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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
DNA SCIENCES, INC.,
a Delaware corporation;
PIPO ACQUISITION CORP.,
a Delaware corporation;
AND
PPGX, INC.,
a Delaware corporation;
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Dated as of December 17, 2000
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TABLE OF CONTENTS
PAGE
SECTION 1. DESCRIPTION OF TRANSACTION .................................................... 1
1.1 Merger of Merger Sub into the Company .................................. 1
1.2 Effect of the Merger ................................................... 1
1.3 Closing; Effective Time ................................................ 1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers ........ 2
1.5 Conversion of Shares ................................................... 2
1.6 Stock Options .......................................................... 6
1.7 Closing of the Company's Transfer Books ................................ 7
1.8 Exchange of Certificates; Escrow Shares ................................ 7
1.9 Appraisal Rights ....................................................... 9
1.10 Tax Consequences ....................................................... 9
1.11 Accounting Treatment ................................................... 10
1.12 Further Action ......................................................... 10
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................................. 10
2.1 Due Organization; Subsidiaries; Etc .................................... 10
2.2 Certificate of Incorporation and Bylaws; Records ....................... 11
2.3 Capitalization, Etc .................................................... 11
2.4 Financial Statements ................................................... 13
2.5 Absence of Changes ..................................................... 14
2.6 Title to Assets ........................................................ 15
2.7 Bank Accounts; Receivables ............................................. 15
2.8 Equipment; Leasehold ................................................... 16
2.9 Proprietary Assets ..................................................... 16
2.10 Contracts .............................................................. 19
2.11 Liabilities ............................................................ 22
2.12 Compliance with Legal Requirements ..................................... 22
2.13 Governmental Authorizations and Facility Certifications ................ 22
2.14 Tax Matters ............................................................ 23
2.15 Employee and Labor Matters; Benefit Plans .............................. 25
2.16 Environmental Matters .................................................. 27
2.17 Insurance .............................................................. 28
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TABLE OF CONTENTS
(CONTINUED)
PAGE
2.18 Related Party Transactions ............................................. 28
2.19 Legal Proceedings; Orders .............................................. 28
2.20 Authority; Binding Nature of Agreement ................................. 29
2.21 Non-Contravention; Consents ............................................ 29
2.22 Inapplicability of Section 2115 of California Corporations Code ........ 30
2.23 Vote Required .......................................................... 30
2.24 Brokers or Finders ..................................................... 30
2.25 Full Disclosure ........................................................ 30
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ....................... 31
3.1 Organization and Standing; Articles and Bylaws ......................... 31
3.2 Capitalization ......................................................... 31
3.3 Financial Statements ................................................... 32
3.4 Actions ................................................................ 32
3.5 Title to Properties and Assets; Liens, etc ............................. 32
3.6 Patents, Trademarks, etc ............................................... 33
3.7 Proprietary Information and Inventions Agreements ...................... 33
3.8 Material Contracts and Commitments ..................................... 33
3.9 Compliance with Other Instruments ...................................... 33
3.10 Validity of Parent Capital Stock ....................................... 34
3.11 Governmental Authorizations ............................................ 34
3.12 Tax Returns and Payments ............................................... 34
3.13 Tax Elections .......................................................... 34
3.14 Employees .............................................................. 34
3.15 Employee Benefit Plans ................................................. 35
3.16 Environmental Matters .................................................. 35
3.17 Insurance .............................................................. 35
3.18 No Conflict of Interest ................................................ 35
3.19 Litigation, etc ........................................................ 35
3.20 Authority; Binding Nature of Agreement ................................. 36
3.21 Non-Contravention; Consents ............................................ 36
3.22 Financial Condition .................................................... 36
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.24 U.S. Real Property Holding Corporation ................................. 36
3.25 Investment Company Act ................................................. 37
3.26 No Brokers or Finders .................................................. 37
3.27 Full Disclosure ........................................................ 37
SECTION 4. CERTAIN COVENANTS OF THE PARTIES .............................................. 37
4.1 Access and Investigation ............................................... 37
4.2 Operation of the Company's Business .................................... 37
4.3 Notification; Updates to Company Disclosure Schedule ................... 40
4.4 Notification; Updates to Parent Disclosure Schedule .................... 41
4.5 Operation of Parent's Business. During the Pre-Closing Period: ......... 41
4.6 No Negotiation ......................................................... 42
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES ........................................... 43
5.1 Filings and Consents ................................................... 43
5.2 Company Stockholders' Meeting .......................................... 43
5.3 Public Announcements ................................................... 44
5.4 Reasonable Efforts ..................................................... 44
5.5 Tax Matters ............................................................ 44
5.6 Noncompetition Agreements .............................................. 44
5.7 Employment Agreements .................................................. 44
5.8 Releases ............................................................... 44
5.9 Underwriter Lockup Agreements .......................................... 45
5.10 Amendment/Clarification of Existing Agreements; Payoff of
Company Line of Credit ................................................. 45
5.11 Termination of Certain Agreements ...................................... 45
5.12 FIRPTA Matters ......................................................... 45
5.13 Employee and Related Matters ........................................... 46
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB .................. 46
6.1 Accuracy of Representations ............................................ 46
6.2 Performance of Covenants ............................................... 46
6.3 Stockholder Approval ................................................... 47
6.4 Consents ............................................................... 47
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.5 Agreements and Documents ............................................... 47
6.6 Absence of Material Adverse Effect ..................................... 48
6.7 HSR Act ................................................................ 48
6.8 FIRPTA Compliance ...................................................... 48
6.9 No Restraints .......................................................... 48
6.10 No Legal Proceedings ................................................... 48
6.11 Employees .............................................................. 48
6.12 Termination of Certain Agreements ...................................... 48
6.13 Closing of Series C Investment ......................................... 49
6.14 Amended and Restated Certificate ....................................... 49
6.15 Company Amended and Restated Certificate ............................... 49
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY ............................ 49
7.1 Accuracy of Representations ............................................ 49
7.2 Performance of Covenants ............................................... 49
7.3 Documents .............................................................. 49
7.4 No Restraints .......................................................... 50
7.5 Absence of Material Adverse Effect ..................................... 50
7.6 HSR Act ................................................................ 50
7.7 Amended and Restated Certificate ....................................... 50
7.8 Director Appointment ................................................... 50
7.9 Company Amended and Restated Certificate ............................... 50
SECTION 8. TERMINATION ................................................................... 50
8.1 Termination Events ..................................................... 50
8.2 Termination Procedures ................................................. 51
8.3 Effect of Termination .................................................. 51
SECTION 9. INDEMNIFICATION, ETC .......................................................... 51
9.1 Survival of Representations, Etc ....................................... 51
9.2 Indemnification ........................................................ 52
9.4 Exclusive Remedy for Monetary Damages .................................. 54
9.5 No Contribution ........................................................ 54
9.6 Interest ............................................................... 54
9.7 Defense of Third Party Claims .......................................... 54
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TABLE OF CONTENTS
(CONTINUED)
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9.8 Exercise of Remedies by Parent Indemnitees Other Than Parent ........... 55
SECTION 10. MISCELLANEOUS PROVISIONS ..................................................... 55
10.1 Stockholders' Agents ................................................... 55
10.2 Further Assurances ..................................................... 55
10.3 Fees and Expenses ...................................................... 55
10.4 Attorneys' Fees ........................................................ 56
10.5 Notices ................................................................ 56
10.6 Confidentiality ........................................................ 57
10.7 Time of the Essence .................................................... 57
10.8 Headings ............................................................... 57
10.9 Counterparts ........................................................... 57
10.10 Governing Law .......................................................... 57
10.11 Successors and Assigns ................................................. 57
10.12 Remedies Cumulative; Specific Performance .............................. 57
10.13 Waiver ................................................................. 58
10.14 Amendments ............................................................. 58
10.15 Severability ........................................................... 58
10.16 Parties in Interest .................................................... 58
10.17 Entire Agreement ....................................................... 58
10.18 Construction ........................................................... 58
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EXHIBITS
Exhibit A - Certain definitions
Exhibit B - Form of Voting Agreement
Exhibit C - Form of Escrow Agreement
Exhibit D - Form of Amended and Restated Certificate
Exhibit E - Forms of tax representation letters
Exhibit F - Form of Noncompetition Agreement
Exhibit G - Persons to Execute Offer Letters
Exhibit H - Form of Offer Letter
Exhibit I - Form of Release
Exhibit J - Form of Underwriter Lockup Agreement
Exhibit K - Form of Amended and Restated Distributor Agreement
Exhibit L - Form of Amended and Restated Technology Transfer Agreement
Exhibit M - Form of PPD Clarification Letter
Exhibit N - Form of PPD Real Property Indemnity Letter
Exhibit O - Form of Axys Covenant Not to Xxx
Exhibit P - Form of Axys Assignment Letter
Exhibit Q - Form of Amended and Restated Investor Rights Agreement
Exhibit R - Form of Amended and Restated Co-Sale Agreement
Exhibit S - Form of legal opinion of Xxxxxx Xxxxxx White & XxXxxxxxx LLP
Exhibit T - Form of legal opinion of Xxxxxx Godward LLP
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of December 17, 2000, by and among: DNA SCIENCES, INC.,
a Delaware corporation ("Parent"), PIPO ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and PPGX,
INC., a Delaware corporation (the "Company"). Certain capitalized terms used in
this Agreement are defined in EXHIBIT A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For accounting purposes, it is intended that the Merger be
treated as a "purchase."
C. This Agreement has been approved by the respective boards of
directors of Parent, Merger Sub and the Company.
D. Contemporaneously with the execution and delivery of this Agreement,
each of Axys Pharmaceuticals, Inc. ("Axys") and Pharmaceutical Product
Development, Inc. ("PPD," and collectively with Axys, the "Major Stockholders")
is executing and delivering to Parent a voting agreement (a "Voting Agreement")
of even date herewith substantially in the form of EXHIBIT B.
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, 0000 Xx Xxxxxx Xxxx, Five Xxxx Xxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000 at 10:00 a.m. on a date to be mutually agreed upon by Parent
and the Company no later than three days after the satisfaction (or, to the
extent permitted, the waiver) of the conditions set forth in Sections 6 and 7.
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed certificate of merger conforming to the requirements of the
Delaware General Corporation Law shall be filed with the Secretary of State of
the State of Delaware. The Merger shall become
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effective at the time such certificate of merger is filed with the Secretary of
State of the State of Delaware (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent and the Company prior to the Effective
Time:
(a) the certificate of incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time in a
form acceptable to Parent;
(b) the bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the bylaws of Merger Sub
as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals selected
by Parent prior to the Closing.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.8(c) and 1.9, at the Effective Time,
by virtue of the Merger and without any further action on the part of Parent,
Merger Sub, the Company or any stockholder of the Company:
(i) each share of common stock of the Company (par value
$0.001 per share) ("Company Common Stock") outstanding immediately prior
to the Effective Time shall be converted into the right to receive a
fraction of a share of the common stock (par value $0.001 per share) of
Parent ("Parent Common Stock") equal to the Remainder Exchange Ratio;
(ii) each share of Series A preferred stock of the
Company (par value $0.001 per share) ("Company Series A Preferred
Stock") outstanding immediately prior to the Effective Time shall be
converted into the right to receive a fraction of a share of the Series
D preferred stock (par value $0.001 per share) of Parent ("Parent Series
D Preferred Stock," and together with Parent Common Stock, "Parent
Capital Stock") equal to the Series A Exchange Ratio; and
(iii) each share of the common stock (par value $0.001
per share) of Merger Sub outstanding immediately prior to the Effective
Time shall be converted into one share of common stock of the Surviving
Corporation.
(b) For purposes of this Agreement:
(i) The "Series A Exchange Ratio" shall be equal to (A)
the Liquidation Portion Exchange Ratio plus (B) the Remainder Exchange
Ratio, rounded to five decimal places.
(ii) The "Liquidation Consideration" shall be equal to
(A) the Debt Repayment divided by (B) a fraction, the numerator of which
is $47,000,000, and the denominator of which is the Merger
Consideration, rounded to five decimal places.
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(iii) The "Liquidation Portion Exchange Ratio" is equal
to (A) the Liquidation Consideration divided by (B) 10,000,000, rounded
to five decimal places.
(iv) The "Remainder Exchange Ratio" shall be equal to
(A) the Merger Consideration minus the Liquidation Consideration divided
by (B) the Aggregate Company Common Number, rounded to five decimal
places.
(v) The "Debt Repayment" shall mean (A) the actual
outstanding indebtedness due and payable to the Bank (as defined in
Section 4.2(k)) that is actually repaid by the Company on or prior to
the Closing Date in accordance with Section 5.10(c) and (B) the value of
the indebtedness due and payable to the Major Stockholders under the
Loan Agreement (as defined in Section 4.2(n)) that is actually
contributed to capital of the Company by the Major Stockholders on or
prior to the Closing Date in accordance with Section 5.10(c).
(vi) "Merger Consideration" shall be equal to (A) 0.1175
times (B) the Aggregate Parent Common Number.
(vii) The "Aggregate Parent Common Number" shall mean
the sum of (1) the total number of shares of Parent Common Stock that
are issued and outstanding on the date hereof; (2) the total number of
shares of Parent Common Stock that are issuable upon the conversion of
any shares of Parent Preferred Stock issued and outstanding on the date
hereof; (3) the total number of shares of Parent Common Stock that are
issuable upon the conversion of any shares of Parent Series C Preferred
Stock issued to PPD in connection with the closing of the Series C
Investment (as defined in Section 6.14) and issued or to be issued to
Alliance Capital Partners; (4) the total number of shares of Parent
Common Stock that are issuable upon the exercise in full of all warrants
to acquire shares of Parent Common Stock that are outstanding on the
date hereof; (5) the total number of shares of Parent Common Stock that
are issuable upon conversion of any shares of Parent Preferred Stock
that are issuable upon the exercise in full of all warrants to acquire
shares of Parent Preferred Stock that are outstanding on the date
hereof; (6) the total number of shares of Down Round Stock that are
issued and outstanding immediately prior to the Effective Time or
pursuant to a contractual agreement under which Parent is bound, as of
the Effective Time, to issue Down Round Stock subsequent to the
Effective Time; and (7) the total number of shares of capital stock of
Parent that are issuable upon the conversion or exercise in full of all
convertible securities or options (whether vested or unvested), warrants
or other rights to acquire capital stock of Parent that are outstanding
on the Initial Series C Closing Date other than convertible securities
or warrants referred to in clauses "(2)," "(3)," "(4)," "(5)" or "(6)"
of this sentence; provided, however, that notwithstanding anything to
the contrary contained in this paragraph, no shares, warrants, options
or rights shall be counted more than one time in calculating the
"Aggregate Parent Common Number."
(viii) The "Aggregate Company Common Number" shall mean
the sum of (1) the total number of shares of Company Common Stock that
are issued and outstanding immediately prior to the Effective Time; (2)
the total number of shares of Company Common Stock that are issuable
upon the conversion of any shares of
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Company Series A Preferred Stock issued and outstanding immediately
prior to the Effective Time; and (3) the total number of shares of
Company Capital Stock that are issuable upon the conversion or exercise
in full of all convertible securities or options, warrants or other
rights to acquire capital stock of the Company that are outstanding
immediately prior to the Effective Time other than convertible
securities or warrants referred to in clause "(2)" of this sentence;
provided, however, that notwithstanding anything to the contrary
contained in this paragraph, no shares, warrants, options or rights
shall be counted more than one time in calculating the "Aggregate
Company Common Number."
(ix) "Down Round Stock" shall mean all shares of Parent
Common Stock issued or deemed to be issued by Parent pursuant to this
Section 1.5(b)(v) in a Subsequent Equity Financing (as defined in
Section 1.5(b)(ix)) after the date hereof for an Effective Price less
than $14.27 other than (A) shares of Parent Common Stock issued upon
conversion of Parent Preferred Stock; (B) shares of Parent Common Stock
issued pursuant to the bona fide acquisition of (i) another entity by
Parent by merger, purchase of substantially all of the assets of such
entity, or other reorganization, or (ii) technology, software, patents
or other intellectual property by license or purchase; (C) up to
4,500,000 shares of Parent Common Stock (or related options) issued to
employees, officers, directors, consultants, or other persons performing
services for Parent (including, but not by way of limitation,
distributors and sales representatives) pursuant to any stock offering,
plan, or arrangement approved by Parent's board of directors; (D) shares
of capital stock issued to financial institutions in connection with the
extension of credit to Parent or in connection with the lease of
equipment, up to a maximum of one percent (1%) of Parent Common Stock
issued and outstanding immediately prior to the date of this Agreement,
and in both cases for other than equity financing purposes as approved
by Parent's board of directors; or (E) shares of capital stock issued in
connection with any stock split, stock dividend or recapitalization by
Parent. In the event Parent at any time or from time to time after the
date of this Agreement issues any Options or Convertible Securities or
shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the
instrument relating thereto assuming the satisfaction of any conditions
to exercisability, including, without limitation, the passage of time
and without regard to any provisions contained therein for a subsequent
adjustment of such number) of Parent Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be shares of Down Round Stock issued as
of the time of such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided that
with respect to a series of preferred stock of Parent, Down Round Stock
shall not be deemed to have been issued unless the consideration per
share of such Down Round Stock would be less than the conversion price
of such series in effect on the date of and immediately prior to such
issue, or such record date, as the case may be, and provided further
that in any such case in which shares of Down Round Stock are deemed to
be issued:
(1) no further adjustment in the Aggregate Parent Common Number
shall be made upon the subsequent issue of Convertible Securities or shares of
Parent
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Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease in
the consideration payable to Parent, or in the number of shares of Parent Common
Stock issuable, upon the exercise, conversion or exchange thereof, the Exchange
Ratio shall be computed so as to reflect any such increase or decrease that has
occurred on or prior to the Effective Time insofar as it affects such Options or
the rights of conversion or exchange under such Convertible Securities;
(3) in the event of the expiration or termination of any such
Options or any rights of conversion or exchange under such Convertible
Securities on or prior to the Effective Time, the Exchange Ratio shall be
computed as if:
a. in the case of Convertible Securities or Options for
Parent Common Stock, the only shares of Down Round Stock issued
were shares of Parent Common Stock, if any, actually issued upon
the exercise of such Options or the conversion or exchange of
such Convertible Securities and the consideration received
therefor was the consideration actually received by Parent for
the issue of all such Options, whether or not exercised, plus
the consideration actually received by Parent upon such
exercise, or for the issue of all such Convertible Securities
which were actually converted or exchanged, plus the additional
consideration, if any, actually received by Parent upon such
conversion or exchange, and
b. in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued upon
the exercise thereof were issued at the time of issue of such
Options, and the consideration received by Parent for the shares
of Down Round Stock deemed to have been then issued was the
consideration actually received by Parent for the issue of all
such Options, whether or not exercised, plus the consideration
deemed to have been received by Parent upon the issue of the
Convertible Securities with respect to which such Options were
actually exercised;
(x) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Parent Common Stock) or other
securities convertible into or exchangeable for Parent Common Stock.
(xi) The "Effective Price" of a share of Down Round
Stock shall mean the quotient obtained by dividing the total number of
shares of Down Round Stock issued or sold, or deemed to have been issued
or sold by Parent under Section 1.5(b)(v), into the dollar value of the
aggregate consideration received, or deemed to have been received by
Parent, for such shares of Down Round Stock.
(xii) "Options" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire either Parent Common
Stock or Convertible Securities.
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(xiii) A "Subsequent Equity Financing" shall mean the
sale by Parent, prior to the Effective Time, of Down Round Stock.
(c) If any shares of Company Capital Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company, then
the shares of Parent Capital Stock issued in exchange for such shares of Company
Capital Stock will also be unvested and subject to the same repurchase option,
risk of forfeiture or other condition, and the certificates representing such
shares of Parent Capital Stock may accordingly be marked with appropriate
legends.
(d) Fifteen percent (15%) of the shares of Parent Capital Stock
otherwise issuable in the Merger to the Major Stockholders (without taking into
account any deductions in respect of payment for Excess Transaction Expenses)
shall be delivered into escrow and held as specified in Section 1.8. In
addition, to the extent a Major Stockholder has not paid such Major
Stockholder's pro rata portion of the Excess Transaction Expenses, an additional
number of shares of Parent Series D Preferred Stock equal to the quotient
obtained by dividing (1) such Major Stockholder's pro rata portion of such
Excess Transaction Expenses by (2) $14.27 (rounded down to the nearest whole
number of shares) shall be deducted from the number of shares of Parent Series D
Preferred Stock otherwise issuable to such Major Stockholder.
(e) If, between the date of this Agreement and the Effective
Time, the outstanding shares of Company Capital Stock or Parent Capital Stock
are changed into a different number or class of shares by reason of any stock
split, division or subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or other similar
transaction, then the Exchange Ratio shall be appropriately adjusted.
1.6 STOCK OPTIONS. At the Effective Time, each option to purchase shares
of Company Capital Stock that is then outstanding, whether vested or unvested (a
"Company Option"), shall be assumed by Parent in accordance with the terms (as
in effect as of the date of this Agreement) of the Company's 1999 Equity
Incentive Plan (the "Stock Plan") and the stock option agreement by which such
Company Option is evidenced. All rights with respect to Company Common Stock
under outstanding Company Options shall thereupon be converted into rights with
respect to Parent Common Stock. Accordingly, from and after the Effective Time,
(i) each Company Option assumed by Parent may be exercised solely for shares of
Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to
each such assumed Company Option shall be equal to the number of shares of
Company Common Stock that were subject to such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounded down to the
nearest whole number of shares of Parent Common Stock, (iii) the per share
exercise price for the Parent Common Stock issuable upon exercise of each such
assumed Company Option shall be determined by dividing the exercise price per
share of Company Common Stock subject to such Company Option, as in effect
immediately prior to the Effective Time, by the Exchange Ratio, and rounding the
resulting exercise price up to the nearest whole cent and (iv) all restrictions
on the exercise of each such assumed Company Option shall continue in full force
and effect, and the term, exercisability, vesting schedule and other provisions
of such Company Option shall otherwise remain unchanged and shall continue to
have, and be subject to, the same terms and conditions as set forth in the Stock
Plan and/or
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stock option agreement by which such Company Option is evidenced immediately
prior to the Effective Time; provided, however, that each such assumed Company
Option shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction effected by Parent after the
Effective Time. The Company and Parent shall take all action that may be
necessary to effectuate the provisions of this Section 1.6. Following the
Closing, Parent will send to each holder of an assumed Company Option a written
notice setting forth (i) the number of shares of Parent Common Stock subject to
such assumed Company Option, and (ii) the exercise price per share of Parent
Common Stock issuable upon exercise of such assumed Company Option. Parent shall
take all necessary corporate action to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of Company Options
assumed in accordance with this Section 1.6. Notwithstanding anything to the
contrary contained in this Section 1.6, in lieu of assuming outstanding Company
Options in accordance with this Section 1.6 Parent may, at its election, cause
such outstanding Company Options to be replaced by issuing reasonably equivalent
replacement stock options in substitution therefor.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of Company Capital Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as stockholders of the Company, and the stock transfer books of the
Company shall be closed with respect to all shares of such capital stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of Company Capital Stock shall be made on such stock transfer books
after the Effective Time. If, after the Effective Time, a valid certificate
previously representing any of such shares of Company Capital Stock (a "Company
Stock Certificate") is presented to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.8.
1.8 EXCHANGE OF CERTIFICATES; ESCROW SHARES.
(a) At or prior to the Effective Time, Parent shall reserve for
exchange in accordance with this Section 1, (i) the aggregate number of shares
of Parent Capital Stock issuable pursuant to Section 1.5 in exchange for
outstanding shares of Company Capital Stock and (ii) cash for fractional shares
in the amount described in Section 1.8(c). At the Closing, each Company
stockholder that does not perfect its appraisal rights and is otherwise entitled
to receive shares of Parent Capital Stock pursuant to Section 1.5 (a "Merger
Stockholder") shall surrender to Parent all certificates representing shares of
Company Capital Stock (properly endorsed for transfer). At or as soon as
practicable after the Effective Time, Parent shall (i) deliver to each Merger
Stockholder that is not a Major Stockholder certificates representing one
hundred percent (100%) of the number of whole shares of Parent Common Stock
and/or Parent Series D Preferred Stock, as the case may be, that such Merger
Stockholder has the right to receive pursuant to the provisions of Section 1.5
(ii) deliver to each Major Stockholder certificates representing eighty-five
percent (85%) of the number of whole shares of Parent Common Stock and/or Parent
Series D Preferred Stock, as the case may be, that such Merger Stockholder has
the right to receive pursuant to the provisions of Section 1.5 and (ii) deliver
to the escrow agent under the Escrow Agreement in the form of EXHIBIT C hereto
(the "Escrow Agreement"), on behalf and in the name of each Major Stockholder,
certificates representing fifteen percent (15%) of the number of whole shares of
Parent Common Stock and/or Parent Series D Preferred Stock,
7.
15
as the case may be, that such Major Stockholder has the right to receive
pursuant to the provisions of Section 1.5 (the "Escrow Shares"). If any Company
Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Capital Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and
indemnity agreement against any claim that may be made against Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(b) No dividends or other distributions declared or made with
respect to Parent Capital Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock or Parent Series D Preferred Stock
represented thereby, and no cash payment in lieu of any fractional share shall
be paid to any such holder, until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.8 or delivers the affidavit and
indemnity agreement referred to in Section 1.8(a) (at which time such holder
shall be entitled receive all such dividends and distributions and such cash
payment).
(c) No fractional shares of Parent Capital Stock shall be issued
in connection with the Merger, and no certificates for any such fractional
shares shall be issued. In lieu of such fractional shares, any holder of Company
Capital Stock who would otherwise be entitled to receive a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) and/or a fraction of a share of Parent Series D
Preferred Stock (after aggregating all fractional shares of Parent Series D
Preferred Stock issuable to such holder) shall, upon surrender of such holder's
Company Stock Certificate(s) or affidavit and indemnity agreement referred to in
Section 1.8(a), as the case may be, be paid in cash the dollar amount (rounded
to the nearest whole cent), without interest, determined by multiplying such
fraction by (i) $2.05, with respect to a fraction of a share of Parent Common
Stock, and (b) $14.27, with respect to a fraction of a share of Parent Series D
Preferred Stock.
(d) The shares of Parent Capital Stock to be issued in the
Merger shall be characterized as "restricted securities" for purposes of Rule
144 under the Securities Act, and each certificate representing any such shares
shall, until such time that the shares are not so restricted under the
Securities Act, bear a legend identical or similar in effect to the following
legend (together with any other legend or legends required by applicable state
securities laws or otherwise, if any):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR
UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT IS AVAILABLE."
(e) Parent and the Surviving Corporation shall be entitled to
deduct and withhold from any consideration payable or otherwise deliverable to
any holder or former holder
8.
16
of Company Capital Stock pursuant to this Agreement such amounts as Parent or
the Surviving Corporation may be required to deduct or withhold therefrom under
the Code or under any provision of state, local or foreign tax law. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable
to any holder or former holder of Company Capital Stock for any shares of Parent
Capital Stock (or dividends or distributions with respect thereto), or for any
cash amounts, delivered to any public official pursuant to any applicable
abandoned property, escheat or similar law.
(g) The Escrow Shares shall be maintained in an escrow fund (the
"Escrow Fund") for purposes of satisfying claims brought pursuant to Section 9
and for the period of time set forth in the Escrow Agreement.
1.9 APPRAISAL RIGHTS.
(a) Notwithstanding anything to the contrary contained in this
Agreement, any shares of Company Capital Stock for which, as of the Effective
Time, the holder thereof has demanded an appraisal of their value in accordance
with Section 262 of the Delaware General Corporation Law ("Dissenting Shares")
shall not be converted into or represent the right to receive Parent Capital
Stock in accordance with Section 1.5, and the holder or holders of such shares
shall be entitled only to such rights as may be granted to such holder or
holders in Section 262 of the Delaware General Corporation Law; provided,
however, that if the status of any such shares as Dissenting Shares shall not be
perfected in accordance with Section 262 of the Delaware General Corporation
Law, or if any such shares shall lose their status as Dissenting Shares then, as
of the later of the Effective Time or the time of the failure to perfect such
status or the loss of such status, such shares shall automatically be converted
into and shall represent only the right to receive (upon the surrender of the
certificate or certificates representing such shares) Parent Capital Stock in
accordance with Section 1.5.
(b) The Company shall give Parent (i) prompt notice of any
written demand received by the Company at or prior to any meeting of the
Company's stockholders pursuant to Section 5.2 hereof to require the Company to
purchase Dissenting Shares pursuant to Section 262 of the Delaware General
Corporation Law and of any other demand, notice or instrument delivered to the
Company prior to the Effective Time pursuant to the Delaware General Corporation
Law, and (ii) the opportunity to participate in all negotiations and proceedings
with respect to any such demand, notice or instrument. The Company shall not
make any payment or settlement offer prior to the Effective Time with respect to
any such demand unless Parent shall have consented in writing to such payment or
settlement offer.
1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
9.
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1.11 ACCOUNTING TREATMENT. For accounting purposes, the Merger is
intended to be treated as a "purchase."
1.12 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation or Parent
with full right, title and possession of and to all rights and property of
Merger Sub and the Company, the officers and directors of the Surviving
Corporation and Parent shall be fully authorized (in the name of Merger Sub, in
the name of the Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Schedule, which
shall be arranged in paragraphs corresponding to the numbered and lettered
paragraphs contained in this Section 2, the Company represents and warrants, to
and for the benefit of the Parent Indemnitees, as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the Entities
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other Entities identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity, other than the Entities identified in Part
2.1(a)(ii) of the Company Disclosure Schedule. (The Company and each of its
Subsidiaries are referred to collectively in this Agreement as the "Acquired
Corporations.") Except as set forth in Part 2.1(a)(iii) of the Company
Disclosure Schedule, none of the Acquired Corporations has agreed or is
obligated to make, or is bound by any Contract under which it may become
obligated to make, any future investment in or capital contribution to any other
Entity. Except as set forth in Part 2.1(a)(iv) of the Company Disclosure
Schedule, none of the Acquired Corporations has, at any time, been a general
partner of, or has otherwise been liable for any of the debts or other
obligations of, any general partnership, limited partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
and where the failure to be so qualified would reasonably be expected to have a
Material Adverse Effect on such Acquired Corporation. Part 2.1(c) of the Company
Disclosure Schedule accurately sets forth for each of the respective Acquired
Corporations each jurisdiction where such qualification is required.
(d) Except as set forth in Part 2.1(d) of the Company Disclosure
Schedule, the Company has not conducted any business under or otherwise used,
for any purpose or in any
10.
18
jurisdiction, any fictitious name, assumed name, trade name or other name, other
than the name "PPGx, Inc."
(e) Part 2.1(e) of the Company Disclosure Schedule accurately
sets forth for each of the respective Acquired Corporations: (i) the names of
the members of the board of directors, (ii) the names of the members of each
committee of the board of directors, and (iii) the names and titles of each of
the officers.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to Parent accurate and complete copies of: (1) the certificate of
incorporation, bylaws and other charter or similar organizational documents of
the respective Acquired Corporations, including all amendments thereto; (2)
stock records of each of the Acquired Corporations; and (3) except as set forth
in Part 2.2 of the Company Disclosure Schedule, the minutes and other records of
the meetings and other proceedings (including any actions taken by written
consent or otherwise without a meeting) of the stockholders, the board of
directors and all committees of the board of directors of each of the Acquired
Corporations. The stockholders and board of directors of the Company have
ratified, confirmed and approved all prior lawful action taken on behalf of the
Company by the Company's board of directors (in the case of ratification,
confirmation and approval by the Company's stockholders) and the Company's
officers (in the case of ratification, confirmation and approval by the
Company's board of directors). There has not been any violation of any of the
provisions of the certificate of incorporation, bylaws or other charter or
similar organizational documents of any of the Acquired Corporations, and none
of the Acquired Corporations has taken any action that is inconsistent in any
material respect with any resolution adopted by its stockholders, board of
directors or any committee of its board of directors. The books of account,
stock records, minute books and other records of each of the Acquired
Corporations are accurate, up-to-date and complete in all material respects, and
have been maintained in accordance with prudent business practices.
2.3 CAPITALIZATION, ETC.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of: (i) 15,000,000 shares of Company Common Stock,
of which 29,000 shares have been issued and are outstanding; and (ii) 10,000,000
shares of preferred stock (par value $0.001 per share), all of which have been
designated "Series A Preferred Stock," of which 10,000,000 shares have been
issued and are outstanding as of the date of this Agreement. Each outstanding
share of preferred stock is convertible into one share of Company Common Stock.
All of the outstanding shares of Company Common Stock and Company Series A
Preferred Stock have been duly authorized and validly issued, and are fully paid
and non-assessable. As of the date of this Agreement, there are no shares of
Company Capital Stock held by any of the other Acquired Corporations. Part
2.3(a) of the Company Disclosure Schedule provides an accurate and complete
description of the terms of each repurchase option which is held by the Company
and to which any of such shares is subject. Except as set forth in Part 2.3(a)
of the Company Disclosure Schedule, there is no Acquired Corporation Contract
relating to the voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or granting any option
or similar right with respect to), any shares of Company Capital Stock. None of
the Acquired Corporations is under any obligation, or is bound by any
11.
19
Contract pursuant to which it may become obligated, to repurchase, redeem or
otherwise acquire any outstanding shares of Company Capital Stock.
(b) The Company has reserved 1,775,000 shares of Company Common
Stock for issuance under the Stock Plan, of which options to purchase 1,405,900
shares are outstanding as of the date of this Agreement. Part 2.3(b) of the
Company Disclosure Schedule accurately sets forth, with respect to each Company
Option that is outstanding as of the date of this Agreement: (i) the name of the
holder of such Company Option; (ii) the total number of shares of Company Common
Stock that are subject to such Company Option and the number of shares of
Company Common Stock with respect to which such Company Option is immediately
exercisable; (iii) the date on which such Company Option was granted and the
term of such Company Option; (iv) the vesting schedule for such Company Option;
(v) the exercise price per share of Company Common Stock purchasable under such
Company Option; and (vi) whether such Company Option has been designated an
"incentive stock option" as defined in Section 422 of the Code.
(c) Except as set forth in Part 2.3(b) or Part 2.3(c) of the
Company Disclosure Schedule, there is no: (i) outstanding subscription, option,
call, warrant or right (whether or not currently exercisable) to acquire any
shares of the capital stock or other securities of any of the Acquired
Corporations; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of any of the Acquired Corporations; (iii) Contract under which
any of the Acquired Corporations is or may become obligated to sell or otherwise
issue any shares of its capital stock or any other securities; or (iv) to the
Knowledge of the Company, condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of capital stock or
other securities of the Acquired Corporations.
(d) All outstanding shares of Company Common Stock and Company
Series A Preferred Stock, all outstanding Company Options and all outstanding
shares of capital stock of each Subsidiary of the Company have been issued and
granted in compliance with (i) all applicable securities laws and other
applicable Legal Requirements, and (ii) all requirements set forth in applicable
Contracts.
(e) Except as set forth in Part 2.3(e) of the Company Disclosure
Schedule, the Company has never repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities of the Company. All securities
so reacquired by the Company were reacquired in compliance with (i) the
applicable provisions of the Delaware General Corporation Law and all other
applicable Legal Requirements, and (ii) all requirements set forth in applicable
restricted stock purchase agreements and other applicable Contracts.
(f) Except as set forth in Part 2.3(f) of the Company Disclosure
Schedule, all of the outstanding shares of capital stock or other ownership
interests of the Entities identified in Part 2.1(a) of the Company Disclosure
Schedule that have been issued to the Company have been duly authorized and are
validly issued, are fully paid and nonassessable and are owned beneficially and
of record by the Company, free and clear of any Encumbrances.
12.
20
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Acquired Corporation Financial
Statements"):
(i) The audited consolidated balance sheets of the
Acquired Corporations as of December 31, 1999, and the related audited
consolidated income statements, consolidated statements of stockholders' equity
and consolidated statements of cash flows for the Acquired Corporations for the
year then ended, together with the notes thereto and the unqualified report and
opinion of Ernst & Young relating thereto; and
(ii) the unaudited consolidated balance sheet of the
Acquired Corporations as of September 30, 2000 (the "Unaudited Interim Balance
Sheet"), and the related unaudited consolidated income statement of the Acquired
Corporations for the nine months then ended.
(b) The Acquired Corporation Financial Statements are accurate
and complete in all material respects and present fairly the consolidated
financial position of the Acquired Corporations as of the respective dates
thereof and the consolidated results of operations and (in the case of the
financial statements referred to in Section 2.4(a)(i)) consolidated cash flows
of the Acquired Corporations for the periods covered thereby. The Acquired
Corporation Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except that the financial statements referred to in Section
2.4(a)(ii) do not contain footnotes and are subject to normal and recurring
year-end audit adjustments, which will not, individually or in the aggregate, be
material in magnitude).
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Company
Disclosure Schedule, since September 30, 2000:
(a) there has not been any material adverse change in the
business, condition, assets, liabilities, operations or financial
performance of the Acquired Corporations taken as a whole, and, to the
Knowledge of the Company, no event has occurred that will, or could
reasonably be expected to, have a Material Adverse Effect on the
Acquired Corporations;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of the assets of any
of the Acquired Corporations (whether or not covered by insurance);
(c) none of the Acquired Corporations has (i) declared, accrued,
set aside or paid any dividend or made any other distribution in respect
of any shares of capital stock, or (ii) repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or
authorized the issuance of (i) any capital stock or other security
(except for Company Common Stock issued upon the exercise of outstanding
Company Options), (ii) any option or right to acquire any capital stock
or any other security (except for Company Options described in
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21
Part 2.3(b) of the Company Disclosure Schedule), or (iii) any instrument
convertible into or exchangeable for any capital stock or other
security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision
of the Stock Plan, (ii) any provision of any agreement evidencing any
outstanding Company Option, or (iii) any restricted stock purchase
agreement;
(f) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of
any of the Acquired Corporations, and none of the Acquired Corporations
has effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction;
(g) none of the Acquired Corporations has formed any Subsidiary
or acquired any equity interest or other interest in any other Entity;
(h) none of the Acquired Corporations has made any capital
expenditure which, when added to all other capital expenditures made on
behalf of the Acquired Corporations since September 30, 2000, exceeds
$500,000;
(i) none of the Acquired Corporations has amended or prematurely
terminated, or waived any material right or remedy under, any Material
Contract;
(j) none of the Acquired Corporations has (i) acquired, leased
or licensed any right or other asset from any other Person, (ii) sold or
otherwise disposed of, or leased or licensed, any right or other asset
to any other Person, or (iii) waived or relinquished any right, except
for immaterial rights or other immaterial assets acquired, leased,
licensed or disposed of in the ordinary course of business and
consistent with past practices;
(k) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to,
any account receivable or other indebtedness;
(l) none of the Acquired Corporations has made any pledge of any
of its assets or otherwise permitted any of its assets to become subject
to any Encumbrance, except for pledges of immaterial assets made in the
ordinary course of business and consistent with past practices;
(m) none of the Acquired Corporations has (i) lent money to any
Person (other than pursuant to routine travel advances made to employees
in the ordinary course of business), or (ii) incurred or guaranteed any
indebtedness for borrowed money;
(n) none of the Acquired Corporations has, outside the ordinary
course of business or inconsistent with past practices, (i) established
or adopted any Employee Benefit Plan, (ii) paid any bonus or made any
profit-sharing or similar payment to, or increased the amount of the
wages, salary, commissions, fringe benefits or other
14.
22
compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(o) none of the Acquired Corporations has changed any of its
methods of accounting or accounting practices in any respect;
(p) none of the Acquired Corporations has made any material Tax
election;
(q) none of the Acquired Corporations has commenced or settled
any Legal Proceeding;
(r) none of the Acquired Corporations has entered into any
material transaction or taken any other material action outside the
ordinary course of business or inconsistent with past practices; and
(s) none of the Acquired Corporations has agreed or committed to
take any of the actions referred to in clauses "(c)" through "(r)"
above.
2.6 TITLE TO ASSETS. The Acquired Corporations own, and have good and
marketable title to, all of the assets purported to be owned by them, including:
(i) all assets reflected on the Unaudited Interim Balance Sheet; (ii) all of the
rights of the Acquired Corporations under the Contracts identified in Part 2.10
of the Company Disclosure Schedule; and (iii) all other assets reflected in the
books and records of the Acquired Corporations as being owned by the Acquired
Corporations. Except as set forth in Part 2.6 of the Company Disclosure
Schedule, all of such assets are owned by the Acquired Corporations free and
clear of any liens or other Encumbrances, except for (x) any lien for current
taxes not yet due and payable, (y) minor liens that have arisen in the ordinary
course of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of any of the Acquired Corporations and (z) Permitted Encumbrances.
2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Company Disclosure Schedule accurately
sets forth, with respect to each account or credit line maintained by or for the
benefit of each Acquired Corporation at any bank or financial institution:
(i) the name and location of the institution at which
such account or credit line is maintained;
(ii) the name in which such account or credit line is
maintained and the account number of such account or credit line;
(iii) a description of such account or credit line and
the purpose for which such account or credit line is used;
(iv) the current balance in such account or amount owed
under such credit line;
15.
23
(v) the rate of interest being earned on the funds in
such account or charged under such credit line; and
(vi) the names of all individuals authorized to draw on
or make withdrawals from such account or to borrow against such credit line.
(b) Except as set forth in Part 2.7(b)(i) of the Company
Disclosure Schedule, all existing accounts receivable of the Acquired
Corporations (including those accounts receivable reflected on the Unaudited
Interim Balance Sheet that have not yet been collected and those accounts
receivable that have arisen since September 30, 2000 and have not yet been
collected) represent valid obligations of customers of the Acquired Corporations
arising from bona fide transactions entered into in the ordinary course of
business. Part 2.7(b)(ii) of the Company Disclosure Schedule accurately
identifies, and provides an accurate and complete breakdown of the revenues
received from, each customer or other Person that accounted for (i) more than
$175,000 of the consolidated gross revenues of the Acquired Corporations in the
fiscal year ended December 31, 1999, or (ii) more than $175,000 of the
consolidated gross revenues of the Acquired Corporations in the nine-month
period ended September 30, 2000 (each, a "Material Customer")(it being
understood that for purposes of clauses "(i)" and "(ii)" of this sentence, a
"Material Customer" of an Acquired Corporation includes any Person to which PPD
provides "Designated Services" or "Designated Products" (as such terms are
defined in the Distributor Agreement dated February 1, 2000 between the Company
and PPD (the "Distributor Agreement")) in accordance with the terms of the
Distributor Agreement). Except as set forth in Part 2.7(c)(iii) of the Company
Disclosure Schedule, the Company has not received any notice or other
communication (in writing or otherwise), and, to the Knowledge of the Company,
has not received any other information, indicating that (a) any Material
Customer is likely to cease dealing with the Company or (b) any Material
Customer is dissatisfied in any material respect with the operation of any
product, system or program currently maintained, sold or licensed by any of the
Acquired Corporations or with any services performed by any of the Acquired
Corporations since January 1, 1999.
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets
owned by or leased to the Acquired Corporations are, in the reasonable judgment
of the Acquired Corporations, adequate for the uses to which they are being put,
are in good condition and repair (ordinary wear and tear excepted) and are
adequate for the conduct of the business of the Acquired Corporations in the
manner in which such businesses are currently being conducted.
(b) None of the Acquired Corporations own any real property or
any interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.8 of the Company Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Company Disclosure Schedule sets
forth, with respect to each Acquired Corporation Proprietary Asset registered
with any Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such
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24
Acquired Corporation Proprietary Asset, and (ii) the names of the jurisdictions
covered by the applicable registration or application. Part 2.9(a)(ii) of the
Company Disclosure Schedule identifies and provides a brief description of each
Proprietary Asset (other than trade secrets, know-how or customer list) owned by
any of the Acquired Corporations. Part 2.9(a)(iii) of the Company Disclosure
Schedule identifies and provides a brief description of, and identifies any
ongoing royalty or payment obligations in excess of $10,000 annually with
respect to, each Proprietary Asset that is licensed or otherwise made available
to any of the Acquired Corporations by any Person and is material to the
business of the Acquired Corporations (except for any Proprietary Asset that is
licensed to any Acquired Corporation under any third party software license
generally available to the public), and identifies the Contract under which such
Proprietary Asset is being licensed or otherwise made available to such Acquired
Corporation. Except as set forth in Part 2.9(a)(iv) of the Company Disclosure
Schedule, each of the Acquired Corporations has good and valid title to, and
exclusive ownership of or exclusive license to use, all of their respective
Proprietary Assets identified or required to be identified in Parts 2.9(a)(i)
and 2.9(a)(ii) of the Company Disclosure Schedule that are material to the
conduct of the business of the Acquired Corporations, free and clear of all
Encumbrances. All of the rights of the Acquired Corporations in all of such
Proprietary Assets are freely transferable, and each of the Acquired
Corporations has a valid right to use, license and otherwise exploit all
Proprietary Assets identified in Part 2.9(a)(iii) of the Company Disclosure
Schedule. Except as set forth in Part 2.9(a)(v) of the Company Disclosure
Schedule, none of the Acquired Corporations has developed jointly with any other
Person any Acquired Corporation Proprietary Asset with respect to which such
other Person has any rights. Except as set forth in Part 2.9(a)(vi) of the
Company Disclosure Schedule, there is no Acquired Corporation Contract pursuant
to which any Person has any right (whether or not currently exercisable) to use,
license or otherwise exploit any Acquired Corporation Proprietary Asset or any
Acquired Corporation Proprietary Asset that may be developed in the future.
(b) Except as set forth in Part 2.9(b)(i) of the Company
Disclosure Schedule, all such Proprietary Assets have been duly registered with,
filed with 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 in the Company Disclosure Schedule, and have been
properly maintained and renewed in accordance with all applicable provisions of
law and administrative regulations of the United States and each such
jurisdiction and, except as stated in Part 2.9(b)(ii) of the Company Disclosure
Schedule, all of the rights and Proprietary Assets of the Acquired Corporations
thereunder are freely assignable without the consent of any Person.
(c) Part 2.9(c)(i) of the Company Disclosure Schedule sets forth
all licenses or other Contracts under which the Acquired Corporations are
granted rights in Proprietary Assets. Except as set forth in Part 2.9(c)(ii),
all such licenses or other Contracts are in full force and effect, there is no
material default by any Acquired Corporation or, to the Knowledge of the
Company, by any other party thereto, and, except as set forth in Part
2.9(c)(iii), all of the rights of the Acquired Corporations thereunder are
freely assignable without the consent of any Person. Except as set forth in Part
2.9(c)(iv), to the Knowledge of the Company, the licensors under said licenses
and other Contracts have and had all requisite power and authority to grant the
rights purported to be conferred thereby. True and complete copies of all such
licenses or other Contracts, and any amendments thereto, have been provided to
Parent.
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(d) Each of the Acquired Corporations has taken reasonable
measures and precautions to protect and maintain the confidentiality, secrecy
and value of all material Acquired Corporation Proprietary Assets (except
Acquired Corporation Proprietary Assets whose value would be unimpaired by
disclosure). Without limiting the generality of the foregoing, except as set
forth in Part 2.9(d) of the Company Disclosure Schedule, (i) each current or
former employee of any Acquired Corporation who is or was involved in, or who
has contributed to, the creation or development of any material Acquired
Corporation Proprietary Asset has executed and delivered to such Acquired
Corporation an agreement (containing no exceptions to or exclusions from the
scope of its coverage) that is substantially identical to the form of the
Company's Employment, Confidential Information and Invention Assignment
Agreement previously delivered by the Company to Parent, and (ii) each current
and former consultant and independent contractor to any Acquired Corporation who
is or was involved in, or who has contributed to, the creation or development of
any material Acquired Corporation Proprietary Asset has executed and delivered
to the Company an agreement (containing no material exceptions to or exclusions
from the scope of its coverage) that is substantially identical to the form of
the Company's Employment, Confidential Information and Invention Assignment
Agreement previously delivered to Parent. No current or former employee,
officer, director, stockholder, consultant or independent contractor has any
right, claim or interest in or with respect to any material Acquired Corporation
Proprietary Asset.
(e) To the Knowledge of the Company: (i) all patents,
trademarks, service marks and copyrights held by any of the Acquired
Corporations are valid, enforceable and subsisting; (ii) none of the Acquired
Corporation Proprietary Assets and no Proprietary Asset that is currently being
developed by any of the Acquired Corporations (either by itself or with any
other Person) misappropriates any Proprietary Asset owned or used by any other
Person, and the use of Acquired Corporation Proprietary Assets in their intended
or contemplated manner does not require a license under or other rights to use
any Proprietary Asset owned by any other Person; (iii) none of the products,
formula, compositions of matter, inventions, designs, technology, proprietary
rights or other intellectual property rights or intangible assets that is or has
been designed, created, developed, assembled, manufactured or sold by any of the
Acquired Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person, and
none of such products has at any time infringed, misappropriated or made any
unlawful or unauthorized use of any Proprietary Asset owned or used by any other
Person; (iv) except as set forth in Part 2.9(e) of the Company Disclosure
Schedule, none of the Acquired Corporations has received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; and (v) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of any
material Acquired Corporation Proprietary Asset.
(f) To the Knowledge of the Company, the Acquired Corporation
Proprietary Assets constitute all the Proprietary Assets necessary to enable the
Acquired Corporations to conduct their business in the manner in which such
business is presently being conducted. Except as set forth in Part 2.9(f) of the
Company Disclosure Schedule, none of the Acquired Corporations has (i) licensed
any of the Acquired Corporation Proprietary Assets to any Person on an exclusive
basis, or (ii) entered into any covenant not to compete or Contract limiting or
purporting to limit the ability of any Acquired Corporation to exploit fully any
material Acquired
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Corporation Proprietary Assets or to transact business in any market or
geographical area or with any Person.
