AGREEMENT AND PLAN OF MERGER AND REORGANIZATION AMONG INVIVO THERAPEUTICS HOLDINGS CORP. INVIVO THERAPEUTICS ACQUISITION CORP. AND INVIVO THERAPEUTICS CORPORATION October 26, 2010
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AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
AMONG
INVIVO
THERAPEUTICS ACQUISITION CORP.
AND
INVIVO
THERAPEUTICS CORPORATION
October
26, 2010
![](https://www.sec.gov/Archives/edgar/data/1292519/000114420410056656/footer.jpg)
TABLE OF
CONTENTS
ARTICLE
I: THE MERGER
|
1
|
|
1.1
|
The
Merger
|
1
|
1.2
|
Private
Placement Offering
|
2
|
1.3
|
Registration
Statement
|
2
|
1.4
|
Bridge
Loan
|
2
|
1.5
|
The
Closing
|
3
|
1.6
|
Actions
at the Closing
|
3
|
1.7
|
Additional
Actions
|
3
|
1.8
|
Conversion
of Company Securities
|
4
|
1.9
|
Dissenting
Shares
|
4
|
1.10
|
Fractional
Shares
|
5
|
1.11
|
Options
and Warrants
|
5
|
1.12
|
[Intentionally
Omitted]
|
6
|
1.13
|
Certificate
of Incorporation and ByLaws
|
6
|
1.14
|
No
Further Rights
|
6
|
1.15
|
Closing
of Transfer Books
|
6
|
1.16
|
Post-Closing
Adjustment
|
7
|
1.17
|
Exemption
From Registration
|
8
|
ARTICLE
II: REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
|
8
|
|
2.1
|
Organization,
Qualification and Corporate Power
|
8
|
2.2
|
Capitalization
|
9
|
2.3
|
Authorization
of Transaction
|
9
|
2.4
|
Noncontravention
|
10
|
2.5
|
Subsidiaries
|
10
|
2.6
|
Financial
Statements
|
11
|
2.7
|
Absence
of Certain Changes
|
11
|
2.8
|
Undisclosed
Liabilities
|
11
|
2.9
|
Tax
Matters
|
11
|
2.10
|
Assets
|
13
|
2.11
|
Owned
Real Property
|
13
|
2.12
|
Real
Property Leases
|
13
|
2.13
|
Contracts
|
14
|
2.14
|
Accounts
Receivable
|
15
|
ii
2.15
|
Powers
of Attorney
|
15
|
2.16
|
Insurance
|
15
|
2.17
|
Litigation
|
16
|
2.18
|
Employees
|
16
|
2.19
|
Employee
Benefits
|
16
|
2.20
|
Environmental
Matters
|
19
|
2.21
|
Legal
Compliance
|
19
|
2.22
|
Customers
and Suppliers
|
20
|
2.23
|
Permits
|
20
|
2.24
|
Certain
Business Relationships With Affiliates
|
20
|
2.25
|
Brokers’
Fees
|
20
|
2.26
|
Books
and Records
|
20
|
2.27
|
Intellectual
Property
|
20
|
2.28
|
Disclosure
|
22
|
2.29
|
Duty
to Make Inquiry
|
22
|
ARTICLE
III: REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
ACQUISITION SUBSIDIARY
|
22
|
|
3.1
|
Organization,
Qualification and Corporate Power
|
22
|
3.2
|
Capitalization
|
23
|
3.3
|
Authorization
of Transaction
|
24
|
3.4
|
Noncontravention
|
24
|
3.5
|
Subsidiaries
|
24
|
3.6
|
Exchange
Act Reports
|
25
|
3.7
|
Compliance
with Laws
|
25
|
3.8
|
Financial
Statements; Internal Controls
|
26
|
3.9
|
Absence
of Certain Changes
|
27
|
3.10
|
Litigation
|
27
|
3.11
|
Undisclosed
Liabilities
|
27
|
3.12
|
Tax
Matters
|
28
|
3.13
|
Assets
|
29
|
3.14
|
Owned
Real Property
|
29
|
3.15
|
Real
Property Leases
|
29
|
3.16
|
Contracts
|
30
|
3.17
|
Accounts
Receivable
|
31
|
iii
3.18
|
Powers
of Attorney
|
31
|
3.19
|
Insurance
|
31
|
3.20
|
Warranties
|
32
|
3.21
|
Employees
|
32
|
3.22
|
Employee
Benefits
|
32
|
3.23
|
Environmental
