Exhibit 2.1
STOCK PURCHASE AGREEMENT
by and among
SONUS PHARMACEUTICALS, INC.
and
SELLERS
MANAGERS
COMPANY OPTION HOLDERS
COMPANY WARRANT HOLDERS
and
SELLERS' AGENTS
Dated as of November 3, 2004
EXHIBITS
Exhibit A Form of Stockholders Agreement
Exhibit B Form of Investment Statement
Exhibit C Form of Irrevocable Waivers of Company Options and
Company Warrants
Exhibit D Buyer Options
SCHEDULES
Schedule 1 List of Sellers, Managers, certain Company Option
Holders and Company Warrant Holders and Allocation of
the Purchase Price (Part 1, Part 2, Part 3, Part 4)
Schedule 5.22 Certain Derivative Security Holders
Managers' Disclosure
Schedule
Buyer's Disclosure
Schedule
APPENDIX
Appendix 1.4(b)(i)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of 3 November 2004 ("Agreement"), by
and among (i) the individual[s] listed in part 1 of Schedule 1 (the "Managers");
(ii) the individuals and legal entities listed in part 2 of Schedule 1
(collectively, the "Sellers" and, individually, a "Seller"); (iii) the
individuals listed in part 3 of Schedule 1 (the "Company Option Holders"); (iv)
the individuals listed in part 4 of Schedule 1, but excluding the Company Option
Holders and Company Warrant Holders set forth on Schedule 5.22 hereof (the
"Company Warrant Holders") (together with the Company Option Holders,
collectively the "Derivative Securities Holders" and individually a "Derivative
Securities Holder"); (v) such Persons to be designated by the Sellers, subject
to the approval of the Buyer, which approval shall not be unreasonably withheld,
within thirty (30) days following the date of this Agreement, which Persons
shall agree to become parties to this Agreement as Sellers' true and lawful
agents (the "Sellers Agents") pursuant to Section 5.18 of this Agreement, on the
one hand, and (vi) Sonus Pharmaceuticals, Inc., a Delaware corporation (the
"Buyer"), on the other hand. Sellers, Managers, Derivative Securities Holders,
Sellers' Agents and Buyer are referred to herein collectively as the "Parties"
and individually as a "Party". Certain capitalized and other terms used in this
Agreement have the meanings given to them in ARTICLE XI.
RECITALS:
WHEREAS, the Sellers own, collectively, all of the outstanding shares (the
"Shares") of capital stock of Synt:em, a French societe anonyme with a share
capital of 5 478 688 Euros which has its registered office in Nimes (30900 -
France) - Parc Scientifique et Technique Xxxxxxx Xxxxx - Xxxxx Xxxxxxx Xxxxxxx
(the "Company").
WHEREAS, the Company Options held by Company Option Holders and the
Company Warrants held by the Company Warrant Holders together with the Company
Options and Company Warrants held by the persons set forth on Schedule 5.22
hereof constitute all of the outstanding Company Options and Company Warrants
issued by the Company (collectively, the "Derivative Securities").
WHEREAS, the Sellers desire to sell to the Buyer and the Buyer desires to
purchase from the Sellers, the outstanding Shares in the amounts set opposite
their respective names on Schedule 1, and the Derivative Securities Holders
accept to waive their Derivative Securities unless exercised on or prior to the
Closing Date hereunder; and
WHEREAS, at the Closing, the Shares and Derivative Securities will
represent all of the issued and outstanding shares of the capital stock and
other securities of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
SALE AND EXCHANGE OF SHARES
Section 1.1. Acquisition Price, Sale and Exchange of Shares. Upon the
terms and subject to the conditions of this Agreement, at the Closing, the
Sellers shall sell, convey, assign,
transfer and deliver to the Buyer free and clear of all Liens, and the Buyer
shall purchase, acquire and accept from the Sellers, the Shares, in exchange for
the consideration specified in Section 1.2. (the "Transaction").
Section 1.2. Consideration for Shares. Upon the terms and subject to the
conditions of this Agreement, the Buyer shall deliver to the Sellers in the
proportions set opposite their respective names on Schedule 1, Consideration
Shares, which Consideration Shares shall have an aggregate value (as calculated
below) of up to US$30,000,000 ("Acquisition Price") equal to the Closing Date
Purchase Price plus contingent payments (complements de prix), equal to the sum
of the Earn-Out Payments and the Contingent Consideration. To the extent the
holders of Derivative Securities exercise their Derivative Securities, the
Parties agree to amend Schedule 1 to reflect such exercises prior to the
Closing, and each such holder shall be deemed to be a "Seller" for the purposes
of this Agreement.
Section 1.3. Closing Date Purchase Price.
(a) Calculation of Closing Date Purchase Price. Upon the terms and
subject to the conditions of this Agreement, the Buyer shall issue and deliver
to the Sellers at the Closing, in the proportions set opposite their respective
names on Schedule 1, subject to the escrow provided at Section 1.3(b), that
number of Consideration Shares exchanged for Shares, equal to $7,500,000 plus
the Adjusted Cash (the "Closing Date Purchase Price"), divided by the Average
Closing Price. The "Average Closing Price" means the average closing price per
share of Buyer Common Stock as reported on the NASDAQ for each of the twenty
(20) consecutive full trading days in which such shares are traded on the NASDAQ
ending on the second trading day prior to, but not including, the Closing Date;
provided, however, that if the Average Closing Price as computed pursuant to the
foregoing terms of this sentence (i) exceeds the price at which the aggregate
Consideration Shares issuable under this Agreement would represent 26% of the
fully-diluted (via the treasury stock method) capitalization of Buyer as of the
Closing Date (subject to adjustment as set forth below) (the "Upper Collar")
then the Average Closing Price shall be the Upper Collar, or (ii) is less than
the price at which the aggregate Consideration Shares issuable under this
Agreement would represent 29% of the fully-diluted (via the treasury stock
method) capitalization of Buyer as of the Closing Date (subject to adjustment as
set forth below) (the "Lower Collar") then the Average Closing Price shall be
the Lower Collar. The Buyer and Sellers' Agents shall mutually determine the
amount of Adjusted Cash, with the participation of the Buyer's and the Company's
respective auditors, and shall provide the Parties with a written report setting
forth the calculation of Adjusted Cash at least five Business Days prior to the
Closing Date. In determining the amount of Adjusted Cash, the amount of the
Research Tax Credit shall be valued at 864,454 Euros. The determination of the
amount of Adjusted Cash, subject to adjustments to the Research Tax Credit,
shall be binding on the Parties. The Average Closing Price shall be calculated
to the nearest one-hundredth of one cent. In the event that anytime prior to the
Closing Date the outstanding shares of the Buyer Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Buyer by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend, or other change in the
capital structure of the Buyer, then corresponding adjustments shall be made to
the Average Closing Price, Upper Collar and Lower Collar determined pursuant to
this Section 1.3, as applicable, in order to preserve, but not to increase or
decrease, the relative dollar value thereof in relation to any such event.
(b) Research Tax Credit Escrow. Upon the terms and subject to the
conditions of this Agreement, at Closing, the Buyer shall deposit (the "First
Escrow Deposit") such number of the Consideration Shares to be delivered to the
Sellers at Closing, under Section 1.3(a), equal to the amount of the US$ value
of the Research Tax Credit (864,454 Euros) (converted into US$ as provided in
Section 10.14), divided by the Average Closing Price to the
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Escrow Agent, which deposit shall be held by the Escrow Agent in accordance with
the terms of the Escrow Agreement, in a sub-escrow account (the "First Escrow
Sub-Account"), pending the receipt by the Company of the final amount of the
Research Tax Credit, with instructions to release and deliver to the Sellers, in
the proportions set opposite their respective names on Schedule 1, or Buyer, in
accordance with the following:
(i) If the final amount of the Research Tax Credit received by
the Company is equal to the amount set forth in Section 1.3(a), then the Escrow
shall release and deliver to the Sellers 100% of the Consideration Shares held
in the First Escrow Sub-Account.
(ii) If, by contrast, the final amount of the Research Tax
Credit received by the Company is less than that amount set forth in Section
1.3(a), then the Escrow Agent shall release and deliver (A) to the Sellers, 100%
of the Consideration Shares held in the First Escrow Sub-Account less an amount
equal to the difference between the Research Tax Credit set forth in Section
1.3(a) and the final amount of the Research Tax Credit received by the Company
with the Consideration Shares valued at the Average Closing Price, and (B) to
the Buyer the remaining Consideration Shares held in the First Escrow
Sub-Account. Buyer shall or shall cause the Company to promptly notify the
Escrow Agent of the receipt of the final amount of the Research Tax Credit in
the form of a written certificate.
(c) Payment of Transaction Expenses. Upon the terms and subject to
the conditions of this Agreement, at Closing, an amount equal to the Reimbursed
Expenses shall be paid by the Buyer to the Persons set forth in the Transaction
Expenses Notice pursuant to the provisions of Section 1.8 below, by wire
transfer of immediately available funds to the bank accounts identified therein.
The Transaction Expenses Notice delivered pursuant to Section 1.8 shall provide
written instructions to Buyer setting forth the exact amounts and payment
instructions for such Reimbursed Expenses and Buyer will make such payments in
accordance with such instructions at Closing.
Section 1.4. Contingent Earn-Out Payments After the Closing.
(a) Earn-Out Payments. On the terms and subject to the conditions of
this Section 1.4 the Buyer shall issue and deliver to the Sellers, and the
Derivative Securities Holders who exercise their Derivative Securities on or
before the Closing Date, following the Closing, in the proportions set opposite
their respective names on Schedule 1, Consideration Shares, if and to the extent
earned as provided in this Section 1.4, in an aggregate amount equal to
US$30,000,000, less the Closing Date Purchase Price and less the Transaction
Expenses divided by the Average Closing Price (the "Earn-Out Amount"), which
shall be due and payable in two equal installments as follows:
(i) The first 50% of the Earn-Out Amount (the "First Earn-Out
Payment") shall be due upon the occurrence of the First Earn-Out Event. The
second 50% of the Earn-Out Amount (the "Second Earn-Out Payment", and together
with the First Earn-Out Payment, collectively, the "Earn-Out Payments", and
individually an "Earn-Out Payment") shall be due upon the occurrence of the
Second Earn-Out Event.
(ii) The First Earn-Out Event or the Second Earn-out Event
means any one of the following events, whichever occurs first: (A) the
initiation of the first human dosing in a Phase I clinical trial under a U.S.
Investigational New Drug Application, or (B) such other drug application,
approvable by the applicable ministry of health, as Buyer in its sole discretion
determines is appropriate for any currently identified Company product
candidate, including a second-generation version of Syn 1001, Syn 1002, Syn
2001, Syn 2002 or any variation thereof, as well as any additional product
candidates derived in whole or in part from
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the Company's product pipeline or research and development technology platform
which additional product candidate(s) are mutually acceptable to Buyer and
Sellers' Agents (each a "Qualified Product Candidate"). (The First Earn-Out
Event and the Second Earn-Out Event are herein referred to collectively as the
"Earn-Out Events", and individually as an "Earn-Out Event").
(b) Covenants Regarding Earn-Out Payments. From the Closing Date
until such date as each of the Earn-Out Payments has been paid by Buyer in
accordance with the provisions of Section 1.4(a), Buyer shall:
(i) until the earlier to occur of such time as the entire
Earn-Out Amount has been paid, or for a period not to exceed five (5) years from
the Closing Date (the "Earn-Out Period"), fund and support at least two
regulatory pre-clinical programs running continuously pursuant to the criteria
generally described in attached Appendix 1.4(b)(i) (the "Agreed Resources").
Anything herein to the contrary notwithstanding, the Company and the Sellers
acknowledge that the Company's research and development team will report to and
will be responsible for performing the directions set forth by the Buyer's
Project Committee, Strategic Committee and Board of Directors, and, in the event
that the Buyer's Board of Directors determines that it is in the best interests
of the Buyer and all of its stockholders to reduce the Agreed Resources, and
that the failure to take such action could reasonably be determined to result in
a breach of the fiduciary duties of Buyer's Board of Directors, then the Buyer
may reduce the Agreed Resources until such time as the continuation of providing
such Agreed Resources could not reasonably be determined to result in a breach
of the fiduciary duties of Buyer's Board of Directors, at which time Buyer shall
resume providing the Agreed Resources. Any period of time during which the
Agreed Resources are reduced or suspended shall extend the Earn-Out Period for
the period of such reduction or suspension unless the Earn-Out Amount has
already been paid. Subject to the above, a milestone event triggering the
payment of the related Earn-Out Payment will be deemed completed in the event
of: (A) the termination of any clinical, pre-clinical or development program of
any Qualified Product Candidate identified by the Closing Date under this
Agreement despite the Buyer's Project Committee, Strategic Committee and Board
of Directors or the arbitrators pursuant to Section 1.4(c), having determined
that such Qualified Product Candidate satisfies the criteria of having
scientific viability, market opportunity and economic feasibility; (B) the sale,
assignment or out-licensing of any potential Qualified Product Candidates which
results in the termination of, or loss of control of the Buyer over, the
clinical and development program of such Qualified Product Candidate; or (C) any
material liquidation of the Company or substantial reduction in its activities
and work force.
(ii) provide, or cause to be provided, to Sellers' Agents, at
least semi-annually a written report generally describing the status of the
Qualified Product Development programs and any known significant actions,
events, circumstances or occurrences which are likely, to the Buyer's reasonable
judgment, to accelerate or delay any Earn-Out Event; provided, however, that
such report shall not contain any material non-public information unless each
Seller shall agree in writing to be bound by Buyer's Xxxxxxx Xxxxxxx Policy.
(iii) promptly notify Sellers' Agents and Escrow Agent of the
occurrence of any Earn-Out Event.
(iv) promptly notify Sellers' Agent of any event that would
trigger an early payment of any Earn-Out Payment or of any decision by the
Buyer's Board of Directors to reduce the Agreed Resources due to a determination
that failure to do so could reasonably be determined to result in a breach of
their fiduciary duties, along with a reasonably detailed explanation of such
actions.
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(v) promptly notify Sellers' Agents when the Agreed Resources
have been resumed after any event or time period during which the Buyer's Board
of Directors has reduced or suspended the Agreed Resources due to a
determination that failure to do so could reasonably be determined to result in
a breach of their fiduciary duties.
(c) Dispute Resolution. The Parties shall initially attempt in good
faith to resolve any controversy, claim, allegation of breach or dispute arising
out of or relating to any portion of the Earn-Out Amount (hereinafter
collectively referred to as a "Dispute") through non-binding mediation between
an executive officer of Buyer and the Sellers' Agents which may be initiated by
either Party upon written notice to the other Party. If the Dispute is not
resolved within thirty (30) Business Days (or such other period of time mutually
agreed upon by the Parties) of notice of the Dispute (the "Mediation Period"),
then the Parties agree to submit the Dispute to binding arbitration. Unless
otherwise mutually agreed by the Parties, only if the Dispute is not resolved
through non-binding mediation as set forth herein, may a Party resort to
arbitration. All Disputes relating in any way to the Earn-Out Amount shall be
resolved exclusively through binding arbitration conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association as then
in effect. The arbitration hearing shall be held as soon as practicable after
the expiration of the Mediation Period. The arbitration hearing shall be held in
New York, New York and shall be before a panel of three arbitrators. The Parties
agree that each of the Buyer, on the one hand, and the Sellers' Agents, on the
other hand, shall appoint one arbitrator, and that these two arbitrators shall
appoint a third arbitrator. If one or more of these persons cannot or will not
serve as arbitrators, the arbitrators shall be selected by the Parties in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association pursuant to its rules on selection of arbitrators. The arbitrators
shall render a formal, binding non-appealable resolution and award on each issue
as expeditiously as possible but not more than ten (10) Business Days after the
hearing. In any arbitration, the prevailing Party shall be entitled to
reimbursement of its reasonable attorney fees and the Parties shall use all
reasonable efforts to keep arbitration costs to a minimum.
(d) Earn-Out Escrow. Upon the terms and subject to the conditions of
this Agreement, at Closing, the Buyer shall deposit (the "Second Escrow
Deposit") a number of Consideration Shares equal to the Earn-Out Amount divided
by the Average Closing Price, to the Escrow Agent, which deposit shall be held
by the Escrow Agent in a sub-escrow account (the "Second Escrow Sub-Account") in
accordance with the Escrow Agreement, with instructions to the Escrow Agent to
deliver to the Sellers and the holders of any Derivative Securities who exercise
their Derivative Securities on or before the Closing Date, in the proportions
set opposite their respective names in Schedule 1, in accordance with the
following:
(i) Subject to the limitation set forth below, 50% of the
Consideration Shares held in the Second Escrow Sub-Account upon receipt either
of (A) the notice sent by the Buyer pursuant to Section 1.4(b)(iii) stating that
either of the Earn-Out Events has occurred, or (B) of joint written instructions
from Sellers' Agents and Buyer stating that the First Earn-Out Payment is due,
or (C) of a written certificate from either Sellers' Agents or Buyer (with a
copy to Buyer, in the case of a certificate by Sellers' Agents, or to Sellers'
Agents, in the case of a certificate by Buyer) attaching thereto a copy of the
final arbitration award issued pursuant to Section 1.4(c) resolving that any of
the First Earn-Out Event and Second Earn-Out Event has occurred.
(ii) Subject to the limitations set forth below, 50% of the
Consideration Shares held in the Second Escrow Sub-Account upon receipt either
of (A) the notice sent by the Buyer pursuant to Section 1.4(b)(iii), or (B) of
joint written instructions from Sellers' Agents and Buyer stating that the
Second Earn-Out Payment is due, or (C) of a written certificate from either
Sellers' Agents or Buyer (with a copy to Buyer, in the case of a certificate
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by Sellers' Agents, or to Sellers' Agents, in the case of a certificate by
Buyer) attaching thereto a copy of the arbitration award issued pursuant to
Section 1.4(d) resolving that the Second Earn-Out Event has occurred.
(iii) The foregoing provisions notwithstanding, if the First
Earn-Out Payment becomes due and payable on or before 18 months following the
Closing Date, 25% of the Consideration Shares representing the First Earn-Out
Payment held in the Second Escrow Sub-Account shall continue to be held by the
Escrow Agent in a sub-escrow account (the "Second Escrow Indemnification
Sub-Account") until 18 months following the Closing Date. The Escrow Agent shall
release 100% of the Consideration Shares held in the Second Escrow
Indemnification Sub-Account 18 months following the Closing Date, provided the
Escrow Agent has not received from the Buyer a Buyer Escrow Claim Notice before
18 months following the Closing Date. If, however, the Escrow Agent has received
from the Buyer one or more Buyer Escrow Claim Notices before 18 months following
the Closing Date, the Escrow Agent (1) shall (x) continue holding in escrow,
after 18 months following the Closing Date, an amount of Consideration Shares
equal to the total amount of the claims stated in such Buyer Escrow Claim
Notices divided by the Average Closing Price, until the Final Resolution of such
claims, (y) promptly notify once a year the Sellers' Agents and the Buyer of
such continuous holding, and (2) 18 months following the Closing Date shall
forthwith deliver to the Sellers a number of Consideration Shares equal to 100%
of the Consideration Shares held by the Escrow Agent in the Second Escrow
Indemnification Sub-Account, less an amount equal to the total amount of the
claims stated in the Buyer Escrow Claim Notices divided by the Average closing
Price, and (3) upon joint written instructions of the Buyer and the Sellers'
Agents or a Final Resolution of any such claim, shall forthwith deliver to the
Sellers or the Buyer, as applicable, a number of Consideration Shares still held
in the Second Escrow Indemnification Sub-Account with respect to such claim
valued on the Average Closing Price in accordance with the Final Resolution.
(iv) The foregoing notwithstanding, all Consideration Shares
remaining in the Second Escrow Deposit five years following the Closing Date
shall be returned to the Buyer and cancelled. The obligations of the Buyer to
issue and deliver Consideration Shares relating to the Earn-Out Payments
pursuant to the provisions set forth in Section 1.4 hereof shall continue in
full force and effect notwithstanding such cancellation of shares.
Section 1.5. Contingent Consideration after Closing.
(a) Contingent Consideration. On the terms and subject to the
conditions of this Section 1.5, the Buyer shall, following Closing, issue and
deliver to the Sellers, in the proportions set opposite their respective names
on Schedule 1, such additional number of Consideration Shares, if and to the
extent earned as provided in this Section 1.5 and in Section 7.6, in an amount
equal to US$500,000 divided by the Average Closing Price, subject to the
adjustments set forth in Section 1.5(b) and in Section 7.6 (the "Contingent
Consideration").
(b) Contingent Consideration Escrow. At Closing, the Buyer shall
deposit (the "Third Escrow Deposit") a number of Consideration Shares equal to
US$500,000 divided by the Average Closing Price to the Escrow Agent, which
deposit shall be held by the Escrow Agent in a sub-escrow account (the "Third
Escrow Sub-Account") in accordance with the Escrow Agreement, with instructions
to the Escrow Agent to deliver them to the Sellers, in the proportions set
opposite their respective names in Schedule 1, or to the Buyer, as applicable,
in accordance with the following:
(i) On the date that is 45 Business Days after the receipt by
Buyer of the audited financial statement from Ernst & Young, LLP ("Ernst &
Young"), or the Buyer's then current auditor, of the combined operations of
Buyer and the Company for the fiscal year-ending
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December 31, 2005 (the "2005 Audit Date"), the Escrow Agent shall release 100%
of the Consideration Shares held by the Escrow Agent in the Third Escrow
Sub-Account, provided that the Escrow Agent has not received from the Buyer a
Buyer Escrow Claim Notice before the 2005 Audit Date.
(ii) If, by contrast, the Escrow Agent receives from the Buyer
one or more Buyer Escrow Claim Notices before the 2005 Audit Date, the Escrow
Agent (A) shall (1) continue holding in escrow, after the 2005 Audit Date, an
amount of the Consideration Shares equal to the total amount of the claims
stated in such Buyer Escrow Claim Notices divided by the Average Closing Price,
until the Final Resolution of such claims, (2) promptly notify once a year the
Sellers' Agents and the Buyer of such continuous holding, and (B) on the 2005
Audit Date, shall forthwith release and deliver to the Sellers a number of
Consideration Shares equal to 100% of the Consideration Shares held by the
Escrow Agent in the Third Escrow Sub-Account less an amount equal to the total
amount of the claims stated in the Buyer's Escrow Claim Notices divided by the
Average Closing Price, and (C) upon a Final Resolution of any such claim, shall
forthwith distribute and deliver to the Sellers or Buyer, as applicable, a
number of Consideration Shares still held in the Third Escrow Sub-Account, in
accordance with the following:
A. If an outstanding claim stated in such Buyer Escrow
Claim Notices is resolved by mutual agreement of Sellers' Agents and Buyer, then
upon receipt of joint written instructions from Sellers' Agents and Buyer, the
Escrow Agent shall make such releases and deliveries in accordance with such
written instructions; or
B. If, by contrast, such outstanding claim stated in
such Buyer Escrow Claim Notices is resolved pursuant to Final Resolution in
accordance with the provisions of the Agreement or in the event of a third-party
action, then upon receipt of a written certificate from either Sellers' Agents
or Buyer (with a copy to Buyer, in the case of a certificate by Sellers' Agents,
or to Sellers' Agents, in the case of a certificate by Buyer) stating that the
claim in question has been finally resolved and attaching thereto a copy of the
Final Resolution, then the Escrow Agent shall release and deliver that number of
Consideration Shares equal to the amount of such claim stated in the relevant
Buyer's Escrow Claim Notice, as awarded to the Sellers or the Buyer, as
applicable, divided by Average Closing Price, to either the Sellers or the
Buyer, as applicable.
