Item
1.01 Entry into a Material Definitive Agreement
Asset
Purchase Agreement
On
March 2, 2018, PolarityTE, Inc., a Delaware corporation (the “Company”), along with its wholly owned subsidiary, Utah
CRO Services, Inc., a Nevada corporation (“Acquisition Co.”), entered into an asset purchase agreement (the “APA”)
with a Utah limited liability company (“Seller”), along with its related entity (“Seller Corp.”), wherein
Seller Corp. agreed to sell the assets and rights to its preclinical research and veterinary sciences business and related real
estate (as more fully described below). The business consists of a “
good laboratory practices
” (GLP) compliant
preclinical research facility, including vivarium, operating rooms, preparation rooms, storage facilities, and surgical and imaging
equipment. A broad range of veterinary services related to orthopedics, soft tissue surgery, neurosurgery, and non-surgical research
and development are performed at the facilities and are intended to be utilized by the Company to expand its research and development
capabilities for development of its skin, bone, muscle, cartilage, fat, and other technologies and derivative products and technologies
related to the Company’s “TE” technology pipeline. The Company also intends to continue to operate and expand
the contract preclinical research business currently operated by the Seller.
Pursuant
to the APA, the $1.6 million purchase price is payable as follows: $266,667 payable at closing and, for the balance of the purchase
price, the Company will enter into a promissory note for approximately $1.3 million at closing in favor of Seller Corp. payable
in 5 equal installments beginning on the six (6) month anniversary of issuance and continuing on each 6 month anniversary thereafter
with interest at the rate of 3.5% per annum.
The
closing of the transaction contemplated by the APA is subject to customary terms and conditions including the satisfaction or
waiver of all conditions as set forth in the APA.
Purchase
and Sale Agreement
Concurrently
with the execution and delivery of the APA, on March 2, 2018, the Company entered into a purchase and sale agreement (the “PSA”)
with Seller to purchase the following:
(i)
two parcels of real property in Cache County, Utah, consisting of approximately 1.75 combined gross acres of land; together with
(ii)
any and all rights, privileges, easements, tenements, hereditaments, rights-of-way, and appurtenances that belong or appertain
to, and/or are owned by or run in favor of Seller, including, without limitation, any and all rights to minerals, oil, gas, hydrocarbon
substances, and other materials or substances on and under the land, as well as any and all development rights, entitlements,
and land use approvals, air rights, water, and appurtenant water rights that pertain to or are associated with the land;
(iii)
any and all buildings, structures, parking areas, paved areas, landscaped areas (including, without limitation, plants, trees,
shrubbery, and other landscaping improvements), fixtures, and other improvements located on the land including, without limitation,
any apparatus, equipment, and appliances used in connection with the use, operation, maintenance, and occupancy of the land, such
as all electrical, mechanical, plumbing, and heating and air conditioning systems and facilities used to provide any utility,
refrigeration, ventilation, garbage disposal, or other services on the land;
(iv)
any and all maps, surveys, reports, studies, plans, specifications, drawings, warranties, appraisals, tests, inspections, and
certificates of occupancy owned or held by Seller that pertain to or are associated with the land or the use, operation, and maintenance
thereof;
(v)
any and all intangible property owned or held by Seller that pertain to or are associated with the land or to the use, operation,
and maintenance thereof, including, without limitation, all permits, authorizations, approvals, licenses, service contracts, management
agreements, and other agreements relating to the land; and
(vi)
any and all personal property owned by Seller located on the land or the improvements, including, without limitation, (a) any
and all carpets, drapes, blinds, and other furnishings comprising a part of, or attached to, or located upon, the land or the
improvements, (b) any and all appliances located on the land or the improvements and owned by Seller, and (c) any and all other
machinery, equipment, and fixtures located on the land (collectively, (i) through (vi), the “Property”).
The
purchase price for the Property is $2.0 million, of which $25,000 will be deposited by the Company into escrow with a title company
within five days of execution of the PSA. The balance of the purchase price is to be paid at closing pursuant to a loan to be
obtained by the Company from a lender of its choice.
The
closing of the transaction contemplated by the PSA is subject to customary terms and conditions including financing conditions
and the final, mutually approved versions of a deed and recordation.