Document:

Exhibit
10.2

Senior Housing Properties Trust

400 Centre Street

Newton, MA  02458

 

September 23, 2004

LTA Holdings, Inc.

Dover Centre

113 Seaboard Lane, Suite B-100 

Franklin, Tennessee 37607

Attention: W. Patrick Mulloy II, President

 

Gentlemen:

 

Reference is made to an
Agreement and Plan of Merger dated as of September 23, 2004 (the “Agreement”) by and among Five Star Quality
Care, Inc., a Maryland corporation (“Five
Star”), FVE Acquisition Inc., a Delaware corporation and a
wholly-owned subsidiary of Five Star (“Sub”), and LTA
Holdings, Inc., a Delaware corporation (“Company”).  Capitalized terms used in this letter
agreement will have the meanings given to them in the Agreement, unless
otherwise defined in this letter agreement.

 

(1)                                  Senior Housing
Properties Trust, a Maryland business trust (“SNH”)
hereby agrees, subject only to the conditions set forth in paragraph (3)
hereof, that immediately after the Closing it will purchase the Company
Facilities and associated real property listed on Exhibit A hereto (the “Subject Facilities and Property”)
and that, contemporaneously with such purchase, it will assume all indebtedness
for borrowed money (including all indebtedness evidenced by mortgages or other
notes) associated with the Subject Facilities and Property; provided that, to the extent, and only to the extent,
approved by the lender or lenders of such indebtedness, SNH may satisfy its
obligations hereunder by causing one or more of its subsidiaries to purchase
the Subject Facilities and Property and to assume all indebtedness for borrowed
money associated with the Subject Facilities and Property.

 

(2)           SNH hereby represents and warrants that:

 

(a)                                  (i) SNH is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite power and authority to enter
into this letter agreement and perform its obligations under this letter
agreement; and (ii) the execution, delivery and performance of this letter
agreement and the consummation of the transactions provided for in this letter
agreement have been duly authorized by all necessary action on the part of SNH.

 

 

1

 

(b)                                 This letter
agreement has been duly executed and delivered by SNH and constitutes its legal,
valid and binding obligation, enforceable against SNH in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors’ rights generally or to
general principles of equity.

 

(c)                                  No filing with,
and no permit, authorization, consent or approval of, any public body or
authority is necessary for execution and delivery of this letter agreement by
SNH and the performance by SNH of its obligations hereunder, except for such
filings, permits, authorizations, consents or approvals which have been made or
obtained.  Neither the execution and
delivery of this Agreement by SNH nor the performance by SNH of its obligations
hereunder will (i) conflict with or result in any breach of any provisions of
the Charter Documents of SNH, (ii) require any consent or other action by any
Person under, result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which SNH is a party
or by which any of them or any of their properties or assets may be bound, or
(iii) violate any order, writ, injunction, decree or Law applicable to SNH.

 

(d)                                 SNH has now and
will have at all times up to and including the Closing sufficient cash,
available lines of credit or other sources of immediately available funds to
enable it to perform its obligations under paragraph (1) above.

 

(3)                                  The obligation
of SNH to consummate the transactions contemplated by paragraph (1) is subject
solely to the satisfaction or waiver of the conditions precedent to the
obligations of Five Star and Sub to consummate the Closing as set forth in
Sections 8.01 and 8.03 of the Agreement.

 

(4)                                  SNH will use
commercially reasonable efforts to obtain any consents or approvals from GMAC
Commercial Mortgage Bank and/or the Federal National Mortgage Association
required in connection with the consummation of the transactions contemplated
hereby.

 

This letter agreement will
become effective upon its acceptance by Company, as evidenced by the delivery
to SNH of an executed counterpart of this letter agreement by Company and will
terminate upon any termination of the Agreement.  Until the termination of this letter
agreement in accordance with the terms of the previous sentence, no provision
of this letter agreement (including Exhibit A hereto) may be assigned, amended,
modified, waived or terminated, in part or in whole, without the prior written
consent of each party hereto.  This
letter agreement will be governed by the laws of the State of New York, without
regard to its conflict of law principles.

 

The Declaration of Trust of
SNH, a copy of which is duly filed with the Department of Assessments and
Taxation of the State of Maryland, provides that the name “Senior Housing
Properties Trust” refers to the trustees under such Declaration of Trust
collectively as trustees, but not individually or personally, and that no
trustee, officer, stockholder, employee or agent of SNH shall be held to any
personal liability, jointly or severally, for any obligation of, or claim
against, SNH.  All persons dealing with SNH
in any way shall look only to the assets of SNH for the payment of any sum or
the performance of any obligation.

 

[SIGNATURE PAGE FOLLOWS]

 

2

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  SENIOR HOUSING PROPERTIES
  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
   

  	
  Name:David J. Hegarty

  
	
   

  	
   

  	
  Title:President

  

 

	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  	
   

  
	
  LTA HOLDINGS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ W.P. Mulloy II

  	
   

  
	
   

  	
  Name: W.P. Mulloy II

  	
   

  
	
   

  	
  Title: President/CEO

  	
   

  

 

3

 

EXHIBIT
A

 

SUBJECT
FACILITIES AND PROPERTY

 

	
  1.

  	
   

  	
  Morningside of Cullman,
  Cullman, AL

  	
   

  
	
  2.

  	
   

  	
  Morningside of Decatur,
  Decatur, AL

  	
   

  
	
  3.

  	
   

  	
  Morningside of Madison,
  Madison, AL

  	
   

  
	
  4.

  	
   

  	
  Morningside of Sheffield,
  Sheffield, AL

  	
   

  
	
  5.

  	
   

  	
  Morningside of Athens,
  Athens, GA

  	
   

  
	
  6.

  	
   

  	
  Morningside of Columbus,
  Columbus, GA

  	
   

  
	
  7.

  	
   

  	
  Morningside of Conyers,
  Conyers, GA

  	
   

  
	
  8.

  	
   

  	
  Morningside of Dalton,
  Dalton, GA

  	
   

  
	
  9.

  	
   

  	
  Morningside of Evans
  ,Evans, GA

  	
   

  
	
  10.

  	
   

  	
  Morningside of
  Gainesville, Gainesville, GA

  	
   

  
	
  11.

  	
   

  	
  Morningside of Macon,
  Macon, GA

  	
   

  
	
  12.

  	
   

  	
  Morningside of Bowling
  Green, Bowling Green, KY

  	
   

  
	
  13.

  	
   

  	
  Morningside of
  Hopkinsville, Hopkinsville, KY

  	
   

  
	
  14.

  	
   

  	
  Morningside of Mayfield,
  Mayfield, KY

  	
   

  
	
  15.

  	
   

  	
  Morningside of Paducah,
  Paducah, KY

  	
   

  
	
  16.

  	
   

  	
  Morningside of Anderson,
  Anderson, SC

  	
   

  
	
  17.

  	
   

  	
  Morningside of Beaufort,
  Beaufort, SC

  	
   

  
	
  18.

  	
   

  	
  Morningside of Camden,
  Camden, SC

  	
   

  
	
  19.

  	
   

  	
  Morningside of Greenwood,
  Greenwood, SC

  	
   

  
	
  20.

  	
   

  	
  Morningside of Hartsville,
  Hartsville, SC

  	
   

  
	
  21.

  	
   

  	
  Morningside of Lexington,
  Lexington, SC

  	
   

  
	
  22.