Section 1.6. Escrow Agreement. Upon the terms and subject to the
conditions of this Agreement:
(a) Escrow Agent. The Sellers and the Buyer shall, at least 10
Business Days prior to Closing, jointly choose an escrow agent (the "Escrow
Agent").
(b) Escrow Deposits. The Parties and the Escrow Agent shall execute
an escrow agreement in a form mutually agreeable prior to or concurrently with
the Closing (the "Escrow Agreement"). The Buyer shall deposit, at Closing, the
First Escrow Deposit, the Second Escrow Deposit and the Third Escrow Deposit
(collectively the "Escrow Deposits") to be held, administered, disbursed and
otherwise dealt with by the Escrow Agent pursuant to the terms and conditions
set forth herein and the Escrow Agreement.
(c) Notice. The Buyer will notify the Escrow Agent and the Sellers'
Agents of receipt by Buyer of the audited financial statements of the combined
operations of Buyer and the Company for the fiscal year ending December 31, 2005
promptly following completion of such audit, which audit shall occur no later
than ninety (90) days following the end of such fiscal year.
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Section 1.7. Waiver to Exercise Derivative Securities. Upon the terms and
subject to the conditions of this Agreement, at Closing, each Derivative
Securities Holder shall irrevocably waive his right to exercise all his Company
Warrants and Company Options, each of them holds, as applicable, as set forth
opposite their respective names on Schedule 1.
Section 1.8. Transaction Expenses. At least three Business Days prior to
the Closing Date, the Sellers' Agents shall deliver to the Buyer a written
notice (the "Transaction Expenses Notice"), setting forth, and representing in
good faith to the Buyer the total Transaction Expenses to be paid after December
31, 2004, together with an itemization and description of such Transaction
Expenses in reasonable detail. Buyer shall pay the Transaction Expenses which
will be listed on the Transaction Expenses Notice, not to exceed, after adding
Transaction Expenses paid up through December 31, 2004, an aggregate of
1,720,000 Euros (the "Reimbursed Expenses"), no more than 1,500,000 Euros of
which shall be paid at or prior to Closing. The Sellers severally and not
jointly shall indemnify and hold the Buyer harmless for all Transaction
Expenses. For the purposes of this Agreement, "Transaction Expenses" means any
and all out of pocket fees and expenses due and payable in connection with the
transactions contemplated by this Agreement, that have not been paid by the
Company by December 31, 2004, whether paid or payable thereby prior to, on or
after the Closing Date, including to the extent paid or payable, the fees and
expenses of legal advisors, accountants, investment bankers, financial advisors,
valuation firms or similar professionals and bonuses, success fees and severance
payments to employees or management of the Company, provided that the
Transaction Expenses shall not include the total amount of the fees and expenses
incurred and paid by the Company on or before December 31, 2004 and which have
therefore been included in the determination of Adjusted Cash. The Buyer will
pay any and all Transaction Expenses that become due in connection with the
Earn-Out Amount to investment bankers as instructed in writing by the Sellers'
Agents at least 5 Business Days prior to the payment of any applicable Earn-Out
Payment.
Section 1.9. Time and Place of Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Xxxxxxx &
Associes, 00, Xxxxxx Xxxxxx Xxxx, 00000 Xxxxx on the third Business Day
following the date on which all of the conditions to each Party's obligations
hereunder have been satisfied or waived, or at such other date, place or time as
the Parties may agree. Subject to the provisions of ARTICLE VIII, failure to
consummate the transactions contemplated by this Agreement on the date and time
and at the place determined under this Section 1.9 will not result in the
termination of this Agreement, and will not relieve any Party of its obligations
under this Agreement. The date on which the Closing occurs and the transactions
contemplated hereby become effective is referred to herein as the "Closing
Date."
Section 1.10. Deliveries by the Sellers, Managers, and Derivative Security
Holders. Subject to the terms and conditions hereof, at the Closing, the
Sellers, the Managers, and the Derivative Security Holders shall, as applicable,
deliver or cause to be delivered the following to the Buyer:
(a) Each Seller shall deliver to Buyer:
(i) Duly completed and executed transfer forms (ordres de
mouvement) providing for the transfer of legal title to and possession of all
Shares and Derivative Securities held by such Seller;
(ii) If applicable, such Sellers' resignation as member of the
Executive Board (Directoire) or the Surveillance Board (Conseil de
Surveillance), as the case may be;
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(iii) Counterparts to the Escrow Agreement, duly executed by
each Seller, the Sellers' Agents and Escrow Agent;
(iv) Counterparts to the Stockholders Agreement in
substantially the form of Exhibit A attached hereto (the "Stockholders
Agreement") with respect to the resale of Consideration Shares delivered
hereunder;
(v) Counterparts of a short form stock purchase agreement, in
the French language, mutually agreed upon by the Sellers and the Buyer, for
French Transfer Tax purposes (for the avoidance of doubt, this Agreement shall
remain the sole binding agreement between the Parties in the event of any
discrepancies); and
(vi) An Investment Representation statement substantially in
the form of Exhibit B.
(b) The Managers shall deliver, or cause the Company to deliver to
the Buyer:
(i) An "Extrait K-bis" and a "Certificat de non-faillite"
issued by the Companies' Registrar no more than 5 Business Days before the
Closing Date;
(ii) A certificate of the Secretary or Assistant Secretary of
the Company, in customary form, certifying as to true and complete copies as in
effect as of the Closing Date of the applicable governing or incorporation
documents of the Company;
(iii) All other documents, instruments, writings or other
deliverables required to be delivered by the Sellers or the Sellers' Agents or
the Company on or prior to the Closing Date pursuant to this Agreement, whether
or not any of the same are specifically identified in Section 1.10 above.
(c) Each Derivative Securities Holder shall deliver to the Buyer:
(i) An irrevocable waiver to exercise the outstanding
Derivative Securities that such Derivative Securities Holder holds, in
substantially the form attached as Exhibit C.
Section 1.11. Deliveries by the Buyer. Subject to the terms and conditions
hereof, at the Closing, the Buyer shall deliver or cause to be delivered to the
Escrow Agent the Escrow Deposits, and shall deliver or cause to be delivered the
following to the Sellers or Derivative Securities Holders, as applicable:
(a) Consideration. Shares for the Closing Date Purchase Price (as
adjusted under Section 1.3, if applicable and less the First Escrow Deposit), in
the manner set forth in Section 1.3(a);
(b) The officer's certificate provided for in Section 6.2(g);
(c) A counterpart to the Escrow Agreement, duly executed by the
Buyer;
(d) Evidence satisfactory to the Sellers' Agents that the Buyer has
made all the Escrow Deposits with the Escrow Agent;
(e) A counterpart of the Stockholders Agreement duly executed by the
Buyer;
9
(f) Counterparts of a short form stock purchase agreement, in the
French language, mutually agreed upon by the Sellers and the Buyer, for French
Transfer Tax purposes (for the avoidance of doubt, this Agreement shall remain
the sole binding agreement between the Parties in the event of any
discrepancies); and
(g) All other documents, instruments, writings or other deliverables
required to be delivered by the Buyer on or prior to the Closing Date pursuant
to this Agreement, whether or not any of the same are specifically identified in
Section 1.11 above.
Section 1.12. Books and Records of the Company. The Managers shall provide
access or cause the Company to provide access to the Buyer at, or as soon as
practicable after the Closing, of all books and records, including the books of
account, minute books and stock books, of the Company.
Section 1.13. Required Withholding. Each of the Escrow Agent, the Buyer
and the Company or any paying agent of the aforementioned Parties shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement such amounts as may be required to be
deducted or withheld therefrom under any applicable 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.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller and Derivative Securities' Holder hereby individually and not
severally not jointly (individuellement, et pas conjointement ni solidairement)
represents and warrants to the Buyer as follows:
Section 2.1. Ownership of Stock and Derivative Securities.
(a) Such Seller is the lawful and record and beneficial owner of all
of the Shares which are set forth opposite such Seller's name on Schedule 1,
which Shares are and as of the Closing shall be free and clear of all Liens. The
purchase and sale of such Seller's Shares by the Buyer at the Closing in the
manner provided in ARTICLE I will, at the Closing, convey to the Buyer good
title to the Shares sold by such Seller, free and clear of all Liens, except for
Liens created by the Buyer or arising out of ownership of the Shares by the
Buyer. Such Seller has no other equity or ownership interest in the Company
except as set forth on Schedule 1.
(b) Such Derivative Securities Holder is the lawful and record and
beneficial owner of all of the Derivative Securities which are set forth
opposite such Derivative Securities Holder's name on Schedule 1, which
Derivative Securities are and as of the Closing and prior to their waiver, shall
be free and clear of all Liens. Such Derivative Securities Holder has no claim
or interest in any equity security of the Company other than as set forth in
Schedule 1 hereto. Following the Closing, all of the Derivative Securities held
by such Derivative Securities Holder shall be cancelled and terminated, and such
Derivative Security Holder shall have no rights or claims against the Company
with respect to such Derivative Securities or the cancellation and termination
thereof.
Section 2.2. Authorization and Validity of Agreement. Such Seller or such
Derivative Securities Holder has the corporate or other power and authority to
execute and deliver this
10
Agreement and the other Transaction Agreements to which it is or will be a
party, and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Seller and such Derivative Securities Holder of
this Agreement and the consummation by such Seller and such Derivative
Securities Holder of the transactions contemplated hereby have been, and the
execution and delivery of the other Transaction Agreements to which such Seller
and such Derivative Securities Holder is or will be a party by such Seller and
such Derivative Securities Holder and the consummation by such Seller and such
Derivative Securities Holder of the transactions contemplated thereby has been
or will at the Closing be, duly and validly authorized by all requisite
corporate or other action on the part of such Seller and such Derivative
Securities Holder if such Seller and such Derivative Securities Holder is not an
individual natural Person. This Agreement has been duly and validly executed and
delivered by such Seller and such Derivative Securities Holder, and assuming
this Agreement has been duly authorized, executed and delivered by the Buyer,
this Agreement constitutes a valid and binding agreement of such Seller and such
Derivative Securities Holder, enforceable against such Seller and such
Derivative Securities Holder in accordance with its terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other Laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief, may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. Each other Transaction Agreement to
which such Seller and such Derivative Securities Holder is or will be a party
has been or will at the Closing be duly and validly executed by such Seller and
such Derivative Securities Holder and, assuming such Transaction Agreement is
duly authorized, executed and delivered by the other Parties thereto (other than
such Seller and such Derivative Securities Holder), such Transaction Agreements
do or will constitute valid and binding agreements of such Seller and such
Derivative Securities Holder, enforceable against such Seller and such
Derivative Securities Holder in accordance with their respective terms, except
that (i) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 2.3. Consents and Approvals; No Violations. Subject to the
provisions of the Sellers Stockholder Agreement in effect on the date hereof and
subject to applicable Law: none of the execution and delivery of this Agreement
or the Transaction Agreements by such Seller, such Derivative Securities Holder
or the consummation by such Seller or such Derivative Securities Holder of the
transactions contemplated hereby and thereby do or will, directly or indirectly,
(a) require, under any applicable Law or Government Entity requirement or under
any agreement to which such Seller is a Party, such Seller or such Derivative
Securities Holder to give any notice to, or obtain any Consent from any Person
(including any Governmental Entity), (b) conflict with, or result in any breach
of any provision of the certificate of incorporation or by-laws (or any similar
governing or constituent document) of, or any resolution adopted by the board of
directors (or similar governing body) or the stockholders of such Seller or such
Derivative Securities Holder, (c) cause the Buyer, the Company to become subject
to, or to become liable for the payment of any Tax, (d) result in the creation
or imposition of any Lien upon or with respect to any of the assets owned or
used by the Company or the Company's Subsidiaries or (e) result in a material
violation or breach of, or constitute a default under, any material note, bond,
mortgage, indenture, agreement, or other instrument or obligation to which such
Seller or Derivative Securities Holder is subject, which violations, breaches or
defaults could reasonably be expected, individually or in the aggregate, to
prevent such Seller from performing its obligations under this Agreement or
establish any condition to the consummation
11
by such Seller or such Derivative Securities Holder of the transactions
contemplated hereby and by the Transaction Agreements.
Section 2.4. Allocation of the Acquisition Price. The allocation of the
Closing Date Purchase Price, the Research Tax Credit, the Earn-out Payments and
the Contingent Consideration set forth in the manner set forth in Schedule 1
reflects the allocation proportions amongst the Sellers respectively of the
Closing Date Purchase Price, the Research Tax Credit, the Earn-out Payments, the
Contingent Consideration, and the Sellers' Transaction Costs as agreed by (a)
himself/itself and the other Sellers; (b) he/it has agreed to deduct from the
Closing Date Purchase Price an amount equal to Transaction Expenses in the
proportions set forth opposite his/its name in Schedule 1; and (c) he/it has
agreed to authorize Buyer to pay, acting on behalf of Sellers, the Reimbursed
Expenses; and
Section 2.5. Litigation. There is no pending Proceeding, or to the
Knowledge of such Seller threatened, against or involving such Seller by or
before any Governmental Entity, which would adversely affect the ability of such
Seller to consummate the transactions contemplated hereby and by the other
Transaction Documents.
Section 2.6. No Other Representations or Warranties. Except for the
representations and warranties contained in ARTICLE II, such Seller has not made
and does not make any other express or implied representation or warranty on
behalf of such Seller, and such Seller hereby disclaims any such representation
or warranty whether by the Managers, the Company or any of its officers,
directors, employees, agents or representatives or any other Person, in
connection with, or with respect to, the execution, delivery or performance of
this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE MANAGERS
Each Manager hereby individually, not joint or severally, represents and
warrants to the Buyer as follows:
Section 3.1. Organization; Qualification and Corporate Power. The Company
(a) is duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, (b) has all requisite corporate power and
authority to own, lease and operate all of its properties and assets and to
carry on its business substantially as it is now being conducted, and (c) is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of its business or the ownership, operation or leasing of its
properties makes such qualification necessary, except in the case of the
preceding clause (c) for such failures to be so qualified and/or in good
standing as would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company does not have any Subsidiaries. Except as set forth
in Schedule 3.1 of the Managers Disclosure Schedule, the Company does not own
any equity, ownership or similar interest in any Person. Section 3.1 of the
Managers Disclosure Schedule contains true and correct copies of the articles of
incorporation and by-laws or similar organizational or constituent documents of
the Company, the Sellers Stockholders Agreement as in effect on the date hereof
and a K-bis excerpt dated within five days from the date hereof.
Section 3.2. Authorization of Transaction. The execution and delivery of
this Agreement by the Managers and the consummation of the transactions
contemplated hereby have been, and the execution and delivery of the other
Transaction Agreements and the consummation of the transactions contemplated
thereby by the Managers will at the Closing be, duly and validly authorized by
all requisite action on the part of the Managers. This Agreement has been duly
and
12
validly executed and delivered by the Managers, and assuming this Agreement has
been duly authorized, executed and delivered by the Buyer, this Agreement
constitutes a valid and binding agreement of the Managers, enforceable against
the Managers in accordance with its terms, except that (a) such enforcement may
be subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
Section 3.3. Capitalization; Ownership of Shares.
(a) The authorized and outstanding equity securities of the Company
are as set forth in Schedule 3.3 to the Managers Disclosure Schedule. The Shares
represent all of the outstanding capital stock in the Company. All of the Shares
are validly issued, fully paid and non assessable. Except as set forth in
Schedule 3.3(a) of the Managers Disclosure Schedule, the Company satisfies all
minimum capital requirements under French Law. The transactions contemplated by
this Agreement shall not increase the minimum capital requirements under French
Law. Except for the Shares and the Derivative Securities and as set forth in
Schedule 3.3(a) of the Managers Disclosure Schedule (which schedule includes all
Derivative Securities), at the Closing there will not be any capital stock or
other equity interests in the Company issued or outstanding or any authorized or
outstanding subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character obligating the
Company to issue or sell any of its capital stock or other equity interests, or
to the Knowledge of the Managers, any agreements, arrangements, or
understandings granting any Person any rights in the Company similar to capital
stock or other equity interests.
(b) None of the Shares was issued in violation of applicable
securities laws, nor are they subject to, or were they issued in violation of
the preemptive rights under the Company's articles of incorporation, statutory
law, or, to the Knowledge of the Managers, otherwise, or to the Knowledge of the
Managers, rights of first refusal or similar rights of any Person. Except as set
forth in Schedule 3.3(b) of the Managers Disclosure Schedule, there are and will
at the Closing be no outstanding stock appreciation or similar rights with
respect to the Company granted by the Company which obligates the Company to
make any payment to any Person based upon the value of capital stock of the
Company.
Section 3.4. Consents and Approvals; No Violations.
(a) Except as set forth in Schedule 3.4(a) of the Managers
Disclosure Schedule, none of the execution and delivery of this Agreement or the
other Transaction Agreements by the Managers, or the consummation by the
Managers of the transactions contemplated hereby or thereby do or will, directly
or indirectly (with or without notice or lapse of time or both) (i) conflict
with or result in any breach of any provision of the articles of incorporation
or by-laws (or any similar governing or constituent document) of, or any
resolution adopted by the Conseil de surveillance or the stockholders of the
Company, (ii) result in a material violation or breach of, or constitute a
default (or give rise to any right of termination, cancellation or acceleration)
under, or require any Consent under, any Applicable Contract subject to Section
3.11(a) below, (iii) violate or contravene any Law or Order or Governmental
Authorization applicable to the Company or any of its businesses, properties or
assets, (iv) require any filing by the Company with, or the obtaining by the
Company of any permit, authorization, Consent or approval of, any Governmental
Entity, (v) cause the Company to become subject to, or to become liable for the
payment of, any French Tax (subject to the consequences of the election made
under Section 5.14(a)), or (vi) result in the imposition or creation of any Lien
upon or with respect to any of the assets owned or used by the Company.
13
(b) Except (i) such filings, notifications and authorizations as may
be required by the French Ministry of Economy and Finance, (ii) such filings,
authorizations, orders and approvals as may be required under French securities
law, and (iii) as set forth in Schedule 3.4(b) of the Managers Disclosure
Schedule, the Company is not, nor will be, required to give any notice to, or
obtain any Consent from any Person (including any Governmental Entity) in
connection with the execution and delivery of this Agreement and the other
Transaction Agreements or the consummation or performance of the other
transactions contemplated hereby or thereby.
Section 3.5. Financial Statements.
(a) Schedule 3.5(a) of the Managers Disclosure Schedule contains (i)
the audited balance sheet (liasse fiscale) (the "Balance Sheet") of the Company
as of December 31, 2003 and the related audited statements of income, changes in
stockholders' equity and cash flows of the Company for the fiscal year of the
Company then ended, together with the report thereon of Price Waterhouse & Co.,
independent certified public accountants (commissaire aux comptes)
(collectively, the "Annual Financial Statements"), and (ii) an unaudited balance
sheet (the "Interim Balance Sheet") of the Company as of September 30, 2004, and
the related unaudited statements of income, changes in stockholders' equity and
cash flows of the Company for the three months then ended (collectively, the
"Unaudited Financial Statements"). Except as set forth in Schedule 3.5(a) of the
Managers Disclosure Schedule, the Annual Financial Statements and the Unaudited
Financial Statements present fairly in accordance with French GAAP the financial
condition and results of operation, changes in stockholders' equity and cash
flow of the Company as of the respective dates and for the respective periods
referred to in such financial statements (subject in the case of the Unaudited
Financial Statements to normal audit adjustments (the effect of which would not,
individually or in the aggregate, be materially adverse)).
(b) The Annual Financial Statements, including the notes thereto,
and the Unaudited Financial Statements have all been prepared in accordance with
French GAAP applied consistently throughout the periods involved (except as
disclosed therein and, in the case of the Unaudited Financial Statements, as
disclosed in Section 3.5(b) of the Managers Disclosure Schedule). No financial
statements of any Person other than the Company are required to be included in
the financial statements of the Company. The Company maintains and will continue
to maintain a standard system of accounting established and administered in
accordance with French GAAP applicable to French private companies.
Section 3.6. No Undisclosed Liabilities. Except as set forth on Schedule
3.6 of the Managers Disclosure Schedule, since September 30, 2004, the Company
has not incurred any liabilities or obligations (whether known or unknown and
whether absolute, accrued, contingent, or otherwise) of the type required by
French GAAP to be disclosed on a balance sheet or in the notes thereto, except
for liabilities and obligations (a) specifically reflected or reserved for on
the Balance Sheet or the Interim Balance Sheet, (b) incurred in the Ordinary
Course of Business since the date of the Interim Balance Sheet, or (c) which
individually or in the aggregate do not exceed 100,000 Euros.
Section 3.7. Legal Proceedings. Except as set forth in Schedule 3.7 of the
Managers Disclosure Schedule, there is no pending Proceeding or, to the
Knowledge of the Managers, investigation by any Person or Governmental Entity,
threatened, against or involving the Company by or before any court or
Governmental Entity, which (a) seeks injunctive or similar relief, (b) seeks
Damages in any amount or (c) could reasonably be expected, individually or in
the aggregate, if determined in a manner adverse to the Company, to have a
Company Material Adverse Effect.
14
Section 3.8. Compliance with Law; Governmental Authorizations.
(a) Except as set forth in Schedule 3.8(a) of the Managers
Disclosure Schedule:
(i) the Company is, and at all times since January 1, 2002 has
been, in compliance in all material respects with each applicable Law or any
Order that is or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets ("Applicable Law");
(ii) to the Knowledge of the Managers, no event has occurred
or, circumstance exists, that (with or without notice or lapse of time) (A)
could reasonably be expected to constitute or result in a material violation by
the Company of, or a material failure on the part of the Company to comply with,
any Applicable Law, or (B) could reasonably be expected to give rise to any
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received, at any time since January
1, 2002, any notice (mise en demure) or other written communication from any
Governmental Entity or any other Person regarding (A) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Applicable
Law, or (B) any actual, alleged, possible, or potential obligation on the part
of the Company to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
(b) Schedule 3.8(b) of the Managers Disclosure Schedule contains a
complete and accurate list of each material Governmental Authorization that is
held by the Company or that otherwise relates to the business of, or to any of
the assets owned or used by, the Company. Each material Governmental
Authorization listed or required to be listed in Schedule 3.8(b) of the Managers
Disclosure Schedule is, and will as of the Closing be, valid and in full force
and effect. Except as set forth in Schedule 3.8(b) of the Managers Disclosure
Schedule:
(i) The Company is, and at all times since January 1, 2002 has
been, in compliance in all material respects with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Schedule 3.8(b) of the Managers Disclosure Schedule;
(ii) to the Knowledge of the Managers no event has occurred
or, circumstance exists that (with or without notice or lapse of time) (A) could
reasonably be expected to constitute or result, directly or indirectly, in a
material violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Schedule 3.8(b) of
the Managers Disclosure Schedule, or (B) could reasonably be expected to result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any material modification to, any material Governmental
Authorization listed or required to be listed in Schedule 3.8(b) of the Managers
Disclosure Schedule;
(iii) the Company has not received, at any time since January
1, 2002, any notice or other communication from any Governmental Entity or any
other Person regarding (A) any actual, alleged, possible, or potential violation
of or failure to comply with any term or requirement of any Governmental
Authorization listed or required to be listed in Schedule 3.8(b) of the Managers
Disclosure Schedule, or (B) any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or material
modification to any Governmental Authorization listed or required to be listed
in Schedule 3.8(b) of the Managers Disclosure Schedule; and
15
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Schedule 3.8 of the Managers Disclosure Schedule have been duly filed on a
timely basis with the appropriate Governmental Entities, and all other filings
required to have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental Entities.