(g) Notwithstanding the generality of anything stated in this
Section 2.9, the Company owns (and immediately after the Effective Time, the
Surviving Corporation shall own), subject to Third-Party Rights, the entire
right, title and interest in and to the DNA Sample Library and any information,
including but not limited to, genotypic and phenotypic information, derived or
developed by the Company from the DNA Sample Library. All right, title and
interest owned by the Company in and to the DNA Sample Library and information
derived or developed by the Company from the DNA Sample Library is freely
transferable, subject only to the Third Party Rights. For purposes of this
Agreement: (1) the "DNA Sample Library" means the library of DNA specimens
identified in Part 2.9(g) of the Company Disclosure Schedule; and (2)
"Third-Party Rights" means those rights retained by Persons other than the
Company and/or the Major Stockholders pursuant to those Contracts identified in
Part 2.9(g) of the Company Disclosure Schedule.
2.10 CONTRACTS.
(a) Part 2.10 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract that constitutes a "Material Contract" as of the
date of this Agreement. For purposes of this Agreement, each of the following
Contracts (to the extent that any of the Acquired Corporations has (or may have)
any liability or obligation thereunder or with respect thereto after the date of
this Agreement) shall be deemed to constitute a "Material Contract":
(i) each Contract relating to the employment of, or the
performance of services by, any employee or consultant (other than any offer
letter provided to any employee of any of the Acquired Corporations which
provides for "at will" employment);
(ii) each Contract pursuant to which any of the Acquired
Corporations is or may become obligated to make any severance, termination or
similar payment to any current or former employee or director; and any Contract
pursuant to which any of the Acquired Corporations is or may become obligated to
make any bonus or similar payment (other than payments in respect of salary or
commissions) in excess of $15,000 to any current or former employee or director;
(iii) each Contract with a face value of $25,000 (A)
with any customer of any of the Acquired Corporations except for standard
purchase orders; or (B) with respect to the distribution or marketing of any
product of any of the Acquired Corporations;
(iv) each Contract relating to the acquisition,
transfer, development, sharing or license of any Acquired Corporation
Proprietary Asset (except for any Contract pursuant to which any Proprietary
Asset is licensed by any of the Acquired Corporations to any Person (other than
a Major Stockholder) on a non-exclusive basis);
(v) each Contract which provides for indemnification of
any officer, director, employee or agent;
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(vi) each Contract creating or relating to any
partnership or joint venture or any sharing of revenues, profits, losses, costs
or liabilities;
(vii) each Contract relating to the purchase or sale of
any product or other asset by or to, or the performance of any services by or
for, any Related Party;
(viii) each Contract imposing any restriction on the
right or ability of any Acquired Corporation (A) to compete with any other
Person, (B) to acquire any material product or other asset or any services from
any other Person, (C) to solicit, hire or retain any Person as an employee,
consultant or independent contractor, (D) to develop, sell, supply, distribute,
offer, support or service any product or any technology or other asset to or for
any other Person, (E) to perform services for any other Person or (F) to
transact business or deal in any other manner with any other Person;
(ix) each Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(x) each Contract relating to the creation of any
Encumbrance (except Permitted Encumbrances) with respect to any asset of any of
the Acquired Corporations;
(xi) each Contract (A) relating to the acquisition,
issuance, voting, registration, sale or transfer of any securities, other than
pursuant to the Company Options, (B) providing any Person with any preemptive
right, right of participation, right of maintenance or any similar right with
respect to any securities or (C) providing any of the Acquired Corporations with
any right of first refusal with respect to, or right to purchase or otherwise
acquire, any securities;
(xii) each Contract incorporating or relating to any
guaranty or any indemnity or similar obligation, except for Contracts entered
into in the ordinary course of business;
(xiii) each Contract relating to any currency hedging;
(xiv) each Contract imposing any confidentiality
obligation on any of the Acquired Corporations other than nondisclosure
agreements entered into in the ordinary course of business;
(xv) each Contract to which any Governmental Body is a
party; and any other Contract directly or indirectly benefiting any Governmental
Body (including any subcontract or other Contract between any Acquired
Corporation and any contractor or subcontractor to any Governmental Body),
except for Contracts entered into in the ordinary course of business for the
license, maintenance or service of products;
(xvi) each Contract with obligations in excess of
$50,000 that has a term of more than 60 days and that may not be terminated by
an Acquired Corporation (without penalty) within 60 days after the delivery of a
termination notice by such Acquired Corporation;
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(xvii) each Contract that contemplates or involves the
payment or delivery of cash or other consideration in an amount or having a
value in excess of $50,000 in the aggregate, or contemplates or involves the
performance of services having a value in excess of $50,000 in the aggregate;
(xviii) each Contract requiring that any of the Acquired
Corporations give any notice or provide any information to any Person prior to
considering or accepting any Acquisition Proposal or similar proposal, or prior
to entering into any discussions, agreement, arrangement or understanding
relating to any Acquisition Transaction or similar transaction;
(xix) each Contract that (A) contemplates or involves
the payment or delivery of cash or other consideration by any of the Acquired
Corporations in an amount or having a value in excess of $100,000 in the
aggregate, (B) contemplates or involves the payment or delivery of cash or other
consideration to any of the Acquired Corporations in an amount or having a value
in excess of $100,000 in the aggregate or (C) contemplates or involves the
performance of services by any of the Acquired Corporations having a value in
excess of $100,000 in the aggregate;
(xx) each Contract that could reasonably be expected to
have a material effect on (A) the business, condition, capitalization, assets,
liabilities, operations, financial performance of any of the Acquired
Corporations or (B) the ability of the Company to perform any of its obligations
under, or to consummate any of the transactions contemplated by, this Agreement;
and
(xxi) each Contract (not otherwise identified in clauses
"(i)" through "(xx)" of this sentence) with a Major Stockholder and/or one or
more of its Subsidiaries.
(b) The Company has delivered to Parent and to Xxxxxx Godward
llp an accurate and complete copy of each Material Contract.
(c) Each Acquired Corporation Contract is valid and in full
force and effect, and is enforceable in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) applicable Legal Requirements governing specific
performance, injunctive relief and other equitable remedies, except where the
failure to be valid and binding and in full force and effect would not
individually or in the aggregate have a Material Adverse Effect on the Acquired
Corporations.
(d) Except as set forth in Part 2.10(d) of the Company
Disclosure Schedule: (i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches and defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and, to the Knowledge of the Company, no other Person has violated
or breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches or defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; (ii) to the Knowledge of the Company, no event has occurred, and
no circumstance or condition exists, that (with or without notice or lapse of
time) will, or would reasonably be expected to, (A) result in a violation or
breach of any of the
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provisions of any Acquired Corporation Contract, (B) give any Person the right
to declare a default or exercise any remedy under any Acquired Corporation
Contract, (C) give any Person the right to receive or require a rebate,
chargeback or penalty under any Acquired Corporation Contract, (D) give any
Person the right to accelerate the maturity or performance of any Acquired
Corporation Contract, or (E) give any Person the right to cancel, terminate or
modify any Acquired Corporation Contract, except in each such case for defaults,
acceleration rights, termination rights and other rights that have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations; and (iii) since January 1, 1999, none of the Acquired
Corporations has received any notice or other communication regarding any actual
or possible violation or breach of, or default under, any Acquired Corporation
Contract, except in each such case for defaults, acceleration rights,
termination rights and other rights that have not had and would not reasonably
be expected to have a Material Adverse Effect on the Acquired Corporations.
2.11 LIABILITIES. None of the Acquired Corporations has accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements in accordance
with generally accepted accounting principles, and whether due or to become
due), except for: (a) liabilities identified as such in the "liabilities" column
of the Unaudited Interim Balance Sheet; (b) accounts payable or accrued salaries
that have been incurred by the Acquired Corporations since September 30, 2000 in
the ordinary course of business and consistent with past practices; (c)
liabilities under the Acquired Corporation Contracts identified in Part 2.10 of
the Company Disclosure Schedule, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of such
Acquired Corporation Contracts; and (d) the liabilities identified in Part 2.11
of the Company Disclosure Schedule.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired
Corporations is, and has at all times since January 1, 1999 been, in compliance
with all applicable Legal Requirements, except where the failure to comply with
such Legal Requirements has not had and will not have a Material Adverse Effect
on the Acquired Corporations. Except as set forth in Part 2.12 of the Company
Disclosure Schedule, since January 1, 1999, none of the Acquired Corporations
has received any notice or other communication from any Governmental Body
regarding any actual or possible violation (or of any pending or threatened
investigation, inspection, audit or other proceeding by any Governmental Body
involving allegations of any violation) of, or failure to comply with, any Legal
Requirement. To the Knowledge of the Company, no investigation, inspection,
audit or other proceeding by Governmental Body involving allegations of any
violation of any Legal Requirement is contemplated by any such Governmental
Body.
2.13 GOVERNMENTAL AUTHORIZATIONS AND FACILITY CERTIFICATIONS.
(a) Part 2.13(a) of the Company Disclosure Schedule identifies
each material Governmental Authorization held by the Acquired Corporations (and
contains a summary description of each such Governmental Authorization and,
where applicable, specifies the date issued, granted or applied for, the
expiration date and the current status thereof), and the Company has delivered
to Parent accurate and complete copies of all Governmental Authorizations
identified in Part 2.13(a) of the Company Disclosure Schedule.
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(b) The Governmental Authorizations identified in Part 2.13(a)
of the Company Disclosure Schedule are valid and in full force and effect (and,
to the Knowledge of the Company, no revocation, withdrawal, suspension,
cancellation, termination or modification thereof has been threatened), and
collectively constitute all Governmental Authorizations necessary to enable the
Acquired Corporations to conduct their respective businesses in the manner in
which such businesses are currently being conducted, except where the failure to
hold such Governmental Authorizations has not had, and based on applicable Legal
Requirements as in effect on the date hereof would not reasonably be expected to
have, a Material Adverse Effect on the Acquired Corporations. Each of the
Acquired Corporations is, and at all times since January 1, 1999 has been, in
substantial compliance with the terms and requirements of such Governmental
Authorizations, except where the failure to be in compliance with the terms and
requirements of such Governmental Authorizations has not had, and based on
applicable Legal Requirements as in effect on the date hereof would not
reasonably be expected to have, a Material Adverse Effect on any of the Acquired
Corporations. Since January 1, 1999, none of the Acquired Corporations has
received any written notice from any Governmental Body regarding (a) any actual
or possible violation of or failure to comply with any term or requirement of
any material Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any material Governmental Authorization.
(c) The certifications identified in Part 2.13(c) of the Company
Disclosure Schedule are valid and in full force and effect (and, to the
Knowledge of the Company, no revocation, withdrawal, suspension, cancellation,
termination, modification or limitation thereof has been threatened). Each of
the Acquired Corporations is, and at all times since January 1, 1999 has been,
in substantial compliance with the terms and requirements of such
certifications, except where the failure to be in compliance with the terms and
requirements of such certifications has not had, and based on the terms of such
certifications would not reasonably be expected to have, a Material Adverse
Effect on any of the Acquired Corporations. Since January 1, 1999, none of the
Acquired Corporations has received any written notice from the Person that
issued each such certification regarding (a) any actual or possible violation of
or failure to comply with any term or requirement of such certification, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination, modification or limitation of such certification.
2.14 TAX MATTERS.
(a) Each of the Tax Returns relating to income taxes required to
be filed by or on behalf of the respective Acquired Corporations with any
Governmental Body with respect to any taxable period ending on or before the
Closing has been or will be filed on or before the applicable due date
(including any extensions of such due date). Each of the Tax Returns required to
be filed by or on behalf of the respective Acquired Corporations with any
Governmental Body with respect to any taxable period ending on or before the
Closing (the "Acquired Corporation Returns") has been, or will be when filed,
accurately and completely prepared in all material respects in compliance with
all applicable Legal Requirements. All amounts shown on the Acquired Corporation
Returns to be due on or before the Closing have been or will be paid on or
before the Closing. The Company has delivered to Parent accurate and
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complete copies of all Acquired Corporation Returns filed since December 31,
1999 which have been requested by Parent.
(b) The Financial Statements of the Acquired Corporations fully
accrue all actual and contingent liabilities for Taxes with respect to all
periods through the dates thereof in accordance with generally accepted
accounting principles. The Acquired Corporations will establish, in the ordinary
course of business and consistent with its past practices, reserves adequate for
the payment of all Taxes for the period from September 30, 2000 through the
Closing, and the Company will disclose the dollar amount of such reserves to
Parent on or prior to the Closing.
(c) No Acquired Corporation Return has ever been examined or
audited by any Governmental Body. Except as set forth in Part 2.14 of the
Company Disclosure Schedule, there have been no examinations or audits of any
Acquired Corporation Returns. The Company has delivered to Parent accurate and
complete copies of all audit reports and similar documents (to which the Company
has access) relating to the Acquired Corporation Returns. Except as set forth in
Part 2.14 of the Company Disclosure Schedule, no extension or waiver of the
limitation period applicable to any of the Acquired Corporation Returns has been
granted (by the Company or any other Person), and no such extension or waiver
has been requested from any Acquired Corporation.
(d) Except as set forth in Part 2.14 of the Company Disclosure
Schedule, no claim or Proceeding is, to the Knowledge of the Company, pending or
has been threatened against or with respect to any Acquired Corporation in
respect of any Tax. There are no unsatisfied liabilities for Taxes (including
liabilities for interest, additions to tax and penalties thereon and related
expenses) with respect to any notice of deficiency or similar document received
by any of the Acquired Corporations with respect to any Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by the Acquired Corporations
and with respect to which adequate reserves for payment have been established).
There are no liens for Taxes upon any of the assets of any of the Acquired
Corporations except liens for current Taxes not yet due and payable. None of the
Acquired Corporations has entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code. None of the Acquired
Corporations has been, and none of the Acquired Corporations will be, required
to include any adjustment in taxable income for any tax period (or portion
thereof) pursuant to Section 481 or 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions or events occurring,
or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations are, or have ever been, a
party to or bound by any tax indemnity agreement, tax-sharing agreement, tax
allocation agreement or similar Contract.
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2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Company Disclosure Schedule identifies
each bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any employee of any of the Acquired
Corporations ("Employee"), except for (1) Plans which would not require any of
the Acquired Corporations to make payments or provide benefits having a value in
excess of $25,000 in the aggregate and (2) except for the Company's 2000 Merit
Compensation Plan and 2000 Incentive Compensation Plant.
(b) Except as set forth in Part 2.15(b) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and, to the Knowledge of the Company, none of the Acquired
Corporations has at any time in the past maintained, sponsored or contributed
to, any employee pension benefit plan (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not excluded from coverage under specific Titles or Merger Subtitles of
ERISA) for the benefit of Employees or former Employees (a "Pension Plan").
(c) Each of the Acquired Corporations maintains, sponsors or
contributes only to those employee welfare benefit plans (as defined in Section
3(1) of ERISA, whether or not excluded from coverage under specific Titles or
Merger Subtitles of ERISA) for the benefit of Employees or former Employees
which are described in Part 2.15(c) of the Company Disclosure Schedule (the
"Welfare Plans"), none of which is a multiemployer plan (within the meaning of
Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered or made
available to Parent:
(i) an accurate and complete copy of such Plan
(including all amendments thereto);
(ii) an accurate and complete copy of the annual report,
if required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent
summary plan description, together with each Summary of Material Modifications,
if required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts
relating to such Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and
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(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) None of the Acquired Corporations are required to be, and,
to the Knowledge of the Company, has ever been required to be, treated as a
single employer with any other Person under Section 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code. None of the Acquired Corporations
has ever been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. To the Knowledge of the Company, none of the
Acquired Corporations has ever made a complete or partial withdrawal from a
multiemployer plan, as such term is defined in Section 3(37) of ERISA, resulting
in "withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment
to create any additional Welfare Plan or any Pension Plan, or to modify or
change any existing Welfare Plan or Pension Plan (other than to comply with
applicable law) in a manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Company
Disclosure Schedule, no Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former Employee after
any such Employee's termination of service (other than (i) benefit coverage
mandated by applicable law, including coverage provided pursuant to Section
4980B of the Code, (ii) deferred compensation benefits accrued as liabilities on
the Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which
are borne by current or former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a
group health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service, and the Company is not aware of any reason why any such
determination letter should be revoked.
(k) Except as set forth in Part 2.15(k) of the Company
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any payment (including any bonus,
golden parachute or severance payment) to any current or former Employee or
director of any of the Acquired Corporations (whether or not under any Plan), or
materially increase the benefits payable under any Plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
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(l) The Company has provided Parent a list of all salaried
employees of each of the Acquired Corporations as of the date of this Agreement,
and such list correctly reflects, in all material respects, their salaries, any
other compensation payable to them (including compensation payable pursuant to
bonus, deferred compensation or commission arrangements), their dates of
employment and their positions. None of the Acquired Corporations is a party to
any collective bargaining contract or other Contract with a labor union
representing any of its Employees. All of the employees of the Acquired
Corporations are "at will" employees.
(m) Part 2.15(m) of the Company Disclosure Schedule identifies
each Employee who is not fully available to perform work because of disability
or other leave and sets forth the basis of such leave and the anticipated date
of return to full service.
(n) Each of the Acquired Corporations is in compliance in all
material respects with all applicable Legal Requirements and Contracts relating
to employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Company
Disclosure Schedule, each of the Acquired Corporations has good labor relations
and the Company has no Knowledge that (i) the consummation of the Merger or any
of the other transactions contemplated by this Agreement will have a material
adverse effect on the labor relations of any of the Acquired Corporations, or
(ii) any officer or head of facility of any of the Acquired Corporations intends
to terminate his or her employment with such Acquired Corporation.
2.16 ENVIRONMENTAL MATTERS. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations are
not in compliance with any Environmental Law, and, to the Knowledge of the
Company, there are no circumstances that may prevent or interfere with the
compliance of the Acquired Corporations with any Environmental Law in the
future. To the Knowledge of the Company, no current or prior owner of any
property leased or controlled by any of the Acquired Corporations has received
any notice or other communication (in writing or otherwise), whether from a
Government Body, citizens group, employee or otherwise, that alleges that such
current or prior owner or any of the Acquired Corporations is not in compliance
with any Environmental Law. All Governmental Authorizations currently held by
the Acquired Corporations pursuant to Environmental Laws are identified in Part
2.16 of the Company Disclosure Schedule. (For purposes of this Section 2.16: (i)
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern;
and (ii) "Materials of Environmental Concern" include chemicals,
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pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products and any other substance that is now or hereafter regulated by any
Environmental Law or that is otherwise a danger to health, reproduction or the
environment.)
2.17 INSURANCE. Part 2.17 of the Company Disclosure Schedule identifies
all insurance policies maintained by, at the expense of or for the benefit of
each of the Acquired Corporations and identifies any material claims made
thereunder since January 1, 1999, and the Company has delivered to Parent
accurate and complete copies of the insurance policies identified on Part 2.17
of the Company Disclosure Schedule. Each of the insurance policies identified in
Part 2.17 of the Company Disclosure Schedule is in full force and effect. Since
December 31, 1999, none of the Acquired Corporations has received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of the
Company Disclosure Schedule: (a) no Related Party has, and no Related Party has
at any time since December 31, 1999 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of any of the
Acquired Corporations; (b) no Related Party is, or has at any time since
December 31, 1999 been, indebted to any of the Acquired Corporations; (c) since
December 31, 1999, no Related Party has entered into, or has had any direct or
indirect financial interest in, any material Contract, transaction or business
dealing involving any of the Acquired Corporations; (d) no Related Party is
competing, or has at any time since December 31, 1999 competed, directly or
indirectly, with any of the Acquired Corporations; and (e) no Related Party has
any claim or right against any of the Acquired Corporations (other than rights
under Company Options and rights to receive compensation for services performed
as an employee of the Company). (For purposes of this Section 2.18, each of the
following shall be deemed to be a "Related Party": (i) each individual who is,
or who has at any time since December 31, 1999 been, an officer of any of the
Acquired Corporations; (ii) each member of the immediate family of each of the
individuals referred to in clause "(i)" above; and (iii) any trust or other
Entity (other than the Acquired Corporations) in which any one of the
individuals referred to in clauses "(i)" or "(ii)" above holds (or in which more
than one of such individuals collectively hold), beneficially or otherwise, a
material voting, proprietary or equity interest.)
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19 of the Company Disclosure
Schedule, there is no pending Legal Proceeding, and (to the Knowledge of the
Company) no Person has threatened to commence any Legal Proceeding: (i) that
involves any of the Acquired Corporations or any of the assets owned or used by
any of the Acquired Corporations or any Person whose liability the Acquired
Corporations has or may have retained or assumed, either contractually or by
operation of law; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the
Knowledge of the Company, except as set forth in Part 2.19 of the Company
Disclosure Schedule, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will, or that could reasonably be
expected to, give rise to or serve as a basis for the commencement of any such
Legal Proceeding.
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(b) Except as set forth in Part 2.19 of the Company Disclosure
Schedule, no Legal Proceeding has ever been commenced by or has ever been
pending against any of the Acquired Corporations.
(c) There is no order, writ, injunction, judgment or decree to
which any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, are subject. To the Knowledge of the Company,
no officer or other employee of any of the Acquired Corporations is subject to
any order, writ, injunction, judgment or decree that prohibits such officer or
other employee from engaging in or continuing any conduct, activity or practice
relating to the business of any of the Acquired Corporations.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT. The Company has the
absolute and unrestricted right, power and authority to enter into and to
perform its obligations under this Agreement; and the execution, delivery and
performance by the Company of this Agreement have been duly authorized by all
necessary action on the part of the Company and its board of directors. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of
the Company Disclosure Schedule, neither (1) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, nor (2) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i)
any of the provisions of the certificate of incorporation, bylaws or
other charter or similar organizational documents of any of the Acquired
Corporations, or (ii) any resolution adopted by the stockholders, the
board of directors or any committee of the board of directors of any of
the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of
the transactions contemplated by this Agreement or to exercise any
remedy or obtain any relief under, any Legal Requirement or any order,
writ, injunction, judgment or decree to which any of the Acquired
Corporations, or any of the assets owned or used by any of the Acquired
Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by any of the Acquired Corporations or that
otherwise relates to the business or to any of the assets owned or used
by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Acquired
Corporation Contract that is or would
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constitute a Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Material
Contract, (ii) accelerate the maturity or performance of any such
Material Contract, or (iii) cancel, terminate or modify any such
Material Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by any of
the Acquired Corporations (except for Permitted Encumbrances).
Except as set forth in Part 2.21 of the Company Disclosure Schedule, none of the
Acquired Corporations was, is or will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.22 INAPPLICABILITY OF SECTION 2115 OF CALIFORNIA CORPORATIONS CODE.
The Company is not subject to Section 2115 of the California Corporations Code.
2.23 VOTE REQUIRED. The affirmative vote of holders of at least (i) a
majority of the outstanding shares of the Company Common Stock and the Company
Series A Preferred Stock, voting together as a single class, and (ii) a majority
of the outstanding shares of the Company Series A Preferred Stock, voting as a
separate class (the "Required Vote") is the vote necessary to adopt and approve
this Agreement, the Merger and the other transactions contemplated by this
Agreement.
2.24 BROKERS OR FINDERS. Except for the fees, costs and expenses payable
to the Company Financial Advisor and incurred in connection with the
transactions contemplated by this Agreement, the Acquired Corporations have not
incurred, and will not incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the transactions contemplated by this Agreement.
2.25 FULL DISCLOSURE.
(a) No representation or warranty made by the Company in this
Agreement (including the Company Disclosure Schedule) (i) contains any
information that is false or misleading with respect to any material fact, or
(ii) omits to state any material fact necessary in order to make such
representations and warranties (in the light of the circumstances under which
such representations, warranties were made) false or misleading.
(b) The information supplied by the Company for inclusion in the
Information Statement (as defined in Section 5.2) will not, as of the date of
the Information Statement or as of the date of the Company Stockholders' Meeting
(as defined in Section 5.3), (i) contain any statement that is inaccurate or
misleading with respect to any material fact, or (ii) omit to state any material
fact necessary in order to make such information (in the light of the
circumstances under which it is provided) not false or misleading.
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as otherwise set forth in the Parent Disclosure Schedule,
Parent and Merger Sub jointly and severally represent and warrant to the Company
as follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. Each of Parent and
Merger Sub is a corporation duly organized and validly existing under, and by
virtue of, the laws of the State of Delaware and is in good standing under such
laws. Each of Parent and Merger Sub has all requisite corporate power to own and
operate its respective properties and assets, and to carry on its respective
business as presently conducted and as proposed to be conducted. Each of Parent
and Merger Sub is qualified to do business as a foreign corporation in any
jurisdiction in which failure to qualify would have a material adverse effect on
Parent's business. Parent has furnished the Company true and complete copies of
its restated certificate of incorporation (the "Restated Certificate") and
bylaws in effect as of the date hereof. Other than Merger Sub, Parent has no
Subsidiaries and does not otherwise own or control any other Entity. Parent has
no equity interest in any Entity other than Merger Sub.
3.2 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Parent consists of 40,000,000 shares of Parent Common Stock,
4,721,364 shares of which are issued and outstanding, and 22,000,000 shares of
Preferred Stock, 8,283,000 shares of which are designated as Series A Preferred
Stock, all of which are issued and outstanding, 7,099,006 shares of which are
designated Series B Preferred Stock, all of which are issued and outstanding,
5,500,000 of which are designated as Series C Preferred Stock, 1,644,076 of
which are issued and outstanding. All such issued and outstanding shares have
been duly authorized and validly issued, and are fully paid and non-assessable
and have been issued in compliance with all federal and applicable state
securities laws. Parent has reserved 8,283,000 shares of Parent Common Stock for
issuance upon conversion of its Series A Preferred, 7,099,006 shares of Parent
Common Stock for issuance upon conversion of its Series B Preferred, 5,500,000
shares of Parent Common Stock for issuance upon conversion of its Series C
Preferred, 5,000,000 shares of Parent Common Stock for issuance upon conversion
of the Parent Series D Preferred Stock, 650,000 shares of Parent Common Stock
for issuance upon conversion of outstanding options granted outside Parent's
2000 Equity Incentive Plan (the "Parent Stock Plan"), and 5,257,136 shares of
Parent Common Stock for issuance to officers, directors, employees, sales
representatives and consultants of Parent pursuant to the Parent Stock Plan, of
which 3,687,395 shares are currently subject to outstanding options and
1,569,741 shares are available for future issuance. The Parent Common Stock and
the Parent Series D Preferred Stock, when the Amended and Restated Certificate
of Parent attached hereto as EXHIBIT D (the "Parent Amended and Restated
Certificate") is filed, shall have the rights, preferences, privileges and
restrictions set forth in the Parent Amended and Restated Certificate. There are
no options, warrants (other than warrants to purchase 10,000 shares of Parent
Common Stock and warrants to purchase 254,000 shares of Parent Series B
Preferred Stock), conversion privileges or other rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of the capital
stock or other securities of Parent, nor any agreements or understandings with
respect thereto. Parent is not a party or subject to any agreement or
understanding, and, to Parent's Knowledge, there is no agreement or
understanding between any Persons, which affects or relates to the voting or
giving of consents with respect to any security or by a director of Parent.
Parent is not under any obligation to register any of its presently outstanding
securities or any of its securities that may hereafter be issued. To Parent's
Knowledge, no stockholders of Parent have entered into any agreements with
respect to the voting of capital stock of Parent.
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3.3 FINANCIAL STATEMENTS.
(a) Parent has delivered to the Company the following financial
statements and notes (collectively, the "Parent Financial Statements"):
(i) The audited balance sheets of Parent as of December
31, 1999, and the related audited income statements, statements of
stockholders' equity and statements of cash flows of Parent for the
years then ended, together with the notes thereto and the unqualified
report and opinion of Ernst & Young LLP relating thereto; and
(ii) the unaudited balance sheet of Parent as of
September 30, 2000 (the "Unaudited Interim Balance Sheet"), and the
related unaudited income statement of Parent for the nine months then
ended.
(b) The Parent Financial Statements are accurate and complete in
all material respects and present fairly the financial position of Parent as of
the respective dates thereof and the results of operations and (in the case of
the financial statements referred to in Section 3.5(a)(i)) cash flows of Parent
for the periods covered thereby. The Parent Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except that the financial
statements referred to in Section 3.5(a)(ii) do not contain footnotes and are
subject to normal and recurring year-end audit adjustments, which will not,
individually or in the aggregate, be material in magnitude).
(c) Except as set forth in the Parent Financial Statements,
Parent has no material liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to September
30, 2000 and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in the Parent Financial Statements, which, in both
cases, individually or in the aggregate are not material to the financial
condition or operating results of Parent.
3.4 ACTIONS. Parent has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) except as may be contemplated by this Agreement,
incurred any indebtedness for money borrowed or incurred any other liabilities
individually in excess of $25,000 or in excess of $50,000 in the aggregate,
(iii) made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.
3.5 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Parent has good and
marketable title to all its properties and assets, and is in compliance with the
lease of all material properties leased by it, in each case subject to no
Encumbrances, other than liens for current taxes not yet due and payable. Parent
is not in default under or in breach of any provision of its leases, and Parent
holds valid lease-hold interests in the properties which it leases. Parent's
material properties and assets are in good condition and repair, ordinary wear
and tear excepted, in all material respects.
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3.6 PATENTS, TRADEMARKS, ETC. To the Knowledge of Parent, Parent has
sufficient title and ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted, and as proposed to be conducted,
and, to the Knowledge of Parent, without conflict with or infringement of the
rights of others. Parent has not received any communications alleging that
Parent has violated or, by conducting its business as proposed, would violate,
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
information or proprietary or intellectual property rights of any other person
or entity. Parent has no Knowledge of any violation or infringement by a third
party of any of Parent's patents, licenses, trademarks, service marks, trade
names, copyrights, trade secrets or other proprietary rights. Parent has
disclosed trade secrets to other persons solely as required for the conduct of
its business and solely under nondisclosure agreements that are enforceable by
Parent. Parent has at all times maintained reasonable procedures to protect and
have enforced all of its trade secrets.
3.7 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee,
consultant and officer of Parent has executed an agreement with Parent regarding
confidentiality and proprietary information substantially in the form or forms
delivered to the counsel for the Company. Parent, after reasonable
investigation, is not aware that any of its employees or consultants is in
violation thereof. All consultants to or vendors of Parent with access to
confidential information of Parent are parties to a written agreement
substantially in the form or forms provided to counsel for the Company under
which, among other things, each such consultant or vendor is obligated to
maintain the confidentiality of confidential information of Parent. Parent,
after reasonable investigation, has no Knowledge that any of its consultants or
vendors are in violation thereof.
3.8 MATERIAL CONTRACTS AND COMMITMENTS. Part 3.8 of the Parent
Disclosure Schedule sets forth a list of all Contracts to which Parent is a
party or by which it or its assets are bound that (a) involve in excess of
$50,000 aggregating similar agreements or obligations to the same party; (b)
involve to Parent's Knowledge any of the officers, consultants, directors,
employees, or shareholders of Parent or any members of the immediate family of
the foregoing; or (c) obligate Parent to share, license, or develop any product.
True and complete copies of all items set forth on Part 3.8 of the Parent
Disclosure Schedule have been made available to the Major Stockholders.
3.9 COMPLIANCE WITH OTHER INSTRUMENTS. Neither Parent nor Merger Sub is
in violation of any term of its respective certificate of incorporation (as
amended) or its respective bylaws (as amended), or in any material respect of
any term or provision of any mortgage, indenture, Contract, judgment or decree,
and to the Parent's Knowledge, neither Parent nor Merger Sub is in violation of
any order, statute, rule or regulation applicable to Parent. The execution,
delivery and performance of and compliance with this Agreement and each of the
other Transaction Agreements, have not resulted and will not result in any
violation of, or conflict with, or constitute a default under any of the
foregoing, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of Parent; and there is no such
violation or default which materially and adversely affects the business,
financial condition or results of operations of Parent or any of its properties
or assets. All of the Contracts set forth on Part 3.8 of the Parent Disclosure
Schedule are in full force and effect and constitute legal, valid and binding
obligations of Parent. Parent and, to the Knowledge of Parent,
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each other party thereto, has performed in all material respects all obligations
required to be performed by it under the Contracts set forth on Part 3.8 of the
Parent Disclosure Schedule, and no material violation or default exists in
respect thereof, nor any event that with notice or lapse of time, or both, would
constitute a default thereof; on the part of Parent or, to the Knowledge of
Parent, any other party thereto; none of the Contracts set forth on Part 3.8 of
the Parent Disclosure Schedule is currently being renegotiated; and the
validity, effectiveness and continuation of all Contracts set forth on Part 3.8
of the Parent Disclosure Schedule will not be materially adversely affected by
the transactions contemplated by this Agreement or any of the other Transaction
Agreements.
3.10 VALIDITY OF PARENT CAPITAL STOCK. The Parent Capital Stock, when
issued in compliance with the provisions of this Agreement, will be duly and
validly issued and will be fully paid and nonassessable and free and clear of
all Encumbrances, and the Parent Common Stock issuable upon conversion of the
Parent Series D Preferred Stock will, prior to the Closing, be duly and validly
reserved and, when issued and delivered in compliance with the provisions of the
Amended and Restated Certificate will be duly and validly issued and will be
fully paid and nonassessable and free and clear of all Encumbrances on transfer
other than as set forth in this Agreement and the other Transaction Agreements,
provided, however, that the Parent Capital Stock (and the Parent Common Stock
issuable upon conversion of the Parent Series D Preferred Stock) may be subject
to restrictions on transfer under state and/or federal securities laws. There
are no outstanding rights of first refusal or preemptive rights applicable to
the Parent Capital Stock.
3.11 GOVERNMENTAL AUTHORIZATIONS. Parent has all Governmental
Authorizations necessary to enable Parent to conduct its business in the manner
in which its business is currently being conducted. Parent is, and at all times
since December 31, 1999 has been, in substantial compliance with the terms and
requirements of all material Governmental Authorizations held by Parent. Since
December 31, 1999, Parent has not received any notice or other communication
from any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization.
3.12 TAX RETURNS AND PAYMENTS. Parent has filed all tax returns and
reports as required by law. These returns and reports are true and correct in
all material respects. Parent has paid all taxes and other assessments due.
3.13 TAX ELECTIONS. Parent has not elected pursuant to the Internal
Revenue Code of 1986, as amended (the "Code"), to be treated as an "S"
corporation or a collapsible corporation pursuant to Section 341(f) or Section
1362(a) of the Code, nor has it made any other elections pursuant to the Code
(other than elections which relate solely to matters of accounting, depreciation
or amortization) which would have a material affect on Parent, its financial
condition, its business as presently conducted or as presently proposed to be
conducted or any of its properties or material assets.
3.14 EMPLOYEES. To Parent's Knowledge, no employee of Parent is or will
be in violation of any judgment, decree or order of any court or administrative
agency, or any term of
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any employment contract or any other contract (including without limitation any
covenant not to compete) or agreement relating to the relationship of any such
employee with Parent or any other party because of the nature of the business
conducted or to be conducted by Parent or to the utilization by the employee of
such employee's reasonable efforts with respect to such business. Parent does
not have any collective bargaining agreements covering any of its employees. To
Parent's Knowledge, Parent is not using any inventions of any of its employees,
consultants or officers made before their employment by Parent. To Parent's
Knowledge, no employee, consultant or officer has taken, removed, or made use of
any proprietary documentation, manuals, products, materials, or any other
tangible items from the employee's previous employers relating to Parent's
business. To Parent's Knowledge, no labor union has sought to represent any of
the employees of Parent. There is no strike or other labor dispute involving
Parent pending, or to the Knowledge of Parent, threatened. To Parent's
Knowledge, no officer or key employee intends to terminate his or her employment
with Parent.
3.15 EMPLOYEE BENEFIT PLANS. Neither Parent nor Merger Sub has any
Employee Benefit Plan as defined in ERISA.
3.16 ENVIRONMENTAL MATTERS. The business, assets and properties of
Parent are and have been operated and maintained in material compliance with all
applicable Environmental Laws. To Parent's Knowledge, no event has occurred
which, with or without the passage of time or the giving of notice, or both,
would constitute noncompliance by Parent with, or a violation by Parent of, the
Environmental Laws. To Parent's Knowledge, Parent has not caused or permitted to
exist, as a result of an intentional or unintentional act or omission, a
disposal, discharge or release of solid wastes, pollutants or hazardous
substances, on or from any site which currently is or formerly was owned,
leased, occupied or used by it, except where such disposal, discharge or release
was in material compliance with the Environmental Laws.
3.17 INSURANCE. Parent has in full force and effect fire, casualty and
liability insurance policies with recognized insurers with such coverages as are
sufficient in amount to allow replacement of the tangible properties of Parent
that might be damaged or destroyed.
3.18 NO CONFLICT OF INTEREST. Parent is not indebted, directly or
indirectly, to any of its officers or directors or to their respective spouses
or children, in any amount whatsoever other than in connection with expenses or
advances of expenses incurred in the ordinary course of business or relocation
expenses of employees. To Parent's Knowledge, none of Parent's officers or
directors, or any members of their immediate families, are, directly or
indirectly, indebted to Parent (other than in connection with purchases of
Parent's stock) or have any direct or indirect ownership interest in any firm or
corporation with which Parent is affiliated or with which Parent has a business
relationship, or any firm or corporation which competes with Parent, except that
officers, directors and/or shareholders of Parent may own stock in (but not
exceeding two percent of the outstanding capital stock of) any publicly traded
company that may compete with Parent. To Parent's Knowledge, none of Parent's
officers or directors or any members of the immediate families are, directly or
indirectly, interested in any material contract with Parent. Parent is not a
guarantor or indemnitor of any indebtedness of any other Person.
3.19 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending or, to Parent's Knowledge, threatened against Parent or
its properties before any Governmental
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Body, which, either in any case or in the aggregate, might result in any
material adverse effect on the business, financial condition, affairs,
operations or equity ownership of Parent or any of its properties or assets, or
in any material impairment of the right or ability of Parent to carry on its
business as now conducted or as presently proposed to be conducted, or in any
material liability on the part of Parent, and none which questions the validity
of this Agreement or any of the other Transaction Agreements or any action taken
or to be taken in connection herewith or therewith. Parent is not a party or
subject to the order, writ, judgement, injunction, decree or other provisions of
any Governmental Body. There is no action, suit, proceeding, or investigation by
Parent currently pending or that Parent intends to initiate.
3.20 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub each
has the absolute and unrestricted right, power and authority to enter into and
to perform its respective obligations under this Agreement, the Escrow
Agreements, the Voting Agreements, and the Noncompetition Agreements
(collectively, the "Transaction Agreements"); and the execution, delivery and
performance by Parent and Merger Sub of the Transaction Agreements have been
duly authorized by all necessary action on the part of the Parent and Merger
Sub. This Agreement and each of the other Transaction Agreements to which either
Parent or Merger Sub is a party constitutes the legal, valid and binding
obligation of Parent and/or Merger Sub, as the case may be, enforceable against
Parent and/or Merger Sub, as the case may be, in accordance with their
respective terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
3.21 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of
this Agreement by Parent and Merger Sub nor the consummation by Parent and
Merger Sub of the Merger will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or bylaws of Parent or Merger Sub,
(b) result in a default by Parent or Merger Sub under any Contract to which
Parent or Merger Sub is a party, except for any default that has not had and
will not have a Material Adverse Effect on Parent, or (c) result in a violation
by Parent or Merger Sub of any order, writ, injunction, judgment or decree to
which Parent or Merger Sub is subject, except for any violation that has not had
and will not have a Material Adverse Effect on Parent. Except as may be required
by the Securities Act, state securities or "blue sky" laws, the DGCL, the HSR
Act, any foreign antitrust law or regulation, Parent is not and will not be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with the execution, delivery or performance of
this Agreement or the consummation of the Merger.
3.22 FINANCIAL CONDITION. Parent was incorporated on May 11, 1998. Since
that time, Parent has only engaged in startup and development activities and has
generated no revenue. Since inception, Parent has been operated only in the
ordinary course of business, and there has not been a Material Adverse Effect on
Parent.
3.23
3.24 U.S. REAL PROPERTY HOLDING CORPORATION. Parent is not now, nor will
it be immediately after the Closing, a "United States Real Property Holding
Corporation" as defined
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in Section 897(c)(2) of the Code and Section 1.897-2(b) of the regulations
promulgated under the Code.
3.25 INVESTMENT COMPANY ACT. Parent is not an "investment company" nor
is Parent directly or indirectly controlled by or acting on behalf of any person
which is an "Investment Company" within the meaning of the Investment Company
Act of 1940, as amended.
3.26 NO BROKERS OR FINDERS. Parent has not incurred, and will not incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with the transactions
contemplated by this Agreement.
3.27 FULL DISCLOSURE.
(a) No representation or warranty made by Parent or Merger Sub
in this Agreement (including the Parent Disclosure Schedule) (i) contains any
information that is false or misleading with respect to any material fact, or
(ii) omits to state any material fact necessary in order to make such
representations and warranties (in the light of the circumstances under which
such representations, warranties were made) false or misleading.
(b) The information supplied by Parent or Merger Sub for
inclusion in the Information Statement (as defined in Section 5.2) will not, as
of the date of the Information Statement or as of the date of the Company
Stockholders' Meeting (as defined in Section 5.3), (i) contain any statement
that is inaccurate or misleading with respect to any material fact, or (ii) omit
to state any material fact necessary in order to make such information (in the
light of the circumstances under which it is provided) not false or misleading.
SECTION 4. CERTAIN COVENANTS OF THE PARTIES
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Company
shall, and shall cause its Representatives to: (a) provide Parent and Parent's
Representatives with reasonable access to the Acquired Corporations'
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Company; and (b) provide Parent and Parent's Representatives with copies of such
existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations, and with such additional
financial, operating and other data and information regarding the Acquired
Corporations, as Parent may reasonably request.
4.2 OPERATION OF THE COMPANY'S BUSINESS. During the Pre-Closing Period:
(a) the Company shall (and shall cause each of the other
Acquired Corporations to) conduct their respective businesses and
operations in the ordinary course and in substantially the same manner
as such businesses and operations have been conducted prior to the date
of this Agreement;
(b) the Company shall (and shall cause each of the other
Acquired Corporations to) use reasonable efforts to preserve intact
their respective current business organizations, keep available the
services of their respective current officers and
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employees and maintain their respective relations and good will with all
suppliers, customers, landlords, creditors, employees and other Persons
having business relationships with any of the Acquired Corporations;
(c) the Company shall (and shall cause each of the other
Acquired Corporations to) keep in full force all insurance policies
identified in Part 2.17 of the Company Disclosure Schedule;
(d) the Company shall (and shall cause each of the other
Acquired Corporations to) cause their respective officers to report
regularly (but in no event less frequently than bi-monthly) to Parent
concerning the status of the business of each Acquired Corporation;
(e) the Company shall use commercially reasonable efforts to
file an amended and restated certificate of incorporation with the
Secretary of State for the State of Delaware that provides for a
liquidation preference in favor of the Company Series A Preferred Stock
equal in value, in the aggregate, to the Liquidation Consideration (the
"Company Amended and Restated Certificate");
(f) the Company shall not (and shall cause each of the other
Acquired Corporations not to) declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of
capital stock, and shall not repurchase, redeem or otherwise reacquire
any shares of capital stock or other securities (except that the Company
may repurchase Company Common Stock from former employees pursuant to
the terms of existing restricted stock purchase agreements);
(g) the Company shall not (and shall cause each of the other
Acquired Corporations not to) sell, issue or authorize the issuance of
(i) any capital stock or other security, (ii) any option or right to
acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security
(except that the Company shall be permitted (y) to issue Company Common
Stock to employees upon the exercise of outstanding Company Options, and
(z) to issue shares of Company Common Stock upon the conversion of
shares of Company Preferred Stock);
(h) the Company shall not (and shall cause each of the other
Acquired Corporations not to) amend or waive any of its rights under, or
permit the acceleration of vesting under, (i) any provision of the Stock
Plan, (ii) any provision of any agreement evidencing any outstanding
Company Option, or (iii) any provision of any restricted stock purchase
agreement;
(i) the Company shall not (and shall cause each of the other
Acquired Corporations not to) amend or permit the adoption of any
amendment to the Company's Certificate of Incorporation or Bylaws or
similar organizational documents of any Acquired Corporation, or effect
or permit any Acquired Corporation to become a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split,
reverse stock split or similar transaction (except that the Company may
issue shares of
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Company Common Stock upon the conversion of shares of Company Series A
Preferred Stock);
(j) the Company shall not (and shall cause each of the other
Acquired Corporations not to) form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(k) the Company shall not (and shall cause each of the other
Acquired Corporations not to) make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures
made on behalf of the Acquired Corporations during the Pre-Closing
Period, do not exceed $15,000 per month;
(l) the Company shall not (and shall cause each of the other
Acquired Corporations not to) (i) enter into, or permit any of the
assets owned or used by any Acquired Corporation to become bound by, any
Contract that is or would constitute a Material Contract, or (ii) amend
or prematurely terminate, or waive any material right or remedy under,
any such Contract (except amendment or termination of the Company's
existing line of credit with that certain Loan Agreement dated February
1, 1999 among First Union National Bank (the "Bank"), the Company and
PPD (the "Company Line of Credit");
(m) the Company shall not (and shall cause each of the other
Acquired Corporations not to) (i) acquire, lease or license any right or
other asset from any other Person, (ii) sell or otherwise dispose of, or
lease or license, any right or other asset to any other Person, or (iii)
waive or relinquish any right, except for assets acquired, leased,
licensed or disposed of by the Company pursuant to Contracts that are
not Material Contracts;
(n) the Company shall not (and shall cause each of the other
Acquired Corporations not to) (i) lend money to any Person (except that
the Company may make routine travel advances to employees in the
ordinary course of business and may, consistent with its past practices,
allow employees to acquire Company Common Stock in exchange for
promissory notes upon exercise of Company Options), or (ii) incur or
guarantee any indebtedness for borrowed money (except that the Company
may make routine borrowings in the ordinary course of business under the
Company Line of Credit or that certain Loan Agreement dated September
22, 2000 among the Company and the Major Stockholders (the "Loan
Agreement"));
(o) the Company shall not (and shall cause each of the other
Acquired Corporations not to) (i) establish, adopt or amend any Employee
Benefit Plan, (ii) pay any bonus or make any profit-sharing payment,
cash incentive payment or similar payment to, or increase the amount of
the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees, or
(iii) hire any new employee whose aggregate annual compensation is
expected to exceed $50,000;
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(p) the Company shall not (and shall cause each of the other
Acquired Corporations not to) change any methods of accounting or
accounting practices of any Acquired Corporation in any material
respect;
(q) the Company shall not (and shall cause each of the other
Acquired Corporations not to) make any Tax election;
(r) the Company shall not (and shall cause each of the other
Acquired Corporations not to) commence or settle any material Legal
Proceeding;
(s) the Company shall not (and shall cause each of the other
Acquired Corporations not to) agree or commit to take any of the actions
described in clauses "(f)" through "(f)" above.
Notwithstanding the foregoing, the Company may take any action described in
clauses "(f)" through "(s)" above if Parent gives its prior written consent to
the taking of such action by the Company, which consent will not be unreasonably
withheld (it being understood that Parent's withholding of consent to any action
will not be deemed unreasonable if Parent determines in good faith that the
taking of such action would not be in the best interests of Parent or would not
be in the best interests of the Company); provided, however, that Parent's
consent shall be deemed to have been granted if Parent fails to reply to a
written request from the Company to take any action described in clauses "(e)"
through "(r)" above within five days after receipt of such written request.
4.3 NOTIFICATION; UPDATES TO COMPANY DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of:
(i) the discovery by any Acquired Corporation of any
event, condition, fact or circumstance that occurred or existed on or
prior to the date of this Agreement and that caused or constitutes an
inaccuracy in or breach of any representation or warranty made by the
Company in this Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would
cause or constitute an inaccuracy in or breach of any representation or
warranty made by the Company in this Agreement if (A) such
representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the
Company; and
(iv) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 4.3(a) requires any change in the
Company Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the
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Company Disclosure Schedule were dated as of the date of the occurrence,
existence or discovery of such event, condition, fact or circumstance, then the
Company shall promptly deliver to Parent an update to the Company Disclosure
Schedule specifying such change. No such update shall be deemed to supplement or
amend the Company Disclosure Schedule for the purpose of (i) except as set forth
in Section 9.2(a), determining the accuracy of any of the representations and
warranties made by the Company in this Agreement, or (ii) determining whether
any of the conditions set forth in Section 6 has been satisfied.
4.4 NOTIFICATION; UPDATES TO PARENT DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, Parent shall promptly notify
the Company in writing of:
(i) the discovery by Parent of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of
this Agreement and that caused or constitutes an inaccuracy in or breach
of any representation or warranty made by Parent and Merger Sub in this
Agreement;
(ii) any event, condition, fact or circumstance that
occurs, arises or exists after the date of this Agreement and that would
cause or constitute an inaccuracy in or breach of any representation or
warranty made by Parent and Merger Sub in this Agreement if (A) such
representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of Parent
or Merger Sub; and
(iv) any event, condition, fact or circumstance that
would make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely.
If any event, condition, fact or circumstance that is required to be
disclosed pursuant to Section 4.4(a) requires any change in the Parent
Disclosure Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Parent Disclosure Schedule were dated as of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstance, then Parent shall promptly deliver to the Company an
update to the Parent Disclosure Schedule specifying such change. No such update
shall be deemed to supplement or amend the Parent Disclosure Schedule for the
purpose of (i) except as set forth in Section 9.2(b), determining the accuracy
of any of the representations and warranties made by Parent and Merger Sub in
this Agreement, or (ii) determining whether any of the conditions set forth in
Section 7 has been satisfied.
