or for which the holder of such obligations has an existing
    right, contingent or otherwise, to be secured by) any
    Encumbrance, other than a Permitted




    

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    Encumbrance, on any property or asset of such Person (whether or
    not such obligation is assumed by such Person).



 



    “Intellectual Property” shall mean any and all
    patents and patent applications (including all provisionals,
    reissues, continuations, divisions,
    continuations-in-part,
    renewals or extensions thereof); trademarks, service marks,
    trade names, trade dress (including all goodwill associated with
    the foregoing), mask works, domain names, logos, business and
    product names, slogans, copyrights, software, content, Internet
    web sites and similar rights; and registrations and applications
    to register or renew the registration of any of the foregoing;
    trade secrets; all other intellectual property and proprietary
    rights.



 



    “Intellectual Property Licenses” means any and
    all licenses, contracts and other arrangements providing in
    whole or in part for the use of, limiting the use of,
    transferring, indemnifying with respect to or otherwise relating
    to any Intellectual Property.



 



    “Intellectual Property Rights” means any or all
    of the following and all rights in, arising out of, or
    associated therewith: (i) all United States and foreign
    patents and utility models and applications therefor and all
    reissues, divisions, re-examinations, renewals, extensions,
    provisionals, continuations and
    continuations-in-part
    thereof, and equivalent or similar rights anywhere in the world
    in inventions and discoveries including, without limitation,
    invention disclosures; (ii) all trade secrets and other
    rights in know-how and confidential or proprietary information;
    (iii) all copyrights, copyright registrations and
    applications therefor and all other rights corresponding thereto
    throughout the world; (iv) all industrial designs and any
    registrations and applications therefor throughout the world;
    (v) mask works, mask work registrations and applications
    therefor, and all other rights corresponding thereto throughout
    the world; (vi) all rights in World Wide Web addresses,
    uniform resource locators and domain names and applications and
    registrations therefor; (vii) all rights in all trade
    names, logos, common law trademarks and service marks, trademark
    and service mark registrations and applications therefor and all
    goodwill associated therewith throughout the world; and
    (viii) any similar, corresponding or equivalent rights to
    any of the foregoing anywhere in the world.



 



    “Interim Balance Sheet” means the unaudited
    consolidated balance sheet of Seller and its subsidiaries as of
    March 31, 2009.



 



    “Interim Financials” means the Interim Balance
    Sheet and related unaudited consolidated statements of
    operations and cash flows of Seller and its subsidiaries for the
    period ended March 31, 2009.



 



    “Knowledge of Seller” or “knowledge of
    Seller” means the actual knowledge of Bradford A. Zakes
    of a particular fact, circumstance, event or matter, or
    knowledge of such fact, circumstance, event or matter that would
    have been obtained after making reasonable inquiry.



 



    “Legal Requirement” means any federal, state,
    local, municipal, foreign, international, and multinational or
    other constitution, law, ordinance, principle of common law,
    code, regulation, statute or treaty.



 



    “Liabilities” means liabilities or obligations
    of any nature whatsoever, known or unknown, fixed or contingent,
    statutory, contractual or otherwise, disclosed or undisclosed,
    whether or not accrued.



 



    “Licensed Intellectual Property” has the
    meaning set forth in Section 2.1(a)(ii).



 



    “Licensor Intellectual Property” has the
    meaning set forth in Section 2.1(a)(iii).



 



    “Losses” means any damages, losses, charges,
    liabilities, demands, claims, actions, suits, proceedings,
    payments, judgments, settlements, assessments, Taxes, interest,
    penalties and costs and expenses (including reasonable expenses
    of investigations, enforcement and collection, reasonable
    attorneys’ and accountants’ fees and reasonable out of
    pocket disbursements).



 



    “Material Adverse Effect” means any change,
    development, event, state of facts, or occurrence that has, or
    could reasonably be expected to have, individually or in the
    aggregate, a material adverse effect on (i) the Acquired
    Assets, (ii) the Program, or (iii) Seller’s
    ability to perform its obligations under this Agreement or the
    consummation by Seller of the transactions contemplated hereby,
    taken as a whole; provided, however, that in no
    event shall any of the following occurring after the date
    hereof, alone or in combination, be deemed to constitute a
    Material Adverse Effect: (A) any change in any Legal
    Requirement (to the extent Seller is not




    

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    disproportionately affected by such change in Legal Requirement
    relative to similarly situated companies in the biotechnology
    industry) or GAAP after the date hereof, (B) any failure by
    the Seller to meet internal projections or published revenue or
    earnings projections, in and of itself, for any period ending
    (or for which revenues or earnings are released) on or after the
    date hereof, (C) any effect that results from changes
    affecting the biotechnology industry (to the extent such effect
    is not disproportionate with respect to the Seller) or the
    United States economy generally (to the extent such effect is
    not disproportionate with respect to Seller), (D) any
    effect that results from changes affecting general worldwide
    economic or capital market conditions (to the extent such effect
    is not disproportionate with respect to Seller), (E) any
    effect resulting from compliance with the terms and conditions
    of this Agreement, (F) any effect caused by an impact to
    Seller’s relationships with its employees, customers,
    suppliers or partners directly attributable to the announcement
    of this Agreement, or (G) any declaration of war, military
    crisis or conflict, civil unrest, act of terrorism, or act of
    God.



 



    “Material Contract” or “Material
    Contracts” means any Contract relating to the Program.



 



    “Off-the-Shelf
    Software” means all software that is commercially
    available
    off-the-shelf
    software that has not been modified and costing less than $5,000
    to replace with equivalent functionality.



 



    “Ordinary Course” or “Ordinary Course
    of Business” means an action taken by a Person
    consistent in nature, scope and magnitude with the past
    practices of such Person and taken in the ordinary course of the
    normal,
    day-to-day
    operations of such Person.



 



    “Permitted Encumbrances” has the meaning set
    forth in Section 6.9.



 



    “Personal Property” means all of the machinery,
    equipment, manufacturing tools, plant, inventory, spare parts,
    supplies and other tangible and intangible personal property,
    that are owned, licensed or leased by Seller and used in or
    related to the Program, plus such additions thereto and
    deletions therefrom arising in the Ordinary Course of Business
    and permitted by this Agreement between the date hereof and the
    Closing Date, but in all cases only to the extent such Personal
    Property is used in or related to the Program.



 



    “Person” means an individual, partnership,
    corporation, business trust, limited liability company, limited
    liability partnership, joint stock company, trust,
    unincorporated association, joint venture or other entity or a
    Governmental Body.



 



    “Program” means Seller’s therapy programs
    for the treatment of ischemic stroke as well as a broad variety
    of other vascular disorders associated with blood clots,
    including but not limited to, Seller’s clinical-stage
    SonoLysis product candidate, which involves the administration
    of Seller’s proprietary MRX-801 microspheres, a proprietary
    formulation of a lipid shell encapsulating an inert
    biocompatible gas, and ultrasonic device technologies to
    penetrate and break up blood clots and restore blood flow to
    oxygen deprived tissues.



 



    “Purchase Price” has the meaning set forth in
    Section 4.1.



 



    “Seller Transaction Expenses” has the meaning
    set forth in Section 14.1.



 



    “Solvent” means, when used with respect to any
    Person, that, as of the Closing and after giving effect to the
    consummation the transactions contemplated hereby, (a) the
    amount of the “fair saleable value” of the assets of
    such Person will, as of such date, exceed (i) the value of
    all “liabilities of such Person, including contingent and
    other liabilities,” as of such date, as such quoted terms
    are generally determined in accordance with applicable Legal
    Requirements governing determinations of the insolvency of
    debtors; and (ii) the amount that will be required to pay
    the probable liabilities of such Person on its existing debts
    (including contingent and other liabilities) as such debts
    become absolute and mature; (b) such Person will not have,
    as of such date, an unreasonably small amount of capital for the
    operation of the businesses in which it intends to engage or
    propose to be engaged following the Closing Date; and
    (c) such Person will be able to pay its liabilities,
    including contingent and other liabilities, as they mature. For
    purposes of this definition, “not have an unreasonably
    small amount of capital for the operation of the businesses in
    which it is engaged or proposed to be engaged” and
    “able to pay its liabilities, including contingent and
    other liabilities, as they mature” means that, as of the
    Closing and immediately after consummating the transactions
    contemplated hereby, the relevant




    

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    Person will be able to generate enough cash from operations,
    asset dispositions or refinancing, or a combination thereof, to
    meet its obligations as they become due.



 



    “Tax” (and with the correlative meaning
    “Taxes”) means all federal, state, local or foreign
    net income, franchise, gross income, sales, use, ad valorem,
    property, gross receipts, license, capital stock, payroll,
    withholding, excise, severance, transfer, employment,
    alternative or add-on minimum, stamp, occupation, premium,
    environmental or windfall profits taxes, and all other taxes,
    charges, fees, levies, imposts, customs, duties, licenses or
    other assessments of any kind, together with any interest and
    any penalties, additions to tax or additional amounts imposed by
    any taxing authority, and any Liabilities with respect to any of
    the foregoing payable by reason of being or ceasing to be a
    member of an affiliated, combined, unitary, or similar group for
    any period (including pursuant to Treasury Regulations
    Section 1.1502-6
    or comparable provisions of state, local or foreign law) or
    under any contract, agreement, assumption, transferee liability,
    operation of law or otherwise.



 



    “Trademark Assignment” means the trademark
    assignment to be entered into between Seller and Buyer in
    substantially the form attached hereto as Exhibit C.



 



    “Transaction Documents” has the meaning set
    forth in Section 6.1.



 


			
	 	    2.  
	
    SALE AND PURCHASE OF ASSETS




 



    2.1.  Acquired
    Assets.  Subject to the terms and conditions
    set forth in this Agreement, at the Closing referred to in
    Section 5 hereof, Seller shall sell, assign, transfer,
    convey and deliver to Buyer, and Buyer shall purchase, acquire
    and take assignment and delivery of, free and clear from all
    Encumbrances (other than Permitted Encumbrances), all right,
    title, and interest of Seller in and to the following assets of
    Seller related to the Program, whether real, personal, tangible,
    intangible or otherwise, and whether now existing or hereinafter
    acquired (other than the Excluded Assets) (collectively, the
    “Acquired Assets”):



 



    (a) (i) all Intellectual Property used in and related
    to the Program, including without limitation, the domain names,
    domain name registration applications, contents of websites
    hosted at the aforementioned domain names, copyrights, copyright
    applications, trademarks, trademark applications, patents and
    patent applications that are owned by Seller as of the Closing
    set forth on Schedule 2.1(a)(i) hereto (the
    “Assigned Intellectual Property”); and



 



    (ii) all Intellectual Property used in or relating to the
    Program, including without limitation, the logos (whether or not
    registered) and associated artwork and typeface, trade names,
    certification marks and service marks that are licensed, used or
    held for use by Seller as of the Closing set forth on
    Schedule 2.1(a)(ii) hereto (the “Licensed
    Intellectual Property”);



 



    (iii) each Contract pursuant to which Seller has licensed
    or authorized others to use any Intellectual Property used in or
    related to the Program as set forth on
    Schedule 2.1(a)(iii) hereto (the “Licensor
    Intellectual Property”).



 



    (b) all of Seller’s rights under the Contracts set
    forth on Schedule 2.1(b) (collectively, the
    “Assumed Contracts”), including any and all
    rights to receive payment, goods or services thereunder, and to
    assert claims and take other actions thereunder, but excluding
    any rights to receive payments with respect to services
    performed on or prior to the Closing Date;



 



    (c) all Governmental Authorizations, including any permits,
    licenses, agreements, waivers and authorizations and any pending
    applications therefore or renewals thereof, held or used by
    Seller in connection with, or required for, the Program, to the
    extent their transfer is permitted by law set forth on
    Schedule 2.1(c) hereto;



 



    (d) all of Seller’s right, title and interest to the
    Personal Property set forth on Schedule 2.1(d)
    hereto;



 



    (e) all rights to claims, demands, lawsuits and judgments
    with respect to the Program or the ownership, use or value of
    any Acquired Assets with respect to all periods following the
    Closing Date;




    

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    (f) all goodwill relating to the Program;



 



    (g) all technical and investor relations materials and
    presentations, research and research-related materials, vendor
    and supplier lists, service provider lists, catalogs, data and
    laboratory books, media records, technical information,
    blueprints, technology, technical designs, drawings,
    specifications and other development records (including those
    relating to development costs) owned, used, associated with or
    employed by Seller relating to the Program and including but not
    limited to those related to Seller’s clinical-stage
    SonoLysis product candidate;



 



    (h) all of Seller’s books, documents and records
    relating to the Acquired Assets.