The Governmental Authorizations listed in Schedule 3.8(b) of the Managers
Disclosure Schedule collectively constitute all of the material Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner they currently conduct and operate such business, and
to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
(c) Without limiting the generality of the representations and
warranties made in this Section 3.8, the Company is in compliance in all
material respects with all current compulsory applicable laws, statutes, rules,
regulations, standards or orders administered, issued or enforced by the
Governmental Entity having regulatory authority or jurisdiction over the
development of the Company's products and the operations of the Company. The
Company's drug development, laboratory practices and clinical practices have
been conducted in compliance with the regulations of the applicable Governmental
Entity having authority over such operations by the Company, all studies
required to be performed have been completed or are ongoing in accordance with
applicable requirements of the applicable Governmental Entity having authority
over such operations by the Company, and all adverse events required to be
reported to the applicable Governmental Entity having authority over such
matters have been so reported in a timely manner. The Company has not received,
and the Company has no knowledge of any facts which would furnish any reasonable
basis for, any notice of adverse findings, inspectional observations, regulatory
letters, notices of violations, warning letters, criminal proceeding notices, or
any other similar communication from the Governmental Entity having authority
over the business and operations of the Company.
Section 3.9. Employee Matters.
(a) Schedule 3.9(a) of the Managers Disclosure Schedule contains a
true and complete list of all employees information and rights either provided
for by French Law (other than regular French Law applicable generally to all
companies) or as a result or an internal collective agreement, individual or
company retirement or insurance plans, bonus, deferred compensation, stock
purchase, stock option (including warrants), insurance, incentive compensation,
severance pay, or other fringe benefit plan, program or arrangement, written or
otherwise, as defined and governed by the provisions of the applicable National
Collective Bargaining Agreement, French Labour Code, Company-wide agreements,
individual employment contracts and company practices applicable to the Company
employees immediately prior to the Acquisition (the "Plans"), which is currently
maintained or contributed to or required to be contributed to by the Company for
the benefit of any employee of the Company. Schedule 3.9(a) of the Managers
Disclosure Schedule contains complete and accurate copies of each of the Plans,
including all amendments thereto.
(b) Each Plan has at all times, in form, operation and
administration, complied in all material respects with its terms and Applicable
Laws.
(c) Except as set forth in Schedule 3.9(c) of the Managers
Disclosure Schedule, the transactions contemplated by this Agreement will not
accelerate the time of payment or vesting or increase the amount of any
compensation due to any employee or former employee (including severance or
termination pay) and will not directly or indirectly result in any
16
payment made to or on behalf of any person which may not be deductible by the
Company for tax purposes or otherwise subject the Company to adverse tax
consequences.
(d) There are no unpaid contributions due prior to the date hereof
with respect to any Plan that are required to have been made under the terms of
the Plan or any applicable Law and all contributions and premium payments
required to be made in connection with any Plan as of the date hereof have been
timely made.
(e) There is no action, suit or claim pending (other than routine
claim for benefits, with respect to any Plan) nor is there to the Knowledge of
the Managers any application or other matter pending with or before any court or
Governmental Entity, with respect to any Plan, Benefit, Social Security
contribution, Employment Contract or their termination thereof and more
generally with respect to any employment, workers representative or social
security issue.
(f) Except as set forth in Schedule 3.9(f) of the Managers
Disclosure Schedule, (i) there is no labor strike, dispute slowdown, stoppage or
lockout pending, or, to the Knowledge of the Managers, threatened against the
Company and (ii) the Company has complied in all material respects with all
Applicable Laws relating to employment and social security, wages, work hours
including with respect to "Xxxx Xxxxx I & II" and their respective implementing
decrees, benefits, collective bargaining agreements, internal collective
agreements, the payment of social security and similar taxes, elections of
workers representative institutions and their functioning thereof, occupational
safety and health, and plant closing. The Company is not liable for the payment
of any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Applicable Laws.
Except as set forth in Schedule 3.9(f), the transactions contemplated by this
Agreement will not result in any substantial liability, cost or expense to the
Company as a result of any applicable employment, labor or similar law or
regulation.
(g) Schedule 3.9(g) of the Managers Disclosure Schedule sets forth a
complete and accurate list of the following information for each director or
employee of the Company, including each such employee on leave of absence or
layoff status: (i) employer; (ii) name; (iii) job title; (iv) current
compensation paid or payable (including any bonus or similar arrangements) and
any change in compensation since September 30, 2004; (v) vacation accrued; and
(vi) service credited for purposes of vesting and eligibility to participate
under the Plans.
(h) To the Knowledge of the Managers, no officer, or other key
employee of the Company identified in Schedule 3.9(h) intends to terminate his
or her employment with the Company, whether as a result of the transactions
contemplated hereby or otherwise.
(i) Schedule 3.9(i) of the Managers Disclosure Schedule also
contains a complete and accurate list of the following information for each
retired employee or director of the Company, or their dependents, if any,
receiving benefits or scheduled to receive benefits in the future: (i) name,
(ii) pension benefit, (iii) pension option election, (iv) retiree medical
insurance coverage, (v) retiree life insurance coverage, and (vi) other
benefits.
(j) Neither information nor consultation with the workers
representative institutions is required under all Labour Law regulations
applicable in conjunction with the execution and the consummation of the
contemplated transaction.
17
Section 3.10. Tax Matters. Except as set forth on Schedule 3.10 of the
Managers Disclosure Schedule:
(a) The Company (i) has timely filed (or there has been timely filed
on its behalf) with the appropriate Taxing Authorities all Tax Returns required
to be filed, and all such Tax Returns are true, correct and complete, and (ii)
has paid or will pay (as applicable) all Taxes that have become due and payable
on or before the Closing Date and (iii) has kept all documentation and
justification needed to file all Tax Returns and which may be requested by
French Tax Authorities. The Company has made available to the Buyer true and
complete copies of income Tax Returns and all other material Tax Returns filed
with respect to the Company since January 1, 2001.
(b) There are no outstanding waivers in writing or comparable
Consents regarding the extension or tolling of the application of any statute of
limitations in respect of Taxes of the Company.
(c) There is no Proceeding, claim or assessment pending or proposed
in writing (or as to which Managers have Knowledge based on written
communications with agents of any Taxing Authority or other Governmental Entity)
with respect to Taxes of the Company.
(d) There are no Liens for Taxes upon the assets of the Company,
except for Liens relating to current Taxes not yet due and payable or Liens for
Taxes being contested in good faith.
(e) The Company is not a party to any French Tax consolidation
agreement or to any de facto partnership agreement ("societe en participation").
(f) The Company has duly collected and timely paid all Taxes
required to be collected from and paid by the Company on behalf of others or, to
the extent required by Law, deducted and withheld from any amount paid to
employees or others.
(g) The current unpaid Taxes of the Company (i) did not, as of the
date of the Balance Sheet, exceed the reserve for Taxes (not including any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the Balance Sheet (other than in
any notes thereto) that are to be accounted for under French GAAP, and (ii) will
not, as of the Closing Date, exceed such reserve or accounts reflected on the
books and records of the Company through the Closing Date that are to be
accounted for under French GAAP.
(h) The Company has not (i) applied for any Tax ruling (such as
"rescrit", "agrement fiscal", or (ii) entered into a settlement agreement with
any French Taxing Authority or other French Governmental Entity.
(i) The Company has not been informed or notified that any of its
income, business, assets, operations or activities is subject to Tax by any
Taxing Authority or other Governmental Entity where the required Tax Return(s)
have not been filed by the Company.
(j) The transactions contemplated by this Agreement will not cause
there to be an increase in any French Tax liability of the Company from those
which have been disclosed to the Buyer.
(k) The Company is not party to or the beneficiary of any contract,
agreement or other arrangement with a Governmental Authority that provides for
the relief from or reduction
18
of Taxes, as provided in particular by Article 44 sexies, 44 sexies-0A, 44
octies, 1461 and 1462, 1465 and 1466, 1383A, 1464B and 1464C, 1383D and 1466D of
French Tax Code.
(l) During the two years preceding the date hereof the Company has
not engaged in any exchange under which the gain realized on such exchange was
deferred and not currently recognized due to applicable French statute or
regulation, such as Article 210 A and following Article 38-7 and 38-7 bis of
French Tax Code.
Section 3.11. Applicable Contracts.
(a) Schedule 3.11(a) of the Managers Disclosure Schedule contains a
complete and accurate list, and the Managers have delivered or caused to be
delivered to the Buyer true and complete copies, of (A) each Applicable Contract
which, in the good faith judgment of the senior officers of the Company, is
material to the business, properties or assets of the Company, and (B) each of
the following:
(i) Each Applicable Contract that involves performance of
services or delivery or purchase of goods, equipment or materials by or to the
Company of an amount or value in excess of 20,000 Euros;
(ii) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of the
Company in excess of 20,000 Euros;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property of an amount or value in excess
of 20,000 Euros;
(iv) each licensing agreement or other Applicable Contract
with respect or relating to patents, trademarks, copyrights, or other
Intellectual Property;
(v) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other representative of a group of
employees;
(vi) each joint venture, partnership, and other Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
the Company with any other Person;
(vii) each Applicable Contract containing covenants that in
any way imposes an exclusivity, noncompetition or nonsolicitation covenant from
the Company;.
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct payments
for goods or services of an amount or value in excess of 20,000 Euros;
(ix) each Applicable Contract concluded directly or indirectly
between the Company thereof, on the one hand, and any Seller or Related Person
of any Seller or other Affiliate or Stockholder holding more than 10% of the
shares in the Company or any member of the Supervisory Board or the Directorate
of the Company, on the other hand and more generally any Applicable Contract
covered by Article L225-86 of the French Commercial Code on interrelated parties
agreement;
19
(x) each Applicable Contract regarding indebtedness for
borrowed money (including guaranties of the obligations of others with respect
thereto) or any capitalized lease obligation or similar arrangement, or under
which a Lien on any tangible or intangible asset of the Company or any of its
capital stock or equity securities is imposed;
(xi) each Applicable Contract under which the Company has
advanced or loaned money to any of its officers, directors and employees, other
than advancement of expenses in the Ordinary Course of Business;
(xii) each Applicable Contract covering the employment,
compensation or severance, of or otherwise relating to, any employee, officer or
director of the Company;
(xiii) each Applicable Contract for joint, collaborative or
shared research, development or research and development, clinical trials or the
production of scientific papers or studies;
(xiv) each Applicable Contract that obligates the Company to
act as a guarantor or surety, or to otherwise provide credit support for any
Person other than the Company, irrespective of the amount involved or type of
underlying liability or obligation;
(xv) each Applicable Contract, other than contracts entered
into in the Ordinary Course of Business, that contains obligations of the
Company to indemnify third parties against any type of liability, whether known,
unknown, fixed, contingent or otherwise; and
(xvi) each amendment, supplement and modification in respect
of any of the foregoing or any Contract, agreement or commitment to enter into
amend, supplement or modify any of the foregoing.
(b) The Managers have delivered to the Buyer a true and correct copy
of each written Applicable Contract listed in Schedule 3.11(a) of the Managers
Disclosure Schedule, as in effect on, and as amended through the date hereof.
With respect to each such Applicable Contract: (i) the Company and, to the
Knowledge of the Managers, any other Party thereto, are not in material breach
or default, and, to the Knowledge of Managers, no event has occurred or
circumstances exist which (with or without notice or lapse of time or both)
could reasonably be expected to constitute a material breach or default of, or
permit termination, modification or acceleration under, the Applicable Contract;
(ii) no Party has repudiated any provision of the Applicable Contract; (iii) the
agreement is legally valid and binding against the Company and, to the Knowledge
of the Managers, any other Parties thereto; and (iv) the Company has not given
to, or received from any other Person, any notice or other communication
regarding any actual or alleged violation or breach thereof or default
thereunder. The Applicable Contracts relating to the sale, manufacture or
provisions of products or services by the Company have been entered into in the
Ordinary Course of Business and, to the Knowledge of the Managers, have been
entered into without any action by the Company that would be in a material
violation of Applicable Law.
Section 3.12. Real Property.
(a) Owned Real Property. The Company does not own any real property.
(b) Leased Real Property. Schedule 3.12(b) of the Managers
Disclosure Schedule contains a complete and accurate list of all real property
leased or subleased to or by the Company and the leases or subleases, rental or
occupancy agreements, or similar Contracts relating to the use, lease or
sublease by the Company of real property, true and correct copies of which are
contained in Section 3.12(b) of the Managers Disclosure Schedule.
20
Section 3.13. Assets; Title to Assets; Sufficiency of Assets.
(a) The buildings, plants, structures, equipment and other tangible
assets of the Company, a complete and accurate list of which as of September 30,
2004 is set forth in Schedule 3.13 of the Managers Disclosure Schedule, are
structurally sound, are in good operating condition and repair given their age,
ordinary wear and tear excepted, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, equipment and other
tangible assets is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or cost. The
building, plants, structures, equipment and other tangible assets of the Company
are sufficient for the continued conduct of the businesses of the Company in
substantially the same manner as currently conducted.
(b) The Company owns or has the right to use all the properties and
assets (whether tangible or intangible) set forth on the Balance Sheet. Except
as set forth on Schedule 3.13(b) of the Managers Disclosure Schedule, all
properties and assets reflected in the Balance Sheet or acquired by the Company
since the date thereof are owned by the Company free and clear of all Liens
except for Permitted Liens.
Section 3.14. Intellectual Property.
(a) To the Knowledge of the Managers, except as set forth in
Schedule 3.14(a) of the Managers Disclosure Schedule, the conduct of the
business of the Company does not infringe upon or violate, and has not infringed
upon or violated the Intellectual Property of any other Person. Except as set
forth in Schedule 3.14(a) of the Managers Disclosure Schedule, to the Knowledge
of the Managers, no Person is currently infringing or has infringed upon any of
the Intellectual Property Assets. Except as set forth in Section 3.14(a) of the
Managers Disclosure Schedule, there are no Proceedings pending or, to the
Knowledge of the Managers threatened, against the Company challenging the
ownership or use by the Company of any Intellectual Property. To the Knowledge
of the Managers, the Company owns (or possesses enforceable licenses or other
rights to use) all Intellectual Property used in its business as presently
conducted, free and clear of all Liens, other than as set forth in Schedule
3.14(a) of the Managers Disclosure Schedule. Schedule 3.14(a) to the Managers
Disclosure Schedule lists all material Intellectual Property owned, used or
licensed for use by the Company in the conduct of its business. Except as set
forth in Schedule 3.14(a) of the Managers Disclosure Schedule, no Person has a
right to receive any royalty or similar payment in respect of any item of
Intellectual Property from the Company. No current or former employee,
stockholder, officer, director, consultant, affiliate or independent consultant
of or to the Company has any claim or interest in or with respect to any of the
Intellectual Property Assets. The Company has taken commercially reasonable and
customary measures and precautions to protect and maintain the confidentiality
of all Intellectual Property Assets (except such Intellectual Property Assets
whose value would be unimpaired by public disclosure) and otherwise to maintain
and protect the Intellectual Property Assets.
(b) "Intellectual Property" means any and all United States, French
or foreign: (i) patents (including, without limitation, utility patents, design
patents, industrial designs, plant patents, inventors' certificates and utility
models) and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and
extensions), patent disclosures awaiting filing determination, inventions and
improvements thereto; (ii) trademarks, service marks, trade names, trade dress,
logos, business and product names, slogans, and registrations and applications
for registration thereof; (iii) copyrights and registrations thereof; (iv)
domain names; (v) inventions, processes, designs, formulae, trade secrets,
know-how, industrial models, confidential and technical information,
manufacturing,
21
engineering and technical drawings, product specifications, preclinical and
clinical plans and studies, customer profiles; and (vi) intellectual property
rights similar to any of the foregoing.
(c) Except as set forth in Schedule 3.14(c) of the Managers
Disclosure Schedule, all former and current employees of and consultants to the
Company have executed written Contracts with the Company that assign all rights
to any inventions, improvements, discoveries, or information relating to the
business of the Company, except to the extent they cannot transfer the title of
which under Applicable Law. To the Knowledge of the Managers, no employee of or
consultant to the Company has entered into any Contract that restricts or limits
in any way the scope or type of work in which the employee or consultant may be
engaged or requires the employee to transfer, assign, or disclose information
concerning his work to anyone other than one or more of the Company.
Section 3.15. No Company Material Adverse Effect. Since the date of the
Balance Sheet, to the Knowledge of the Managers, there has not been any Company
Material Adverse Effect and no events have occurred or circumstances exist that,
individually or in the aggregate, could reasonably be expected (with or without
the giving of notice or the passage of time) to result in a Company Material
Adverse Effect.
Section 3.16. Insurance. Schedule 3.16 of the Managers Disclosure Schedule
sets forth the following information with respect to each insurance policy to
which the Company is a party, a named insured, or otherwise the beneficiary of
coverage a statement from the insurance agent for the Company setting forth:
(a) the name of the insurer and the name of each covered insured;
(b) the policy number, the period of coverage and a general
description of the coverage; and
(c) a statement that the policies are in full force and effect.
With respect to each such insurance policy, the Company is not in material
breach or default (including with respect to the payment of premiums), and no
claim for coverage has been denied. Each such insurance policy is and will at
the Closing be in full force and effect. Since January 1, 2002, the Company has
not received any refusal to provide insurance coverage, or any notice of
cancellation or intent to cancel or notice of increase or intent to increase
premiums in any material respect with respect to such insurance policies. All
such insurance policies, taken together, are sufficient for compliance in all
material respects with all Applicable Laws in accordance with the custom and
practice of similar companies in similar industries.
Section 3.17. Environmental Matters. Except as set forth in Schedule 3.17
of the Seller Disclosure Schedule:
(a) The Company is, and at all times has been, in compliance in all
material respects with all applicable Environmental Laws. The Company has not,
nor to the Knowledge of the Managers has any other Person for whose conduct it
is or may be held to be responsible received, any actual or threatened order,
notice, or other communication from (i) any Governmental Entity or private
citizen acting in the public interest, or (ii) the current or prior owner or
operator of any Facilities, of any actual or potential material violation or
failure to comply in any material respect with any Environmental Law, or of any
actual or threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which the Company has or had an interest, or with respect to any property or
Facility at or to
22
which Hazardous Materials were generated, manufactured, refined, transferred,
imported, used, or processed by the Company, or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
(b) There are no pending or, to the Knowledge of the Managers,
threatened claims, Liens, or other restrictions of any nature, resulting from
any Environmental, Health, and Safety Liabilities or arising under or pursuant
to any Environmental Law, with respect to or materially affecting any of the
Facilities or any other properties and assets (whether real, personal, or mixed)
in which the Company has or had an interest.
(c) The Company has not nor, to the Managers' Knowledge, has any
other Person for whose conduct they are or may be held responsible, received,
any citation, directive, inquiry, notice, Order, summons, warning, or other
communication that relates to (i) Hazardous Activity, Hazardous Materials, or
any alleged, actual, or potential violation or failure to comply in any material
respect with any Environmental Law, or (ii) any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other properties
or assets (whether real, personal, or mixed) in which the Company has an
interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, used, or
processed by the Company, or any other Person for whose conduct they are or may
be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) To the Knowledge of the Managers, neither the Company nor any
other Person for whose conduct it is or may be held responsible, has any
Environmental, Health, and Safety Liabilities with respect to the Facilities or
with respect to any other properties and assets (whether real, personal, or
mixed) in which the Company (or any predecessor), has or had an interest, or at
any property geologically or hydroponically adjoining the Facilities or any such
other property or assets.
(e) To the Knowledge of the Managers, there are no Hazardous
Materials present on or in the Environment at the Facilities or at any
geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. To the Knowledge of the Managers, neither
the Company, or any other Person for whose conduct it is or may be held
responsible, or any other Person, has permitted or conducted, or is aware of,
any Hazardous Activity conducted with respect to the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the Company has
or had an interest except in compliance in all material respects with all
applicable Environmental Laws.
(f) There has been no Release or, to the Knowledge of the Managers,
Threat of Release, of any Hazardous Materials at or from the Facilities or, to
the Knowledge of the Managers, at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which the Company
has or had an interest, or any geologically or hydrologically adjoining
property, whether by the Company, or any other Person.
(g) The Company has delivered to the Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any Seller
23
or the Company, if any, pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities, or concerning compliance by the
Company, or any other Person for whose conduct they are or may be held
responsible, with Environmental Laws.
Section 3.18. Books and Records. The books of account, minute books, stock
record books, and other records of the Company, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Company contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Conseil de surveillance and
committees of the Conseil de surveillance, and no meeting of any such
stockholders, Conseil de surveillance, or committee has been held for which
minutes have not been prepared and are not contained in such minute books except
as set forth in Schedule 3.18 of the Managers Disclosure Schedule. The Company's
independent auditor (expert comptable) files on behalf of the Company certain of
its Tax returns over the Internet.
Section 3.19. Brokers; Finders and Fees. Except as set forth in Schedule
3.19 of the Managers Disclosure Schedule and except for Adams, Harkness, Inc.,
the Company has not employed any investment banker, broker or finder or incurred
any liability for any investment banking fees, brokerage fees, commissions or
finders' fees in connection with this Agreement or the transactions contemplated
hereby.
Section 3.20. Accounts Receivable. Subject to any reserves set forth in
the Audited Financial Statements or the Unaudited Financial Statements or the
accounting records of the Company as of the Closing Date, the accounts
receivable shown on such financial statements and on the accounting records of
the Company as of the Closing Date (the "Accounts Receivable") (a) do or will
represent valid obligations for bona fide sales and deliveries of goods,
performance of services and other business transactions in the Ordinary Course
of Business, and (b) are not, except as set forth in Schedule 3.20 of the
Managers Disclosure Schedule, subject to any prior assignment, Lien or security
interest and are not, to the Knowledge of the Managers, subject to valid
defenses, set-offs or counterclaims, and (c) are or will be as of the Closing
Date (unless paid prior to the Closing Date), as applicable, current and
collectible at least to 90% of the net value thereof within 120 days from the
date thereof. The reserves for doubtful accounts on the Audited Financial
Statements and the Unaudited Financial Statements and on the accounting records
of the Company as of the Closing Date have been or will be in all material
respects, as applicable, adequate and booked in accordance with French GAAP
applied in a manner consistent with the Company's past practice, and, in the
case of the reserve as of the Closing Date, will not represent a materially
greater percentage of such Accounts Receivable as of the Closing Date, than the
reserve reflected in the Interim Balance Sheet represented of such Accounts
Receivable reflected therein and will not represent a material adverse change in
the composition of such Accounts Receivable in terms of aging.