4.5 OPERATION OF PARENT'S BUSINESS. DURING THE PRE-CLOSING PERIOD:
(a) Parent shall (and shall cause each of its Subsidiaries to)
conduct their respective businesses and operations in the ordinary
course and in substantially the same
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manner as such businesses and operations have been conducted prior to
the date of this Agreement (it being understood, however, that Parent
may continue preparations for the initial public offering of Parent
Common Stock);
(b) Parent shall (and shall cause each of its respective
Subsidiaries to) use reasonable efforts to preserve intact their
respective current business organizations, keep available the services
of their respective current officers and employees and maintain their
respective relations and good will with all suppliers, customers,
landlords, creditors, employees and other Persons having business
relationships with any of Parent and/or any of its Subsidiaries;
(c) Parent shall use commercially reasonable efforts to file the
Amended and Restated Certificate as soon as possible;
(d) Parent shall use commercially reasonable efforts to ensure
that, as of immediately after the Closing, PPD will be permitted to
appoint one member of the board of directors of Parent;
(e) Parent shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of
Parent's capital stock, and shall not repurchase, redeem or otherwise
reacquire any shares of Parent's capital stock or other securities
(except that Parent may repurchase Parent Common Stock from former
employees pursuant to the terms of existing restricted stock purchase
agreements);
(f) Parent shall not amend or permit the adoption of any
amendment to the Restated Certificate or Parent's Bylaws that would have
the effect of diminishing the rights, preferences or privileges of the
Parent Series D Preferred Stock as set forth in the Restated
Certificate.
Notwithstanding the foregoing, Parent may take any action described in clauses
"(e)" or "(f)" if the Company gives its prior written consent to the taking of
such action by Parent, which consent will not be unreasonably withheld (it being
understood that the Company's withholding of consent to any action will not be
deemed unreasonable if the Company determines in good faith that the taking of
such action would not be in the best interests of the Company); provided,
however, that the Company's consent shall be deemed to have been granted if the
Company fails to reply to a written request from Parent to take any action
described in clauses "(e)" or "(f)" above within five days after receipt of such
written request.
4.6 NO NEGOTIATION. During the Pre-Closing Period, the Company shall not
(and shall cause each of the other Acquired Corporations not to), directly or
indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal
or offer from any Person (other than Parent) relating to a possible
Acquisition Transaction;
(b) participate in any discussions or negotiations or enter into
any agreement with, or provide any non-public information to, any Person
(other than Parent) relating to or in connection with a possible
Acquisition Transaction; or
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(c) consider, entertain or accept any proposal or offer from any
Person (other than Parent) relating to a possible Acquisition
Transaction.
The Company shall promptly notify Parent in writing of any material inquiry,
proposal or offer relating to a possible Acquisition Transaction that is
received by the Company during the Pre-Closing Period.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, and (b) shall use all commercially reasonable efforts to obtain all
Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger and the other transactions contemplated by this Agreement. The Company
shall (upon request) promptly deliver to Parent a copy of each such filing made,
each such notice given and each such Consent obtained by the Company during the
Pre-Closing Period.
5.2 COMPANY STOCKHOLDERS' MEETING. As promptly as practicable after the
execution of this Agreement, the Company and Parent shall jointly prepare an
Information Statement relating to the adoption of this Agreement and the
approval of the transactions contemplated hereby by the Company's stockholders
and the exercise of appraisal rights in connection therewith (the "Information
Statement"). The Company shall provide and include in the Information Statement
such information relating to the Company and its stockholders as may be required
pursuant to the provisions of applicable securities and corporate laws
(including, without limitation, Rule 502 under the Securities Act). The Company
shall, in accordance with its Certificate of Incorporation and Bylaws and the
applicable requirements of the Delaware General Corporation Law, call and hold a
special meeting of its stockholders as promptly as practicable, and in any event
no later than December 20, 2000, for the purpose of permitting them to consider
and to vote upon and adopt this Agreement and approve the transactions
contemplated hereby (the "Company Stockholders' Meeting"). The Company shall
cause a copy of the Information Statement to be delivered to each stockholder of
the Company who is entitled to vote on the adoption of this Agreement and
approval of the transactions contemplated hereby. As promptly as practicable
after the delivery of copies of the Information Statement to all stockholders
entitled to vote at the Company Stockholders' Meeting, the Company shall take
all actions necessary (i) to solicit from each of such stockholders a proxy in
favor of the adoption of this Agreement and the approval of the transactions
contemplated hereby and (ii) to cause each of such stockholders to execute and
deliver to Parent a Stockholder Representation Letter in a form to be mutually
agreed upon by the parties hereto. In lieu of calling and holding the Company
Stockholders' Meeting, the Company may solicit written consents (to be effective
on or prior to December 20, 2000) in accordance with its certificate of
incorporation and bylaws and the applicable requirements of the Delaware General
Corporation Law. Parent will reasonably cooperate with the Company with respect
to the matters set forth in this Section 5.2. Parent will promptly provide all
information relating to its business or operations necessary for inclusion in
the Information Statement to satisfy all requirements of applicable state and
federal securities and corporate laws.
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5.3 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) Neither
Parent nor the Company shall (and Parent and the Company shall not permit any of
their respective Representatives to, and the Company shall use commercially
reasonable efforts to cause the Major Stockholders to) issue any press release
or make any public statement regarding this Agreement or the Merger, or
regarding any of the other transactions contemplated by this Agreement, without
the prior written consent of the Company or Parent, as the case may be, and (b)
Parent and the Company will use reasonable efforts to consult with one another
(and the Company shall use commercially reasonable efforts to cause the Major
Stockholders to consult with Parent) prior to issuing any press release or
making any public statement regarding the Merger.
5.4 REASONABLE EFFORTS. During the Pre-Closing Period, (a) the Company
shall use commercially reasonable efforts to cause the conditions set forth in
Section 6 to be satisfied on a timely basis, and (b) Parent and Merger Sub shall
use commercially reasonable efforts to cause the conditions set forth in Section
7 to be satisfied on a timely basis.
5.5 TAX MATTERS. Prior to the Closing, Parent, Merger Sub and the
Company shall execute and deliver, to Xxxxxx Godward LLP and to Xxxxxx Xxxxxx
White & XxXxxxxxx LLP, tax representation letters in substantially the form of
EXHIBIT E. Parent, Merger Sub and the Company shall each confirm to Xxxxxx
Godward LLP and to Xxxxxx Xxxxxx White & XxXxxxxxx LLP the accuracy and
completeness as of the Effective Time and thereafter, where relevant, of the tax
representation letters delivered pursuant to the immediately preceding sentence.
Parent and the Company shall use commercially reasonable efforts prior to the
Effective Time to cause the Merger to qualify as a tax-free reorganization under
Section 368(a)(1) of the Code. Following delivery of the tax representation
letters pursuant to the first sentence of this Section 5.6, each of Parent and
the Company shall use its commercially reasonable efforts to cause Xxxxxx
Godward LLP and Xxxxxx Xxxxxx White & XxXxxxxxx LLP, respectively, to deliver to
it a tax opinion satisfying the requirements of Section 6.5(h) hereof and
Section 7.3(b) hereof. In rendering such opinions, each of such counsel shall be
entitled to rely on the tax representation letters referred to in this Section
5.6. The parties hereto shall report the Merger as a reorganization within the
meaning of Section 368(a) of the Code, and neither Parent, Merger Sub nor the
Company shall take any action prior to or following the Closing that would
reasonably be expected to cause the Merger to fail to qualify as a
reorganization.
5.6 NONCOMPETITION AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each of the Major Stockholders to execute and
deliver to Parent prior to the Closing a Noncompetition Agreement in the form of
EXHIBIT F.
5.7 EMPLOYMENT AGREEMENTS. The Company shall use commercially reasonable
efforts to cause each of the individuals identified on EXHIBIT G to execute and
deliver to Parent prior to the Closing an Employment Agreement in the form of
EXHIBIT H.
5.8 RELEASES. The Company shall use commercially reasonable efforts to
cause each of the Company stockholders to execute and deliver to Parent at the
Closing a Release in the form of EXHIBIT I.
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5.9 UNDERWRITER LOCKUP AGREEMENTS. The Company shall use commercially
reasonable efforts to cause each of the Company stockholders to execute and
deliver to Parent prior to the Closing an Underwriter Lockup Agreement in the
form of EXHIBIT J.
5.10 AMENDMENT/CLARIFICATION OF EXISTING AGREEMENTS; PAYOFF OF COMPANY
LINE OF CREDIT.
(a) The Company shall execute and deliver, and shall use
commercially reasonable efforts to cause the other parties to such agreements to
execute and deliver: (1) the Amended and Restated Distributor Agreement between
the Company and PPD dated February 1, 1999, as amended attached hereto as
EXHIBIT K; and (2) the Amended and Restated Technology Transfer and License
Agreement between the Company and Axys dated February 1, 1999, as amended
attached hereto as EXHIBIT L. The Company shall execute and deliver, and shall
use commercially reasonable efforts to cause PPD to execute and deliver, (1) the
clarification letter to the PPD/PPGx Joint Development Agreement attached hereto
as EXHIBIT M and (2) the real property indemnity letter attached hereto as
EXHIBIT N. The Company shall execute and deliver, and shall use commercially
reasonable efforts to cause Axys to execute and deliver, (1) the covenant not to
xxx agreement attached hereto as EXHIBIT O and (2) the assignment letter
attached hereto as EXHIBIT P.
(b) Parent shall use commercially reasonable efforts to execute
and deliver (and the Company shall use commercially reasonable efforts to cause
the Major Stockholders to execute and deliver): (1) that certain Amended and
Restated Investor Rights Agreement attached hereto as EXHIBIT Q; and (2) that
certain Co-Sale Agreement attached hereto as EXHIBIT R.
(c) The Company shall use commercially reasonable efforts to
cause the Company's indebtedness existing as of immediately prior to the Closing
to the Bank to be repaid and the indebtedness due and payable to the Major
Stockholders under the Loan Agreement to be contributed to the capital of the
Company.
5.11 TERMINATION OF CERTAIN AGREEMENTS.
(a) The Company shall use commercially reasonable efforts to
ensure that the Investor Rights Agreement of the Company dated February 1, 1999
and the Registration Rights Agreement of the Company dated February 1, 1999 are
terminated prior to the Closing:
(b) The Company shall use commercially reasonable efforts to
ensure that all provisions in Contracts that provide any Person with rights of
any nature with respect to the board of directors of the Company (except as
provided generally by the Company's Certificate of Incorporation and Bylaws (or
similar organizational documents) or by applicable Legal Requirements) are
validly and effectively terminated as of the Effective Time.
5.12 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasure Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Xxxxxxx 0.000 - 0(x)(0)
xx xxx Xxxxxx Xxxxxx Treasury Regulations.
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5.13 EMPLOYEE AND RELATED MATTERS.
(a) The Company shall take any and all actions that are
necessary prior to the Closing to terminate its status as a participating
employer/sponsor of the AXYS qualified retirement plan (the "AXYS 401(k) Plan")
so that the employees of the Acquired Corporations will no longer be eligible to
participate in the AXYS 401(k) Plan as of a date that is prior to the Closing
Date. Those employees of the Acquired Corporations that continue to be employees
of Parent or any of its affiliates, including the Company, following the Closing
would, subject to any necessary transition period and the terms of such plans,
be eligible to participate in Parent's health, vacation, employee stock
purchase, stock option, 401(k) and other plans, to the same extent as comparably
situated employees of Parent and would receive credit under Parent's benefit
plans for service as an employee of the Acquired Corporations. Parent shall
exercise commercially reasonable efforts to minimize the duration of any
necessary transition period and to amend or replace Parent's existing plans as
Parent, in its reasonable discretion believes necessary to comply with this
Section 5.13(a).
(b) At the Closing, the Company shall terminate its 2000
Incentive Compensation Plan and its 2000 Merit Compensation Plan, and shall
ensure that no employee or former employee of any Acquired Corporation has any
rights under any of such Plans and that any liabilities of the Acquired
Corporations under such Plans (including any such liabilities relating to
services performed prior to the Closing) are fully extinguished at no cost to
the Acquired Corporations.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger
and otherwise consummate the transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of each of the
following conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company in this Agreement and in each of the other
agreements and instruments delivered to Parent in connection with the
transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement (except to the extent that
such representations and warranties relate to a specific date, in which case
such representations and warranties shall be accurate on and as of such specific
date), and shall be accurate in all material respects as of the Closing as if
made at the Closing (except to the extent that such representations and
warranties relate to a specific date, in which case such representations and
warranties shall be accurate on and as of such specific date); provided,
however, that for purposes of determining the accuracy of such representations
and warranties for purposes of this Section 6.1, all "Material Adverse Effect,"
other materiality qualifications and other similar qualifications contained in
such representations and warranties shall be disregarded.
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
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6.3 STOCKHOLDER APPROVAL. The adoption of this Agreement and the
approval of the transactions contemplated hereby shall have been duly approved
by the affirmative vote of all of the shares of Company Series A Preferred Stock
and at least 95% of the shares of Company Common Stock entitled to vote with
respect thereto.
6.4 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.21 of the Company Disclosure Schedule) shall
have been obtained and shall be in full force and effect.
6.5 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have received
the following agreements and documents, each of which shall be in full force and
effect:
(a) Employment Agreements in the form of EXHIBIT H, executed by
the individuals identified on EXHIBIT G;
(b) Noncompetition Agreements in the form of EXHIBIT F, executed
by the Major Stockholders;
(c) Releases in the form of EXHIBIT I, executed by the Major
Stockholders;
(d) the statement referred to in Section 5.12, executed by the
Company;
(e) the documents listed as Exhibits to this Agreement set forth
in Section 5.10(a);
(f) a legal opinion of Xxxxxx Xxxxxx White & XxXxxxxxx LLP,
dated as of the Closing Date, in the form of EXHIBIT S;
(g) a legal opinion of Xxxxxx Godward LLP (or, if Xxxxxx Godward
LLP for any reason does not render such legal opinion, a legal opinion
of Xxxxxx Xxxxxx White & XxXxxxxxx LLP), dated as of the Closing Date,
to the effect that the Merger will constitute a reorganization within
the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, such counsel may rely upon the tax
representation letters referred to in Section 5.5;
(h) written resignations of all directors and officers of the
Company, effective as of the Effective Time;
(i) an Underwriter Lock-up Agreement in the form of EXHIBIT J,
executed by each of the Major Stockholders;
(j) an Escrow Agreement in the form of EXHIBIT C, executed by
the Stockholders' Agent and the Stockholders' Agent;
(k) the Amended and Restated Investor Rights Agreement in the
form of EXHIBIT Q, executed by each of the Major Stockholders;
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(l) the Amended and Restated Co-Sale Agreement in the form of
EXHIBIT R, executed by each of the Major Stockholders; and
(m) a certificate executed by the Chief Executive Officer of the
Company and containing the representation and warranty of each of them
that the conditions set forth in Sections 6.1, 6.2, 6.3, 6.4, 6.6 and
6.8 have been duly satisfied (the "Company Closing Certificate").
6.6 ABSENCE OF MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect on the
Company, and no event shall have occurred or circumstance shall exist that, in
combination with any other events or circumstances, could reasonably be expected
to have a Material Adverse Effect on the Company.
6.7 HSR ACT. The waiting period applicable to the consummation of the
exercise of the PPD Call, as such term is defined in the Company's Investor
Rights Agreement, under the HSR Act shall have expired or been terminated, and
there shall not be in effect any voluntary agreement between PPD and the Federal
Trade Commission or the Department of Justice pursuant to which PPD has agreed
not to consummate the exercise of the PPD Call for any period of time; any
similar waiting period applicable to the Merger or the exercise of the PPD Call
under any applicable foreign antitrust law or regulation shall have expired or
been terminated; and any Consent required under any applicable foreign antitrust
law or regulation in connection with the Merger or the exercise of the PPD call
shall have been obtained.
6.8 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.12.
6.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.10 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened
to commence any Legal Proceeding (a) challenging or seeking the recovery of a
material amount of damages in connection with the Merger, (b) seeking to
prohibit or limit the exercise by Parent of any material right pertaining to its
ownership of stock of the Surviving Corporation, or (c) claiming to own any
capital stock of the Company, or option or other right to acquire capital stock
of the Company or any other Acquired Corporation, or right to receive
consideration as a result of the Merger.
6.11 EMPLOYEES. Parent shall have received assurances reasonably
satisfactory to it that none of the individuals identified on EXHIBIT G shall
have ceased to be employed by, or expressed an intention to terminate their
employment with, the Company.
6.12 TERMINATION OF CERTAIN AGREEMENTS. The Company shall have provided
Parent with evidence, reasonably satisfactory to Parent, as to the termination
of those agreements listed in Section 5.11.
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6.13 CLOSING OF SERIES C INVESTMENT. Parent and PPD shall have closed
the acquisition of Parent Series C Preferred Stock by PPD (the "Series C
Investment").
6.14 AMENDED AND RESTATED CERTIFICATE. The Amended and Restated
Certificate shall have been accepted for filing by the Secretary of State of the
State of Delaware.
6.15 COMPANY AMENDED AND RESTATED CERTIFICATE. The Company Amended and
Restated Certificate shall have been accepted for filing by the Secretary of
State of the State of Delaware.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Parent and Merger Sub in this Agreement shall have been
accurate in all material respects as of the date of this Agreement (except to
the extent that such representations and warranties relate to a specific date,
in which case such representations and warranties shall be accurate on and as of
such specific date), and shall be accurate in all material respects as of the
Closing as if made at the Closing (except to the extent that such
representations and warranties relate to a specific date, in which case such
representations and warranties shall be accurate on and as of such specific
date); provided, however, that for purposes of determining the accuracy of such
representations and warranties for purposes of this Section 7.1, all "Material
Adverse Effect," other materiality qualifications and other similar
qualifications contained in such representations and warranties shall be
disregarded.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 DOCUMENTS. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Godward LLP, dated as of the
Closing Date, in the form of EXHIBIT T;
(b) a legal opinion of Xxxxxx Xxxxxx White & XxXxxxxxx LLP (or,
if Xxxxxx Xxxxxx White & XxXxxxxxx LLP for any reason does not render
such legal opinion, a legal opinion of Xxxxxx Godward LLP), dated as of
the Closing Date, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, such counsel may rely upon
the tax representation letters referred to in Section 5.6; and
(c) an Escrow Agreement in the form of EXHIBIT C, executed by
Parent and the Escrow Agent, which Escrow Agreement shall be in full
force and effect.
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7.4 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.5 ABSENCE OF MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, there shall not have occurred any Material Adverse Effect on Parent,
and no event shall have occurred or circumstance shall exist that, in
combination with any other events or circumstances, could reasonably be expected
to have a Material Adverse Effect on Parent.
7.6 HSR ACT. The waiting period applicable to the consummation of the
exercise of the PPD Call under the HSR Act shall have expired or been
terminated, and there shall not be in effect any voluntary agreement between PPD
and the Federal Trade Commission or the Department of Justice pursuant to which
PPD has agreed not to consummate the exercise of the PPD Call for any period of
time; any similar waiting period applicable to the Merger or the exercise of the
PPD Call under any applicable foreign antitrust law or regulation shall have
expired or been terminated; and any Consent required under any applicable
foreign antitrust law or regulation in connection with the Merger or the
exercise of the PPD Call shall have been obtained.
7.7 AMENDED AND RESTATED CERTIFICATE. The Amended and Restated
Certificate shall have been accepted for filing by the Secretary of State of the
State of Delaware.
7.8 DIRECTOR APPOINTMENT. The Company shall have received evidence
reasonably satisfactory to it that immediately after the Closing, PPD shall have
the right to appoint one member of the board of directors of Parent.
7.9 COMPANY AMENDED AND RESTATED CERTIFICATE. The Company Amended and
Restated Certificate shall have been accepted for filing by the Secretary of
State of the State of Delaware.
7.10 CLOSING OF SERIES C INVESTMENT. Parent and PPD shall have closed
the Series C Investment.
SECTION 8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Parent if Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become
impossible (other than as a result of any failure on the part of Parent
or Merger Sub to comply with or perform any covenant or obligation of
Parent or Merger Sub set forth in this Agreement);
(b) by the Company if the Company reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of the
Company to comply with or perform any covenant
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or obligation set forth in this Agreement or in any other agreement or
instrument delivered to Parent);
(c) by Parent if the Closing has not taken place on or before
January 15, 2001 (other than as a result of any failure on the part of
Parent to comply with or perform any covenant or obligation of Parent
set forth in this Agreement);
(d) by the Company if the Closing has not taken place on or
before January 15, 2001 (other than as a result of the failure on the
part of the Company to comply with or perform any covenant or obligation
set forth in this Agreement or in any other agreement or instrument
delivered to Parent);
(e) by either Parent or the Company if a Governmental Body shall
have issued a final and nonappealable order, decree or ruling, or shall
have taken any other action, having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(f) by the mutual consent of Parent and the Company.
8.2 TERMINATION PROCEDURES. If Parent wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Parent shall
deliver to the Company a written notice stating that Parent is terminating this
Agreement and setting forth a brief description of the basis on which Parent is
terminating this Agreement. If the Company wishes to terminate this Agreement
pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(e), the Company shall
deliver to Parent a written notice stating that the Company is terminating this
Agreement and setting forth a brief description of the basis on which the
Company is terminating this Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) neither the Company nor Parent shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 10; and (c) the Company shall, in all events, remain bound by and
continue to be subject to Section 5.4.
SECTION 9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the parties
(including the representations and warranties set forth in Section 2 and Section
3) shall survive until the February 28, 2002 (the "Termination Date"); provided,
however, that if, at any time prior to the Termination Date, any Parent
Indemnitee or Stockholder Indemnitee (acting in good faith) delivers to the
Stockholders' Agent or Parent, as the case may be, a written notice alleging the
existence of an inaccuracy in or a breach of any of the representations and
warranties made by the Company, on the one hand, or Parent and Merger Sub, on
the other hand, (and setting forth in reasonable detail the basis for such
Indemnitee's belief that such an inaccuracy or breach may
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exist) and asserting a claim for recovery under Section 9.2 based on such
alleged inaccuracy or breach, then the claim asserted in such notice shall
survive the Termination Date until such time as such claim is fully and finally
resolved.
(b) The representations, warranties, covenants and obligations
of the Company, on the one hand, and Parent and Merger Sub, on the other hand,
and the rights and remedies that may be exercised by the Indemnitees, shall not
be limited or otherwise affected by or as a result of any information furnished
to, or any investigation made by or knowledge of, any of the Indemnitees or any
of their Representatives.
(c) For purposes of this Agreement, (i) each statement or other
item of information set forth in the Company Disclosure Schedule or in any
update to the Company Disclosure Schedule shall be deemed to be a representation
and warranty made by the Company in this Agreement and (ii) each statement or
other item of information set forth in the Parent Disclosure Schedule or in any
update to the Parent Disclosure Schedule shall be deemed to be a representation
and warranty made by Parent and Merger Sub in this Agreement.
9.2 INDEMNIFICATION.
(a) INDEMNIFICATION BY MAJOR STOCKHOLDERS. From and after the
Closing (but subject to Section 9.1(a), 9.3 and 9.4), the Major Stockholders,
jointly and severally shall hold harmless and indemnify each of the Parent
Indemnitees from and against, and shall compensate and reimburse each of the
Parent Indemnitees for, any Damages that are suffered or incurred by any of the
Parent Indemnitees or to which any of the Parent Indemnitees may otherwise
become subject (regardless of whether or not such Damages relate to any
third-party claim) and that arise from or as a result of, or are directly or
indirectly connected with: (i) any inaccuracy in or breach of any representation
or warranty made by the Company in Section 2 of this Agreement (without giving
effect to any "Material Adverse Effect" or other materiality qualification or
any similar qualification contained or incorporated directly in such
representation or warranty, and without giving effect to any update to the
Company Disclosure Schedule delivered by the Company to Parent prior to the
Closing); (ii) any inaccuracy in or breach of any representation or warranty
made by the Company in Section 2 as if such representation and warranty had been
made on and as of the Closing Date (except for such representations and
warranties that address matters only as of a particular time, which need only be
accurate as of such time) (after having given effect to any updates to the
Company Disclosure Schedule delivered to Parent prior to the Closing pursuant to
Section 4.3(b), but without giving effect to any "Material Adverse Effect" or
other materiality qualification or any similar qualification contained or
incorporated directly in such representation or warranty); (iii) any breach of
any covenant or obligation of the Company in this Agreement to be performed
prior to the Closing (including, without limitation, the covenants set forth in
Sections 4 and 5); (iv) any claim or demand made by the Company's legal counsel,
accountants, the Company Financial Advisors or other advisors with respect to
fees, costs or expenses payable to them in connection with the transactions
contemplated by this Agreement to the extent that such fees, costs and expenses
constitute Excess Transaction Expenses and exceed the Excess Transaction
Expenses, if any, used in determining the Parent Share Number in Section 1.5; or
(v) any Legal Proceeding relating to (Y) any inaccuracy or breach of the type
referred to in clause "(i)," "(ii)" or "(iii)" above or (Z) any claim or demand
of the type referred to in clause "(iv)" above (including with
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respect to each of clause "(Y)" and clause "(Z)" of this clause "(v)," any Legal
Proceeding commenced by any Parent Indemnitee for the purpose of enforcing any
of its rights under this Section 9).
(b) INDEMNIFICATION BY PARENT. From and after the Closing (but
subject to Section 9.1(a), 9.3 and 9.4), Parent shall hold harmless and
indemnify each of the Stockholder Indemnitees from and against, and shall
compensate and reimburse each of the Stockholder Indemnitees for, any Damages
that are suffered or incurred by any of the Stockholder Indemnitees or to which
any of the Stockholder Indemnitees may otherwise become subject (regardless of
whether or not such Damages relate to any third-party claim) and that arise from
or as a result of, or are directly or indirectly connected with: (i) any
inaccuracy in or breach of any representation or warranty made by Parent and
Merger Sub in Section 3 of this Agreement (without giving effect to any
"Material Adverse Effect" or other materiality qualification or any similar
qualification contained or incorporated directly in such representation or
warranty, and without giving effect to any update to the Parent Disclosure
delivered by Parent to the Company prior to the Closing); (ii) any inaccuracy in
or breach of any representation or warranty made by Parent and Merger Sub in
Section 3 as if such representation and warranty had been made on and as of the
Closing Date (except for such representations and warranties that address
matters only as of a particular time, which need only be accurate as of such
time) (after having given effect to any updates to the Parent Disclosure
Schedule delivered to the Company prior to the Closing pursuant to Section
4.4(b), but without giving effect to any "Material Adverse Effect" or other
materiality qualification or any similar qualification contained or incorporated
directly in such representation or warranty); (iii) any breach of any covenant
or obligation of Parent or Merger Sub in this Agreement to be performed prior to
the Closing (including, without limitation, the covenants set forth in Sections
4 and 5); or (iv) any Legal Proceeding relating to any inaccuracy or breach of
the type referred to in clause "(i)," "(ii)" or "(iii)" above (including any
Legal Proceeding commenced by any Stockholder Indemnitee for the purpose of
enforcing any of its rights under this Section 9).
9.3 DEDUCTIBLE. The Major Stockholders, on the one hand, and Parent, on
the other hand, shall not be required to make any indemnification payment
pursuant to Section 9.2(a) or Section 9.2(b), as the case may be, for any
inaccuracy in or breach of any of (a) the Company's representations and
warranties set forth in this Agreement (in the case of the Major Stockholders)
or (b) Parent and Merger Sub's representations and warranties in this Agreement
(in the case of Parent) until such time as the total amount of all Damages
(including, without limitation, the Damages arising from such inaccuracy or
breach and all other Damages arising from any other inaccuracies in or breaches
of any representations or warranties) that have been directly or indirectly
suffered or incurred by any one or more of the Parent Indemnitees or the
Stockholder Indemnitees, as the case may be, or to which any one or more of the
Parent Indemnitees or the Stockholder Indemnitees, as the case may be, has or
have otherwise become subject, exceeds $500,000 in the aggregate. If the total
amount of such Damages exceeds $500,000, then the Parent Indemnitees or the
Stockholder Indemnitees, as the case may be, shall be entitled to be indemnified
against and compensated and reimbursed only for the portion of such Damages that
exceeds $500,000. Notwithstanding the preceding sentence, no individual claim or
series of related claims for indemnification under this Section 9 may be
asserted unless it is (or they are) for an amount in excess of $15,000.
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9.4 EXCLUSIVE REMEDY FOR MONETARY DAMAGES.
(a) From and after the Closing, the total aggregate liability of
the Major Stockholders for Damages arising under Section 9.2(a) shall not exceed
the Escrow Fund. From and after the Closing, the total aggregate liability of
Parent for Damages arising under Section 9.2(b) shall not exceed a cash amount
equal to the aggregate value (as of the Closing Date) of the Parent Capital
Stock held in the Escrow Fund.
(b) Nothing in this Section 9.4 or elsewhere in this Agreement
shall affect the parties' rights to specific performance or other equitable
remedies with respect to the covenants referred to in this Agreement to be
performed after the Closing.
(c) In the absence of fraud or intentional misconduct, from and
after the Closing, this Section 9 sets forth the exclusive remedy for monetary
Damages owing from the Indemnitors to the Indemnitees that arise from the
matters described in Section 9.2.
9.5 NO CONTRIBUTION.
No stockholder of the Company shall have any right of contribution,
right of indemnity or other right or remedy against the Surviving Corporation in
connection with any indemnification obligation or any other liability to which
he may become subject under or in connection with this Agreement.
9.6 INTEREST. If the Major Stockholders, on the one hand, or Parent, on
the other hand, are required to hold harmless, indemnify, compensate or
reimburse any Parent Indemnitee or Stockholder Indemnitee, as the case may be,
pursuant to this Section 9 with respect to any Damages, then the Major
Stockholders or Parent, as the case may be, shall also be liable to such Parent
Indemnitee or Stockholder Indemnitee, as the case may be, for interest on the
amount of such Damages (for the period commencing as of the date on which such
the Major Stockholders or Parent, as the case may be, first received notice of a
claim for recovery by such Parent Indemnitee or Stockholder Indemnitee, as the
case may be, and ending on the date on which the liability of the Major
Stockholders or Parent, as the case may be, to is fully satisfied) at a floating
rate equal to the rate of interest publicly announced by Bank of America, N.T. &
S.A. from time to time as its prime, base or reference rate.
9.7 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against the
Surviving Corporation, against Parent or against any other Person) with respect
to which any of the Major Stockholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 9,
Parent shall have the right, at its election, to proceed with the defense of
such claim or Legal Proceeding on its own. If Parent so proceeds with the
defense of any such claim or Legal Proceeding:
(a) all reasonable expenses relating to the defense of such
claim or Legal Proceeding shall be borne and paid exclusively by the
Major Stockholders;
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(b) each Major Stockholder shall make available to Parent any
documents and materials in his possession or control that may be
necessary to the defense of such claim or Legal Proceeding; and
(c) Parent shall not have the right to settle, adjust or
compromise such claim or Legal Proceeding with the consent of the
Stockholders' Agent (as defined in Section 10.1); provided, however,
that such consent shall not be unreasonably withheld.
Parent shall give the Stockholders' Agent prompt notice of the commencement of
any such Legal Proceeding against Parent or the Surviving Corporation; provided,
however, that any failure on the part of Parent to so notify the Stockholders'
Agent shall not limit any of the obligations of the Major Stockholder under this
Section 9 (except to the extent such failure materially prejudices the defense
of such Legal Proceeding).
9.8 EXERCISE OF REMEDIES BY PARENT INDEMNITEES OTHER THAN PARENT. No
Parent Indemnitee (other than Parent or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless Parent (or any successor thereto or assign
thereof) shall have consented to the assertion of such indemnification claim or
the exercise of such other remedy.
SECTION 10. MISCELLANEOUS PROVISIONS
10.1 STOCKHOLDERS' AGENTS. By virtue of their adoption of this Agreement
and approval of the transactions contemplated hereby, the stockholders of the
Company hereby irrevocably appoint Xxxx Xxxxxx and Xxxx Xxxxxxxxx as their joint
agents for purposes of Section 9 (the "Stockholders' Agents"), and Xxxx Xxxxxx
and Xxxx Xxxxxxxxx hereby accept their appointment as the Stockholders' Agents.
Parent shall be entitled to deal exclusively with the Stockholders' Agents on
all matters relating to Section 9, and shall be entitled to rely conclusively
(without further evidence of any kind whatsoever) on any document executed or
purported to be executed on behalf of any Merger Stockholder by both of the
Stockholders' Agents, and on any other action taken or purported to be taken on
behalf of any Merger Stockholder by the Stockholders' Agents, as fully binding
upon such stockholder. If one of the Stockholders' Agents shall die, become
disabled or otherwise be unable to fulfill his responsibilities as agent of the
Merger Stockholders, then the Merger Stockholders shall, within ten days after
such death or disability, appoint a successor agent and, promptly thereafter,
shall notify Parent of the identity of such successor. Any such successor shall
become a "Stockholders' Agents" for purposes of Section 9 and this Section 10.1.
If for any reason there is no Stockholders' Agent at any time, all references
herein to the Stockholders' Agents shall be deemed to refer to the Merger
Stockholders.
10.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
10.3 FEES AND EXPENSES. Subject to Section 9.2(a), each party to this
Agreement shall bear and pay all fees, costs and expenses (including legal fees,
costs and expenses and accounting fees, costs and expenses) that have been
incurred or that are incurred by such party in connection with the transactions
contemplated by this Agreement.
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10.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
10.5 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
IF TO PARENT:
DNA Sciences, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX. 00000
Attention:
Phone: (650)
Fax: (650)
WITH A COPY TO:
Cooley Godward LLP
3000 El Camino Real
0 Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
IF TO THE COMPANY:
PPGx, Inc.
00000 Xxxxx Xxxxxx Xxxxx Xxxx
Xx Xxxxx, XX 00000
Attention: Xxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
WITH A COPY TO:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
IF TO THE STOCKHOLDERS' AGENTS:
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Xxxx Xxxxxxxxx
Pharmaceutical Product Development, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Xxxx Xxxxxx
Axys Pharmaceuticals, Inc.
000 Xxxxxxx Xxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
10.6 CONFIDENTIALITY. Without limiting the generality of anything
contained in Section 5.6, on and at all times after the Closing Date, each party
to this Agreement shall keep confidential, and shall not use or disclose to any
other Person, any non-public document or other non-public information in such
stockholder's possession that relates to the business of the Company or Parent.
10.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.8 HEADINGS. The underlined headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.10 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the internal laws of the State of
Delaware (without giving effect to principles of conflicts of laws).
10.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns (if any), Parent and its successors and
assigns (if any), and Merger Sub and its successors and assigns (if any). This
Agreement shall inure to the benefit of: the Company, the Company's stockholders
(to the extent set forth in Section 1.5) and the Stockholder Indemnitees (to the
extent set forth in Section 9), the holders of assumed Company Options (to the
extent set forth in Section 1.6), Parent, Merger Sub, the other Parent
Indemnitees (subject to Section 9.6), and the respective successors and assigns
(if any) of the foregoing. Parent may freely assign any or all of its rights
under Section 9, in whole or in part, to any other Person without obtaining the
consent or approval of any other party hereto or of any other Person.
10.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
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available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (b) an injunction restraining such breach or threatened breach.
10.13 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
10.14 AMENDMENTS. This Agreement may not be amended, modified, altered
or supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
10.15 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.16 PARTIES IN INTEREST. Except for the provisions of Sections 1.5,
1.6 and 9, none of the provisions of this Agreement is intended to provide any
rights or remedies to any Person other than the parties hereto and their
respective successors and assigns (if any).
10.17 ENTIRE AGREEMENT. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof; provided, however, that the Confidentiality and
Non-Disclosure Agreement executed on behalf of Parent and the Company on
September 6, 2000 shall not be superseded by this Agreement and shall remain in
effect in accordance with its terms until the earlier of (a) the Effective Time,
or (b) the date on which such Confidentiality and Nondisclosure Agreement is
terminated in accordance with its terms.
10.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the
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feminine and neuter genders; the feminine gender shall include the masculine and
neuter genders; and the neuter gender shall include the masculine and feminine
genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
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The parties hereto have caused this Agreement to be executed and
delivered as of December 17, 2000.
DNA SCIENCES, INC.,
a Delaware corporation
By:
--------------------------------------
Chief Business Officer,
DNA Sciences, Inc.
PIPO ACQUISITION CORP.,
a Delaware corporation
By:
--------------------------------------
President and Chief Executive Officer,
PIPO Acquisition Corp.
PPGx, INC.,
a Delaware corporation
By:
--------------------------------------
President,
PPGx, Inc.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of the any of the Acquired Corporations' business or
assets;
(b) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of any of the Acquired Corporations'
(other than common stock issued to employees of the Acquired
Corporations, upon exercise of Company Options or otherwise, in routine
transactions in accordance with the Acquired Corporations' past
practices), (ii) any option, call or right (whether or not immediately
exercisable) to acquire any capital stock or other equity security of
the any of the Acquired Corporations (other than stock options granted
to employees of the Acquired Corporations in routine transactions in
accordance with the Acquired Corporations' past practices), or (iii) any
security, instrument or obligation that is or may become convertible
into or exchangeable for any capital stock or other equity security of
any of the Acquired Corporations; or
(c) any merger, consolidation, business combination,
reorganization or similar transaction involving any of the Acquired
Corporations.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Company
Disclosure Schedule and the Parent Disclosure Schedule), as it may be amended
from time to time.
COMPANY CAPITAL STOCK. "Company Capital Stock" shall mean, collectively,
the Company Common Stock and the Company Series A Preferred Stock.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the schedule (dated as of the date of the Agreement) delivered to Parent on
behalf of the Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
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ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCESS TRANSACTION EXPENSES. "Excess Transaction Expenses" shall mean
(A) 50% of the first $400,000 in aggregate fees, costs and expenses payable by
the Company to the Company's legal counsel, accountants and other advisors
(other than P2 Partners (the "Company Financial Advisor") and incurred in
connection with the transactions contemplated by this Agreement, plus (B) 100%
of the aggregate fees, costs and expenses payable to the Company's legal
counsel, accountants and other advisors (other than the Company Financial
Advisor) in excess of $400,000 and incurred in connection with the transactions
contemplated by this Agreement, plus (C) all fees, costs and expenses payable by
the Company to the Company Financial Advisor and incurred in connection with the
transactions contemplated by this Agreement.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority or
component of any nature (including any governmental branch, division,
department, agency, commission, instrumentality, official, organization, unit,
body or Entity and any court or other tribunal).
INDEMNITEES. "Indemnitees" shall mean the Parent Indemnitees and the
Stockholder Indemnitees.
KNOWLEDGE. Information shall be deemed "known to" or "to the Knowledge"
of the Company if that information is actually known by any of Xxxx Xxxxx or
Xxxx Xxxx or should be known to such individual after reasonable inquiry by such
individual. Information shall be deemed "known to" or "to the Knowledge" of
Parent if that information is actually known by any officer or director of
Parent or should be known to such officer or director after reasonable inquiry
by such officer or director.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
publicly available administrative interpretation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A "Material Adverse Effect" on the Acquired
Corporations means any change, effect, event, occurrence, state of facts or
development that is materially adverse to the business, condition, assets,
liabilities, operations or financial performance of one or more of the Acquired
Corporations. A "Material Adverse Effect" on Parent means any change, effect,
event, occurrence, state of facts or development that is materially adverse to
the business, condition, assets, liabilities, operations or financial
performance of Parent; provided, however, that any adverse change, effect,
event, occurrence, state of facts or development affecting Parent's ability to
obtain or arrange public or private debt or equity financing on terms acceptable
to Parent or otherwise adversely affecting the financial markets in general or
the financial markets for the industry sector in which Parent competes shall not
be deemed to constitute, nor taken into account in determining whether there has
been, a Material Adverse
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Effect on Parent; provided further however, that any adverse change, effect,
event, occurrence, state of facts or development referred to in the preceding
proviso will be taken into account in determining whether there has been a
Material Adverse Effect on Parent (but will not in and of itself constitute a
Material Adverse Effect on Parent) if such adverse change, effect, event,
occurrence, state of facts or development resulted from the gross negligence or
willful misconduct of Parent or its Representatives and such adverse change,
effect, event, occurrence, state of facts or development has resulted in an
obligation of Parent to pay money damages in an amount in excess of $300,000.
PARENT DISCLOSURE SCHEDULE. "Parent Disclosure Schedule" shall mean the
schedule (dated as of the date of the Agreement) delivered to the Company on
behalf of Parent and Merger Sub.
PARENT INDEMNITEES. "Parent Indemnitees" shall mean the following
Persons: (a) Parent; (b) Parent's current and future affiliates (including the
Surviving Corporation); (c) the respective Representatives of the Persons
referred to in clauses "(a)" and "(b)" above; and (d) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that the stockholders of the Company shall not be deemed to
be "Parent Indemnitees."
PARENT PREFERRED STOCK. "Parent Preferred Stock" shall mean
collectively, the Series A Preferred Stock ($0.001 par value per share) of
Parent, the Series B Preferred Stock ($0.001 par value per share) of Parent, the
Parent Series C Preferred Stock and the Parent Series D Preferred Stock.
PARENT SERIES C PREFERRED STOCK. "Parent Series C Preferred Stock" shall
mean the Series C Preferred Stock (0.001 par value per share) of Parent.
PERMITTED ENCUMBRANCE. "Permitted Encumbrance" shall mean any (i) any
Encumbrance for Taxes (other than income taxes) either not yet due and payable
or being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the Acquired Corporation Financial
Statements in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered and (ii) mechanic's,
materialmen's, workmen's, warehousemen's and other similar liens incurred in the
ordinary course of business with respect to obligations that are not past due or
that are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the Acquired Corporation Financial
Statements in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (b) at least 50% of
the outstanding equity or financial interests or such Entity.
STOCKHOLDER INDEMNITEES. "Stockholder Indemnitees" shall mean the
following Persons: (a) the Merger Stockholders; (b) the Merger Stockholders'
current and future affiliates; (c) the respective Representatives of the Persons
referred to in clauses "(a)" and "(b)" above; and (d) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that the Company shall not be deemed to be a "Stockholder
Indemnitee."
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
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business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(d) the sale, license, disposition or acquisition of all or a
material portion of the any of the Acquired Corporations' business or
assets;
(e) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of any of the Acquired Corporations'
(other than common stock issued to employees of the Acquired
Corporations, upon exercise of Company Options or otherwise, in routine
transactions in accordance with the Acquired Corporations' past
practices), (ii) any option, call or right (whether or not immediately
exercisable) to acquire any capital stock or other equity security of
the any of the Acquired Corporations (other than stock options granted
to employees of the Acquired Corporations in routine transactions in
accordance with the Acquired Corporations' past practices), or (iii) any
security, instrument or obligation that is or may become convertible
into or exchangeable for any capital stock or other equity security of
any of the Acquired Corporations; or
(f) any merger, consolidation, business combination,
reorganization or similar transaction involving any of the Acquired
Corporations.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached (including the Company
Disclosure Schedule and the Parent Disclosure Schedule), as it may be amended
from time to time.
COMPANY CAPITAL STOCK. "Company Capital Stock" shall mean, collectively,
the Company Common Stock and the Company Series A Preferred Stock.
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the schedule (dated as of the date of the Agreement) delivered to Parent on
behalf of the Company.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan or legally binding commitment or undertaking of
any nature.
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DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCESS TRANSACTION EXPENSES. "Excess Transaction Expenses" shall mean
(A) 50% of the first $400,000 in aggregate fees, costs and expenses payable by
the Company to the Company's legal counsel, accountants and other advisors
(other than P2 Partners (the "Company Financial Advisor") and incurred in
connection with the transactions contemplated by this Agreement, plus (B) 100%
of the aggregate fees, costs and expenses payable to the Company's legal
counsel, accountants and other advisors (other than the Company Financial
Advisor) in excess of $400,000 and incurred in connection with the transactions
contemplated by this Agreement, plus (C) all fees, costs and expenses payable by
the Company to the Company Financial Advisor and incurred in connection with the
transactions contemplated by this Agreement.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority or
component of any nature (including any governmental branch, division,
department, agency, commission, instrumentality, official, organization, unit,
body or Entity and any court or other tribunal).
INDEMNITEES. "Indemnitees" shall mean the Parent Indemnitees and the
Stockholder Indemnitees.
KNOWLEDGE. Information shall be deemed "known to" or "to the Knowledge"
of the Company if that information is actually known by any of Xxxx Xxxxx or
Xxxx Xxxx or should be known to such individual after reasonable inquiry by such
individual. Information shall be deemed "known to" or "to the Knowledge" of
Parent if that information is actually known by any officer or director of
Parent or should be known to such officer or director after reasonable inquiry
by such officer or director.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
publicly available administrative interpretation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Body.
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MATERIAL ADVERSE EFFECT. A "Material Adverse Effect" on the Acquired
Corporations means any change, effect, event, occurrence, state of facts or
development that is materially adverse to the business, condition, assets,
liabilities, operations or financial performance of one or more of the Acquired
Corporations. A "Material Adverse Effect" on Parent means any change, effect,
event, occurrence, state of facts or development that is materially adverse to
the business, condition, assets, liabilities, operations or financial
performance of Parent; provided, however, that any adverse change, effect,
event, occurrence, state of facts or development affecting Parent's ability to
obtain or arrange public or private debt or equity financing on terms acceptable
to Parent or otherwise adversely affecting the financial markets in general or
the financial markets for the industry sector in which Parent competes shall not
be deemed to constitute, nor taken into account in determining whether there has
been, a Material Adverse Effect on Parent; provided further however, that any
adverse change, effect, event, occurrence, state of facts or development
referred to in the preceding proviso will be taken into account in determining
whether there has been a Material Adverse Effect on Parent (but will not in and
of itself constitute a Material Adverse Effect on Parent) if such adverse
change, effect, event, occurrence, state of facts or development resulted from
the gross negligence or willful misconduct of Parent or its Representatives and
such adverse change, effect, event, occurrence, state of facts or development
has resulted in an obligation of Parent to pay money damages in an amount in
excess of $300,000.
PARENT DISCLOSURE SCHEDULE. "Parent Disclosure Schedule" shall mean the
schedule (dated as of the date of the Agreement) delivered to the Company on
behalf of Parent and Merger Sub.
PARENT INDEMNITEES. "Parent Indemnitees" shall mean the following
Persons: (a) Parent; (b) Parent's current and future affiliates (including the
Surviving Corporation); (c) the respective Representatives of the Persons
referred to in clauses "(a)" and "(b)" above; and (d) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that the stockholders of the Company shall not be deemed to
be "Parent Indemnitees."
PARENT PREFERRED STOCK. "Parent Preferred Stock" shall mean
collectively, the Series A Preferred Stock ($0.001 par value per share) of
Parent, the Series B Preferred Stock ($0.001 par value per share) of Parent, the
Parent Series C Preferred Stock and the Parent Series D Preferred Stock.
PARENT SERIES C PREFERRED STOCK. "Parent Series C Preferred Stock" shall
mean the Series C Preferred Stock (0.001 par value per share) of Parent.
PERMITTED ENCUMBRANCE. "Permitted Encumbrance" shall mean any (i) any
Encumbrance for Taxes (other than income taxes) either not yet due and payable
or being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the Acquired Corporation Financial
Statements in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered and (ii) mechanic's,
materialmen's, workmen's, warehousemen's and other similar liens incurred in the
ordinary course of business with respect to obligations that are not past due or
that are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established on the Acquired Corporation Financial
Statements in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; or (b) right to use or exploit any of the
foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
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SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (b) at least 50% of
the outstanding equity or financial interests or such Entity.
STOCKHOLDER INDEMNITEES. "Stockholder Indemnitees" shall mean the
following Persons: (a) the Merger Stockholders; (b) the Merger Stockholders'
current and future affiliates; (c) the respective Representatives of the Persons
referred to in clauses "(a)" and "(b)" above; and (d) the respective successors
and assigns of the Persons referred to in clauses "(a)", "(b)" and "(c)" above;
provided, however, that the Company shall not be deemed to be a "Stockholder
Indemnitee."
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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EXHIBIT B
FORM OF
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Voting Agreement") is entered into as of
December___, 2000, by and between DNA SCIENCES, INC., a Delaware corporation
("DNA Sciences"), and PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. ("Stockholder").
RECITALS
- DNA Sciences, PIPO Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of DNA Sciences ("Merger Sub"), and
PPGx, Inc., a Delaware corporation ("PPGx"), are entering into
an Agreement and Plan of Merger and Reorganization of even date
herewith (the "Reorganization Agreement") which provides
(subject to the conditions set forth therein) for the merger of
Merger Sub with and into PPGx (the "Merger").
- Stockholder is a significant stockholder of PPGx and is an
accredited investor, as such term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended.
- In order to induce DNA Sciences to enter into the Reorganization
Agreement, Stockholder is entering into this Voting Agreement.
AGREEMENT
The parties to this Voting Agreement, intending to be legally bound,
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Voting Agreement:
(a) All capitalized terms used but not otherwise defined in this
Voting Agreement have the meanings given to them in the Reorganization
Agreement.
(b) "EXPIRATION DATE" shall mean the earlier of (i) the date
upon which the Reorganization Agreement is validly terminated, or (ii) the date
upon which the Merger becomes effective.
(c) Stockholder shall be deemed to "OWN" or to have acquired
"OWNERSHIP" of a security if Stockholder: (i) is the record owner of such
security; or (ii) is the "beneficial owner" (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934) of such security.
(d) "PERSON" shall mean any (i) individual, (ii) corporation,
limited liability company, partnership or other entity, or (iii) governmental
authority.
(e) "PPGX COMMON STOCK" shall mean the common stock, $.001 par
value per share, of PPGx.