 



    2.2.  Excluded
    Assets.  Notwithstanding the provisions of
    Section 2.1 or any other provision hereof of any schedule
    or exhibit thereto, Seller is not selling and Buyer is not
    purchasing, pursuant to this Agreement, and the term
    “Acquired Assets” shall not include, any of the
    following assets or rights of Seller (collectively, the
    “Excluded Assets”):



 



    (a) the rights of Seller under this Agreement, the
    Transaction Documents or from the consummation of the
    transactions contemplated by this Agreement;



 



    (b) Seller’s tax assets, including without limitation,
    Seller’s right to refunds of Taxes and other governmental
    charges of whatever nature;



 



    (c) cash, bank accounts or similar cash and cash
    equivalents, accounts receivable, notes and investments;



 



    (d) Seller’s rights under all Contracts other than the
    Assumed Contracts, to the extent such rights do not relate to
    the Program, including, without limitation, all employment
    agreements, loan agreements and notes; provided, however, that
    this exclusion shall not exclude from the Acquired Assets to be
    acquired by Buyer hereunder any rights, title, interest or
    benefits to which Seller may be entitled under any such Contract
    relating to Intellectual Property, which rights, title, interest
    and benefits shall be included among the Acquired Assets
    notwithstanding that Buyer will not be assuming any Liabilities
    under such Contracts;



 



    (e) all rights to receive payments with respect to services
    performed on or prior to the Closing Date under any of the
    Assumed Contracts;



 



    (f) all minute books and stock records and corporate seals;



 



    (g) all Intellectual Property and Intellectual Property
    Rights of Seller or Seller’s Affiliates of any kind not
    related to or used in the Program;



 



    (h) all personal property of Seller other than the Personal
    Property as set forth on Schedule 2.1(d);



 



    (i) the rights to claims, demands, lawsuits and judgments
    with respect to the Program or the ownership, use or value of
    any Acquired Assets with respect to the period ending on or
    before the Closing Date;



 



    (j) all insurance policies and insurance benefits owned by
    Seller, including rights and proceeds, arising from or relating
    to the Assets or Assumed Liabilities prior to the Closing;



 



    (k) all assets, tangible or intangible, not expressly
    included in the Acquired Assets.



 


			
	 	    3.  
	
    ASSUMPTION OF CERTAIN LIABILITIES.




 



    3.1  Assumed
    Liabilities.  Subject to the limitations and
    provisions set forth in Section 3.2, at the Closing, Buyer
    shall assume the following Liabilities of Seller (the
    “Assumed Liabilities”) relating exclusively to
    the Acquired Assets:



 



    (a) all Liabilities under the Assigned Intellectual
    Property, the Licensed Intellectual Property, the Licensor
    Intellectual Property, the Assumed Contracts and the
    Governmental Authorizations, from and after the Closing;




    

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    (b) any Taxes that Buyer has agreed to pay in accordance
    with Section 14.1 of this Agreement and all Taxes
    attributable to the Acquired Assets attributable to any period
    or partial period beginning after the Closing; and



 



    (c) all Liabilities arising after the Closing Date related
    to the research, development, marketing, manufacture,
    distribution, testing, sale or trials of the Program.



 



    3.2  Excluded
    Liabilities.  Notwithstanding anything in this
    Agreement to the contrary, Buyer shall not and none of
    Buyer’s Affiliates shall assume, and shall not be deemed to
    have assumed, any Liabilities of Seller whatsoever not otherwise
    an Assumed Liability, including without limitation the following
    unassumed Liabilities (collectively, the “Excluded
    Liabilities”):



 



    (a) any Liabilities for accounts payable or for
    Indebtedness of Seller;



 



    (b) any Liabilities under any Contracts other than the
    Assumed Contracts;



 



    (c) any Liabilities relating to the Acquired Assets or to
    the operation of the Program prior to the Closing Date;



 



    (d) any Liabilities for Taxes (including any amounts
    payable under Section 11.4 (Transaction-Related Taxes));



 



    (e) any Liabilities in connection with or relating to all
    actions, suits, claims, proceedings, demands, warranty claims,
    assessments and judgments, costs, losses, damages, deficiencies
    and expenses (whether or not arising out of third party claims),
    including, without limitation, the matters set forth on
    Schedule 6.7 and any interest, penalties, reasonable
    attorney and accountant fees and all amounts paid in
    investigation, defense or settlement of any of the foregoing, to
    the extent such liability arises out of injuries, actions,
    omissions, conditions or events that occurred or existed prior
    to the Closing in connection with the Acquired Assets or to the
    operation of the Program;



 



    (f) any Liabilities arising in connection with the
    employment or termination of employment of any Persons
    affiliated with Seller prior to the Closing, including any
    workers’ compensation claims relating to events which
    transpired prior to the Closing, any employee grievances, any
    Liabilities with respect to any Employee Benefit Plan, or
    arising as a result of the consummation of the transactions
    contemplated by this Agreement;



 



    (g) any Liabilities of Seller under this Agreement, the
    Transaction Documents or from the consummation of the
    transactions contemplated by this Agreement;



 



    (h) any Liability of Seller under any Contract that is not
    an Assumed Liability;



 



    (i) any Liabilities relating to employees of Seller;



 



    (j) any Seller Transaction Expenses;



 



    (k) all other Liabilities of Seller existing at the Closing
    Date; and



 



    (l) any Liabilities arising out of any actual or alleged
    non-compliance with any Environmental Laws.



 


			
	 	    4.  
	
    PURCHASE PRICE.




 



    4.1  Purchase Price.  Subject
    to the terms and conditions hereof, Buyer shall pay to Seller,
    by wire transfer of immediately available funds to the account
    previously designated in writing by Seller to Buyer, a purchase
    price for the Acquired Assets equal to $500,000 (Five-Hundred
    Thousand Dollars) (the “Purchase Price”)
    payable as follows:



 



    (a) $400,000 (Four-Hundred Thousand Dollars) at the Closing
    (the “Closing Purchase Price”); and



 



    (b) $100,000 (One-Hundred Thousand Dollars) (the
    “Holdback”) to be delivered to the Escrow Agent
    for deposit into an escrow account an amount equal to secure
    Seller’s obligations under Section 12. The Holdback
    shall be held in an escrow account and applied pursuant to the
    terms of an Escrow Agreement, substantially in the form
    reasonably satisfactory to the Parties and the Escrow Agent at
    the




    

    A-8








 








    Closing. On the Expiration Date, the Holdback, together with the
    interest thereon, then remaining in the escrow account less any
    payments due to Buyer or pending claims made by Buyer pursuant
    to Section 12, shall be delivered to Seller.



 



    4.2  Allocation of Purchase
    Price.  Prior to the Closing, Buyer shall
    submit to Seller the Allocation for Seller’s review and
    approval (not to be unreasonably withheld, conditioned or
    delayed). The Allocation shall be consistent with
    Exhibit D and may be amended by Buyer from time to
    time as payments under Section 12 (if any) are made,
    provided that each such amended Allocation shall be consistent
    with Exhibit D.  At any time, the then
    most recent Allocation shall be binding on Seller and Buyer for
    all Tax purposes (including filing of IRS Form 8594).
    Seller shall cooperate with Buyer in Buyer’s preparation of
    all Allocations, including providing such information as Buyer
    may reasonably request. The Allocation will be made in
    accordance with Section 1060 of the Code and the Treasury
    Regulations promulgated thereunder. Seller and Buyer shall
    comply with the applicable information requirements of
    Section 1060 of the Code and shall file all information and
    Tax returns (and any amendments thereto) in a manner consistent
    with the Allocation (including, without limitation, filing
    Form 8594 with their United Stated federal income Tax
    return for the Taxable year that includes he date of the
    Closing). If, contrary to the intent of Buyer and Seller as
    expressed in this Section 4.2, any Taxing authority makes
    or proposes an allocation different from that determined in
    accordance with the terms of this Section 4.2, Buyer and
    Seller shall cooperate with each other in good faith to contest
    such Taxing authority’s allocation (or proposed
    allocation); provided, however, that after consultation with the
    Parties adversely affected by such allocation (or proposed
    allocation), the other Parties hereto may file such protective
    claims or returns as may reasonably be required to protect their
    interests.



 


			
	 	    5.  
	
    CLOSING.




 



    5.1.  Time and Place.  The
    closing of the transfer and delivery of all documents and
    instruments necessary to consummate the transactions
    contemplated by this Agreement (the “Closing”)
    shall be held at the offices of the Seller, 12277
    134th Court NE, Suite 202, Redmond, WA 98052 at
    10:00 a.m. on a mutually acceptable date agreed to by the
    parties hereto not more than two (2) Business Days after
    the satisfaction of all conditions set forth in Sections 9
    and 10 hereof (the date of the Closing, the “Closing
    Date”).



 



    5.2.  Closing Deliveries by
    Seller.  At the Closing, Seller shall cause to
    be delivered to Buyer:



 



    (a) a duly executed Bill of Sale, assignment and general
    conveyance, in substantially the form attached hereto as
    Exhibit A, dated the Closing Date, with respect to
    the Acquired Assets, and such other instruments of assignment
    and transfer with respect to the Acquired Assets as Buyer may
    reasonably request
    and/or as
    may reasonably be necessary to vest in Buyer valid and
    enforceable title to all of the Acquired Assets;



 



    (b) a duly executed Assignment and Assumption Agreement, in
    substantially the form attached hereto as Exhibit E,
    dated the Closing Date, pursuant to which Seller shall assign
    the Assumed Liabilities;



 



    (c) such duly executed documents and instruments of
    ownership transfer and assignment as Buyer shall request and
    provide to Seller (the “National Assignment
    Documents”), substantially in the form reasonably
    acceptable to Buyer, requesting the commissioners of the United
    States Patent and Trademark Office, the European Patent Office
    and the other national patent offices wherein the Intellectual
    Property was issued or is pending (a “National Patent
    Authority”), to transfer ownership and issue the same to
    Buyer, it successors, legal representatives and assigns, in
    accordance with the terms of the applicable National Assignment
    Document.



 



    (d) a duly executed Trademark Assignment, in substantially
    the form attached hereto as Exhibit C, dated as of the
    Closing Date.



 



    (e) a duly executed Domain Name Assignment, in
    substantially the form attached hereto as Exhibit B, dated
    the Closing Date.



 



    (f) a certificate contemplated by Section 9.9 hereof;




    

    A-9








 








    (g) true and complete copies, certified by a duly
    authorized officer of Seller, of the resolutions duly and
    validly adopted by the Board of Directors of Seller evidencing
    its authorization of the execution and delivery of this
    Agreement, the Transaction Documents and all other documents to
    be delivered hereunder or thereunder and the consummation of the
    transactions contemplated by this Agreement;



 



    (h) the executed Transaction Documents;



 



    (i) the executed Required Consents; and



 



    (i) the legal opinion of Seller’s counsel contemplated
    by Section 9.13 hereof, addressed to Buyer and dated as of
    the Closing Date, substantially in the form attached hereto as
    Exhibit F; and



 



    (j) such other documents or instruments as Buyer may
    reasonably request.



 



    5.3.  Closing Deliveries by
    Buyer.  At the Closing, Buyer shall cause to
    be delivered to Seller:



 



    (a) the Closing Purchase Price set forth in
    Section 4.1(a);



 



    (b) true and complete copies, certified by a duly
    authorized officer of Buyer, of the resolutions duly and validly
    adopted by the Board of Directors of Buyer evidencing its
    authorization of the execution and delivery of this Agreement,
    the Transaction Documents and all other documents to be
    delivered hereunder or thereunder and the consummation of the
    transactions contemplated by this Agreement;



 



    (c) the executed Transaction Documents; and



 



    (d) such other documents or instruments as Seller may
    reasonably request.



 



    5.4.  Required Consents.



 



    (a) If any of the Required Consents (as defined in
    Section 8.1.11) have not yet been obtained (or otherwise
    are not in full force and effect) as of the Closing, in the case
    of each Acquired Asset as to which such Required Consents were
    not obtained (or otherwise are not in full force and effect)
    (the “Restricted Material Contracts”), Buyer
    may waive Buyer’s closing condition as to any such Required
    Consent and, if Seller waives the condition to closing set out
    in Section 10.7, either:



 



    (i) elect to have Seller continue its efforts for a period
    of three (3) months to obtain the Required Consents; or



 



    (ii) elect to have Seller retain that Restricted Material
    Contract and all Liabilities arising therefrom or relating
    thereto.



 



    If, pursuant to this Section 5.4, Buyer elects to have
    Seller continue its efforts to obtain any Required Consents and
    the Closing occurs, notwithstanding Sections 2 and 3
    hereof, neither this Agreement nor any assignment and assumption
    agreement nor any other document related to the consummation of
    the transactions contemplated by this Agreement shall constitute
    a sale, assignment, assumption, transfer, conveyance or delivery
    or an attempted sale, assignment, assumption, transfer,
    conveyance or delivery of the Restricted Material Contracts, and
    following the Closing, the Parties shall use their commercially
    reasonable efforts, and cooperate with each other, to obtain the
    Required Consent relating to each Restricted Material Contract
    as quickly as practicable. Pending the obtaining of such
    Required Consents relating to any Restricted Material Contract,
    the Parties shall cooperate with each other in any reasonable
    and lawful arrangements designed to provide to Buyer the
    benefits of use of the Restricted Material Contract for its term
    (or any right or benefit arising thereunder, including the
    enforcement for the benefit of Buyer of any and all rights of
    Seller against a third party thereunder). Once a Required
    Consent for the sale, assignment, assumption, transfer,
    conveyance and delivery of a Restricted Material Contract is
    obtained, Seller shall promptly assign, transfer, convey and
    deliver such Restricted Material Contract to Buyer, and Buyer
    shall assume the obligations under such Restricted Material
    Contract assigned to Buyer from and after the date of assignment
    to Buyer pursuant to a special-purpose assignment and assumption
    agreement (which special-purpose agreement the Parties shall
    prepare, execute and deliver in good faith at the time of such
    transfer, all at no additional cost to Buyer).