Section 3.21. Guaranties. Except as set forth in Schedule 3.21 of the
Managers Disclosure Schedule, the Company is not and will not at the Closing be,
a guarantor or surety for, with respect to any indebtedness or other liability
or obligation of any nature of any Person other than the Company, whether known,
unknown, fixed, contingent or otherwise.
Section 3.22. Customers and Suppliers. Schedule 3.22 of the Managers
Disclosure Schedule sets forth a complete and accurate list of (a) each of the
top 10 suppliers to the Company, measured by reference to the aggregate payments
made by the Company thereto for the twelve month period ended September 30,
2004, and (b) each of the sole suppliers or manufacturers of any drug, compound,
or material for any of the Company's existing products, products under
development or products proposed to be developed ((a) and (b) the "Major
24
Suppliers"). No Major Supplier has or will as of the Closing Date have (i)
canceled or otherwise terminated its relationship with the Company or materially
decreased its services or supplies to the Company other than at the request of
the Company or, (ii) to the Knowledge of the Managers, threatened to cancel or
otherwise terminate its relationship with the Company or to materially decrease
its services or supplies to the Company other than at the request of the
Company.
Section 3.23. Inventories. All clinical supplies and related materials of
the Company, whether or not reflected in the Balance Sheet or the Interim
Balance Sheet satisfies the specifications for such clinical supplies and
materials and is usable and in the Ordinary Course of Business, except for items
below-standard quality, or which have expired, all of which have been written
off or written down to net realizable value in the Balance Sheet or the Interim
Balance Sheet in accordance with French GAAP applied in a manner consistent with
the Company's past practice. The expiration dates for such clinical supplies and
materials by category is set forth in Schedule 3.23 of the Managers Disclosure
Schedule.
Section 3.24. Interested Party Transactions. Except as disclosed on
Schedule 3.24 of the Managers Disclosure Schedule, (a) the Company is not
directly or indirectly indebted to any member of the Supervisory Board or of the
Directorate, Affiliate, stockholder holding more than 10% of the shares in the
Company or employee of the Company (except for amounts due as normal salaries
and bonuses and in reimbursement of expenses incurred in the Ordinary Course of
Business) or any Related Person of any of the foregoing, and no such Person is
indebted to the Company and (b) any agreement entered into, either directly or
through an intermediary, between the Company and a member of the Directorate or
of the Supervisory Board, one of its stockholders holding a fraction of the
voting rights greater than 10% or, in the case of a corporate stockholder, the
Company which controls or any agreement in which a person referred to above has
an indirect interest have been validly authorized in accordance with Article
L225-86 of the French Commercial Code. Agreements entered into between the
Company and another firm whenever a member of the Directorate or of the
Supervisory Board is the owner, an indefinitely liable partner, a manager, a
director or a member of that firm's supervisory board or, more generally, is in
any way involved in its management, have also been validly authorized in
accordance with said Article.
Section 3.25. Certain Payments. Neither the Company nor to Knowledge of
Managers, any director, officer, agent, or employee of any such Person, or any
other Person associated with or acting for or on behalf of Company, has directly
or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of Company, or (iv) in violation of any applicable
Law, or (b) established or maintained any fund or asset that has not been
recorded in the books and records of the Company as required by French GAAP.
Section 3.26. Disclosure. To the Knowledge of the Managers, no
representation or warranty of the Managers in this ARTICLE III and no statement
in the Managers Disclosure Schedule omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
Section 3.27. Product Liability. No product liability or similar claims
have been made against the Company since inception. Set forth in Schedule 3.27
of the Managers Disclosure Schedule is a list of all product liability insurance
policies currently in effect or providing coverage for occurrences in prior
periods. Except as set forth in Schedule 3.27 of the Managers Disclosure
Schedule, there is no Proceeding or to the Knowledge of Managers any inquiry or
25
investigation, by or before any court of Governmental Entity, pending, or to the
Knowledge of the Managers threatened, against or involving the Company, relating
to any product manufactured or sold or proposed to be sold by the Company and
alleged to have been defective or improperly designed or manufactured. Schedule
3.27 of the Managers Disclosure Schedule contains a complete and accurate list
of any recall by the Company affected since inception with respect to any of its
products, including a description of the circumstances relating to such recall
in reasonable detail.
Section 3.28. No Other Representations or Warranties. Except for the
representations and warranties contained in ARTICLE III, no Managers has made
any other express or implied representation or warranty on behalf of the
Managers, the Sellers or the Company, and Managers hereby disclaim any such
representation or warranty whether by the Company or any of its officers,
directors, employees, agents or representatives or any other Person, in
connection with, or with respect to, the execution, delivery or performance of
this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers as follows:
Section 4.1. Organization; Etc. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
Section 4.2. Authority Relative to this Agreement and Other Transaction
Agreements. The Buyer has the corporate power and authority to execute and
deliver this Agreement and the other Transaction Agreements to which it is or
will be party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been, and the execution and delivery
of the other Transaction Agreements to which the Buyer is to be a party will at
the Closing be, duly and validly authorized by all requisite corporate action on
the part of the Buyer except for the consent of the stockholder of Buyer as
provided in Section 4.3 below. This Agreement has been and as of the Closing the
other Transaction Agreements to which the Buyer is to be party will be duly and
validly executed and delivered by the Buyer and, assuming this Agreement has
been duly authorized, executed and delivered by the Sellers and the Company,
this Agreement constitutes, and as of the Closing such other Transaction
Agreements will constitute, a valid and binding agreement of the Buyer,
enforceable against the Buyer in accordance with their respective terms, except
that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally, and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 4.3. Consents and Approvals; No Violations.
(a) Except (i) as set forth in Schedule 4.3(a) of the disclosure
schedule being delivered by the Buyer to the Sellers concurrently herewith (the
"Buyer Disclosure Schedule"), (ii) the filing with the SEC of the Proxy
Statement and such other reports and information under the Exchange Act and the
rules and regulations promulgated thereunder, (iii) such filings,
authorizations, orders and approvals as may be required under foreign securities
laws, state securities laws and the rules of NASDAQ, (iv) such filings,
notifications and authorizations as may be required by the French Ministry of
Economy and Finance, (v) the consent of the
26
stockholders of Buyer, and (vi) where the failure to obtain or make such
consents, approvals, orders, authorizations or filings would not reasonably by
likely to have a Buyer Material Adverse Effect, none of the execution and
delivery of this Agreement or the other Transaction Agreement by the Buyer or
the consummation by the Buyer of the transactions contemplated hereby or thereby
do or will, directly or indirectly (with or without notice or lapse of time or
both), (i) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws of, or any resolution adopted by the
board of directors or the stockholders of the Buyer, (ii) result in a violation
or breach of, or constitute a default (or give rise to any right of termination,
cancellation, or acceleration) under, or require any Consent under, any material
indenture, license, Contract, agreement, or other instrument or obligation to
which the Buyer or any of its Subsidiaries is a party or by which any of them or
any of their respective properties or assets may be bound, (iii) violate or
contravene any Order or Law or Governmental Authorization applicable to the
Buyer, any of its Subsidiaries or any of their respective properties or assets,
(iv) require any filing with, or the obtaining of any permit, authorization,
Consent or approval of, any Governmental Entity, or (v) require the Buyer to
give any notice to, or obtain any Consent from, any Person (including any
Governmental Entity).
Section 4.4. Capitalization.
(a) The entire authorized capital stock of Buyer consists of (i)
Seventy Five Million (75,000,000) shares of Buyer Common Stock, US$.001 par
value ("Buyer Common Stock"), of which, as of October 26, 2004, 21,347,977
shares were issued and outstanding, and (ii) Five Million (5,000,000) shares of
Preferred Stock US$.001 par value, 500,000 of which shares are designated Series
A Junior Participating Preferred Stock, none of which are issued or outstanding
(the foregoing, the "Buyer Securities"). All of the outstanding Buyer Securities
are duly authorized, validly issued, fully paid and non assessable and free of
preemptive rights. As of September 30, 2004, (A) an aggregate of Nine Hundred
Thousand (900,000) shares of Buyer Common Stock were reserved for issuance
pursuant to Buyer's 1999 Stock Incentive Plan, of which Four Hundred Forty-Nine
Thousand Two Hundred Thirty-One (449,231) such shares were issuable upon or
otherwise deliverable in connection with the exercise of outstanding stock
options issued by Buyer, (B) an aggregate of Two Million Six Hundred Sixteen
Thousand One Hundred Thirty-Three (2,616,133) shares of Buyer Common Stock were
reserved for issuance pursuant to Buyer's 2000 Stock Incentive Plan, of which
1,627,482 shares were issuable upon or otherwise deliverable in connection with
the exercise of outstanding stock options issued by Buyer, (C) an aggregate of
200,000 shares of Buyer Common Stock were reserved for issuance under Buyer's
Employee Stock Purchase Plan and 401(k) plan, 135,563 of which have been issued
and delivered in accordance with such plans, and (D) 1,828,116 shares of Buyer
Common Stock are reserved for issuance under all other outstanding options and
warrants, and other outstanding securities convertible into or exercisable into
Buyer Common Stock.
(b) Except as set forth above in subsection (a) of this Section 4.4
or in Schedule 4.4(b) of the Buyer Disclosure Schedule, as of the date hereof
there are outstanding (i) no shares of capital stock or other securities of
Buyer, (ii) no securities of Buyer convertible into or exchangeable or
exercisable for, shares of capital stock or other securities of Buyer, (iii) no
options, warrants or other rights to acquire from Buyer, and no obligations of
Buyer to issue, any capital stock or other securities or securities convertible
into or exchangeable or exercisable for capital stock or other securities of
Buyer, and (iv) no equity equivalent interests in the ownership or earnings of
Buyer or other similar rights. All of the outstanding Buyer Securities were
issued (A) in compliance in all material respects with the Securities Act, and
applicable state or foreign securities laws, and (B) not in violation of any
preemptive rights, rights of first refusal or similar rights. As of the date
hereof, there are no outstanding rights or obligations of Buyer to repurchase,
redeem or otherwise acquire any outstanding shares of its respective capital
stock or other ownership interests. Except as set forth in Schedule 4.4(b) of
the
27
Buyer Disclosure Schedule, there are no stockholder agreements, voting trusts or
other arrangements or understandings to which Buyer, or its Boards of Directors,
is a party, and to Buyer's Knowledge, there are no other agreements, voting
trusts or other arrangements or understandings, relating to the voting or
registration of any shares of capital stock or other securities of Buyer.
(c) The sale and issuance of the Consideration Shares will not under
Certificate of Incorporation or Bylaws, or any agreement to which the Buyer is a
Party or bound, (i) obligate Buyer to issue any additional shares of its capital
stock or any securities convertible into or evidencing the right to subscribe
for any shares of its capital stock, (ii) obligate Buyer to issue any
subscriptions, warrants, options or other rights to purchase or acquire
additional shares of its capital stock or any securities convertible into or
evidencing the right to subscribe for any shares of its capital stock, (iii)
trigger any anti-dilution, preemptive, accelerated vesting or increases in the
number of available subscriptions, warrants, options or other rights to purchase
or acquire additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of its capital stock.
Section 4.5. Authorization and Issuance of Stock Consideration. The
Consideration Shares comprising the Acquisition Price under this Agreement are
duly authorized and, upon issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, free from all
Taxes and Liens with respect to the issue thereof, will not be subject to
preemptive rights or other similar rights of stockholders of Buyer, and will not
impose personal liability on the holders thereof.
Section 4.6. SEC Reports; Financial Statements. Buyer has filed all
required forms, reports and documents ("Buyer SEC Reports") with the Securities
and Exchange Commission ("SEC") during the past three (3) years, each of which
complied at the time of filing in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and each other Applicable Law as in effect on the
dates such forms, reports and documents were filed. None of such Buyer SEC
Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading,
except to the extent superseded or amended by a Buyer SEC Report filed
subsequently and prior to the date hereof. The consolidated financial statements
of Buyer included in the Buyer SEC Reports (the "Buyer Financial Statements")
fairly presented in all material respects, in conformity with U.S. GAAP
consistently applied (except as may be indicated in the notes thereto and except
that unaudited statements do not contain footnotes in substance or form required
to the extent permitted by Form 10-Q of the Exchange Act), the consolidated
financial position of Buyer and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended.
Section 4.7. No Undisclosed Liabilities. Buyer has no material obligations
or liabilities which are required to be reflected or reserved on a balance sheet
in conformity with U.S. GAAP applied on a basis consistent with the preparation
of the Buyer Financial Statements, or any claim, liability or assessment of any
nature (matured, unmatured, fixed or contingent) material to Buyer or any fact
or circumstance which is reasonably likely to lead to such a claim, liability or
assessment being asserted, for which an unfavorable outcome is reasonably
possible, of any nature other than (a) those set forth or adequately provided
for in the most recent Buyer Financial Statements, (b) those incurred since the
most recent Buyer Financial Statements in the Ordinary Course of Business, (c)
material obligations or liabilities which, individually or in the
28
aggregate do not exceed US$100,000, and (d) those set forth on Schedule 4.7 of
the Buyer Disclosure Schedule.
Section 4.8. Absence of Certain Changes. Since June 30, 2004 through the
date of this Agreement, there has been no material adverse change in the assets,
liabilities, business, properties, operations, financial condition, prospects or
results of operations of Buyer, and Buyer has not (a) varied its business plan
or practices, in any material respect, from past practices, (b) entered into any
material financing, joint venture, license or similar arrangements or (c)
suffered or permitted to be incurred any liability or obligation against any of
its properties or assets that would limit or restrict Buyer's ability to perform
its obligations hereunder.
Section 4.9. Fairness Opinion. Buyer has received the opinion of Xxxxxxx &
Company, Inc. dated on or before the date of this Agreement to the effect that,
the Acquisition Price is fair to Buyer from a financial point of view.
Section 4.10. Taxes. Buyer has filed all Tax Returns required to have been
filed by it, and has paid, all Taxes required to have been shown on such Tax
Returns. The current unpaid Taxes of the Buyer (i) did not, as of the date of
the most recent financial statements contained in the Buyer's SEC Reports,
exceed the reserve for Taxes (not including any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of such financial statements (other than in any notes thereto) that
are to be accounted for under US GAAP, and (ii) will not, as of the Closing
Date, exceed such reserve or accounts reflected on the books and records of the
Buyer through the Closing Date that are to be accounted for under US GAAP. No
material deficiencies for any Taxes have been proposed, asserted or assessed
against Buyer or any of its subsidiaries.
Section 4.11. Acquisition of Shares for Investment; Ability to Evaluate
and Bear Risk.
(a) The Buyer is acquiring the Shares for investment and not with a
view toward, or for sale in connection with, any distribution thereof, nor with
any present intention of distributing or selling such Shares. The Buyer agrees
that the Shares may not be sold, transferred, offered for sale, pledged,
hypothecated, or otherwise disposed of without registration under the Securities
Act and any applicable state or foreign securities Laws, except pursuant to an
exemption from such registration under the Securities Act and such Laws.
(b) The Buyer (i) is able to bear the economic risk of holding the
Shares for an indefinite period, (ii) can afford to suffer the complete loss of
its investment in the Shares, and (iii) has knowledge and experience in
financial and business matters such that it is capable of evaluating the risks
of the investment in the Shares.
Section 4.12. Litigation. There is no claim or Proceeding or, to the
Knowledge of the Buyer, investigation by any Person or Governmental Entity
pending or, to the Knowledge of the Buyer, threatened against the Buyer or any
of its Subsidiaries by or before any court or Governmental Entity which (a)
seeks injunctive or equitable relief, (b) would adversely affect the ability of
the Buyer to consummate the transactions contemplated hereby or the other
Transaction Documents, or (c) seeks damages in any amount which, individually or
in the aggregate, could reasonably be expected to have a Buyer Material Adverse
Effect. As used in this Agreement, the term "Buyer Material Adverse Effect"
shall mean an event, change or circumstance which would materially and adversely
affect the ability of the Buyer to consummate the transactions contemplated
hereby, or a material adverse change in, or effect on, the business, financial
condition, or results of operations of the Buyer.
29
Section 4.13. Intellectual Property.
(a) To the Knowledge of the Buyer, the conduct of the business of
the Buyer does not infringe upon or violate, and has not infringed upon or
violated the Intellectual Property of any other Person. To the Knowledge of the
Buyer, no Person is currently infringing or has infringed upon any of the Buyer
Intellectual Property. There are no Proceedings pending or, to the Knowledge of
the Buyer threatened, against the Buyer or any of its Subsidiaries challenging
the ownership or use by the Buyer or its Subsidiaries of any Intellectual
Property. To the Knowledge of the Buyer, the Buyer and its Subsidiaries own (or
possess enforceable licenses or other rights to use) all Intellectual Property
necessary for the operation of their respective businesses as presently
conducted, free and clear of all Liens. To the Knowledge of Buyer, no current or
former employee, stockholder, officer, director, consultant, affiliate or
independent consultant of the Buyer has any claim or interest in or with respect
to any of the Buyer's material Intellectual Property. The Buyer has taken
commercially reasonable and customary measures and precautions to protect and
maintain the confidentiality of all material Intellectual Property (except such
Intellectual Property whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect its material Intellectual Property.
(b) All current employees of the Buyer have executed written
Contracts with the Buyer that assign to the Buyer all rights to any inventions,
improvements, discoveries, or information relating to the business of the Buyer.
To the Buyer's Knowledge, no employee of the Buyer has entered into any Contract
that restricts or limits in any way the scope or type of work in which the
employee may be engaged or requires the employee to transfer, assign, or
disclose information concerning his work to anyone other than the Buyer.
Section 4.14. Brokers; Finders and Fees. Except for the engagement of
Xxxxxxx & Company, Inc., neither the Buyer nor any of its Affiliates has
employed any investment banker, broker or finder or incurred any liability for
any investment banking, financial advisory or brokerage fees, commissions or
finders' fees in connection with this Agreement or the transactions contemplated
hereby.
Section 4.15. Compliance with Law. Except as set forth in Schedule 4.15 of
the Buyer Disclosure Schedule, the Buyer is in compliance in all material
respects with each applicable Law or any Order that is or was applicable to it
or the conduct of the operation of its business, or the ownership or use of any
of its assets which could reasonably be expected to give rise to any obligation
which could reasonably be expected to have a Buyer Material Adverse Effect.
Buyer has not received any notice or other communication from any Governmental
Entity or any other Person regarding (a) any actual, alleged, possible or
potential violation of, or failure to comply with, any Law or any Order, or (b)
any actual, alleged, possible or potential obligation on the part of the Buyer
to undertake or bear all or any portion of the cost of any remedial action of
any nature which could reasonably be expected to have a Buyer Material Adverse
Effect.
Section 4.16. No Buyer Material Adverse Effect. Since September 30, 2004,
there has not been any Buyer Material Adverse Effect and, to the Knowledge of
the Buyer, no events have occurred or circumstances exist that, individually or
in an aggregate, could reasonably be expected (with or without the giving of
notice or the passage of time) to result in a Buyer Material Adverse Effect.
Section 4.17. Environmental Matters. The Buyer is in compliance in all
material respects with all Environmental Laws. The Buyer has not, nor to the
Buyer's Knowledge, has any other Person for whose conduct it is or may be held
responsible, or received any actual or threatened Order, notice or other
communication from (a) any Governmental Entity or private citizen acting in the
public interest, or (b) the current or prior owner or operator of any facilities
30
of the Buyer, of any actual or potential material violation or federal
compliance in any material respect with any Environmental Law, or any actual or
threatened obligation undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any of the facilities of Buyer or any
other property or assets, which the Buyer has or had an interest or with respect
to a property or facility of the Buyer or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed by
the Buyer, or any other Person, for whose conduct the Buyer is or may be held
responsible, or from which Hazardous Materials have been transported, treated,
handled, transferred, disposed, recycled or received.
Section 4.18. Certain Payments. Neither the Buyer, nor any director,
officer, agent or employee of the Buyer, or to the Buyer's Knowledge, any other
person associated with or acting for or on behalf of the Buyer, as directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for
business, (iii) to obtain special concessions or for special concessions already
obtained, for in or in respect of the Buyer, or any of its affiliates, or (iv)
in violation of any Law, or(b) established or maintained any fund or assets that
has not be recorded in the books or records of Buyer.
Section 4.19. Insurance. The Buyer presently carries insurance with
responsible and reputable insurance companies or associations in such amounts
and covering such risks and in amounts as are customarily carried by companies
engaged in similar businesses or similar size and owning similar properties in
the same general areas in which the Buyer operates. With respect to each such
insurance policy, the Buyer is not in material breach or default (including with
respect to the payment of premiums), and no material claim for coverage has been
denied. Each such insurance policy is and will at the Closing be in full force
and effect. Since January 1, 2004, the Buyer has not received any refusal to
provide insurance coverage, or any notice of cancellation or intent to cancel or
notice of increase or intent to increase premiums in any material respect with
respect to such insurance policies. All such insurance policies, taken together,
are sufficient for compliance in all material respects with all applicable Laws.
Section 4.20. Buyer Rights. Assuming (i) none of the Sellers beneficially
owns any shares of Buyer's Common Stock prior to closing, (ii) the Sellers own
only such shares of the Company's capital stock as is set forth on Schedule 1,
and (iii) none of the Sellers files a Schedule 13D or 13G pursuant to Regulation
13D-G promulgated under the Exchange Act, the Buyer Rights will not be triggered
by the execution of this Agreement or the consummation of the transactions
contemplated therein.
Section 4.21. NASDAQ Delisting. The NASDAQ has not informed Buyer, in
writing or orally, of the possible delisting of Buyer Common Stock from the
NASDAQ.
Section 4.22. Books and Records. The books and other records of the Buyer
have been maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls.
Section 4.23. Reporting Status; Eligibility to Use Form S-3. The Buyer
Common Stock is registered under Section 12g of the Exchange Act. The Buyer
currently meets the "registrant eligibility" requirements set forth in the
general instructions to Form S-3 to enable the registration of the Registrable
Securities, as defined in the Stockholders Agreement.