Matters
|
34
|
3.24
|
Permits
|
35
|
3.25
|
Certain
Business Relationships With Affiliates
|
35
|
3.26
|
Tax-Free
Reorganization
|
35
|
3.27
|
Split-Off
|
36
|
3.28
|
Brokers’
Fees
|
36
|
3.29
|
Disclosure
|
36
|
3.30
|
Interested
Party Transactions
|
37
|
3.31
|
Duty
to Make Inquiry
|
37
|
3.32
|
Accountants
|
37
|
3.33
|
Minute
Books
|
37
|
3.34
|
Board
Action
|
37
|
ARTICLE
IV: COVENANTS
|
38
|
|
4.1
|
Closing
Efforts
|
38
|
4.2
|
Governmental
and Thirty Party Notices and Consents
|
38
|
4.3
|
Current
Report
|
38
|
4.4
|
Operation
of Business
|
38
|
4.5
|
Access
to Information
|
40
|
4.6
|
Operation
of Business
|
40
|
4.7
|
Access
to Information
|
42
|
4.8
|
Expenses
|
42
|
4.9
|
Indemnification
|
42
|
4.10
|
Quotation
of Merger Shares
|
43
|
4.11
|
Split-Off
|
43
|
4.12
|
Stock
Option Plan
|
43
|
4.13
|
Information
Provided to Company Stockholders
|
43
|
4.14
|
No
Shorting
|
44
|
ARTICLE
V: CONDITIONS TO CONSUMMATION OF MERGER
|
44
|
|
5.1
|
Conditions
to Each Party’s Obligations
|
44
|
iv
5.2
|
Conditions
to Obligations of the Parent and the Acquisition
Subsidiary
|
44
|
5.3
|
Conditions
to Obligations of the Company
|
46
|
ARTICLE
VI: INDEMNIFICATION
|
48
|
|
6.1
|
Indemnification
by the Company Stockholders
|
48
|
6.2
|
Indemnification
by the Parent
|
48
|
6.3
|
Indemnification
Claims by the Parent
|
48
|
6.4
|
Survival
of Representations and Warranties
|
50
|
6.5
|
Limitations
on Parent’s Claims for Indemnification
|
50
|
ARTICLE
VII: DEFINITIONS
|
51
|
|
ARTICLE
VIII: TERMINATION
|
53
|
|
8.1
|
Termination
by Mutual Agreement
|
53
|
8.2
|
Termination
for Failure to Close
|
53
|
8.3
|
Termination
by Operation of Law
|
53
|
8.4
|
Termination
for Failure to Perform Covenants or Conditions
|
53
|
8.5
|
Effect
of Termination or Default; Remedies
|
54
|
8.6
|
Remedies;
Specific Performance
|
54
|
ARTICLE
IX: MISCELLANEOUS
|
54
|
|
9.1
|
Press
Releases and Announcements
|
54
|
9.2
|
No
Third Party Beneficiaries
|
54
|
9.3
|
Entire
Agreement
|
55
|
9.4
|
Succession
and Assignment
|
55
|
9.5
|
Counterparts
and Facsimile Signature
|
55
|
9.6
|
Headings
|
55
|
9.7
|
Notices
|
55
|
9.8
|
Governing
Law
|
56
|
9.9
|
Amendments
and Waivers
|
56
|
9.10
|
Severability
|
56
|
9.11
|
Submission
to Jurisdiction
|
57
|
9.12
|
Construction
|
57
|
EXHIBITS
|
|
Exhibit
A
|
Form
of Split-Off Agreement
|
Exhibit
B
|
Form
of Opinion of Counsel to the Company
|
Exhibit
C
|
Form
of Opinion of Counsel to the Parent and the Acquisition
Subsidiary
|
v
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER
(this “Agreement”), dated as of October 26, 2010, by and among InVivo
Therapeutics Holdings Corp. (f/k/a Design Source, Inc.), a Nevada corporation
(the “Parent”), InVivo Therapeutics Acquisition Corp., a Delaware corporation
(the “Acquisition Subsidiary”) and InVivo Therapeutics Corporation, a Delaware
corporation (the “Company”). The Parent, the Acquisition Subsidiary
and the Company are each a “Party” and referred to collectively herein as the
“Parties.”