    

    A-10








 








    (b) If there are any consents other than the Required
    Consents necessary for the assignment and transfer of any
    Acquired Assets to Buyer (the “Nonmaterial
    Consents”) which have not yet been obtained (or
    otherwise are not in full force and effect) as of the Closing,
    Buyer shall elect at the Closing, in the case of each of the
    Acquired Assets as to which such Nonmaterial Consents were not
    obtained (or otherwise are not in full force and effect) (the
    “Restricted Nonmaterial Contracts”), whether to:



 



    (i) accept the assignment of such Restricted Nonmaterial
    Contract, in which case, as between Buyer and Seller, such
    Restricted Nonmaterial Contract shall, to the maximum extent
    practicable and notwithstanding the failure to obtain the
    applicable Nonmaterial Consent, be transferred at the Closing to
    Buyer under this Agreement; or



 



    (ii) reject the assignment of such Restricted Nonmaterial
    Contract, in which case, notwithstanding Sections 2 and 3
    of this Agreement, (A) neither this Agreement nor any
    assignment and assumption agreement nor any other document
    related to the consummation of the transactions contemplated by
    this Agreement shall constitute a sale, assignment, assumption,
    conveyance or delivery or an attempted sale, assignment,
    assumption, transfer, conveyance or delivery of such Restricted
    Nonmaterial Contract, and (B) Seller shall retain such
    Restricted Nonmaterial Contract and all Liabilities arising
    therefrom or relating thereto.



 



    6.  REPRESENTATIONS AND WARRANTIES OF
    SELLER.  As a material inducement to Buyer to
    enter into this Agreement and consummate the transactions
    contemplated hereby, Seller represents and warrants as of the
    date of this Agreement and as of the Closing Date that the
    statements in this Section 6 are true, correct and
    complete except as set forth in Seller’s disclosure
    schedules (each a “Schedule” and collectively,
    the “Schedules”). The Schedules have been
    arranged for purposes of convenience in separately titled
    sections corresponding to the provisions of this
    Section 6; however, each section of the Schedules
    shall be deemed to incorporate by reference all information
    disclosed in any other section of the Schedules to the extent it
    is reasonably apparent on its face to a reader unfamiliar to the
    Company or the Company’s business that such information is
    relevant to such other section of the Schedules.



 



    6.1.  Organization of Seller;
    Authority.  Seller is a corporation duly
    organized, validly existing and in good standing under the laws
    of the State of Delaware. Seller is duly qualified and in good
    standing as a foreign corporation in all jurisdictions in which
    the character of the properties owned or leased or the nature of
    the activities conducted by it makes such qualification
    necessary, except where any such failure would not reasonably be
    expected to have a Material Adverse Effect. Seller is not in
    violation of any term of its Certificate of Incorporation.
    Seller has all requisite corporate power and corporate authority
    to own and hold the Acquired Assets owned or held by it, to
    carry on the Program as such program is now conducted and to
    execute and deliver this Agreement and the other documents,
    instruments and agreements contemplated hereby or thereby
    (collectively, the “Transaction Documents”) to
    which it is a party and to carry out all actions required of it
    pursuant to the terms of the Transaction Documents.



 



    6.2.  Corporate Approval; Binding
    Effect.  Seller has obtained all necessary
    authorizations and approvals from its Board of Directors and
    required for the execution and delivery of the Transaction
    Documents to which it is a party and the consummation of the
    transactions contemplated hereby and thereby. As of the Closing,
    Seller shall have obtained all necessary authorizations and
    approvals from its stockholders required for the execution and
    delivery of this Agreement, the Transaction Documents to which
    it is a party and the consummation of the transactions
    contemplated hereby and thereby. Each of the Transaction
    Documents has been duly executed and, when delivered by Seller
    in accordance with the terms hereof and thereof, will constitute
    the legal, valid and binding obligation of Seller enforceable
    against Seller in accordance with its terms, except as the
    enforceability thereof may be limited by any applicable
    bankruptcy, reorganization, insolvency or other laws affecting
    creditors’ rights generally or by general principles of
    equity.



 



    6.3.  Non-Contravention.  The
    execution and delivery by Seller of the Transaction Documents
    and, subject to receipt of required stockholder approvals, the
    consummation by Seller of the transactions contemplated hereby
    and thereby will not (a) violate or conflict with any
    provision of the Certificate of Incorporation or By-Laws of
    Seller; or (b) constitute a violation of, or be in conflict
    with, or constitute or create a default under, or result in the
    creation or imposition of any Encumbrance upon any property of
    Seller (including




    

    A-11








 








    without limitation any of the Acquired Assets) pursuant to
    (i) any agreement or instrument to which Seller is a party
    or by which Seller or any of its properties (including without
    limitation any of the Acquired Assets) is bound or to which
    Seller or any of such properties is subject, or (ii) any
    Legal Requirement applicable to Seller, except in the case of
    clause (b) for such violations, conflicts, defaults and
    Encumbrances as could not reasonably be expected to have a
    Material Adverse Effect.



 



    6.4.  Governmental Consents; Transferability of
    Licenses, Etc.  Except as set forth on
    Schedule 6.4, no consent, approval or authorization
    of, or registration, qualification or filing with, any
    governmental agency or authority, including but not limited to
    the Food and Drug Administration, is required for the execution
    and delivery by Seller of the Transaction Documents or for the
    consummation by Seller of the transactions contemplated hereby
    or thereby, other than such as have been obtained or made.
    Seller has and maintains, and the Governmental Authorizations
    listed on Schedule 2.1(c) hereto include, all
    licenses, permits and other authorizations from all Governmental
    Bodies as are (x) necessary for the conduct of the Program
    as it is now being conducted or in connection with the ownership
    or current use of the Acquired Assets or (y) required to be
    in compliance with all Legal Requirements applicable to the
    Acquired Assets, except for such licenses, permits and other
    authorizations the lack of which would not reasonably be
    expected to have a Material Adverse Effect. The Governmental
    Authorizations are in full force and effect in accordance with
    their terms, and there have been no material violations of such
    Governmental Authorizations, no proceedings are pending or, to
    Seller’s Knowledge, threatened, which could result in their
    revocation or limitation and all steps have been taken and
    filings made on a timely basis with respect to each Governmental
    Authorization and its renewal; in each case, except as would not
    reasonably be expected to have a Material Adverse Effect on the
    Acquired Assets. Except as expressly designated on
    Schedule 6.4, all of the Governmental Authorizations
    listed on Schedule 2.1(c) are transferable to Buyer,
    and true and complete copies of the Governmental Authorizations
    listed on Schedule 2.1(c) have previously been
    delivered or made available to Buyer.



 



    6.5.  Financial
    Statements.  Seller has delivered the
    Financial Statements to Buyer. Each of the Financial Statements
    have been prepared in accordance with generally accepted
    accounting principles accepted in the United States
    (“GAAP”), consistently applied; during the
    periods involved (except (i) as may be otherwise indicated
    in the Financial Statements or the notes thereto, or
    (ii) in the case of Interim Financials, to the extent that
    they may not include notes, may be condensed or summary
    statements or may conform to the Securities and Exchange
    Commission’s (“SEC”) rules and
    instructions for Reports on
    Form 10-Q).
    Each of the Audited Balance Sheets and the Interim Balance
    Sheets fairly presents the consolidated financial condition of
    Seller and its subsidiaries as of its respective date; and each
    of the statements of operations and cash flows included in the
    Audited Financials and the Interim Financials fairly presents
    the consolidated results of operations and cash flows of Seller
    and its subsidiaries for the periods then ended (subject, in the
    case of Interim Financials, to normal recurring year-end
    adjustments).



 



    6.6.  Absence of Certain
    Changes.  Except as set forth on
    Schedule 6.6 or except as would not reasonably be
    expected to have a Material Adverse Effect, since the date of
    the Interim Financials, there has not been with respect to the
    Program: (a) any change in the assets, Liabilities, income
    or business of Seller, or in its relationships with suppliers,
    other than changes in the Ordinary Course of Business;
    (b) any acquisition or disposition by Seller of any asset
    or property other than in the Ordinary Course of Business;
    (c) any damage, destruction or loss, whether or not covered
    by insurance, adversely affecting, in the aggregate, the
    property or business of Seller; (d) any entry by Seller
    into any transaction other than in the Ordinary Course of
    Business; (e) any incurrence by Seller of any Liabilities,
    whether absolute, accrued, contingent or otherwise (including,
    without limitation, Liabilities as a guarantor or otherwise with
    respect to obligations of others), other than Liabilities
    incurred in the Ordinary Course of Business; or (f) any
    Encumbrance on any of the Acquired Assets, other than in the
    Ordinary Course of Business.



 



    6.7.  Litigation.  Except as
    set forth on Schedule 6.7 hereto, no action, suit,
    proceeding or investigation is pending or, to the knowledge of
    Seller, threatened, relating to or affecting any of the Acquired
    Assets or the Program, nor, to the knowledge of Seller, has any
    event occurred that is reasonably likely to give rise to or
    serve as a basis for the commencement of any such action, suit,
    proceeding or investigation. No action, suit, proceeding or
    investigation is pending or, to the knowledge of Seller,
    threatened, which questions the validity of the Transaction
    Documents or challenges any of the transactions contemplated
    hereby or thereby, nor, to the




    

    A-12








 








    knowledge of Seller, has any event occurred that is reasonably
    likely to give rise to or serve as a basis for the commencement
    of any such action, suit, proceeding or investigation.



 



    6.8.  Conformity to
    Law.  Except as set forth on
    Schedule 6.8 or except where any such noncompliance
    has been cured or would not reasonably be expected to have a
    Material Adverse Effect, Seller has complied with, and is in
    compliance with (a) all Legal Requirements, including all
    laws, statutes, governmental regulations and all judicial or
    administrative tribunal orders, judgments, writs, injunctions,
    decrees or similar commands applicable to the Program or any of
    the Acquired Assets (including, without limitation, any labor,
    environmental, occupational health, zoning or other law,
    regulation or ordinance) and (b) all terms and provisions
    of all contracts, agreements and indentures of the Program to
    which Seller is a party, or by which the Program or any of the
    Acquired Assets is subject. Except as set forth in
    Schedule 6.8 hereto, Seller has not committed, been
    charged with, or, to the knowledge of Seller, is or has been
    under investigation with respect to, nor to the knowledge of
    Seller does there exist, any violation of any provision of any
    Legal Requirement which would reasonably be expected to have a
    Material Adverse Effect.



 



    6.9.  Title to Acquired
    Assets.  Except as set forth on
    Schedule 6.9, Seller has valid and enforceable title
    or interest in or to all of the Acquired Assets, and has the
    full right to sell, convey, transfer, assign and deliver the
    Acquired Assets, without the need to obtain the consent or
    approval of any third party. Except for Permitted Encumbrances
    (as defined below), all of the Acquired Assets are free and
    clear of any security interests, liens, claims, charges,
    options, mortgages, debts, leases (or subleases), conditional
    sales agreements, title retention agreements, encumbrances of
    any kind, material defects as to title or restrictions against
    the transfer or assignment thereof (collectively,
    “Encumbrances”). Except as set forth on
    Schedule 6.9, all of the Acquired Assets are in good
    condition and repair (reasonable wear and tear excepted) and are
    adequate in all material respects to carry on the Program as
    presently conducted. At and as of the Closing, Seller will
    convey the Acquired Assets to Buyer by bills of sale,
    certificates of title and other instruments of assignment and
    transfer effective in each case to vest in Buyer, and Buyer will
    have, valid and enforceable title or interest in or to all of
    the Acquired Assets, free and clear of all Encumbrances other
    than (a) those identified in Schedule 6.9;
    (b) those for Taxes and other governmental assessments or
    charges not yet due and payable; and (c) any other
    Encumbrances which in the aggregate relate to claims totaling
    less than $5,000, do not materially detract from the value or
    transferability of the property or assets subject thereto or
    materially interfere with the present use and have no arisen
    other than in the Ordinary Course of Business
    (“Permitted Encumbrances”).



 



    6.10.  Environmental
    Matters.  Except as set forth on
    Schedule 6.10, Seller is in material compliance with
    all Environmental Laws to the extent such compliance or lack
    thereof would have any impact on the Program or Seller’s
    ability to consummate the transactions contemplated herein in
    accordance with the terms hereof, which compliance includes the
    possession by Seller of all material permits and other
    Governmental Authorizations required under Environmental Laws
    and compliance with the terms and conditions thereof. Seller has
    not received any written notice or other written communication,
    whether from any Governmental Body, citizens groups, employee or
    otherwise, that alleges that Seller is not in compliance with
    any Environmental Law. All Governmental Authorizations currently
    held by Seller pursuant or in connection with any Environmental
    Law are in full force and effect, Seller is in compliance in all
    respects with all of the terms of such Governmental
    Authorizations to the extent such compliance or lack thereof
    would reasonably be expected to have a Material Adverse Effect,
    and no other Governmental Authorizations material to the Program
    are required by Seller. Except as set forth on
    Schedule 6.10, the management, handling, storage,
    transportation, treatment and disposal by Seller of all
    Hazardous Substances have been in compliance in all respects
    with all applicable Environmental Laws to the extent such
    compliance or lack thereof would reasonably be expected to have
    a Material Adverse Effect.