(f) "PPGX PREFERRED STOCK" shall mean the Series A preferred
stock, $.001 par value per share, of PPGx.
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(g) "SUBJECT SECURITIES" shall mean: (i) all securities of PPGx
(including all shares of PPGx Common Stock, PPGx Preferred Stock and all
options, warrants and other rights to acquire shares of PPGx Common Stock and
PPGx Preferred Stock) Owned by Stockholder as of the date of this Voting
Agreement; and (ii) all additional securities of PPGx (including all additional
shares of PPGx Common Stock, PPGx Preferred Stock and all additional options,
warrants and other rights to acquire shares of PPGx Common Stock and PPGx
Preferred Stock) of which Stockholder acquires Ownership during the period from
the date of this Voting Agreement through the Expiration Date.
(h) A Person shall be deemed to have a effected a "TRANSFER" of
a security if such Person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security; or (ii) enters into an agreement or commitment
contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
SECTION 2. RESTRICTIONS ON TRANSFER OF SUBJECT SECURITIES
2.1 TRANSFER OF SUBJECT SECURITIES. Stockholder agrees that, during the
period from the date of this Voting Agreement through the Expiration Date,
Stockholder shall not cause or permit any Transfer of any of the Subject
Securities or any interest therein to be effected, and any such attempted
Transfer shall be null and void; provided, however, that nothing in this Voting
Agreement shall restrict Stockholder's ability to effect the transfer of any
shares of PPGx Common Stock or PPGx Preferred Stock under the "Axys Put" or the
"PPD Call," as such terms are defined in the PPGx Investor Rights Agreement, by
and among PPGx, Axys Pharmaceuticals, Inc. and PPD, Inc., dated as of February
1, 1999.
2.2 NO TRANSFER OF VOTING RIGHTS. Stockholder agrees that, during the
period from the date of this Voting Agreement through the Expiration Date,
Stockholder shall ensure that: (a) none of the Subject Securities is deposited
into a voting trust; and (b) no proxy is granted, and no voting agreement or
similar agreement is entered into, with respect to any of the Subject
Securities, except as contemplated by this Voting Agreement or the
Reorganization Agreement.
SECTION 3. VOTING OF SHARES
3.1 VOTING AGREEMENT. Stockholder agrees that, during the period from
the date of this Voting Agreement through the Expiration Date:
(a) at any meeting of stockholders of PPGx, however called,
Stockholder shall (unless otherwise directed in writing by DNA Sciences) cause
all outstanding shares of PPGx Common Stock and PPGx Preferred Stock that are
Owned by Stockholder as of the record date fixed for such meeting to be voted:
(i) in favor of the adoption of the Reorganization
Agreement and the approval of the Merger and the other transactions
contemplated by the Reorganization Agreement, and in favor of each of
the other actions contemplated by the Reorganization Agreement; and
(ii) against the following actions (other than the
Merger and the other transactions contemplated by the Reorganization
Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving PPGx or
any subsidiary of PPGx; (B) any sale, lease or transfer of a material
amount of assets of PPGx or any subsidiary of PPGx; (C) any
reorganization, recapitalization, dissolution or liquidation of any part
of PPGx or any subsidiary of PPGx; (D) any removal of or change in a
majority of the board of directors of PPGx or any
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subsidiary of PPGx; (E) except as required pursuant to the
Reorganization Agreement, any amendment to the certificate of
incorporation of PPGx, or to the certificate of incorporation of any
subsidiary of PPGx; (F) any material change in the capitalization or
corporate structure of PPGx or any subsidiary of PPGx; and (G) any other
action that is inconsistent with the Merger or that is intended, or
could reasonably be expected, to impede, interfere with, delay,
postpone, discourage or adversely affect the Merger or any of the other
transactions contemplated by the Reorganization Agreement or this Voting
Agreement.
(b) in the event written consents are solicited or otherwise
sought from stockholders of PPGx with respect to the approval or adoption of the
Reorganization Agreement, with respect to the approval of the Merger or with
respect to any of the other transactions contemplated by the Reorganization
Agreement, Stockholder shall (unless otherwise directed in writing by DNA
Sciences) cause to be executed, with respect to all outstanding shares of PPGx
Common Stock and PPGx Preferred Stock that are Owned by Stockholder as of the
record date fixed for the consent to the proposed action, a written consent or
written consents to such proposed action; and
(c) in the event written consents or proxies are solicited or
otherwise sought from stockholders of PPGx with respect to any of the matters
referred to in clauses "(A)" through "(G)" of clause "(ii)" of paragraph "(a)"
of this Section 3.1, Stockholder shall not execute or cause to be executed, with
respect to any outstanding shares of PPGx Common Stock and PPGx Preferred Stock
that are Owned by Stockholder as of the record date fixed for the consent to the
proposed action, a written consent or written consents or proxy or proxies in
favor of such proposed action.
3.2 PROXY; FURTHER ASSURANCES.
(a) Contemporaneously with the execution of this Voting
Agreement: (i) Stockholder shall deliver to DNA Sciences a proxy in the form
attached to this Voting Agreement as Exhibit A, which shall be irrevocable to
the fullest extent permitted by law, with respect to the shares referred to
therein (the "Proxy"); and (ii) Stockholder shall cause to be delivered to DNA
Sciences an additional proxy (in the form attached hereto as Exhibit A) executed
on behalf of the record owner of any outstanding shares of PPGx Common Stock and
PPGx Preferred Stock that are owned beneficially (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934), but not of record, by
Stockholder.
(b) Stockholder shall, at its own expense, perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in DNA Sciences the power to carry out and give effect to the
provisions of this Voting Agreement.
SECTION 4. WAIVER OF APPRAISAL RIGHTS
Stockholder hereby irrevocably and unconditionally waives, and agrees to
cause to be waived and to prevent the exercise of, any rights of appraisal, any
dissenters' rights and any similar rights relating to the Merger or any related
transaction that Stockholder or any other Person may have by virtue of the
ownership of any outstanding shares of PPGx Common Stock or PPGx Preferred Stock
Owned by Stockholder.
SECTION 5. NO SOLICITATION
Stockholder agrees that, during the period from the date of this Voting
Agreement through the Expiration Date, Stockholder shall not, directly or
indirectly, and Stockholder shall ensure that its Representatives (as defined in
the Reorganization Agreement) do not, directly or indirectly: (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Transaction (as defined in the Reorganization Agreement) or take any
action that could reasonably be expected to lead to an Acquisition Transaction;
(ii) furnish any information regarding the Company or any direct or indirect
subsidiary of the Company to any Person in connection with or in response to an
Acquisition Transaction or potential Acquisition Transaction; or (iii) engage in
discussions with any Person with respect to any Acquisition Transaction.
Stockholder shall immediately cease and discontinue, and
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Stockholder shall ensure that its Representatives immediately cease and
discontinue, any existing discussions with any Person that relate to any
Acquisition Transaction.
SECTION 6 REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
Stockholder hereby represents and warrants to DNA Sciences as follows:
6.1 AUTHORIZATION, ETC. Stockholder has the absolute and unrestricted
right, power and authority to enter into and to perform its obligations under
this Voting Agreement and the Proxy; and the execution, delivery and performance
by Stockholder of this Voting Agreement and the Proxy have been duly authorized
by all necessary action on the part of Stockholder and its board of directors.
This Voting Agreement and the Proxy constitute the legal, valid and binding
obligation of Stockholder, enforceable against Stockholder in accordance with
their terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
6.2 NO CONFLICTS OR CONSENTS
(a) The execution and delivery of this Voting Agreement and the
Proxy by Stockholder do not, and the performance of this Voting Agreement and
the Proxy by Stockholder will not: (i) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to Stockholder or by which it
or any of the Subject Shares are or may be bound or affected; or (ii) result in
or constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other Person (with or without notice or lapse of time) any
right of termination, amendment, acceleration or cancellation of, or result
(with or without notice or lapse of time) in the creation of any encumbrance or
restriction on any of the Subject Securities pursuant to, any contract to which
Stockholder is a party or by which Stockholder or any of its affiliates or
properties is or may be bound or affected.
(b) The execution and delivery of this Voting Agreement and the
Proxy by Stockholder do not, and the performance of this Voting Agreement and
the Proxy by Stockholder will not, require any consent or approval of any
Person.
6.3 TITLE TO SECURITIES. As of the date of this Voting Agreement: (a)
Stockholder holds of record, free and clear of any encumbrances or restrictions
(except for the rights associated with the PPD Call or the Axys Put), the number
of outstanding shares of PPGx Common Stock and PPGx Preferred Stock set forth
under the heading "Shares Held of Record" on the signature page hereof; (b)
Stockholder holds, free and clear of any encumbrances or restrictions (except
for the rights associated with the PPD Call or the Axys Put), the warrants and
other rights to acquire shares of PPGx Common Stock and PPGx Preferred Stock set
forth under the heading "Warrants and Other Rights" on the signature page
hereof; (c) Stockholder Owns the additional securities of PPGx set forth under
the heading "Additional Securities Beneficially Owned" on the signature page
hereof; and (d) Stockholder does not directly or indirectly Own any shares of
capital stock or other securities of PPGx, or any option, warrant or other right
to acquire, by purchase, conversion or otherwise (except for rights associated
with the PPD Call and the Axys Put), any shares of capital stock or other
securities of PPGx, other than the shares and options, warrants and other rights
set forth on the signature page hereof.
6.4 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in this Voting Agreement are accurate in all respects as of the date
of this Voting Agreement, will be accurate in all respects at all times through
the Expiration Date and will be accurate in all respects as of the date of the
consummation of the Merger as if made on that date, provided that the number of
shares of PPGx Common Stock and PPGx Preferred Stock held by Stockholder may be
different from those set forth on the signature page of this Voting Agreement at
the Closing, as a result of the exercise of the Axys Put or the PPD Call after
the date of this Voting Agreement.
SECTION 7. ADDITIONAL COVENANTS OF STOCKHOLDER
7.1 FURTHER ASSURANCES. From time to time and without additional
consideration, Stockholder shall (at Stockholder's sole expense) execute and
deliver, or cause to be executed and delivered, such additional transfers,
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assignments, endorsements, proxies, consents and other instruments, and shall
(at Stockholder's sole expense) take such further actions, as DNA Sciences may
request for the purpose of carrying out and furthering the intent of this Voting
Agreement.
7.2 LEGEND. Immediately after the execution of this Voting Agreement
(and from time to time upon the acquisition by Stockholder of Ownership of any
shares of PPGx Common Stock or PPGx Preferred Stock prior to the Expiration
Date), Stockholder shall ensure that each certificate evidencing any outstanding
shares of PPGx Common Stock or PPGx Preferred Stock or other securities of PPGx
Owned by Stockholder bears a legend in the following form:
THE SECURITY OR SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, EXCHANGED OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE VOTING AGREEMENT DATED
AS OF DECEMBER __, 2000, BETWEEN THE ISSUER AND DNA SCIENCES, INC., AS
IT MAY BE AMENDED, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE ISSUER.
SECTION 8. MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Stockholder in this Voting Agreement shall survive the
consummation of the Merger.
8.2 TERMINATION. This Voting Agreement shall terminate and shall have no
further force or effect as of the Expiration Date.
8.3 INDEMNIFICATION. Stockholder shall hold harmless and indemnify DNA
Sciences and DNA Sciences' directors, officers, employees and agents
(collectively "Affiliates") from and against, and shall compensate and reimburse
DNA Sciences and DNA Sciences' Affiliates for, any loss, damage, claim,
liability, fee (including attorneys' fees), demand, cost or expense (regardless
of whether or not such loss, damage, claim, liability, fee, demand, cost or
expense relates to a third-party claim) that is directly or indirectly suffered
or incurred by DNA Sciences or any of DNA Sciences' Affiliates, or to which DNA
Sciences or any of DNA Sciences' Affiliates otherwise becomes subject, and that
arises directly or indirectly from, or relates directly or indirectly to, (a)
any inaccuracy in or breach of any representation or warranty contained in this
Voting Agreement, or (b) any failure on the part of Stockholder to observe,
perform or abide by, or any other breach of, any restriction, covenant,
obligation or other provision contained in this Voting Agreement or in the
Proxy.
8.4 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Voting Agreement shall be paid by the party
incurring such costs and expenses.
8.5 NOTICES. Any notice or other communication required or permitted to
be delivered to either party under this Voting Agreement shall be in writing and
shall be deemed properly delivered, given and received when delivered (by hand,
by registered mail, by courier or express delivery service or by facsimile) to
the address or facsimile telephone number set forth beneath the name of such
party below (or to such other address or facsimile telephone number as such
party shall have specified in a written notice given to the other party):
if to Stockholder:
[ADDRESS]
if to DNA Sciences:
DNA SCIENCES, INC.
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0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX. 00000
Attention:
Phone: (000) 000-0000
Fax: (000) 000-0000
WITH A COPY TO:
XXXXXX GODWARD LLP
3000 El Camino Real
5 Palo Alto Square
Palo Alto, CA 4306
Attention: Xxxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
8.4 SEVERABILITY. If any provision of this Voting Agreement or any part
of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Voting Agreement. Each
provision of this Voting Agreement is separable from every other provision of
this Voting Agreement, and each part of each provision of this Voting Agreement
is separable from every other part of such provision.
8.7 ENTIRE AGREEMENT. This Voting Agreement, the Proxy and any other
documents delivered by the parties in connection herewith constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto. No addition to or modification of any provision of
this Voting Agreement shall be binding upon either party unless made in writing
and signed by both parties.
8.8 ASSIGNMENT; BINDING EFFECT. Except as provided herein, neither this
Voting Agreement nor any of the interests or obligations hereunder may be
assigned or delegated by Stockholder and any attempted or purported assignment
or delegation of any of such interests or obligations shall be void. Subject to
the preceding sentence, this Voting Agreement shall be binding upon Stockholder
and its successors and assigns, and shall inure to the benefit of DNA Sciences
and its successors and assigns. Without limiting any of the restrictions set
forth in Section 2 or elsewhere in this Voting Agreement, this Voting Agreement
shall be binding upon any Person to whom any Subject Securities are transferred.
Nothing in this Voting Agreement is intended to confer on any Person (other than
DNA Sciences and its successors and assigns) any rights or remedies of any
nature.
8.9 SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Voting Agreement or
the Proxy was not performed in accordance with its specific terms or was
otherwise breached. Stockholder agrees that, in the event of any breach or
threatened breach by Stockholder of any covenant or obligation contained in this
Voting Agreement or in the Proxy, DNA Sciences shall be entitled (in addition to
any other remedy that may be available to it, including monetary damages) to
seek (a) a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. Stockholder further agrees that neither DNA
Sciences nor any other Person shall be required to obtain, furnish or post any
bond or similar instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 8.9, and Stockholder irrevocably waives any
right it may have to require the obtaining, furnishing or posting of any such
bond or similar instrument.
8.10 NON-EXCLUSIVITY. The rights and remedies of DNA Sciences under this
Voting Agreement are not exclusive of or limited by any other rights or remedies
which it may have, whether at law, in equity, by contract or
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otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights and remedies of DNA
Sciences under this Voting Agreement, and the obligations and liabilities of
Stockholder under this Voting Agreement, are in addition to their respective
rights, remedies, obligations and liabilities under common law requirements and
under all applicable statutes, rules and regulations.
8.11 GOVERNING LAW; VENUE.
(a) This Voting Agreement and the Proxy shall be construed in
accordance with, and governed in all respects by, the laws of the State of
Delaware (without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Voting Agreement or the Proxy or the enforcement of any provision of this Voting
Agreement or the Proxy may be brought or otherwise commenced in any state or
federal court located in the County of Santa Clara, California. Stockholder:
(i) expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in the
County of Santa Clara, California (and each appellate court located in the State
of California), in connection with any such legal proceeding;
(ii)agrees that service of any process, summons,
notice or document by U.S. mail addressed to him at the address set forth in
Section 8.5 shall constitute effective service of such process, summons, notice
or document for purposes of any such legal proceeding;
(iii) agrees that each state and federal court
located in the County of Santa Clara, California, shall be deemed to be a
convenient forum; and
(iv)agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any state or
federal court located in the County of Santa Clara, California, any claim that
Stockholder is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum, that the venue
of such proceeding is improper or that this Voting Agreement or the subject
matter of this Voting Agreement may not be enforced in or by such court.
Nothing contained in this Section 8.11 shall be deemed to limit or otherwise
affect the right of DNA Sciences to commence any legal proceeding or otherwise
proceed against Stockholder in any other forum or jurisdiction.
(c) STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS VOTING AGREEMENT OR THE
PROXY OR THE ENFORCEMENT OF ANY PROVISION OF THIS VOTING AGREEMENT OR THE PROXY.
8.12 COUNTERPARTS. This Voting Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument.
8.13 CAPTIONS. The captions contained in this Voting Agreement are for
convenience of reference only, shall not be deemed to be a part of this Voting
Agreement and shall not be referred to in connection with the construction or
interpretation of this Voting Agreement.
8.14 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Voting Agreement or the enforcement of any provision of this
Voting Agreement is brought against Stockholder, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
8.15 WAIVER. No failure on the part of DNA Sciences to exercise any
power, right, privilege or remedy under this Voting Agreement, and no delay on
the part of DNA Sciences in exercising any power, right, privilege or remedy
under this Voting Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no
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single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. DNA Sciences shall not be deemed to have waived any claim
available to DNA Sciences arising out of this Voting Agreement, or any power,
right, privilege or remedy of DNA Sciences under this Voting Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of DNA
Sciences; and any such waiver shall not be applicable or have any effect except
in the specific instance in which it is given.
8.16 CONSTRUCTION.
(a) For purposes of this Voting Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include masculine and feminine genders.
(b) The parties agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Voting Agreement.
(c) As used in this Voting Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this Voting
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Voting Agreement and Exhibits to this Voting Agreement.
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IN WITNESS WHEREOF, DNA Sciences and Stockholder have caused this Voting
Agreement to be executed as of the date first written above.
DNA SCIENCES, INC.
By:
---------------------------------
STOCKHOLDER:
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
Name:
-----------------------------------
SHARES HELD OF RECORD WARRANTS AND OTHER RIGHTS ADDITIONAL SECURITIES BENEFICIALLY OWNED
EXHIBIT A
FORM OF IRREVOCABLE PROXY
The undersigned stockholder of PPGX, INC., a Delaware corporation
("PPGx"), hereby irrevocably (to the fullest extent permitted by law) appoints
and constitutes ______________, _______________ and DNA SCIENCES, INC., a
Delaware corporation ("DNA Sciences"), and each of them, the attorneys and
proxies of the undersigned with full power of substitution and resubstitution,
to the full extent of the undersigned's rights with respect to (i) the
outstanding shares of capital stock of PPGx owned of record by the undersigned
as of the date of this proxy, which shares are specified on the final page of
this proxy, and (ii) any and all other shares of capital stock of PPGx which the
undersigned may acquire on or after the date hereof. (The shares of the capital
stock of PPGx referred to in clauses "(i)" and "(ii)" of the immediately
preceding sentence are collectively referred to as the "Shares.") Upon the
execution hereof, all prior proxies given by the undersigned with respect to any
of the Shares are hereby revoked, and the undersigned agrees that no subsequent
proxies will be given with respect to any of the Shares.
This proxy is irrevocable, is coupled with an interest and is granted in
connection with the Voting Agreement, dated as of the date hereof, between DNA
Sciences and the undersigned (the "Voting Agreement"), and is granted in
consideration of DNA Sciences entering into the Agreement and Plan of Merger and
Reorganization, dated as of the date hereof, among DNA Sciences, PIPO
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of DNA
Sciences, and PPGx (the "Reorganization Agreement").
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the earlier to occur
of the valid termination of the Reorganization Agreement or the effective time
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of the merger contemplated thereby (the "Merger") at any meeting of the
stockholders of PPGx, however called, or in connection with any solicitation of
written consents from stockholders of PPGx:
(i) in favor of the adoption of the
Reorganization Agreement and the approval of the Merger and the other
transactions contemplated by the Reorganization Agreement, and in favor of each
of the other actions contemplated by the Reorganization Agreement; and
(ii) against the following actions (other than
the Merger and the other transactions contemplated by the Reorganization
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving PPGx or any subsidiary of
PPGx; (B) any sale, lease or transfer of a material amount of assets of PPGx or
any subsidiary of PPGx (other than in the ordinary course of business); (C) any
reorganization, recapitalization, dissolution or liquidation of any part of PPGx
or any subsidiary of PPGx; (D) any removal of or change in a majority of the
board of directors of PPGx or any subsidiary of PPGx; (E) any amendment to the
certificate of incorporation of PPGx, or to the certificate of incorporation of
any subsidiary of PPGx; (F) any material change in the capitalization or
corporate structure of PPGx or any subsidiary of PPGx; and (G) any other action
that is inconsistent with the Merger or that is intended, or could reasonably be
expected, to impede, interfere with, delay, postpone, discourage or adversely
affect the Merger or any of the other transactions contemplated by the
Reorganization Agreement or this Voting Agreement.
The undersigned may vote the Shares on all other matters.
This proxy shall be binding upon the successors and assigns of the
undersigned (including any transferee of any of the Shares).
If any provision of this proxy or any part of any such provision is held
under any circumstances to be invalid or unenforceable in any jurisdiction, then
(a) such provision or part thereof shall, with respect to such circumstances and
in such jurisdiction, be deemed amended to conform to applicable laws so as to
be valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
proxy. Each provision of this proxy is separable from every other provision of
this proxy, and each part of each provision of this proxy is separable from
every other part of such provision.
This proxy shall terminate upon the earlier of the valid termination of
the Reorganization Agreement or the effective time of the Merger.
Dated: November __, 2000.
[MAJOR STOCKHOLDER]
By:
--------------------------------------
Number of shares of common stock of PPGx
owned of record as of the date of this
proxy:
----------------------------------------
Number of shares of Series A preferred
stock of PPGx owned of record as of the
date of this proxy:
----------------------------------------
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EXHIBIT C
FORM OF
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") is made and entered into as of
December ___, 2000, by and among: DNA SCIENCES, INC., a Delaware corporation
("Parent"), Xxxxxxx Xxxxxx and Xxxx Xxxxxxxxx as Stockholders' Agents
("Stockholders' Agents"), and State Street Bank and Trust Company of California,
N.A., a national banking association (the "Escrow Agent").
RECITALS
A. Parent, PIPO Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and PPGx, Inc., a Delaware
corporation (the "Company"), have entered into an Agreement and Plan of Merger
and Reorganization dated as of December ___, 2000 (the "Reorganization
Agreement"), pursuant to which Merger Sub will merge with and into the Company
and the stockholders of the Company identified on EXHIBIT A (the "Stockholders")
will have the right to receive shares of capital stock of Parent.
B. The Reorganization Agreement contemplates the establishment of an
escrow arrangement to secure the indemnification and other obligations of the
Stockholders under the Reorganization Agreement.
C. Pursuant to Section 10.1 of the Reorganization Agreement and Section
10 of this Agreement, the Stockholders have irrevocably appointed Xxxxxxx Xxxxxx
and Xxxx Xxxxxxxxx to serve as Stockholders' Agents for, among other things, all
matters set forth in Section 9 of the Reorganization Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINED TERMS. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given to them in the Reorganization
Agreement, a copy of which is attached hereto.
2. ESCROW AND INDEMNIFICATION.
(a) SHARES PLACED IN ESCROW. On the Closing Date, which shall be set
forth in a notice to the Escrow Agent, Parent shall deliver to
the Escrow Agent, on behalf of
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the Stockholders, a certificate representing the shares of
Parent common stock (par value $.001 per share) ("Common Stock")
and Parent Series D preferred stock (par value $.001 per share)
(collectively, with the Common Stock, "Parent Capital Stock"),
registered in the name of Embassy & Co., as nominee of the
Escrow Agent, to be held in escrow in accordance with this
Agreement. The shares of Parent Capital Stock being held in
escrow pursuant to this Agreement (together with any securities
or other property paid or distributed in respect of or in
exchange for such Escrow Shares as contemplated by Section 2(c)
(the "Escrow Shares") shall constitute an escrow fund (the
"Escrow Fund") with respect to the indemnification, compensation
and reimbursement obligations of the Stockholders under the
Reorganization Agreement. The Escrow Fund shall be held as a
trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of
any Stockholder or of any party hereto. The Escrow Agent agrees
to accept delivery of the Escrow Fund and to hold the Escrow
Fund in an escrow account (the "Escrow Account"), subject to the
terms and conditions of this Agreement.
(b) VOTING OF ESCROW SHARES. Each Stockholder shall be entitled to
exercise all voting rights with respect to the Escrow Shares
being held in the Escrow Account on behalf of such Stockholder
and Parent shall take all reasonable steps necessary to timely
allow the exercise of such voting rights, including the delivery
of proxies or other notices to Stockholders. Each Stockholder
shall be entitled to exercise such voting rights by delivering
to Parent in a timely manner written instructions with respect
to the manner in which such Stockholder desires the Escrow
Shares being held in the Escrow Account on behalf of such
Stockholder be voted. Even though a nominee of the Escrow Agent
will be the record owner of the Escrow Shares, the Escrow Agent
need not (i) vote the shares or (ii) furnish to any of the
Stockholders or to the Stockholders' Agents originals or copies
of any proxy materials, annual reports or other documents the
Escrow Agent may receive from Parent with respect to the Escrow
Shares.
(c) DIVIDENDS, ETC. Parent and each of the Stockholders agree among
themselves, for the benefit of Parent and the Escrow Agent, that
any securities payable or distributable (whether by way of
dividend, stock split or otherwise) in respect of or in exchange
for any Escrow Shares shall not be paid or distributed to the
Stockholders, but rather shall be paid and distributed to and
held by the Escrow Agent in the Escrow Account; provided,
however, that other property payable or distributable (whether
by way of dividend, stock split or otherwise) in respect of or
in exchange for any Escrow Shares, including ordinary cash
dividends, will be paid or distributed by Parent directly to the
Stockholders and not to the Escrow Agent. Unless and until the
Escrow Agent shall actually receive such additional securities,
it may assume without inquiry that the Escrow Shares currently
being held by it in the Escrow Account are all that the Escrow
Agent is required to hold. At the time any Escrow Shares are
required to be released from the Escrow Account to any Person
pursuant to this Agreement, any securities previously received
by the Escrow Agent in respect of or in exchange for such Escrow
Shares shall be released from the Escrow Account to such Person.
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(d) TRANSFERABILITY. The interests of the Stockholders in the Escrow
Account and in the Escrow Shares shall not be assignable or
transferable, other than by operation of law. No transfer of any
of such interests by operation of law shall be recognized or
given effect until Parent and the Escrow Agent shall have
received written notice of such transfer.
(e) FRACTIONAL SHARES. No fractional shares of Parent Capital Stock
shall be retained in or released from the Escrow Account
pursuant to this Agreement. In connection with any release of
Escrow Shares from the Escrow Account, Parent and the Escrow
Agent shall "round down" in order to avoid retaining any
fractional shares in the Escrow Account and in order to avoid
releasing any fractional shares from the Escrow Account;
provided that, Parent shall purchase any shares remaining in the
Escrow Account that cannot be distributed in whole shares at
fair market value on the date of termination of the Escrow,
which purchase shall be made no later than 30 days after
termination of the Escrow and the Escrow Agent shall distribute
the cash resulting form such purchase to the Stockholders as
soon as practicable thereafter.
3. ADMINISTRATION OF ESCROW ACCOUNT. Except as otherwise provided
herein, the Escrow Agent shall administer the Escrow Account as follows:
(a) If any Indemnitee has or claims to have incurred or suffered
Damages for which it is or may be entitled to indemnification,
compensation or reimbursement under Section 9 of the
Reorganization Agreement, such Indemnitee may deliver a claim
notice (a "Claim Notice") to the Stockholders' Agents and to the
Escrow Agent on or prior to February 28, 2002 (the "Termination
Date"). Each Claim Notice shall state that such Indemnitee
believes that there is or has been a breach of a representation,
warranty or covenant contained in the Reorganization Agreement
or that such Indemnitee is otherwise entitled to
indemnification, compensation or reimbursement under Section 9
of the Reorganization Agreement and describe in reasonable
detail of the circumstances supporting such Indemnitee's belief
that there is or has been such a breach or that such Indemnitee
is so entitled to indemnification, compensation or reimbursement
(including the identity, contact person and address of any third
party claimant, and copies of any formal demand or other
documents given to the Indemnitee by the third party and any
other documentation relating to the claim as the Indemnitee may
possess or have within the Indemnitee's control) and shall, to
the extent possible, contain a non-binding, preliminary estimate
of the amount of Damages such Indemnitee claims to have so
incurred or suffered (the "Claimed Amount").
(b) Within 30 business days after receipt by the Stockholders'
Agents of a Claim Notice, the Stockholders' Agents may deliver
to the Indemnitee who delivered the Claim Notice and to the
Escrow Agent a written response (the "Response Notice") in which
the Stockholders' Agents: (i) agree that a whole number of
Escrow Shares having a "Stipulated Value" (as defined below)
equal to the full Claimed Amount may be released from the Escrow
Account to the Indemnitee; (ii) agree that Escrow Shares having
a Stipulated Value equal to part,
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but not all, of the Claimed Amount (the "Agreed Amount") may be
released from the Escrow Account to the Indemnitee or (iii)
indicate that no part of the Claimed Amount may be released from
the Escrow Account to the Indemnitee. Any part of the Claimed
Amount that is not to be released to the Indemnitee shall be the
"Contested Amount." If a Response Notice is not received by the
Escrow Agent within such 30 business-day period, then the
Stockholders' Agents shall be deemed to have agreed that Escrow
Shares having a Stipulated Value equal to the full Claimed
Amount may be released to the Indemnitee from the Escrow
Account.
(c) If the Stockholders' Agents deliver a Response Notice agreeing
that Escrow Shares having a Stipulated Value equal to the full
Claimed Amount may be released from the Escrow Account to the
Indemnitee, or if the Stockholders' Agents do not deliver a
Response Notice in accordance with Section 3(b), the Escrow
Agent shall promptly following the receipt of the Response
Notice (or, if the Escrow Agent has not received a Response
Notice, promptly following the expiration of the 30 business-day
period referred to in Section 3(b)), deliver to such Indemnitee
such Escrow Shares.
(d) If the Stockholders' Agents deliver a Response Notice agreeing
that Escrow Shares having a Stipulated Value equal to part, but
not all, of the Claimed Amount may be released from the Escrow
Account to the Indemnitee, the Escrow Agent shall promptly
following the receipt of the Response Notice deliver to such
Indemnitee Escrow Shares having a Stipulated Value equal to the
Agreed Amount.
(e) If the Stockholders' Agents deliver a Response Notice indicating
that there is a Contested Amount, the Stockholders' Agents and
the Indemnitee shall attempt in good faith to resolve the
dispute related to the Contested Amount. If the Indemnitee and
the Stockholders' Agents shall resolve such dispute, such
resolution shall be binding on all of the Stockholders and all
of the Indemnitees and a settlement agreement shall be signed by
the Indemnitee and the Stockholders' Agents and sent to the
Escrow Agent, who shall, upon receipt thereof, if applicable,
release Escrow Shares from the Escrow Account in accordance with
such agreement.
(f) If the Stockholders' Agents and the Indemnitee are unable to
resolve the dispute relating to any Contested Amount within 30
business days after the delivery of the Claim Notice, then the
claim described in the Claim Notice may be submitted to by
binding arbitration by either Parent or the Stockholders' Agents
in Santa Xxxxx County in the State of California in accordance
with the Commercial Arbitration Rules then in effect of the
American Arbitration Association (the "AAA Rules"). Arbitration
will be conducted by three arbitrators; one selected by Parent,
one selected by the Stockholders' Agents and the third selected
by the first two arbitrators. If Parent or the Stockholders'
Agents fail to select an arbitrator prior to the expiration of
the 30-business day period referred to in the first sentence of
this Section 3(f), or if later, the date specified by the AAA as
of
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which the arbitrators shall have been chosen, then the other
shall be entitled to select the second arbitrator. The parties
agree to use all reasonable efforts to cause the arbitration
hearing to be conducted within 60 calendar days after the
appointment of the last of the three arbitrators and to use all
reasonable efforts to cause the arbitrators' decision to be
furnished within 95 calendar days after the appointment of the
last of the three arbitrators. The arbitrators' decision shall
relate solely to whether the Indemnitee is entitled to recover
the Contested Amount (or a portion thereof), and the portion of
such Contested Amount the Indemnitee is entitled to recover. The
final decision of the arbitrators shall be furnished to the
Stockholders' Agents, the Indemnitee and the Escrow Agent in
writing and shall constitute a conclusive determination of the
issue in question, binding upon the Stockholders' Agents, the
Stockholders, the Indemnitee and the Escrow Agent and shall not
be contested by any of them. The non-prevailing party in any
arbitration shall pay the reasonable expenses (including
attorneys' fees) of the prevailing party, any additional
reasonable fees and expenses (including reasonable legal fees)
of the Escrow Agent, and the fees and expenses associated with
the arbitration (including the arbitrators' fees and expenses).
For purposes of this Section 3(f), the non-prevailing party
shall be deemed to be the Indemnitee if it is entitled to
recover less than 50% of the Contested Amount; otherwise it
shall be the Stockholders.
(g) The Escrow Agent shall release Escrow Shares from the Escrow
Account in connection with any Contested Amount within 5
business days after the delivery to it of: (i) a copy of a
settlement agreement executed by the Indemnitee and the
Stockholders' Agents setting forth instructions to the Escrow
Agent as to the number of Escrow Shares, if any, to be released
from the Escrow Account, with respect to such Contested Amount
or (ii) a copy of the award of the arbitrators referred to and
as provided in Section 3(f) setting forth instructions to the
Escrow Agent as to the number of Escrow Shares, if any, to be
released from the Escrow Account, with respect to such Contested
Amount.
(h) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto agree that as soon as practicable
after the Escrow Agent shall receive (i) written instructions
from Parent that Parent or the Company is repurchasing any
Escrow Shares from any Stockholder in accordance with applicable
repurchase rights available to Parent or the Company under a
restricted stock purchase agreement with a Stockholder or
otherwise and (ii) a revised version of EXHIBIT B setting new
percentage interests in the Escrow Fund (or a statement that
EXHIBIT B will not be changed), the Escrow Agent shall release
such Escrow Shares from the Escrow Account to Parent.
(i) If Parent is required under the terms of the Registration Rights
Agreement being entered into in connection with the Merger to
cause the Escrow Agent to release Escrow Shares to the
Stockholders, Parent shall deliver written instructions to the
Escrow Agent to so release such Escrow Shares. Promptly
following the Escrow Agent's receipt of such written
instructions, the Escrow Agent shall release such
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Escrow Shares to the Stockholders in accordance with the terms
of such instructions.
(j) Any Escrow Shares released from the Escrow Account to an
Indemnitee (other than pursuant to Section 3(h)) shall be deemed
to reduce the Escrow Shares pro rata with respect to each
Stockholder in accordance with each Stockholder's percentage
interest in the Escrow Fund as set forth in EXHIBIT B.
4. RELEASE OF ESCROW SHARES. The Escrow Agent is not the stock transfer
agent for the Parent Capital Stock. Accordingly, if a distribution of a number
of shares of Parent Capital Stock less than all of the Escrow Shares is to be
made, the Escrow Agent must requisition the appropriate number of shares from
such stock transfer agent, delivering to it the appropriate stock certificates.
For the purposes of this Agreement, the Escrow Agent shall be deemed to have
delivered Parent Capital Stock to the Person entitled to it when the Escrow
Agent has delivered such certificates to such stock transfer agent with
instructions to deliver it to the appropriate Person. Distributions of Parent
Capital Stock shall be made to Parent or the Stockholders, as appropriate, at
the addresses described in Section 11(b). Whenever a distribution is to be made
to the Stockholders, pro rata distributions shall be made to each of them based
on the percentage interests in the Escrow Fund set forth in EXHIBIT B as then in
effect. Within five business days after the Termination Date, the Escrow Agent
shall distribute or cause the stock transfer agent for the Parent Capital Stock
to distribute to the Stockholders' Agents the number of Escrow Shares calculated
in accordance with Section 10 and to each of the Stockholders such Stockholder's
pro-rata portion of the balance of the Escrow Shares then held in escrow based
on the percentage interests in the Escrow Fund set forth in EXHIBIT B as then in
effect; provided, however, that notwithstanding the foregoing, if, prior to the
Termination Date, any Indemnitee has given a Claim Notice containing a claim
which has not been resolved prior to the Termination Date in accordance with
Section 3, the Escrow Agent shall retain in the Escrow Account after the
Termination Date Escrow Shares having a Stipulated Value equal to 100% of the
Claimed Amount or Contested Amount, as the case may be, with respect to all
claims which have not then been resolved.
5. VALUATION OF ESCROW SHARES, ETC.
(a) STIPULATED VALUE. For purposes of this Agreement, the
"Stipulated Value" of each Escrow Share shall be deemed to be
equal to $___________. If shares of Parent Capital Stock
receivable at the Closing of the Reorganization Agreement are to
be released to Parent they shall be valued at the Stipulated
Value, and if securities (other than Parent Capital Stock
receivable at the Closing) or other property are to be
distributed to Parent, they shall be valued at their fair market
value as agreed by Parent and the Stockholders' Agents, as set
forth in a certificate signed by both Parent and at least one of
the Stockholders' Agents and delivered to the Escrow Agent. Any
failure of Parent and the Stockholders' Agents to agree shall be
resolved as provided in Section 3(f) before one arbitrator
chosen by the AAA.
(b) STOCK SPLITS. All numbers contained in, and all calculations
required to be made pursuant to, this Agreement shall be
adjusted as appropriate to reflect any stock
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split, reverse stock split, stock dividend or similar
transaction effected by Parent after the date hereof; provided,
however, that the Escrow Agent shall have received notice of
such stock split, reverse stock split, stock dividend or similar
transaction and shall have received the appropriate number of
additional shares of Parent Capital Stock or other property
pursuant to Section 2(c) hereof. In the event of any such stock
split, reverse stock split, stock dividend or similar
transaction, Parent shall deliver to the Stockholders' Agents
and the Escrow Agent a revised version of EXHIBIT B setting
forth the new number of Escrow Shares held in the Escrow Fund.
Unless and until the Escrow Agent receives the certificates
representing additional shares of Parent Capital Stock or other
property pursuant to Section 2(c), the Escrow Agent may assume
without inquiry that no such stock or other property has been or
is required to be issued with respect to Escrow Shares.
6. FEES AND EXPENSES. Upon the execution of this Agreement by all
parties hereto and the initial deposit of the Escrow Fund in the Escrow Account,
fees and expenses, in accordance with EXHIBIT C, will be payable to the Escrow
Agent by Parent. In accordance with EXHIBIT C, the Escrow Agent will also be
entitled to reimbursement for reasonable and documented out-of-pocket expenses,
including those of its counsel, incurred by the Escrow Agent in the performance
of its duties hereunder and the execution and delivery of this Agreement. All
such fees and expenses shall be paid by Parent.
7. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) The Escrow Agent undertakes to perform such duties as are
specifically set forth in this Agreement only and shall have no
duty under any other agreement or document notwithstanding their
being referred to herein or attached hereto as an exhibit. The
Escrow Agent shall not be liable except for the performance of
such duties as are specifically set forth in this Agreement, and
no implied covenants or obligations shall be read into this
Agreement against the Escrow Agent. The Escrow Agent shall incur
no liability with respect to any action taken by it or for any
inaction on its part in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it
to be genuine and duly authorized, nor for any other action or
inaction except for its own willful misconduct or negligence. In
all questions arising under this Agreement, the Escrow Agent may
rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such
advice the Escrow Agent shall not be liable to anyone. The
Escrow Agent shall not be required to take any action hereunder
involving any expense unless the payment of such expense is made
or provided for in a manner reasonably satisfactory to it. In no
event shall the Escrow Agent be liable for incidental, punitive
or consequential damages.
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(b) Parent hereby agrees to indemnify the Escrow Agent for, and hold
it harmless against, any loss, liability or expense incurred
without negligence or willful misconduct on the part of Escrow
Agent, arising out of or in connection with its carrying out of
its duties hereunder. This right of indemnification shall
survive the termination of this Agreement, and the resignation
of the Escrow Agent. The costs and expenses of enforcing this
right of indemnification shall also be paid by Parent.
8. TERMINATION. This Agreement shall terminate on the Termination Date
or, if earlier, upon the release by the Escrow Agent of the entire Escrow Fund
in accordance with this Agreement; provided, however, that if the Escrow Agent
has received from any Indemnitee a Claim Notice setting forth a claim that has
not been resolved by the Termination Date, then this Agreement shall continue in
full force and effect until the claim has been resolved and the Escrow Shares
released in accordance with this Agreement.
9. SUCCESSOR ESCROW AGENT. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than 30 calendar days after it is
given to all parties hereto. Parent may appoint a successor Escrow Agent with
the consent of the Stockholders' Agents (which consent shall not be unreasonably
withheld or delayed). The Escrow Agent shall act in accordance with written
instructions from Parent as to the transfer of the Escrow Fund to a successor
escrow agent. If no successor escrow agent is selected, the Escrow Agent may
apply to a court of competent jurisdiction for the selection of such successor
escrow agent.
10. STOCKHOLDERS' AGENTS. By virtue of their approval of principal terms
of the Merger and the Reorganization Agreement, the Stockholders shall have
approved the indemnification, compensation and reimbursement terms set forth in
the Reorganization Agreement and the terms of this Agreement and shall have
agreed to irrevocably appoint Xxxxxxx Xxxxxx and Xxxx Xxxxxxxxx as Stockholders'
Agents, to give and receive notices and communications, to authorize delivery to
Parent of Parent Capital Stock, cash or other property from the Escrow Fund, to
object to such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand dispute resolution pursuant to Section 3 of this
Agreement and comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or appropriate in the
judgment of the Stockholders' Agents for the accomplishment of the foregoing.
Each of the Stockholders' Agents shall have the authority to act on behalf of
the Stockholders in his individual capacity, provided the Stockholders' Agents
have consulted with each other. The Stockholders' Agents shall not be
responsible for any act done or omitted thereunder as Stockholders' Agents while
acting in good faith and in the exercise of reasonable judgment. The
Stockholders shall jointly and severally indemnify the Stockholders' Agents and
hold the Stockholders' Agents harmless against any loss, liability or expense
incurred without gross negligence, bad faith or willful misconduct on the part
of the Stockholders' Agents and arising out of or in connection with the
acceptance or administration of the Stockholders' Agents' duties hereunder,
including the reasonable fees and expenses of any legal counsel or other
professional retained by the Stockholders' Agents. By virtue of their approval
of the Merger and this Agreement, the Stockholders hereby agree to pay all costs
and
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expenses, including those of any legal counsel or other professional retained by
the Stockholders' Agents, in connection with the acceptance and administration
of the Stockholders' Agents' duties hereunder. Subject to the prior right of
Parent to make claims for Damages, the Stockholders' Agents shall have the right
to recover from the Escrow Fund prior to any distribution to the Stockholders, a
number of Escrow Shares, calculated on the basis of the Stipulated Value,
equivalent to any costs and expenses, including those of any legal counsel or
other professional retained by the Stockholders' Agents, in connection with the
acceptance and administration of the Stockholders' Agents' duties hereunder as
set forth in a certificate delivered to the Escrow Agent by the Stockholders'
Agents (and approved by Parent) prior to the Termination Date. The Escrow Agent
may rely on such certificate and need not inquire into or verify any information
set forth therein.
11. MISCELLANEOUS.
(g) ATTORNEYS' FEES. If any Legal Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
(h) NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received (i) when delivered by
hand, or (ii) two business days after sent by registered mail, by courier or
express delivery service or by facsimile to the address or facsimile telephone
number set forth in Section 10.5 of the Reorganization Agreement or to the
Escrow Agent at the address set forth below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
State Street Bank and Trust Company of California, N.A.
Corporate Trust Division
000 Xxxx 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notices addressed to the Escrow Agent shall be effective only
upon receipt. The Escrow Agent may assume that any Claim Notice, Response Notice
or other notice of any kind required to be delivered to the Escrow Agent and any
other Person has been received by such other Person if it has been received by
the Escrow Agent, but the Escrow Agent need not inquire into or verify such
receipt.
(i) HEADINGS. The bold-faced headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
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(k) GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed in all respects by, the internal laws of the State
of Delaware (without giving effect to principles of conflicts of laws).
(l) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
each of the parties hereto and each of their respective permitted successors and
assigns, if any. No Stockholder may assign such Stockholder's rights under this
Agreement without the express prior written consent of Parent, provided,
however, that upon the death of a Stockholder, such Stockholder's rights under
this Agreement shall be transferred to the person(s) who receive such
Stockholder's Parent Capital Stock under the laws of descent and distribution.
Nothing in this Agreement is intended to confer, or shall be deemed to confer,
any rights or remedies upon any person or entity other than the parties hereto
and their permitted successors and assigns. This Agreement shall inure to the
benefit of: the Stockholders; Parent; the Escrow Agent and the respective
successors and assigns, if any, of the foregoing.
(m) WAIVER. No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
(n) AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties hereto; provided,
however, that any amendment duly executed and delivered by the Stockholders'
Agents shall be deemed to have been duly executed and delivered by all of the
Stockholders.
(o) SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as to
which it is determined to be invalid, unlawful, void or unenforceable, shall not
be impaired or otherwise affected and shall continue to be valid and enforceable
to the fullest extent permitted by law.
(p) ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof.
(q) 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 transactions contemplated
hereby.
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(r) TAX REPORTING INFORMATION AND CERTIFICATION OF TAX
IDENTIFICATION NUMBERS.
(i) The parties hereto agree that, for tax reporting
purposes, all interest on or other income, if any, attributable to the Escrow
Shares or any other amount held in escrow by the Escrow Agent pursuant to this
Agreement shall be allocable to the Stockholders in accordance with their
percentage interests in the Escrow Fund set forth in EXHIBIT B.
(ii) Parent and each of the Stockholders agree to
provide the Escrow Agent with certified tax identification numbers for each of
them by furnishing appropriate Forms W-9 (or Forms W-8, in the case of non-U.S.
persons) and other forms and documents that the Escrow Agent may reasonably
request (collectively, "Tax Reporting Documentation") to the Escrow Agent within
30 days after the date hereof. The parties hereto understand that, if such Tax
Reporting Documentation is not so certified to the Escrow Agent, the Escrow
Agent may be required by the Internal Revenue Code, as it may be amended from
time to time, to withhold a portion of any interest or other income earned on
the investment of monies or other property held by the Escrow Agent pursuant to
this Agreement.
(s) CONSTRUCTION.
(i) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(ii) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of
this Agreement.
(t) PARTIES TO THIS AGREEMENT. Approval of the Reorganization
Agreement by the stockholders of the Company shall be deemed to be approval of
this Agreement by each of the stockholders. By virtue of such approval, the
stockholders of the Company have agreed that such approval shall cause this
Agreement to be the valid and binding obligation of such stockholder. Moreover,
by entering into certain Stockholder Representation Letters in favor of Parent
and Merger Sub, the stockholders of the Company have affirmed their agreement to
be bound by the terms and conditions of this Agreement as though they were
parties hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
DNA SCIENCES, INC.
By:
--------------------------------------
Its:
-------------------------------------
Print Name:
------------------------------
STOCKHOLDERS' AGENTS:
-----------------------------------------
Xxxxxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxxxxx
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A.
By:
--------------------------------------
Its:
-------------------------------------
Print Name:
------------------------------
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EXHIBIT A
STOCKHOLDERS
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
AXYS PHARMACEUTICALS, INC.
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EXHIBIT B
Stockholder's percentage interest in the
Name and Address of Stockholder Number of Shares Escrow Fund
------------------------------- ---------------- ----------------------------------------
Pharmaceutical Product Development, Inc. 221,782 50%
Axys Pharmaceuticals, Inc. 221,782 50%
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EXHIBIT C
ESCROW FEES AND EXPENSES
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.
Schedule of Fees for Escrow Services
ACCEPTANCE FEE: $750.00
This one-time charge, payable at closing, includes acceptance
and assumption of responsibility and duties as Escrow Agent; review and
comment on the form of agreement; and establishment of account(s) in
accordance with governing document.
LEGAL COUNSEL: AT COST
State Street will engage the firm of Xxxxxxx & Xxxxxxx, Xxxxxx X. Xxxxx, Esq.
to review and comment on the form of agreement.
ESCROW AGENT FEE: $3,500.00
Payable at funding and annually thereafter, if applicable.
Compensates State Street for administrative services in accordance with
the Escrow Agreement.
ADDITIONAL FEES, IF APPLICABLE:
PRO-RATA PERCENTAGE: Should the Escrow Agreement require pro-rata
distribution of principal cash or investment income to the
beneficiaries, STATE STREET WILL ASSESS an additional $100, for each
beneficiary pro-rata distribution, which may be offset at State
Street's discretion against each distribution.
DIRECTED SALE: State Street will charge $500.00, plus broker
commission, for each Directed Sale. The fee will be paid from
the proceeds of such sale.
CLAIMS (if applicable):
Uncontested $500.00
Contested BILLED AT COST
WIRE TRANSFER FEE (This fee will be deducted from wire amount, if applicable)
International $40.00
Domestic $20.00
INVESTMENT FEE: $65.00
Per security purchased (i.e. Treasuries, Agencies, etc.)
INVESTMENT IN STATE STREET INVESTMENT VEHICLES: 40 BASIS POINTS (.0040)
(Calculated on the Average Daily Net Assets)
INVESTMENT VEHICLES:
SSgA Prime Money Market Fund
SSgA US Treasury Money Market Fund
SSgA Tax Free Money Market Fund
OUT-OF-POCKET EXPENSE: AT COST
The transaction underlying this proposal, and all related documentation, is
subject to review and acceptance by State Street in accordance with its policies
and procedures. Should the actual transaction materially differ from the
assumptions used herein, State Street reserves the right to modify this
proposal. In the event that the subject transaction fails to close for reasons
beyond the control of State Street, the party requesting these services agrees
to pay State Street's acceptance fees, legal fees and out-of-pocket expenses.