Section 4.24. Disclosure. No representation or warranty of the Buyer in
this Agreement and no statement in the Buyer Disclosure Schedule omits to state
a material fact necessary to
31
makes these statements herein or therein, in light of the circumstances in which
they were made, taken as a whole, not misleading.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1. Conduct of Business of the Company. During the period from
the date of this Agreement to the Closing Date, except as otherwise expressly
contemplated by this Agreement or as consented to by the Buyer in advance in
writing, the Managers, acting severally and not jointly, each to the extent the
acts or omissions in this Section 5.1 are within their control, shall cause the
Company:
(a) to conduct its business and operations only in the Ordinary
Course of Business and to use its commercially reasonable best efforts to
preserve intact its present business organization, keep available the services
of its present officers and key employees and preserve its relationships with
material customers, suppliers, distributors, licensors, licensees and others
having material or significant business relationships with it;
(b) to pay its accounts payable and collect its accounts receivable
only in the Ordinary Course of Business;
(c) to pay all of its debts and Taxes, and to pay or perform any of
its other material obligations, when due in the Ordinary Course of Business,
subject to good faith disputes with respect to the same; and
(d) not to:
(i) sell, lease, license or dispose of, or mortgage, pledge or
permit the imposition of any Lien upon, any of its material tangible or
intangible properties or assets, including any Intellectual Property Assets,
except for sales of inventory in the Ordinary Course of Business;
(ii) make any loans, advances or capital contributions to, or
investments in, any other Person;
(iii) terminate or materially amend, or waive any material
term of any material Applicable Contracts or licenses or Governmental
Authorizations;
(iv) enter into any new Applicable Contract involving costs or
expenses in excess of an aggregate of US$25,000 or exceeding one year in
duration other than the renewal of existing Applicable Contracts in the Ordinary
Course of Business;
(v) make capital expenditures, capital additions or capital
improvements other than in the Ordinary Course of Business, not to exceed
US$25,000, in the aggregate;
(vi) increase the compensation of any of the officers or other
employees of the Company, except for such increases as are granted in the
Ordinary Course of Business in accordance with customary practices of the
Company (which shall include normal periodic performance reviews and related
compensation and benefit increases, in any event not to exceed increases of more
than 5%);
32
(vii) except as set forth on Schedule 5.1(d), adopt, grant,
extend or increase the rate or terms of any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with any officers
or employees of the Company, except increases required by any applicable Law and
increases in the Ordinary Course of Business;
(viii) make any change in any of its present accounting
methods and practices, except as required by changes in French GAAP;
(ix) license any Intellectual Property to or from any Person
pursuant to an arrangement other than in the Ordinary Course of Business;
(x) settle or compromise any material Tax liability;
(xi) declare or pay any dividends or declare or pay any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect or, or in lieu of,
or in substitution for shares of its capital stock, or repurchase or otherwise
acquire for value, directly or indirectly, any shares of its capital stock;
(xii) amend or cause or permit any amendments to its articles
of association or by-laws or other governing or constituent documents;
(xiii) incur any indebtedness for borrowed money (including
guaranties of any such indebtedness of others) or enter into any capitalized
lease or similar obligations, except for borrowings not exceeding US$25,000 in
the aggregate under existing credit facilities;
(xiv) cancel or waive any claims or rights with a value in
excess of US$10,000;
(xv) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of its capital stock or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other agreements or commitments of
any character obligating it to issue any such shares or other convertible
securities, other than the issuance of shares of the Company's common stock
pursuant to the exercise of stock options or warrants outstanding as of the date
of this Agreement;
(xvi) materially reduce the amount of any insurance coverage
provided by, or terminate, any insurance policies existing on the date of this
Agreement;
(xvii) grant any severance or termination pay or benefits (A)
to any director or officer except in accordance with written agreements in
effect on the date of this Agreement and disclosed on Schedule 3.9 of the
Managers Disclosure Schedule, or (B) to any other employees except in the
Ordinary Course of Business, consistent with currently effective written policy
of the Company;
(xviii) commence any lawsuit, action or other Proceeding other
than (A) for the routine collection of bills, (B) in such cases where it in good
faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business; provided, that it consults with
the Buyer before the filing of such a suit or (C) for breach of this Agreement;
(xix) acquire or agree to acquire by merging or consolidating
with, or by purchasing all or any substantial portion of the assets or equity
of, or by other manner, any
33
business or any other Person or division thereof or otherwise agree to acquire
or acquire directly or indirectly any assets which are material, individually or
in the aggregate, to the Company and its business;
(xx) revalue any of its assets, including writing down the
value of any accounts receivable, other than in the Ordinary Course of Business
or as required by changes in French GAAP;
(xxi) engage in any transaction with, or make any payment to
any director or officer of the Company or any of their respective Affiliates or
Related Persons, except as disclosed on Schedule 3.26 of the Managers Disclosure
Schedule;
(xxii) manage and/or value the inventory of the Company other
than in the Ordinary Course of Business or take any extraordinary write-downs
with respect to such inventory except as required by French GAAP:
(xxiii) take, or agree in writing or otherwise to take, any of
the actions described in Sections 5.1(i) through 5.1(xxii) above, or any action
which could reasonably be expected to cause a material breach of the
representations or warranties contained in ARTICLE II or ARTICLE III or prevent
the Company or any Seller from materially performing or cause any of them not to
materially perform their respective covenants and agreements hereunder, to the
extent that Managers have control over the same.
Section 5.2. Access to Information for the Buyer.
(a) From the date of this Agreement to the Closing, in order to
permit the Buyer to conduct a comprehensive and complete business, legal,
financial and other due diligence investigation of the Company, the Managers
shall cause the Company to (i) give the Buyer and its authorized representatives
reasonable access to all books, records, personnel, offices, Applicable
Contracts and other facilities, information and properties of the Company, (ii)
permit the Buyer and its authorized representatives to make such copies and
inspections, as applicable, thereof as the Buyer may reasonably request, and
(iii) cause the officers, employees, accountants, counsel and other
representatives and advisors of the Company to furnish the Buyer and its
authorized representatives with such financial and operating data and other
documentation, data and information with respect to the business, operations and
properties of the Company as the Buyer may from time to time reasonably request;
provided, however, that any such access shall be conducted at the Buyer's
expense, at reasonable times and in such a manner as to maintain the
confidentiality of this Agreement and the transactions contemplated hereby, and
not to interfere unreasonably with the operation of the business of the Company,
and further provided that the Buyer shall be responsible for compliance with
this Section 5.2(a) by its authorized representatives.
(b) From and after the date of this Agreement and whether or not the
Closing occurs, the Sellers and, until the Closing Date, the Buyer will, and
will cause their respective Affiliates, directors, officers, employees, agents
and advisors to, maintain in strict confidence, and not disclose any written,
oral or other information of a confidential or proprietary nature or otherwise
obtained in confidence from another party or the Company in connection with this
Agreement or the transactions contemplated hereby, unless (i) such information
is already known to such Party or such information becomes publicly available
through no fault of such Party, (ii) the use of such information is necessary or
appropriate in making any filing or obtaining any Consent required for the
consummation of the transactions contemplated hereby, or (iii) the furnishing or
use of such information is required by legal proceedings or required pursuant to
34
regulatory filings or filings with stock exchanges or fund subscribers or is
required by any Governmental Entity.
(c) If the transactions contemplated hereby are not consummated,
each Party will return or destroy as much of such written information as the
other Party may reasonably request, to the extent however they are authorized to
do so by any applicable Law of requirements of any Governmental Entity to which
they are subject.
Section 5.3. SEC Filings.
(a) The Managers will cause the Company to promptly provide all
information relating to the business or operations of the Company, and each
Seller will promptly provide all information relating to itself or himself
necessary for inclusion in the Proxy Statement to be filed by the Buyer (the
"Proxy Statement") to satisfy all requirements of applicable state and federal
securities laws relating to the stockholders' meeting of Buyer to approve the
issuance of the Consideration Shares hereunder. Each Seller shall be solely
responsible for any statement, information or omission in the Proxy Statement
relating respectively to such Seller, and such Seller or their respective
Affiliates based upon written information furnished by such Seller.
(b) As soon as practicable after the execution of this Agreement,
the Buyer will prepare and file with the SEC the Proxy Statement. The Buyer will
respond to any comments of the SEC, will use its commercially reasonable best
efforts to have the Proxy Statement approved by the SEC as promptly as
practicable after such filing and the Buyer will cause the Proxy Statement to be
mailed to its stockholders at the earlier practicable time after the Proxy
Statement is approved by the SEC. The Buyer will use its commercially reasonable
best efforts to provide the Sellers' Agents a reasonable opportunity to review
and comment on any amendment or supplement to the Proxy Statement; provided,
however, that the foregoing shall not prevent or unreasonably delay the Buyer
from filing any such amendment or supplement should the Buyer determine upon
advice of counsel that such filing is necessary or appropriate.
(c) The Buyer will notify the Sellers' Agents promptly upon the
receipt of any comments from the SEC or its staff or any other government
officials in connection with any filing made pursuant hereto and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Proxy Statement or any other filings or for additional
information and will supply the Sellers' Agents with copies of all
correspondence between such Party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Proxy Statement, or any other filing. Each of the
Buyer and the Sellers will cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 5.3 to comply in
all material respects with all applicable requirements of Law and the rules and
regulations promulgated thereunder. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement or any
other filing, the Buyer will promptly inform the Sellers' Agents of such
occurrence and cooperate in filing with the SEC or its staff or any government
officials.
Section 5.4. Form S-3 Resale Registration Statement. As provided in the
Stockholders Agreement, within five Business Days following the Closing, the
Buyer will prepare and file with the SEC a Registration Statement on Form S-3
with respect to the resale of the Consideration Shares by Sellers (the "S-3
Registration Statements"). Sellers shall provide all information relating to
Sellers necessary for inclusion in the S-3 Registration Statement to satisfy all
requirements of applicable state and federal securities laws. The Buyer and
Sellers shall be solely responsible for any statement, information or omission
in the S-3 Registration Statement relating respectively to the Buyer and such
Seller or their respective Affiliates based upon written information furnished
35
by the Buyer or Sellers. The Buyer will respond to any comments of the SEC and
will use its commercially reasonable best efforts to have the S-3 Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing. The Buyer will use its commercially reasonable best efforts
to provide the Sellers' Agents a reasonable opportunity to review and comment on
any amendment or supplement to the S-3 Registration Statement; provided,
however, that the foregoing shall not prevent or unreasonably delay the Buyer
from filing any such amendment or supplement should the Buyer determine upon
advice from counsel that such filing is necessary or appropriate.
Section 5.5. Foreign Securities. The Company and Sellers shall use their
commercially reasonable best efforts to assist the Buyer to the extent
reasonably necessary to comply with the securities and blue sky laws of France
and all other jurisdictions which are applicable in connection with the
transaction contemplated by this Agreement.
Section 5.6. Conduct of Business of the Buyer. During the period from the
date of this Agreement to the Closing Date, except as otherwise expressly
contemplated by this Agreement or as consented to by the Sellers' Agents in
advance in writing, the Buyer shall:
(a) conduct its business and operations only in the Ordinary Course
of Business and use commercially reasonable efforts to preserve intact its
present business organization, keep available the services of its present
officers and key employees and preserve its relationships with material
customers, suppliers, distributors, licensors, licensees and others having
material or significant business relationships with it; and
(b) not:
(i) make any change in any of its present accounting methods
and practices, except as required by changes in U.S. GAAP;
(ii) amend or cause or permit any amendments to its
certificate of incorporation or bylaws or other governing or constituent
documents;
(iii) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital stock, or redeem or otherwise acquire
any of its capital stock; provided, however, that the Buyer may repurchase
shares of Buyer Common Stock held by employees, officers, directors,
consultants, independent contractors, advisors, or other persons performing
services for Buyer or a subsidiary that are subject to agreements under which
Buyer has the option to repurchase such shares upon the occurrence of certain
events, such as the termination of employment or services;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing all or any substantial portion of the assets or equity
of, or by other manner, any business or any other Person or division thereof or
otherwise agree to acquire directly or indirectly any assets which are material,
individually or in the aggregate, to the Buyer and its business and which could
reasonably be expected to materially adversely affect the consummation of the
transactions contemplated herein;
(v) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.6(i) through 5.6(iv) above, or any action which
could reasonably be expected to cause a material breach of the representations
or warranties contained in ARTICLE IV or prevent the Buyer from materially
performing or cause Buyer not to materially perform its covenants and agreements
hereunder.
36
Anything in this Section 5.6 or elsewhere herein to the contrary
notwithstanding, nothing shall prevent or prohibit the Buyer from raising any
capital, whether through borrowings, or any private or public offering of debt
or equity securities, or otherwise, or entering into any business development,
collaborative, licensing or other agreement or relationship with any other
Person with respect to the development, manufacture, marketing or sale of any
current or proposed product or technology of the Buyer.
Section 5.7. Regulatory Approvals. The Buyer will execute and file, or
join in the execution and filing, of any application or other document that may
be necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which the Company may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. The Buyer will
use its commercially reasonable best efforts to obtain all such authorizations,
approvals and consents.
Section 5.8. Buyer Stockholders' Approval. The Buyer will call a special
meeting of its stockholders (the "Buyer Stockholder Meeting"), to be held within
35 days after the Proxy Statement shall have been approved by the SEC, to submit
the issuance of Consideration Shares in connection with the transactions
contemplated hereby, and related matters for the consideration and approval of
the Buyer stockholders. The Proxy Statement will include a statement to the
effect that the Buyer's Board of Directors has recommended that Buyer
stockholders vote in favor of the issuance of Consideration Shares in connection
with the transactions contemplated hereby, unless the Buyer's Board of Directors
determines in good faith, after consultation with legal counsel, that in order
to comply with its fiduciary duties under applicable Law it can no longer make
such a recommendation. Such meeting will be called, held and conducted, and any
proxies will be solicited, in compliance with applicable Law.
Section 5.9. NASDAQ Listing. The Buyer agrees to authorize for listing on
NASDAQ the Consideration Shares issuable, and those required to be reserved for
issuance, in connection with this Agreement, upon official notice of issuance.
Section 5.10. Board Representation. Prior to or on the Closing Date, the
Buyer shall (a) set its authorized number of members of its Board of Directors
at six (6), it being understood that five of such Board seats will be reserved
for existing or new representatives of the Buyer, (b) appoint Xxxxxx Xxxxxxxx to
the Buyer's Board of Directors. The Buyer agrees to nominate Xx. Xxxxxxxx
(assuming he is willing to serve) as part of the slate of nominee directors at
the Buyer's next annual stockholders meeting, provided that the Buyer does not
reasonably determine after consultation with outside counsel that doing so would
be a breach of fiduciary duty by the Buyer's Board of Directors.
Section 5.11. Reasonable Best Efforts. Each of the Sellers, the Sellers'
Agents, the Managers, and the Buyer shall cooperate and use their commercially
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
Laws or Contracts or otherwise to consummate and make effective the transactions
contemplated by this Agreement and the other Transaction Agreements to the
extent each such Party has the power to do so. Without limiting the generality
of the foregoing, each Seller as regards itself, the Managers, and the Buyer
shall, and the Managers shall cause the Company to (a) make all filings (if any)
and give all notices (if any) required to be made or given by such Party in
connection with the transactions contemplated by this Agreement, including
filings with and notices to any applicable Governmental Entities, (b) use all
reasonable best efforts to obtain each Consent (if any) required to be obtained
(pursuant to Law or the terms of any Contract or Governmental Authorization or
otherwise) by such Party in connection with the transactions contemplated by
this Agreement and (c) use all reasonable best efforts to lift any
37
restraint, injunction or other legal bar to the consummation of the transactions
contemplated by this Agreement. Each Seller as regards itself, the Managers as
regards such Managers, and the Company, shall promptly deliver to the Buyer a
copy of each such filing made, each such notice given and each such Consent
requested and obtained by any of them. Subject to the terms and conditions of
this Agreement, each Party hereto, at the reasonable request of the other Party
hereto, shall execute and deliver such other instruments, and shall do and
perform such other acts and things as may be reasonably necessary or desirable
for effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
Section 5.12. Confidentiality. The information exchanged between the
Parties in connection with the preparation and the consummation of this
Agreement and of the Transaction shall be treated as confidential and shall not
be disclosed by any Party hereto other than to its fund subscribers officers,
directors, Affiliates, employees, accountants, lawyers, bankers, auditors and
other advisors on a need-to-know basis, provided that they agree to be bound by
similar terms of confidentiality; provided, however, that for purposes of this
Section 5.12, the following information shall not be treated as confidential:
(a) information that is or becomes generally known or available to the public,
other than as a result of a disclosure by a disclosing Party in violation of the
provision hereof, (b) information that was known by the Parties to whom
disclosure is made prior to receiving such information from the disclosing Party
as demonstrated by written records, (c) information that is required to be
disclosed pursuant to applicable Law or pursuant to regulatory filings or
filings with stock exchanges or fund subscribers or by any Governmental Entity,
provided that wherever practical, prompt notice of such disclosure is given to
the other Party such that the other Party will have a reasonable opportunity to
contest such disclosure, or (d) information that is required to be disclosed for
the purpose of any dispute arising from the execution, performance or
termination of this Agreement.
Section 5.13. Public Announcements. Each of the Parties hereby agrees with
the other Party that (a) except as may be required for a Party to comply with
the requirements of any applicable Law or Governmental Entity with respect to
such Party, any press release or similar public announcement or communication
concerning the execution or performance of this Agreement shall be provided to
the other Party in advance of release for such other Party's review and comment
and the releasing Party will in good faith consider all reasonable comments; and
(b) except as contemplated in the foregoing clause (a), no press release or
similar public announcement or communication shall ever be made or caused to be
made concerning the execution or performance of this Agreement, unless
specifically approved in advance by the other Party, provided, however, that (i)
upon execution of this Agreement, the Parties shall mutually issue a single,
joint press release with respect to the Transaction, and (ii) after the Closing
Date, (1) Buyer may freely issue press releases or similar public announcements
or communications with respect to the business, affairs and prospects of the
Company, and (2) the Sellers may freely issue at a time of their choosing press
releases or similar public announcements or communications concerning the
transactions contemplated by this Agreement, provided they are approved by the
Buyer in advance of release, which approval shall not be unreasonably withheld.
Section 5.14. Tax Matters.
(a) Tax Treatment. The Sellers, the Company and the Buyer hereby
acknowledge and agree that an election under Section 338 of the Code (or any
similar provision of the law of any state or other taxing jurisdiction) will be
made with respect to the Company and any of its Subsidiaries in connection with
the transactions contemplated by this Agreement.
(b) Transfer Taxes. All excise, sales, use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation, and other
similar taxes, together with any interest, additions or penalties with respect
thereto and any interest in respect of such
38
additions or penalties, attributable to the transactions contemplated by this
Agreement (the "Transfer Taxes"), shall be borne by the Party on which they are
primarily imposed under applicable Law; provided, that each Seller shall pay his
or its pro rata portion of any such Transfer Taxes imposed upon the Company. Any
Tax Returns that must be filed in connection with Transfer Taxes shall be
prepared and filed when due by the Party primarily or customarily responsible
under the applicable local Law for filing such Tax Returns, and such Party will
use its reasonable efforts to provide such Tax Returns to the other Party at
least 10 days prior to the Due Date for such Tax Returns. Sellers shall be
solely responsible for any income and capital gain Taxes due, if any, as a
result of the sale of the Shares to the Buyer in exchange for the Acquisition
Price.
(c) Filing of Tax Returns. The Company shall prepare and file or
cause to be prepared and filed on a timely basis all Tax Returns with respect to
the Company and its Subsidiaries that are due on or before the Closing Date. The
Company shall prepare all Tax Returns that are due after the Closing Date with
respect to the Company for all Pre-Closing Periods in a manner consistent with
past practice of the Company unless otherwise required by applicable Law. The
Company and its Subsidiaries shall prepare and file or cause to be prepared and
filed all other Tax Returns and reports of the Company.
Section 5.15. Notice of Developments.
(a) The Buyer will promptly advise Sellers in writing (i) of any
event occurring subsequent to the date of this Agreement that would render any
representation or warranty of the Buyer contained in this Agreement, if made on
or as of the date of such event or the Closing Date, untrue or inaccurate in any
material respect, together with a proposed amendment or supplement to the Buyer
Disclosure Schedule relating thereto, (ii) the breach of any covenant by the
Buyer or the occurrence of any event that makes the satisfaction of any of the
conditions set forth in ARTICLE V impossible or unlikely, and (iii) of any Buyer
Material Adverse Effect.
(b) Each Seller will give prompt written notice to the Buyer, with a
copy to the other Sellers, of any development causing or which could reasonably
be expected (including with the giving of notice or the passage of time) to
cause a material breach of or inaccuracy in any representations or warranties of
any of such Seller, including if such representations or warranties were given
as of the time of such development. Each Seller will give prompt written notice
to the Buyer, with a copy to the other Sellers, if any such Seller becomes aware
of the breach of any covenant of such Sellers or any Seller or the Company in
this Agreement or the occurrence of any event that makes the satisfaction of any
of the conditions set forth in ARTICLE V impossible or unlikely.
(c) Managers will give prompt written notice to the Buyer, with a
copy to the other Sellers, of any development causing or which could reasonably
be expected (including with the giving of notice or the passage of time) to
cause a material breach of or inaccuracy in any representations or warranties of
the Managers, including if such representations or warranties were given as of
the time of such development, together with a proposed amendment or supplement
to the Managers Disclosure Schedule relating thereto. The Managers will give
prompt written notice to the Buyer, with a copy to the other Sellers, if any
Managers or the Company becomes aware of the breach of any covenant of the
Managers in this Agreement or the occurrence of any event that makes the
satisfaction of any of the conditions set forth in ARTICLE V impossible or
unlikely.
(d) No disclosure by a Party pursuant to this Section 5.15, however,
shall be deemed to amend or supplement the Buyer Disclosure Schedule or Managers
Disclosure
39
Schedule for the purpose of the conditions set forth in Section 6.2(a) or
Section 6.3(a), respectively. If, however, the Sellers shall determine in their
discretion to waive the condition set forth in Section 6.2(a) notwithstanding
any modification or supplement to the Buyer Disclosure Schedule, or the Buyer
shall determine in its discretion to waive the condition set forth in Section
6.3(a) notwithstanding any modification or supplement to the Managers Disclosure
Schedule, then, in either such event, the updated Buyer Disclosure Schedule or
Managers Disclosure Schedule shall be the final Buyer Disclosure Schedule or
Managers Disclosure Schedule for all purposes of this Agreement.
Section 5.16. Exclusivity. Neither Sellers, nor the Company will, nor will
they permit any of their respective Affiliates or their or such Affiliates'
respective officers, directors, employees, agents and representatives or anyone
else acting for them or their Affiliates, directly or indirectly, to: (a) supply
any third party or other Person with information which could reasonably be
expected to lead to a Third Party Acquisition or to inquiries or proposals with
respect thereto; (b) initiate, solicit, encourage, negotiate, accept or discuss
any transaction or series of related transactions with a third party or other
Person (other than the Buyer and its Affiliates) involving any recapitalization,
restructuring, financing, merger, consolidation, sale or encumbrance or other
business combination transaction or extraordinary corporate transaction of the
Company or all or any significant part of the assets or equity or the business
and properties of Company or any other transaction the consummation of which
would or could reasonably be expected to impede, interfere with, prevent or
materially delay the acquisition of the Company by Buyer contemplated hereby
(any transaction described in this clause (b) is referred to as a "Third Party
Acquisition"); or (c) enter into any Contract, agreement, arrangement or
understanding with a third party or other Person that would have the effect of
causing the Sellers to or would otherwise delay, abandon or terminate the
acquisition of the Company by the Buyer contemplated hereby, provided, however,
that, subject to the provisions set forth in Section 5.1 above, nothing herein
shall preclude the Company or the Sellers from engaging in usual and customary
business development, collaboration or licensing activities that would not
reasonably be expected to preclude or have a material adverse effect on the
proposed transaction. Neither the Sellers, nor the Company is engaged in any
current discussions or negotiations with any Third Party or Person relating to a
Third Party Acquisition or which could possibly result in a Third Party
Acquisition. The Sellers and the Company shall promptly advise the Buyer of any
inquiry, indication of interest or proposal with respect to, or that could
reasonably be expected to lead to, a Third Party Acquisition or any request for
nonpublic information relating to the Company or any of its Subsidiaries
(including the identity of the person making or submitting such, inquiry,
indication of interest, proposal or request), and thereafter shall keep the
Buyer fully and promptly informed as to the status of, and any developments with
respect to any of the same.