 



    6.11.  Personal
    Property.  Schedule 2.1(d) hereto
    sets forth a complete and accurate list of all of the Personal
    Property existing as of the date hereof. Except as set forth in
    Schedule 6.11, Seller owns or has the sole and
    exclusive right to use all the Personal Property and upon the
    consummation of the transactions contemplated by this Agreement,
    Buyer shall own or have the sole and exclusive right to use the
    Personal Property. All of the Personal Property held by Seller
    to be transferred to Buyer is in good condition and repair
    (reasonable wear and tear excepted), except as would not
    reasonably be expected to have a Material Adverse Effect.




    

    A-13








 








    6.12.  Assumed
    Contracts.  Schedule 2.1(b) sets
    forth a complete and accurate list of all Assumed Contracts with
    respect to or relating to the Program to which Seller is a party
    or by which Seller is bound or to which Seller or any of the
    Acquired Assets is subject. Seller has made available to Buyer
    true, correct and complete copies of all such Assumed Contracts,
    together with all modifications and supplements thereto. Each of
    the Assumed Contracts is in full force and effect in accordance
    with its terms, Seller is not in breach of any of the material
    provisions of any such contract, nor, to the knowledge of
    Seller, is any other party to any such contract in default
    thereunder, nor does any event or condition exist which with
    notice or the passage of time or both would constitute a
    material default thereunder. Seller has performed all material
    obligations required to be performed by it to date under each
    Assumed Contract. Subject to obtaining any necessary consents of
    the other party or parties to any such Assumed Contract (the
    requirement of any such consent being reflected on
    Schedule 2.1(b)) and except as set out in
    Schedule 2.1(b) no such contract (a) includes
    any provision the effect of which would be to enlarge or
    accelerate any obligations of Buyer to be assumed thereunder or
    give additional rights to any other party thereto or will
    adversely affect the Program as presently conducted by Seller,
    or (b) contains any material provision which would
    terminate or lapse by reason of the transactions contemplated by
    this Agreement.



 



    6.13  Material Contracts.



 



    (a) Except as set forth on Schedule 6.13,
    Seller is not a party to or bound by:



 



    (i) any Material Contract relating to Indebtedness (whether
    incurred, assumed, guaranteed or secured by any asset);



 



    (ii) any joint venture, partnership, limited liability
    company or other similar Material Contract or arrangement
    (including any agreement relating to the Program providing for
    joint research, development or marketing);



 



    (iii) any Material Contract or series of related Material
    Contracts, including any option agreement, relating to the
    acquisition or disposition of any business, a material amount of
    stock or assets of any other Person or any material real
    property (whether by merger, sale of stock, sale of assets or
    otherwise);



 



    (iv) any Material Contract (A) that limits the
    freedom of Seller to compete in the Program, including, without
    limitation, with any Person in the Program or in any area or
    (B) contains exclusivity obligations or restrictions
    binding on Seller;



 



    (v) any Intellectual Property License or series of related
    Intellectual Property Licenses (other than shrink wrap licenses
    for
    Off-the-Shelf
    Software);



 



    (vi) any Material Contract pursuant to which the Company
    has agreed to indemnify any Person against any claim of
    infringement relating to the Assigned Intellectual;



 



    (vii) any Material Contract with any current individual
    officer, director, employee, consultant or independent
    representative of Seller or former individual officer, director,
    employee, consultant or independent representative thereof under
    which there exists any present or future liability;



 



    (viii) any Material Contract that grants any exclusive
    rights, rights of first refusal, rights of first negotiation or
    similar rights to any person; or



 



    (ix) any other Material Contract or series of related
    Material Contracts, that (A) is not made in the Ordinary
    Course of Business and (B) involves a payment (whether
    fixed, contingent or otherwise) of more than $50,000 in the
    aggregate.



 



    (b) Each Material Contract disclosed on Schedule 6.13
    or required to be disclosed thereon is a valid and binding
    agreement of Seller, is in full force and effect in accordance
    with its terms, and Seller is not in breach of any of the
    material provisions of any such contract, nor, to the knowledge
    of Seller, is any other party to any such contract in default
    thereunder, nor does any event or condition exist which with
    notice or the passage of time or both would constitute a
    material default thereunder. Seller has performed all material
    obligations required to be performed by it to date under each
    Material Contract. Except as set out in Schedule 6.13 no
    such Contract (a) includes any provision the effect of
    which would be to enlarge or accelerate any obligations




    

    A-14








 








    of Buyer to be assumed thereunder or give additional rights to
    any other party thereto or will adversely affect the Program as
    presently conducted by Seller, or (b) contains any material
    provision which would terminate or lapse by reason of the
    transactions contemplated by this Agreement. Seller has made
    available to Buyer true, correct and complete copies of all such
    Material Contracts (including all modifications and amendments
    thereto and waivers thereunder). All Material Contracts are in
    written form.



 



    6.14.  Intellectual Property.



 



    (a) (i) Schedule 2.1(a)(i) hereto sets forth a
    complete and accurate list of the Assigned Intellectual
    Property; (ii) Schedule 2.1(a)(ii) hereto sets forth
    a complete and accurate list of the Licensed Intellectual
    Property; and (iii) Schedule 2.1(a)(iii) hereto sets
    forth a complete and accurate list of the Licensor Intellectual
    Property.



 



    (b) Except as set forth in Schedule 6.14(b) and
    except as would not have a Material Adverse Effect, Seller owns
    or has the sole and exclusive right to use all Assigned
    Intellectual Property and has the right to use the Licensed
    Intellectual Property used in the Ordinary Course of the
    Program. Upon the consummation of the transactions contemplated
    by this Agreement, and subject to receipt of all consents
    required to assign to Buyer (i) all Assigned Intellectual
    Property and (ii) all licenses or other authorizations to
    use the Licensed Intellectual Property, Buyer shall have the
    right to use the Assigned Intellectual Property and Licensed
    Intellectual Property in the Ordinary Course of the Program as
    presently conducted. Seller agrees to cooperate in placing the
    Assigned Intellectual Property in the name of Buyer. No claims
    have been asserted against Seller, and to the knowledge of
    Seller no claims are pending, by any Person that may affect the
    use of any Assigned Intellectual Property or Licensed
    Intellectual Property, or challenging or questioning the
    validity or effectiveness of any material license or agreement
    pertaining to the Assigned Intellectual Property, and, except as
    set forth in Schedule 6.14(b), to the knowledge of
    Seller, there is no basis for such claim. Except as set forth in
    Schedule 6.14(b), the use by Seller of the Assigned
    Intellectual Property and the Licensed Intellectual Property in
    the Ordinary Course of the Program does not infringe on the
    rights of any Person, and no claims have been asserted against
    Seller, and to the knowledge of Seller no claims are pending, by
    any Person alleging that the use by Seller of any Assigned
    Intellectual Property or Licensed Intellectual Property
    infringes on the rights of any Person.



 



    (c) Seller has the legal right to grant licenses or
    sublicenses with respect to all the Licensor Intellectual
    Property that Seller has licensed or authorized others to use.
    All licenses or other agreements pursuant to which Seller has
    granted licenses or authorized others to use any Licensor
    Intellectual Property are, unless they have expired according to
    their terms, in full force and effect, and, to the knowledge of
    Seller, there is no default by any party thereto. To
    Seller’s knowledge, the licenses granted by Seller with
    respect to the Licensor Intellectual Property do not infringe on
    the rights of any person.



 



    (d) Except as set forth in Schedule 6.14(d) and
    except as would not have a Material Adverse Effect, all of the
    Assigned Intellectual Property has been duly registered in,
    filed in or issued by the United States Patent and Trademark
    Office, the United States Register of Copyrights, or the
    corresponding offices of other jurisdictions as identified on
    Schedule 2.1(a)(i), and has been maintained and
    renewed in accordance with all applicable provisions of law and
    administrative regulations of the United States and each such
    other jurisdiction.



 



    (e) Except as set forth in Schedule 6.14(e),
    Seller has taken commercially reasonable steps to establish and
    preserve its Intellectual Property Rights with respect to the
    Assigned Intellectual Property. Except as set forth in
    Schedule 6.14(e), Seller has required all
    professional and technical employees employed with respect to
    the Program, and other such employees and consultants having
    access to valuable nonpublic information of Seller, to execute
    agreements under which such employees or consultants are
    required to convey to Seller ownership of all inventions and
    developments conceived or created by them in the course of their
    employment or engagement with Seller and to maintain the
    confidentiality of all such information of Seller. Except as set
    forth in Schedule 6.14(e), Seller has not made such
    information available to any person other than employees or
    consultants of Seller, except pursuant to written agreements
    requiring the recipients to maintain the confidentiality of such
    information and appropriately restricting the use thereof.




    

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    6.15.  Suppliers.  Schedule 6.15
    hereto sets forth the five (5) largest suppliers of the
    Program based on purchases by the Program, for the period ending
    on December 31, 2008. The relationships of Seller with such
    suppliers are, to Seller’s knowledge, good commercial
    working relationships and, except as set forth on
    Schedule 6.15, no supplier of material importance to
    the Program has cancelled or otherwise terminated, or threatened
    in writing to cancel or otherwise to terminate, its relationship
    with Seller or has during the last twelve (12) months
    decreased materially, or threatened in writing to decrease or
    limit materially, its services, supplies or materials for use in
    the Program, except for normal cyclical changes related to such
    suppliers’ businesses. Except as set forth on
    Schedule 6.15, to the knowledge of Seller, no such
    supplier intends to cancel or otherwise substantially modify its
    relationship with Seller or to decrease materially or limit its
    services, supplies or materials to Seller, and to the knowledge
    of Seller, the consummation of the transactions contemplated
    hereby would not reasonably be expected to materially adversely
    affect the post-Closing relationship of Buyer with any supplier
    of Seller relating to the Program.



 



    6.16.  Adequacy of Acquired
    Assets.  The Acquired Assets are reasonably
    adequate to conduct the Program on substantially the same basis
    as currently conducted by Seller.



 



    6.17.  Solvency.  Seller is,
    individually and together with its subsidiaries on a
    consolidated basis and after giving effect to the incurrence of
    all obligations being incurred in connection herewith, Solvent.



 



    6.18.  No Undisclosed
    Liabilities.  Except to the extent
    (a) reflected or reserved against in the Interim Balance
    Sheet, (b) incurred in the Ordinary Course of Business
    after the date of the Interim Balance Sheet, or
    (c) described on any Schedule hereto, Seller is not subject
    to any liabilities or obligations of any nature, whether
    accrued, absolute, contingent or otherwise in connection with
    the Program (including without limitation as guarantors or
    otherwise with respect to obligations of others), other than
    liabilities and obligations in connection with the Program that
    would not be required to be reflected or reserved against on a
    balance sheet prepared in accordance with GAAP.



 



    6.19.  Taxes.  Seller has duly
    filed (or have obtained an extension of time within which to
    file) with the appropriate government agencies all of the
    income, sales, use, employment and other Tax returns and reports
    required to be filed by it. No waiver of any statute of
    limitations relating to Taxes has been executed or given by
    Seller. All Taxes, assessments, fees and other governmental
    charges upon Seller or upon any of its properties, assets,
    revenues, income and franchises which are owed by Seller with
    respect to any period ending on or before the Closing Date have
    or will be paid, other than those the non-payment of which would
    not reasonably be expected to have a Material Adverse Effect.
    Seller has withheld and paid all Taxes required to be withheld
    or paid in connection with amounts paid or owing to any
    employee, creditor, independent contractor or third party. No
    federal Tax return of Seller is currently under audit by the
    IRS, and no other Tax return of Seller is currently under audit
    by any other Taxing authority. Neither the IRS nor any other
    Taxing authority is now asserting or, to Seller’s
    knowledge, threatening to assert against Seller any deficiency
    or claim for additional Taxes or interest thereon or penalties
    in connection therewith or any adjustment that would have
    Material Adverse Effect.



 



    6.20.  Broker.  Seller has not
    retained, utilized or been represented by any broker, agent,
    finder or intermediary in connection with the negotiation or
    consummation of the transactions contemplated by this Agreement,
    and Seller has not incurred or become liable for any
    broker’s commission or finder’s fee relating to or in
    connection with the transactions contemplated by this Agreement.



 



    6.21  Insurance.  Set forth on
    Schedule 6.21 is a list of all insurance policies
    (including fidelity bonds and other similar instruments)
    relating to the Acquired Assets or the Program or for which
    Seller is an insured party (including policies providing
    property, fire, theft, casualty, liability and workers’
    compensation coverage, but excluding policies relating to
    Employee Benefit Plans) (the “Insurance
    Policies”), which are in full force and effect in all
    material respects and have not been terminated and which provide
    for coverages which are reasonable for the Program as to both
    amount and scope. Complete copies of the Insurance Policies have
    been made available for review by Buyer. Such policies (or other
    policies providing substantially similar insurance coverage)
    have been in effect continuously since the date indicated on
    Schedule 6.21 for such policy. All premiums due in
    respect of the Insurance Policies have been paid by Seller and
    Seller is otherwise in material compliance with the terms of
    such policies. There has not been any threatened termination of,
    pending




    

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    premium increase (other than with respect to customary annual
    premium increases) with respect to, or alteration of coverage
    under, any Insurance Policy. To the Knowledge of Seller, there
    are no pending or threatened claims against the Insurance
    Policies as to which the applicable insurer has questioned,
    disputed or denied liability and there exist no material claims
    that have not been timely submitted by Seller to the applicable
    insurer.