This proposal is a confidential document and should not be duplicated and/or
distributed.
Dated: December ____, 2000 Page One of One
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EXHIBIT D
FORM OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PPGX, INC.
(Pursuant to Sections 242 and 245 of the Delaware General Corporation Law)
1. The original name of this corporation is PPGx, Inc., and the date of
filing of the original Certificate of Incorporation of this corporation with the
Secretary of State of the State of Delaware is January 25, 1999.
2. The Certificate of Incorporation of the corporation is hereby amended
and restated to read as follows:
I.
The name of this corporation is PPGx, Inc.
II.
The address of the registered office of the corporation in the State of
Delaware is 0000 Xxxxxxxxxxx Xxxx, #000 in the City of Wilmington, County of New
Castle, and the name of the registered agent of the corporation in the State of
Delaware at such address is Corporation Service Company.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
IV.
This corporation is authorized to issue only one class of stock to be
designated "Common Stock." The total number of shares of Common Stock which the
corporation is presently authorized to issue is One Thousand (1,000) shares,
each having a par value of one tenth of one cent ($0.001).
V.
- The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by the Board of Directors in the manner
provided in the Bylaws.
- ELECTION OF DIRECTORS
1. Directors shall be elected at each annual meeting of
stockholders to hold office until the next annual meeting. Each director shall
hold office either until the expiration of the term for which elected or
appointed and until a successor has been elected and qualified, or
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until such director's death, resignation or removal. No decrease in the number
of directors constituting the Board of Directors shall shorten the term of any
incumbent director.
2. No person entitled to vote at an election for directors may
cumulate votes to which such person is entitled, unless, at the time of such
election, the corporation is subject to Section 2115(b) of the California
General Corporation Law (" CGCL"). During such time or times that the
corporation is subject to Section 2115(b) of the CGCL, every stockholder
entitled to vote at an election for directors may cumulate such stockholder's
votes and give one candidate a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which such stockholder's
shares are otherwise entitled, or distribute the stockholder's votes on the same
principle among as many candidates as such stockholder thinks fit. No
stockholder, however, shall be entitled to so cumulate such stockholder's votes
unless (a) the names of such candidate or candidates have been placed in
nomination prior to the voting and (b) the stockholder has given notice at the
meeting, prior to the voting, of such stockholder's intention to cumulate such
stockholder's votes. If any stockholder has given proper notice to cumulate
votes, all stockholders may cumulate their votes for any candidates who have
been properly placed in nomination. Under cumulative voting, the candidates
receiving the highest number of votes, up to the number of directors to be
elected, are elected.
- REMOVAL
3. During such time or times that the corporation is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote on
such removal; provided, however, that unless the entire Board is removed, no
individual director may be removed when the votes cast against such director's
removal, or not consenting in writing to such removal, would be sufficient to
elect that director if voted cumulatively at an election which the same total
number of votes were cast (or, if such action is taken by written consent, all
shares entitled to vote were voted) and the entire number of directors
authorized at the time of such director's most recent election were then being
elected.
4. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section C.1 above shall not apply and the Board of Directors or any director may
be removed from office at any time (a) with cause by the affirmative vote of the
holders of a majority of the voting power of all then-outstanding shares of
capital stock of the corporation entitled to vote at an election of directors or
(b) without cause by the affirmative vote of the holders of a majority of the
voting power of all then-outstanding shares of capital stock of the corporation,
entitled to vote generally at an election of directors.
- The Board of Directors is expressly empowered to adopt, amend or
repeal the Bylaws of the corporation. The stockholders shall also
have power to adopt, amend or repeal the Bylaws of the corporation;
provided, however, that, in addition to any vote of the holders of
any class or series of stock of the corporation required by law or
by this Certificate of Incorporation, the affirmative vote of the
holders of at least a majority of the voting power of all of the
then-outstanding shares of the capital stock of the
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corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to
adopt, amend or repeal any provision of the Bylaws of the
corporation.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law. If the DGCL is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the DGCL, as
so amended.
B. This corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the CGCL) for breach of
duty to the corporation and its stockholders through bylaw
provisions or through agreements with the agents, or through
stockholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL,
subject, at any time or times that the corporation is subject to
Section 2115(b) of the CGCL, to the limits on such excess
indemnification set forth in Section 204 of the CGCL.
- Any repeal or modification of this Article VI shall be prospective
and shall not affect the rights under this Article VI in effect at
the time of the alleged occurrence of any act or omission to act
giving rise to liability or indemnification.
VII.
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this reservation.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been subscribed as of this 22nd day of December, 2000 by the
undersigned who affirms that the statements made herein are true and correct.
PPGX, INC.
BY:
-----------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive
Officer
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EXHIBIT E
FORM OF
OFFICERS' TAX CERTIFICATE
DNA Sciences, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
December ___, 2000
Xxxxxx Godward LLP Heller, Ehrman, White &
0 Xxxxxxxx Xxxxx XxXxxxxxx XXX
Xxx Xxxxxxxxx, XX 00000-0000 0000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xx Xxxxx, XX 00000
Re: Merger pursuant to the Agreement and Plan of Merger and
Reorganization (the "Agreement"), dated as of December 17, 2000,
among DNA Sciences, Inc., a Delaware corporation ("Parent"),
PIPO Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and PPGx,
Inc., a Delaware corporation ("Company").
Ladies and Gentlemen:
This letter is supplied to you in connection with your rendering of
opinions regarding certain United States federal income tax consequences of the
merger of Merger Sub with and into Company with Company surviving the merger
(the "Merger"). Unless otherwise indicated, capitalized terms not defined herein
have the meanings set forth in the Agreement including exhibits and schedules
attached thereto.
A. Representations. After consulting with their counsel and auditors
regarding the meaning of and factual support for the following representations,
the undersigned hereby certify and represent that the following facts are now
true and will continue to be true as of the Effective Time of the Merger and
thereafter where relevant:
1. Pursuant to the Merger, Merger Sub will merge with and into Company,
and Company will thereby acquire all of the assets and liabilities of Merger
Sub. The assets transferred to Company pursuant to the Merger will represent at
least ninety percent (90%) of the fair market value of the net assets and at
least seventy percent (70%) of the fair market value of the gross assets held by
Merger Sub immediately prior to the Merger. In addition, at least ninety percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by Company immediately
prior to the Merger will continue to be held by Company immediately after the
Merger. For the purpose of determining the percentage of Company's and Merger
Sub's net and gross assets held by Company immediately following the Merger, the
following assets will be treated as property held by Merger Sub or Company, as
the case may be, immediately prior but not subsequent to the Merger: (i) assets
disposed of by Company or Merger Sub (other than assets transferred from Merger
Sub to Company in the Merger) prior to or subsequent to the Merger and in
contemplation thereof (including without limitation any asset disposed of by
Company, other than in the ordinary course of business, pursuant to a plan or
intent existing during the period ending at the Effective Time of the Merger and
beginning with the commencement of negotiations (whether formal or informal)
with Parent regarding the Merger (the "Pre-Merger Period")); (ii) assets used by
Company or Merger Sub to pay or retire outstanding indebtedness of Company other
than repayments in the ordinary course of business; (iii) assets used by Company
or Merger Sub to pay stockholders in lieu of fractional shares of Parent Capital
Stock or stockholders perfecting dissenters' rights or to pay other expenses or
liabilities incurred in connection with the Merger and (iv) assets used to make
distribution, redemption or other payments in respect of stock of Company or
rights to acquire such stock (including payments treated as such for tax
purposes) that are made in contemplation of the Merger or that are related
thereto;
X-0
000
0. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to taxes;
3. Prior to the Merger, Parent will be in "Control" of Merger Sub. As
used in this letter, "Control" shall consist of direct ownership of shares of
stock possessing at least eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of all other classes of stock of the corporation.
For purposes of determining Control, a person shall not be considered to own
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;
4. In the Merger, shares of stock of Company representing "Control" of
Company will be exchanged solely for voting stock of Parent. For purposes of
this paragraph, shares of stock of Company exchanged in the Merger for cash and
other property (including, without limitation, cash paid by Parent or Merger Sub
to stockholders of Company in lieu of fractional shares of Parent Capital Stock
or to stockholders of Company perfecting dissenters' rights) will be treated as
shares of stock of Company outstanding on the date of the Merger but not
exchanged for shares of voting stock of Parent;
5. The Parent Capital Stock and the Parent Series D Preferred Stock
constitute voting stock. For purposes of this paragraph 5, stock shall not be
considered voting stock unless the voting rights associated with the stock are
equal to the voting rights of all other classes of stock with respect to the
election of directors;
6. Merger Sub was formed solely for the purposes of effecting the Merger
and has conducted no business or other activities except in connection with the
Merger;
7. Parent has no plan or intention to cause Company to issue additional
shares of stock after the Merger, or take any other action, that would result in
Parent losing "Control" of Company;
8. None of Parent or any related person of Parent (as such term is
defined in Treas. Reg. Section 1.368-1(e)(3)) or to Parent's knowledge, Company
or any related person of the Company has any plan or intention to reacquire any
of the stock issued in the Merger. For purposes of this representation,
repurchases in the ordinary course of business of unvested shares, if any,
acquired from terminating employees of Parent or Company will be disregarded;
9. Except for transfers described in both Section 368(a)(2)(C) of the
Code and the Treasury Regulations promulgated thereunder, Parent has no plan or
intention to: (a) liquidate Company; (b) except for the Merger, merge Company
with or into another corporation including Parent or its affiliates; (c) sell,
distribute or otherwise dispose of stock of Company, or cause Company to sell or
otherwise dispose of stock of Company; or (d) cause Company to sell or otherwise
dispose of any of its assets or of any assets acquired from Merger Sub, except
for dispositions made in the ordinary course of business or payment of expenses
incurred by Company pursuant to the Merger including payments with respect to
fractional shares, if any;
10. In the Merger, no liabilities of any person will be assumed by
Parent or Company nor will any person transfer any assets subject to liabilities
to Parent or Company;
11. Parent will cause Company to either continue the historic business
of Company or use a significant portion of its historic business assets in a
business consistent with the provisions of Treas. Reg. Section 1.368-1(d);
12. During the past five (5) years, none of the outstanding shares of
capital stock of Company, including the right to acquire or vote any such shares
have, directly or indirectly, been owned by Parent or, to Parent's knowledge,
affiliates of Parent;
13. Neither Parent nor Merger Sub is, nor will be at the Effective Time
of the Merger, an "investment company" within the meaning of Section
368(a)(2)(F)(iii) and (iv) of the Code;
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14. Following the Merger, Parent will comply with the record-keeping and
information filing requirements of Treas. Reg. Section 1.368-3;
15. No stockholder of Company is acting as agent for Parent in
connection with the Merger or the approval thereof; Parent will not reimburse
any stockholder of Company for any stock of Company such stockholder may have
purchased or for other obligations such stockholder may have incurred;
16. At least eighty percent (80%) of the value of the Company
stockholders' proprietary interests in Company will be preserved as a
proprietary interest in Parent received in exchange for Company Capital Stock.
For purposes of this representation, proprietary interests will not be preserved
to the extent that, in connection with the Merger; (i) a redemption or
acquisition of stock of Company is made by Company or a person related to
Company with money or other property provided directly or indirectly by Parent;
(ii) Parent or a person related to Parent acquires stock of Company for
consideration other than Parent stock; or (iii) Parent redeems, or a person
related to Parent acquires, the stock issued in the Merger. Any reference to
Parent or Company includes a reference to any successor or predecessor of such
corporation, except that Company is not treated as a predecessor of Parent. A
corporation will be treated as related to another corporation if they are both
members of the same affiliated group within the meaning of Section 1504 of the
Code (without regard to the exceptions in Section 1504(b)) or they are related
as described in Section 304(a)(2) of the Code (disregarding Treas. Reg. Section
1.1502-80(b)), in either case whether such relationship exists immediately
before or immediately after the acquisition. Each partner of a partnership will
be treated as owning or acquiring any stock owned or acquired, as the case may
be, by the partnership (and as having paid any consideration paid by the
partnership to acquire such stock) in accordance with that partner's interest in
the partnership. As used herein, the term "partnership" shall have the same
meaning given to it in Section 7701(a)(2) of the Code;
17. Except with respect to payments of cash to stockholders of Company
in lieu of fractional shares of Parent Capital Stock and to stockholders of
Company perfecting dissenters' rights, one hundred percent (100%) of the stock
of Company outstanding immediately prior to the Merger will be exchanged solely
for Parent Capital Stock;
18. The total fair market value of all consideration other than Parent
Capital Stock received by stockholders of Company in the Merger (including,
without limitation, cash paid to stockholders of Company in lieu of fractional
shares and to stockholders of Company perfecting dissenters' rights) will be
less than twenty percent (10%) of the aggregate fair market value of stock of
Company outstanding immediately prior to the Merger;
19. The fair market value of the Parent Capital Stock received by each
stockholder of Company will be approximately equal to the fair market value of
the stock of Company surrendered in exchange therefor, and the consideration
received by stockholders of Company pursuant to Section 1.5(a) of the Agreement
will be approximately equal to the fair market value of all of the outstanding
shares of stock of Company immediately prior to the Merger;
20. Except as provided in Section 10.3 of the Agreement, each of Merger
Sub, Parent and Company and each stockholder of Company will each pay separately
his, her or its own expenses relating to the Merger;
21. There is no intercorporate indebtedness existing between Parent and
Company or between Merger Sub and Company, and Parent will assume no liabilities
of Company or any stockholder of Company in connection with the Merger;
22. The terms of the Agreement and the agreements related thereto are
the product of arm's length negotiations;
23. None of the compensation received by any stockholder-employee or
stockholder-independent contractor of Company will be separate consideration
for, or allocable to, any of their shares of stock of Company; none of the
shares of Parent Capital Stock received by any stockholder-employee or
stockholder-independent contractor of Company will be separate consideration
for, or allocable to, any employment agreement or other service agreement or any
covenants not to compete or any release; and the compensation paid to any
stockholder-
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employee or stockholder-independent contractor of Company will be for services
actually rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services;
24. The payment of cash in lieu of fractional shares of Parent Capital
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the transaction to Company stockholders instead of issuing fractional shares of
Parent Capital Stock will not exceed one percent (1%) of the total consideration
that will be issued in the transaction to Company stockholders in exchange for
their shares of Company Capital Stock. The fractional share interests of each
Company stockholder will be aggregated, and no Company stockholder will receive
cash in an amount equal to or greater than the value of one full share of Parent
Capital Stock;
25. The Merger will be consummated in accordance with the Agreement
without waiver or modification by any party of any material provision thereof;
26. Company will pay its stockholders holding Dissenting Shares the
value of such shares out of its own funds. No funds will be supplied for that
purpose, directly or indirectly, by Parent or Merger Sub, nor will Parent or
Merger Sub directly or indirectly reimburse Company for any payments to holders
of Dissenting Shares;
27. The escrow agreement required pursuant to Section 1.8 of the
Agreement is being established for good and valid business purposes;
28. The Parent Capital Stock held in escrow will appear as issued and
outstanding on the balance sheet of Parent and will be released within five
years from the date of the Merger (unless there is a bona fide dispute as to
whom the stock should be released);
29. All taxable dividends (other than stock dividends), if any, paid on
the Parent Capital Stock held in escrow will be distributed currently to the
Company stockholders that exchange their Company stock therefor;
30. All voting rights of the Parent Capital Stock held in escrow will be
exercisable by or on behalf of the Company stockholders that exchange their
Company stock therefor; and
31. Parent and Merger Sub are authorized to make all of the
representations set forth herein.
B. Reliance by You in Rendering Opinions; Limitations on Your Opinions
1. The undersigned recognize that (i) your opinions will be based on,
among other things, the representations set forth herein and on the statements
contained in the Agreement and documents related thereto, and (ii) your opinions
will be subject to certain limitations and qualifications including that they
may not be relied upon if any such representations are not accurate in all
material respects.
2. The undersigned recognize that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
3. If any of the certifications and representations contained herein
ceases to be true at any time prior to the Effective Time of the Merger, Parent
shall deliver to both of you a written statement to that effect.
Very truly yours,
DNA Sciences, Inc.,
a Delaware corporation
By:
-----------------------------------
Xxxx X. Xxxxxxxx, Xx.
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Chairman of the Board and Chief
Executive Officer
PIPO Acquisition Corp.,
a Delaware corporation
By:
---------------------------------------
Title:
------------------------------------
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EXHIBIT F
FORM OF
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
December __, 2000 by AXYS PHARMACEUTICALS, INC, a Delaware corporation
("Stockholder") in favor of, and for the benefit of: DNA SCIENCES, INC., a
Delaware corporation ("Parent"); PIPO ACQUISITION CORP., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"); and PPGX, INC., a
Delaware corporation (the "Company"); and the other "Indemnitees" (as
hereinafter defined). Certain capitalized terms used in this Noncompetition
Agreement are defined in Section 19.
RECITALS
A. As a stockholder of the Company, Stockholder has obtained extensive
and valuable knowledge and confidential information concerning the businesses of
the Company and its subsidiaries. (The Company and its subsidiaries are referred
to collectively herein as the "Acquired Companies.")
B. Pursuant to an Agreement and Plan of Merger and Reorganization dated
as of December ___, 2000, Parent, Merger Sub and the Company intend to effect a
merger of Merger Sub with and into the Company (the "Merger"). Upon consummation
of the Merger and contemporaneously with the execution and delivery of this
Noncompetition Agreement, Merger Sub will cease to exist and the Company will
become a wholly owned subsidiary of Parent.
C. In connection with and as a condition to the Merger, and to enable
Parent to secure more fully the benefits of the Merger, Parent has required that
Stockholder enter into this Noncompetition Agreement; and Stockholder is
entering into this Noncompetition Agreement in order to induce Parent to
consummate the transactions contemplated by the Reorganization Agreement.
D. Parent, the Acquired Companies and Stockholder have conducted and are
conducting their respective businesses on a worldwide basis.
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AGREEMENT
In order to induce Parent to consummate the transactions contemplated by
the Reorganization Agreement, and for other good and valuable consideration,
Stockholder agrees as follows:
12. RESTRICTION ON COMPETITION. Stockholder agrees that, during the
Noncompetition Period, Stockholder shall not, and shall not permit any of its
Affiliates to:
(a) engage directly in Competition in any Restricted Territory; or
(b) become an stockholder, owner, co-owner, Affiliate, or promoter,
for or to, or otherwise acquire or hold (of record, beneficially or
otherwise) any direct or indirect interest in, any Person that engages
directly in Competition in any Restricted Territory;
provided, however, that Stockholder may, without violating this Section
1, own, as a passive investment, shares of capital stock or comparable ownership
interest in a Person that engages in Competition if (i) the capital stock or
comparable ownership interest that is owned beneficially by Stockholder and
Stockholder's Affiliates collectively represent less than five percent of the
total number of shares of such Person's capital stock or comparable equity
outstanding, or (ii) Stockholder and Parent mutually agree in writing that a
Competing Product or Competing Service is not included under this Section 1(b).
13. NO SOLICITATION OF EMPLOYEES. Stockholder agrees that, during the
Noncompetition Period, Stockholder shall not, and shall not permit any of its
Affiliates to: directly encourage, induce, attempt to induce, solicit or attempt
to solicit (on Stockholder's own behalf or on behalf of any other Person) any
Specified Employee to leave his or her employment with Parent, any of the
Acquired Companies or any of Parent's other subsidiaries. (For purposes of this
Section 2, "Specified Employee" shall mean any individual who (i) is or was an
employee of any of the Acquired Companies on the date of this Noncompetition
Agreement or during the 180-day period ending on the date of this Noncompetition
Agreement, and (ii) remains or becomes an employee of Parent, any of the
Acquired Companies or any of Parent's other subsidiaries on the date of this
Noncompetition Agreement or at any time during the Noncompetition Period.)
14. CONFIDENTIALITY. Stockholder agrees that it shall hold all
Confidential Information in confidence and shall not for a ten (10) year period
commencing on the date of this Noncompetition Agreement: (a) reveal, report,
publish, disclose or transfer any Confidential Information to any Person (other
than Parent or the Company); (b) use any Confidential Information for any
purpose; or (c) use any Confidential Information for the benefit of any Person
(other than Parent or the Company).
15. REPRESENTATIONS AND WARRANTIES. Stockholder represents and warrants,
to and for the benefit of the Indemnitees, that: (a) it has full power and
capacity to execute and deliver, and to perform all of its obligations under,
this Noncompetition Agreement; and (b) neither the execution and delivery of
this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which Stockholder or any of its Affiliates is or may
be bound, or
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(ii) any law, rule or regulation. Stockholder's representations and warranties
shall survive the expiration of the Noncompetition Period for an unlimited
period of time.
16. SPECIFIC PERFORMANCE. Stockholder agrees that, in the event of any
breach or threatened breach by Stockholder of any covenant or obligation
contained in this Noncompetition Agreement, each of Parent, the Company and the
other Indemnitees shall be entitled (in addition to any other remedy that may be
available to them, including monetary damages) to seek (a) a decree or order of
specific performance to enforce the observance and performance of such covenant
or obligation, and (b) an injunction restraining such breach or threatened
breach. Stockholder further agrees that no Indemnitee shall be required to
obtain, furnish or post any bond or similar instrument in connection with or as
a condition to obtaining any remedy referred to in this Section 5, and
Stockholder irrevocably waives any right it may have to require any Indemnitee
to obtain, furnish or post any such bond or similarly instrument.
17. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, Stockholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises out of or by virtue of, or relates to,
(a) any material inaccuracy in or material breach of any representation or
warranty contained in this Noncompetition Agreement, or (b) any failure on the
part of Stockholder to observe, perform or abide in all material respects by, or
any other material breach of, any restriction, covenant, obligation or other
provision contained in this Noncompetition Agreement.
18. NON-EXCLUSIVITY. The rights and remedies of Parent, the Company and
the other Indemnitees under this Noncompetition Agreement are not exclusive of
or limited by any other rights or remedies which they may have, whether at law,
in equity, by contract or otherwise, all of which shall be cumulative (and not
alternative).
19. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
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20. GOVERNING LAW.
This Noncompetition Agreement shall be construed in accordance with, and
governed in all respects by, the laws of the State of California (without giving
effect to principles of conflicts of laws).
21. WAIVER. No failure on the part of Parent, the Company or any other
Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of Parent, the Company or any
other Indemnitee in exercising any power, right, privilege or remedy under this
Noncompetition Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy. No Indemnitee shall be deemed to
have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of such Indemnitee; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
22. SUCCESSORS AND ASSIGNS. None of Parent, the Company and the other
Indemnitees may assign any or all of its rights under this Noncompetition
Agreement, at any time, in whole or in part, to any Person without first
obtaining the consent or approval of Stockholder. This Noncompetition Agreement
shall be binding upon Stockholder and its successors and assigns, and shall
inure to the benefit of Parent, the Company and the other Indemnitees.
23. FURTHER ASSURANCES. Stockholder shall (at Stockholder's sole
expense) execute and/or cause to be delivered to each Indemnitee such
instruments and other documents, and shall (at Stockholder's sole expense) take
such other actions, as such Indemnitee may reasonably request at any time
(whether during or after the Noncompetition Period) for the purpose of carrying
out or evidencing any of the provisions of this Noncompetition Agreement.
24. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against Stockholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
25. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
26. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
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drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
27. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein, the
obligations of Stockholder under this Noncompetition Agreement (including its
obligations under Sections 3, 6 and 12) shall survive the expiration of the
Noncompetition Period. The expiration of the Noncompetition Period shall not
operate to relieve Stockholder of any obligation or liability arising from any
prior breach by Stockholder of any provision of this Noncompetition Agreement.
28. AMENDMENT. This Noncompetition Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Stockholder, Parent (or any successor
to Parent) and the Company (or any successor to the Company).
29. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by certified mail (return receipt requested) or sent
via facsimile (with confirmation of receipt) to the parties at their respective
addresses set forth below (or at such other address for a party as shall be
specified by like notice:
IF TO STOCKHOLDER: IF TO COMPANY:
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
30. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" 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. Notwithstanding the
foregoing, Affiliate does not include any Person, or Affiliates
of that Person, who acquires control of Stockholder in a Change
of Control.
(b) "Change of Control" means (i) a change of control of a nature
that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"),
provided that such a Change in Control shall be deemed to have
occurred if any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of Stockholder
representing fifty percent (50%) or more of the
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combined voting power of Stockholder's then outstanding
securities; (ii) a sale of substantially all of the assets of
Stockholder; or (iii) a liquidation of Stockholder.
(c) "Competing Product" means any existing Pharmacogenomics or
Genetic-Based Clinical Diagnostics product developed or licensed
prior to the Commencement of the Noncompetition Period by any of
the Acquired Corporations and that any of the Acquired
Corporations makes available for sale or licensing during the
Noncompetition Period that is comprised of either: (i) one or
more software programs, including those containing algorithms
that organize genetic information to identify and correlate
polymorphisms with candidate genes, associated documentation for
such software, information and information systems, sequence
information, sample collection information and methods,
including Enhancements; or (ii) equipment, devices or systems,
including such equipment or devices that perform Pharmacogenomic
or Genetic-Based Clinical Diagnostic assays or methods.
(d) "Competing Service" means any existing services that use any
Competing Product, such services including contract, consulting,
research and development, laboratory, and technical and
maintenance support services.
(e) A Person shall be deemed to be engaged in "Competition" if:
(a) such Person or any of such Person's subsidiaries or other
Affiliates is engaged directly in research and development,
laboratory, or technical and maintenance support services of any
Competing Product; or (b) such Person or any of such Person's
subsidiaries or other Affiliates is engaged directly in
providing, performing or offering any Competing Service;
provided, however, neither a Person, nor its subsidiaries or
other Affiliates shall be deemed to be engaged directly in
Competition if the activities which would otherwise be
considered to be Competition are part of such Person's internal
or collaborative drug discovery and development activities or
agreements directed towards the development and/or
commercialization of therapeutic and/or other pharmaceutical
products.
(f) "Confidential Information" means any and all non-public
information relating to the business, operations, financial
affairs, performance, assets, technology, processes, products
(including Competing Products or Competing Services), contracts,
customers, licensees, sublicensees, suppliers, personnel,
consultants or plans of Parent, any of the Acquired Companies or
any of Parent's other subsidiaries (including any such
information consisting of or otherwise relating to trade
secrets, know-how, technology, inventions, prototypes, designs,
drawings, sketches, processes, license or sublicense
arrangements, formulae, proposals, research and development
activities, customer lists or preferences, pricing lists,
referral sources, marketing or sales techniques or plans,
operations manuals, service manuals, financial information,
projections, lists of consultants, lists of suppliers or lists
of distributors); provided, however, that "Confidential
Information" shall not be deemed to include: (i) information of
the Company that was already publicly known and in the public
domain prior to the time of its initial disclosure to
Stockholder; (ii) information that is later made known to the
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public through no default by Stockholder of its obligations
under this Agreement; (iii) information that is rightfully
received by Stockholder from a third party having no obligation
of confidentiality to the Company; (iv) has been approved for
release to the general public by written authorization of the
Company; (v) information that is disclosed pursuant to a
requirement of a governmental agency or of law without similar
restrictions or other protections against such public
disclosure, or disclosure is required by law; (vi) information
which was already known to Stockholder at the time it was first
disclosed to Stockholder by Parent, any of the Acquired
Companies or any of Parent's other subsidiaries but shall
include information known to Stockholder solely because of its
ownership interest in with the Acquired Companies; or (vii)
information which is or becomes available to Stockholder
pursuant to that Technology Transfer and License Agreement dated
February 1, 1999 between Stockholder and the Company, as
amended.
(g) "Enhancements" are changes, alterations, improvements or
upgrades to the Competing Services or Competing Products, as
applicable, including but not limited to new products or
services that (i) support new releases of operating systems and
devices, (ii) correct errors or defects, (iii) provide
substantial additional value, or (iv) serve as alternative
solutions or substitutions for the existing Competing Services
or Competing Products, as applicable.
(h) "Genetic-Based Clinical Diagnostics" means compositions,
assays and methods to diagnose the presence of, susceptibility
to or course of treatment for a disease by identifying the
presence or absence of one or more nucleotide polymorphisms in a
gene from a specimen. Such diagnostic products and services may
include products and services to be used by healthcare
professionals and products and services to be used directly by
consumers without the intervention of healthcare professionals.
(i) "Indemnitees" shall include: (i) Parent; (ii) Merger Sub,
(iii) the Company; (iv) each Person who is or becomes an
Affiliate of Parent or the Company; and (iv) the successors and
assigns of each of the Persons referred to in clauses "(i)",
"(ii)", "(iii)" and (iv) of this sentence.
(j) "Noncompetition Period" shall mean the period commencing on
the date of this Noncompetition Agreement and ending on the
second anniversary of the date of this Noncompetition Agreement.
(k) "Person" means any: (i) individual; (ii) corporation,
general partnership, limited partnership, limited liability
partnership, trust, company (including any limited liability
company or joint stock company) or other organization or entity;
or (iii) governmental body or authority.
(l) "Pharmacogenomics" means compositions, assays and methods
useful for predicting the safety, toxicity and/or efficacy of
drugs for humans as part of a drug discovery and development
program or as part of an individual's diagnosis
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and treatment regimen but excluding predicting modes of function
of a therapeutic.
(m) "Restricted Territory" means each county or similar
political subdivision of each State of the United States of
America (including each of the counties in the State of
California), each State, territory or possession of the United
States of America and each country, region or similar political
subdivision of the world.
IN WITNESS WHEREOF, Stockholder has duly executed and delivered this
Noncompetition Agreement as of the date first above written.
AXYS PHARMACEUTICALS, INC.
------------------------------------------
By:
---------------------------------------
ADDRESS:
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EXHIBIT G
PERSON TO EXECUTE OFFER LETTER
Xxxx Xxxxx, Ph.D.
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EXHIBIT H
FORM OF OFFER LETTER
December 11, 0000
Xxxxxx X. Xxxxx Ph. D.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Dear Xxxxxx:
This letter is a formal offer, subject to the review and approval of the
Compensation Committee of the Board of Directors of DNA Sciences, Inc., setting
forth the principal terms for you to join DNA Sciences, Inc. (the "Company"), a
Delaware corporation, currently located in Mountain View, California, effective
with the acquisition of PPGx by DNA Sciences, Inc.
Position: Chief Executive Officer, PPGX
Reporting to: Chief Business Officer, DNA Sciences, Inc.
Annual Salary: $225,000.00
Start Date: January 2, 2001
Performance
Bonus: You will be eligible for a year end bonus assuming your
Performance meets position expectations and the Company
elects to issue bonuses.
Equity: Subject to the approval of the Company's Compensation
Committee, you will be granted an incentive stock
option to purchase one hundred thousand (100,000)
shares of the Company's Common Stock (the "Option") at
the first meeting of the Compensation Committee
following your employment start date. The per share
exercise price of the Option will be the current fair
market value of the Company's Common Stock as
determined by the Board of Directors on the date of
grant of the Option.
The shares of Common Stock subject to your Option will
vest according to the following schedule: 20% will vest
on the first anniversary of your
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employment start date; the remainder of the shares will
vest monthly thereafter over the following four (4)
year period at a rate of 1,666.70 shares per month, in
each case assuming your continued employment with the
Company.
The specific terms and conditions of the Option will be set forth in an
agreement between you and the Company and shall be pursuant to the terms
of the Company's 2000 Equity Incentive Plan.
Benefits: You will be entitled to receive standard medical,
dental and optical insurance benefits for yourself and
your dependants in accordance with company policy.
401(k) Plan: You may contribute up to 15% of your earnings or
$10,500, whichever is less, to the DNA Sciences, Inc.'s
401(k) Century Plan. At this time DNA Sciences, Inc.
will make no contribution.
Vacation Leave: The Company provides 15 days of Paid Vacation Leave
(PVL) for your first year of service with the
organization. Vacation leave accrues at a rate of 1.25
days per month (10 hours). At each subsequent
anniversary of your employment, an additional day will
be added to the accrual rate, up to a maximum accrual
of 25 days.
Sick Leave: The Company provides 6 sick days of leave. Sick leave
is accrued at a rate of .5 days per month (4 hours).
EMPLOYMENT AT
Will: Your employment will be at will, which means it may be
terminated at any time by you or the Company with or
without cause.
As a condition of your employment, you will be required to sign a copy of our
Employee Proprietary Information Agreement when you begin your employment. In
order to conform with the Immigration and Reform Control Act of 1986, you will
be required to provide sufficient documentation to show proof of employment
eligibility in the United States.
It is the Company's policy to respect fully the rights of your previous
employers in their proprietary or confidential information. No employee is
expected to disclose, or is allowed to use for the Company's purposes, any
confidential or proprietary information he or she may have acquired as a result
of previous employment.
Once signed by you, this letter, together with your Proprietary
Information and Inventions Agreement and your _________________, forms the
complete and exclusive statement of your employment with the Company. It
supersedes any other agreements or promises made to you by anyone, whether oral
or written, and it can only be modified in a written agreement signed by you and
by an officer of the Company.
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This letter agreement shall be governed by and construed under the law
of the State of North Carolina.
I am pleased to extend this offer to you and look forward to your acceptance.
Please sign and return the enclosed copy of this offer letter as soon as
possible to indicate your agreement with the terms of this offer. This offer
will lapse if not signed and returned by fax to (000) 000-0000 within one (1)
week of the date of this offer letter.
I believe you will be able to make an immediate contribution to DNA Sciences'
effort, and I think you will enjoy working in this innovative, fast-paced
company. One of the keys to our success is good people; we hope you accept our
offer to be one of those people.
Sincerely
Xxxxxx X. Xxxxxx
Chief Business Officer
I accept the terms of employment as described in this offer letter dated
_____________ and will start my employment on ____________________.
I confirm that by my start date at DNA Sciences, I will be under no contract or
agreement with any other entity which would in any way restrict my ability to
work at DNA Sciences or perform the functions of my job for DNA Sciences,
including, but not limited to, any employment agreement and/or non-compete
agreement.
_____________________________ Date_____________________
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EXHIBIT I
FORM OF
RELEASE
This Release ("Release") is made and entered into by Axys
Pharmaceuticals, Inc., a Delaware corporation ("Releasor").
1. This Release is for the benefit of DNA Sciences, Inc., a Delaware
corporation ("DNAS"), and PPGx, Inc., a Delaware corporation ("PPGx"), each
of the direct and indirect subsidiaries of DNAS and PPGx, each other
affiliate of DNAS and PPGx and all successors and past, present and future
assigns, directors, officers, employees, agents, attorneys and
representatives of the respective entities identified or otherwise referred
to in this paragraph (all hereinafter "Releasees"), wherever the context
requires or admits.
2. For good and valuable consideration, the receipt of which is hereby
acknowledged, Releasor, for and on behalf of itself and each of its direct
and indirect subsidiaries, hereby releases and discharges Releasees from and
against any and all past, present and future disputes, claims, rights,
demands, actions, obligations, liabilities and causes of action, whether
asserted or unasserted, of any and every kind, nature and character
whatsoever, known or unknown, which Releasor may now have, or have ever had
against Releasees; provided, however, claims arising under the following are
not included in the scope of this Release:
a) any claims which Releasor may have against DNAS or any of its affiliates,
officers, directors, employees, agents, subsidiaries or related entities for
actions arising prior to the date hereof;
b) claims arising from the performance of either PPGx, DNAS and/or PIPO
Acquisition Corp., a Delaware corporation ("PIPO"), under the following
agreements: (i) the Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") by and between DNAS, PPGx and PIPO, dated December ___,
2000, and the transactions contemplated thereunder and the performance of
the obligations provided therein; (ii) that certain Software License
Agreement, by and between the Releasor and Axys Pharmaceuticals, Inc., dated
as of January 31, 1999, assigned and assumed by PPGx under the Assignment
and Assumption of License Agreement, between PPGx and Releasor, dated as of
February 1, 1999, in respect of PPGx's performance of its obligations
thereunder from and after the date hereof; (iii) that certain Technology
Transfer Agreement, by and between PPGx and Releasor, dated as of February
1, 1999, in respect of PPGx's performance of its obligations thereunder from
and after the date hereof; (iv) that certain Distributor Agreement, by and
between PPGx and PPD Pharmaco, Inc., a Texas corporation and a wholly owned
subsidiary of Releasor, dated as of February 1, 1999, as amended, in respect
of PPGx's performance of its obligations thereunder from and after the date
hereof; and (v) that certain Services Agreement, between PPGx and Releasor,
dated as of February 1, 1999, as amended, in respect of PPGx's performance
of its obligations thereunder from and after the date hereof; and
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c) claims relating to nonpayment of monetary obligations under the Investor
Rights Agreement by and between PPGx, Releasor and Axys Pharmaceuticals,
Inc., dated as of February 1, 1999.
3. THE RELEASOR AGREES THAT IT WILL NOT, ON BEHALF OF ITSELF, OR IN
COOPERATION OF PARTICIPATION WITH ANY OTHER PERSON, FIRM, ENTITY,
CORPORATION, INSTITUTE, OR GOVERNMENT AGENCY, FILE, REFILE, OR IN ANY
MANNER PARTICIPATE IN OR PROSECUTE ANY CLAIM, CHARGE, GRIEVANCE,
COMPLAINT, OR ACTION OF ANY SORT AGAINST RELEASEES BEFORE ANY LOCAL,
STATE OR FEDERAL COURT, ARBITRATOR, ADMINISTRATIVE AGENCY, BOARD OR
TRIBUNAL CONCERNING ANY MATTER WHICH WAS OR COULD HAVE BEEN RAISED IN
CONNECTION WITH ANY MATTER RELEASED IN PARAGRAPH 2 ABOVE, UNLESS IT IS
REQUIRED TO DO SO BY LAW.
4. IF ANY SUIT IS BROUGHT RELATING TO THIS RELEASE OR ANY BREACH OF IT
BY RELEASOR, THE PREVAILING PARTY IN SUCH SUIT SHALL BE ENTITLED TO
REIMBURSEMENT FOR REASONABLE COSTS, EXPENSES, AND ATTORNEYS' FEES
INCURRED BY IT IN SUCH SUIT, AND ITS OTHER LEGAL AND EQUITABLE REMEDIES.
5. THE RELEASOR (a) REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT IT HAS
BEEN FULLY ADVISED BY ITS ATTORNEY OF THE CONTENTS OF SECTION 1542 OF
THE CIVIL CODE OF THE STATE OF CALIFORNIA, AND (b) HEREBY EXPRESSLY
WAIVES THE BENEFITS THEREOF AND ANY RIGHTS THE RELEASOR MAY HAVE
THEREUNDER. SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA
PROVIDES AS FOLLOWS:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
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The Releasor also hereby waives the benefits of, and any rights the Releasor
may have under, any statute or common-law principle of similar effect in any
jurisdiction.
6. This General Release shall be construed in accordance with, and governed in
all respects by, the laws of the State of Delaware (without giving effect to
principles of conflicts of laws).
7. The releases provided herein are subject to the consummation of the merger
of PPGx and PIPO as provided for in the Merger Agreement.
Dated: December __, 2000 AXYS PHARMACEUTICALS, INC.
---------------------------------------
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EXHIBIT I-1
FORM OF
RELEASE
This Release ("Release") is made and entered into by Pharmaceutical
Product Development, Inc., a North Carolina corporation ("Releasor").
8. This Release is for the benefit of DNA Sciences, Inc., a Delaware
corporation ("DNAS"), and PPGx, Inc., a Delaware corporation ("PPGx"), each
of the direct and indirect subsidiaries of DNAS and PPGx, each other
affiliate of DNAS and PPGx and all successors and past, present and future
assigns, directors, officers, employees, agents, attorneys and
representatives of the respective entities identified or otherwise referred
to in this paragraph (all hereinafter "Releasees"), wherever the context
requires or admits.
9. For good and valuable consideration, the receipt of which is hereby
acknowledged, Releasor, for and on behalf of itself and each of its direct
and indirect subsidiaries, hereby releases and discharges Releasees from and
against any and all past, present and future disputes, claims, rights,
demands, actions, obligations, liabilities and causes of action, whether
asserted or unasserted, of any and every kind, nature and character
whatsoever, known or unknown, which Releasor may now have, or have ever had
against Releasees; provided, however, claims arising under the following are
not included in the scope of this Release:
d) any claims which Releasor may have against DNAS or any of its affiliates,
officers, directors, employees, agents, subsidiaries or related entities for
actions arising prior to the date hereof;
e) claims arising from the performance of either PPGx, DNAS and/or PIPO
Acquisition Corp., a Delaware corporation ("PIPO"), under the following
agreements: (i) the Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") by and between DNAS, PPGx and PIPO, dated December ___,
2000, and the transactions contemplated thereunder and the performance of
the obligations provided therein; (ii) that certain Software License
Agreement, by and between the Releasor and Axys Pharmaceuticals, Inc., dated
as of January 31, 1999, assigned and assumed by PPGx under the Assignment
and Assumption of License Agreement, between PPGx and Releasor, dated as of
February 1, 1999, in respect of PPGx's performance of its obligations
thereunder from and after the date hereof; (iii) that certain Technology
Transfer Agreement, by and between PPGx and Releasor, dated as of February
1, 1999, in respect of PPGx's performance of its obligations thereunder from
and after the date hereof; (iv) that certain Distributor Agreement, by and
between PPGx and PPD Pharmaco, Inc., a Texas corporation and a wholly owned
subsidiary of Releasor, dated as of February 1, 1999, as amended, in respect
of PPGx's performance of its obligations thereunder from and after the date
hereof; and (v) that certain Services Agreement, between PPGx and Releasor,
dated as of February 1, 1999, as amended, in respect of PPGx's performance
of its obligations thereunder from and after the date hereof; and
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f) claims relating to nonpayment of monetary obligations under the Investor
Rights Agreement by and between PPGx, Releasor and Axys Pharmaceuticals,
Inc., dated as of February 1, 1999.
10. THE RELEASOR AGREES THAT IT WILL NOT, ON BEHALF OF ITSELF, OR IN
COOPERATION OF PARTICIPATION WITH ANY OTHER PERSON, FIRM, ENTITY,
CORPORATION, INSTITUTE, OR GOVERNMENT AGENCY, FILE, REFILE, OR IN ANY
MANNER PARTICIPATE IN OR PROSECUTE ANY CLAIM, CHARGE, GRIEVANCE,
COMPLAINT, OR ACTION OF ANY SORT AGAINST RELEASEES BEFORE ANY LOCAL,
STATE OR FEDERAL COURT, ARBITRATOR, ADMINISTRATIVE AGENCY, BOARD OR
TRIBUNAL CONCERNING ANY MATTER WHICH WAS OR COULD HAVE BEEN RAISED IN
CONNECTION WITH ANY MATTER RELEASED IN PARAGRAPH 2 ABOVE, UNLESS IT IS
REQUIRED TO DO SO BY LAW.
11. IF ANY SUIT IS BROUGHT RELATING TO THIS RELEASE OR ANY BREACH OF IT
BY RELEASOR, THE PREVAILING PARTY IN SUCH SUIT SHALL BE ENTITLED TO
REIMBURSEMENT FOR REASONABLE COSTS, EXPENSES, AND ATTORNEYS' FEES
INCURRED BY IT IN SUCH SUIT, AND ITS OTHER LEGAL AND EQUITABLE REMEDIES.
12. THE RELEASOR (a) REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT IT HAS
BEEN FULLY ADVISED BY ITS ATTORNEY OF THE CONTENTS OF SECTION 1542 OF
THE CIVIL CODE OF THE STATE OF CALIFORNIA, AND (b) HEREBY EXPRESSLY
WAIVES THE BENEFITS THEREOF AND ANY RIGHTS THE RELEASOR MAY HAVE
THEREUNDER. SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA
PROVIDES AS FOLLOWS:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
The Releasor also hereby waives the benefits of, and any rights the Releasor
may have under, any statute or common-law principle of similar effect in any
jurisdiction.
13. This General Release shall be construed in accordance with, and governed in
all respects by, the laws of the State of Delaware (without giving effect to
principles of conflicts of laws).
14. The releases provided herein are subject to the consummation of the merger
of PPGx and PIPO as provided for in the Merger Agreement.
Dated: December __, 2000 PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
------------------------------------------
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EXHIBIT J
FORM OF UNDERWRITER LOCK-UP AGREEMENT
XXXXXX BROTHERS INC.
XXXX XXXXXXXX INCORPORATED
CIBC WORLD MARKETS CORP.
As Representatives of the several
Underwriters named in Schedule 1,
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing
for the purchase by you and such other firms (the "UNDERWRITERS") of shares (the
"SHARES") of Common Stock, par value $0.001 per share (the "COMMON STOCK"), of
DNA Sciences, Inc., a Delaware corporation (the "COMPANY"), and that the
Underwriters propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Xxxxxx
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock owned
by the undersigned on the date of execution of this Lock-Up Letter Agreement or
on the date of the completion of the Offering, or (2) enter into any swap or
other derivatives transaction that transfers to another, in whole or in part,
any of the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or other securities, in cash or
otherwise, for a period of 180 days after the date of the final Prospectus
relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
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Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
[____________]
By:
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Name:
Title:
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EXHIBIT K
FORM OF
AMENDED AND RESTATED DISTRIBUTOR AGREEMENT
THIS AMENDED AND RESTATED DISTRIBUTOR AGREEMENT (the "Agreement") is
made and entered into effective as of this ___ day of December, 2000, (the
"Amendment Effective Date") and amends and restates that certain Distributor
Agreement made and entered into as of the 1st day of February, 1999 (the
"Effective Date"), as amended by Amendment No. 1 to Distributor Agreement, made
the 21st day of October, 1999, and Amendment No. 2, made the 28th day of June,
2000, by and between PPGx, Inc., a Delaware corporation whose mailing and notice
address is 00000 X. Xxxxxx Xxxxx Xxxx, Xx Xxxxx, Xxxxxxxxxx 00000, Telephone:
(000) 000-0000 and Facsimile: (000) 000-0000 (hereinafter called the
"Corporation"), and PPD PHARMACO, INC., a Texas corporation (now PPD
Development, LLC, a Texas limited liability company), whose mailing and notice
address is 0000 00xx Xxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000 and Facsimile: (000) 000-0000(hereinafter called
"PPD").
RECITALS
A. PPD desires to acquire the exclusive, worldwide rights to market and
offer for sale certain Designated Services (as hereinafter defined) of the
Corporation upon the terms and conditions set forth hereinafter.
B. PPD further desires to acquire the exclusive, worldwide rights to
market for sublicense and sublicense certain Designated Products (as hereinafter
defined) of the Corporation upon the terms and conditions set forth hereinafter.
C. The Corporation is willing to grant to PPD such rights upon the terms
and conditions set forth hereinafter.
NOW, THEREFORE, in consideration of the foregoing recitals, the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties agree as follows:
31. Definitions. As used throughout this Agreement, the following
definitions shall apply:
(a) Affiliate. The term "Affiliate" shall mean an entity which
controls, is controlled by or under common control with,
directly or indirectly, PPD. Control for these purposes shall
mean ownership of more than 50% of the voting securities of a
corporation or comparable interest of another entity.
(b) Confidential Information. The term "Confidential Information"
shall mean any and all proprietary and confidential data and
information (including any trade secrets) of the Corporation or
relating to the Corporation Technology, the Designated Services
and/or the Designated Products (i) which is not generally known
to the public; and (ii) which is treated by the Corporation as
confidential, and all physical embodiments of the foregoing.
Confidential Information shall not include any information which
was already known to PPD at the time it was first disclosed to
PPD by the Corporation or Axys Pharmaceuticals, Inc., but shall
include confidential information known to PPD solely because of
its prior acquisition, ownership and operation of Intek Labs,
Inc. Confidential Information
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also shall not include any data or information which before
being divulged, disclosed or used by PPD (i) has become
generally known to the public through no wrongful act of PPD;
(ii) has been rightfully received by PPD from a third party
without restriction on disclosure or use and without breach of
an obligation of confidentiality running directly or indirectly
to the Corporation; (iii) has been approved for release to the
general public by written authorization of the Corporation; or
(iv) has been disclosed pursuant to a requirement of a
governmental agency or of law without similar restrictions or
other protections against public disclosure, or disclosure is
required by operation of law; provided, however, that PPD shall
have first given written notice of such required disclosure to
the Corporation, made a reasonable effort to obtain a protective
order requiring that the Confidential Information so disclosed
be used only for the purposes for which disclosure is required
and taken reasonable steps to allow the Corporation to seek to
protect the confidentiality of the information required to be
disclosed.
(c) Controlled. "Controlled" means, with respect to an item of
information or intellectual property, that the Corporation owns,
has a license to or otherwise has lawful access to, such
information and intellectual property and has the ability to
grant a license as provided in this Agreement without violating
the terms of an agreement with a third party.
(d) Corporation Technology. "Corporation Technology" means and
includes all Patents, data, materials, formulas, know-how, trade
secrets, process information, clinical data, trademarks,
copyrights, computer software and/or program(s), marketing and
demographic information, promotional materials and any and all
other information or technology necessary or useful for
Diagnostic Services and/or Diagnostic Products and Controlled by
the Corporation.
(e) Customer. "Customer" means a customer or potential customer of
Designated Services and/or Designated Products sold or licensed
hereunder by PPD or by PPD's sub-distributors and resellers.