Section 5.17. Responsibility for Transaction Expenses. Sellers hereby
agree that Transaction Expenses shall be the sole responsibility of the Sellers,
except for the Reimbursed Expenses which the Buyer has agreed to make on behalf
and upon instruction of the Sellers, which payments shall be the sole
responsibility of the Buyer.
Section 5.18. Sellers' Agents. Each of the Sellers shall irrevocably
appoint the Sellers' Agents as its agents (mandataire) pursuant to Articles 1984
et. seq. of the French Civil Code in connection with the enforcement of the
provisions of this Agreement and the completion of the transactions contemplated
hereby, pursuant to such terms and conditions to be agreed between the Sellers
and the Sellers' Agents, which terms and conditions shall provide that the
Sellers' Agents agree to be bound by the terms and conditions of this Agreement
as though original parties hereto and that such Sellers' Agents shall be
required to execute and deliver counterpart signatures to this Agreement if
requested by the Buyer or Sellers. Each of the Sellers' Agents shall not be
entitled to terminate its appointment of the Sellers' Agents unless it has first
obtained the agreement of another Person to replace it as the Sellers' Agents
hereunder.
40
Section 5.19. Employment Agreements, Noncompetition Agreements.
Contemporaneously with the execution and delivery of this Agreement:
(a) The existing employment agreements between the Company and
Xxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxxxxxx and Luc-Xxxxx
Xxxxxxx shall be modified in a manner mutually satisfactory to the Buyer and
such Persons, to be effective upon the Closing, as provided for in the
respective drafts of the amendments of their employment contracts dated November
2, 2004;
(b) The Buyer and Xxxxxx Xxxxxxxx shall enter into the Kaczorek
Employment Agreement which shall be effective as of the Closing (Xx. Xxxxxxxx
and the individuals specified in Section 5.19(a), hereinafter referred to as the
"Key Employees"), as provided for in the draft of the amendment of his
employment contract dated November 2, 2004; and
(c) The existing noncompetition agreements between the Company and
the Key Employees shall be modified in a manner mutually satisfactory to the
Buyer and the Key Employees, to be effective upon the Closing, as provided for
in the respective drafts of the amendments of their noncompetition agreements
dated November 2, 2004.
Section 5.20. Indemnification, Exculpation and Insurance.
(a) Buyer agrees to cause the Company to maintain in effect in
accordance with their terms all rights to indemnification, exculpation from
liabilities and reimbursement of expenses for acts or omissions occurring at or
prior to the Closing Date now existing in favor of the current or former
directors or officers of the Company as provided in their organizational
documents and any indemnification contracts between the Company and their
respective current or former directors and officers, copies of all of which have
been delivered to the Buyer.
(b) In the event that Buyer or its successors or assigns (i) causes
the Company to consolidate with or merge into any other Person and the Company
is not the continuing or surviving corporation or Person of such consolidation
or merger or (ii) the Company transfers or conveys all or substantially all of
its properties and assets to any Person, then, and in each such case, proper
provision will be made so that such successor or assign assumes the obligations
set forth in this Section 5.20.
(c) The provisions of this Section 5.20 are intended to be for the
benefit of, and will be enforceable by, each indemnified Party, his or her heirs
and his or her representatives.
(d) Each Seller hereby represents and warrants that he or it has no
claim or action, nor is there any fact or circumstance which may give rise to
any claims or actions by such Seller, against any current or former director or
officer of the Company or any Managers (including but not limited to claims or
actions relating to this Agreement or the transactions contemplated thereby),
and further, upon the Closing hereunder, each Seller irrevocably waives any such
claim or action, whether known or unknown, against any current or former
director or officer of the Company or any Managers (including but not limited to
claims or actions relating to this Agreement or the transactions contemplated
thereby).
Section 5.21. Benefit Plans.
(a) As soon as administratively practicable after the Closing Date,
Buyer shall take all reasonable action to cause the Company to maintain the
Company employee benefit plans so that employees of the Company shall be
entitled to participate in each employee benefit plan
41
of the Company to the same extent as such employees participated prior to the
Closing in accordance with French Law.
(b) Buyer shall cause the Company to honor and continue to be
obligated to perform, in accordance with their terms, all benefit obligations
to, and contractual rights of, current and former employees of the Company
existing as of the Closing Date, as well as all employment or severance
agreements, plans or policies of the Company, as any such agreements, plans or
policies may be amended from time to time in accordance with applicable Law;
provided, however, that all agreements which provide for any payment or benefit
upon a change in control of the Company shall be terminated effective
immediately after the Closing; provided, however, that the existing change in
control agreements and the redwood success bonuses granted to the Key Employees
in June 2004 shall continue in effect as they relate to the transactions
contemplated by this Agreement, but not to any subsequent transactions.
(c) If employees of the Company become eligible to participate in a
medical, dental or vision benefits plan of Buyer, Buyer shall, to the extent
allowable under the terms of any such plan, cause each such plan to (i) waive
any preexisting condition limitations to the extent such conditions are covered
under the applicable medical, dental or vision benefits plans of Buyer, (ii)
honor under such plans any deductible, co-payment and out-of-pocket expenses
incurred by the employees and their beneficiaries during the portion of the
calendar year prior to such participation and (iii) waive any waiting period
limitation or evidence of insurability requirement which would otherwise be
applicable to such employee on or after the Closing Date to the extent such
employee had satisfied any similar limitation or requirement under an analogous
the Company employee benefit plan prior to the Closing Date.
(d) The Buyer agrees to offer to the key management employees of the
Company listed on Exhibit D on the Closing Date options to purchase shares of
the Buyer's Common Stock in the aggregate amount set forth on Exhibit D, to be
allocated among such key management employees as Buyer shall determine, and
subject to the terms and provisions of the standard form option agreement of the
Buyer and the equity incentive plan of the Buyer.
Section 5.22. Company Derivative Securities. Each of the Sellers, the
Sellers' Agents, the Managers and the Buyer shall cooperate and use their
commercially reasonable best efforts to cause the holders of Derivative
Securities listed on Schedule 5.22 hereof and who are not Parties to this
Agreement to waive the right to exercise and terminate their respective
Derivative Securities as described on Schedule 5.22 hereto, without unreasonable
cost or expense to the Company or the Buyer. The use of commercially reasonable
best efforts shall not require any Party to pay any consideration to the holders
of Derivative Securities listed on Schedule 5.22. Any cost or expense incurred
by the Company or the Buyer which has been mutually agreed upon by Buyer and the
Sellers' Agents in connection with such waiver and termination shall be included
in Transaction Expenses hereunder.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
Section 6.1. Conditions to Each Party's Obligations to Consummate the
Transaction. The respective obligations of each Party to consummate the
transactions contemplated hereby is subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree, Order, or
injunction, or Proceeding initiated or threatened by a Governmental Entity shall
have been enacted, entered,
42
promulgated, enforced or commenced by any court or Governmental Entity which
remains in force or pending or threatened (as applicable) and prohibits or seeks
to prohibit the consummation of the transactions contemplated hereby, requires
or seeks to require divestiture of any material assets of the Buyer or the
Company or their respective Subsidiaries or requires or seeks to require any
such assets to be held separate or orders or seeks material damages or other
relief in connection therewith.
(b) There shall have been obtained at or prior to the Closing Date
such permits or authorizations, and there shall have been taken such other
action, as may be required to consummate the transactions contemplated hereby by
any Governmental Entity having jurisdiction over the Parties and the actions
herein proposed to be taken, including but not limited to requirements under
applicable federal and state securities laws;
(c) The Proxy Statement, with respect to the Buyer Stockholder
Meeting, shall not be subject to any enforcement proceedings commenced or
threatened by the SEC;
(d) The principal terms of this Agreement and the issuance of the
Consideration Shares issuable hereunder, shall have been approved and adopted by
the Buyer Stockholder Meeting as required by NASDAQ and applicable Law;
Section 6.2. Further Conditions to the Sellers' Obligations. The
obligation of the Sellers to consummate the transactions contemplated hereby are
further subject to satisfaction or waiver by the Sellers of the following
conditions:
(a) The representations and warranties of the Buyer contained in
this Agreement which are qualified as to materiality or as to a Buyer Material
Adverse Effect or similarly qualified shall be true and correct in all respects
as of the date hereof and at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date (except
to the extent expressly made as of an earlier date, in which case, as of such
date), and the representations and warranties of the Buyer contained in this
Agreement which are not so qualified shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date as if made at
and as of the Closing Date (except to the extent expressly made as of an earlier
date, in which case, as of such date). For the purposes of determining whether
the condition set forth in this Section 6.2(a) has been satisfied, all updates
of, or modification to, the Buyer Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded;
(b) The Buyer shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) No litigation or proceeding shall be threatened or pending for
the purpose or with the probable effect of enjoining or preventing the
consummation of any of the transactions contemplated by this Agreement or which
could reasonably be expected to have a Buyer Material Adverse Effect.
(d) There shall not have been any Buyer Material Adverse Effect from
the date hereof to the Closing Date, nor shall there exist any state of facts or
condition which could reasonably be expected (with or without the passage of
time or the giving of notice) to result in such a Buyer Material Adverse Effect;
(e) The Escrow Agreement shall have been executed by the Buyer and
Escrow Agent;
43
(f) The Stockholders Agreement shall have been executed by the
Buyer;
(g) The Buyer shall have delivered to the Sellers a certificate,
dated the Closing Date, executed by the President or Chief Executive Officer of
the Buyer, to the effect that each of the conditions specified above in Sections
6.2(a) and (b) is satisfied in all respects; and
(h) Each of the documents required to be delivered by the Buyer to
the Sellers under Section 1.11 shall have been so delivered.
Section 6.3. Further Conditions to the Buyer's Obligations. The obligation
of the Buyer to consummate the transactions contemplated hereby is further
subject to the satisfaction or waiver by the Buyer at or prior to the Closing
Date of the following conditions:
(a) The representations and warranties of any Seller or the Managers
contained in this Agreement which are qualified as materiality or as to a
Company Material Adverse Effect or similarly qualified (and those set forth in
ARTICLE II) shall be true and correct in all respects as of the date hereof and
at and as of the Closing Date as though such representations and warranties were
made at and as of such date (except to the extent expressly made as of an
earlier date, in which case, as of such date), and the representations and
warranties of the Sellers or the Managers contained in this Agreement which are
not so qualified (or set forth in ARTICLE II) shall be true and correct in all
material respects as of the date hereof and at and as of the Closing Date as if
made at and as of the Closing Date (except to the extent expressly made as of an
earlier date, in which case, as of such date). For the purposes of determining
whether the condition set forth in this Section 6.3(a) has been satisfied all
updates of, or modification to, the Managers Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded;
(b) The Sellers and the Managers shall have performed and complied
in all material respects with all agreements and obligations required by this
Agreement to be performed or complied with by them on or prior to the Closing;
(c) No litigation or proceeding shall be threatened or pending for
the purpose or with the probable effect of enjoining or preventing the
consummation of any of the transactions contemplated by this Agreement, or which
could reasonably be expected to have a Company Material Adverse Effect;
(d) An Investment Representation statement in substantially the form
of Exhibit B shall have been executed and delivered by each Seller;
(e) The Escrow Agreement shall have been executed by the Escrow
Agent, the Sellers and the Sellers' Agents;
(f) The Stockholders Agreement shall have been executed by Sellers
and Sellers' Agents;
(g) Irrevocable waivers in the form of Exhibit C shall have been
executed and delivered by each of the Derivative Securities Holders.
(h) The Managers and Sellers shall have delivered to the Buyer a
certificate, dated the Closing Date, executed by the Managers and by the
Sellers' Agents on behalf of each Seller to the effect that each of the
conditions specified in Sections 6.3(a), (b) and (i) is satisfied in all
respects;
44
(i) Each of the Consents to the consummation of the transactions
contemplated hereby that is identified in Section 3.4(a) and (b) shall have been
obtained and shall be in full force and effect;
(j) Each of the documents required to be delivered by the Sellers,
the Managers, the Derivative Securities Holders, and the Company to the Buyer
under Section 1.10 shall have been so delivered;
(k) There shall not have been any Company Material Adverse Effect
from the date hereof to the Closing Date, nor shall there exist any state of
facts or condition which could reasonably be expected (with or without the
passage of time or the giving of notice) to result in such a Company Material
Adverse Effect;
(l) The Kaczorek Employment Agreement and the modifications to
employment agreements with the other Key Employees, and the modifications to the
noncompetition agreements with each of the Key Employees as provided in Section
5.19, shall each be in full force and effect as of the Closing; and
(m) The Managers shall have delivered or caused to be delivered to
the Buyer a statement setting forth the amount of cash and cash equivalents,
accounts receivable and accounts payable of the Company as of a date not earlier
than five Business Days preceding the Closing Date which statement shall provide
that the amount of cash and cash equivalents of the Company as of the Closing
Date shall be not less than (i) 2,500,000 Euros if the Closing Date shall occur
on or before January 31, 2005, or (ii) 1,400,000 Euros if the Closing Date shall
occur after January 31, 2005 but prior to February 28, 2005. Such statement will
be unaudited and is intended only to be an indication of such cash and cash
equivalents, accounts receivable and accounts payable.
ARTICLE VII
INDEMNIFICATION AND REMEDIES
Section 7.1. Survival; Right to Indemnification Not Affected by Knowledge.
All representations, warranties, covenants, and obligations in this Agreement,
the Managers Disclosure Schedule, the Buyer Disclosure Schedule, the certificate
delivered pursuant to Section 6.3(h), and the certificate to be delivered
pursuant to Section 6.2(g) and any other certificate or document delivered by
the Sellers or the Buyer pursuant to this Agreement will survive the Closing.
The right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations, will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation, subject to the disclosures set forth on the Managers
Disclosure Schedule or the Buyer Disclosure Schedule, as modified or
supplemented as provided in Section 5.15(d), as applicable. The waiver of any
condition based on the performance of, or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of Damages, or
other remedy based on such covenants, and obligations.
Section 7.2. Remedies for Breaches of Sellers.
(a) Indemnification. Subject to the limitations set forth in Section
7.6(b) and (c), each Seller, acting for himself or itself, individually and
solely in his or its capacity as a
45
Seller and not as a Managers (individuellement et non solidairement) hereby
agrees to indemnify, defend and hold Buyer and its successors and assigns
(collectively, the "Buyer Indemnified Persons") harmless from and against any
damages arising, directly or indirectly, from or in connection with:
(i) any inaccuracy in, or breach of any of the representations
or warranties made by such Seller in ARTICLE II or in Schedule 1 (to the extent
only that they relate to such Seller);
(ii) any failure to satisfy or comply with, or any breach of
any covenants, promises or agreements of such Seller to be performed by such
Seller hereunder;
(iii) any failure of such Seller to have good, valid and
marketable title to the Shares free and clear of any Liens;
(iv) any Fraud or Willful Breach; and
(v) any claim by any Person for any such Seller's portion of
Transaction Expenses, other than Reimbursed Expenses, incurred but unpaid by
such Seller in connection with this Agreement and the transactions contemplated
hereby.
(b) Time Limitations. If the Closing occurs, no Seller will have
liability for indemnification of Damages pursuant to Sections 7.2(a) (i) and
(ii): (i) with respect to claims against the Third Escrow Sub-Account, unless on
or before the 2005 Audit Date, or (ii) with respect to claims against the Second
Escrow Indemnification Sub-Account, unless on or before the date that is 18
months following the Closing Date, the Buyer (A) provides the Sellers' Agents
with a Buyer's Claim Notice and (B) provides the Escrow Agent with a Buyers'
Escrow Claim Notice.
(c) Limitations on Amount. Each Seller will have no liability for
indemnification with respect to matters described in Sections 7.2(a)(i) and (ii)
until the total of all Damages with respect to such matters exceeds such
Seller's proportionate share, based upon Shares of the Company owned by such
Seller, of US$20,000, in which event the Sellers shall be responsible for any
and all Damages without regard to such limitation; provided, that the aggregate
liability of each Seller for indemnification with respect to the matters
described in Section 7.2(a)(i) and (ii) shall not exceed such Seller's
proportionate share, based upon Shares of the Company owned by such Seller, of
the difference between (i) either (A) the amount of the Third Escrow Sub-Account
and the Second Escrow Indemnification Sub-Account if a claim is made prior to
the 2005 Audit Date, or (B) the amount of the Second Escrow Indemnification
Sub-Account if the claim is made after the 2005 Audit Date, and (ii) the
Consideration Shares previously distributed to Buyer from such accounts pursuant
to this Agreement and the Escrow Agreement. For the avoidance of doubt, after
all Consideration Shares comprising the Third Escrow Sub-Account and the Second
Escrow Indemnification Sub-Account have been distributed to Buyer and/or the
Sellers, the Buyer shall have no further remedy with respect to matters
described in Sections 7.2(a)(i) and (ii).
Section 7.3. Remedies to breaches of ARTICLE III.
(a) Reduction of Acquisition Price. The Contingent Consideration and
the First Earn-Out Payment to which each Seller is entitled under this Agreement
shall be reduced by its proportionate share, based upon Shares of the Company
owned by such Seller, of the amount of any loss, liability, claim, damage,
expense (including costs of investigation and defense and
46
reasonable attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(i) any breach or inaccuracy of any representation or warranty
made by the Managers in ARTICLE III, the Managers' Disclosure Schedule (as may
be modified or supplemented as provided in Section 5.15(d)), or any other
certificate or document delivered by or on behalf of the Managers pursuant to
this Agreement; provided, that if any of such representation or warranty of
ARTICLE III or in the Managers' Disclosure Schedule contains a materiality
qualifier, such materiality will be taken into consideration only for purposes
of determining whether a breach of such representation or warranty containing
the materiality qualifier has or has not occurred but, in the event it is
determined that a breach of any such representation or warranty has occurred,
the materiality qualifier shall be disregarded for purposes of determining the
amount of the Damages resulting from such breach;
(ii) any breach by the Managers of any of their respective
covenants or obligations in this Agreement; or
(iii) any claim by any Person for any Transaction Expenses,
other than Reimbursed Expenses, incurred but unpaid in connection with this
Agreement and the transactions contemplated hereby.
(b) Time Limitations. If the Closing occurs, the Acquisition Price
will not be reduced by the amount of Damages pursuant to Section 7.3(a)(i) and
(ii): (i) with respect to claims against the Third Escrow Account unless on or
before the 2005 Audit Date and (ii) with respect to claims against the Second
Escrow Indemnification Sub-Account, unless on or before the date that is 18
months following the Closing Date, the Buyer notifies (A) the Sellers' Agents of
one or more claims specifying the factual basis of each claim for Buyer's
Damages in reasonable detail to the extent then known by the Buyer, including a
fair estimation of each claim (the "Buyer's Claim Notice") and (B) the Escrow
Agent of such Buyer's claims (the "Buyer's Escrow Claim Notice").
(c) Limitations on Amount. The Sellers will have no liability for
indemnification with respect to the matters described in Section 7.3(a)(i) and
(ii) until the total of all Damages with respect to such matters exceeds
US$20,000, in which event the Sellers shall be responsible for any and all
Damages without regard to such limitation; provided, that the aggregate
reduction of each Seller's proportionate share, based upon Shares of the Company
owned by such Seller, of the Acquisition Price with respect to the matters
described in Section 7.3(a)(i) and (ii) shall not exceed each Seller's
proportionate share of the difference between (i) either (A), the amount of the
Third Escrow Sub-Account and the Second Escrow Indemnification Sub-Account if a
claim is made prior to the 2005 Audit Date, or (B) the amount of the Second
Escrow Indemnification Sub-Account if the claim is made after the 2005 Audit
Date and (ii) the proportionate share of the Consideration Shares previously
distributed to Buyer from such accounts pursuant to this Agreement and the
Escrow Agreement. For the avoidance of doubt, after all Consideration Shares
comprising the Third Escrow Sub-Account and the Second Escrow Indemnification
Sub-Account have been distributed to Buyer and/or the Sellers, the Buyer shall
have no further remedy with respect to matters described in Section 7.3(a)(i)
and (ii).
(d) For the avoidance of doubt, each Seller has agreed that its
portion of the Acquisition Price deposited in the Third Escrow Sub-Account and
the Second Escrow Indemnification Sub-Account is subject to the amount of
Buyer's Damages which may be awarded to the Buyer with respect to the matters
described in Section 7.3(a) upon mutual agreement between the Buyer and Sellers'
Agents or upon Final Resolution, and, except as set
47
forth in Section 7.7, the Buyer acknowledges that the Managers, acting in their
capacity as Managers, shall have no liability for indemnification of Buyer's
Damages.
Section 7.4. Indemnification by the Buyer.
(a) Indemnification. The Buyer will indemnify and hold harmless the
Sellers for, and will pay to the Sellers and its successors and assigns, the
amount of any Damages arising, directly or indirectly, from or in connection
with:
(i) any breach or inaccuracy of any representation or warranty
made by the Buyer in this Agreement, the Buyer Disclosure Schedule, (as may be
modified or supplemented as provided in Section 5.15(d)) or any other
certificate or document delivered by or on behalf of the Buyer pursuant to this
Agreement;
(ii) any breach by the Buyer of any of its covenants or
obligations under this Agreement (other than payment of the Consideration Shares
and Transaction Expenses as required by this Agreement);
(iii) any Fraud or Willful Breach; and
(iv) any failure of Buyer to pay the Consideration Shares and
Transaction Expenses as required by this Agreement or to deliver good, valid and
marketable title to the Consideration Shares to which each Seller is entitled
free of any Liens, subject to the restrictions contemplated by this Agreement
and the exhibits attached hereto.
(b) Time Limitations. If the Closing occurs, the Buyer will have no
liability for indemnification of Damages pursuant to Section 7.4(a)(i) and (ii):
(i) with respect to claims against the Buyer's First Indemnification Cap, unless
on or before the 2005 Audit Date, and (ii) with respect to claims against the
Buyer's Second Indemnification Cap, unless on or before the date that is 18
months following the Closing Date, any of Sellers' Agents notifies (A) the Buyer
of one or more such claims specifying the factual basis of each such claim in
reasonable detail to the extent then known by the Sellers' Agents, including a
fair estimation of each such claim (the "Sellers Claim Notice") and (B) the
Escrow Agent of such Sellers' claims (the "Sellers' Escrow Claim Notice").
(c) Limitations in Amount. The Buyer will have no liability for
indemnification of Sellers' Damages with respect to matters described in
Sections 7.4(a)(i) and (ii) until the total of all Sellers' Damages exceeds
US$20,000, in which event the Buyer shall be responsible for any and all
Sellers' Damages without regard to such limitation; provided, that the aggregate
liability of the Buyer for indemnification with respect to matters described in
Sections 7.4(a)(i) and (ii) shall not exceed the difference between (i) either
(A) US$500,000 (the "Buyer's First Indemnification Cap") plus twenty-five
percent (25%) of the US Dollar value of the First Earn-Out Payment earned by and
deliverable to Sellers (the "Buyer's Second Indemnification Cap") if the claim
is made prior to the 2005 Audit Date, or (B) the amount of the Buyer's Second
Indemnification Cap if the claim is made after the 2005 Audit Date, and (ii) the
amounts previously paid to Sellers by Buyer pursuant to this Section 7.4.
Section 7.5. Procedure for Indemnification.