 



    6.22  Disclosure.  Subject to
    Section 6.23 below, no representation or warranty by Seller
    in this Section 6 contains at the time made any untrue
    statement of a material fact or omits to state a material fact
    required to be stated therein or necessary to make the
    statements contained therein not misleading.



 



    6.23.  No Other Representations and
    Warranties.  Except for the representations
    and warranties of Seller contained in this Section 6,
    Seller makes no other representations and warranties, written or
    oral, statutory, express, or implied. Buyer acknowledges that
    except as expressly provided in this Agreement, Seller has not
    made, and Seller hereby expressly disclaims and negates, and
    Buyer hereby expressly waives, any representation or warranty,
    express or implied, at common law, by statute, or otherwise
    relating to, and Buyer hereby expressly waives and relinquishes
    any and all rights, claims and causes of action against Seller
    and its representatives in connection with the accuracy,
    completeness or materiality of, any information, data or other
    information (written or oral) heretofore furnished to Buyer and
    its representatives by and on behalf of Seller.



 



    7.  REPRESENTATIONS AND WARRANTIES OF THE
    BUYER.  As a material inducement to Seller to
    enter into this Agreement and consummate the transactions
    contemplated hereby, Buyer represents and warrants as of the
    date of this Agreement and as of the Closing Date, to Seller as
    follows, except as specifically contemplated by this Agreement
    and/or the
    Transaction Documents:



 



    7.1.  Organization of Buyer;
    Authority.  Buyer is a corporation duly
    organized, validly existing and presently subsisting under the
    laws of the state of Washington. Buyer is not in violation of
    any term of its Articles of Incorporation. Buyer has all
    requisite corporate power and corporate authority to own and
    hold all property owned or held by it, to carry on its business
    as such business is now conducted and to execute and deliver
    this Agreement and the Transaction Documents to which it is a
    party, and to carry out all actions required of it pursuant to
    the terms of the Transaction Documents, except where any such
    failure would not reasonably be expected to have a Material
    Adverse Effect.



 



    7.2.  Corporate Approval; Binding
    Effect.  Buyer has obtained all necessary
    authorizations and approvals from its Board of Directors
    required for the execution and delivery of the Transaction
    Documents to which it is a party and the consummation of the
    transactions contemplated hereby and thereby. Each of the
    Transaction Documents to which Buyer is a party has been duly
    executed and delivered by Buyer, and constitutes the legal,
    valid and binding obligation of Buyer, enforceable against Buyer
    in accordance with its terms, except as enforceability thereof
    may be limited by any applicable bankruptcy, reorganization,
    insolvency or other laws affecting creditors’ rights
    generally or by general principles of equity.



 



    7.3.  Non-Contravention.  The
    execution and delivery by Buyer of the Transaction Documents to
    which it is a party and the consummation by Buyer of the
    transactions contemplated hereby and thereby will not
    (a) violate or conflict with any provisions of the Articles
    of Incorporation or By-Laws of Buyer, each as amended to date;
    or (b) constitute a violation of, or be in conflict with,
    constitute or create a default under, or result in the creation
    or imposition of any Encumbrance upon any property of Buyer
    pursuant to (i) any agreement or instrument to which Buyer
    is a party or by which Buyer or any of its properties is bound
    or to which Buyer or any of its properties is subject, or
    (ii) any statute, judgment, decree, order, regulation or
    rule of any court or governmental authority to which Buyer is
    subject, except in the case of clause (b) for such
    violations, conflicts, defaults and Encumbrances as could not
    reasonably be expected to have a Material Adverse Effect.



 



    7.4.  Litigation.  No action,
    suit, proceeding or investigation is pending or, to the
    knowledge of Buyer, threatened, against Buyer in which an
    adverse decision could reasonably be expected to have a Material
    Adverse Effect, nor, to the knowledge of the Buyer, has any
    event occurred that is reasonably




    

    A-17








 








    likely to give rise to or serve as a basis for the commencement
    of any such action, suit, proceeding or investigation.



 



    7.5  Conformity to
    Law.  Except where any such noncompliance has
    been cured or would not reasonably be expected to have a
    Material Adverse Effect, Buyer has complied with, and is in
    compliance with (a) all laws, statutes, governmental
    regulations and all judicial or administrative tribunal orders,
    judgments, writs, injunctions, decrees or similar commands
    applicable to its business (including, without limitation, any
    labor, environmental, occupational health, zoning or other law,
    regulation or ordinance) and (b) all terms and provisions
    of all contracts, agreements and indentures of its business to
    which Buyer is a party, or by which its business or its
    properties are subject. Buyer has not committed, been charged
    with, or, to the knowledge of Buyer, is or has been under
    investigation with respect to, nor to the knowledge of Buyer
    does there exist, any violation of any provision of any federal,
    state or local law or administrative regulation which would
    reasonably be expected to have a Material Adverse Effect.



 



    7.6.  Broker.  Buyer has not
    retained, utilized or been represented by any broker, agent,
    finder or other intermediary in connection with the negotiation
    or consummation of the transactions contemplated by this
    Agreement, and Buyer has not incurred or become liable for any
    broker’s commission or finder’s fee relating to or in
    connection with the transactions contemplated by this Agreement.



 



    7.7  No Other Representations and
    Warranties.  Except for the representations
    and warranties of Buyer contained in this Section 7, Buyer
    make no other representations and warranties, written or oral,
    statutory, express, or implied, Seller acknowledge that except
    as expressly provided in this Agreement, Buyer has not made, and
    Buyer hereby expressly disclaim and negate, and Seller hereby
    expressly waives, any representation or warranty, express or
    implied, at common law, by statute, or otherwise relating to,
    and Seller hereby expressly waives and relinquishes any and all
    rights, claims and causes of action against Buyer and its
    representatives in connection with the accuracy, completeness or
    materiality of, any information, data or other information
    (written or oral) heretofore furnished to Seller and each of its
    representatives by and on behalf of Buyer.



 



    8.  COVENANTS AND AGREEMENTS



 



    8.1.  Conduct of the Program by Seller Pending
    Closing.  Seller covenants and agrees that,
    from and after the date of this Agreement and until the Closing,
    except as otherwise specifically consented to or approved by
    Buyer in writing or except as contemplated by this Agreement
    and/or the
    Transaction Documents:



 



    8.1.1  Full Access.  Seller
    shall afford to Buyer and its authorized representatives full
    access during normal business hours to all properties, assets,
    books, records, Tax returns, financial information, contracts
    and documents of Seller and a full opportunity to make such
    reasonable investigations as they shall desire to make of Seller
    or with respect to the Acquired Assets, and Seller shall furnish
    or cause to be furnished to Buyer and its authorized
    representatives all such information with respect to the Program
    and with respect to the Acquired Assets as Buyer may reasonably
    request.



 



    8.1.2.  Carry on in Ordinary
    Course.  Seller shall maintain the Acquired
    Assets in their current state of repair and condition, excepting
    normal wear and tear or failure to replace consistent with
    Seller’s past practice, and shall carry on the Program in
    the Ordinary Course and shall not make or institute any unusual
    or novel methods of manufacture, purchase, sale, lease,
    management, accounting or operation.



 



    8.1.3.  Contracts and
    Commitments.  Seller shall not incur any
    Indebtedness other than in connection with purchases of capital
    assets not in violation of Section 8.1.4 under lines of
    credit existing prior to the date of this Agreement, enter into
    any contract or commitment or engage in any transaction with
    respect to the Program not in the Ordinary Course of Business
    (other than this Agreement and the Transaction Documents and the
    transactions contemplated hereunder and thereunder), or for
    which disclosure would be required under
    Schedule 6.6 or 6.13.



 



    8.1.4.  Purchase and Sale of Capital
    Assets.  Other than pursuant to this
    Agreement, Seller shall not sell, transfer, assign or otherwise
    dispose of, or enter into, or commit to enter into, any Contract
    to sell, transfer, assign or otherwise dispose of, any capital
    asset constituting part of the Acquired Assets.




    

    A-18








 








    8.1.5.  Insurance.  Seller
    shall maintain with financially sound and reputable insurance
    companies, funds or underwriters adequate insurance for the
    Program of the kinds, covering such risks and in such amounts
    and with such deductibles and exclusions as are customary for
    similarly situated companies in Seller’s industry.



 



    8.1.6.  Preservation of Business
    Relationships.  Seller shall use its
    commercially reasonable efforts to preserve for Buyer the
    present relationships of Seller’s suppliers, customers,
    independent contractors and others having business relations
    with Seller in respect of the Program.



 



    8.1.7.  No Default.  Seller
    shall not do any act or omit to do any act, or permit any act or
    omission to act, which will cause a material breach of any
    contract, commitment or obligation of Seller material to the
    Program, including without limitation any of the Governmental
    Authorizations or Assumed Contracts.



 



    8.1.8.  Compliance with
    Laws.  Seller shall comply in all material
    respects with all Legal Requirements and orders material to the
    Program or the Acquired Assets, or as may be reasonably required
    for the valid and effective transfer of the Acquired Assets.



 



    8.1.9.  Notice of Material Adverse
    Effect.  Seller will promptly notify Buyer in
    writing of any Material Adverse Effect.



 



    8.1.10.  Exclusive
    Dealing.  Prior to the Closing:



 



    (a) Seller shall not directly or indirectly, solicit,
    initiate, or encourage submission of proposals or offers from
    any persons relating to any liquidation, dissolution,
    recapitalization, sale of stock representing 50% or more of the
    combined voting power of Seller’s voting equity securities,
    merger, consolidation or acquisition of all or substantially all
    of the assets of Seller, or purchase of any equity interest in
    Seller representing 50% or more of the combined voting equity
    power of the voting securities of Seller, or any other similar
    transaction or business combination. Seller shall cease
    immediately and cause to be terminated all contracts (other than
    confidentiality and nondisclosure agreements to which Seller is
    a party as of the date hereof (each, an “Existing
    NDA”)), negotiations and communications with third
    parties with respect to the foregoing, if any, existing on the
    date hereof.



 



    (b) Seller shall not participate, directly or indirectly,
    in any negotiations regarding, or furnish to any other person,
    any information with respect to, or otherwise cooperate in any
    way with, or assist, any effort or attempt by any other person
    to do or seek any of the activities referred to in
    Section 8.1.10(a). Except to the extent prohibited by an
    Existing NDA, and the material terms and conditions thereof,
    should Seller receive any proposal, inquiry or contact about any
    of the activities referred to in Section 8.1.10(a), Seller
    shall by the close of the next Business Day following give oral
    or written notice thereof to Buyer and also promptly provide
    Buyer with the name of the person making such proposal, inquiry
    or contact.



 



    (c) Notwithstanding the foregoing or any other provision of
    this Agreement or the Transaction Documents, at any time prior
    to the date on which this Agreement is approved by the
    stockholders of Seller, in the event that the Board of Directors
    of Seller determines in good faith by a majority vote, based on
    the advice of its outside legal counsel, that there is a
    reasonable basis requiring Seller to consider a Favorable Third
    Party Offer (as defined below) to comply with its fiduciary
    duties, Seller may furnish non-public information with respect
    to Seller and its subsidiaries to the person who made the
    Favorable Third Party Offer pursuant to a confidentiality
    agreement and participate in discussions or negotiations with
    such person regarding the Favorable Third Party Offer. The Board
    of Directors of Seller may after the third Business Day
    following Seller’s written notice to Buyer that specifies
    the material terms and conditions of the Favorable Third Party
    Proposal, terminate this Agreement (and concurrently with such
    termination, if it so chooses, cause Seller to enter into any
    agreement with respect to the Favorable Third Party Proposal)
    and withdraw any recommendation to the stockholders of Seller to
    approve the transactions contemplated by this Agreement and the
    Transaction Documents.




    

    A-19








 








    (d) As used in this Agreement, “Favorable Third
    Party Proposal” means a written proposal from a
    credible, bona fide third party relating to any direct or
    indirect acquisition or purchase of all or substantially all of
    the assets of Seller and its subsidiaries, taken as a whole, or
    50% or more of the equity securities of Seller, any tender offer
    or exchange offer that if consummated would result in any Person
    beneficially owning 50% or more of the combined voting power of
    Seller’s voting equity securities, or any merger,
    consolidation, business combination, share exchange,
    recapitalization, liquidation, dissolution or similar
    transaction involving Seller or combined voting power of Seller,
    and otherwise on terms which the Board of Directors of Seller
    determines in its good faith judgment, taking into account
    legal, financial, regulatory and other aspects of the proposal
    deemed appropriate by the Board of Directors of Seller, to be
    more favorable to the stockholders of Seller than the
    transactions contemplated by this Agreement (taking into account
    any amendments to this Agreement proposed by Buyer in response
    to the receipt by Buyer of information about the proposal).



 



    (e) Nothing contained in this Section 8.1.10 shall
    (i) prohibit Seller from at any time taking and disclosing
    to its stockholders a position contemplated by
    Rule 14d-9
    or
    Rule 14e-2
    promulgated under the Securities Exchange Act of 1934, as
    amended (the “Exchange Act”) or making any
    disclosure required by
    Rule 14a-9
    promulgated under the Exchange Act; or (ii) prohibit or
    limit Seller from at any time engaging in the activities and
    transactions referred to in Section 8.1.10(a) in connection
    with the development and implementation of Seller’
    post-Closing business plan (assuming completion of the sale of
    the Acquired Assets and the Program to Buyer), including but not
    limited to soliciting, initiating, encouraging submissions of
    proposals or offers for the sale, transfer, disposition,
    restructuring or similar transactions relating to Seller’s
    existing business
    and/or other
    Excluded Assets.