(f) Designated Services. "Designated Services" are all existing and
future Pharmacogenomics contract, consulting, research and
development, laboratory, and technical and maintenance support
services, including Enhancements (as hereinafter defined),
offered by or available to the Corporation from time to time. By
way of illustration but not limitation, Designated Services
include, to the extent offered by or available from the
Corporation, candidate gene and polymorphism identification,
sequencing, assay development, genotyping, phenotyping, nucleic
acid extraction, storage and archiving, protein and gene
expression, sample collection, clinical trial design,
statistical analysis, clinical diagnostic testing, algorithm
development, and software development, customization,
consultation, support and maintenance.
(g) Designated Products. "Designated Products" are all existing and
future Pharmacogenomics software programs, documentation,
information and information systems, sequences, sample
collections, technology and methods,
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including Enhancements, developed or licensed by the Corporation
and which the Corporation makes available for sale or licensing,
as the case may be, from time to time. By way of illustration
but not limitation, Designated Products include, to the extent
made available by the Corporation for sale or licensing,
GeneTrials(TM), allele frequency database (AFDB),
PowerCalculator(TM), clinical genetics laboratory information
systems, Target Validation System (TVS), LIMS, gene and
polymorphism sequences, allele frequencies, medical and
demographic data, clinical outcomes, DNA panels from reference
populations, assay procedures, turnkey laboratory systems,
system specifications and informatics algorithms.
(h) Enhancements. "Enhancements" are changes, additions,
improvements or upgrades to the Designated Services or the
Designated Products, as applicable, including but not limited to
new products or services that (i) support new releases of
operating systems and devices, (ii) correct errors or defects,
(iii) provide substantial additional value, (iv) result in
downgrading or obsolescence of existing services or products, or
(v) serve as alternative solutions or substitutes to the
existing Designated Services or Designated Products, as
applicable.
(i) LIMS. "LIMS" is the laboratory information system, including
Enhancements, that integrates and automates the laboratory and
information process components in use in the Corporation's
high-throughput pharmacogenomics laboratory currently located in
La Jolla, California, Morrisville, North Carolina and Cambridge,
England. By way of illustration and not limitation, LIMS
includes single nucleotide polymorphism genotyping, sequencing,
nucleic acid extraction, project definition, and sample
management and tracking capabilities.
(j) Patents. "Patents" means and collectively includes all U.S. and
foreign patents and patent applications, including, without
limitation, any patents issued from such patent applications,
reissues, extensions, substitutions, divisions, continuations,
and continuations-in-part.
(k) Pharmacogenomics. "Pharmacogenomics" shall have the same meaning
set forth in the Technology Transfer and License Agreement
executed by and between Axys Pharmaceuticals, Inc. and the
Corporation effective as of February 1, 1999.
(l) PPD Margin. "PPD Margin" means that portion of the Sales Price
which PPD retains for payment for its services and other
obligations and duties under this Agreement, including the
amount which PPD retains as payment for the client contracts in
the name of Intek Labs, Inc. obtained by said company prior to
the Effective Date (the "Intek Contracts") and including the
amount which PPD retains as payment under the Collateral
Contracts as defined in Section 7 hereof. The PPD Margin
(including the PPD Margin on the Intek Contracts and the
Collateral Contracts) shall be determined from time to time as
provided in Schedule 1 attached.
(m) Sales Price. "Sales Price" means the price charged by PPD to a
Customer for a Designated Product or a Designated Service. With
respect to the Intek Contracts,
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Sales Price means the fees charged to clients under the terms of
the Intek Contracts. The Sales Price for each Designated Product
and each Designated Service shall be determined from time to
time in accordance with Schedule 1; provided, however, that
notwithstanding anything in this Agreement or Schedule 1
attached, PPD in its sole discretion shall set the Sales Price
charged for each Designated Product and each Designated Service.
(n) Transfer Price. "Transfer Price" means the price charged to PPD
by the Corporation for a Designated Product or a Designated
Service. The Transfer Price for each Designated Product and each
Designated Service shall be determined from time to time as
provided in Schedule 1 attached.
32. Appointment and Licenses.
(a) Appointment. Subject to the terms and conditions herein, the
Corporation hereby appoints PPD as its exclusive, worldwide
distributor and/or reseller, with the right to appoint
sub-distributors and/or resellers, of Designated Services and/or
Designated Products and PPD accepts such appointment.
(b) Limitation on Appointment. Notwithstanding Section 2(a) hereof,
the Corporation (by itself or through agents selected by the
Corporation) shall have the exclusive right to distribute and/or
sell, and/or offer for sale clinical diagnostic testing services
that, with respect to a given patient, are ordered by a
physician, other authorized healthcare professional or requested
by the patient for the sole purpose of diagnosing the presence,
susceptibility or course of treatment of a disease or condition
for such patient.
(c) Licenses. Subject to the terms of this Agreement, the
Corporation hereby grants to PPD an exclusive, worldwide, fully
paid right and license under the Corporation Technology to use,
offer for sale, promote, market, distribute and import the
Designated Services and the Designated Products to Customers,
except that, the license under the trademark PPGx shall be
non-exclusive.
(d) Sublicenses. The Corporation hereby grants to PPD the right to
sublicense (i) sub-distributors and resellers appointed by PPD
pursuant to Section 2.a. subject to the same limitations as are
imposed upon PPD herein, and (ii) Customers, to the extent
necessary to allow Customers full use and enjoyment of the
Designated Services and/or the Designated Products. Any
sublicenses for the Designated Products granted by PPD to
Customers pursuant to this Agreement shall (i) include such
terms and conditions as may be established from time to time by
the Corporation, after reasonable consultation with PPD, as
applicable to end users or sublicensees, and (ii) certain
restrictions, to the extent applicable, similar to type
described in Section 4.1 of that certain Software License
Agreement dated February 1, 1999 as required to be included in
sublicenses granted pursuant to that agreement.
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(e) Non-Compete. PPD agrees that, during the Term, it shall not
re-sell, license or distribute, for any third party, any
products or services owned or controlled by such third party
that are substantially similar to any Designated Products or
Designated Services for which PPD is the distributor on behalf
of the Corporation under this Agreement ("Competing Products"),
without the written consent of the Corporation. Notwithstanding
the foregoing, PPD shall have the right to sell, license or
otherwise commercialize any products which are substantially
similar to the Designated Products or the Designated Services,
and which are either acquired by PPD from a third party (by
asset acquisition or merger), or developed independently by PPD
("Allowed Products"); provided that PPD's plans for marketing
such Allowed Products are included in the overall marketing plan
described in and subject to the provisions of Section 5.c so as
to ensure that PPD is allocating sufficient marketing effort to
the Designated Services and Designated Products as compared to
such Allowed Products.
33. Term of License. Unless sooner terminated or extended as hereinafter
provided, the rights and licenses granted to PPD under this Agreement shall
commence effective as of the Effective Date and shall continue for a period of
ten (10) years ending on the tenth anniversary of the Effective Date. At least
six (6) months prior to the expiration of the initial term and each renewal
term, if any, PPD and the Corporation shall negotiate in good faith for a
renewal of the current term then in effect or such other term as either party
may propose upon such terms and conditions which are mutually acceptable to both
parties. If the parties are unable to agree upon mutually acceptable terms for a
renewal of the current term or any other term, then the Corporation shall have
the right to enter into a new agreement with a third party covering the rights
granted to PPD hereunder, but any such new agreement shall not be on terms which
are more favorable, taken as whole, than those offered to PPD. For purposes of
this Agreement, references to "term" shall mean the initial term and each
renewal term resulting from an extension or renewal as provided above. The
parties agree that for any sublicense or agreement for Designated Services or
Designated Products, or any ancillary agreement in support thereof, which PPD
has entered into with a Customer that has a term which extends beyond the term
of this Agreement, PPD and the Corporation shall continue to fulfill their
obligations under said sublicense, agreement or ancillary agreement until the
expiration or termination thereof, notwithstanding anything in this Agreement to
the contrary.
34. Payment of Transfer Price to the Corporation. PPD shall pay the
Corporation the Transfer Price for the Designated Products and the Designated
Services, , as the case may be, purchased by PPD hereunder, during the term of
this Agreement as follows:
(a) Time of Payment. PPD shall pay the Corporation the Transfer
Price for each Designated Product and each Designated Service
within thirty (30) days after PPD has the contractual right to
invoice its Customer for each such Designated Product and
Designated Service. With respect to the Intek Contracts, the
Corporation shall inform PPD at what time intervals to invoice
clients thereunder, and PPD shall be entitled to retain the PPD
Margin at such times as it collects fees thereunder and remits
payment of the Transfer Price to the Corporation.
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(b) Returns and Refunds. Within thirty (30) days thereafter each
calendar quarter during the term of this Agreement, PPD shall
provide the Corporation with a report setting forth all refunds
made by PPD in the preceding calendar quarter to Customers in
connection with the sale, license and delivery of the Designated
Products and Designated Services which refunds arise from an
uncured material breach of this Agreement by the Corporation,
including but not limited to an uncured material breach of any
warranties made herein by the Corporation, including the portion
of each such refund which includes all or a portion of the
Transfer Price paid by PPD to the Corporation. The Corporation
shall reimburse PPD for all such refunds to the extent of the
Transfer Price refunded within fifteen (15) days after the
Corporation's receipt of PPD's report and supporting
documentation. Any disagreements over such refunds shall be
resolved by the appropriate officers of the parties. Refunds, if
any, made by the Corporation under the Intek Contracts for the
same reasons refunds may be made pursuant to this Section 4.b.
by PPD with respect to the Designated Products and the
Designated Services shall be handled in a similar manner, and
PPD shall reimburse the Corporation for all refunds to the
extent of the PPD Margin refunded by the Corporation.
(c) Post-Termination Payments. Upon the termination of this
Agreement, PPD shall continue to pay the Corporation, in the
manner described in subsection a. of this Section 4, the
Transfer Price for Designated Products and Designated Services
sold or licensed during the term of this Agreement.
35. Duties of PPD. During the term of this Agreement, PPD agrees to
perform, directly or through one or more of its Affiliates, the following
duties:
(a) Marketing, Advertising, and Promotion. PPD shall use its
reasonable best efforts to promote and market at its sole
expense the Designated Services and the Designated Products to
Customers during the term of this Agreement in accordance with
the Marketing Plan described in Section 5.c below. Such efforts
shall include, by way of example, identification of potential
Customers, demonstrations of the Designated Products to
Customers as appropriate and development of sales proposals.
Without limiting the generality of the first sentence of this
Section 5.a., PPD shall be responsible for all costs of
advertising, sales and promotional materials used for these
purposes.
(b) Personnel. In performing its duties hereunder, PPD shall employ
such persons and/or engage independent contractors at its sole
expense as PPD deems reasonably necessary to perform its duties
under this Agreement. In this regard, PPD, in its discretion,
may promote and market the Designated Services and the
Designated Products, and grant sublicenses related thereto,
directly through employees of PPD or its Affiliates or through
an outside sales force, or any combination thereof. PPD shall be
solely responsible for compensating all personnel used by PPD to
accomplish these purposes.
(c) Marketing Plan and Management.
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(1) Marketing Plan Preparation and Implementation. Prior to the
beginning of each calendar year during the term of this
Agreement, PPD shall provide the Corporation with a reasonably
detailed marketing plan generally consistent in form and
substance with those prepared for the marketing of PPD's
services and products to the extent the marketing efforts
reflected in such plans is comparable to the efforts set forth
in PPD's marketing plan under this Agreement for the upcoming
calendar year. Such marketing plan shall include, among other
things, performance goals and milestones to be achieved by PPD
during the relevant year. PPD shall provide said plan to the
Corporation at least 30 days before each calendar year end and
the Corporation shall have 30 days in which to discuss or
comment on the marketing plan. PPD shall use all reasonable
efforts to either incorporate or respond to any such comments
made by PPGx or to discuss with PPGx its comments and provide an
explanation of why they are not incorporated or addressed. PPD
shall carry out its marketing activities under this Section 5 in
accordance with the marketing plan. To the extent the parties
cannot agree with respect to the nature of, or undertakings
pursuant to, the marketing plan, either party shall have the
right to submit such disputed aspect of the marketing plan to a
joint review committee ("JRC").
(2) JRC Composition. The JRC will be composed of at least two, but
no more than four, representatives each from PPD and the
Corporation. The initial members of the JRC will be those
representatives the names of whom will be provided to the other
party within ten days of the Effective Date. Each party will
promptly notify the other party in writing of any change in its
appointed representatives. The chairmanship of the JRC will be
one of PPD's representatives.
(3) JRC Voting Mechanism; Dispute Resolution. Each party will have
one vote on the JRC regardless of the number of representatives
of each party on the JRC. All of the decisions of the JRC must
be unanimous in order for a JRC matter to be resolved. In the
event of a deadlocked vote on an issue, the chief executive
officers of PPD and the Corporation will discuss such issue in
good faith and will use their best efforts to find a resolution
to the deadlock. In the == event such executive officers are
unable to resolve such issue within 30 days of submission of the
issue to them by the JRC, either party shall have the right to
submit the matter to binding arbitration before a single
arbitrator ("Arbitrator") selected by the American Arbitration
Association (the "Administrator"), in accordance with its then
existing arbitration rules or procedures regarding commercial or
business disputes. The arbitration shall be held in Chicago,
Illinois. The Arbitrator shall, within fifteen (15) calendar
days after the conclusion of the Arbitration hearing, issue a
written statement of decision describing the essential findings
and conclusions. Each party shall bear its own attorney's fees,
costs, and disbursements arising out of the arbitration, and
shall pay an equal share of the fees and costs of the
Administrator and the Arbitrator.
(4) Meetings. To accomplish its objectives, the JRC will meet when
needed by teleconference or at a mutually agreed upon site. Each
party will bear its
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expenses for personnel to attend any meeting. The chairperson of
the JRC will chair the meetings and will be responsible for
preparing agenda, circulating agendas to the other JRC members
prior to the meetings, preparing written minutes of each such
meeting, which minutes will, without limitation, describe each
recommendation and the determination made by the JRC. Such
minutes will be promptly confirmed and unanimously approved in
writing by the JRC.
(d) Marketing Materials. PPD shall provide to the Corporation from
time to time, at no additional charge, reasonable quantities of
PPD's most recent marketing materials, if any, related to the
Designated Services and the Designated Products. In addition,
PPD shall provide drafts of new marketing materials to the
Corporation at least thirty (30) days prior to the scheduled
publication date for same and the Corporation shall have fifteen
(15) days in which to comment on said materials.
(e) Strategic Planning. During each calendar year of this Agreement,
PPD shall plan and host up to four (4) strategic planning
meetings at the Corporation's request which shall focus upon the
marketing and promotion of the Designated Services and the
Designated Products. The Corporation may send a reasonable
number of representatives to said meetings. All strategic
planning meetings shall be conducted on dates and at locations
mutually acceptable to the Corporation and PPD.
(f) Periodic Review. During the term of this Agreement, PPD shall
periodically confer (not less frequently than quarterly) with
the Corporation with respect to monthly, quarterly and annual
forecasts for sales and sublicensing of the Designated Products
and the Designated Services, scheduling delivery of the
Designated Products and the Designated Services and other issues
related to Customer satisfaction and the respective parties'
duties hereunder; provided, however, that PPD and the
Corporation shall establish a mutually agreeable process for
order acceptance, scheduling, delivery and performance so that
the Corporation is not committed to specifically perform
hereunder without its prior consent.
(g) Other Activities. PPD shall be responsible for ordering, billing
and accounts receivable activities related to the sale or
sublicense of the Designated Products and the Designated
Services to Customers. PPD shall also be responsible for billing
and accounts receivable activities related to the Intek
Contracts.
36. Duties of the Corporation. During the term of this Agreement, the
Corporation shall be responsible for performance of the following duties:
(a) Performance of Designated Services. The Corporation agrees to
perform for PPD or a Customer, as the case may be, any of the
Designated Services undertaken on behalf of a Customer pursuant
to this Agreement in a timely, professional manner and to the
best of its ability, consistent with its agreements pursuant to
Section 5.f. The Corporation shall be responsible for
determining the timing, nature and scope
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of the Designated Services to be provided to a Customer and it
alone shall be responsible for the performance or nonperformance
of such services. The Corporation shall pay all costs associated
with the performance of such services for a Customer.
(b) Delivery of the Designated Products. The Corporation agrees to
cause delivery of the Designated Products to PPD or to
Customers, as the case may be, in a timely fashion consistent
with its agreements pursuant to Section 5.f. The Corporation
shall pay all transportation charges required for the shipment
and delivery of the Designated Products to PPD or a Customer, as
the case may be, unless otherwise agreed with the Customer.
(c) Current Versions and Information. The Corporation agrees to
provide PPD in timely fashion (and in any event not less than
forty-five (45) days before PPD is expected to market said
release or version) the most current release or version of the
Designated Products available from time to time and to supply
PPD with the Corporation's most current marketing and technical
information concerning the Designated Services and the
Designated Products.
(d) Staffing. The Corporation agrees to hire or retain adequate
trained personnel to meet the good faith demands of Customers
for the Designated Services and the Designated Products
projected to be generated from the marketing and sales efforts
of PPD and based upon sales forecasts to be established jointly
by the Corporation and PPD. If the Corporation acting in good
faith determines that it is unable for any reason to meet the
good faith requirements of Customers for the Designated Services
and/or the Designated Products in a timely fashion, then it
shall give advance notice of same to PPD so that PPD and the
Corporation shall have a reasonable time to determine and agree
upon alternatives for delivery of the Designated Services and/or
the Designated Products so as to maximize Customer satisfaction
and sales.
(e) Marketing Materials. The Corporation shall provide to PPD and
its Affiliates at no additional charge, copies of the
Corporation's most recent descriptions and/or specifications
related to the Designated Services and the Designated Products
and a reasonable number of copies (in whatever format reasonably
requested) of the Designated Products for demonstration
purposes, as provided for in this Agreement.
(f) Training. The Corporation agrees to provide each year during the
term of this Agreement at PPD's reasonable request up to four
(4) technical training classes related to the demonstration,
marketing, installation and/or utilization of the Designated
Services and the Designated Products, including specifically any
Enhancements, at no charge to PPD or its Affiliates. Each
training class shall not exceed five (5) days in duration. All
training shall be conducted on dates and at locations mutually
agreed to by the parties.
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(g) Market and Technical Support. The Corporation agrees to provide
to PPD and its Affiliates market and pre- and post-sale
technical support, by telephone or in some other reasonably
appropriate manner, as reasonably requested from time to time to
assist PPD and its Affiliates in the marketing and promotion of
the Designated Services and the Designated Products. Such market
and technical support shall be provided at no additional charge
to PPD or its Affiliates during the term of this Agreement. In
connection with pre-sale technical support, PPD shall pay all
expenses which are approved in advance that are incurred by
employees or agents of the Corporation in traveling to and from
customer sites to assist PPD in the marketing and promotion of
the Designated Services and the Designated Products.
(h) Development Plan. At each strategic planning meeting hosted by
PPD during the term of this Agreement, the Corporation shall
provide a status report on development plans for the Designated
Services and the Designated Products, including a description of
each development project, target markets, individual development
project time lines, and projected development project costs.
37. Collateral Contracts. From time to time the Corporation may wish to
enter into contracts with third parties for the sole purpose of evaluating the
technology of a third party or because the third party will not agree to
contract with PPD for Designated Services or Designated Products, which contract
may include performance of a Designated Service by the Corporation or delivery
by the Corporation of a Designated Product (a "Collateral Contract"). The
Corporation shall be permitted to enter into such Collateral Contracts in its
name provided that (i) each such Collateral Contract is approved by PPD prior to
its execution and (ii) subject to compliance with applicable confidentiality
provisions, a copy of each fully executed Collateral Contract shall be provided
to PPD in accordance with the notice provisions herein within seven (7) days
after final execution of the Collateral Contract. In cases in which a third
party indicates an unwillingness to contract with PPD for Designated Services or
Designated Products, the Corporation shall use good faith efforts to have such
third party contract with PPD and, if unsuccessful, to use good faith efforts to
include a provision permitting disclosure of such Collateral Contract to PPD in
confidentiality clauses between such third party and the Corporation.
38. Contracts with DNA Sciences, Inc. From time to time the Corporation
may wish to enter into contracts with DNA Sciences, Inc. for the sole purpose of
conducting internal research and development projects at DNA Sciences, Inc. (R&D
Contract) for the sole benefit of DNA Sciences, Inc. and not for any third party
for whom DNA Sciences, Inc. is conducting research and development.
Notwithstanding anything in this Agreement to the contrary, the Corporation
shall be permitted to enter into such R&D Contracts. In the event, however, that
the Corporation desires to enter into contracts with DNA Sciences, Inc. for the
purpose of conducting, on behalf of DNA Sciences, Inc., services for a third
party which are the same as any Designated Services ("DNAS/Third Party
Agreement"), the Corporation shall have the right to enter into any such
DNA/Third Party Agreement in its name provided that (i) each DNAS/Third Party
Contract is approved by PPD prior to its execution and (ii) subject to
compliance with applicable confidentiality provisions, a copy of each fully
executed
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DNAS/Third Party Contract shall be provided to PPD in accordance with the notice
provisions herein within seven (7) days after final execution of the DNAS/Third
Party Contract.
39. Reports and Audits. PPD will furnish to the Corporation quarterly
reports of such information as is reasonably requested by the Corporation for
purposes of the activities set forth in Schedule 1. The Corporation shall have
the right, through a certified public accountant mutually acceptable to both
parties, to inspect the books and records of PPD not more than once per quarter,
and to verify the figures provided by PPD to the Corporation. Any such
inspection will be conducted during normal business hours at PPD's office and in
such a manner so as not to interfere with PPD's normal business activities.
40. Representations and Warranties of PPD. PPD makes the following
warranties and representations, each of which shall be deemed a separate
covenant to the Corporation and shall survive the execution and delivery of this
Agreement:
(a) Organization and Standing of PPD. PPD is duly organized and
validly existing and has complied with all requirements to
continue its existence under the laws of the State of Texas, and
has the corporate power and authority, to own, lease and use its
properties and to transact its business where and as now
conducted, and is duly qualified as a foreign corporation in
each jurisdiction where the character of its properties it owns,
leases or licenses or the nature of its business makes such
qualification necessary.
(b) Execution and Delivery Authorized. The execution and delivery of
this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by the
board of directors of PPD.
(c) Validity of Agreement. The execution and performance of this
Agreement and the actions provided for or contemplated hereunder
will not violate the provisions of any agreement, instrument or
obligation to which PPD is a party or by which it is bound.
Assuming due authorization, execution and delivery hereof by the
Corporation, this Agreement constitutes the valid and binding
agreement of PPD, enforceable against PPD in accordance with its
terms, subject as to enforceability to general equitable
principles and to the laws of bankruptcy, insolvency or similar
laws governing the rights of creditors.
(d) No False Statements. No exhibit, report, document or certificate
furnished or to be furnished by PPD to the Corporation in
connection with this Agreement contains or will contain any
false or misleading statement or representation of a material
fact or figure or omit or will omit any material fact or
statement.
(e) No Infringement of Licensed Rights. PPD acknowledges that any
violation, infringement, unauthorized use or misappropriation of
any of the licensing rights or proprietary rights of the
Corporation by PPD is prohibited, will render PPD liable to the
Corporation and constitutes a breach of this Agreement. The
Corporation shall be entitled to take all necessary action
against such
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unauthorized use, including instituting proceedings for
injunctive and other equitable relief.
(f) Notice of Infringement. In the event PPD learns of any
third-party violation, infringement, unauthorized use or
misappropriation of the Corporation's licensing or proprietary
rights, PPD shall immediately notify the Corporation giving such
details as are available. Thereafter, the Corporation may take
such action and institute such proceedings as the Corporation
deems appropriate, all at the Corporation's sole expense.
(g) Compliance with Laws. PPD represents and warrants that it has
the resources to perform its duties and obligations under this
Agreement, and that PPD will comply with any applicable laws,
rules or regulations in performance of its duties and
obligations hereunder.
(h) Proprietary Rights Retained. PPD acknowledges and agrees that
the Corporation has retained all of its proprietary rights
(including, without limitation, trademarks and service marks)
with respect to the Corporation Technology, the Designated
Services and the Designated Products except and unless otherwise
provided in this Agreement. PPD acknowledges and agrees that the
Designated Products do not include diagnostic kits or
substantially similar diagnostic products, and small molecule
therapeutic compounds or targets or other intellectual property
relating thereto and that all such matters are outside the scope
of this Agreement. Except as expressly provided herein, this
Agreement shall not be construed to give PPD any vested right,
title or interest in any of the patents (issued or pending),
trademarks, service marks, trade names, copyrights, licenses,
licensed rights granted by third parties to the Corporation or
in any of the Corporation's other proprietary rights.
41. Representations and Warranties of the Corporation. The Corporation
makes the following warranties and representations, each of which shall be
deemed a separate covenant to PPD and shall survive the execution and delivery
of this Agreement:
(a) Organization and Standing of the Corporation. The Corporation is
duly organized and validly existing and has complied with all
requirements to continue its existence under the laws of the
State of Delaware, and has the power and authority, corporate
and other, to own, lease and use its properties and to transact
its business where and as now conducted, and is duly qualified
as a foreign corporation in each jurisdiction where the
character of its properties it owns, leases or licenses or the
nature of its business makes such qualification necessary.
(b) Execution and Delivery Authorized. The execution and delivery of
this Agreement, and the consummation of the transactions
contemplated by this Agreement have been duly authorized and
approved by the board of directors of the Corporation.
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(c) Validity of Agreement. The execution and performance of this
Agreement and the actions provided for or contemplated hereunder
will not violate the provisions of any agreement, instrument or
obligation to which the Corporation is a party or by which it is
bound. Assuming due authorization, execution and delivery hereof
by PPD, this Agreement constitutes the valid and binding
agreement of the Corporation, enforceable against the
Corporation in accordance with its terms, subject as to
enforceability to general equitable principles and to the laws
of bankruptcy, insolvency or similar laws governing the rights
of creditors.
(d) No False Statements. No exhibit, report, document or certificate
furnished or to be furnished by the Corporation to PPD in
connection with this Agreement contains or will contain any
false or misleading statement or representation of a material
fact or figure or omit or will omit any material fact or
statement.
(e) Ownership and Grant of Rights. The Corporation owns or is
licensed or otherwise possesses legally sufficient rights to
grant the rights and licenses granted to PPD this Agreement. All
patents, registered trademarks, service marks and copyrights
held by the Corporation with respect to the Designated Services
and the Designated Products are valid and in full force and
effect.
(f) No Unauthorized Use. To the knowledge of the Corporation, there
is no material unauthorized use, disclosure, infringement or
misappropriation by any third party (including employees and
former employees of the Corporation) of the Designated Products
or any proprietary rights embodied therein or related thereto.
Except for the Most Favored Nations Agreement between Axys
Pharmaceuticals, Inc. and the Corporation dated February 1,
1999, the Corporation has not entered into any agreement related
to the granting of any rights or licenses with respect to the
Designated Services or the Designated Products.
(g) No Infringement. To the Corporation's knowledge, the Designated
Services and the Designated Products do not infringe any
currently issued patent, copyright, trademark or trade secret or
any other intellectual property rights of any third party, and
do not contain any computer virus which is an undocumented and
unauthorized program designed to cause a loss of, or damages to,
data files, or to gain access to and interfere with the
operations, other programs or computer resources, or any other
results not intended by the use of the computer system on which
the virus resides. Except as set forth in Schedule 1.g., the
marketing, sublicense or marketing for sublicense, as
applicable, of the Designated Services or the Designated
Products by PPD pursuant to this Agreement does not and will not
infringe any currently issued patent, copyright, trademark or
trade secret or any other intellectual property rights of any
third party.
(h) Use; Conformity with Written Specifications. The Designated
Products and the Designated Services shall be fit substantially
for the uses for which they are intended consistent with
industry standards and applicable law. In addition, the
Designated Products and the Designated Services shall materially
conform to their written specifications from time to time and
any written representations made by
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the Corporation to PPD and, if specifically approved in writing
by the Corporation (which approval shall not be unreasonably
withheld), by PPD to Customers. PPD and the Corporation shall
confer periodically (and no less frequently than semi-annually)
in good faith for the purpose of preparing or revising, as
applicable, appropriate written specifications about the
Designated Products and the Designated Services which PPD shall
be permitted to make to Customers. All information supplied by
the Corporation during the term of this Agreement regarding the
Designated Products, including any written marketing materials,
shall be at the time of disclosure accurate in all material
respects.
(i) Compliance with Laws. The Corporation represents and warrants
that the Corporation will comply with any applicable laws, rules
or regulations in performance of its duties and obligations
hereunder.
(j) Disclaimer of Certain Warranties. EXCEPT AS EXPRESSLY SET FORTH
IN THIS SECTION 9 (REPRESENTATIONS AND WARRANTIES OF THE
CORPORATION), THE CORPORATION MAKES NO OTHER WARRANTIES WITH
RESPECT TO THE DESIGNATED PRODUCTS AND THE DESIGNATED SERVICES
AND HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS,
IMPLIED AND STATUTORY, WHETHER ARISING FROM COURSE OF DEALING OR
USAGE OF TRADE, INCLUDING, WITHOUT LIMITATION, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR
PURPOSE AND NON-INFRINGEMENT.
42. Confidential Information.
(a) Acknowledgment of Confidential Information. PPD will receive the
Confidential Information and (i) will hold the Confidential
Information in trust and in strictest confidence; (ii) will
protect the Confidential Information from disclosure and in no
event take any action causing, or fail to take any action
reasonably necessary in order to prevent, any Confidential
Information to lose its character as Confidential Information;
(iii) will keep such Confidential Information secure; and (iv)
will not use, duplicate, reproduce, distribute, disclose or
otherwise disseminate the Confidential Information except
pursuant to the terms of this Agreement.
(b) Disclosures of Confidential Information. Disclosures of the
Confidential Information shall be made only to officers,
employees, agents and/or independent contractors of PPD and its
Affiliates who are directly involved in utilizing the rights
granted to PPD under this Agreement and who have a specific need
to know such information.
43. Indemnification.
(a) Indemnification of the Corporation. PPD shall indemnify, hold
harmless and defend the Corporation, its respective officers,
directors, employees and agents,
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from any and all liability, loss, claim, demand, cost or expense
(including reasonable attorneys' fees) based upon or arising out
of: (i) any unauthorized use of the distribution, reseller,
marketing and licensing rights granted to PPD in this Agreement,
(ii) any misrepresentation of a material fact or omission of a
material fact made by PPD, its employees, agents or
representatives in connection with the marketing, promotion,
sublicense or sale, as applicable, of the Designated Services
and/or the Designated Products; (iii) any material breach of any
warranty, representation, covenant or agreement of PPD set forth
in this Agreement; or (iv) any failure by PPD to comply in any
material respect with the other terms and conditions of this
Agreement. The foregoing indemnity obligation of PPD shall not
extend to any of the foregoing items to the extent caused by a
misrepresentation, act or omission on the part of the
Corporation.
(b) Indemnification of PPD. The Corporation shall indemnify, hold
harmless and defend PPD and its Affiliates, their respective
officers, directors, agents and employees, from any and all
liability, loss, claim, demand, cost or expense (including
reasonable attorneys' fees) based upon or arising out of: (i)
any infringement claims or actual infringement arising out of
the approved use of the distributor, reseller, marketing and
licensing rights granted to PPD in this Agreement; (ii) any
material breach of any warranty, representation, covenant or
agreement of the Corporation set forth in this Agreement; (iii)
any failure by the Corporation to comply in any material respect
with the other terms and conditions of this Agreement; or (iv)
any claims by customers or end users related to the
Corporation's performance of the Designated Services or related
to actions or omissions of the Corporation pertaining to the
Designated Products. The foregoing indemnity obligation of the
Corporation shall not extend to any of the foregoing items to
the extent caused by a misrepresentation, act or omission on the
part of PPD or its Affiliates.
44. Termination. The Corporation, at its sole option, may terminate this
Agreement upon the happening of any of the following events: (i) PPD breaches
any material term or provision of this Agreement, and fails to cure such breach
within sixty (60) days (or twenty (20) days in the case of payment obligations
arising under Section 4 which are not being contested in good faith by PPD) of
notice of such breach from the Corporation; (ii) PPD dissolves and is
liquidated; or (iii) PPD is insolvent, or files for bankruptcy under any
bankruptcy, insolvency or similar laws or in the event that a petition for
bankruptcy or insolvency shall be filed against PPD under applicable law and
such petition is not dismissed or stayed within sixty (60) days. Upon
termination of this Agreement, all rights of PPD (including without limitation,
PPD's distributor, reseller, marketing and licensing rights granted hereunder)
shall immediately cease.
45. Miscellaneous.
(a) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or
by commercial delivery service, or mailed by certified mail
(return receipt requested) or sent via facsimile (with
confirmation of receipt) to the parties at their respective
addresses first set forth above (or at such other address for a
party as shall be specified by like notice.
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(b) Headings. The headings, titles, and subtitles herein are
inserted for convenience or reference only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
(c) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware. All
references to "$" shall refer to United States dollars.
(d) Severability. In the event any provision (or portion thereof) of
this Agreement shall be held invalid or unenforceable according
to law, such holding or action shall not invalidate or render
unenforceable any other provision (or portion thereof) of this
Agreement.
(e) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
personal and legal representatives, guardians, successors and
permitted assigns.
(f) Assignment. PPD may assign all of its rights under this
Agreement to an Affiliate, without the consent of the
Corporation, provided that such Affiliate assumes, by contract
or operation of law, PPD's duties and obligations under this
Agreement; provided that no such assignment shall release PPD
from its secondary liability for its assignee's performance
hereunder without the Corporation's prior written consent, which
shall not be unreasonably withheld. Either party also may assign
all of its rights under this Agreement to a third party
successor-in-interest, with the prior written consent of the
other party (which consent shall not be unreasonably withheld,
delayed or conditioned), provided that such
successor-in-interest assumes, by contract or operation of law,
the assigning party's duties and obligations hereunder.
(g) Recitals, Schedules and Exhibits. Each Recital and each Schedule
and Exhibit attached hereto shall be incorporated into and be a
part of this Agreement.
(h) Entire Agreement. This Agreement contains the entire
understanding between the parties and supersedes any prior
understandings or agreements between them affecting the subject
matter. No changes, alterations, amendments, modifications,
additions or qualifications to the terms of this Agreement shall
be made or be binding unless made in writing and signed by each
of the parties.
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Corporation and PPD have caused this Agreement
to be executed through their duly authorized officers as of the date first
written above.
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PPD DEVELOPMENT, LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PPGx, Inc.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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SCHEDULE 1
TRANSFER PRICING MECHANISM
This schedule outlines the initial procedure for calculating and adjusting the
Transfer Price for Designated Products and Designated Services pursuant to the
Distributor Agreement between the Corporation and PPD dated February 1, 1999, as
amended and restated this __ day of December, 2000 (the "Distributor
Agreement"). Both parties acknowledge that these procedures will be revised from
time to time in order to achieve the objectives of the parties under the
Distributor Agreement. Unless otherwise expressly indicated in this schedule,
all capitalized terms shall have the same meaning set forth in the Distributor
Agreement.
Three relevant prices or costs exist:
1. Direct Costs as hereinafter defined.
2. Transfer Price.
3. Sales Price.
For each Designated Product, the original Transfer Price will be set so that the
PPD Margin on sales of Designated Products will target an "Agreed PPD Margin."
The Agreed PPD Margin upon commencement of the Distributor Agreement for
Designated Products is assumed to be 40 percent. Thereafter, the Transfer Price
for Designated Products will be set from time to time by evaluating PPD's actual
Sales Prices and arriving at an average Sales Price for each Designated Product.
The actual PPD Margin for each Designated Product is calculated by subtracting
the Transfer Price from PPD's average Sales Price and dividing the difference by
PPD's average Sales Price. It is the intention of PPD and PPGx that the Transfer
Price paid to PPGx hereunder for any given Designated Product shall in all
events be greater than PPGx's costs of goods plus some reasonable profit margin,
and that PPGx's cost of goods plus some reasonable profit margin does not
prevent PPD from offering Designated Products at a competitive price which also
provides PPD some reasonable profit margin.
For each Designated Service, the PPD Margin will be the difference between the
Sales Price and the Transfer Price for Designated Services. The Transfer Price
for any given Designated Services will be the sum of (a) Direct Costs and (b) 50
percent of the difference between Direct Costs and the Sales Price of such
Designated Services. It is the intention of PPD and PPGx that the Transfer Price
paid to PPGx hereunder with respect to a given Designated Service shall in all
events be greater than PPGx's Direct Costs plus some reasonable profit margin,
and that PPGx's Direct Costs plus some reasonable profit margin does not prevent
PPD from offering Designated Services at a competitive price which also provides
PPD some reasonable profit margin.
Direct costs will be determined by evaluating the actual costs of the
Corporation for each Designated Service and arriving at an average. "Direct
Costs" means (i) the cost of salaries and benefits of those employees of the
Corporation directly providing or producing, as the case may be, the Designated
Service (direct labor), (ii) the cost of supplies or materials consumed or used
in providing or producing the Designated Service, and (iii) a production or
operations overhead calculated in accordance with GAAP (based on effective
utilization of the Corporation's facilities) and applied according to an agreed
allocation scheme (initially presumed to be direct labor hours). Direct Costs
will not include the Corporation's development or selling, general, and
administrative costs.
(j) To the extent the parties cannot agree with respect to the
Transfer Price to be paid with respect to a given Designated Product or
Designated Service, or the Direct Costs incurred by the Corporation, the
issue shall be resolved by the JRC in the same manner outlined in
Section 5.c of the Distributor Agreement. In addition, appropriate
representatives from the Corporation and PPD will meet or otherwise
confer, pursuant to such procedure they establish, from time to time
(but not less than annually) to review and analyze the actual Sales
Price charged by PPD and the Direct Costs incurred by the Corporation
for the purpose of adjusting the Transfer Price.
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SCHEDULE 1.g
The performance of the Corporation's proposed business activities
(including the Designated Services) involves the use of equipment, reagents and
other items which utilize PCR technology. Absent the receipt of appropriate
supplemental licenses permitted use of such PCR technology, which PPGx does not
currently possess, the performance of the Corporation's proposed business
activities (including the Designated Services) may violate the intellectual
property rights of the licensors of the applicable PCR technology. Accordingly,
to the extent that the use of PCR technology in connection with the
Corporation's proposed business activities (including the Designated Services)
would violate the intellectual property rights (including patent rights) of the
licensors of such PCR technology, the Corporation makes no warranty of
non-infringement under Section 9.g.
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EXHIBIT L
FORM OF
AMENDED AND RESTATED TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS AMENDED AND RESTATED TECHNOLOGY TRANSFER AND LICENSE AGREEMENT (the
"AGREEMENT") is made and entered into as of December ___, 2000, amending and
restating that certain Technology Transfer and License Agreement made and
entered into as of February 1, 1999 (the "EFFECTIVE DATE") by and between AXYS
PHARMACEUTICALS, INC., a Delaware corporation with offices at 000 Xxxxxxx Xxx,
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to collectively with
its Affiliates as "AXYS"), and PPGX, INC., a Delaware corporation with offices
at 00000 X. Xxxxxx Xxxxx Xxxx, Xx Xxxxx, Xxxxxxxxxx 00000 ("PPGX"). Axys and
PPGx may be referred to herein individually as a "Party" and collectively as the
"Parties." The amendments effected by this amended and restated Agreement shall
be prospective only.
RECITALS
WHEREAS, Axys and Pharmaceutical Product Development, Inc. ("PPD") have
formed PPGx to develop and commercialize products and services in the field of
Pharmacogenomics; and
WHEREAS, Axys owns or controls certain patents, patent applications,
genetic materials, DNA samples, equipment and other assets and intellectual
property rights relating to the identification, sequencing and study of genes
and gene sequence information useful for working in the field of
Pharmacogenomics; and
WHEREAS, PPGx wishes to obtain the exclusive, worldwide license to use
and practice such Axys technology, intellectual property rights and assets
solely to develop and commercialize products and services in the field of
Pharmacogenomics, and Axys is willing to grant PPGx such license subject to the
terms of this Agreement; and
WHEREAS, the parties' intent in amending the term "Pharmacogenomics" is
to clarify further the parties' prior understanding of the scope of that term;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the Parties hereby agree as follows:
SECTION 1
DEFINITIONS
1.1 "AFFILIATE" means any corporation or other business entity
controlling, controlled by or under common control of such Party, with the
exception that for purposes of this Agreement, PPGx and Axys shall be deemed not
to be "Affiliates" of each other. The term
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"controlling" (and including the correlative terms "controlled by" and "under
common control with") as used in this definition means, with respect to a Party,
corporation or other business entity, either (a) the direct or indirect
ownership of more than fifty percent (50%) of the voting or income interest in
such Party, corporation or other business entity, or (b) the ability, by
contract or otherwise, to control the management of such Party, corporation or
other business entity.
1.2 "AXYS KNOW-HOW" means all tangible or intangible know-how, trade
secrets, inventions (whether or not patentable), data and other information
pertaining to the field of Pharmacogenomics that are necessary or useful for the
discovery, development, manufacture, registration and/or commercialization of
Products and are Controlled by Axys as of the Effective Date of the Agreement as
set forth in summary form in Exhibit 1.2 attached hereto. It is understood by
the Parties that the summary in Exhibit 1.2 is not intended to be an exhaustive
and specific description of each element of the Axys Know-How.
1.3 "AXYS PATENTS" means (a) all patents and patent applications, both
foreign and domestic, that are Controlled by Axys as of the Effective Date of
the Agreement and claim inventions necessary or useful for the discovery,
development, manufacture, registration and/or commercialization of Products as
listed in Exhibit 1.3 attached hereto; (b) any future continuations,
continuations-in-part, divisionals or foreign patent applications of the
foregoing filed by Axys; and (c) any and all patents issuing on the patent
applications described in subsections (a) and (b) above and any reissues,
reexaminations, extensions and supplementary protection certificates with
respect to any of the patents covered by subsections (a) through (c) of this
Section 1.3.
1.4 "AXYS TECHNOLOGY" means the Axys Patents and Axys Know-How, or any
aspect thereof.
1.5 "CONTROLLED" means, with respect to any material, Information or
intellectual property right, that Axys owns, has a license to or otherwise has
lawful access to such material, Information or intellectual property right, and
has the ability to grant to PPGx access, a license, or a sublicense to such
material, Information or intellectual property right as provided for in the
Agreement without violating an agreement with a Third Party as of the Effective
Date.
1.6 "DNA SAMPLE LIBRARY" means the library of DNA specimens and data
related thereto Controlled by Axys (or its Affiliate) that are useful in the
field of Pharmacogenomics, as identified in Exhibit 1.6 attached hereto.
1.7 "INFORMATION" means any data, results, information, know-how, trade
secrets, techniques, methods, processes, inventions, developments, materials or
compositions of matter of any type or kind.
1.8 "INVENTION" means any Information that is discovered, developed,
conceived or reduced to practice by either Party or the Parties under this
Agreement.
1.9 "MICROARRAYS" means DNA microarray technology that is or may be
useful for discovering or developing Products and is Controlled by Axys as of
the Effective Date as summarized in Exhibit 1.9 attached hereto. It is
understood by the Parties that the summary in
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Exhibit 1.9 is not intended to be an exhaustive and specific description of each
element of the Microarrays.
1.10 "PATENT RIGHT" means (i) an issued and existing letters patent,
including any extensions, supplemental protection certificates, registration,
confirmation, reissue, reexamination or renewal thereof, (ii) pending
applications, including any continuation, divisional, continuation-in-part
application thereof, for any of the foregoing, and (iii) all counterparts to any
of the foregoing issued by or filed in any country or other jurisdiction.
1.11 "PGX PRODUCT" means a diagnostic product for use in conducting
Pharmacogenomics analysis, which product is based on, utilizes or comprises Axys
Technology.
1.12 "PGX SERVICE" means a Pharmacogenomics service that is based on,
utilizes or comprises Axys Technology.
1.13 "PHARMACOGENOMICS" or "PGX" means the gathering and use of genetic
and other related information, whether from a population, an individual or
animals, to (i) predict the safety, toxicity and/or efficacy of drugs for humans
as part of a drug discovery and development program or as part of an
individual's diagnosis and treatment regimen; or (ii) to determine or predict
the susceptibility or disposition of an individual to disease, disease
complications, and disease course. By way of illustration and not limitation,
"Pharmacogenomics" includes identification of candidate genes and polymorphisms,
correlation of polymorphisms to clinical outcomes and drug effects, development
of novel algorithms and informatics tools in connection with such identification
and correlation, and clinical diagnostics, such as prediction of drug response
or selection and dosing of drugs based on genotype and/or expression, i.e.,
phenotype, as well as the development of genetic tests or screens for use in
predicting susceptibility to disease, disease complications and disease course.
1.14 "PRODUCT" means any PGX Product or PGX Service.
1.15 "SMALL MOLECULE THERAPEUTIC" means a non-protein organic compound
(including, without limitation, compounds that are natural products and
derivatives thereof) which may be suitable for, or which can be derivatized into
other compounds suitable for, the prevention or treatment of disease.
1.16 "THIRD PARTY" means any entity or individual other than Axys and
PPGx and the Affiliates of each of them.
1.17 "TRANSFERRED EQUIPMENT" means the equipment owned by Axys (or its
Affiliate) that is used in the field of Pharmacogenomics and is identified in
Exhibit 1.17 attached hereto.
SECTION 2
LICENSES AND TECHNOLOGY TRANSFER
2.1 LICENSES TO PPGX IN THE FIELD OF PHARMACOGENOMICS.
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(a) Subject to the terms of the Agreement, Axys hereby grants to
PPGx an exclusive (except as to Axys or as provided in subsection 2.1(b) or 2.4
below), fully-paid, worldwide, non-transferable (subject to Section 9.3)
license, with the right to sublicense solely as permitted in Section 2.2, to use
and practice the Axys Technology in the field of Pharmacogenomics and to
develop, make, have made, use, import, offer for sale and sell Products, solely
for use in Pharmacogenomics applications.
(b) The license granted to PPGx in subsection 2.1(a) to use the
Axys Technology shall be exclusive only to the extent that Axys can grant such
exclusivity in compliance with the terms of the license agreements, corporate
partnering agreements, and other agreements between Axys and a Third Party in
force as of the Effective Date, and shall otherwise be non-exclusive. To the
extent that such information is not confidential, Axys shall identify such Third
Party licensees and provide to PPGx a summary description of the rights granted
to them by Axys. Any such information disclosed to PPGx shall be deemed to be
the Confidential Information (as such term is defined in Section 7.1 herein) of
Axys.
2.2 SUBLICENSES.
(a) PPGx shall have the right, without Axys' consent, to grant
sublicenses under the Axys Technology solely in the field of Pharmacogenomics to
(i) any Affiliate of PPGx (with the right to further sublicense to other
Affiliates of PPGx), and (ii) any customers of Products and solely to the extent
such sublicensing is reasonably necessary in association with and in the
ordinary course of selling or providing such Products to such customers. Any
such sublicense shall be consistent with the terms of this Agreement.
(b) PPGx may grant sublicenses under the Axys Technology solely in
the field of Pharmacogenomics, for purposes other than those permitted under
subsection 2.2(a) above, only with the prior written consent of Axys.
2.3 NEGATIVE COVENANTS.
(a) PPGX NEGATIVE COVENANTS. PPGx covenants that neither PPGx nor
any of its Affiliates or sublicensees shall use or practice the Axys Technology
for any use or purpose except as expressly permitted in Section 2.1. In
particular, but without limiting the generality of the foregoing, PPGx covenants
that neither PPGx nor any of its Affiliates or sublicensees shall use or
practice the Axys Technology for any purpose outside the field of
Pharmacogenomics. Further, PPGx, in any sublicense or any other agreement or
transaction evidenced by agreement or other writing to which it is a party, will
expressly prohibit in such agreement or writing any party that obtains access to
any Products or any Axys Technology from using same for any purpose outside the
field of Pharmacogenomics. PPGx further agrees to comply fully, and to require
its Affiliates and sublicensees to comply fully, with any and all restrictions
and limitations that are imposed as of the Effective Date on Axys regarding use
of the Axys Technology by any license or corporate partnering agreement to which
Axys is a party, but only to the extent such restrictions or limitations are
communicated in writing to PPGx or otherwise known to PPGx. A description of
such restrictions and limitations is set forth in Exhibit 2.3 attached hereto.
The Parties acknowledge that Axys may revise and amend such description of
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the restrictions and limitations within thirty (30) days of the Effective Date,
which revised and amended description shall be attached hereto as a replacement
for Exhibit 2.3.
(b) AXYS NEGATIVE COVENANTS. Except as otherwise provided in
Section 2.4, Axys covenants that neither Axys nor its Affiliates shall use or
practice any of the Axys Technology, or license any Third Party to use the Axys
Technology, in the field of Pharmacogenomics.
2.4 RESERVATION OF RIGHTS. Notwithstanding the foregoing, (a) Axys
hereby expressly reserves the exclusive right to use, sell or otherwise
commercialize the Axys Technology, including (without limitation) the right to
license (with right of sublicense) others to use, sell or commercialize the
same, for any purpose or activity outside of the field of Pharmacogenomics; (b)
Axys also hereby expressly reserves the right to use the Axys Technology in
Axys' internal drug discovery and development activities (notwithstanding the
fact that such use might be within the field of Pharmacogenomics); and (c) Axys
also hereby expressly reserves the right to use the Axys Technology and to
license its existing and future drug discovery partners (with right of
sublicense to their respective affiliates and collaboration partners) to use the
Axys Technology in connection with collaborative drug discovery and development
activities (notwithstanding the fact that such use might be within the field of
Pharmacogenomics); subject, however, to the restrictions set forth in that
certain Noncompetition Agreement dated December ___, 2000, delivered by Axys
Pharmaceuticals, Inc., for the benefit of DNA Sciences, Inc., PIPO Acquisition
Corp., and PPGx, Inc.