  	
   

  	
  Morningside of Orangeburg,
  Orangeburg, SC

  	
   

  
	
  23.

  	
   

  	
  Morningside of Seneca,
  Seneca, SC

  	
   

  
	
  24.

  	
   

  	
  Morningside of Belmont,
  Nashville, TN

  	
   

  
	
  25.

  	
   

  	
  Morningside of Cleveland,
  Cleveland, TN

  	
   

  
	
  26.

  	
   

  	
  Morningside of Cookeville,
  Cookeville, TN

  	
   

  
	
  27.

  	
   

  	
  Morningside of Franklin,
  Franklin, TN

  	
   

  
	
  28.

  	
   

  	
  Morningside of Gallatin,
  Gallatin, TN

  	
   

  
	
  29.

  	
   

  	
  Morningside of Jackson,
  Jackson, TN

  	
   

  
	
  30.

  	
   

  	
  Morningside of Knoxville,
  Knoxville, TN

  	
   

  
	
  31.

  	
   

  	
  Morningside of
  Springfield, Springfield, TN

  	
   

  
	
  32.

  	
   

  	
  Morningside of Bellgrade,
  Midlothian, VA

  	
   

  
	
  33.

  	
   

  	
  Morningside of
  Charlottesville, Charlottesville, VA

  	
   

  
	
  34.

  	
   

  	
  Morningside of Newport
  News, Newport News, VA

  	
   

  
	
  35.

  	
   

  	
  Morningside of West End,
  Richmond, VA

  	
   

  

 

4Exhibit 10.1

 

 

ASSET PURCHASE AGREEMENT

 

by and among

 

ProCyte Corporation

 

as Seller

 

and

 

ICOS Corporation

 

as Purchaser

 

and

 

AMT Capital, Ltd., solely for the purpose of Section 3.5(b)

 

Dated as of October 22, 2004

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  
	
  CERTAIN DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  
	
  SALE AND PURCHASE OF ASSETS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Transfer
  of Assets

  	
   

  
	
  Section 2.2

  	
  Limited
  Assumption of Liabilities

  	
   

  
	
  Section 2.3

  	
  Purchase
  Price; Purchase Price Allocation

  	
   

  
	
  Section 2.4

  	
  Closing

  	
   

  
	
  Section 2.5

  	
  Nonassignable
  Assets

  	
   

  
	
  Section 2.6

  	
  Risk
  of Loss

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Organization

  	
   

  
	
  Section 3.2

  	
  Authority

  	
   

  
	
  Section 3.3

  	
  No
  Conflict; Required Filings and Consents

  	
   

  
	
  Section 3.4

  	
  Various
  Lists and Documents

  	
   

  
	
  Section 3.5

  	
  Title
  to Assets

  	
   

  
	
  Section 3.6

  	
  Environmental
  Matters

  	
   

  
	
  Section 3.7

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Organization

  	
   

  
	
  Section 4.2

  	
  Authority

  	
   

  
	
  Section 4.3

  	
  No
  Conflict; Required Filings and Consents

  	
   

  
	
  Section 4.4

  	
  Brokers

  	
   

  

 

i

 

	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Access
  to Information; Confidentiality; Cooperation

  	
   

  
	
  Section 5.2

  	
  Shared
  Areas

  	
   

  
	
  Section 5.3

  	
  Removal
  of Excluded Assets and Repair of Premises

  	
   

  
	
  Section 5.4

  	
  Fixtures
  and Tenant Improvements

  	
   

  
	
  Section 5.5

  	
  Enviromental

  	
   

  
	
  Section 5.6

  	
  Manufactures’
  Warranties

  	
   

  
	
  Section 5.7

  	
  Software
  Licenses

  	
   

  
	
  Section 5.8

  	
  Further
  Assurances

  	
   

  
	
  Section 5.9

  	
  Tax
  Matters

  	
   

  
	
  Section 5.10

  	
  Publicity

  	
   

  
	
  Section 5.11

  	
  Certain
  Provisions Relating to the Transfer

  	
   

  
	
  Section 5.12

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
  CONDITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Conditions
  to Each Party’s Obligations

  	
   

  
	
  Section 6.2

  	
  Conditions
  to Obligations of Purchaser

  	
   

  
	
  Section 6.3

  	
  Conditions
  to Obligations of Seller

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  TERMINATION AND AMENDMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Termination

  	
   

  
	
  Section 7.2

  	
  Effect
  of Termination

  	
   

  
	
  Section 7.3

  	
  Amendment

  	
   

  
	
  Section 7.4

  	
  Extension;
  Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
  SURVIVAL; INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Survival
  Period

  	
   

  
	
  Section 8.2

  	
  Indemnification

  	
   

  

 

ii

 

	
  Section 8.3

  	
  Indemnification
  Procedures

  	
   

  
	
  Section 8.4

  	
  Limitation
  of Liability

  	
   

  
	
  Section 8.5

  	
  Other
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Notices

  	
   

  
	
  Section 9.2

  	
  Descriptive
  Headings

  	
   

  
	
  Section 9.3

  	
  Counterparts

  	
   

  
	
  Section 9.4

  	
  Entire
  Agreement

  	
   

  
	
  Section 9.5

  	
  Fees
  and Expenses

  	
   

  
	
  Section 9.6

  	
  Governing
  Law

  	
   

  
	
  Section 9.7

  	
  WAIVER
  OF JURY TRIAL

  	
   

  
	
  Section 9.8

  	
  Assignment

  	
   

  
	
  Section 9.9

  	
  Parties
  in Interest

  	
   

  
	
  Section 9.10

  	
  Interpretation

  	
   

  
	
  Section 9.11

  	
  Severability

  	
   

  
	
  Section 9.12

  	
  Payments

  	
   

  

 

EXHIBITS

 

	
  Exhibit A -

  	
  Bill of Sale

  
	
  Exhibit B -

  	
  Listed Assets

  
	
  Exhibit C -

  	
  Excluded Assets

  
	
  Exhibit D -

  	
  Nonassignable Assets

  
	
  Exhibit E -

  	
  List of Manufactures’ Warranties

  
	
  Exhibit F -

  	
  List of Operating Systems and Software

  
	
  Exhibit G -

  	
  List of Permits

  
	
  Exhibit H -

  	
  Emerald Fixed Asset Register

  
	
  Exhibit I -

  	
  Seller’s Lease

  
	
  Exhibit J -

  	
  Diagram of the Shared Areas

  
	
  Exhibit 5.2

  	
  Seller’s Items that May be Stored in Shared Area

  
	
  Exhibit 6.2(f)

  	
  Form of Acknowledgement and Agreement

  
			

 

iii

 

THIS ASSET PURCHASE
AGREEMENT (this “Agreement”) is made as of the 22nd day of October,
2004, by and among ProCyte Corporation, a Washington corporation (“Seller”),
AMT Capital, Ltd., a Texas limited partnership (“AMT”), solely for the purpose
of Section 3.5(b), and ICOS Corporation, a Delaware corporation (“Purchaser”).