 



    8.1.11.  Consents of Third
    Parties.  Seller will employ its commercially
    reasonable efforts to secure, before the Closing Date, the
    consent, in form and substance reasonably satisfactory to Buyer
    and Buyer’s counsel, to the consummation of the
    transactions contemplated by this Agreement by each party to any
    of the Assumed Contracts, Licensed Intellectual Property and
    transferable Governmental Authorizations as set forth by Buyer
    on Schedule 8.1.11 (the “Required
    Consents”).



 



    8.1.12.  Reasonable Best
    Efforts.  Except to the extent that the
    Parties’ obligations are specifically set forth elsewhere
    in this Agreement, upon the terms and subject to the conditions
    set forth in this Agreement, each of the Parties shall use
    reasonable best efforts to take, or cause to be taken, all
    actions, and to do, or cause to be done, and to assist and
    cooperate with the other Parties in doing, all things necessary,
    proper or advisable to consummate, in the most expeditious
    manner practicable, the Closing including the execution and
    delivery of any additional instruments reasonably necessary to
    consummate the Closing and to fully carry out the purposes of
    this Agreement. Buyer and its Affiliates shall not
    (i) amend or otherwise change any of its organization
    documents, or (ii) enter into any transaction or take any
    action, including asset sales, divestitures or other
    distributions, or payment of dividends or other distributions,
    or any merger, acquisition, investment, joint venture, lease,
    contract or financing that in the case of clause (i) or
    (ii) could reasonably be expected to cause a material delay
    in the satisfaction of the conditions contained in
    Section 10 hereof.



 



    8.1.13  8-K
    Obligation.  Within four (4) Business
    Days of the date hereof, Seller shall issue a press release and
    file a report on
    Form 8-K
    each in the form previously agreed upon by Seller and Buyer
    disclosing the execution of this Agreement and the transaction
    contemplated herein and attaching such press release and this
    Agreement (the “8-K Filing”).



 



    8.1.14  Proxy Statement; Stockholder
    Approval.



 



    (a) As promptly as reasonably practicable following the
    date hereof, Seller, acting through its Board of Directors,
    shall, subject to and in accordance with applicable Legal
    Requirements and its Certificate of Incorporation and Bylaws,
    and in all cases subject to Section 8.1.10(c) above,
    (i) duly call, give notice of and hold a special meeting of
    the holders of Seller’s voting equity securities for the
    purpose of voting to approve the principal terms of the
    transactions contemplated hereby and adopt and approve this
    Agreement; (ii) recommend to the stockholders of Seller
    that they vote in favor of the matters described




    

    A-20








 








    in the preceding clause (i); (iii) include in the proxy
    statement with respect to such meeting (the “Proxy
    Statement”) such recommendation; and (iv) take all
    reasonable and lawful action to solicit and obtain such vote in
    favor of the matters described in clause (i) above. The
    Proxy Statement will comply as to form in all material respects
    with the applicable provisions of Schedule 14A of
    the Exchange Act.



 



    (b) Seller will use its commercially reasonably efforts,
    and Buyer will use its commercially reasonable efforts to
    cooperate with it, to, as promptly as reasonably practicable and
    in any event no later than 30 days following the date
    hereof, cause a preliminary Proxy Statement to be filed with the
    SEC and, following clearance thereof by the SEC, cause a
    definitive Proxy Statement to be mailed to Seller stockholders.
    Buyer shall use its commercially reasonably efforts to promptly
    respond to requests from Seller to assist Seller in responding
    to SEC comments on information regarding Buyer required to be
    included in the Proxy Statement under applicable law or
    regulation.



 



    (c) Buyer shall provide to Seller such information for
    inclusion in the Proxy Statement regarding Buyer’s
    business, financial condition, operations and prospects as
    Seller and its counsel reasonably determines is required under
    applicable rules and regulations of the SEC. Any such
    information shall not contain any untrue statement of a material
    fact omit to state a 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 false or
    misleading.



 



    (d) Buyer shall promptly inform Seller if any of the
    information supplied by Buyer for inclusion in the Proxy
    Statement to be mailed to the stockholders of Seller in
    connection with the special meeting will, on the date the Proxy
    Statement (or any supplement or amendment thereto) is first
    mailed to Seller stockholders or at the time of the special
    meeting, contain any untrue statement of a material fact omit to
    state a 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 false or
    misleading.



 



    (e) At or prior to the Closing, Seller shall deliver to
    Buyer a certificate of its Secretary setting forth the voting
    results from its stockholder meeting.



 



    8.1.15  Compliance with Bulk Sales Law
    Requirements.  Buyer hereby waives compliance
    with any applicable bulk sales transfer laws in connection with
    the consummation of the transactions contemplated by this
    Agreement, including the bulk transfer provisions of the Uniform
    Commercial Code, with indemnification from Seller against claims
    or Liabilities arising from such noncompliance as provided in
    Section 12.2.



 



    9.  CONDITIONS PRECEDENT TO BUYER’S
    OBLIGATIONS.  The obligation of Buyer to
    consummate the Closing shall be subject to the satisfaction at
    or prior to the Closing of each of the following conditions (to
    the extent noncompliance is not waived in writing by Buyer):



 



    9.1.  Representations and
    Warranties.  The representations and
    warranties made by Seller in Section 6 of this Agreement
    shall be true and correct in all material respects at and as of
    the Closing Date with the same effect as though such
    representations and warranties had been made or given at and as
    of the Closing Date (without regard to any materiality
    qualifications included therein and except where such
    representation and warranty is made as of a specific date and
    except as contemplated by this Agreement).



 



    9.2.  Compliance with
    Agreement.  Seller shall have performed and
    complied in all material respects with all of its obligations
    under this Agreement to be performed or complied with by it on
    or prior to the Closing Date.



 



    9.3.  No Change.  From the
    date of this Agreement through the date of the Closing there
    shall not have occurred any change or changes concerning the
    Program or the Acquired Assets that individually or in the
    aggregate has had or would reasonably be expected to have a
    Material Adverse Effect.



 



    9.4  Board, Stockholder and Other
    Approvals.  Seller shall have obtained all
    necessary authorizations and approvals from its Board of
    Directors, its stockholders and any other approvals required for
    the completion of the transaction contemplated hereunder and the
    actions contemplated by Section 8.1.14 shall have occurred
    as and when required by such Section.




    

    A-21








 








    9.5  8-K Filing and Press
    Release.  The actions contemplated by
    Section 8.1.13 shall have occurred as and when required by
    such Section.



 



    9.6  University License
    Agreement.  The Board of Regents
    (“Board”) of The University of Texas System, an
    agency of the State of Texas, on behalf of the University of
    Texas Health Science Center at the University of Houston shall
    have executed and delivered the License Agreement by and between
    Board and Buyer, in form and substance reasonably satisfactory
    to Buyer (the “University License Agreement”).



 



    9.7  Consulting
    Agreement.  Andrei Alexandrov shall have
    executed and delivered his Consulting Agreement with Buyer, in
    form and substance reasonably satisfactory to Buyer (the
    “Alexandrov Consulting Agreement”).



 



    9.8  Employment
    Agreements.  Each of Bradford A. Zakes and
    Dilip Worah shall have executed and delivered his respective
    employment agreement with Buyer, each in form and substance
    substantially consistent with the term sheets attached hereto as
    Exhibit G (the “Employee Term
    Sheets”).



 



    9.9.  Seller’s
    Certificate.  Seller shall have delivered to
    Buyer in writing, at and as of the Closing, one or more
    certificates duly executed by Seller, in form and substance
    reasonably satisfactory to Buyer and Buyer’s counsel,
    certifying that the conditions in each of Section 9.1, 9.2
    and 9.3 have been satisfied and attaching copies of the
    certified resolutions of Seller’s Board of Directors
    approving the transactions contemplated hereby. Buyer shall have
    also received the certificate referenced in
    Section 8.1.14(e).



 



    9.10.  No Litigation.  No
    restraining order or injunction shall prevent the transactions
    contemplated by this Agreement and no action, suit or proceeding
    shall be pending or threatened before any court or
    administrative body in which it will be or is sought to restrain
    or prohibit or obtain damages or other relief in connection with
    this Agreement or the consummation of the transactions
    contemplated hereby.



 



    9.11  Required
    Consents.  Seller shall have obtained and
    delivered to Buyer the Required Consents in writing.



 



    9.12  Delivery of Acquired
    Assets.  Buyer shall have taken delivery of
    all tangible Acquired Assets at each such Acquired Asset’s
    current location.



 



    9.13  Opinion of the Seller’s
    Counsel.  Buyer shall have received an opinion
    dated the Closing Date of Stoel Rives LLP, counsel to Seller, in
    substantially the form attached hereto as Exhibit F.



 



    10.  CONDITIONS PRECEDENT TO SELLER’S
    OBLIGATIONS.  The obligation of Seller to
    consummate the Closing shall be subject to the satisfaction, at
    or prior to the Closing, of each of the following conditions (to
    the extent noncompliance is not waived in writing by Seller):



 



    10.1.  Representations and
    Warranties.  The representations and
    warranties made by Buyer in Section 7 of this Agreement
    shall be true and correct in all material respects at and as of
    the Closing Date with the same effect as though such
    representations and warranties had been made or given at and as
    of the Closing Date (without regard to any materiality
    qualifications included therein and except where such
    representations and warranty is made as of a specific date and
    except as contemplated by this Agreement).



 



    10.2.  Compliance with
    Agreement.  Buyer shall have performed and
    complied in all material respects with all of its obligations
    under this Agreement that are to be performed or complied with
    by it at or prior to the Closing.



 



    10.3.  No Change.  From the
    date of this Agreement through the date of the Closing there
    shall not have occurred any change or changes concerning the
    respective businesses of or properties owned by Buyer that
    individually or in the aggregate has had or would reasonably be
    expected to have a Material Adverse Effect.




    

    A-22








 








    10.4  Approvals.  All
    corporate and other approvals of Buyer in connection with the
    transactions contemplated by this Agreement shall have been
    obtained and copies of the minutes or resolutions reflecting
    such approvals shall have been delivered to Seller.



 



    10.5.  Employment
    Agreements.  Buyer shall have executed and
    delivered the employment agreements with each of Bradford A.
    Zakes and Eilip Worah, each in form and substance substantially
    consistent with the Employee Term Sheets.



 



    10.6.  Closing
    Certificate.  Buyer shall have delivered to
    Seller in writing, at and as of the Closing, a certificate duly
    executed by an officer of Buyer, in form and substance
    reasonably satisfactory to Seller’s counsel, to the effect
    that the conditions in each of Sections 10.1, 10.2 and 10.3
    have been satisfied.



 



    10.7  No Litigation.  No
    restraining order or injunction shall prevent the transactions
    contemplated by this Agreement and no action, suit or proceeding
    shall be pending or threatened before any court or
    administrative body in which it will be or is sought to restrain
    or prohibit or obtain damages or other relief in connection with
    this Agreement or the consummation of the transactions
    contemplated hereby.



 



    10.8  Closing Purchase
    Price.  Buyer shall have delivered to Seller
    the Closing Purchase Price as provided in Section 4.1(a).



 



    11.  CERTAIN COVENANTS.



 



    11.1.  Confidential
    Information.  Any and all information
    disclosed by Buyer to Seller or by any Seller to Buyer as a
    result of the negotiations leading to the execution of this
    Agreement that is to remain the confidential information of such
    party, or in furtherance thereof, which information was not
    already known to Seller or Buyer shall remain confidential to
    Seller and Buyer and their respective employees, agents and
    investors until the Closing Date and, if the Closing occurs, in
    Seller’s case, from and after the Closing Date. If the
    Closing does not take place for any reason, Seller and Buyer
    agree to return (or certify that it has destroyed) all copies,
    summaries and excerpts of such information to the disclosing
    party, and agrees not to further divulge or disclose any such
    information at any time in the future unless it has otherwise
    become public or its disclosure is required by law. The
    information intended to be protected hereby is confidential or
    proprietary data of Seller and Buyer which shall include, but
    not be limited to, financial information, customers, sales
    representatives, and anything else having an economic or
    pecuniary benefit to Buyer or Seller, respectively.



 



    11.2  Non-Competition.  For a
    period of two (2) years after the Closing Date, Seller
    shall not directly or indirectly invest in, own, manage,
    operate, finance, control, advise, render services to or
    guarantee the obligations of any Person that directly competes
    with Buyer in respect of the Program; provided
    however, that this covenant shall not prohibit, or be
    interpreted as prohibiting, Seller from purchasing or otherwise
    acquiring up to (but not more than) five percent (5%) of any
    class of the securities of any Person (but may not otherwise
    participate in the activities of such Person) if such securities
    are listed on any national or regional securities exchange or
    have been registered under Section 12(g) of the Exchange
    Act.



 



    11.3  Non-Solicitation.  For a
    period of two (2) years after the Closing Date, Seller
    shall not, directly or indirectly:



 



    (a) solicit the business of any Person who is a customer of
    Buyer;



 



    (b) cause, induce or attempt to cause or induce any
    customer, supplier, licensee, licensor, franchisee, employee,
    consultant or other business relation of Buyer to cease doing
    business with Buyer, to deal with any competitor of Buyer or
    materially and adversely interfere with its relationship with
    Buyer; or



 



    (c) hire, retain or attempt to hire or retain any employee
    or independent contractor of Buyer or materially and adversely
    interfere with the relationship between Buyer and any of its
    employees or independent contractors.