(a) Promptly after receipt by the Buyer or a Seller (collectively,
"Indemnified Person(s)") under Sections 7.2, 7.4 or 7.7 of notice of the
commencement of any Proceeding against it, or Section 7.3 with respect to a
claim for a reduction of the Acquisition Price, such Indemnified Person will, if
a claim is to be made against the other Party under such Section (the
48
"Indemnifying Person"), give notice to the Indemnifying Person of the
commencement of such claim, but the failure to notify the Indemnifying Person
will not relieve the Indemnifying Person of any liability that it may have to
any Indemnified Person, except to the extent that the Indemnifying Person
demonstrate that the defense of such action is actually prejudiced by the
Indemnified Person's failure to give such notice.
(b) If any Proceeding referred to in Section 7.5(a) is brought
against an Indemnified Person and it gives notice to the Indemnifying Person of
the commencement of such Proceeding, the Indemnifying Person will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless any of
the Indemnifying Persons, are also a Party to such Proceeding and the
Indemnified Person determines in good faith that joint representation would be
inappropriate), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Person and, after notice from the Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
Proceeding, the Indemnifying Person will not, as long as it diligently conducts
such defense, be liable to the Indemnified Person under this Section 7.5 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the Indemnified Person in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If the Indemnifying Person assumes the defense of a Proceeding,
(i) no compromise or settlement of such claims may be effected by the
Indemnifying Person without the Indemnified Person's consent unless (A) there is
no finding or admission of any violation of Law or any violation of the rights
of any Person and no effect on any other claims that may be made against the
Indemnified Person, and (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person; and (ii) the Indemnifying Person
will have no liability with respect to any compromise or settlement of such
claims effected without its consent. If notice is given to an Indemnifying
Person of the commencement of any Proceeding and the Indemnifying Person does
not, within ten days after the Indemnified Person's notice is given, give notice
to the Indemnified Person of its election to assume the defense of such
Proceeding, the Indemnifying Person will be bound by any determination made in
such Proceeding or any compromise or settlement effected by the Indemnified
Person.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Person may, by notice to the Indemnifying Person,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the Indemnifying Person will not be bound by any determination of a Proceeding
so defended or any compromise or settlement effected without its consent (which
may not be unreasonably withheld).
(d) Each of the Parties hereby consents to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may have
under this Section 7.5 with respect to such Proceeding or the matters alleged
therein, and agrees that process may be served on the Parties with respect to
such a claim anywhere in the world.
(e) For the purposes of this Section 7.5, any and all notices to be
given to the Sellers may be given by the Buyer to the Sellers' Agents on behalf
of the Sellers (and the Buyer shall not be obligated to give any such notice to
all Sellers).
49
Section 7.6. Recourse to Escrow Agreement and Earn-Out Offset.
(a) The Buyer may set-off against the First Earn-Out Payment, to the
extent of the Second Indemnification Sub-Account, which may be payable by the
Buyer to any Sellers in accordance with Section 1.4(a), amounts to which the
Buyer may, or may believe itself to be entitled in respect of Damages under
Section 7.2(a) and Section 7.3(a).
(i) At the time the Buyer pays the First Earn-Out Payment to
such Seller under Section 1.4(a), the Buyer may (A) give written notice (a
"Setoff Notice") to the Sellers' Agents specifying in reasonable detail the
nature and dollar amount of any claim(s) (each, a "Setoff Claim") for Damages
that Buyer may then have under Section 7.2(a) or Section 7.3(a) (whether or not
such claim has previously been asserted by the Buyer or the final resolution
thereof is then pending) and (ii) notify forthwith a copy of the Setoff Claim to
the Escrow Agent (the "Setoff Escrow Notice"), instructing the Escrow Agent to
withhold the Buyer's Damages from the First Earn-Out Payment then otherwise
payable to the Sellers in an amount equal to the full amount of any and all such
Setoff Claims. Each share of Buyer Common Stock subject to the set off shall be
valued in an amount equal to the Average Closing Price.
(ii) Unless the Sellers' Agents give written notice (a
"Counter Notice") to the Buyer, with a copy to the Escrow Agent, disputing any
Setoff Claim within 30 days following receipt by the Sellers' Agents of the
Setoff Notice relating to such Setoff Claim, then the amount of Damages claimed
by the Buyer in the Setoff Notice as to such Setoff Claim and the Buyer's right
of setoff against the First Earn-Out Payment for satisfaction thereof, shall be
deemed conclusively established, and the Sellers shall no longer be entitled to
payment of such portion of the First Earn-Out Payment, and the Escrow Agent
shall release and deliver to the Buyer the number of Consideration Shares
withheld pursuant to Setoff Escrow Notice.
(iii) If the Sellers' Agents give a timely Counter Notice with
respect to any Setoff Claim set forth in a Setoff Notice and, after final
resolution of such Setoff Claim by agreement or settlement of the Parties, by a
court or other Governmental Entity or otherwise, the Buyer elects or is required
to pay to the Sellers all or any part of the amount of the First Earn-Out
Payment as to which the Buyer exercised the right of setoff set forth in this
Section 7.6 in satisfaction of such resolved Setoff Claim (the "Released
Earn-Out Payment Amount"), then the Escrow Agent shall release and deliver to
the Seller a number of Consideration Shares withheld pursuant to Setoff Escrow
Notice, equal to the Released Earn-Out Payment Amount to the Sellers' Agents for
distribution to the Sellers, and shall deliver, if applicable, the remaining
withheld Consideration Shares to the Buyer.
(b) If this Agreement is consummated, recovery from and/or offset
against the Third Escrow Sub-Account, and the Second Escrow Indemnification
Sub-Account for matters listed in 7.3(a)(i) and (ii), and recovery from and/or
offset against the Third Escrow Sub-Account and the Second Escrow
Indemnification Sub-Account for matters listed in Sections 7.2(a)(i) and (ii)
shall be the sole and exclusive remedy for the Buyer. No limitations set forth
in this ARTICLE VII shall limit Buyer's remedies for matters listed in Section
7.2(a) (iii), (iv) and (v), Section 7.3(a)(iii) or Section 7.7.
(c) All payments made by Sellers under the provisions of this
ARTICLE VII will be treated for all Tax purposes as adjustments of the purchase
price except to the extent such treatment is not permitted by the applicable Tax
Law. If the treatment as an adjustment to purchase price is disputed by any
taxing authority, the Party receiving the notice of such dispute will promptly
notify and consult with the other Party concerning resolution of such dispute.
50
Section 7.7. Remedies for Managers Fraud or Willful Breach. Each Manager
will, individually, indemnify and hold harmless the Buyer Indemnified Persons
for, and will pay to the Buyer Indemnified Persons the amount of any Damages
arising, directly or indirectly, from or in connection with any Fraud or Willful
Breach of such Manager. Each Seller individually agrees to pay on a proportional
basis based on the number of Shares of the Company any and all fees and expenses
(including without limitation all attorney fees from a law firm selected by the
Manager(s)) of the Manager(s) for defense of any claims unless and until a Final
Resolution finding Fraud or Willful Breach on the claims occurs.
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior
to the Closing Date:
(a) by mutual written consent of the Sellers' Agents and the Buyer;
(b) by the Buyer if the stockholders of the Buyer fail to approve
the issuance of Consideration Shares at the Buyer Stockholders Meeting as
provided in Section 5.7 above.
(c) by the Sellers' Agents on behalf of the Sellers or the Buyer at
any time after January 31, 2005 (or February 28, 2005 if the SEC shall elect to
review the Proxy Statement), if the Closing shall not have occurred by such
date; provided, however, that (i) the Buyer may elect to extend the February 28,
2005 date if the SEC shall elect to review the Proxy Statement to March 31,
2005, if it is not practical to hold the Buyer Stockholder Meeting by February
28, 2005 as a result of such SEC review, conditioned upon making a loan to the
Company of 500,000 Euros on commercial terms, and (ii) the right to terminate
this Agreement under this Section 8.1 shall not be available to (A) the Sellers,
if any Seller has or the Managers has breached any of its representations,
warranties or covenants hereunder in any material respect and such breach has
been the cause of or resulted in the failure of the Closing to occur on or
before such date or (B) the Buyer, if the Buyer has breached any of its
representations, warranties or covenants hereunder in any material respect and
such breach has been the cause of or resulted in the failure of the Closing to
occur on or before such date. If the Buyer shall elect to extend the date as
provided in clause (c)(i) above and the Closing Date does not occur by March 31,
2005 for any reason other than a breach or default by Sellers or the Managers
hereunder, the loan of the Buyer to the Company shall be forgiven; or
(d) by the Sellers' Agents on behalf of the Sellers or the Buyer
upon written notice to the other Party, if the Buyer, or the Sellers, as
applicable shall have breached or failed to perform in any material respect any
of its respective representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 6.2(a) or (b) or Section
6.3(a) or (b), as applicable, and (ii) cannot be or has not been cured within 30
days after the giving of written notice by the Sellers or the Buyer to the
other, as applicable.
Section 8.2. Procedure for, and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by the Parties hereto pursuant to Section 8.1 hereof, written notice
thereof shall be given by a Party so terminating to the other Party and this
Agreement shall forthwith terminate and shall become null and void and of no
further effect, and the transactions contemplated hereby shall be abandoned
without further action by the Company, the Sellers or the Buyer. Upon
termination of this Agreement pursuant
51
to the provisions of Section 8.1(a), (b) or (c) above, neither Party shall have
any further duty, liability or obligation to the other Parties under this
Agreement. The provisions of Sections 5.2(b), Section 5.11, Section 5.15 and
ARTICLE VII shall survive any termination of this Agreement. Each Party's right
of termination under Section 8.1 is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of a right of termination
will not be an election of remedies.
ARTICLE IX
WAIVERS OF PRE-EMPTIVE RIGHTS, RIGHTS OF
FIRST REFUSAL, TAG-ALONG AND SIMILAR RIGHTS
Section 9.1. Waiver of Notices, Pre-Emptive Rights, Rights of First
Refusal, Tag-Along and Similar Rights. In connection with the sale and exchange
of the Shares by Sellers, and the consummation of the transactions contemplated
hereby, each of the Sellers hereby irrevocably waives (a) any and all rights to
receive written notice of the proposed sale and exchange of the Shares as
contemplated herein, (b) any and all pre-emptive rights, or rights of first
refusal or any similar rights to acquire any of the Shares under the Articles of
Association of the Company, as amended, any other charter or governing
instrument of the Company, or that certain Stockholders Agreement dated December
20, 2000, as amended, among the Sellers (the "Sellers Stockholders Agreement"),
or any other agreement or understanding to which the Company or any of Sellers
is a Party, and (c) any and all rights to sell of their respective Shares
pursuant to any tag-along rights, or any similar rights, pursuant to the
Articles of Association of the Company, as amended, any other charter or
governing instrument of the Company, the Sellers Stockholder Agreement, or any
other agreement or understanding to which the Company or any of Sellers is a
Party.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Entire Agreement; Amendment. This Agreement (including the
Managers Disclosure Schedule and the Buyer Disclosure Schedule and the Exhibits
and Annexes hereto) constitutes the entire agreement of the Parties relating to
the subject matter hereof and supersedes all other prior agreements,
negotiations, discussions, arrangements and understandings between the Parties
both oral and written regarding such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Managers Disclosure Schedule (other than an exception expressly set forth as
such in the appropriate Schedule of the Managers Disclosure Schedule with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement shall control. This Agreement may be amended,
supplemented, amended and restated or otherwise changed or modified only by a
written agreement duly executed by the Company, the Buyer and the Sellers'
Agents.
Section 10.2. Severability. Each Article, Section, subsection, term and
provision (or part thereof) of this Agreement shall be considered severable, and
if, for any reason, any such Article, Section, subsection, term or provision (or
part thereof) herein is determined by a court or other Governmental Entity of
competent jurisdiction to be invalid and contrary to, or in conflict with any
existing or future Law or regulation, such determination shall not impair the
operation of, or otherwise affect the remaining Articles, Sections, subsections,
terms or provisions (or parts thereof) of this Agreement, and the latter will
continue to be given full force and effect and bind
52
the Parties hereto; and said invalid Articles, Sections, subsections, terms or
provisions (or parts hereof) shall be deemed not a part of this Agreement.
Section 10.3. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly delivered (i) upon receipt if
delivered personally, (ii) five Business Days after being mailed by registered
or certified mail, postage prepaid, return receipt requested, (iii) two Business
Days after it is sent by an internationally recognized commercial overnight
courier service, or (iv) upon transmission, if sent via facsimile (with
confirmation of receipt) to the Parties at the following address (or telecopy
number in the case of facsimile transmission), or at such other address for a
Party as shall be specified upon prior notice given in the manner contemplated
by this Section 10.3:
(a) if to the Sellers' Agents, to
-------------------------
-------------------------
-------------------------
Telecopy:
Attention:
with a copy to:
-------------------------
-------------------------
-------------------------
Telecopy:
Attention:
(b) if to the Buyer, to:
Sonus Pharmaceuticals, Inc.
00000 00xx Xxxxxx XX
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, President and CEO
with a copy to:
X.X. Xxxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Telecopy: (000) 000-0000
Section 10.4. Governing Law; Jurisdiction. This Agreement shall be
governed by, enforced under and construed in accordance with the laws of the
State of Delaware applicable to Contracts made and to be performed entirely
within the State of Delaware, without giving effect to any choice or conflict of
law provision or rule thereof. Except as provided in Section 1.4(c), each of the
Parties hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York or the United
States District Court for the Southern District of New York for any litigation,
proceeding or action arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation,
proceeding or action relating thereto except in such courts). Each of the
Parties
53
hereto hereby irrevocably and unconditionally waives any objection to the laying
of venue of any litigation, proceeding or action arising out of this Agreement
or the transactions contemplated hereby in the courts of the State of New York
or the United States District Court for the Southern District of New York and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such litigation, proceeding or action brought
in any such court has been brought in an inconvenient forum. Each Party hereto
hereby consents to process being served in any such litigation, proceeding or
action by the mailing of a copy thereof to the address set forth in Section 10.3
hereof below its name and agrees that such service upon receipt shall constitute
good and sufficient service of process or notice thereof. Nothing in this
paragraph shall affect or eliminate any right to serve process in any other
manner contemplated by applicable Law.
Section 10.5. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and shall in no way be construed to
define, limit, describe, explain, modify, amplify, or add to the interpretation,
construction or meaning of any provision of, or scope or intent of, this
Agreement nor in any way affect this Agreement.
Section 10.6. Counterparts. This Agreement may be signed in multiple
counterparts and all signed copies of this Agreement will together constitute
one original of this Agreement. This Agreement shall only be deemed valid and
effective once all of the Buyer, Sellers, Managers, the Company Option Holders
(excluding those listed on Schedule 5.22, if any) and the Company Warrant
Holders (excluding those listed on Schedule 5.22, if any) have executed and
delivered this Agreement. Prior to the execution and delivery by all of such
Parties, any of such Parties may by written notice withdraw their signature on
this Agreement from the other Parties hereto.
Section 10.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other Parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective successors and assigns.
Section 10.8. Fees and Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, including with respect to Transaction Expenses, all
costs and expenses (including legal and financial advisory fees and expenses)
incurred in connection with, or in anticipation of, this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
expenses.
Section 10.9. Interpretation. Throughout this Agreement, nouns, pronouns
and verbs shall be construed as masculine, feminine, neuter, singular or plural,
whichever shall be applicable. Unless otherwise specified, all references herein
to "Section" or "Article" shall refer to corresponding provisions of this
Agreement. Unless otherwise specified, all references herein to "Schedules"
"Exhibits" or "Appendices" are references to the Schedules, Exhibits and
Appendices of this Agreement. Whenever the words "include", "includes" or
including" are used in this Agreement, they are deemed to be followed by the
words "without limitation." In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement. Unless otherwise specified in the Agreement, Sellers act
individually, and not jointly or severally.
Section 10.10. No Third Party Beneficiaries. Except as expressly provided
in this Agreement, this Agreement shall not benefit or create any right or cause
of action in or on behalf
54
of any Person other than the Parties hereto; provided, however, that this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the Parties and their respective successors and permitted assigns.
Section 10.11. Waivers. The failure of a Party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that Party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing and must be executed by the Party against whom enforcement is sought
(which, in the case of any Seller, may be the Sellers' Agents).
Section 10.12. Specific Performance. The Parties agree that irreparable
damages would occur if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly hereby agreed that the Parties shall be entitled to an injunction
or injunctions to prevent actual breaches or threatened breaches of this
Agreement and to otherwise enforce specifically, and obtain equitable relief in
connection with, the terms and provisions hereof in any court of the United
States or any state having jurisdiction, all of the foregoing, in addition to
any other remedy to which they are entitled at law or in equity and without the
necessity of proving damages or posting a bond or other security.
Section 10.13. Time. If the last day permitted for the giving of any
notice or the performance of any act required or permitted under this Agreement
falls on a day which is not a Business Day, the time for the giving of such
notice or the performance of such act will be extended to the next succeeding
Business Day.
Section 10.14. Exchange Rate. For the avoidance of doubt, all
Euro-denominated amounts referred in this Agreement or in the notices sent by
the Parties to the Escrow Agent or in their attachments shall be converted to US
Dollars on the basis of an exchange rate equal to the Euro to US$ exchange rate
applicable the day before Closing, which exchange rate for purpose of the Escrow
Agreement shall be specified as a fixed exchange rate in the Escrow Agreement.
ARTICLE XI
DEFINITIONS
Section 11.1. Defined Terms. As used herein, the terms below shall have
the following meanings.
"2005 Audit Date" has the meaning set forth in Section 1.5(b)(i).
"Accounts Receivable" has the meaning set forth in Section 3.19.
"Acquisition Price" has the meaning set forth in Section 1.2.
"Adjusted Cash" means the aggregate cash and cash equivalents and
marketable securities of the Company as defined by [the French Plan Comptable
General] as of December 31, 2004, less debt for money borrowed (including loans
made by ANVAR) as of December 31, 2004, less any Transaction Expenses incurred
and paid after December 31, 2004 in connection with the transaction as of the
Closing Date, which are paid or payable or reimbursed or reimbursable in cash by
Buyer, and plus the amount of the Research Tax Credit.
"Affiliates" means, with respect to any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For the purposes of this definition,
55
a Person shall be regarded as in control of another corporation or non-corporate
entity if it owns, or directly or indirectly controls at least 50% of the voting
stock of the other entity or, (a) in the absence of the ownership of at least
50% of the voting stock of a corporation or (b) in the case of a non-corporate
entity, if it has the power to direct or cause the direction of the management
and policies of such corporation or non-corporate entity, as applicable. In the
case of Sellers who are financial investors, the term "Affiliate" shall
specifically exclude any corporate or non-corporate entity in which such Sellers
hold for investment purposes shares, warrants, convertible debentures,
securities or other ownership interests.
"Agreement" has the meaning set forth in the Preamble.
"Annual Financial Statements" has the meaning set forth in Section 3.4(a).
"Applicable Contract" means any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become subject
to any obligation or liability, or (c) by which the Company or any of the assets
owned or used by it is or may become bound.
"Applicable Law" has the meaning set forth in Section 3.8(a)(i).
"Average Closing Price" has the meaning set forth in Section 1.3(a) as
such Average Closing Price may be adjusted pursuant to the last sentence of
Section 1.3(a).
"Balance Sheet" has the meaning set forth in Section 3.4(a).
"Business Day" shall mean any day other than a Saturday, a Sunday or other
day which is a legal holiday or on which banks are closed in Seattle,
Washington, United States of America.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Common Stock" has the meaning set forth in Section 4.4.
"Buyer Disclosure Schedule" has the meaning set forth in Section 4.3.
"Buyer Financial Statements" has the meaning set forth in Section 4.6.
"Buyer Indemnified Persons" has the meaning set forth in Section 7.2(a).
"Buyer Material Adverse Effect" has the meaning set forth in Section 4.12.
"Buyer Options" has the meaning set forth in the Recitals.
"Buyer Rights" has the same meaning as the term "Rights" under the Buyer
Rights Plan.
"Buyer Rights Plan" means the Amended and Restated Right Agreement, date
as of July 24, 2002, between the Company and U.S. Stock Transfer Corporation, as
amended from time to time.
"Buyer's Claim Notice" has the meaning set forth in the Section 7.3.
"Buyer's Escrow Claim Notice" has the meaning set forth in Section 7.3.
"Buyer Financial Statements" has the meaning set forth in Section 4.6.
"Buyer's First Indemnification Cap" has the meaning set forth in Section
7.4(c).
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"Buyer's Second Indemnification Cap" has the meaning set forth in Section
7.4(c).
"Buyer SEC Reports" has the meaning set forth in Section 4.6.
"Buyer Securities" has the meaning set forth in Section 4.4.
"Buyer Stockholder Meeting" has the meaning set forth in Section 5.7.
"Closing" has the meaning set forth in Section 1.9.
"Closing Date" has the meaning set forth in Section 1.9.
"Closing Date Purchase Price" has the meaning set forth in Section 1.3(a).
"Code" means the Internal Revenue Service Code of 1986, as amended, or any
successor law, and the regulations issued by the Internal Revenue Service or any
successor agency (and, to the extent relevant, the US Department of the
Treasury) thereunder.
"Company" has the meaning set forth in the Recitals.
"Company Material Adverse Effect" means a material adverse change in, or
effect on, the business, financial condition, results of operations of the
Company other than any such change or effect (a) relating to general economic,
regulatory or political conditions, except to the extent such change or effect
disproportionately affects the Company (relative to other industry participants)
or (b) relating to the healthcare industry, the life sciences industry or the
pharmaceutical industry generally, except to the extent such change or effect
disproportionately affects the Company (relative to other industry
participants). Failure to pursue the first generation of Syn 1001 in its current
configuration shall not, in and of itself, be deemed to cause a Company Material
Adverse Effect.
"Company Options" means options to purchase shares of capital stock of the
Company.
"Company Option Holders" has the meaning set forth in the Preamble.
"Company Warrants" means warrants to purchase shares of capital stock of
the Company.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Consideration Shares" means the shares of Buyer Common Stock that Buyer
shall issue and deliver to Sellers as consideration for the acquisition of the
Shares.
"Contingent Consideration" has the meaning set forth in Section 1.5.
"Contract" means any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Counter Notice" has the meaning set forth in Section 7.7.
"Damages" has the meaning set forth in Section 7.3(a).
"Derivative Securities" means the Company Options and the Company
Warrants, as set forth in the Recitals.
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"Derivative Securities Holder(s)" has the meaning set forth in the
Preamble.
"Dispute" has the meaning set forth in Section 1.1(b).
"Due Date" means, with respect to any Tax Return, the date such return is
due to be filed (taking into account any valid extensions).
"Earn-Out Amount" has the meaning set forth in Section 1.4(a).
"Earn-Out Event(s)" has the meaning set forth in Section 1.4(a)(ii).
"Earn-Out Payments" has the meaning set forth in Section 1.4(b)(i).
"Earn-Out Period" has the meaning set forth in Section 1.4(b)(i).
"Environment" means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of, or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Entity or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 USC. Section 9601 et seq., as amended
("CERCLA").
"Environmental Law" means any applicable Law that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
58
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible Parties pay private Parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"Escrow Agent" has the meaning set forth in Section 1.6(a).