 

RECITALS

 

WHEREAS, Seller leases a portion of Building A, West Park, 8511 154th
Avenue, Redmond, Washington  98052 (the “ProCyte
Premises”) from Teachers Insurance & Annuity Association (“Teachers”)
pursuant to the terms of the Lease dated as of October 1, 1993 (as
amended, the “Seller’s Lease”).  On or
about July 13, 2001, ProCyte and Emerald Pharmaceuticals, L.P. (“Emerald”)
entered into a sublease (the “Sublease) of a portion of the ProCyte Premises
(the “Premises”);

 

WHEREAS, on June 21, 2004, ProCyte provided Emerald with Notice to
Cure Lease Defaults or Vacate Premises, and on June 25, 2004, Emerald
vacated the Premises and did not cure the default under the Sublease.  As a result of such termination, Emerald
legally remised, released, quitclaimed and surrendered to ProCyte, the Sublease
and all of the estate and rights of Emerald in and to the Sublease and the
Premises;

 

WHEREAS, on or about July 17, 2001, Emerald executed: (1) a
promissory note (the “Note”) payable to the order of ProCyte; and (2) a
security agreement (the “Security Agreement”) securing the Note in favor of
ProCyte, granting ProCyte a first priority security interest in essentially all
assets of Emerald.  Such collateral is
described in that certain UCC financing statement filed with the Delaware
Secretary of State on July 13, 2001 under Filing No. 10662614 (the “Collateral”),
by which ProCyte perfected its security interest;

 

WHEREAS, on June 21, 2004, Seller sent notice to Emerald of
default under the Note and Security Agreement as a result of its failure to pay
amounts owing under the Note;

 

WHEREAS, on June 25, 2004, Seller sent a proposal to all parties
required by applicable Law to effect the strict foreclosure of the Collateral
free and clear of all liens and encumbrances in accordance with applicable law;

 

WHEREAS, on July 16, 2004, having received no objection to its
proposal from a party entitled to object under applicable law, Seller strictly
foreclosed its perfected security interest in the Collateral;

 

 

WHEREAS, pursuant to this Agreement Purchaser wishes to purchase and
Seller wishes to sell certain designated assets of Seller.

 

NOW, THEREFORE, in consideration of the premises, covenants, representations
and warranties contained herein, and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

Section 1.1                                      Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Access Period” shall have the meaning ascribed to it in Section 5.2.

 

“Affiliate” of a specified Person shall mean another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.

 

“Agreement” shall have the meaning ascribed to it in the preamble
hereto.

 

“Bill of Sale” shall mean the Bill of Sale in the form of Exhibit A.

 

“Business Day” means any day on which banks are not required or
authorized to close in New York, New York.

 

“Closing” shall have the meaning ascribed to it in Section 2.4.

 

“Closing Date” shall have the meaning ascribed to it in Section 2.4.

 

“Collateral” shall have the meaning ascribed to it in the Recitals.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Control” (including the terms “controlled by” and “under common
control with”) means, with respect to a Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of securities or as
trustee or executor, by contract or credit arrangement or otherwise.

 

“Conveyed Assets” shall have the meaning ascribed to it in Section 2.1(a).

 

“Conveyed Permits” shall
have the meaning ascribed to it in Section 3.4(c).

 

 

“Environmental Laws” means any Federal, state, or local U.S. Law and
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree, judgment, stipulation, injunction,
Permit, authorization, policy, opinion, or agency requirement, in each case
having the force and effect of Law, relating to the pollution, protection,
investigation or restoration of the environment, health, safety or natural
resources, including those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution or
contamination.

 

“Excluded Assets” shall have the meaning ascribed to it in Section 2.1(b).

 

“Governmental Entity” shall mean any Federal, state, or local U.S.
government or any court, legislature, governmental agency or governmental
commission or any judicial or regulatory authority of any government.

 

“Hazardous Materials” means (A) any petroleum, petroleum products,
byproducts or wastes, radioactive materials, asbestos-containing materials or
polychlorinated biphenyls or (B) any chemical, material or other substance
defined or subject to regulation as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.

 

“Indemnified Party” shall have the meaning ascribed to it in Section 8.3(a).

 

“Indemnifying Party” shall have the meaning ascribed to it in Section 8.3(a).

 

“Law” shall mean any U.S. Federal, state, local or law, statute, code,
ordinance, regulation, order, judgment, writ, injunction, decision, ruling or
decree.

 

“Lien” shall mean any lien, security interest (whether perfected or
not), pledge, mortgage, easement, right of way or hypothecation or any other
similar encumbrance.

 

“Losses” shall have the meaning ascribed to it in Section 8.2(a).

 

“Permit” shall have the meaning ascribed to it in Section 3.4(c).

 

“Person” shall mean any individual, group, corporation, partnership,
limited liability company, Governmental Entity or other organization or entity.

 

“Purchase Price” shall have the meaning ascribed to it in Section 2.3(a).

 

“Purchaser” shall have the meaning ascribed
to it in the preamble hereto.

 

“Purchaser Indemnified Parties” shall have the meaning ascribed to it
in Section 8.2(a).

 

 

“Purchaser’s Lease” shall mean a lease agreement with Teachers
satisfactory to Purchaser, under which, among other things, (a) Purchaser would
have a leasehold right respecting the Premises beginning the Closing Date, and
(b) Purchaser would have no obligation to remove building fixtures or tenant
improvements upon termination of such lease

 

“Release” shall mean any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal
or leaching of Hazardous Materials into the environment.

 

“Seller” shall have the meaning ascribed to it in the preamble hereto.

 

“Seller Indemnified Parties” shall have the meaning ascribed to it in Section 8.2(b).

 

“Seller’s Lease” shall have the meaning ascribed to it in the Recitals.

 

“Shared Areas” shall have the meaning ascribed to it in Section 5.2.

 

“Survival Period” shall have the meaning ascribed to it in Section 8.1.

 

 “Third-Party Claim” shall have
the meaning ascribed to it in Section 8.3(a).

 

“Transaction Taxes” shall mean any and all sales, use, transfer,
documentary, filing, conveyance, recording, gross receipts, value added and
similar taxes imposed by the United States, or any state, or local government
or subdivision or agency thereof, any interest, penalties, additions to tax or
additional amounts in respect of the foregoing (whether disputed or not), and
any transferee or secondary liability in respect of the foregoing (whether
imposed by Law, contractual agreement or otherwise).

 

Section 1.2                                      Interpretation.  Unless otherwise indicated to the contrary in
this Agreement by the context or use thereof: 
(a) the words “herein,” “hereto,” “hereof” and words of similar import
refer to this Agreement as a whole and not to any particular Section or
paragraph hereof; (b) words importing the masculine gender shall also include
the feminine and neutral genders, and vice versa; (c) words importing the
singular shall also include the plural, and vice versa; and (d) the word “including”
means “including without limitation.”