 



    11.4  Transaction-Related
    Taxes.  Buyer and Seller shall each pay
    one-half of all personal property taxes, sales, use, stamp,
    registration, ad valorem obligations and such Taxes and fees
    (including any penalties,




    

    A-23








 








    interest and filing expenses) which are due and payable in
    connection with the sale of the Acquired Assets pursuant to this
    Agreement, and Seller will prepare and file all necessary Tax
    Returns and other documentation with respect to all such
    documentary, sales, use, stamp, registration and other taxes and
    fees, and, if required by applicable Legal Requirements, Buyer
    will, and will cause its Affiliates to, join in the execution of
    any such Tax Returns and other documentation upon 10 day
    prior written notice and reasonable approval by Seller.



 



    11.5  Assignment of Intellectual
    Property.  Seller agrees that it will execute
    and deliver to Buyer any and all additional documents
    and/or
    instruments that may be reasonably requested by Buyer and
    necessary to vest full and complete legal and equitable title to
    the Intellectual Property in Buyer, without further
    consideration than now paid. Buyer and Seller shall each pay
    one-half of all costs related to the preparation, execution and
    registration of the National Assignment Documents referred to in
    5.2(c) and for all actions and all costs whatsoever, including
    attorney’s fees, arising after the Closing Date and
    associated with the perfection of rights, title, and interest in
    and to the Intellectual Property.



 



    11.6  Notice of
    Developments.  Seller shall promptly inform
    Buyer in writing of any event that would render any of the
    representations and warranties contained in Section 6 above
    inaccurate or incomplete in any respect or any breach of any
    covenant or obligation of Seller contained in this
    Section 11. No such disclosure by Seller pursuant to this
    Section 11.6, however, shall be deemed to cure any breach
    of any representation or warranty or covenant contained herein
    except to the extent specifically provided for in the following
    two sentences. From time to time commencing on the date of this
    Agreement and until the Closing Date, Seller shall, only with
    respect to any matter hereafter arising (promptly after
    discovery thereof) which, if existing, occurring or known at the
    date of this Agreement, would have been required to be set forth
    or described in the disclosure Schedules with respect to any of
    the representations or warranties set forth in Section 6 of
    this Agreement, deliver to Buyer (in accordance with
    Section 14.2 and prominently labeled
    “Schedule Supplement”) written notice of any
    event or development (promptly after discovery thereof) that
    would render any statement, representation or warranty of the
    Seller in this Agreement, including the Schedules attached
    hereto, inaccurate or incomplete in any respect (each a
    “Schedule Supplement”); provided that each
    such Schedule Supplement shall be detailed with a level of
    specificity that is consistent with other disclosures on the
    Schedules attached hereto to the reasonable satisfaction of
    Buyer. For purposes of determining representations and
    warranties were accurate for purposes of satisfaction of the
    condition set forth in Section 9.1 the Schedules
    delivered by Seller hereunder shall be deemed to exclude any
    information contained in any such Schedule Supplement (such
    that no Schedule Supplement item shall cure a breach for
    purposes of Section 9.1; provided, however, that if
    Seller acknowledges in writing that as a result of such
    Schedule Supplement that Buyer could terminate this
    Agreement pursuant to Section 13(a)(vi), then if and to the
    extent Buyer waives its right to terminate the Agreement arising
    out of such Schedule Supplement, following the Closing the
    Buyer Indemnified Parties shall not be entitled to
    indemnification pursuant to Section 12 with respect to any
    Losses arising out of the Schedule Supplement).



 



    12.  INDEMNIFICATION.



 



    12.1  Survival of Representations and
    Warranties.



 



    (a) In the event that the Closing occurs on or before
    July 15, 2009, The representations and warranties of Seller
    in Section 6 and Buyer in Section 7 of this Agreement
    shall survive the Closing and remain in full force and effect
    for a period ending upon the earlier to occur of:



 



    (i) the six (6) month anniversary of the
    Closing; or



 



    (ii) December 15, 2009;



 



    (b) In the event that the Closing occurs after
    July 15, 2009, the representations and warranties of Seller
    in Section 6 and Buyer in Section 7 of this Agreement
    shall survive the Closing and remain in full force and effect
    for a period of five (5) months from the Closing Date.



 



    The expiration date of such survival periods referred to in this
    Section 12.1, as applicable, shall be referred to the
    “Expiration Date”.




    

    A-24








 








    Notwithstanding any other provision herein, the survival period
    relating to (i) Section 6.1 (Organization of Seller;
    Authority), Section 6.2 (Corporate Approval; Binding
    Effect) Section 6.9 (Title to Acquired Assets),
    Section 6.14 (Intellectual Property) and Section 6.17
    (Solvency), Excluded Liabilities and fraud which shall survive
    the Closing indefinitely and (ii) all covenants, agreements
    and undertakings of the Parties contained in this Agreement
    shall survive until fully performed or fulfilled.



 



    12.2.  Indemnity by Seller.



 



    (a) Subject to the conditions and limitations set forth in
    this Section 12.2, Seller agrees to indemnify and hold
    Buyer and its Affiliates, officers, directors, shareholders,
    accountants, employees, agents, successors and assigns
    (collectively, the “Buyer Indemnified Parties”)
    harmless from, against and with respect to any and all Losses
    imposed on, sustained, incurred or suffered by, or asserted
    against, any of the Buyer Indemnified Parties, whether in
    respect of third party claims, claims between the parties
    hereto, or otherwise, related to or arising out of:



 



    (i) any breach of any representation or warranty made by
    Seller in this Agreement, the Transaction Documents, or any
    other certificate or document signed by Seller delivered or
    required to be delivered pursuant to this Agreement;



 



    (ii) any breach or violation of, or failure by Seller to
    perform any covenant, agreement undertaking or obligation in
    this Agreement, the Transaction Documents, or any other
    certificate or document delivered or required to be delivered
    pursuant to this Agreement;



 



    (iii) any claim or liability with respect to any of the
    Excluded Liabilities and any other liability of Seller other
    than Assumed Liabilities; and



 



    (iv) any and all Losses resulting from Seller’s
    operation or ownership of the Program or Acquired Assets prior
    to the Closing Date;



 



    (b) For purposes of calculating the amount of Losses (but
    not determining the existence of a breach), any limitation as to
    materiality or Material Adverse Effect contained in the
    representations and warranties will be ignored.



 



    (c) No Buyer Indemnified Party will be entitled to
    indemnification under this Section 12 unless and until the
    aggregate amount of such Buyer Indemnified Parties’ Losses
    exceeds $10,000 (the “Threshold Amount”), in
    which case the Buyer Indemnified Party shall be entitled to be
    paid the aggregate amount of all such Losses (including all such
    Losses up to $10,000); provided, that Losses related to
    the following will not be subject to the Threshold Amount:



 



    (i) a claim relating to fraud;



 



    (ii) a breach or violation of, or failure to perform, any
    covenant, agreement, undertaking or obligation of Seller
    contained in Section 2; or



 



    (iii) breaches of the representations or warranties
    contained in Section 6.1 (Organization of Seller;
    Authority), Section 6.2 (Corporate Approval; Binding
    Effect), Section 6.9 (Title to Acquired Assets),
    Section 6.14 (Intellectual Property) and Section 6.17
    (Solvency) (the “Specified Representations”),



 



    In each case, shall not be subject to the Threshold Amount.
    Notwithstanding any other provision herein, the aggregate
    liability of Seller under this Agreement shall be limited to
    $500,000; provided that there should be no such limitation with
    respect to Excluded Liabilities or claims related to fraud.



 



    12.3.  Indemnity by Buyer.



 



    (a) Subject to the conditions and limitations set forth in
    this Section 12.3, from and after the Closing, Buyer agrees
    to indemnify and hold Seller and its Affiliates, officers,
    directors, stockholders, accountants, employees, agents,
    successors and assigns (collectively, the “Seller
    Indemnified Parties” and together with the Buyer
    Indemnified Parties, the “Indemnified Parties”)
    harmless from, against and with respect to any and all Losses
    imposed on, sustained, incurred or suffered by, or asserted
    against, any of the Seller Indemnified




    

    A-25








 








    Parties, whether in respect of third party claims, claims
    between the parties hereto, or otherwise, related to or arising
    out of:



 



    (i) any breach of any representation or warranty made by
    Buyer in this Agreement, the Transaction Documents or any other
    certificate or document signed by an officer of Buyer delivered
    or required to be delivered pursuant to this Agreement;



 



    (ii) any breach or violation of, or failure by Buyer to
    perform any covenant, agreement, undertaking or obligation in
    this Agreement, the Transaction Documents or any other
    certificate or document signed by an officer of Buyer delivered
    or required to be delivered pursuant to this Agreement;



 



    (iii) the conduct of the Program and the ownership and
    operation of the Acquired Assets after the Closing Date, except
    to the extent any Losses in this clause (a): (x) relate to,
    arise out of or result from a breach by Seller of any
    representation or warranty contained in this Agreement,
    (y) are an Excluded Liability or (z) are Losses to
    which the Buyer Indemnified Parties are entitled to
    indemnification under Section 12.2, in each case, including
    without limitation with respect to Third Party Claims; or



 



    (iv) any claim or liability with respect to any of the
    Assumed Liabilities, except to the extent any Losses in this
    clause (d) (x) relate to, arise out of or result from a
    breach by Seller of any representation or warranty contained in
    this Agreement, or (y) are Losses to which the Buyer
    Indemnified Parties are entitled to indemnification under
    Section 12.2, in each case, including without limitation
    with respect to Third Party Claims.



 



    (b) For purposes of calculating the amount of Losses (but
    not determining the existence of a breach), any limitation as to
    materiality or Material Adverse Effect contained in the
    representations and warranties will be ignored.



 



    (c) No Seller Indemnified Party will be entitled to
    indemnification under this Section 12 with respect to
    breaches of representations and warranties unless and until the
    aggregate amount of such Seller Indemnified Parties’ Losses
    exceeds the Threshold Amount, in which case the Seller
    Indemnified Party shall be entitled to be paid the aggregate
    amount of all such Losses, (including all such Losses up to
    $10,000); provided, that any Losses relating to breaches
    of representations or warranties contained in Section 7.1
    (Organization of Buyer; Authority) and Section 7.2
    (Corporate Approval; Binding Effect) will not be subject to the
    Threshold Amount. Notwithstanding any other provision herein,
    the aggregate liability of Buyer under this Agreement shall be
    limited to $500,000.



 



    12.4.  Claims.



 



    (a)  Notice.  An Indemnified
    Party shall promptly notify the other party or parties hereto
    from whom such Indemnified Party is entitled or may reasonably
    be entitled to indemnification hereunder of any action, suit,
    proceeding, demand or breach (a “Claim”) with
    respect to which the Indemnified Party claims indemnification
    hereunder, provided that failure of the Indemnified Party
    to give such notice shall not relieve the Indemnifying Party of
    its obligations under this Section 12 except to the extent,
    if at all, that such Indemnifying Party shall have been
    prejudiced thereby.



 



    (b)  Third Party Claims.  If
    such Claim relates to any, suit or proceeding instituted in any
    tribunal or governmental authority against the Indemnified Party
    by a third party (a “Third Party Claim”), the
    Indemnifying Party shall be entitled to participate in the
    defense of such Third Party Claim after receipt of notice of
    such claim from the Indemnified Party. Within thirty
    (30) days after receipt of notice of a particular matter
    from the Indemnified Party, the Indemnifying Party may assume
    the defense of such Third Party Claim, in which case the
    Indemnifying Party shall have the authority to negotiate
    compromise and settle such Third Party Claim at their expense
    and through counsel of their choice, if and only if the
    following conditions are satisfied:



 



    (i) the Indemnifying Party shall have confirmed in writing
    that it is obligated hereunder to indemnify the Indemnified
    Party with respect to such Third Party Claim;




    

    A-26








 








    (ii) the Indemnified Party shall not have given the
    Indemnifying Party written notice that it has determined, in the
    exercise of its reasonable discretion, that matters of corporate
    or management policy or a conflict of interest make separate
    representation by the Indemnified Party’s own counsel
    advisable; and



 



    (iii) such Third Party Claim involves only monetary damages
    and does not seek an injunction or other equitable relief.



 



    The Indemnified Party shall retain the right to employ its own
    counsel and to participate in the defense of any Third Party
    Claim, the defense of which has been assumed by the Indemnifying
    Party pursuant hereto, but the Indemnified Party shall bear and
    shall be solely responsible for its own costs and expenses in
    connection with such participation.



 



    12.5.  Method and Manner of Paying
    Claims.  In the event of any claims under this
    Section 12, the claimant shall advise the party or parties
    who are required to provide indemnification therefor in writing
    of the amount and circumstances surrounding such claim. With
    respect to liquidated claims, if within thirty days the other
    party has not contested such claim in writing, the other party
    will pay the full amount thereof within ten days after the
    expiration of such period. Any amount owed by an Indemnifying
    Party hereunder with respect to any Claim may be set-off by the
    Indemnified Party against any amounts owed by the Indemnified
    Party to any Indemnifying Party.