"Escrow Agreement" has the meaning set forth in Section 1.6(b).
"Escrow Deposits" has the meaning set forth in Section 1.6(b).
"Exchange Act" has the meaning set forth in Section 4.6.
"Facilities" means any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by any such Person.
"Final Resolution" means a binding and non-appealable court or arbitration
decision which finally resolves any dispute arising out of a claim of any Party
against one or more other Parties under this Agreement.
"First Earn-Out Event" has the meaning set forth in Section 1.4(a)(i).
"First Earn-Out Payment" has the meaning set forth in Section 1.4(a)(i).
"First Escrow Deposit" has the meaning set forth in Section 1.3(b).
"First Escrow Sub-Account" has the meaning set forth in Section 1.3(b).
"Fraud" or "Willful Breach" means dol as defined by Article 1116 of the
French Civil Code: Deception (dol) is a ground for annulment of a contract where
the schemes used by one of the parties are such that it is obvious that, without
them, the other party would not have entered into the contract. It may not be
presumed, and must be proved.
"French "GAAP" means French generally accepted accounting principals,
consistently applied.
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"Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Entity or pursuant to
any Law.
"Governmental Entity" means any government or any agency, bureau,
board, directorate, commission, court, department, official, political,
subdivision, tribunal, or other instrumentality of any government, whether
federal, state or local, domestic or foreign.
"Hazardous Activity" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and any
other act, business, operation, or thing that increases the danger, or risk of
danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that may affect the value of the Facilities or the Company.
"Hazardous Materials" means any waste or other substance that is
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"Indemnified Person" has the meaning set forth in Section 7.6(a).
"Indemnifying Person" has the meaning set forth in Section 7.6(a).
"Intellectual Property" has the meaning set forth in Section 3.13(b).
"Intellectual Property Assets" means all of the Intellectual Property
owned, licensed or otherwise used or held for use by the Company in the conduct
of its business.
"Interim Balance Sheet" has the meaning set forth in Section 3.4(a).
"Kaczorek Employment Agreement" means an Employment Agreement, dated
the date hereof, between Xxxxxx Xxxxxxxx and the Buyer.
"Key Employee" has the meaning set forth in Section 5.19(b).
"Knowledge" means, for the purposes of this Agreement and all
references to the "Knowledge of the Sellers or the Managers" herein, the Sellers
and the Managers will be deemed to have Knowledge of any fact or matter if (i)
any officer or director of the Company is actually aware of that fact or matter,
or (ii) an officer or director of the Company could reasonably be expected to
discover or otherwise become aware of such fact or matter after due inquiry,
including due inquiry of employees, officers and directors of the Company. For
the purposes of this Agreement and all references to the "Knowledge of the
Buyer" herein, the Buyer will be deemed to have Knowledge of any fact or matter
if (a) any officer or director of the Buyer is actually aware of that fact or
matter or (b) an officer or director of the Buyer could reasonably be expected
to discover or otherwise become aware of such fact or matter after due inquiry,
including due inquiry of employees, officers and directors of the Buyer.
"Law(s)" means any federal, state, local, municipal, French, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
60
"Lien" means any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership
other than Permitted Liens.
"Lower Collar" has the meaning set forth in Section 1.13(a).
"Major Customer" has the meaning set forth in Section 3.21.
"Managers" has the meaning set forth in the Preamble of this Agreement.
"Managers Disclosure Schedule" means a document, dated of even date
with this Agreement and delivered by the Managers to the Buyer at the Closing,
which refers to the representations and warranties of the Managers in this
Agreement and which contains the information contemplated to be set forth in the
Managers Disclosure Schedule by this Agreement and certain exceptions to the
representations and warranties of the Managers provided by the Managers in
ARTICLE III and otherwise under this Agreement. The Managers Disclosure Schedule
shall be arranged in sections which correspond to the numbered and lettered
paragraphs contained in ARTICLE III and otherwise in this Agreement (as
applicable).
"Mediation Period" has the meaning set forth in Section 1.4(d).
"Multiemployer Plan" has the meaning set forth in Section 3.8(b).
"NASDAQ" means the NASDAQ National Market System or such other
automated quotation system in which the Buyer Common Stock is then quoted if the
Buyer Common Stock is not quoted on the National Market System.
"Noncompetition Agreements" means two noncompetition agreements, dated
the date of this Agreement, executed and delivered by Xx. Xxxxxxxx and by Xx.
Xxxxxxx in favor of the Buyer, containing certain agreements by Messrs. Kaczorek
and Xxxxxxx with respect to noncompetition and nonsolicitation, effective as of
the Closing Date.
"Occupational Safety and Health Law" means any Law designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order" means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Entity or by any arbitrator.
"Ordinary Course of Business" means with respect to any action taken by
a Person, an action consistent with the past practices of such Person is taken
in the ordinary course of the normal day-to-day operations of such Person.
"Pension Plan" has the meaning set forth in Section 3.9(b).
"Permitted Liens" means (a) Liens that arise out of Taxes not in
default and payable without penalty or interest or the validity of which is
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with French GAAP, (b)
workmen's, repairmen's or other similar Liens arising or incurred by the
operation of
61
law and in the Ordinary Course of Business in respect of obligations which are
not overdue, and (c) minor title defects, recorded easements or Liens affecting
real or personal property, which defects, easements or Liens do not,
individually or in the aggregate, impair the continued use, occupancy, value or
marketability of title of the real or personal property to which they relate,
assuming that the property is used on substantially the same basis as such
property is currently being used by the Company.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Entity.
"Plans" has the meaning set forth in Section 3.8(a).
"Pre-Closing Period" means any taxable period ending on or before the
Closing Date and, with respect to any taxable period that includes but does not
end on the Closing Date, the portion of such period that ends on and includes
the Closing Date.
"Pre-Closing Taxes" means any Taxes of the Company and its Subsidiaries
attributable to Pre-Closing Periods; provided, that Pre-Closing Taxes shall not
include the amount of any Taxes reflected as a current liability on the Balance
Sheet or the Interim Balance Sheet or books of the Company as of the Closing.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Entity or arbitrator.
"Proxy Statement" has the meaning set forth in Section 5.3(a).
"Qualified Product Candidate" has the meaning set forth in Section
1.4(a)(ii).
"Reimbursed Expenses" has the meaning set forth in Section 1.8.
"Related Person" means, (a) with respect to a particular individual:
(a) each other member of such individual's Family, (b) any Person that is
directly or indirectly controlled by such individual or one or more members of
such individual's Family, (c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a Material
Interest, (d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity); and (e) with respect to a
specified Person other than an individual: (i) any Person that directly or
indirectly controls, is directly or indirectly controlled by, or is directly or
indirectly under common control with such specified Person, (ii) any Person that
holds a Material Interest in such specified Person, (iii) each Person that
serves as a director, officer, partner, executor, or trustee of such specified
Person (or in a similar capacity), (iv) any Person in which such specified
Person holds a Material Interest, (v) any Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity) and (vi) any Related Person of any individual described in clause (ii)
or (iii).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of voting securities or other voting interests representing at least
10% of the outstanding voting
62
power of a Person or equity securities or other equity interests representing at
least 10% of the outstanding equity securities or equity interests in a Person.
"Release" means any spilling, leaking, emitting, discharging,
depositing, escaping, leaching, dumping, or other releasing into the
Environment, whether intentional or unintentional.
"Released Earn-Out Payment Amount" has the meaning set forth in Section
7.7(a)(iii).
"Research Tax Credit" means the research tax credit (credit d'impot
recherche) of the Company for the fiscal year ended December 31, 2001 in the
amount of approximately 864,454 Euros which becomes due on December 31, 2004 and
is payable in the first quarter of 2005.
"S-3 Registration Statement" has the meaning set forth in Section 5.4.
"Sale of the Company" has the meaning set forth in Section 1.4(c).
"Sale Notice" has the meaning set forth in Section 1.4(c).
"Second Earn-Out Event" has the meaning set forth in Section 1.4(a)(i).
"Second Earn-Out Payment" has the meaning set forth in Section
1.4(a)(i).
"Second Escrow Deposit" has the meaning set forth in Section 1.4(d).
"Second Escrow Indemnification Sub-Account" has the meaning set forth
in Section 1.4(d)(iii).
"Second Escrow Sub-Account" has the meaning set forth in Section
1.4(d).
"SEC" has the meaning set forth in Section 4.6.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Seller" and "Sellers" has the meaning set forth in the Preamble.
"Sellers' Agents" has the meaning set forth in Section 5.17.
"Sellers Claim Notice" has the meaning set forth in Section 7.3.
"Sellers Escrow Claim Notice" has the meaning set forth in Section 7.3.
"Second Escrow Deposit" has the meaning set forth in Section 1.4(e).
"Second Escrow Sub-Account" has the meaning set forth in Section
1.4(e).
"Sellers Stockholders Agreement" has the meaning set forth in Section
9.1.
"Setoff Claim" has the meaning set forth in Section 7.7.
"Setoff Escrow Notice" has the meaning set forth in Section 7.7.
"Setoff Notice" has the meaning set forth in Section 7.7.
"Shares" has the meaning set forth in the Recitals.
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"Stockholders Agreement" has the meaning set forth in Section
1.10(a)(iv).
"Subsidiary" of any Person means another Person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its board of directors or
other governing body (or more than 50% of the equity interests of which) is
owned directly or indirectly by such person.
"Taxes" means (a) any tax, governmental fee or other like assessment or
charge of any kind whatsoever; including withholding on amounts paid to or by
any Person, federal and state income taxes, real property gains taxes, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, capital stock taxes, real and personal property
taxes, environmental taxes, transfer taxes, severance taxes, alternative or
add-on minimum taxes, and custom duties, together with any interest, penalty,
addition to tax or additional amount imposed by any Tax Authority or
Governmental Entity responsible for the imposition of any such tax; (b) any
liability for the payment of any amount of the type described in the immediately
preceding clause (a) as a result of the Company being a member of an affiliated,
consolidated, combined or similar group with any other Person at any time on or
prior to the Closing Date; and (c) any liability for the payment of any amount
of the type described in clause (a) or clause (b) above as a result of any
express or implied obligation to indemnify or otherwise assume or succeed to the
liability of any other Person.
"Taxing Authority" means any Governmental Entity, U.S., French, or
otherwise, having jurisdiction over the assessment, determination, collection or
other imposition of any Tax.
"Tax Returns" means all returns, reports, statements, declarations,
estimates and forms or other documents (including any related or supporting
information), required to be filed with respect to any Taxes.
"Third Escrow Deposit" has the meaning set forth in Section 1.5(b).
"Third Escrow Sub-Account" has the meaning set forth in Section 1.5(b).
"Third Party Acquisition" has the meaning set forth in Section 5.5.
"Threat of Release" means a substantial likelihood of a Release that
may require action in order to prevent or mitigate damage to the Environment
that may result from such Release.
"Transaction" has the meaning set forth in Section 1.1.
"Transaction Agreements" means, together this Agreement, the Kaczorek
Employment Agreement, the Xxxxxxx Employment Agreement, the Noncompetition
Agreements, the Escrow Agreement, the Company Option Holders waivers, and the
Stock Restriction Agreement.
"Transaction Expenses" has the meaning set forth in Section 1.8.
"Transaction Expenses Notice" has the meaning set forth in Section 1.8.
"Transfer Taxes" has the meaning set forth in Section 5.13(a).
"Unaudited Financial Statements" has the meaning set forth in Section
3.5(a).
"Upper Collar" has the meaning set forth in Section 1.3(a).
64
"US GAAP" means United States generally accepted accounting principles,
consistently applied.
* * * * *
65
IN WITNESS WHEREOF, each of the undersigned has caused this Stock
Purchase Agreement to be duly signed as of the date first above written.
SONUS PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President and Chief Executive
Officer
By: /s/ Xxxxx Xxxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxxx, PhD
Title: Vice President, Strategic Planning
and Business Development
66
[Signature Page to Stock Purchase Agreement Dated November 3, 2004]
------------------------------------------ ------------------------------------------
APAX FRANCE IV FCPR BANEXI VENTURES II FCPR
.. .
.. /s/ Xxxxxxx Xxxxx . /s/ Sophie Pierrin-Lepinard
----------------- ---------------------------
.. .
.
by: Xxxxxxx Xxxxx by: Sophie Pierrin-Lepinard
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
LOMBARD ODIER IMMUNITY 3I TECHNOLOGY 2001 FCPR
FUND FCP .
.. . /s/ Xxxxxxx Xxxxxx
------------------
.. /s/ Xxxxxx Xxxxxxxx .
-------------------
.. .
by: by Xxxxxx Xxxxxxxx, as attorney-in- by: by Xxxxxxx Xxxxxx, as attorney-in-fact
fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
BIOMEDICINSK UDVIKLING PRIVATE EQUITY DIRECT FINANCE
(BBU III) .
.. . /s/ Sophie Pierrin-Lepinard
---------------------------
../s/ Xxxxxx Xxxxxxx .
------------------
.. .
by: Xxxxxx Xxxxxxx, as attorney-in- by: Sophie Pierrin-Lepinard, as
fact attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXXX XXXXXXXX SORIDEC SA
.
.. . /s/ Xxxxxxxx Xxxxxx
.. /s/ Xxxxxx Xxxxxxxx -------------------
-------------------- .
.. .
by: Xxxxxx Xxxxxxxx by: Xxxxxxxx Xxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
BIOMEDICINSK UDVIKLING RENDEX SA
(BBU II) .
.. . /s/ Barend Bots
---------------
../s/ Xxxxxx Xxxxxxx .
------------------
.. .
by: Xxxxxx Xxxxxxx, as attorney-in-fact by: Barend Bots
------------------------------------------ ------------------------------------------
67
[Signature Page to Stock Purchase Agreement Dated November 3, 2004]
------------------------------------------ ------------------------------------------
SOFILARO SA HEALTHCAP COINVEST KB
.. .
.. /s/ Xxxxxxxx Xxxxxx ./s/ Xxxxxxx Xxxxx
------------------- -----------------
.
.. .
by: Xxxxxxxx Xxxxxx, as attorney-in-fact by: Xxxxxxx Xxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
SOFIMAC SA MISTRAL INVESTISSEMENTS SA
.. .
.. /s/ Xxxxxx Xxxxxxxx . /s/ Xxxxxxxx Xxxxxx
------------------- --------------------
.. .
.
by: Xxxxxx Xxxxxxxx, as attorney-in-fact by: Xxxxxxxx Xxxxxx
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
ALTAMIR & CIE SCA HEALTHCAP KB
.. .
.. /s/ Xxxxxxx Xxxxx . /s/ Xxxxxxx Xxxxx
----------------- ------------------
.. .
.
by: Xxxxxxx Xxxxx by: Xxxxxxx Xxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXX XXXXXX XXXXXX XXXXXXXXX
.. .
.. /s/ Xxxxxxxx Xxxxxxx . /s/ Xxxxxx Xxxxxxxx
-------------------- -------------------
by: Xxxxxxxx Xxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXXXXX XXXXXXX XXXXXX XXXXXXXX
.. .
.. /s/ Xxxxxxxx Xxxxxxx. . /s/ Xxxxxx Xxxxxxxx
--------------------- --------------------
.. .
by: Xxxxxxxx Xxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
68
[Signature Page to Stock Purchase Agreement Dated November 3, 2004]
------------------------------------------ ------------------------------------------
MERCURE BIOTECH SARL XXXXXXX
.. .
.. /s/ Xxxxxx Xxxxxxx . /s/ Xxxxxx Xxxxxxxx
------------------ --------------------
.. .
.
.. by: Xxxxxx Xxxxxxx, as attorney-in-fact . by: Xxxxxx Xxxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXXXXX XXXXX XXXX-XXXX MANNECY
.. .
.. . /s/ Xxxxxx Xxxxxxxx
--------------------
.. /s/ Xxxxxx Xxxxxxxx by: Xxxxxx Xxxxxxxx, as attorney-in-fact
--------------------
by: Xxxxxx Xxxxxxxx, as attorney-in-fact .
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
MEDICIS VENTURES GMBH XXXXXX XXXXXXX
&CO KG .
.. ./s/ Xxxxxx Xxxxxxx
.. /s/ Xxxxxxx Xxxxx ------------------
------------------ .
.. .
by: Xxxxxxx Xxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxx
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
FOCAL AUDIO INTERNATIONAL XXXXX XXXXXX
.. .
.. /s/ Xxxxxx Xxxxxxxx . /s/ Xxxxxx Xxxxxxxx
-------------------- --------------------
..
by: Xxxxxx Xxxxxxxx, as attorney-in-fact
by: Xxxxxx Xxxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
69
[Signature Page to Stock Purchase Agreement Dated November 3, 2004]
------------------------------------------ ------------------------------------------
XXXXXXXX XXXXX XXXXXXXXX XXXXX
.. . .
.. /s/ Xxxxxx Xxxxxxxx . /s/ Xxxxxx Xxxxxxxx
------------------- -------------------
by: Xxxxxx Xxxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxxx, as attorney-in-fact
.
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXXXX XXXXX XXXXXXX XXXX
.. .
.. /s/ Xxxxxx Xxxxxxxx ./s/ Xxxxxx Xxxxxxx
-------------------- ------------------
by: Xxxxxx Xxxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxx, as attorney-in-fact
.
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXX XXXXXX DENIS LONDEIX
.. .
.
.. /s/ Xxxxxx Xxxxxxxx . /s/ Xxxxxx Xxxxxxxx
-------------------- --------------------
by: Xxxxxx Xxxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxxx, as attorney-in-fact
.
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXXXXXX XXXXXXXX LUC-XXXXX XXXXXXX
.. .
../s/ Xxxxxxxxx Xxxxxxxx ./s/ Xxxxxx Xxxxxxx
---------------------- -------------------
by: Xxxxxxxxx Xxxxxxxx by: Xxxxxx Xxxxxxx, as attorney-in-fact
.. .
------------------------------------------ ------------------------------------------
------------------------------------------ ------------------------------------------
XXXXX XXXXXXXXX XXXX-XXXXXX SCHERRMANN
.. .
.. /s/ Xxxxxx Xxxxxxxx . /s/ Xxxxxx Xxxxxxxx
-------------------- -------------------
by: Xxxxxx Xxxxxxxx, as attorney-in-fact by: Xxxxxx Xxxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
70
[Signature Page to Stock Purchase Agreement Dated November 3, 2004]
------------------------------------------ ------------------------------------------
XXXXXXX XXXXX BANKINVEST BIOMEDICINSK
.. UDVIKLING (BBU I)
../s/ Xxxxxx Xxxxxxx .
------------------ ./s/ Xxxxxx Xxxxxxx
by: Xxxxxx Xxxxxxx, as attorney-in-fact ------------------
.
by: Xxxxxx Xxxxxxx, as attorney-in-fact
------------------------------------------ ------------------------------------------
Erhvervsudviklingsforeningen BankInvest Biomedicinsk Venture I is required to
make a reservation as to Article II, Sections 1(a), (b), (d), (e), (f) and (g)
of the Stockholders Agreement and as a consequence thereof and only with regard
to these provisions to Sections 1.10(a)(iv), 1.11(e), 2.2 and 6.3.(f) of this
Agreement, as we are not permitted to enter into agreements that decrease the
liquidity of the instruments that the fund invests its assets according to the
Danish Act on Mutual Funds, Special Purpose Mutual Funds and other Collective
Investment Schemes section 92(1) cf. 109(4). Consequently the said provisions
shall not be legally binding for us to the extent that such provisions restrict
the liquidity of our shares. However, it is our non-binding intention to comply
with the provisions as set out in letter of intent issued by us to the Buyer in
connection with entering into the Agreement. Subject to this reservation, we
agree to the Agreement.
71
APPENDIX 1.4(B)(I)
Buyer and the Company will support a steady state of at least two regulatory
preclinical programs for products of Buyer and Company (whether or not Qualified
Product Candidates) within the combined development plan of the Company and
Buyer until the Earn-Out Amount has been paid or for 5 years (which ever comes
first).
The final choice of these programs and the various "go / no go" decisions during
the 5 year period will be decided by the Buyer's Project Committee, Strategic
Committee and Board of Directors in the exercise of commercially reasonable
discretion.
Decisions for project selection and investment will incorporate the following
criteria:
1. Scientific viability;
2. Market opportunity and
3. Economic feasibility.
Factors to be considered in determining the criteria above shall include,
without limitation, available personnel with the requisite knowledge and
experience, technological changes, available financial resources, the
enforceability or defensibility of intellectual property rights relating to any
Qualified Product Candidate, and the availability of compounds and other
supplies necessary to pursue a preclinical program.
A-1
EXHIBIT B - FORM OF INVESTMENT STATEMENT
The purpose of the Form of Investment Certificate is to assure the
Buyer that the Seller will meet certain suitability standards in connection with
the transaction, in particular those imposed by United States securities laws
and the regulations under those laws. This schedule has been omitted because it
does not contain information which is material to an investment decision. Sonus
will furnish supplementally a copy of Exhibit B to the Commission upon request.
Schedule 1-2
EXHIBIT C - FORM OF IRREVOCABLE WAIVERS OF COMPANY OPTIONS AND COMPANY WARRANTS
This schedule has been omitted because it does not contain information
which is material to an investment decision. Sonus will furnish supplementally a
copy of Exhibit C to the Commission upon request.
Schedule 1-3
EXHIBIT D - BUYER OPTIONS
The Buyer Options exhibit lists key Synt:em S.A. management personnel
and aggregate option grants held by those key personnel. This schedule has been
omitted because it does not contain information which is material to an
investment decision. Sonus will furnish supplementally a copy of Exhibit D to
the Commission upon request.
Schedule 1-4
SCHEDULE 1 - LIST OF SELLERS, MANAGERS, CERTAIN COMPANY OPTION HOLDERS AND
COMPANY WARRANT HOLDERS AND ALLOCATION OF THE PURCHASE PRICE (PART1, PART 2,
PART 3, PART 4)
Schedule 1 contains a list of Sellers, Managers, certain Company Option
Holders and Company Warrant Holders and Allocation of the Purchase Price. This
schedule has been omitted because it does not contain information which is
material to an investment decision. Sonus will furnish supplementally a copy of
Schedule 1 to the Commission upon request.
Schedule 1-5
SCHEDULE 5.22 - CERTAIN DERIVATIVE SECURITY HOLDERS
Schedule 5.22 contains a list of Certain Derivative Security Holders.
This schedule has been omitted because it does not contain information which is
material to an investment decision. Sonus will furnish supplementally a copy of
Schedule 5.22 to the Commission upon request.
Schedule 1-6
MANAGERS' DISCLOSURE SCHEDULE
The Managers' Disclosure Schedule contains disclosures that are
exceptions to the representations and warranties of the Managers set forth in
the Stock Purchase Agreement. This schedule has been omitted because it does not
contain information which is material to an investment decision. Sonus will
furnish supplementally a copy of the Managers' Disclosure Schedule to the
Commission upon request.
Schedule 1-7
BUYER'S DISCLOSURE SCHEDULE
The Buyer's Disclosure Schedule contains disclosures that are
exceptions to the representations and warranties of the Buyer set forth in the
Stock Purchase Agreement. This schedule has been omitted because it does not
contain information, which is material to an investment decision. Sonus will
furnish supplementally a copy of the Buyer's Disclosure Schedule to the
Commission upon request.
Schedule 1-8