 

ARTICLE II

 

SALE AND
PURCHASE OF ASSETS

 

Section 2.1                                      Transfer
of Assets.  On the terms and subject
to the conditions set forth in this Agreement, at the Closing, Seller shall
sell, assign and transfer to Purchaser, and Purchaser shall purchase from
Seller, all of Seller’s rights, title and interest in, to and under those
certain rights and assets set forth below (collectively, the “Conveyed Assets”):

 

 

(a)                                  all
tangible assets of Emerald which were subject to the security interest of
Seller (which security interest was strictly foreclosed by Seller as of July 16,
2004) located on the Premises, including, but not limited to, the assets listed
in Exhibit B hereto, and provided that the assets subject to the
security interest constitute all of the tangible assets of Emerald located on
the Premises; but excluding the assets listed in Exhibit C hereto (the “Excluded
Assets”);

 

(b)                                 to the extent assignable by Seller,
any manufacturer’s warranties with respect to the Conveyed Assets;

 

(c)                                  to the extent assignable by Seller,
any operating systems or software for any equipment that is a Conveyed Asset;

 

(d)                                 all records and documents controlled
by the Seller relating to the Conveyed Assets, including (i) operating manuals,
equipment maintenance and repair logs, and documentation related to warranties,
installation qualification, operational qualification, and performance qualification;
(ii) license agreements for operating systems or software, and (iii) all
Conveyed Permits, but excluding any records or documents relating solely to the
business of Emerald, any confidential information of Seller, and records or
documents related to metallic peptides or its production; and

 

(e)                                  to the extent known and assignable
by Seller, all rights, claims and credits, including all guarantees,
indemnities and similar rights, in favor of Seller or any of its Affiliates to
the extent directly relating to any Conveyed Asset.

 

Section 2.2                                      Limited
Assumption of Liabilities.  With the
exception of those liabilities related to warranty and software agreements
which Purchaser chooses to expressly assume pursuant to a separate written
instrument, Purchaser does not assume any debts, liabilities, guarantees or
obligations of Seller, whether fixed or contingent, known or unknown,
liquidated or unliquidated, secured or unsecured, or otherwise.

 

Section 2.3                                      Purchase
Price; Purchase Price Allocation.  (a)  In consideration for the sale of the Conveyed
Assets, at the Closing, Purchaser shall pay to Seller $900,000 (the “Purchase
Price”).  The Purchase Price shall be
payable in cash by wire transfer of immediately available funds to an account
designated by Seller to Purchaser in writing at least three (3) Business Days
prior to Closing.

 

(b)                                 Within ninety (90) days following
the Closing Date, Seller and Purchaser shall negotiate in good faith to agree
on an allocation of the Purchase Price among the Conveyed Assets in accordance
with applicable Laws.

 

Section 2.4                                      Closing.  The consummation of the transactions
contemplated by this Agreement (the “Closing”) will take place on the Business
Day following the satisfaction or waiver of the conditions set forth in Article VI
hereof (other than those conditions which, by their nature, can only be
satisfied at Closing which shall only be required to be satisfied at the
Closing), at 10:00 a.m. (Seattle time), at the offices of Perkins

 

 

Coie LLP or at such other time and place as shall be mutually agreed
upon by the parties.  The date on which
the Closing under this Agreement occurs is referred to herein as the “Closing
Date.”

 

Section 2.5                                      Nonassignable
Assets.  Nothing in this Agreement,
nor the consummation of the transactions contemplated hereby, shall be
construed as an attempt or agreement to assign or transfer any Conveyed Asset
to Purchaser which by its terms or by Law is nonassignable without the consent
of a third party or is cancelable by a third party in the event of an
assignment or transfer (each a “Nonassignable Asset”), unless and until such
consent shall have been obtained.  Exhibit
D hereto contains a list of all such Nonassignable Assets.  To the extent permitted by applicable Law and
by the terms of the applicable Nonassignable Asset, such Nonassignable Asset
shall be held, as of and from the Closing, by Seller for the benefit of
Purchaser and all rights (to the extent such rights are Conveyed Assets)
existing thereunder shall be for Purchaser’s account.  To the extent permitted by applicable Law and
by the terms of the applicable Nonassignable Asset, Seller shall take or cause
to be taken, at Purchaser’s expense, such actions as Purchaser may reasonably
request which are required to be taken or appropriate in order to provide
Purchaser with the benefits of the Nonassignable Asset.

 

Section 2.6                                      Risk
of Loss.  Until the Closing, Seller
shall bear the risk of any loss or damage to the Conveyed Assets from fire,
casualty or any other occurrence or omission. 
Following the Closing, Purchaser shall bear the risk of any loss or
damage to the Conveyed Assets from fire, casualty or any other occurrence or
omission.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser as follows:

 

Section 3.1                                      Organization.  Seller is a corporation duly organized and
validly existing under the Laws of the State of Washington.  Seller has the requisite power and authority
to own, lease and operate its properties and to conduct its business as now
being conducted.

 

Section 3.2                                      Authority.  Seller has the requisite power and authority
to execute and deliver this Agreement and the Bill of Sale, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby.  The execution and
delivery of this Agreement and the Bill of Sale and the consummation by Seller
of such transactions have been duly authorized by all requisite corporate
action on the part of Seller and no other authorization of Seller or Seller’s
shareholders is required to authorize the execution and delivery of this
Agreement or the Bill of Sale or the consummation of the transactions
contemplated hereby.  This Agreement has
been validly executed and delivered by Seller and constitutes, and the Bill of
Sale that is to be executed and delivered by Seller

 

 

will constitute when executed
and delivered by Seller, a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms.

 

Section 3.3                                      No
Conflict; Required Filings and Consents. 
(a)  The execution and delivery of
this Agreement by Seller do not, and the execution and delivery of the Bill of
Sale will not, and the performance by Seller 
of its obligations under this Agreement will not, (i) conflict with or
violate any provision of Seller’s constituent documents including, without
limitation, articles of incorporation or bylaws, or (ii) conflict with or
violate any Law applicable to Seller or by which any of the Conveyed Assets is
bound, or (iii) require any consent or approval under, result in any
breach of, any loss of any benefit under or constitute a change of control or
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, modification,
acceleration or cancellation of, or result in the creation of a Lien or other
encumbrance on any Conveyed Asset.

 

(b)                                 The execution and delivery of this
Agreement by Seller does not, and the performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby will not, require
any consent, approval, authorization or Permit of, or filing with or
notification to, any third party or any Governmental Entity.

 

Section 3.4                                      Various
Lists and Documents.

 

(a)                                  Exhibit E hereto sets forth a list of all
manufactures’ warranties known by Seller to cover the Conveyed Assets.

 

(b)                                 Exhibit F hereto sets forth a list of primary
operating systems and software contained in the Conveyed Assets.

 

(c)                                  Exhibit G hereto sets forth a list of all
authorizations, licenses, permits, certificates, approvals, consents,
confirmations, orders, waivers and clearances of Governmental Entities (each, a
“Permit”) known to Seller to relate to the Conveyed Assets and/or the Premises
(the “Conveyed Permits”).  Seller shall
reasonably cooperate with Purchaser to determine if each of the Conveyed
Permits may be assigned, conveyed and transferred to Purchaser without consent
or authorization from any third party or Governmental Entity.

 

(d)                                 Attached hereto as Exhibit H
is a copy of a fixed asset register of Emerald as of the date indicated
thereon.

 

(e)                                  Attached hereto as Exhibit I
is a true and correct copy of the Seller’s Lease and there are no other written
agreements between Seller and Teachers with respect to the Premises.

 

 

Section 3.5                                      Title
to Assets.

 

(a)  As a result of Seller’s strict foreclosure of
its security interest in the Collateral in accordance with applicable law on July 16,
2004, Seller has, and at the Closing Seller will deliver to Purchaser, good and
valid title to all of the Conveyed Assets free and clear of all Liens, claims,
and interests of any type.  There exists
no dispute or disagreement between Seller and Emerald or any other person or
entity, nor does Seller know of any basis for the same, with respect to such
strict foreclosure or the Conveyed Assets.