 



    13.  TERMINATION; ALTERNATIVE TRANSACTION.



 



    (a) This Agreement (other than the provisions of
    Section 11.1 and Sections 13 and 14 hereof) may be
    terminated at any time prior to the Closing:



 



    (i) by mutual written consent of all Parties to this
    Agreement;



 



    (ii) by Seller, pursuant to the provisions of
    Section 8.1.10(c);



 



    (iii) by either Buyer or Seller, if the approval of the
    stockholders of Seller required by Section 9.4 shall not
    have been obtained at a meeting duly convened therefor or any
    adjournment thereof (unless, in the case of any such termination
    pursuant to this Section 13(a)(iv), the failure to obtain
    such stockholder approval shall have been caused by the action
    or failure to act of the party (or its subsidiaries) seeking to
    terminate this Agreement, which action or failure to act
    constitutes a breach of this Agreement);



 



    (iv) by either Buyer or Seller, if any permanent injunction
    or action by any governmental entity of competent jurisdiction
    preventing the consummation of transactions contemplated by this
    Agreement shall have become final and nonappealable; provided,
    however, that the party seeking to terminate this Agreement
    pursuant to this Section 13(a)(v) shall have used all
    commercially reasonable efforts to remove such injunction or
    overturn such action;



 



    (v) by Buyer, if (A) there has been a breach of any
    representations or warranties (as of the time such
    representations or warranties were made) of Seller set forth
    herein the effect of which, individually or together with all
    other such breaches, constitutes a Material Adverse Effect,
    (B) there has been a breach in any material respect of any
    of the representations, warranties, covenants or agreements set
    forth in this Agreement on the part of Seller, which breach is
    not curable or, if curable, is not cured within 30 days
    after written notice of such breach is given by Buyer to Seller,
    or (C) the Board of Directors of Seller (x) withdraws
    or amends or modifies in a manner materially adverse to Buyer
    its recommendation or approval in respect of this Agreement,
    (y) makes a recommendation with respect to any transaction
    arising out of a Favorable Third Party Proposal (including
    making no recommendation or stating an inability to make a
    recommendation), other than a recommendation to reject such
    transaction, or (z) takes any action that is prohibited by
    Section 8.1.10(a);



 



    (vi) by Seller, if (A) there has been a breach of any
    representations or warranties (as of the time such
    representations or warranties were made) of Buyer set forth
    herein the effect of which, individually or together with all
    other such breaches, constitutes a Material Adverse Effect,
    (B) there has been a breach in any material respect of any
    of the representations, warranties, covenants or agreements set
    forth in this Agreement on the part of Buyer, which breach is
    not curable or, if curable, is not cured within




    

    A-27








 








    30 days after written notice of such breach is given by
    Seller to Buyer, or (C) if, except such conditions that, by
    their nature, can only be satisfied at Closing, all conditions
    set forth in Section 9 hereof have been satisfied and the
    Closing shall not have occurred (other than as a result of
    Seller’s refusal to close in violation of this Agreement);



 



    (b) In the event of termination of this Agreement pursuant
    to this Section 13, the transactions contemplated by this
    Agreement shall be deemed abandoned and this Agreement shall
    forthwith become void, without liability on the part of any
    party hereto, except as provided in Section 13(c);
    provided, however, that, subject to
    Sections 12.2(c)(iii) and 12.3(c) herein, no such
    termination (or any provision of this Agreement) shall relieve
    any Party from liability for any damages (including, in the case
    of Seller, claims for damages based on the consideration that
    would have otherwise been payable to the stockholders of Seller,
    and, in the case of Buyer, claims for damages based on loss of
    the economic benefits of the transaction) for a knowing and
    intentional breach of any covenant hereunder.



 



    (c) If this Agreement shall have been terminated pursuant
    to Sections 13(a)(iii) or (vi)(C), then, in any of such
    cases, Seller shall pay to Buyer a termination fee equal to
    $100,000 as liquidated damages and not as a penalty. If this
    Agreement shall have been terminated pursuant to
    Section 13(a)(vi), then, in any of such cases, Buyer shall
    pay to Seller a termination fee equal to $100,000 as liquidated
    damages and not as a penalty. Any amounts payable under this
    Section 13(c) shall be paid in same day funds no later than
    two Business Days after a termination described in this Section.



 



    (d) The Parties acknowledge and agree that the agreements
    contained in this Section 13 are an integral part of the
    transactions contemplated by this Agreement, and that, without
    these agreements, the Parties would not enter into this
    Agreement. If a Party fails to promptly pay the amount due by it
    pursuant to this Section 13, interest shall accrue on such
    amount from the date such payment was required to be paid
    pursuant to the terms of this Agreement until the date of
    payment at the rate of 8% per annum. If, in order to obtain such
    payment, the other Party commences a suit that results in
    judgment for such Party for such amount, the defaulting Party
    shall pay the other Party its reasonable costs and expenses
    (including reasonable attorneys’ fees and expenses)
    incurred in connection with such suit. Notwithstanding anything
    to the contrary in this Agreement, the parties agree that the
    monetary remedies set forth in Section 13 shall be the sole
    and exclusive remedies of (A) Seller against Buyer and any
    of their respective former, current or future general or limited
    partners, stockholders, managers, employees, representatives,
    members, directors, officers, Affiliates or agents for any loss
    suffered as a result of the failure of the Closing to be
    consummated except in the case of fraud or with respect to
    Buyer, a knowing and intentional breach as described in
    Section 13(b), and upon payment of such amount, neither
    Buyer nor any of its respective former, current or future
    general or limited partners, stockholders, managers, employees,
    representatives, members, directors, officers, Affiliates or
    agents shall have any further liability or obligation relating
    to or arising out of this Agreement or the transactions
    contemplated hereby except in the case of fraud or, with respect
    to Buyer, a knowing and intentional breach as described in
    Section 13(b); and (B) Buyer against Seller and any of
    their respective former, current or future stockholders,
    managers, employees, representatives, members, directors,
    officers, Affiliates or agents for any loss suffered as a result
    of the failure of the Closing to be consummated except in the
    case of fraud or with respect to Seller, a knowing and
    intentional breach as described Section 13(b), and upon
    payment of such amount, neither Seller nor any of its respective
    former, current or future stockholders, managers, employees,
    representatives, members, directors, officers, Affiliates or
    agents shall have any further liability or obligation relating
    to or arising out of this Agreement or the transactions
    contemplated hereby except in the case of fraud or, with respect
    to Seller, a knowing and intentional breach as described in
    Section 13(b).



 



    14.  GENERAL.



 



    14.1.  Expenses.  Except as
    provided in Section 11.4 (Transaction-Related Taxes) and
    Section 11.5 (Assignment of Intellectual Property), Seller,
    on the one hand, and Buyer, on the other hand, shall bear their
    respective expenses, costs and fees (including attorneys’
    and accountants’ fees) in connection with the transactions
    contemplated hereby, including the preparation, negotiation,
    execution and performance of this Agreement, the Transaction
    Documents and the Closing, including all fees and expenses of
    its representatives




    

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    (the “Seller Transaction Expenses”), whether or
    not the transactions contemplated hereby shall be consummated.



 



    14.2.  Notices.  All notices,
    demands and other communications hereunder shall be in writing
    or by written telecommunication, and shall be deemed to have
    been duly given if delivered personally; when transmitted, if
    transmitted by telecopy, electronic or digital transmission
    method; the day after it is sent, if sent for next day delivery
    by recognized overnight delivery service; and upon receipt, by
    certified or registered mail, return receipt requested. In each
    case such notice shall be sent to:



 



    If to Seller or either of them, to:



 



    ImaRx Therapeutics, Inc.

    12277 134th Court NE, Suite 202

    Redmond, WA 98052

    Attention: Bradford A. Zakes

    Fax:
    (425) 821-1404

    Email: bzakes@imarx.com



 



    with a copy sent contemporaneously to:



 



    Stoel Rives LLP

    201 South Main Street, Suite 1100

    Salt Lake City, Utah 84111

    Attention: Kevin Ontiveros

    Fax:
    801-578-6999

    Email: kjontiveros@stoel.com



 



    If to Buyer, to:



 



    WA 32609, Inc.

    20001 North Creek Parkway

    Bothell, WA 98011

    Attention: Gerald McMorrow



 



    or such other place and with such other copies as any party may
    designate as to itself by written notice to the others.



 



    14.3.  Entire Agreement.  This
    Agreement together with the other Transaction Documents and the
    Schedules contains the entire understanding of the parties,
    supersede all prior agreements and understandings relating to
    the subject matter hereof and shall not be amended except by a
    written instrument hereafter signed by all of the parties hereto.



 



    14.4.  Governing Law.  The
    validity and construction of this Agreement shall be governed by
    the internal laws (and not the
    choice-of-law
    rules) of the State of Washington. Each party hereto irrevocably
    and unconditionally (a) agrees that any suit, action or
    other legal proceeding arising out of this Agreement may be
    brought and adjudicated in the federal or the state courts of
    Washington situated in King County, (b) submits to the
    jurisdiction of any such court for the purposes of any such suit
    and (c) waives and agrees not to assert by way of motion,
    as a defense or otherwise in any such suit, any claim that it,
    he or she is not subject to the jurisdiction of the above
    courts, that such suit is brought in an inconvenient forum or
    that the venue of such suit is improper.



 



    14.5.  Sections and
    Section Headings.  The headings of
    sections and subsections are for reference only and shall not
    limit or control the meaning thereof.



 



    14.6.  Assigns.  This
    Agreement shall be binding upon and inure to the benefit of the
    parties hereto and their respective heirs, successors and
    permitted assigns. Neither this Agreement nor the obligations of
    any party hereunder shall be assignable or transferable by any
    party without the prior written consent of the other parties
    hereto.




    

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    14.7.  Severability.  In the
    event that any covenant, condition, or other provision herein
    contained is held to be invalid, void, or illegal by any court
    of competent jurisdiction, the same shall be deemed to be
    severable from the remainder of this Agreement and shall in no
    way affect, impair, or invalidate any other covenant, condition,
    or other provision contained herein.



 



    14.8.  Further
    Assurances.  The parties agree to take such
    reasonable steps and execute such other and further documents as
    may be necessary or appropriate to cause the terms and
    conditions contained herein to be carried into effect.



 



    14.9.  Tax Treatment.  Buyer
    and Seller shall treat and report the transactions contemplated
    by this Agreement in all respects consistently for purposes of
    any foreign, federal, state or local Tax, including without
    limitation with respect to calculation of gain, loss and basis
    with reference to the Allocation determined in accordance with
    Section 4.2 hereof.



 



    14.10.  No Implied Rights or
    Remedies.  Nothing herein expressed or implied
    is intended or shall be construed to confer upon or to give any
    person, firm or corporation, other than Seller and Buyer and
    their successors and permitted assigns, any rights, remedies or
    claims under or by reason of this Agreement and this Agreement
    shall not be interpreted or enforced as a third party
    beneficiary contract.



 



    14.11.  Counterparts.  This
    Agreement may be executed in multiple counterparts, each of
    which shall be deemed an original, but all of which together
    shall constitute one and the same instrument.



 



    14.12.  Public Statements or
    Releases.  Each of the parties hereto agrees
    that prior to the consummation of the Closing no party to this
    Agreement will make, issue or release any public announcement,
    statement or acknowledgment of the existence of, or reveal the
    status of, this Agreement or the transactions provided for
    herein, without first obtaining the consent of the other parties
    hereto (which consent shall not be unreasonably withheld).
    Nothing contained in this Section 14.12 shall prevent any
    party from making such disclosures as such party may consider
    reasonably necessary to satisfy such party’s legal or
    contractual obligations, or to comply with the requirements of
    applicable laws and regulations (in which case the party so
    obligated to make such disclosure shall advise the other parties
    in advance).



 



    14.13.  Business
    Records.  Seller acknowledge that business
    records of Seller relating to the operations of the Program
    prior to the Closing will not be conveyed to Buyer as part of
    the Acquired Assets, and that Buyer may from time to time
    require access to or copies of such records in connection with
    claims arising with respect to operations of the Program prior
    to the Closing, and Seller agrees that upon reasonable prior
    notice from Buyer, it will, during normal business hours,
    provide Buyer with either access to or, at Seller’s option,
    copies of such records for such purposes prior to the Closing.
    Buyer agrees to hold any confidential information so provided in
    confidence and to use such information only for the purposes
    described above. Seller agrees that it will not within eighteen
    (18) months after the Closing Date destroy any business
    records prepared prior to the Closing without first notifying
    Buyer and affording it the opportunity to remove or copy them.
    For purposes of the preceding sentence, any notice from Seller
    delivered in accordance with Section 14.2 shall be deemed
    to be adequate notice if not responded to in writing by Buyer
    within five (5) Business Days.



 




    [Remainder
    of Page Intentionally Left Blank]




    

    A-30








 








    IN WITNESS WHEREOF, and intending to be legally bound hereby,
    the parties hereto have caused this Asset Purchase Agreement to
    be duly executed and delivered as a sealed instrument as of the
    date and year first above written.



 



    IMARX THERAPEUTICS, INC.



 


			
	 	    By: 
	
    /s/  Bradford
    A. Zakes









    Bradford A. Zakes




    President and Chief Executive Officer



 



    WA 32609, Inc.



 


			
	 	    By: 
	
    /s/  Gerald
    McMorrow









    Name:     Gerald McMorrow



			
	 	    Title: 
	
    President and Founder





    

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