2.5 DNA SAMPLES AND EQUIPMENT. Axys hereby assigns to PPGx its entire
interest, right and title to the DNA Sample Library and the Transferred
Equipment.
2.6 AVAILABILITY AND PRICING OF PGX SERVICES TO AXYS. Axys shall have
the right to purchase, and PPGx agrees to provide to Axys, PGX Services on a
most-favored nations basis, pursuant to the terms of a Most Favored Nations
Agreement between the Parties.
2.7 TECHNOLOGY TRANSFER. Commencing promptly after the Effective Date,
and during the thirty (30) days thereafter or so long as reasonably required to
effect the transfer contemplated herein, Axys shall disclose and transfer to
PPGx the Axys Technology. In addition, during the Agreement Axys shall disclose
and transfer to PPGx any changes, enhancements or improvements in the Axys
Technology to the extent made prior to the date three (3) months after the
Effective Date to the extent that the Axys Technology to which such changes,
enhancements or improvements relate has not previously been fully disclosed and
transferred to PPGx. Any such additional changes, enhancements or improvements
so disclosed shall be deemed to be part of the Axys Technology.
2.8 ACCESS TO MICROARRAYS. Axys shall use commercially reasonable
efforts to assist PPGx in procuring a license or sublicense or otherwise
acquiring rights under Axys' license as of the Effective Date (to the extent
Axys' license continues) to have the right to acquire and use Microarrays on
terms that are no less favorable than the terms of Axys' license.
2.9 ABILITY TO ENGAGE IN PROPOSED BUSINESS. Axys represents to PPGx that
none of the restrictions and limitations set forth (or to be set forth) in
Exhibit 2.3 to this Agreement or in
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Schedule 2.3 to the Software License Agreement dated of even date herewith
between Axys and Pharmaceutical Product Development, Inc. ("PPD"), or which
would otherwise be set forth in said Exhibit or Schedule if said restrictions
and limitations were not confidential, will limit in any materially adverse
manner PPGx's ability to pursue its proposed business.
SECTION 3
CONSIDERATION
3.1 Pursuant to the terms of the Stock Purchase Agreement between PPGx
and Axys, PPGx shall issue to Axys 8,200,000 shares of Series A Preferred Stock
of PPGx and 820 shares of Common Stock of PPGx as part consideration for the
rights and licenses under this Agreement.
SECTION 4
PATENTS AND INFRINGEMENT
4.1 TITLE. Axys shall own and retain all right, title and interest in
and to all Axys Technology. PPGx shall own and retain all right, title and
interest in and to all Patent Rights in any Inventions that PPGx solely
develops, discovers or makes under this Agreement. Any Patent Rights claiming
Inventions and other Information that are developed, discovered or made jointly
by the Parties pursuant to work conducted under this Agreement, if any, shall be
owned jointly, with each Party retaining an undivided one-half interest in such
jointly-developed Patent Rights, unless otherwise agreed to in writing by the
Parties.
4.2 PATENT PROSECUTION.
(a) AXYS PATENTS. Axys shall have the right, but not the
obligation, at its option and expense and through patent attorneys or agents of
its choice, to prepare, file, prosecute (including any proceedings relating to
reissues, reexaminations, protests, interferences and requests for patent
extensions or supplementary protection certificates) and maintain in its own
name any Axys Patents. If Axys elects not to prepare, file, prosecute or
maintain any Axys Patent, it shall promptly notify PPGx and PPGx shall have the
option, at its expense and through patent attorneys or agents of its choice, to
prepare, file, prosecute (including any proceedings relating to reissues,
reexaminations, protests, interferences and requests for patent extensions or
supplementary protection certificates) and maintain on Axys' behalf and in its
own name any such Axys Patents.
(b) PPGX PATENT RIGHTS. PPGx shall have the right, but not the
obligation, at its option and expense and through patent attorneys or agents of
its choice, to prepare, file, prosecute (including any proceedings relating to
reissues, reexaminations, protests, interferences and requests for patent
extensions or supplementary protection certificates) and maintain in its own
name any Patent Rights in any other Inventions that PPGx solely develops,
discovers or makes under this Agreement. If PPGx elects not to prepare, file,
prosecute or maintain any such Patent Rights, it shall promptly notify Axys and
Axys shall have the option, at its expense and through patent attorneys or
agents of its choice, to prepare, file, prosecute (including any
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proceedings relating to reissues, reexaminations, protests, interferences and
requests for patent extensions or supplementary protection certificates) and
maintain on PPGx's behalf and in its name any such Patent Rights.
(c) JOINT PATENTS. For Patent Rights owned jointly by the Parties
pursuant to Section 4.1, if any, PPGx shall have the right but not the
obligation to pay all expenses in connection with the preparation, filing,
prosecution and maintenance of such joint Patent Rights. If PPGx elects not to
exercise its rights under this Section 4.2(c), then the Parties shall determine
in good faith which Party shall prosecute each particular patent application
claiming such Patent Right, and the Parties shall share equally all costs of
filing, prosecuting and maintaining such Patent Rights, provided that either
Party may elect not to share such costs and expenses as to a particular
jointly-owned Patent Right, in which case such Party shall promptly thereafter
assign to the other Party all its right, title and interest in and to such
Patent Right.
4.3 INFRINGEMENT BY THIRD PARTIES.
(a) Each Party shall promptly notify the other in writing of any
alleged, suspected or threatened infringement of which they become aware of any
Axys Patents, or any PPGx Patent Rights.
(b) PPGx shall have the first right to bring and control any action
or proceeding with respect to infringement of any PPGx Patent Rights at its own
expense and by counsel of its own choice. In any action or proceeding with
respect to an infringement outside the field of Pharmacogenomics of any PPGx
Patent Rights (a "Non-Field Infringement"), Axys shall have the right, at its
own expense, to be represented in such Non-Field Infringement action. If PPGx
fails to bring an action or proceeding with respect to such Non-Field
Infringement within (i) sixty (60) days following the notice of alleged
Non-Field Infringement or (ii) ten (10) days before the time limit, if any, set
forth in the appropriate laws and regulations for the filing of such actions,
whichever comes first, Axys shall have the right to bring and control any such
Non-Field Infringement action at its own expense and by counsel of its own
choice, and PPGx shall have the right, at its own expense, to be represented in
any such action by counsel of its own choice.
(c) Axys shall have the first right to bring and control any action
or proceeding with respect to infringement of any Axys Patents at its own
expense and by counsel of its own choice. In any action or proceeding with
respect to an infringement in the field of Pharmacogenomics of an Axys Patent
necessary to make, have made, use, offer to sell or sell any Product (a "Field
Infringement"), PPGx shall have the right, at its own expense, to be represented
in such Field Infringement action. If Axys fails to bring an action or
proceeding with respect to any Field Infringement within (i) sixty (60) days
following the notice or alleged Field Infringement or (ii) ten (10) days before
the time limit, if any, set forth in the appropriate laws and regulations for
the filing of such actions, whichever comes first, PPGx shall have the right to
bring and control any such Field Infringement action at its own expense and by
counsel of its own choice, and Axys shall have the right, at its own expense, to
be represented in any such Field Infringement action by counsel of its own
choice.
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(x) In the event of any infringement of a Patent Right
jointly-owned hereunder, the Parties shall promptly discuss and decide the best
way to carry out any action or proceeding.
(e) In the event either Party brings an infringement action, the
other Party shall cooperate fully, including if required to bring such action,
the furnishing of a power of attorney. Neither Party shall have the right to
settle any patent infringement litigation under this Section 4.3 in a manner
that diminishes the rights or interest of the other Party without the consent of
such other Party. Except as otherwise agreed to by the Parties as part of a cost
sharing arrangement, any recovery realized as a result of such litigation, after
reimbursement of any litigation expenses of PPGx and Axys, shall belong to the
Party who brought the action.
4.4 ALLEGATION OF INFRINGEMENT BY THIRD PARTIES. In the event that Axys
or PPGx receives notice that any action by either of them under this Agreement
is alleged to be a violation of the patent or other intellectual property rights
of a Third Party, it shall promptly notify in writing the other Party to this
Agreement, and the Parties shall reasonably discuss appropriate responses and
courses of action. However, the Party that is sued in any such action shall have
full and unfettered right to defend itself at its expense.
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Each Party represents and warrants to the other Party that, as of
the date of this Agreement:
(i) such Party is duly organized and validly existing under
the laws of the state of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;
(ii) such Party has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance its
obligations under this Agreement;
(iii) this Agreement is a legal and valid obligation of such
Party, binding upon such Party and enforceable against such Party in accordance
with the terms of this Agreement, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance; and
(iv) it has the right to enter into this Agreement and grant
the rights granted herein.
5.2 Axys represents and warrants to PPGx that (i) it has not granted
rights in or to the Axys Technology that would prevent Axys from entering into
the Agreement, (ii) to Axys' knowledge, Axys has the full right to grant the
licenses set forth in Section 2.1 hereof, free and clear of any adverse
assignment, grant or other encumbrance inconsistent with such grant,
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subject to Section 2.1(c), and (iii) to its knowledge, there are no claims of
Third Parties that would prohibit or restrict Axys from entering into the
Agreement.
5.3 Axys warrants to PPGx that Axys owns and has good title to the DNA
Sample Library and the Transferred Equipment and that the Transferred Equipment
is in good working order, normal wear and tear excepted, provided that the
foregoing is not a warranty of non-infringement of any Third Party intellectual
property.
SECTION 6
TERM AND TERMINATION
6.1 TERM. The Agreement shall commence on the Effective Date and
continue in force, unless terminated as provided herein.
6.2 EARLY TERMINATION. To the extent permitted by applicable law, the
Agreement will automatically terminate upon the occurrence of any of the
following events with respect to PPGx: (i) the filing or institution of
bankruptcy, reorganization, liquidation or receivership proceedings; provided,
however, in the case of an involuntary bankruptcy proceeding such termination
shall only become effective if the proceeding is not dismissed within ninety
(90) days after the filing thereof; (ii) the assignment of a substantial portion
of PPGx's assets for the benefit of creditors of PPGx; (iii) the appointment of
a receiver or custodian for PPGx's business; (iv) if a substantial portion of
PPGx's business or assets are subject to attachment or similar process; or (v)
the dissolution of PPGx.
SECTION 7
CONFIDENTIALITY
7.1 CONFIDENTIALITY OBLIGATION. During the term of this Agreement, and
for five (5) years thereafter, each Party shall maintain in confidence any and
all Information disclosed to it by the other Party pursuant to the activities
under this Agreement (collectively, the "Confidential Information"). Each Party
further agrees that it shall not use for any purpose other than the purposes
expressly contemplated under this Agreement and shall not disclose to any Third
Party the Confidential Information of the other Party, except that either Party
may disclose Confidential Information under a similar obligation of
confidentiality and non-use and on a need-to-know basis to its directors,
officers, employees, consultants, or agents.
7.2 EXCEPTIONS. The obligations of confidentiality and non-use contained
in Section 7.1 shall not apply to any Information the extent that it can be
established by the Party receiving the Information (the "Receiving Party") that
such Information:
(a) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the Receiving Party;
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(c) became generally available to the public or otherwise part
of the public domain after its disclosure to the Receiving Party through no
fault attributable to the Receiving Party;
(d) was disclosed to the Receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others;
or
(e) was independently discovered or developed by the Receiving
Party without the use of Confidential Information belonging to the disclosing
Party.
7.3 AUTHORIZED DISCLOSURE. Notwithstanding the limitations in this
Article 7, each Party may disclose Confidential Information belonging to the
other Party (or otherwise subject to this Article 7), to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:
(a) filing or prosecuting patents relating to the Axys
Intellectual Property, PPGx Intellectual Property, and/or PPGx Improvements;
(b) regulatory and tax filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental laws or regulations
or valid court orders;
(e) disclosure to Affiliates, licensees, sublicensees,
employees, consultants or agents as needed in furtherance of a Party's
obligations or rights under this Agreement;
provided, however, that prior to any disclosure pursuant to subsection
(e) above, the disclosee must have agreed in writing to be bound by similar
terms of confidentiality and non-use at least equivalent in scope to those set
forth in this Article 7 (but with the duration to be limited to not less than
five (5) years from date of disclosure). Notwithstanding the foregoing, in the
event a Party is required to make a disclosure of the other Party's Confidential
Information pursuant to subsections (a), (b), (c) or (d) above, it will give
reasonable advance notice to the other Party of such disclosure obligation and
will endeavor in good faith to limit the extent of such disclosure and to secure
a protective order or other confidential treatment of such information, or to
cooperate with the other Party's attempt to obtain such protective order or
confidential treatment. Further, the Parties agree to consult with one another
on the provisions of this Agreement to be redacted in any filings made by a
Party with the United States Securities and Exchange Commission or as otherwise
required by law.
7.4 PRESS RELEASES AND OTHER DISCLOSURES. Except as required by law or
in accordance with this Section, neither Party shall have the right to make any
public announcements or other disclosures concerning this Agreement or the terms
or performance hereof without the prior written consent of the other, which
shall not be unreasonably withheld. Notwithstanding the foregoing, the Parties
agree that (a) Axys, PPGx and PPD shall jointly make an announcement and press
release regarding the formation of PPGx, the contents of which are
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acceptable to said parties; (b) each Party may disclose the Agreement in
confidence to its attorneys, accountants and other professional advisors and to
existing or potential investors, licensees, acquirors or merger partners,
provided that, with respect to the latter group, such Party obtains agreement of
such recipient to maintain such disclosed information in confidence; and (c)
each Party may desire or be required to issue press releases relating to the
Agreement or activities thereunder, and the Parties agree to consult with each
other reasonably and in good faith with respect to the text of such press
releases (under this subsection (c)) prior to the issuance thereof, provided
that a Party may not unreasonably withhold consent to such releases. All such
public disclosures with respect to this Agreement must be accurate and comply
with applicable law and regulations. In the event of a required or desired
public announcement, such Party shall provide the other Party with a reasonable
opportunity to review and comment on the content of such announcement prior to
its being made. Each Party agrees that any filings it makes with the Securities
and Exchange Commission describing the terms of this Agreement shall be
consistent with the prior press releases and other public disclosures of such
terms.
SECTION 8
INDEMNIFICATION AND LIABILITY
8.1 INDEMNIFICATION BY AXYS. Axys shall indemnify, defend and hold PPGx
and its agents, employees, officers and directors (the "PPGx Indemnitees")
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorneys' fees) arising out of Third Party claims or
suits related to breach by Axys of its representations and warranties set forth
in Sections 5.1, 5.2 and 5.3. Upon the assertion of any such claim or suit, the
PPGx Indemnitees shall promptly notify Axys thereof, and Axys shall appoint and
pay for counsel reasonably acceptable to the PPGx Indemnitees to represent the
PPGx Indemnitees with respect to any claim or suit for which indemnification is
sought. The PPGx Indemnitees shall not settle any such claim or suit without the
prior written consent of Axys, unless they shall have first waived their rights
to indemnification hereunder. Notwithstanding the foregoing, Axys shall have no
obligation to indemnify PPGx with respect to claims arising out of breach by
PPGx of its representations and warranties set forth in Section 5.1.
8.2 INDEMNIFICATION BY PPGX. PPGx shall indemnify, defend and hold Axys
and its agents, employees, officers and directors (the "Axys Indemnitees")
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorney's fees) arising out of Third Party claims or
suits related to (a) breach by PPGx of its representations and warranties set
forth in Section 5.1 or (b) manufacture, use or sale of Products by PPG or its
Affiliates or sublicensees. Upon the assertion of any such claim or suit, the
Axys Indemnitees shall promptly notify PPGx thereof and PPGx shall appoint and
pay for counsel reasonably acceptable to the Axys Indemnitees to represent the
Axys Indemnitees with respect to any claim or suit for which indemnification is
sought. The Axys Indemnitees shall not settle any such claim or suit without the
prior written consent of PPGx, unless they shall have first waived their rights
to indemnification hereunder. Notwithstanding the foregoing, PPGx shall have no
obligation to indemnify Axys with respect to claims arising out of a breach by
Axys of its representations and warranties set forth in Sections 5.1, 5.2 and
5.3.
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8.3 LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER FOR INDIRECT, CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES, INCLUDING
BUT NOT LIMITED TO LOST PROFITS, ARISING FROM OR RELATING TO ANY BREACH OF THIS
AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 8.3
IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATION OF
EITHER PARTY.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware that apply to contracts negotiated, executed and performed
within the State of Delaware. Any claim or controversy arising out of or
relating to this Agreement or any breach hereof shall be submitted to a court of
applicable jurisdiction in the State of Delaware and each Party hereby consents
to the jurisdiction and venue of such court.
9.2 ENTIRE AGREEMENT. This Agreement constitutes the entire, final and
complete agreement and understanding between the Parties with respect to the
subject matter hereof, and replaces and supersedes all prior discussions and
agreements between and among the Parties with respect to the subject matter
hereof. No amendment, modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each Party.
9.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon each of
the Parties, their successors and assigns. Neither Party shall be entitled to
assign any rights hereunder to any Party without the prior written consent of
the other Party; provided, however, such consent shall not be required in
connection with the merger, acquisition, consolidation or sale of substantially
all of the assets of a Party.
9.4 NOTICE. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail, or delivered by a nationally recognized overnight courier, to the address
set forth in the first paragraph of this Agreement or delivered by hand. All
notices shall be deemed to have been given two days after such notice is mailed,
as evidenced by the postmark at the point of mailing include fax and personal
delivery, or on the date of personal delivery, if not mailed.
9.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
9.6 SEVERABILITY. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either PPGx or Axys deems any provision to
be contrary to any laws, then that provision shall be severed and the remainder
of the Agreement shall continue in full force and effect. The Parties further
agree to discuss in good faith an amendment to replace such void, invalid,
unenforceable, or unlawful provision with a valid and enforceable provision that
will achieve, to
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the extent possible, the economic, business and other purposes of such void,
invalid, unenforceable or unlawful provision.
9.7 FURTHER AGREEMENT. Neither Party is obligated by this Agreement to
enter into any further agreement of any kind with the other Party.
9.8 INDEPENDENT CONTRACTORS. Each Party shall act solely as an
independent contractor, and nothing in this Agreement shall be construed to give
either Party the power or authority to act for, bind or commit the other Party
in any way. Nothing herein shall be construed to create the relationship of
partnership, principal and agent or joint venture between the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the
Effective Date.
AXYS PHARMACEUTICALS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PPGX, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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EXHIBIT 1.2
AXYS KNOW-HOW
Axys Know-How generally includes the following know-how:
Laboratory Services
Know-how pertaining to:
- sample tracking and handling of large numbers (>60,000) of samples using
bar code technology and 96 well plate formats
- extraction of large amounts of high quality DNA from large numbers of
pharmacogenetic samples from source materials including blood, solid
tissues, mouth scrapings, tissue culture cells, etc.
- assay design and development for TaqMan assays
- performance of large numbers of TaqMan genotyping in a high throughput
manner
- use of the Amersham/Molecular Devices microarray spotter and reader
(subject to the license) to characterize and quantitate mRNA expression
in response to drug treatment in target tissues.
Gene Characterization
Know-how pertaining to:
- resequencing of genes of pharmacogenetic relevance
- closing and determining the genomic structure of pharmacogenetically
relevant genes
- polymorphism detection in pharmacogenetically relevant genes
- biological and biochemical characterization of pharmcogenetically
relevant gene products in cell culture, in cell free systems and in
model organisms.
1.
162
Software and Databases
Know-how pertaining to:
- designing relational databases for pharmacogenetic data handling
- designing relational databases for pharmacogenetic sample handling and
tracking
- data analysis in the area of pharmacogenetic studies
- data analysis tools for calculating sample size, type of genetic effect
strength of genetic effect, resulting trial length, etc.
- laboratory automation capability using robotics and informatics,
including the building of custom systems for automation of routine
manual laboratory tasks for pharmacogenetics
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163
EXHIBIT 1.3
AXYS PATENTS
U.S. Patent Application SN 09/144,367, entitled Genotyping of Human CYP3A4,
filed on August 31, 1998
U.S. Patent application SN 60/084,807, entitled Genotyping the Human
UDP-Glucuronosyltransferase 1 (UGTI) Gene, filed on May 7, 1998
U.S. Patent Application SN 60/088,710, entitled Genotyping the Human Phenol
Xxxxxxxxxxxxxxxx 0 Xxxx (XXX0), filed on June 10, 1998
U.S. Patent Application SN 60/094,391, entitled Genotyping Human
UDP-Glucuronosyltransferase 2B4 (UGT 2B4), 2B7 (UGT2B7) and 2B15 (UGT2B15),
filed on July 28, 1998
1.
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EXHIBIT 1.6
DNA SAMPLE LIBRARY
- 2,475 DNA Samples -- identified by bar code as patient sample
nos.:
> BAH0001G1 -- BAH0175G1
> CTH0001G1 -- CTH0131G1
> DVH0001G1 -- DVH2586G1
- Of these 2,475 samples, there are plates which contain 1,300
samples, broken down by category (as specified below), and
demographic data (as specified below) on an additional 925
samples:
REFERENCE POPULATIONS
MASTER PLATE #OF SAMPLES ETHNICITY
------------ ----------- ------------------
DVHP0006 94 Caucasian
DVHP0007 94 Hispanic
DVHP0008 94 African American
DVHP0009 94 Hispanic
DVHP0011 94 Caucasian
DVHP0013 94 African American
DVHP0020 77 Japanese
DVHP0021 78 Chinese
DVHP0014 62 Asthma, AfrAm
DVHP0015 94 Asthma, Mixed race
DVHP0016 92 Asthma, Mixed race
DVHP0017 65 Parkinsons
DVHP0018 91 Parkinsons
DVHP0019 82 Parkinsons
DVHP0022 95 4 ethnic groups
(Xxxxx)
Total 1300
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TRAITS FOR 925 INDIVIDUALS
--------------------------
Gender
Height
Weight
# siblings
maternal grandmother ethnicity
maternal grandfather ethnicity
paternal grandmother ethnicity
paternal grandfather ethnicity
hay fever
Allergies
asthmatic attack
age onset asthma
hospitalization for asthma
medication for asthma
cause of asthma attack
relatives with asthma
parents smoked
Smoking
smoke exposure
Diabetes
medication for diabetes
when was diabetes diagnosed
weight when diagnosed
relatives with type 1 diabetes
relatives with type 2 diabetes
list of other diseases
physical activity
alcohol consumption
education
income
dependents
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EXHIBIT 1.9
MICROARRAYS
The microarray technology as it currently pertains or may pertain to
Pharmacogenomics involves the Molecular Dynamics/Amersham spotter and reader
machines. Both of these machines, now in their third generation, are the
components required for creating high density microarrays of either
oligonucleotides, PCR products or clones for subsequent analysis by
hybridization with various labeled samples DNAs. The spotter allows deposition
of nanoliter amounts of DNA in an array up to 10,000 spots obtained from either
96 or 384 well plate format onto a microscope slide. The slide is then
hybridized with the sample material and read by the MD/Amersham reader which can
read one slide in three minutes and using a CCD camera, process the fluorescent
data from the array. The images are quantitated using ImageQuant or Array Vision
Generation III. The exact capabilities of the spotter and scanner for both the
second and third generation machines (both of which Axys has and both of which
may be useful in the Pharmacogenomics business) are listed below:
Spotter Generation II Generation III
------------- --------------
12x96 well plates 12x384 well plates
24 glass slides 36 glass slides
6 pens 12 pens
3072 spots/slide 9216 spots/slide
microplate hotel
bar code recognition
internal humidifier
Reader 2 excitation lasers 2 excitation lasers
confocal optics confocal optics
2 color scanning automatic slide loader
bar code scanning
4 color scanning
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EXHIBIT 1.17
TRANSFERRED EQUIPMENT
See the attached pages
1.
168
EQUIPMENT LIST FOR PGx
SUPPLIER MODEL CATALOG # DESCRIPTION QTY AXYS # SERIAL #
-------- --------- ---------- --------------------- --- -------------- -----------
IEC (VWR) 20673-080 MICROMAX MICROFUGE 1 #00996
IEC (VWR) 20673-042 ROTOR 24 X 1.5ML No tag N/A
VWR 1545 35823-204 INCUBATOR 2 #00469
NEW BRUNSKWICK 4300 M1193-0000 INNOVA SHAKER4300 1 #00222
NEW BRUNSKWICK Universal Platform 1 no tag N/A
SEARS 46-26041 20 Cu Ft Freezer 1 no tag WB72525122
PE BIOSYSTEMS 377 377-01 377 SEQUENCERS 2 #01011
PE BIOSYSTEMS 377 377-01 377 SEQUENCERS #205 96031303
PE BIOSYSTEMS 377 377 computer 2 no tag XX0000XX00X
XX BIOSYSTEMS 377 377 monitor 2 no tag CJ5236E939X
PE BIOSYSTEMS 310 310 SEQUENCER 1 #02680
PE BIOSYSTEMS 310 310 computer 1 no tag CK73611A9RL
PE BIOSYSTEMS 310 310 monitor 1 no tag CY7161BA6UC
XXXXXX SCIENTIFIC 00-000-00 BATH, ISOTEMP 10L 2 no tag 515640
PE Biosystems 9600 Thermalcycler 6 #01877
PE Biosystems 9600 Thermalcycler #01878
PE Biosystems 9600 Thermalcycler #01879
PE Biosystems 9600 Thermalcycler #02616
PE Biosystems 9600 Thermalcycler #02615
PE Biosystems 9600 Thermalcycler #02617
MJ Research PTC-100 thermocycler 2 #01824
MJ Research PTC-100 thermocycler #02785
BIORAD 1655050 PowerPAC 300 1 none available 310BR3375
Xxxxxx Biotech FBUVLS-80 UV Hand lamp 1 no tag N/A
Labline Multiblock Heat block 1 no tag 0495-0399
Rainin pipetters P-1000 Rainin pipetters 6 no tag P61497D
Rainin pipetters P-1000 Rainin pipetters no tag P50008G
Rainin pipetters P-1000 Rainin pipetters no tag R56325J
Rainin pipetters P-200 Rainin pipetters 6 no tag Q57441H
Rainin pipetters P-200 Rainin pipetters no tag D15392L
Rainin pipetters P-200 Rainin pipetters no tag R52397J
Rainin pipetters P-100 Rainin pipetters 6 no tag P61656E
Rainin pipetters P-100 Rainin pipetters no tag R61764H
Rainin pipetters P-20 Rainin pipetters 7 no tag P66340D
Rainin pipetters P-20 Rainin pipetters no tag P64476D
Rainin pipetters P-20 Rainin pipetters no tag R65252J
1.
169
SUPPLIER MODEL CATALOG # DESCRIPTION QTY AXYS # SERIAL #
-------- --------------- ---------- -------------------------------- --- ------ ----------------
Rainin pipetters P-2 Rainin pipetters 6 no tag Q59082H
Rainin pipetters P-2 Rainin pipetters no tag P61244G
Rainin pipetters P-2 Rainin pipetters no tag R67344J
SORVALL RT7 7400 TABLE CENTRIFUGE 1 01699 9602885
SORVALL RT7 00000 Xxxx/XX XXX 000 BUCKET 4000 RPM 1 " "
3,313G
SORVALL RT7 447 Bucket adapter 4 " "
SORVALL RT7 436 50ml Conical Tube adapter 5 pc 4 " "
SORVALL RT7 11737 250ml tc adapter 1 " "
SEARS 46-26041 20 CU FT FREEZER 1 no # no #
WESTERN FOOD EQUIPMENT GDM-41 41 CU FT DELI BOX 1 02606 no #
PE Biosystems 7700 7700-01 Sequence Detector plus computer 1 1913 97060371
PE Biosystems 9700 Thermalcycler " 02881 805S8081809
PE Biosystems 9700 Thermalcycler " 02861 805S8080933
PE Biosystems 9700 Thermalcycler " 02920 805S8080871
PE Biosystems 9700 Thermalcycler " 02862 805S8080881
Xxxxxxx Scientific 1029-40-1 Hydra-96 1 02759 MD98530427
Packard Robot MULTIPROBE 204 1 01430 408160
Hewlett Packard computer Vectra VE 4/66 computer for Pak5 1 01431 no #
Monitor for Packard Super VGA monitor for Pak5 1 01432 no #
Pooling Robot T265 CRS A255 ARM on 2-meter track 1 01876 no #
Pooling Robot Xxxxxxx Multimek 96 1 no # no #
Pooling Robot software integration 1 no # no #
Computer for Pooling Robit Compaq Prolinea computer for Astro 1 01089 could not access
466
Monitor for pooling robot Sony Multi Scan Monitor for pooling robot 1 01436 no #
17sf II
Stratagene Picofuge HF-120 400550 Personal workstation microfuge 4 no #
Rainin pipetters P-1000 Rainin pipetters 4 no #
Rainin pipetters P-200 Rainin pipetters 4 no #
Rainin pipetters P-100 Rainin pipetters 4 no #
Rainin pipetters P-10 Rainin pipetters 4 no #
Rainin pipetters P-2 Rainin pipetters 4 no #
Xxxxxxxx Transferpette-12 20-100 ul Multi-channel pipetters 2 no #
Xxxxxxxx Transferpette-12 5-50 ul Multi-channel pipetters 2 no #
Xxxxxxxx Transferpette-12 2.5-25 ul Multi-channel pipetters 2 no #
Xxxxxxxx pipet-aid 2 no #
2.
170
SUPPLIER MODEL CATALOG # DESCRIPTION QTY AXYS # SERIAL #
-------- ------ --------- -------------------- --- ------ ---------
Xxxxxxx KTx temperature recorder 2 no # 8261078
Xxxxxxx KTx temperature recorder no # 8261079
CBS Scientific #P-048 PCR Workstation 1 01829
Quadra 610 laboratory computer 1 leased
VWR 980001 57018-754 orbital shaker 1 no # 0383
COMPUTERS AND MONITORS
CPU SERIAL CPU ID DESCRIPTION MONITOR SERIAL # MONITOR ID
----------- ------ -------------------- ----------------- -------------
1338391 None MAC Power Computing 1074391 & 1074394 01797 & 01798
0008975785 02704 PC Gateway 2000 2704939 02941
XB6366UF8FD 01614 MAC 7200/120 XX00000X00X Xxxx
XX0000XXXXX 00000 XXX 0X Xxxxxx X/X X/X
X0XXX 00000 Dell Dimension M166a 815839 02604
XB735153A6W Xxxx XXX 0000/000 Xxxx Xxxx
X0XXX 02610 Xxxx X000x 8150896 02602
XB8360H9D8X 02864 MAC G3 SG54604Z35J 01508
FC5512BL55F 01256 MAC PPC 7200 SG5460LJ35J 01144
?? 00966 MAC PPC 7200 ?? 36377
US63752790 ?? HP Pentium 100 ?? ??
0008172595 02621 Gateway 2000 PC 8149516 02628
SN537F07E3 33325 Sun SPARC 5 3651324-01 00873
SN525F02QZ 36052 Sun SPARC 20 3651316-01 00626
SN638F1A8D 01519 Sun SPARC 4 3651335-01 01520
0008975786 01873 Gateway 2000 PC 8010634 02695
SG8359UDDL4 0295 Apple Power PC S15250NF1XX 00985
7Y071245 02674 NEC Laptop PC none none
CH9XL A3840 Dell Optiflex Gxa CH9ZL A4524
3.
171
EXHIBIT 2.3
RESTRICTIONS AND LIMITATIONS
To be delivered after the closing of the PPGx formation transactions
4.
172
EXHIBIT M
FORM OF PPD CLARIFICATION LETTER
December 14, 0000
Xxxxxx X. Xxxxx, Ph.D.
President and Chief Executive Officer
PPGx, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: JOINT DEVELOPMENT AGREEMENT BETWEEN PPD DEVELOPMENT, INC. AND PPGx
Dear Xx. Xxxxx:
As you know, DNA Sciences, Inc. ("DNA Sciences") is currently negotiating to
effect a merger of PIPO Acquisition Corp. ("PIPO"), a wholly-owned merger
subsidiary of DNA Sciences, into PPGx, Inc. ("PPGx"). Upon consummation of this
merger, PIPO will cease to exist, and PPGx will become a wholly-owned subsidiary
of DNA Sciences. DNA Sciences wants to ensure, however, that there are no
ambiguities regarding PPGx's rights, title, and interest in and to DNA samples
and any data related thereto acquired pursuant to the March 1, 2000 Joint
Development Agreement between PPD Development, Inc. ("PPD") and PPGx
post-merger.
Therefore, to induce DNA Sciences to proceed with the merger, PPD hereby
clarifies that PPGx has the following rights, title, and interest in and to the
DNA samples and data derived therefrom that are generated pursuant to the Joint
Development Agreement:
PPD will provide PPGx with blood samples and medical history information
related to the blood samples. PPGx will extract DNA from blood samples
provided by PPD, and will divide each resulting DNA sample into two
parts, Product A and Product B. PPD shall anonymize Product B so that it
and its related information cannot be linked to the volunteer from whom
it was obtained. Once Product B has been anonymized, PPGx shall have
sole and exclusive rights to Product B, to all genotype data produced by
PPGx related to Product B, and to any other associations established
through PPGx's analysis of Product B. In addition, PPGx shall have the
right to use the medical information related to Product B for any
purpose, including the transfer or sale of such information to third
parties.
This clarification comports with the intent and understanding of both PPD and
PPGx under the Joint Development Agreement.
Very truly yours,
PPD Development, Inc.
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
I hereby agree with the clarification of the Joint Development Agreement as set
forth herein.
M-1
173
------------------------------------
Dr. Xxxxxx Xxxxx
Chairman and Chief Executive Officer
PPGx, Inc.
M-2
174
EXHIBIT N
REAL PROPERTY SIDE INDEMNITY LETTER
December __, 2000
Xxxx X. Xxxxxxxx, Xx., M.D.
Chief Executive Officer
DNA Sciences, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxxxx:
The purpose of this letter is to set forth the terms and conditions under
which Pharmaceutical Product Development, Inc. or one of its wholly owned
subsidiaries (collectively, "we" or "us") will sublease to DNA Sciences, Inc.
or one of its wholly owned subsidiaries (collectively, "you") the space
described in paragraph 1 below (the "Space") in certain premises which we have
leased. The two leases or subleases (collectively, the "Leases" and
individually, a "Lease") in which the Space is located are described in more
detail in SCHEDULE A attached. As denoted in the schedule, we will sometimes
refer to an individual Lease as the Cambridge Lease or the Philadelphia Lease,
whichever is applicable.
The Cambridge Lease and the Philadelphia Lease each contain a provision
which prohibit sublease of the Space without the lessor's consent. In each
case, we want to make the Space available to you under the terms set forth
below without obtaining the prior consent of the lessor.
1. PREMISES. We will sublease to you approximately 1,344 square feet of
office and lab Space under the Cambridge Lease and approximately 350 square
feet of office Space under the Philadelphia Lease. In addition, you will also
have reasonable access to other areas which we have leased or to which we have
access if reasonably necessary to use the Space we are making available to you
under those two Leases. This includes common area access, bathroom facilities,
parking (if any), etc.
2. TERM. The Cambridge Lease expires on December 24, 2007, and the Space
under this Lease will be available to you until that date unless either we or
you gives the other 180 days advance notice of an earlier termination date, or
unless the lessor terminates the Cambridge Lease for a reason other than our
failure to obtain the lessor's consent to sublease the Space to you. If any
applicable certifying authority requires execution of a sublease in order for
you to maintain in effect the MCA and GLP
175
certifications currently maintained by this facility, then the parties hereto
shall negotiate in good faith such a sublease, and we shall use commercially
reasonable efforts to obtain any necessary third-party consents to such
sublease. If we elect to cause the termination of the existing lease to this
facility and move to a different site in the United Kingdom and at the time you
are still occupying space leased by us under the Cambridge Lease, then, to the
extent we have equivalent space reasonably available at such new facility that
can be offered to you, we shall make such space available to you on terms
mutually agreeable to both parties.
The Philadelphia Lease expires on August 31, 2007, and the Space under
that Lease will be available to you until that date unless the lessor
terminates the Lease for a reason other than our failure to obtain the lessor's
consent to sublease the Space to you.
3. RENT. You will pay us as rent the fully loaded cost per square
foot (calculated on a pass-through basis without xxxx-up for our administrative
costs) to us of the Space. Thus, rent includes not only any base rent which we
pay to the lessor, but also other costs of operating and maintaining the Space,
whether these costs are paid directly to the lessor or paid by us to a third
party. For example, additional costs include ad valorem taxes, insurance,
utilities, janitorial and maintenance expense which we pay in addition to base
rent. Rent for the Space which we are required to pay monthly to the lessor you
will pay to us three days before we must make payment to the lessor. We will
give you a schedule of when such payments are due monthly and amounts that are
due, which we will revise from time to time as monthly rent is adjusted. We
will xxxx you for all other rent items and payment is due 15 days from the date
of our invoice. If it is not reasonably possible to determine what portion of a
rent item is attributable to the Space (for example, certain utilities which
are not separately metered), we will xxxx you for a prorata portion of such
item based on the total square footage which we have leased.
4. MAINTENANCE AND COMPLIANCE. You will keep the Space in the same
condition in which you find it, reasonable wear and tear excepted. You will
also comply with the terms of the respective Leases, copies of which we have
previously provided to you. You understand that if we have granted you rights
in this letter which we are not entitled to grant under one or more of the
Leases (other than making the Space available to you notwithstanding contrary
provisions in the Leases), such rights are deemed void.
5. INDEMNITY. We will indemnify you for all damages and costs,
including attorney's fees, that you incur as a result of our negligence or
intentional misconduct in connection herewith, our breach of any material
provision in this letter, and our failure to obtain the consents of the
respective lessors under the Leases to make the Space available to you. You
will indemnify us for all damages and costs, including attorney's fees, that we
incur as a result of your negligence or intentional misconduct in connection
herewith and your breach of any material provision in this letter.
2
176
6. DEFAULT. Any act or omission by you which, if done by us, would
constitute an event of default under the applicable Lease, will constitute an
event of default by you under the terms of this letter with respect to the
Space made available with respect to such applicable Lease. A breach of any
material provision in this letter also constitutes an event of default with
respect to the applicable Space. In each such instance, we shall have all of
the rights and remedies available to the lessor under the applicable Lease.
7. MISCELLANEOUS. You cannot assign any rights given to you or obligations
imposed upon you in this letter without our prior written consent. Any notices,
including notice of a change of address, with respect to any Space shall be
given in the same manner provided in the applicable Lease. We will give you
notice at the address which appears at the beginning of this letter unless you
inform us otherwise. You may give us notice at 0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx, XX 00000, Attn: Executive Director, Corporate
Administration, with a copy to our General Counsel at the same address. You
take the Space subject to the same encumbrances to which we are subject,
including the Leases and any subordination or similar obligations contained in
the Leases. The governing law specified in each Lease is incorporated in this
letter by reference and shall apply to the subject Space. To the extent a term
or condition addressed in one or more of the Leases is not addressed in this
letter, the Leases shall control, as applicable.
8. EFFECT. This letter supersedes that certain letter agreement dated
February 1, 1999 between PPD and PPGx, Inc. ("PPGx") which, upon execution of
this letter, shall be deemed terminated. Other than the rights provided to DNAS
and PPGx under this letter agreement, there exist no sublease or similar
documents pursuant to which we have subleased or otherwise made available Space
to PPGx.
Please indicate your assent to the terms and conditions set forth in this
letter by signing in the space provided below.
Sincerely yours,
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
3
177
DNA Sciences, Inc. and PPGx, Inc. hereby accept and agree to the terms and
conditions set forth in this letter.
DNA SCIENCES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
PPGx, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
4
178
SCHEDULE A
1. CAMBRIDGE LEASE: Lease dated December 8, 1995 by and between Lockton House
Investments Limited and Pharmaco UK Limited for space located at Xxxxxxx
Xxxxx, Xxxxxxxxx Xxxx, Xxxxxxxxx, and consisting of approximately 15,130
square feet.
2. PHILADELPHIA LEASE: Lease dated May, 1999, as amended by Amendment dated
September 13, 2000, by and between Principal Life Insurance Company and PPD
Pharmaco, Inc. for space located at Union Meeting IV. 000 Xxxxxxx Xxxxx,
Xxxx Xxxx, Xxxxxxxxxxxx and consisting of approximately 20,820 square feet.
179
EXHIBIT O
FORM OF AXYS COVENANT NOT TO XXX
December 17, 2000
Xxxxxx X. Xxxxx, Ph.D.
President and Chief Executive Officer
PPGx, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: MERGER AND REORGANIZATION AMONG DNA SCIENCES, INC. AND PPGx
Dear Xx. Xxxxx:
As you know, DNA Sciences, Inc. ("DNA Sciences") is currently negotiating to
effect a merger of PIPO Acquisition Corp. ("PIPO"), a wholly-owned merger
subsidiary of DNA Sciences, into PPGx, Inc. ("PPGx"). Upon consummation of this
merger, PIPO will cease to exist, and PPGx will become a wholly-owned subsidiary
of DNA Sciences. DNA Sciences wants to ensure, however, that PPGx post-merger
has freedom to operate under certain intellectual property owned or otherwise
controlled by Axys Pharmaceuticals, Inc. ("Axys"). Therefore, to induce DNA
Sciences to proceed with the merger, Axys hereby agrees to be bound, in
perpetuity, to the following covenant, effective immediately upon the closing of
the contemplated merger under the Agreement and Plan of Merger and
Reorganization among DNA Sciences, PIPO, and PPGx ("Merger Date"):
COVENANT NOT TO XXX. To the full extent that it is able in compliance
with the terms of the third party agreement to which it is a party that
is identified on the attached Exhibit A ("Third Party Agreement"), Axys
agrees that it shall not assert any claim(s) based on the patent(s)
and/or patent application(s) listed on Exhibit A and any future or
presently existing continuations, continuations-in-part, divisionals or
foreign patent applications thereof and any and all patents issuing on
such patent applications and any reissues, reexaminations, extensions
and supplementary protection certificates with respect to such patents
("Axys IP"), and shall not authorize any third party (pursuant to an
assignment, license agreement, or otherwise) to assert in any way any
Axys IP, against PPGx, its subsidiaries or affiliates, or their agents,
contractors, licensees, or customers, in respect of the development,
manufacture, use, importation, offer for sale, or sale of
Pharmacogenomics (as that term is defined in the Technology Transfer and
License Agreement between Axys and PPGx effective February 1, 1999, as
amended as of the Effective Date) products and services, including,
without limitation, diagnostic products for use in conducting
Pharmacogenomics analysis. Axys confirms that it has no obligation to
assign any of the Axys IP pursuant to the Third Party Agreement.
Very truly yours,
Axys Pharmaceuticals, Inc.
O-1
180
Xxxx X. Xxxxxx
Chairman and Chief Executive Officer
O-2
181
EXHIBIT A
THIRD PARTY AGREEMENTS
Collaborative Research Agreement as of June 12, 1995, between Sequana
Therapeutics, Inc. and Boehringer Ingelheim International GmbH, as amended June
19, 1997.
AXYS IP
U.S. Patent Application Serial No. 09/078,317, entitled "RAQ Genes and Their
Uses", filed May 13, 1998.
U.S. Patent Application Serial No. 60/084,938, entitled "RHOH Genes and Their
Uses", filed May 11, 1998.
U.S. Patent Application Serial No. 60/095,835, entitled "Human Anion Transporter
Genes ATNOV", filed Aug. 7, 1998.
U.S. Patent Application Serial No. 08/909,954, entitled "GAP12 Genes and Their
Uses", filed August 12, 1997.
U.S. Patent No. 6,100,058, entitled "GAP12 Genes and Their Uses", filed August
12, 1997, and issued August 8, 2000.
U.S. Patent Application Serial No. 60/035,663, entitled "Asthma Related Genes ",
filed January 21, 1997.
U.S. Patent Application Serial No. 60/051,432, entitled "Asthma Related Genes ",
filed July 1, 1997.
O-3
182
EXHIBIT P
FORM OF
ASSIGNMENT
This Assignment is entered into as of December ___, 2000, (the
"Effective Date") by and between AXYS PHARMACEUTICALS, INC., a Delaware
corporation with offices at 000 Xxxxxxx Xxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx
00000 ("Axys"), and PPGx, INC., a Delaware corporation with offices at 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("PPGx").
WHEREAS, DNA Sciences, Inc. ("DNA Sciences") is contemplating a merger
transaction, the consummation of which will result in PPGx becoming a
wholly-owned subsidiary of DNA Sciences;
WHEREAS, Axys, one of the founders of PPGx, is a major stockholder of
PPGx, and desires for DNA Sciences to proceed with the merger;
WHEREAS, Sequana Therapeutics, Inc. ("Sequana"), a former subsidiary of
Axys, had acquired certain DNA samples pursuant to research agreements between
Sequana and third parties (the "Samples");
WHEREAS, Sequana was merged into Axys and out of existence, and
consequently all ownership rights that Sequana had in the Samples were
transferred to Axys;
WHEREAS, during PPGx's corporate existence and prior to the Effective
Date, Axys transferred to PPGx its entire right, title, and interest in and to
certain specified samples comprising in part the Samples;
WHEREAS, Axys did not transfer certain other specified samples
comprising in part the Samples, nor did it transfer its entire right, title, and
interest in and to data related to the Samples including, but not limited to,
phenotype, pedigree, and genotype data (the "Sample Data"), at the time Axys
transferred its ownership rights in the specified samples comprising in part the
Samples to PPGx;
WHEREAS, DNA Sciences desires to ensure that post-merger, PPGx holds all
right, title, and interest Axys has in and to the Samples and the Sample Data;
WHEREAS, to induce DNA Sciences to proceed with the merger, Axys is
willing to assign all its right, title, and interest in and to the DNA samples
and all related data to PPGx;
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants set forth herein, Axys and DNA Sciences hereby agree as follows:
AGREEMENT
46. Axys hereby assigns to PPGx its entire right, title, and interest in
and to all Samples and data related to those samples, including, without
limitation, phenotype, pedigree, medical information, and genotype data, that
Axys transferred to PPGx prior to the Effective Date, including those DNA
samples and data originating from the following agreements:
(a) Research Agreement Regarding the Genetics of Asthma between
Sequana and The Council of The Queensland Institute of Medical
Research, having an effective date of April 1, 1995;
P-1
183
(b) Research Agreement Regarding the Genetics of Asthma (Phase II)
between Sequana and The Council of The Queensland Institute of
Medical Research, having an effective date of April 1, 1996;
(c) Research Agreement Regarding the Genetics of Asthma between
Sequana and Vrije Universiteit, having an effective date of June
15, 1996;
(d) Research Agreement Regarding the Genetics of IBD between
Sequana, Mucosal Immunology Research Group, and Charite
University Hospital, having an effective date of June 1, 1997;
(e) Research Agreement Regarding the Genetics of Inflammatory Bowel
Disease between Sequana and King's College School of Medicine
and Dentistry, having an effective date of June 1, 1997;
(f) Research Agreement Regarding the Genetics of Inflammatory Bowel
Disease between Sequana and United Medical and Dental Schools of
Guy's and St. Xxxxxx'x Hospitals, having an effective date of
January 1, 1996;
(g) Research Agreement between Sequana and Institut Pasteur de
Lille, having an effective date of April 1, 1995;
(h) Research Agreement Regarding the Genetics of Obesity between
Sequana and Trustees of the University of Pennsylvania, having
an effective date of July 15, 1995;
(i) Research Agreement Regarding the Genetics of Osteoporosis
between Sequana and the University Hospital of Kuopio,
Department of Obstetrics and Gynecology and Department of
Surgery, having an effective date of March 10, 1997;
(j) Research Agreement between Sequana and Xxxxx-Xxxx Xxxxxx Medical
Group, having an effective date of December 1, 1996;
(k) Contract Research Agreement between Sequana and Birmingham
Heartland Hospital, having an effective date of August 1, 1994;
(l) Research Collaboration Agreement between Axys and American Home
Products Corporation, acting through Wyeth-Ayerst Reseach
Division, having an effective date of July 15, 1998;
(m) Research Support Agreement between Sequana and Xxxxxx Foundation
Hospitals, having an effective date of March 1, 1994;
(n) Material Transfer Agreement between Sequana and Regents of the
University of California (UCSD), having an effective date of
February 1, 1995;
(o) Agreement between Mount Sinai Hospital Corporation and Sequana,
having an effective date of July 15, 1994; and
P-2
184
(p) Any other agreements between Sequana and/or Axys and any third
parties under which Sequana and/or Axys obtained DNA samples
and/or information related to the samples that Axys subsequently
transferred to PPGx.
47. Axys acknowledges that, as a result of the foregoing assignment, it
shall not retain any right, title, and interest in and to the DNA samples and
related data assigned to PPGx hereunder.
IN WITNESS WHEREOF, the Parties have executed this Assignment as of the
date indicated in the first paragraph above.