 

(b)                                 AMT hereby expressly acknowledges
and confirms that at no time since July 16, 2004, has it had any Lien or
other right, title or interest in or to any of the Conveyed Assets.

 

(c)                                  Except for the Excluded Assets, the
Conveyed Assets constitute all of the tangible assets of Emerald now located on
the Premises.

 

Section 3.6                                      Environmental
Matters.

 

(a)                                  The Premises have been controlled by
Seller only after June 25, 2004 and, during the period from July 13,
2001 to June 25, 2004, the Premises were under the exclusive control of
Emerald.

 

(b)                                 Seller, to the extent related to the
Premises, has obtained those Permits required by Environmental Law and
necessary for the operation of the Conveyed Assets, and Seller is in compliance
with such Permits and other requirements of applicable Environmental Laws;

 

(c)                                  Seller, to the extent related to the
Premises, has not received any written notice from any Governmental Entity or
any other Person alleging a violation of, or liability under, any Environmental
Laws related to any matter which has not been fully resolved;

 

(d)                                 During the period that the Premises
were controlled by Seller, there has been no Release of any Hazardous Materials
at, on or under the Premises, and the Premises do not contain any underground
storage tanks or surface impoundments containing any Hazardous Materials; and

 

(e)                                  To the best of Seller’s knowledge,
there are not other Releases or violations of Environmental Law that have
occurred or exist on or with respect to the Premises.

 

Section 3.7                                      Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Seller.

 

 

Section 3.8                                      No
Other Representation or Warranty. 
Purchaser has done its own due diligence with respect to the Conveyed
Assets and the Premises.  Purchaser
understands that, except as expressly set forth in this Article III, the
Conveyed Assets are transferred by Seller to Purchaser “AS IS” “WHERE IS”
without representation or warranty of any kind, express or implied, including,
but not limited to merchantability or fitness for a particular use.

 

ARTICLE IV

 

REPRESENTATIONS
AND WARRANTIES OF PURCHASER

 

Purchaser represents and
warrants to Seller as follows:

 

Section 4.1                                      Organization.  Purchaser is a corporation duly organized and
validly existing under the Laws of the State of Delaware.  Purchaser has the requisite power and
authority to own, lease and operate its properties and to conduct its business
as it is now being conducted.

 

Section 4.2                                      Authority.  Purchaser has the requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby.  The execution and delivery of
this Agreement and the consummation by Purchaser of such transactions have been
duly authorized by all requisite corporate action on the part of Purchaser and
no other authorization of Purchaser or its shareholders is required to
authorize the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby. 
This Agreement has been validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms.

 

Section 4.3                                      No
Conflict; Required Filings and Consents. 
(a)  The execution and delivery of
this Agreement by Purchaser do not, and the performance by Purchaser of its
obligations under this Agreement will not, (i) conflict with or violate any
provision of the Purchaser’s articles of incorporation or bylaws, (ii) 
conflict with or violate any Law applicable to Purchaser or by which any
property or asset of Purchaser is bound or (iii)  require any consent or
approval under, result in any breach of, any loss of any benefit under or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
modification, acceleration or cancellation of, or result in the creation of a
Lien or other encumbrance on any contract to which Purchaser is a party or any
property or asset of Purchaser, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, consents, approvals, breaches, losses,
defaults, rights, Liens or other occurrences which would not, individually or
in the aggregate, reasonably be expected to prevent or materially delay the
performance of this Agreement by Purchaser.

 

 

(b)                                 The execution and delivery of this
Agreement does not, and the performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby will not, require any
consent, approval, authorization or Permit of, or filing with or notification
to, any Governmental Entity, except where failure to obtain such consents,
approvals, authorizations or Permits, or to make such filings or notifications,
would not, individually or in the aggregate, reasonably be expected to prevent
or materially delay the performance or consummation of this Agreement by
Purchaser.

 

Section 4.4                                      Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.

 

ARTICLE V

 

COVENANTS

 

Section 5.1                                      Access
to Information; Confidentiality; Cooperation.  After the date hereof and prior to the
Closing, Seller shall permit Purchaser and its Subsidiaries and their
authorized representatives to have reasonable access during normal business
hours, upon reasonable prior notice to Seller, to the Conveyed Assets and the Premises
and Seller shall furnish promptly to Purchaser such information in Seller’s
possession concerning the Conveyed Assets as Purchaser may reasonably request
(including, without limitation, any fixed asset ledger of Emerald which is in
Seller’s possession; provided, however, that any such access shall be conducted
in such a manner as not to unreasonably interfere with the operation of Seller’s
business.

 

Section 5.2                                      Shared
Areas.  Seller and Purchaser each
require access to the negative 20 degree freezer located on the first floor to
the Premises (the “Freezer”) and the room/physical areas diagramed on Exhibit
J hereto (the “Physical Areas” and together with the Freezer, the “Shared
Areas).  Purchaser shall make the Freezer
available to Seller on a non-exclusive basis and at no expense to Seller (that
is, rent-free and with no charges for utilities or other services) for the
period from the Closing Date until January 31, 2005.  Purchaser shall make the Physical Areas
available to Seller on a non-exclusive basis and at no expense to Seller (that
is, rent-free and with no charges for utilities or other services) for the
period from the Closing Date until the (i) date upon which Seller is a no
longer a tenant of any portion of Building A, West Park, 8511 154th Avenue,
N.E., Redmond, WA 98052 or (ii) June 30, 2007, whichever occurs
first.  The Shared Areas may be used by
Seller during the respective time periods described in this Section 5.2
solely for the storage and operation of Seller’s computer and telecommunications
equipment and other items described on Exhibit 5.2 and the warehousing
of Seller’s products and raw materials and only in ways that are consistent
with Seller’s past use of the Shared Areas. 
Purchaser shall only have access to the Shared Areas during the Access
Period on an as-needed basis and subject to Purchaser’s normal security
requirements; provided, however, Purchaser shall have unlimited access to the
Ante-Room diagramed on Exhibit J during the Access Period.  Purchaser shall have no

 

 

liability to Seller for any
damage to Seller’s property within the Shared Areas or use of the Shared Areas
except for damage caused by conduct of Purchaser that constitutes gross
negligence or willful misconduct.  Seller
shall deliver to purchaser a certificate of insurance indicating that Seller’s
use of the Shared Areas remains subject to coverage throughout the duration of
the Access Period and, if requested in writing by Purchaser, naming Purchaser
as an intended beneficiary of such policy solely with respect to loss events
occurring as a result of or relating to Seller’s access to or use of the Shared
Areas.  Seller shall be responsible for
any damage to the Premises that may be caused by Seller’s representatives or
their invitees or any of its property within the Shared Areas.

 

Section 5.3                                      Removal
of Excluded Assets and Repair of Premises. 
Prior to the Closing Date, Seller shall remove, or shall work with
Teachers and Purchaser and other relevant third parties to arrange at Seller’s
expense, on or before September 30, 2004, for removal of, all of the
Excluded Assets from the Premises. 
Further, Seller shall work with Purchaser to restore the portion of the
Premises affected by such removal to a mutually acceptable condition.

 

Section 5.4                                      Fixture
and Tenant Improvements.  Except as
otherwise provided herein, Seller shall not remove any Conveyed Assets,
fixtures or tenant improvements from the Premises prior to Closing.

 

Section 5.5                                      Environmental.  

 

(a)                                  Prior to the Closing Date, Seller
shall at its cost (i) remove all Hazardous Materials from the Premises, such
removal to be performed in compliance with all applicable laws and regulations,
and (ii) provide Purchaser with copies of all environmental site assessments,
Permits and reports of any accident, spill or other Release  related to the Premises within the Seller’s
possession or control.

 

(b)                                 Prior to the Closing Date, Purchaser
may hire David Waddell (who works for King County) to certify as to the removal
of all Hazardous Materials by Envirotech to Mr. Waddell’s satisfaction (based
on a post removal inspection).

 

(c)                                  Purchaser may conduct an
environmental inspection of the Premises and review all of Seller records
relating to such matters, including Hazardous Materials, Permits and operations
regulated or subject to liability under Environmental Laws.

 

Section 5.6                                      Manufacturers’
Warranties.  To the extent
transferable by Seller, Seller shall reasonably cooperate with Purchaser to
ensure that any manufacturers’ warranties with respect to the Conveyed Assets
are transferred to Purchaser.

 

Section 5.7                                      Software
Licenses.  To the extent transferable
by Seller, Seller shall reasonably cooperate with Purchaser to ensure that any
operating systems or other software on computers or other Conveyed Assets are
transferred to Purchaser.

 

 

Section 5.8                                      Further
Assurances.  From time to time
following the Closing, Seller and Purchaser shall, and shall cause their
respective Affiliates to, execute, acknowledge and deliver all such further
conveyances, notices, assumptions, releases and acquittances and such other
instruments, and shall take such further actions, as may be necessary or
appropriate to assure fully to Purchaser and its respective successors or
assigns, all of the properties, rights, titles, interests, estates, remedies,
powers and privileges intended to be conveyed to Purchaser under this
Agreement.

 

Section 5.9                                      Tax
Matters.  (a)  Purchaser and Seller shall share equally any
Transaction Taxes imposed in connection with the transfer of the Conveyed
Assets.

 

(b)                                 Seller and Purchaser recognize that
Washington State sales taxes are normally due on sales of tangible personal
property, but that exemptions from such taxes on the sale of Conveyed Assets
may be available, depending on the nature and use of the Conveyed Assets and
the use of the Premises.  Seller and
Purchaser shall endeavor in good faith to qualify for any such available
exemption.

 

Section 5.10                                Publicity.  Except as otherwise required by applicable
Law or applicable stock exchange requirements, prior to the Closing, neither
Purchaser nor Seller shall, and each of them shall cause their respective
Affiliates, representatives and agents not to, issue or cause the publication
of any press release or public announcement with respect to the transactions contemplated
by this Agreement without the express prior approval of the other party, which
approval shall not be unreasonably withheld or delayed; provided, that each of
Seller and Purchaser may make any public statement in response to questions by
the press, analysts, investors or those attending industry conferences or
financial analyst calls, or issue press releases, so long as any such public
statement or press release is not inconsistent with prior public disclosures,
press releases or public statements approved by the other party pursuant to
this Section 5.6 and which do not reveal non-public information about the
other party.

 

Section 5.11                                Certain
Provisions Relating to the Transfer. 
Except in respect of Nonassignable Assets (which are the subject of Section 2.5
hereof), in the event that record or beneficial ownership or possession of any
Conveyed Asset has not been transferred to Purchaser on the Closing Date,
Seller, on the one hand, and Purchaser, on the other hand, shall reasonably
cooperate with each other and Seller shall use its reasonable best efforts to
transfer, or cause to be transferred to Purchaser, such Conveyed Asset; and
pending such transfer to Purchaser, Seller shall hold such Conveyed Asset and,
provide to Purchaser all of the benefits and liabilities associated with the
ownership and operation of such Conveyed Asset and, accordingly, Seller shall
cause such Conveyed Asset to be operated or retained as may reasonably be
instructed by Purchaser, all at Purchaser’s expense (except for any costs and
expenses that are indemnifiable Losses of Purchaser Indemnified Parties under Section 8.2).

 

Section 5.12                                Insurance.  In the event that prior to the Closing Date
any Conveyed Asset suffers any damage, destruction or other loss as a result of
a casualty event,

 

 

Seller shall, after the Closing
Date, (i) promptly pay to Purchaser all insurance proceeds received by Seller
with respect to such damage, destruction or other loss, less any proceeds
applied to the physical restoration of such asset, and (ii) assign to Purchaser
all rights of Seller against third parties (other than against its insurance
carriers) with respect to any causes of action, whether or not litigation has
commenced as of the Closing Date, in connection with such damage, destruction
or other loss; provided, however, that the proceeds of such insurance shall be
subject to (and recovery thereon shall be reduced by the amount of) any
applicable deductibles and co-payment provisions or any payment or
reimbursement obligations of Seller in respect thereof; provided, further, that
Seller shall not be required to pay any insurance proceeds under any insurance
policy which constitutes “self-insurance” or which is subject to a retroactive
premium increase.

 

ARTICLE VI

 

CONDITIONS

 

Section 6.1                                      Conditions
to Each Party’s Obligations.  The
respective obligations of each party to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction or waiver by Purchaser and
Seller (to the extent permitted by applicable Law) at or prior to the Closing
of the following conditions (provided, however, that a party’s obligations
hereunder shall not serve as a condition precedent to their obligation to
effect such transactions):

 

(a)                                  There shall not be in effect any
statute, regulation, order, decree or judgment of any Governmental Entity,
which makes illegal or enjoins or prevents the consummation of the transactions
contemplated by this Agreement;

 

(b)                                 execution of the Purchaser’s Lease;
and

 

(c)                                  termination of the Seller’s leasehold
interest in the Premises.

 

Section 6.2                                      Conditions
to Obligations of Purchaser.  The
obligation of Purchaser to effect the transactions contemplated by this
Agreement shall be further subject to the satisfaction at or prior to the
Closing of the following conditions, any or all of which may be waived, in
whole or in part, by Purchaser:

 

(a)                                  The representations and warranties
of Seller contained in Article III of this Agreement shall be true and
correct at and as of the Closing Date as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
earlier date);

 

(b)                                 Seller shall have performed and
complied in all material respects with all agreements and covenants required to
be performed or complied with by Seller under this Agreement at or prior to the
Closing including, without limitation, the Hazardous Material removal and
inspection contemplated by Section 5.5 of this Agreement;

 

 

(c)                                  Seller shall have complied in all
material respects with its obligations regarding removal of the Excluded Assets
(except as described in Section 5.2) and repair of the Premises as
described in Section 5.3;

 

(d)                                 Seller’s satisfaction of the
environmental requirements described herein, including the removal requirements,
and Purchaser’s reasonable satisfaction with the environmental certification
provided by Mr. Waddell;

 

(e)                                  Seller shall have delivered or
caused to be delivered to Purchaser the Bill of Sale; and

 

(f)                                    Purchaser shall have received the
Acknowledgement and Agreement, substantially in the form attached hereto as
Exhibit 6.2(f), executed on behalf of Emerald.

 

Section 6.3                                      Conditions
to Obligations of Seller.  The
obligation of Seller to effect the transactions contemplated by this Agreement
shall be further subject to the satisfaction at or prior to the Closing of the
following conditions, any or all of which may be waived, in whole or in part,
by Seller:

 

(a)                                  The representations and warranties
of Purchaser contained in Article IV of this Agreement shall be true and
correct in all material respects at and as of the Closing Date as if made at
and as of such time (except to the extent expressly made as of an earlier date,
in which case as of such earlier date;

 

(b)                                 Purchaser shall have performed and
complied in all material respects with all agreements and covenants required to
be performed or complied with by Purchaser under this Agreement at or prior to
the Closing; and

 

(c)                                  Purchaser shall have paid to Seller
the Purchase Price in immediately available funds.