AXYS PHARMACEUTICALS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
PPGx, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
P-3
185
EXHIBIT Q
FORM OF
DNA SCIENCES, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
DECEMBER ___ 2000
186
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; AMENDMENT AND WAIVER .....................................................................2
1.1 "Commission"....................................................................................2
1.2 "Common Stock"..................................................................................2
1.3 "Exchange Act"..................................................................................2
1.4 "Holder"........................................................................................2
1.5 "Initiating Holders"............................................................................2
1.6 "Preferred".....................................................................................2
1.7 "Registrable Securities"........................................................................2
1.8 The terms "register," "registered" and "registration"...........................................3
1.9 "Registration Expenses".........................................................................3
1.10 "Securities"....................................................................................3
1.11 "Securities Act"................................................................................3
1.12 "Selling Expenses"..............................................................................3
1.13 Amendment of Prior Rights Agreement; Waiver of Right of
First Offer.....................................................................................3
SECTION 2. INFORMATION RIGHTS ....................................................................................3
2.1 Financial Information...........................................................................3
2.2 Assignment of Rights............................................................................4
2.3 Termination.....................................................................................4
SECTION 3. RIGHTS OF FIRST OFFER ON NEW ISSUANCES ................................................................4
3.1 Rights of First Offer...........................................................................4
3.2 Termination.....................................................................................6
SECTION 4. REGISTRATION RIGHTS ...................................................................................6
4.1 Requested Registration..........................................................................6
4.2 Company Registration............................................................................8
4.3 Registration on Form S-3........................................................................9
4.4 Limitations on Subsequent Registration Rights...................................................9
4.5 Expenses of Registration.......................................................................10
4.6 Registration Procedures........................................................................10
4.7 Indemnification................................................................................11
4.8 Information by Holder..........................................................................13
4.9 Rule 144 Reporting.............................................................................13
i
187
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.10 Transfer of Registration Rights................................................................14
4.11 Termination....................................................................................14
4.12 Lockup Agreement...............................................................................14
SECTION 5. LEGENDS ..............................................................................................14
5.1 Legends........................................................................................14
SECTION 6. MISCELLANEOUS ........................................................................................15
6.1 Governing Law..................................................................................15
6.2 Entire Agreement; Amendment....................................................................15
6.3 Aggregation....................................................................................15
6.4 Notices, etc...................................................................................15
6.5 Additional Purchasers..........................................................................16
6.6 Severability...................................................................................16
6.7 Counterparts...................................................................................16
ii
188
EXHIBIT Q
FORM OF
DNA SCIENCES, INC.
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this "AGREEMENT")
is made as of this ___ day of December, 2000 by and among DNA Sciences, Inc., a
Delaware corporation (the "COMPANY"), the holders of the Company's Series A
Preferred Stock set forth on Exhibit A hereto (the "SERIES A HOLDERS"), the
holders of the Company's Series B Preferred Stock set forth on Exhibit A hereto
(the "SERIES B HOLDERS"), the holders of the Company's Series C Preferred Stock
set forth on Exhibit A hereto (the "SERIES C HOLDERS"), the holders of the
Company's Series C-1 Preferred Stock set forth on Exhibit A hereto (the "Series
C-1 Holders") and the holders of the Company's Series D Preferred Stock set
forth on Exhibit A hereto (the "SERIES D HOLDERS"). The Series A Holders, the
Series B Holders, the Series C Holders, the Series C-1 Holders and the Series D
Holders shall be referred to hereinafter individually as an "INVESTOR" and
collectively as the "INVESTORS."
RECITALS
A. The Company, the Series A Holders, the Series B Holders and certain
of the Series C Holders have previously entered into that certain Amended and
Restated Investor Rights Agreement dated as of December 15, 2000 (the "PRIOR
RIGHTS AGREEMENT"), pursuant to which the Company granted the Series A Holders,
the Series B Holders and the Series C Holders certain rights;
B. The Company and PPGx, Inc., a Delaware corporation ("PPGx"), entered
into that certain Agreement and Plan of Merger and Reorganization, by and among
the Company, PIPO Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of the Company ("MERGER SUB"), and PPGx, dated as of December 17,
2000 (the "REORGANIZATION AGREEMENT"), pursuant to which Merger Sub was merged
with and into PPGx and PPGx became the surviving corporation and a wholly owned
subsidiary of the Company;
C. Pursuant to the Reorganization Agreement, the Company issued two
million nine hundred and fifty-seven thousand one hundred (2,957,100) shares of
its Series D Preferred to the Series D Holders;
D. A condition to the Series D Holders' obligations under the
Reorganization Agreement is that the Company extend to them certain information
and registration rights and other rights with respect to the Company's Series D
Preferred as set forth below, and
E. The Series A Holders, the Series B Holders and certain of the Series
C Holders are holders of at least a majority of the Registrable Securities of
the Company (as defined in the Prior Rights Agreement), and desire to amend and
restate the Prior Rights Agreement in its entirety and accept the rights created
pursuant to this Agreement in lieu of the rights granted to them under the Prior
Rights Agreement.
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NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Reorganization Agreement, the parties mutually agree as
follows:
SECTION 1
DEFINITIONS; AMENDMENT AND WAIVER
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "COMMISSION" shall mean the Securities and Exchange Commission of
the United States or any other U.S. federal agency at the time administering the
Securities Act.
1.2 "COMMON STOCK" shall mean shares of the Company's Common Stock, par
value $.001 per share.
1.3 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
1.4 "HOLDER" shall mean each of the Investors (and their transferees as
permitted by Section 4.10) holding Registrable Securities or securities
convertible into Registrable Securities.
1.5 "INITIATING HOLDERS" shall mean Holders who in the aggregate hold
greater than fifty percent (50%) of the Preferred.
1.6 "PREFERRED" shall mean shares of the Company's Series A preferred
stock, par value $.001 per share (the "SERIES A PREFERRED"), the Company's
Series B preferred stock, par value $.001 per share (the "SERIES B PREFERRED"),
including shares of Series B PREFERRED issuable upon exercise of: (i) that
certain warrant entered into by and between the Company and Xxxxxx Godward LLP
on March 16, 2000; (ii) that certain warrant entered into by and between the
Company and GATX Ventures, Inc. on October 6, 2000 (the "GATX WARRANT"); and
(iii) that certain warrant entered into by and between the Company and TBCC
Funding Trust II on October 6, 2000 (the "TBCC WARRANT"), the Company's Series C
preferred stock, par value $.001 per share (the "SERIES C PREFERRED"), the
Company's Series C-1 preferred stock, par value $.001 per share (the "SERIES C-1
PREFERRED") and the Company's Series D preferred stock, par value $.001 per
share (the "SERIES D PREFERRED").
1.7 "REGISTRABLE SECURITIES" shall mean any shares of Common Stock
issued or issuable (i) on conversion of the Preferred, (ii) upon exercise by the
Investors of their preemptive rights as provided in Section 3 of this Agreement,
(iii) upon exercise by the Investors of their right of first offer rights
pursuant to the Amended and Restated Right of First Refusal and Co-Sale
Agreement of even date herewith, and (iv) any shares of Common Stock issued or
issuable in respect of such Common Stock upon any stock split, stock dividend,
recapitalization or similar event. Shares of Common Stock or other securities
shall only be treated as Registrable Securities if they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction. Solely for the purposes of Section 4.2 of this
Agreement, the Company shall treat the Warrant Shares, as defined in the GATX
Warrant and the TBCC Warrant, as Registrable Securities.
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1.8 THE TERMS "REGISTER," "REGISTERED" AND "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.9 "REGISTRATION EXPENSES" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 4.1, 4.2, and
4.3 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company (and fees and disbursements of one special counsel for Holders,
if any), blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company, which shall be paid in any event by the
Company).
1.10 "SECURITIES" shall mean Common Stock or Preferred.
1.11 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar United States federal statute and the rules and regulations of
the Commission thereunder, all as the same, which shall be in effect at the
time.
1.12 "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
1.13 AMENDMENT OF PRIOR RIGHTS AGREEMENT; WAIVER OF RIGHT OF FIRST
OFFER. Effective and contingent upon execution of this Agreement by the Company
and the holders of a majority of the Registrable Securities, as that term is
defined in the Prior Rights Agreement, and upon closing of the transactions
contemplated by the Reorganization Agreement, the Prior Rights Agreement is
hereby amended and restated in its entirety to read as set forth in this
Agreement, and the Company and the Investors hereby agree to be bound by the
provisions hereof as the sole agreement of the Company and the Investors with
respect to registration rights of the Company's securities and certain other
rights, as set forth herein. The Series A Holders, the Series B Holders and the
Series C Holders hereby waive the right of first offer, including the notice
requirements, set forth in the Prior Rights Agreement with respect to the
issuance of Series D Preferred, except to the extent that a Series A Holder, a
Series B Holder or a Series C Holder is receiving Series D Preferred, as set
forth in the Reorganization Agreement.
SECTION 2
INFORMATION RIGHTS
2.1 FINANCIAL INFORMATION. The Company will provide each Investor the
following reports for so long as the Investor is a holder of a minimum of ten
thousand (10,000) shares of Registrable Securities (as adjusted for stock splits
and combinations):
(a) As soon as practicable after the end of each fiscal year,
and in any event within one hundred twenty (120) days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such fiscal year, and consolidated statements of income, stockholders' equity
and cash flows of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in
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each case in comparative form the figures for the previous fiscal year, and all
in reasonable detail and audited by independent public accountants of national
standing selected by the Company.
(b) As soon as practicable after the end of each month and
fiscal quarter, and in any event within thirty (30) days and forty-five (45)
days, respectively, thereafter, a consolidated balance sheet of the Company and
its subsidiaries, if any, as of the end of each such period, consolidated
statements of income, consolidated statements of changes in financial condition,
a consolidated statement of cash flow of the Company and its subsidiaries and a
statement of stockholders' equity for such period and for the current fiscal
year to date, and setting forth in each case in comparative form the figures for
corresponding periods in the previous fiscal year, and setting forth in
comparative form the budgeted figures, prepared in accordance with generally
accepted accounting principles (other than for accompanying notes), subject to
changes resulting from year-end audit adjustments, all in reasonable detail and
signed by the principal financial or accounting officer of the Company.
(c) As soon as practicable after its adoption by the Board of
Directors of the Company (the "BOARD OF DIRECTORS"), a copy of the annual
operating plan of the Company for the next fiscal year and an annual budget for
the next fiscal year of the Company containing profit and loss projections, cash
flow projections and capital expenditures, all on a monthly basis.
2.2 ASSIGNMENT OF RIGHTS. The rights granted pursuant to Section 2.1 may
be assigned or otherwise conveyed by an Investor to a constituent partner or an
affiliate of the Investor or to a transferee who acquires (i) at least ten
thousand (10,000) shares of Preferred (as adjusted for stock splits and
combinations), or (ii) all shares of Preferred held by such transferor.
Notwithstanding the foregoing, the rights granted pursuant to Section 2.1 may
not be assigned or otherwise conveyed to a competitor of the Company, as
reasonably determined by the Board of Directors excluding any director with an
interest in such transferee. The Investor shall provide the Company with written
notice of any assignment or conveyance of the rights granted pursuant to Section
2.1.
2.3 TERMINATION. The provisions of Sections 2 and 3, including
information rights, rights of first offer and miscellaneous covenants, shall
terminate upon the closing of a firmly underwritten public offering pursuant to
an effective registration statement under the Securities Act covering any
securities of the Company.
SECTION 3
RIGHTS OF FIRST OFFER ON NEW ISSUANCES
3.1 RIGHTS OF FIRST OFFER. The Company hereby grants to each Investor
the right of first offer to purchase such Investor's pro rata portion of New
Securities (as defined in Section 3.1(a)) that the Company may, from time to
time, propose to sell and issue. Such Investor's pro rata portion, for purposes
of this right of first offer, is the ratio of the number of shares of Common
Stock held by such Investor (including Common Stock issuable upon conversion of
securities convertible into Common Stock held by such Investor, including the
Preferred) bears
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to the total number of shares of Common Stock outstanding at the time of
issuance of such New Securities (including Common Stock issuable upon conversion
of all outstanding securities convertible into Common Stock, including the
Preferred). This right of first offer shall be subject to the following
provisions:
(a) "NEW SECURITIES" shall mean any Common Stock, whether now
authorized or not, any rights, options, or warrants to purchase said Common
Stock and securities of any type whatsoever that are, or may become, convertible
into Common Stock; provided, however, that New Securities shall not include (i)
shares of Common Stock issued upon conversion of the Preferred; (ii) securities
issued pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or other reorganization;
(iii) up to four million five hundred thousand (4,500,000) shares of Common
Stock (or related options) issued to employees, officers, directors, consultants
or other persons performing services for the Company pursuant to any stock
offering, plan or other arrangement approved by the Board of Directors; (iv)
securities issued to financial institutions in connection with the extension of
credit to the Company or in connection with the lease of equipment and in both
cases for other than equity financing purposes; (v) securities issued to any
third party in connection with participation in a strategic bona fide alliance
or other corporate partner transaction with the Company approved by the Board of
Directors for purposes which are not primarily equity financing; (vi) securities
issued pursuant to the acquisition or license of technology, software or other
intellectual property rights; (vii) shares of Common Stock issued in connection
with any stock split, stock dividend or recapitalization by the Company; or
(viii) shares of Series D Preferred issued pursuant to the Reorganization
Agreement.
(b) In the event that the Company proposes to issue New
Securities, it shall give each Investor at least thirty (30) days prior written
notice of its intention, describing the type of New Securities, the price and
the general terms upon which the Company proposes to issue the same. Each
Investor shall have twenty (20) days from the date of mailing of any such notice
to agree to purchase its pro rata share of such New Securities for the price and
upon the general terms specified in the notice, by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased.
(c) In the event that an Investor fails to exercise in full its
right of first refusal within said twenty (20) day period, the Company shall
have seventy-five (75) days thereafter to sell (or enter into an agreement
pursuant to which the sale of New Securities covered thereby shall be closed, if
at all, within thirty (30) days from the date of said agreement) the New
Securities respecting which the Investor's rights were not exercised, at a price
and upon general terms no more favorable to the Investors thereof than specified
in the Company's notice. In the event the Company has not sold the New
Securities within said forty-five (45) day period (or sold and issued New
Securities in accordance with the foregoing within thirty (30) days from the
date of said agreement), the Company shall not thereafter issue or sell any New
Securities, without first offering such securities to the Investors in the
manner provided above.
(d) The Investor's failure to exercise this right of first
refusal on any issuance of New Securities shall not adversely affect the
Investor's right of first refusal to purchase subsequent issuances of New
Securities.
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(e) The right of first refusal set forth in this Section 3.1 is
nonassignable, except to another Investor or another entity under common control
with an Investor.
3.2 TERMINATION. The provisions of this Section 3 shall terminate in
accordance with the provisions of Section 2.3.
SECTION 4
REGISTRATION RIGHTS
4.1 REQUESTED REGISTRATION.
(a) Request for Registration. In case the Company shall receive
from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to not less than forty
percent (40%) of the Registrable Securities (or a lesser percentage of the
Registrable Securities if the reasonably anticipated aggregate price to the
public thereof would exceed Five Million dollars ($5,000,000)) the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable and in any event within
ninety (90) days of the receipt of such request, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company.
Provided, however, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 4.1:
(1) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) prior to the earlier to occur of (i) six (6)
months after the effective date of the Company's first registered public
offering of its stock, or (ii) December 31, 2002, provided that the Company is
actually employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(3) during the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date six (6) months immediately
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following the effective date of, any registration statement pertaining to
securities of the Company sold by the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective;
(4) after the Company has effected two (2)
registrations pursuant to this paragraph 4.1, and such registrations have been
declared or ordered effective, provided that all Registrable Securities
requested to be included in such registrations were in fact included in the
registrations; provided, however, that the Company, upon the approval, by vote
or written consent, of the holders of at least fifty percent (50%) of the
Registrable Securities held by the Series C Holders and the Series D Holders,
voting together as a separate class, shall effect one (1) additional
registration only with respect to such Registrable Securities held by the Series
C Holders and the Series D Holders, pursuant to this Section 4.1(a)(ii); or
(5) if the Company shall furnish to such Holders
a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its Investors for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 4 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of written request from the
Initiating Holders, provided, however, that the Company shall not utilize this
right more than once in any twelve (12) month period.
Subject to the foregoing clauses (A) through
(E), the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Initiating Holders.
(b) UNDERWRITING. In the event that a registration pursuant to
this Section 4.1 is for a registered public offering involving an underwriting,
the Initiating Holders will so advise the Company as part of the written request
given by such Initiating Holders pursuant to Section 4.1(a), and the Company
shall in turn advise the Holders as part of the notice given pursuant to Section
4.1(a)(i). In such event, the right of any Holder to registration pursuant to
this Section 4.1 shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 4.1, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company, but subject to the reasonable approval of
a majority in interest of the Initiating Holders. Notwithstanding any other
provision of this Section 4.1, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
Holders, and the number of shares that may be included in the registration and
underwriting shall be allocated first among all Holders in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement; provided, however,
that no stock other than capital stock owned by the Company is included in such
registration statement. No Registrable
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Securities or other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
holder to the nearest one hundred (100) shares.
If any Holder of Registrable Securities disapproves of the terms
of the underwriting, such person may elect to withdraw therefrom by written
notice to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration.
4.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time, or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests made, within twenty (20) days after receipt of such written notice
from the Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 4.2(a)(i). In such event the right of any Holder to
registration pursuant to this Section 4.2 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall,
together with the Company, enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 4.2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
number of shares of Registrable Securities to be included in such registration
without requiring any limitation in the number of shares to be registered on
behalf of the Company, provided that if such underwriting is other than an
initial public offering, (i) the number of shares of Registrable Securities to
be included in such registration shall not be limited to less than thirty
percent (30%) of the total number of shares to be included in such registration,
and (ii) no shares owned by a person or entity who is not a party to this
Agreement, or entitled to the benefits hereof pursuant to Section 4.10, shall be
included in such registration. The Company shall so advise all Holders and the
number of shares that may be included in the registration and underwriting by
all Holders shall be allocated among the Holders of Registrable Securities in
proportion to the respective amounts of Registrable Securities held by such
Holders at the time of filing of the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder to the nearest one hundred
(100) shares. If any Holder disapproves of the terms of
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any such underwriting, such holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 4.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Securities in such registration.
4.3 REGISTRATION ON FORM S-3.
(a) REQUEST FOR REGISTRATION. If any Holder or Holders request
that the Company file a registration statement on Form S-3 (or any successor
form to Form S-3) for a public offering of shares of the Registrable Securities
the reasonably anticipated aggregate price to the public of which would exceed
Three Million dollars ($3,000,000), and the Company is a registrant entitled to
use Form S-3 to register the Registrable Securities for such an offering, the
Company shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as the Holder or Holders may
reasonably request. The substantive provisions of Section 4.1(a)(i) and (ii)
(not including the proviso immediately following paragraph (ii) and of Section
4.1(b) shall be applicable to each registration initiated under this Section
4.3.
(b) LIMITATIONS. Notwithstanding the foregoing, the Company
shall not be obligated to take any action pursuant to this Section 4.3: (i) in
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act; (ii)
during the period starting with the date sixty (60) days prior to the Company's
estimated date of filing of, and ending on the date six (6) months immediately
following, the effective date of any registration statement pertaining to
securities of the Company (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iii) if the Company shall
furnish to such Holder a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or the Investors as a whole for
registration statements to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed ninety (90) days from the receipt of the
request to file such registration by such Holder, provided, however, that the
Company shall not utilize this right more than once in any twelve (12) month
period.
4.4 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company will not, without the prior written consent of the
holders of a majority of the voting power of the then outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which allows such holder or prospective holder of
any securities of the Company to include such securities in any registration
filed under Sections 4.1, 4.2 or 4.3 hereof, unless, under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the
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inclusion of such securities will not diminish the amount of Registrable
Securities which are included. However, the Company may by agreement grant such
holder or prospective holder a registration right analogous to that set forth in
Section 4.1 provided that (i) such holder or prospective holder may not demand a
registration analogous to that set forth in Section 4.1 at any time earlier than
the Holders first have such right or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Section 4.1, and (ii)
that the Registrable Securities may be included in any such registration
demanded by such holders to the extent such inclusion will not diminish the
amount of securities of such holders which are included.
4.5 EXPENSES OF REGISTRATION.
(a) REGISTRATION EXPENSES. The Company shall bear all
Registration Expenses incurred in connection with all registrations pursuant to
Section 4.1, Section 4.2 and Section 4.3 hereof, including the expense of one
special counsel to the selling Holders, not to exceed Twenty-Five Thousand
dollars ($25,000).
(b) SELLING EXPENSES. All Selling Expenses relating to
securities registered on behalf of the Holders shall be borne by the Holders pro
rata on the basis of the number of shares so registered.
4.6 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will:
(a) keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof;
(b) as soon as practicable, prepare and file with the Commission
a registration statement with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective
until the earlier of (i) one hundred twenty (120) days, or (ii) the distribution
described in the Registration Statement has been completed; provided, however,
that (i) such one hundred twenty (120) day period shall be extended for a period
of time equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common Stock
(or other securities) of the Company, and (ii) in the case of any registration
of Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such one hundred twenty (120) day period shall be
extended, if necessary, to keep the registration statement effective until all
such Registrable Securities are sold, provided that Rule 415, or any successor
rule under the Securities Act, permits an offering on a continuous or delayed
basis, and, provided further, that applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in lieu of
filing a post-effective amendment, which (I) includes any prospectus required by
Section 10(a)(3) of the Securities Act, or (II) reflects facts or events
representing a material or fundamental change in the information set forth in
the registration statement, the incorporation by reference of information
required to be included in (I) and (II) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the
registration statement;
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(c) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities;
(d) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(e) in the event of an underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
(f) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements made therein not misleading in the light of the circumstances then
existing; and
(g) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
4.7 INDEMNIFICATION.
(a) BY COMPANY. The Company will indemnify each Holder, each of
its officers and directors and partners and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act and each
Investor and its officers, directors and partners and each person controlling
such Investor within the meaning of Section 15 of the Securities Act, against
all expenses, claims, losses, damages or liabilities, joint or several, (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading or any violation by the Company of the Securities
Act, the Exchange Act or any state or federal securities law, or any rule or
regulation promulgated under such Acts or law applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers, directors and
partners,
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and each person controlling such Holder, each such underwriter and each person
who controls any such underwriter, each Investor, each of its officers,
directors and partners and each person controlling such Investor, for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder, controlling person,
underwriter or Investor and stated to be specifically for use therein. If the
Holders and Investors are represented by counsel other than counsel for the
Company, the Company will not be obligated under this Section 4.7(a) to
reimburse legal fees and expenses of more than one separate counsel for all
Holders and Investors.
(b) BY HOLDERS. Each Holder will, if Registrable Securities held
by such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, each of its officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder under this subsection (b) shall be limited in an amount
equal to the public offering price of the shares sold by such Holder, unless
such liability arises out of or is based on willful misconduct by such Holder.
(c) PROCEDURES. Each party entitled to indemnification under
this Section 4.7 (the "INDEMNIFIED PARTY") shall give notice to the party
required to provide indemnification (the "INDEMNIFYING PARTY") promptly after
such Indemnified Party has actual knowledge of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided
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further, that the Indemnifying Party shall not assume the defense for matters as
to which there is a conflict of interest or separate and different defenses. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 4.7 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) CONTROLLING AGREEMENT. Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions of this Section 4.7, the
provisions in the underwriting agreement shall control.
4.8 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by them as the Company may request in writing
and only as shall be necessary to enable the Company to comply with the
provisions hereof in connection with any registration, qualification or
compliance referred to in this Agreement.
4.9 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock, the Company agrees to
use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
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(c) Furnish to any Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 (at any time after ninety (90) days from the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as such Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without
registration.
4.10 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted Holders under Sections 4.1, 4.2 and 4.3 may be
assigned in connection with any transfer or assignment by a Holder of
Registrable Securities provided that: (i) such transfer may otherwise be
effected in accordance with applicable securities laws, (ii) such transfer is
effected in compliance with the restrictions on transfer contained in this
Agreement and in any other agreement between the Company and the Holder, and
(iii) such assignee or transferee is a constituent partner of an Investor or
purchases (i) at least fifty thousand (50,000) shares of Preferred or (ii) all
shares of Preferred held by an Investor if transferred to a single entity;
provided, however, the transferee shall agree in writing to be bound by the
terms of this Agreement. No transfer or assignment will divest a Holder or any
subsequent owner of such rights and powers unless all Registrable Shares are
transferred or assigned.
4.11 TERMINATION. The rights granted pursuant to this Section 4 shall
terminate as to each Holder following the effective date of the Company's first
registered public offering of its stock and at such time such Holder may sell
under Rule 144, or a successor rule, in a three-month period all Registrable
Securities then held by such Holder, regardless of whether such Holder is an
affiliate of the Company.
4.12 LOCKUP AGREEMENT. Each Holder agrees that, if, in connection with
the Company's initial public offering of the Company's securities, the Company
or the underwriters managing the offering so request, the Holder shall not sell,
make any short sale of, loan, grant any option for the purchase of or otherwise
dispose of any Registrable Securities (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the Company or the underwriters; provided that each officer and
director of the Company who owns stock of the Company also agrees to such
restrictions. This Section 4.12 shall be binding on all transferees or assignees
of Registrable Securities, whether or not such persons are entitled to
registration rights pursuant to Section 4.10.
SECTION 5
LEGENDS
5.1 LEGENDS. Each Investor understands that the share certificates
evidencing any Registrable Securities shall be endorsed with the following
legends (in addition to any legends required under applicable state securities
laws):
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(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
LOCKUP NOT TO EXCEED 180 DAYS FOLLOWING THE COMPANY'S INITIAL PUBLIC OFFERING, A
COPY OF WHICH LOCKUP IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY."
(c) Any legend required to be placed thereon by the California
Commissioner of Corporations or any other applicable state securities laws.
SECTION 6
MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware, as such laws are applied to agreements
between Delaware residents entered into and performed entirely in Delaware.
6.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. This Agreement or any term hereof may be amended,
waived, discharged or terminated by a written instrument signed by the Company
and the Holders or transferees of such Holders holding more than fifty percent
(50%) of the Registrable Securities.
6.3 AGGREGATION. For the purposes of determining the number of shares of
Registrable Securities held by an Investor, Holder, transferee or assignee, the
holdings of affiliates shall be aggregated together and with the holdings of
such Investor, Holder, transferee or assignee, respectively; provided, that all
assignees and transferees who would not qualify individually for assignment of
registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Sections 2
and 4.
6.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be deemed given if in writing and mailed by registered
or certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed (a) if to a Holder, at such Holder's address as set forth
on Exhibit A to this Agreement, or at such other address as such Holder shall
have furnished to the Company in writing, or (b) if to any other holder of any
Registrable Securities, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Registrable
Securities who has so furnished an address to the Company, or (c) if to the
Company, at the address of its principal offices and addressed to the attention
of the Corporate Secretary and with a copy to Xxxxxx Godward LLP, 3000 El Camino
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Real, 0 Xxxx Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxx, or at such other address as the Company shall have furnished to the
Investors.
6.5 ADDITIONAL PURCHASERS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Preferred
Stock, any purchaser of such shares of Preferred Stock may become a party to
this Agreement by executing and delivering an additional counterpart signature
page to this Agreement and shall be deemed an "Investor" hereunder.
6.6 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
6.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
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The foregoing Agreement is hereby executed as of the date first above written.
THE "COMPANY" DNA SCIENCES, INC.
a Delaware corporation
By:
---------------------------------
Xxxx X. Xxxxxxxx, Xx.
Chairman & CEO
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EXHIBIT R
FORM OF
DNA SCIENCES, INC.
AMENDED AND RESTATED
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
This AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT is made
as of December __, 2000 (this "AGREEMENT") by and among DNA Sciences, Inc., a
Delaware corporation (the "COMPANY"), the holders of the Company's Series A
Preferred Stock set forth on Exhibit A hereto (the "SERIES A HOLDERS"), the
holders of the Company's Series B Preferred Stock set forth on Exhibit A hereto
(the "SERIES B HOLDERS"), the holders of the Company's Series C Preferred Stock
set forth on Exhibit A hereto (the "SERIES C HOLDERS"), the holders of the
Company's Series C-1 Preferred Stock set forth on Exhibit A hereto (the "SERIES
C-1 HOLDERS"), the holders of the Company's Series D Preferred Stock set forth
on Exhibit A hereto (the "SERIES D HOLDERS") (each an "INVESTOR," collectively,
the "INVESTORS"), and the Company's founders set forth on Exhibit B hereto (the
"FOUNDERS").
RECITALS
The Company has authorized the issuance and sale of shares of its Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series C-1
Preferred Stock and Series D Preferred Stock to the Investors. In connection
with such issuances, the Founders are willing to provide certain rights to the
Company and to the Investors as set forth in this Agreement. In consideration of
the foregoing and the promises and covenants contained herein, the parties agree
as follows:
ARTICLE 1
SECTION 11. RIGHT OF FIRST REFUSAL
11.1 COMPANY'S RIGHT OF FIRST REFUSAL. Before any (i) common stock, par
value $.001 per share, of the Company (the "COMMON STOCK"), held by Founder Xxxx
X. Xxxxxxxx, Xx., or (ii) Series A preferred stock, par value $.001 per share,
of the Company held by Founder Amersham Pharmacia Biotech, Inc. may be sold or
otherwise transferred by a Founder, except as provided in Section 1.8 below, the
Company shall have a right of first refusal (the "RIGHT OF FIRST REFUSAL") to
purchase such shares (the "OFFERED SECURITIES") as described herein.
11.2 NOTICE OF PROPOSED TRANSFER. Before the transfer of any Offered
Securities, the Founder shall deliver to the Company and the Investors a written
notice (the "TRANSFER NOTICE") stating: (i) the Founder's bona fide intention to
sell or otherwise transfer such Offered Securities, (ii) the name of each
proposed purchaser or other transferee (a "PROPOSED TRANSFEREE"), (iii) the
number of Offered Securities to be transferred to each Proposed Transferee, and
(iv) the bona fide cash price or other consideration for which the Founder
proposes to transfer the Offered Securities (the "OFFERED PRICE"). The Founder
shall offer the Offered Securities at the Offered Price first to the Company and
then to the Investors.
11.3 EXERCISE OF RIGHT OF FIRST REFUSAL. At any time within fourteen
(14) days after receipt of the Transfer Notice, the Company may, by giving
written notice to the Founder, elect to purchase all, or such lesser amount as
desired, of the Offered Securities proposed to be transferred to any one or more
of the Proposed Transferees, at the purchase price determined in accordance with
Section 1.4 below. Failure of the Company to give such a notice within such time
period will be deemed an election by it not to exercise its option.
11.4 PURCHASE PRICE. The purchase price for the Offered Securities so
purchased by the Company shall be the Offered Price, or such other amount agreed
to in writing by the
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Company and such Founder (the "COMPANY PURCHASE PRICE"). If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined in good faith by the Board of
Directors of the Company (the "BOARD OF DIRECTORS"), but if challenged by such
Founder, then it shall be determined by an independent appraiser mutually
acceptable to the Board of Directors and such Founder, the cost of such
appraisal to be borne equally by such Founder and the Company.
11.5 PAYMENT. Payment of the Company Purchase Price shall be made in
cash (or such other form of consideration mutually agreed to by the Company and
such Founder) within thirty (30) days after such Company Purchase Price is
agreed upon between the Company and such Founder.
11.6 INVESTOR'S RIGHT TO PURCHASE.
(a) In the event or to the extent the Company does not exercise
its Right of First Refusal, as the case may be, each Investor shall have the
right, upon notice to the Founder at any time within twenty-one (21) days after
receipt of the Transfer Notice (the "PURCHASE RIGHT PERIOD"), to purchase its
Pro Rata Share of all, but not less than all, of such Offered Securities not
purchased by the Company at the Offered Price and upon the same terms (or terms
as similar as reasonably possible) upon which the Founder is proposing or is to
dispose of such Offered Securities (the "PURCHASE RIGHT"), and the Founder shall
sell such Offered Securities to the Investors pursuant to such terms. "PRO RATA
SHARE" for the purposes of this Section 1.6 shall mean the ratio, the numerator
of which is the number of shares of Common Stock (on an as-converted basis) held
by such Investor (the "SHARES") and the denominator of which is the total number
of shares of Common Stock (on an as-converted basis) held by all Investors,
including the Founders; provided, that, if the Founder proposing to transfer
such Offered Securities is an Investor, such Pro Rata Share shall mean the
ratio, the numerator of which is the number of shares of Common Stock (on an
as-converted basis) held by such Investor and the denominator of which is the
total number of shares of Common Stock (on an as-converted basis) held by all
Investors other than such Founder.
(b) The Company shall grant to the Investors the right of
oversubscription such that if any Investor fails to purchase its Pro Rata Share,
the other Investors shall, among them, have the right to purchase up to the
balance of the Offered Securities not so purchased. Such right of
oversubscription may be exercised by an Investor by notifying the Founder of its
desire to purchase more than its Pro Rata Share. If, as a result thereof, such
over subscriptions exceed the total number of Offered Securities available in
respect of such oversubscription privilege, the oversubscribing Investors shall
be cut back with respect to their over subscriptions on a pro rata basis in
accordance with their respective Pro Rata Shares or as they may otherwise agree
among themselves.
(c) Upon expiration of the Purchase Right Period, the Company
will provide notice to all Investors as to whether or not the Right of First
Refusal or the Purchase Right have been exercised by the Company or the
Investors (the "EXPIRATION NOTICE").
11.7 FOUNDER'S RIGHT TO TRANSFER. If all of the Offered Securities
proposed in the Transfer Notice to be transferred are not purchased by the
Company and the Investors, then such
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Founder may sell or otherwise transfer all Offered Securities originally covered
in the Transfer Notice to the Proposed Transferee(s) that are not sold to the
Company or the Investors at the Offered Price or at a higher price, provided
that such sale or other transfer is consummated within ninety (90) days after
the date of the Transfer Notice and provided further that any such sale or other
transfer is effected in accordance with any applicable securities laws and the
Proposed Transferee agrees in writing that the provisions of this Section 1
shall continue to apply to the Offered Securities that are transferred to such
Proposed Transferee. If the Offered Securities described in the Transfer Notice
are not transferred to the Proposed Transferee(s) within such ninety (90) day
period, such Founder will not transfer any Offered Securities unless such
securities are first reoffered to the Company and the Investors in accordance
herewith.
11.8 EXCEPTION FOR CERTAIN TRANSFERS. Anything to the contrary contained
in this Section 1.8 notwithstanding, this Article 1 shall not apply to (i)
shares transferred to affiliates, (ii) shares transferred by will or intestacy
to the Founder's Immediate Family (as defined in this Section 1.8), a trust for
the benefit of the Founder or to the Founder's Immediate Family as a gift, (iii)
shares pledged to financial institutions or other entities as security for
indebtedness, (iv) shares transferred in any bona fide gift by a Founder which
in the aggregate amounts to no more than ten percent (10%) of the shares held by
a Founder on the date hereof, or (v) other similar transactions approved by the
Board of Directors. "IMMEDIATE FAMILY" shall mean spouse, ancestors,
descendants, father, mother, brother or sister. As a condition to any such
transfer effected pursuant to this Section 1.8, the transferee or other
recipient shall receive and hold the Offered Securities so transferred subject
to the provisions of this Agreement and shall agree in writing to be bound by
the provisions of this Agreement.
ARTICLE 2
SECTION 12. CO-SALE.
12.1 RIGHT TO PARTICIPATE. To the extent that the Right of First Refusal
is not exercised by the Company and the Purchase Right is not exercised by the
Investors, each Investor shall have the right to participate in any sale to a
Proposed Transferee upon the same terms and conditions as set forth in the
Transfer Notice, subject to the terms and conditions set forth in this Article
2. An Investor shall exercise its right by delivering to the Founder, within
fourteen (14) days after receipt of the Expiration Notice, written notice of its
intention to participate, specifying the number of shares Investor desires to
sell to the Proposed Transferee. At the closing of the transaction, Investor
shall deliver one or more certificates representing the number of shares of
Common Stock, or Common Stock equivalents, which Investor elects to sell
hereunder, duly endorsed for transfer to the Proposed Transferee.
12.2 QUALIFIED PARTICIPATION. Each Investor shall have the right to sell
up to that number of shares of Common Stock of the Company, or Common Stock
equivalents, equal to the product of (i) the amount of Offered Securities
multiplied by (ii) a fraction, the numerator of which is the number of Shares
owned by such Investor, and the denominator of which is the total number of
shares of Common Stock owned by such Founder or Permitted Transferee pursuant to
Section 3.2 hereof, plus the total number of Shares owned by the Investors as a
group. In the event that Proposed Transferee desires to purchase a number of
shares of Common Stock different from the amount of the Offered Securities, the
amount that the Proposed Transferee
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desires to purchase shall be substituted for Offered Securities in the above
equation for the purpose of determining each Investor's participation rights. In
the event of Investor participation, the Founder shall include such Investor
Shares in the sale at the Closing.
12.3 RESTRICTIONS IMPOSED BY TRANSFEREE. To the extent that any Proposed
Transferee prohibits such assignment or otherwise refuses to purchase Shares
from any Investor exercising its rights of co-sale here-under, Founder shall not
sell to the Proposed Transferee any Offered Securities unless and until,
simultaneously with such sale or transfer, such Founder shall purchase such
Shares from Investor on the same terms and conditions specified in the Transfer
Notice.
12.4 CONTINUING RIGHTS. The exercise or non-exercise of the right to
participate hereunder with respect to a particular sale by any Founder shall not
adversely affect any Investor's right to participate in subsequent sales by such
Founder pursuant to this Article 2.
12.5 EXCEPTION FOR CERTAIN TRANSFERS. Anything to the contrary contained
in this Section 2.5 notwithstanding, this Article 2 shall not apply to (i)
shares transferred to affiliates, (ii) shares transferred by will or intestacy
to the Founder's Immediate Family (as defined in above), a trust for the benefit
of the Founder or to the Founder's Immediate Family as a gift, (iii) shares
pledged to financial institutions or other entities as security for
indebtedness, (iv) shares transferred in any bona fide gift by a Founder which
in the aggregate amounts to no more than ten percent (10%) of the shares held by
a Founder on the date hereof, or (v) other similar transactions approved by the
Board of Directors. As a condition to any such transfer effected pursuant to
this Section 2.5, the transferee or other recipient shall receive and hold the
Offered Securities so transferred subject to the provisions of this Agreement
and shall agree in writing to be bound by the provisions of this Agreement.
ARTICLE 3
SECTION 13. MISCELLANEOUS
13.1 INVALID TRANSFERS. Any sale, assignment or other transfer of
Offered Securities by Founder contrary to the provisions of this Agreement
hereof shall be null and void, and the transferee shall not be recognized by the
Company as the holder or owner of the Offered Securities sold, assigned, or
transferred for any purpose (including, without limitation, voting or dividend
rights), unless and until the Founder has satisfied the requirements of this
Agreement with respect to such sale. Founder shall provide the Company and the
Investors with written evidence that such requirements have been met or waived
prior to consummating any sale, assignment or other transfer of securities, and
no Securities shall be transferred on the books of the Company until such
written evidence has been received by the Company and the Investors.
13.2 PERMITTED TRANSFEREES. The participation rights set forth in
Article 1 and Article 2 above shall not apply to (i) any pledge of the Offered
Securities made by such Founder which creates a mere security interest, (ii) the
transfer to a Founder's Immediate Family, (iii) the transfer to a trust
established by a Founder for the benefit of one or more members of such
Founder's Immediate Family, (iv) the sale of Offered Securities in a broker's
transaction pursuant to Rule 144 promulgated pursuant to the Securities Act of
1933, as amended, or (v) the transfer of Offered Securities currently held by
any Founder to another Founder that was
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approved by the Board of Directors, which approval shall not be unreasonably
withheld, provided in each case that the recipient of such Offered Securities
shall receive and hold such the shares so transferred subject to the provisions
of this Agreement.
13.3 TERMINATION. The rights of each Investor under this Agreement shall
terminate upon (i) that point in time when such Investor no longer owns any
Shares, (ii) the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock for the account of the Company to
the public, or (iii) the occurrence of the merger or consolidation of the
Company into, or the sale of all or substantially all of the Company's assets
to, another corporation.
13.4 LEGENDS.
(a) The certificates evidencing shares of the Company held by
the Founders hereto shall bear, in addition to any other legend required under
the federal or the Delaware securities laws, the following legends, as
applicable:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS, INCLUDING RESTRICTIONS ON TRANSFER, AS SET FORTH IN A RIGHT OF
FIRST REFUSAL AND CO-SALE AGREEMENT ENTERED INTO BY THE HOLDER OF THESE
SHARES, THE ISSUER AND CERTAIN STOCKHOLDERS OF THE ISSUER. A COPY OF
SUCH AGREEMENT MAY BE EXAMINED AT THE PRINCIPAL OFFICE OF THE COMPANY."
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO A RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT AMONG THE
STOCKHOLDER, THE COMPANY AND CERTAIN HOLDERS OF PREFERRED STOCK OF THE
COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY."
(b) LEGEND REMOVAL. The legends referred to in Section 3.4(a)
shall be removed upon termination of this Agreement in accordance with the
provisions of Section 3.3 above.
13.5 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated hereby.
13.6 ENTIRE AGREEMENT. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
13.7 NOTICE. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed
(a) if to an Investor, at Investor's address set forth on EXHIBIT A, or at such
other address as Investor shall have furnished to the Company in writing, (b) if
to a Founder, at Founder's address set forth on EXHIBIT B or at such other
address as Founder shall have furnished to the Company in writing, and (c) if to
the Company, to DNA Sciences, Inc., 0000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxx, XX 00000
and addressed to the attention of the Corporate Secretary, or to such other
address as the Company shall have furnished to the Investors and the Founders.
If notice is provided by registered mail,
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notice shall be deemed to be given forty-eight (48) hours following proper
deposit in the mail (and if outside the United States, sent by airmail).
13.8 SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
13.9 AMENDMENTS OR WAIVERS. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by written
instrument signed by the party against whom enforcement of any such amendment,
waiver, or discharge or termination is sought; provided, however, that the
holders of a majority of the Shares held by the Investors voting together may
waive, discharge, terminate, modify or amend on behalf of all Investors, any
provisions hereof.
13.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one instrument, and each of
which may be executed by less than all of the parties to this Agreement.
13.11 ADDITIONAL PURCHASERS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Preferred
Stock pursuant to this Agreement, any purchaser of such shares of Preferred
Stock may become a party to this Agreement by executing and delivering an
additional counterpart signature page to this Agreement and shall be deemed an
"Investor" hereunder.
13.12 SEVERABILITY. In the event that any provision of this Agreement
becomes or declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
13.13 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware, as such laws are applied to agreements
between Delaware residents entered into and performed entirely in Delaware.
13.14 FACSIMILE SIGNATURES. Any signature page delivered by fax machine
or telecopy machine shall be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a signature page agrees to later deliver an
original counterpart to any party which requests it.
[SIGNATURE PAGES FOLLOW]
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The foregoing Agreement is hereby executed as of the date first above written.
THE "COMPANY" DNA SCIENCES, INC.
a Delaware corporation
By:
---------------------------------
Xxxx X. Xxxxxxxx, Xx.
Chairman & CEO
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EXHIBIT S
FORM OF OPINION OF XXXXXX XXXXXX WHITE & XXXXXXXXX
1. The Company is a duly organized and is a validly existing corporation in
good standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power and authority to own its
property and assets, to conduct its business as it is currently being
conducted, and to enter into the Reorganization Agreement and to
consummate the transactions contemplated thereby.
3. Except as disclosed in the Disclosure Schedule, the execution, delivery
and performance of the Reorganization Agreement by the Company, the
consummation by the Company of the transactions contemplated thereby,
and compliance by the Company with the provisions thereof (i) do not
violate or conflict with any term or provision of the Company's
certificate of incorporation or bylaws, (ii) do not constitute a
material default under the provisions of any material agreement listed
on the Disclosure Schedule to which the Company is a party or by which
it is bound, (iii) do not violate or contravene any order, writ,
judgment, injunction, decree, determination or award which has been
entered against the Company and which is known to us, the violation or
contravention of which would have a Material Adverse Effect on the
Company and (iv) to our knowledge, do not violate or contravene any
provision of any law, rule or regulation applicable to the Company in
connection with transactions similar to that contemplated by the
Reorganization Agreement.
4. All corporate action, including approval by the Company's Board of
Directors and stockholders, required to be taken on the part of the
Company and its stockholders to adopt, authorize and approve the
Reorganization Agreement and consummate the Merger has been taken.
5. The Reorganization Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms.
6. To our knowledge, all consents, approvals, authorizations or orders of,
and filings, registrations and qualifications with, any regulatory
authority or governmental body in the United States that the Company is
obligated to obtain or make and that are required for the consummation
by the Company of the transactions contemplated by the Reorganization
Agreement have been made or obtained, except (i) for the filing of the
certificate of merger with the Secretary of State of the State of
Delaware and (ii) where the failure to obtain any such consents,
approvals, authorizations, or orders, or failure to make any such
filings, registrations or qualifications, would not prevent or delay
consummation of the Merger or have a Material Adverse Effect of the
Company.
7. To our knowledge, except as set forth in the Disclosure Schedule, there
are no civil, criminal or administrative actions, suits or proceedings
pending or threatened against
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the Company before any court, arbitrator, or administrative,
governmental or regulatory authority, domestic or foreign, that
questions the validity or enforceability of the Reorganization Agreement
or the right of the Company to enter into the Reorganization Agreement.
8. Immediately prior to the Effective Time, the authorized capital stock of
the Company consisted of 15,000,000 shares of Company Common Stock, of
which [_______] shares were issued and outstanding, and 10,000,000
shares of Company Series A Preferred Stock, of which [_________] shares
were issued and outstanding. All of the outstanding shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and non-assessable. Except as set forth in the Disclosure
Schedule, none of the outstanding shares of the Company Common Stock or
Company Preferred Stock is subject to any repurchase option or
restrictions on transfer in favor of, or imposed by, the Company (other
than restrictions on transfer imposed by virtue of applicable federal
and state securities laws).
9. Immediately prior to the Closing Date, except as set forth in the
Disclosure Schedule, to our knowledge there was no: (a) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) to acquire any shares of the capital stock or other
securities of the Company; (b) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for
any shares of the capital stock or other securities of the Company or
(c) contract under which the Company is or may become obligated to sell
or otherwise issue any shares of its capital stock or any other
securities.
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EXHIBIT T
FORM OF OPINION OF XXXXXX GODWARD
1. The Company and Merger Sub have been duly incorporated and are
validly existing corporations in good standing under the laws of the State
of Delaware.
2. The Company and Merger Sub have the requisite corporate power
and authority to own their respective property and assets, to conduct their
respective business as such business is currently being conducted, to enter into
the Reorganization Agreement and to consummate the transactions contemplated
thereby.
3. All corporate action required to be taken on the part of the
Company and Merger Sub to authorize the Reorganization Agreement, the
Convertible Promissory Notes, the Series D Preferred Warrants and the Escrow
Agreement (collectively, the "Transaction Documents") and consummate the
transactions contemplated thereby have been taken.
4. The Transaction Documents have been duly and validly authorized,
executed and delivered by the Company and Merger Sub and constitutes a valid and
binding agreement of the Company and Merger Sub, enforceable against the Company
and Merger Sub in accordance with their respective terms, except as enforcement
may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
5. The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by the Company and Merger
Sub are not prohibited by, and will not violate or conflict with, (i) any
provision of the certificate of incorporation or bylaws of the Company or Merger
Sub; (ii) any law, rule or regulation applicable to the Company in connection
with transactions similar to that contemplated by the Transaction Documents,
(iii) the provisions of any material agreement listed on the Parent Disclosure
Schedule to which the Company or Merger Sub are a party or by which they are
bound, (iv) any order, writ, judgment, injunction, decree, determination or
award which has been entered against the Company or Merger Sub and which is
known to us, except where any of the foregoing would not have, individually or
in the aggregate, a material adverse effect on the business, financial condition
or results of operations of the Company.
6. To our knowledge, all consents, approvals, authorizations or orders
of, and filings, registrations and qualifications with, any regulatory authority
or governmental body in the United States that the Company is obligated to
obtain or make and that are required for the consummation by the Company and
Merger Sub of the transactions contemplated by the Transaction Documents have
been made or obtained, except (i) qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) under state
blue sky laws of the offer and sale of shares of Company common stock or Series
D preferred stock pursuant to the Merger, and (ii) where the failure to obtain
any such consents, approvals, authorizations, or orders, or failure to make any
such filings, registrations or qualifications, would not prevent or delay the
consummation of the transaction contemplated by the Transaction Documents or
have a material adverse effect on the business, financial condition or results
of operations of the Company.
7. Immediately prior to the Closing Date, the authorized capital stock
of the Company consists of 40,000,000 shares of Common Stock and [_______]
shares of Preferred Stock. Of the Preferred
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Shares, 8,283,000 shares are designated as Series A Preferred Shares, 7,099,000
shares are designated as Series B Preferred Shares, [5,500,000] shares are
designated as Series C Preferred Shares and ______ shares are designated as
Series D Preferred Stock. Immediately prior to the Closing Date, the stock
records of the Company indicate that [4,643,708] shares of Common Stock,
8,283,000 shares of Series A Preferred Stock, 7,099,000 shares of Series B
Preferred Stock, _____shares of Series C Preferred Stock and ______ shares of
Series D Preferred Stick were issued and outstanding. All such issued and
outstanding shares of the Company's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable. To our knowledge, and
except as set forth in the Parent Disclosure Schedule and the Company's
certificate of incorporation, immediately prior to the Closing Date there are no
options, warrants, conversion privileges, preemptive rights, or other rights
outstanding granted by the Company to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other securities of the
Company.
8. The Company's common stock and Series D preferred stock to be issued
(i) in the Merger, (ii) upon exercise of options to acquire shares of common
stock of PPGx, Inc. assumed in accordance with the provisions of the
Reorganization Agreement, (iii) upon exercise of the Series D Preferred Warrants
and (iv) upon conversion of the Convertible Promissory Notes will, when issued
in accordance with the provisions of the Reorganization Agreement and such
options, warrants and convertible notes be duly authorized, validly issued,
fully paid and nonassessable.
9. To our knowledge, there are no civil, criminal or administrative
actions, suits or proceedings pending or threatened against the Company or
Merger Sub before any court, arbitrator or administrative, governmental or
regulatory authority that questions the validity or enforceability of the
Transaction Documents or the right of the Company or Merger Sub to enter into
the Transaction Documents.
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