 

ARTICLE VII

 

TERMINATION
AND AMENDMENT

 

Section 7.1                                      Termination.  This Agreement may be terminated at any time
prior to the Closing by: 

 

(a)                                  mutual written consent of Seller and
Purchaser; or

 

(b)                                 Purchaser, by written notice to
Seller, if the Closing shall not have occurred on or before October 12,
2004; or

 

(c)                                  either Seller or Purchaser (provided
that the terminating party is not then in material breach of any
representation, warranty, covenant, or other agreement contained herein), by
written notice to the other party, if there shall have been a material

 

 

breach of any of the
representations, warranties, agreements or covenants set forth in this
Agreement on the part of the other party which has rendered the satisfaction of
any conditions contained in Article VI hereof impossible, such violation
or breach has not been waived by the terminating party, and the breach has not
been cured within ten (10) days following the terminating party’s written
notice of such breach; provided, however, that if such breach
cannot reasonably be cured within ten (10) days and the breaching party is
diligently proceeding to cure such breach, this Agreement may not be terminated
pursuant to this Section 7.1(c).

 

Section 7.2                                      Effect
of Termination.  In the event of the
termination of this Agreement pursuant to Section 7.1 hereof, this
Agreement shall forthwith become null and void and have no effect, without any
liability on the part of any party hereto or its Affiliates, directors,
officers or stockholders, other than the provisions of Article IX and
Sections 3.7, 4.4, and 7.2 hereof; provided, however, that nothing contained in
this Section 7.2 shall relieve either party to this Agreement from
liability to the other party for any willful and material breach of this Agreement.

 

Section 7.3                                      Amendment.  This Agreement may be amended or modified at
any time by Seller and Purchaser, but only by an instrument in writing signed
by or on behalf of each of Seller and Purchaser.

 

Section 7.4                                      Extension;
Waiver.  At any time prior to the
Closing, either party hereto may (i) extend the time for the performance of any
of the obligations or acts of the other party, (ii) waive any inaccuracies in
the representations and warranties of the other party contained herein or in
any document delivered pursuant hereto, (iii) waive compliance with any of the
agreements of the other party contained herein or (iv) waive any condition to
its obligations hereunder.  Any agreement
on the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed by or on behalf of such
party.  Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
partial exercise of any right, power or remedy by any party, and no course of
dealing between the parties, shall constitute a waiver of any such right, power
or remedy.

 

ARTICLE VIII

 

SURVIVAL;
INDEMNIFICATION

 

Section 8.1                                      Survival
Period.  The representations and
warranties of the parties contained in Articles III and IV hereof shall survive
the Closing until the second anniversary of the Closing Date; provided,
however, that the representations and warranties of Seller in
Sections 3.2, 3.5 and 3.7 hereof and Purchaser in Sections 4.2 and 4.4
hereof shall survive the Closing indefinitely. 
The period of time a representation or warranty survives the Closing
pursuant to the preceding sentence shall be the “Survival Period” with respect
to such representation or warranty.  The
parties intend for the preceding two sentences to shorten the otherwise
applicable statute of limitations and agree that, subject to

 

 

the last sentence of this Section 8.1,
no claims (other than claims of, or causes of action arising from, fraud) may
be brought based upon, directly or indirectly, any of the representations and
warranties contained in this Agreement after the Survival Period with respect
to such representation and warranty.  The
covenants and agreements of the parties hereto contained herein shall survive
in accordance with their respective terms. 
In the event notice of any claim for indemnification under Section 8.2(a)(i)
or 8.2(b)(i) hereof shall have been given within the applicable Survival Period
and such claim has not been finally resolved by the expiration of such Survival
Period, the representations and warranties that are the subject of such claim
shall survive the end of the Survival Period of such representations or
warranties until such claim is finally resolved, but such representations and
warranties shall only survive with respect to such asserted claim.

 

Section 8.2                                      Indemnification.  Subject to the terms, conditions and
limitations set forth in this Article VIII, from and after the Closing:

 

(a)                                  Seller shall defend, indemnify and
hold harmless Purchaser and its Affiliates and each of their respective
directors, officers, equity holders, partners, employees, agents and
representatives and their respective heirs, successors and assigns
(collectively, the “Purchaser Indemnified Parties”) from and against any
loss, liability, claim, damage or expense (including reasonable attorneys’ fees
and expenses) (collectively, “Losses”) arising out of, in connection
with, or otherwise with respect to: (i) any breach of, or inaccuracy in,
any representation or warranty of Seller set forth in Article III hereof,
(ii) the failure to perform any covenant or agreement of Seller set forth
in this Agreement, (iii) Hazardous Materials that were Released during the term
of Seller’s Lease up to the Closing Date, (iv) Seller’s actions pursuant to Section 5.2,
including resulting from the presence of Seller’s property within the Shared
Areas and Seller’s use of the Shared Areas, (v) Seller’s breaches of, or
defaults under, the Seller’s Lease, up to the Closing Date, (vi) any actual or
threatened claim, whether or not merited, that Purchaser did not receive from
Seller good and valid title to all of the Conveyed Assets free and clear of all
Liens, claims, and interests of any type and (vii) the Excluded Assets.

 

(b)                                 Purchaser shall defend, indemnify
and hold harmless Seller and its Affiliates and each of their respective
directors, officers, equity holders, partners, employees, agents and
representatives and their respective heirs, successors and assigns
(collectively, the “Seller Indemnified Parties”) from and against any
Losses arising out of, in connection with or otherwise with respect to:  (i) any breach of, or inaccuracy in, any
representation or warranty of Purchaser set forth in Article IV hereof,
and (ii) the failure to perform any covenant or agreement of Purchaser set
forth in this Agreement.

 

Section 8.3                                      Indemnification
Procedures.  (a)  In order for a party (the “Indemnified Party”)
to be entitled to any indemnification provided for under this Article VIII
in respect of, arising out of or involving a claim made by any Person against
the Indemnified Party (a “Third-Party Claim”), such Indemnified Party must
notify the indemnifying party hereunder (the “Indemnifying Party”) in writing
of the Third-Party Claim promptly following receipt by such Indemnified Party
of actual notice of the Third-Party

 

 

Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure. 
Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, promptly following the Indemnified Party’s receipt thereof, copies of
all notices and documents (including court papers) received by the Indemnified
Party relating to the Third-Party Claim other than those notices and documents
separately addressed to the Indemnifying Party.

 

(b)                                 If a Third-Party Claim is made
against an Indemnified Party, the Indemnifying Party shall be entitled to
participate in the defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party; provided, however,
that such counsel is not reasonably objected to by the Indemnified Party.  Should the Indemnifying Party so elect to assume
the defense of a Third-Party Claim, the Indemnifying Party shall not be liable
to the Indemnified Party for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof.  If the Indemnifying Party assumes such
defense, the Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense. 
The Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel employed by the Indemnified Party for any period during
which the Indemnifying Party has not assumed the defense thereof.

 

If the Indemnifying Party assumes the defense of a Third-Party Claim,
the Indemnified Party shall agree to any settlement, compromise or discharge of
a Third-Party Claim that the Indemnifying Party may recommend and that by its
terms obligates the Indemnifying Party to pay the full amount of the liability
in connection with such Third-Party Claim, that releases the Indemnified Party
completely in connection with such Third-Party Claim and that would not
otherwise adversely affect the Indemnified Party in any material respect.

 

Notwithstanding the two foregoing paragraphs, the Indemnifying Party
shall not be entitled to assume the defense of any Third-Party Claim (and shall
be liable for the reasonable fees and expenses of counsel incurred by the
Indemnified Party in defending such Third-Party Claim) if the Third-Party Claim
seeks an order, injunction or other equitable relief or relief for other than
money damages against the Indemnified Party that the Indemnified Party
reasonably determines cannot be separated from any related claim for money
damages.  If such equitable relief or
other relief portion of the Third-Party Claim can be so separated from that for
money damages, the Indemnifying Party shall be entitled to assume the defense
of the portion relating to money damages.

 

(c)                                  In the event any Indemnified Party
should have a claim against any Indemnifying Party under Section 8.2(a) or
8.2(b) that does not involve a Third-Party Claim being asserted against or
sought to be collected from such Indemnified Party, the Indemnified Party shall
deliver notice of such claim with reasonable promptness to the Indemnifying
Party.  The failure by any Indemnified
Party so to notify the Indemnifying Party shall not

 

 

relieve the
Indemnifying Party from any liability that it may have to such Indemnified
Party under Section 8.2(a) or 8.2(b), except to the extent that the
Indemnifying Party has been actually prejudiced by such failure.

 

Section 8.4                                      Limitation
of Liability.  (a)  Notwithstanding anything in this Agreement to
the contrary, the liability of the Indemnifying Party to indemnify any
Indemnified Party against any Losses pursuant to Sections 8.2(a)(i) or
8.2(b)(i) shall be limited to claims for indemnification with respect to which
an Indemnified Party has given to the Indemnifying Party notice of such claim
within the Survival Period specified in Section 8.1.

 

(b)                                 Except for indemnification claims
related to Section 3.5, in no event shall Seller be liable for
indemnification pursuant to Section 8.2(a)(i) unless and until the
aggregate of all Losses which are incurred or suffered by the Purchaser
Indemnified Parties exceeds $25,000, in which case the Purchaser Indemnified
Parties shall be entitled to indemnification for all such Losses in excess of
$25,000; provided, however, that Seller shall not be required to
make payments for indemnification pursuant to Section 8.2(a)(i) in an
aggregate amount in excess of the Purchase Price.

 

(c)                                  In no event shall Purchaser be
liable for indemnification pursuant to Section 8.2(b)(i) unless and until
the aggregate of all Losses which are incurred or suffered by the Seller
Indemnified Parties exceeds $25,000, in which case the Seller Indemnified
Parties shall be entitled to indemnification for all such Losses in excess of
$25,000; provided, however, that Purchaser shall not be required
to make payments for indemnification pursuant to Section 8.2(a)(i) in an
aggregate amount in excess of the Purchase Price.

 

Section 8.5                                      Other
Matters.  Notwithstanding anything to
the contrary contained in this Agreement or otherwise, there shall be no
indemnification pursuant to this Agreement by Seller or Purchaser for any
special, incidental, punitive, consequential or similar damages (including
damages for lost profits).

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                      Notices.  Any notices or other communications required
or permitted under, or otherwise in connection with, this Agreement or the
Related Instruments shall be given in writing and shall be deemed to have been
duly given (i) when delivered in person, (ii) upon confirmation of
receipt when transmitted by facsimile transmission (but only if followed by
transmittal by internationally recognized overnight courier (providing proof of
delivery) or hand, (iii) on receipt after being sent, postage prepaid, by
registered or certified mail, or (iv) when delivered if transmitted by
internationally recognized overnight courier (providing proof of delivery), in
each case as follows (or to such other address which has been delivered in
accordance with this Section 9.1):

 

 

(a)                                  if to Seller, to:

 

ProCyte
Corporation

8511
154th Avenue NE, Building A

Redmond,
WA 98052

Facsimile:
(425) 869-1229

Attention:
Mr. John F. Clifford

 

(b)                                 if to Purchaser, to:

 

ICOS Corporation

22021 20th Avenue SE

Bothell, WA 98021

Facsimile:  (425) 398-8950

Attention: General Counsel

 

Section 9.2                                      Descriptive
Headings.  The descriptive headings
herein are inserted for convenience only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.

 

Section 9.3                                      Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties hereto and
delivered to the other party.

 

Section 9.4                                      Entire
Agreement.  This Agreement, the
Exhibits hereto, the Bill of Sale and the Confidentiality Agreement constitute
the entire agreement of the parties hereto, and supersede all prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.

 

Section 9.5                                      Fees
and Expenses.  Except as set forth in
this Agreement or in any Related Instrument, regardless of whether or not the
transactions contemplated by this Agreement are consummated, each party shall
bear its own fees and expenses incurred in connection with this Agreement and
the Related Instruments and the transactions contemplated hereby and thereby.

 

Section 9.6                                      Governing
Law.  This Agreement shall be
governed by and construed in accordance with the Laws of the State of
Washington, without regard to any applicable principles of conflicts of
law.  Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the jurisdiction of the
courts of the State of Washington and of the United States of America located
in Seattle, and any appellate court from any such court, for any litigation
arising out of or relating to this Agreement or any Related Instrument

 

 

and the transactions contemplated
hereby or thereby (and agrees not to commence any litigation relating thereto
except in such courts).  Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue of any litigation arising out of or relating to this
Agreement or the transactions contemplated hereby or thereby in the courts of
the State of Washington or of the United States of America located in Seattle
and hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such litigation brought in any such court
has been brought in an inconvenient forum. 
The parties agree that a final judgment in any such litigation shall be
conclusive and may be enforced in other jurisdictions by suits on the judgment
or in any other manner provided by Law.

 

Section 9.7                                      WAIVER
OF JURY TRIAL.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE RELATED
INSTRUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 

 

Section 9.8                                      Assignment.  Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be transferred, assigned or delegated
by either of the parties hereto, in whole or in part, without the prior written
consent of the other party, and any attempt to make any such transfer,
assignment or delegation without such consent shall be null and void.

 

Section 9.9                                      Parties
in Interest.  This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and their
respective successors and permitted assigns, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, interests, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.

 

Section 9.10                                Interpretation.  In the event an ambiguity or a question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.

 

Section 9.11                                Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by Law.

 

 

Section 9.12                                Payments.  Unless otherwise provided herein, all
payments required to be made pursuant to this Agreement shall be made in U.S.
dollars in the form of cash or by wire transfer of immediately available funds
to an account designated by the party receiving such payment.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Asset
Purchase Agreement as of the date first written above.

 

	
   

  	
  PROCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert W. Benson

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert W. Benson

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ICOS CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Clark

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paul N. Clark

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
					

 

 

Solely for the Purpose of Section 3.5(b)

 

AMT Capital, LTD

By:  AMT Capital G.P., Inc., as
General Partner

 

 

	
  By:

  	
  /s/ Tom Delimitros

  	
   

  
	
   

  	
  Name:

  	
  Tom Delimitros

  	
   

  
	
   

  	
  Title:

  	
  President

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