WHEREAS,
immediately following the Merger, the Parent intends to split-off its wholly
owned subsidiary, DSource Split Corp., a Delaware corporation (the “Split-Off
Subsidiary”), through the sale of all of the outstanding capital stock of the
Split-Off Subsidiary (the “Split-Off”) upon the terms and conditions of a
split-off agreement by and among the Parent, Xxxxx X. Xxxxxxxx, Xxxxxxxx X.
Xxxxxxxx and Xxxxx X. Xxxxx (the “Buyers”), the Company and the Split-Off
Subsidiary, substantially in the form of Exhibit A attached
hereto (the “Split-Off Agreement”); and
ARTICLE
I
1.1 The
Merger. Upon and subject to the terms and conditions of this
Agreement, the Acquisition Subsidiary shall merge with and into the Company at
the Effective Time (as defined below). From and after the Effective
Time, the separate corporate existence of the Acquisition Subsidiary shall cease
and the Company shall continue as the surviving corporation in the Merger (the
“Surviving Corporation”). The “Effective Time” shall be the time at
which the Certificate of Merger (the “Certificate of Merger”) and other
appropriate or required documents prepared and executed in accordance with the
relevant provisions of the Delaware General Corporation Law (the “GCL”) are
filed with the Secretary of State of Delaware. The Merger shall have
the effects set forth in the applicable provisions of the GCL, including
Sections 251, 259, 260 and 261 of the GCL.
-2-
(a) the
Company shall deliver to the Parent and the Acquisition Subsidiary the various
certificates, instruments and documents referred to in Section 5.2;
(b) the
Parent and the Acquisition Subsidiary shall deliver to the Company the various
certificates, instruments and documents referred to in Section 5.3;
(c) the
Surviving Corporation shall file the Certificate of Merger with the Secretary of
State of the State of Delaware;
(d) each
of the stockholders of record of the Company immediately prior to the Effective
Time (collectively, the “Company Stockholders”) shall, if requested by the
Parent, deliver to the Parent the certificate(s) representing his, her or its
shares of Company common stock (the “Company Shares”);
(e) the
Parent agrees to promptly deliver certificates for the Merger Shares (as defined
below) to each Company Stockholder in accordance with Section 1.8;
(f) the
Parent shall deliver to the Company (i) evidence that the Parent’s board of
directors is authorized to consist of five individuals, (ii) the resignations of
all individuals who served as directors and/or officers of the Parent
immediately prior to the Closing Date, which resignations shall be effective as
of the Closing Date, (iii) evidence of the appointment of five directors to
serve immediately following the Closing Date, four of whom shall have been
designated by the Company and one of whom shall be designated by the Placement
Agent immediately prior to the Closing Date, provided that such appointee is
reasonably acceptable to the Company, and (v) evidence of the appointment of
such executive officers of the Parent to serve immediately upon the Closing Date
as shall have been designated by the Company; and
(g) the
Private Placement Offering shall be completed and the proceeds therefrom
distributed in accordance with the terms of the Private Placement
Offering.
-3-
(a) Each
Company Share issued and outstanding immediately prior to the Effective Time
other than Dissenting Shares (as defined below) shall be converted into and
represent the right to receive (subject to the provisions of Section 1.9) such
number of shares of common stock, $0.00001 par value per share, of the Parent
(“Parent Common Stock”) as is equal to the Common Conversion Ratio (as defined
in Section 1.8(b)). An aggregate of approximately 31,647,190 shares of Parent Common
Stock shall be issued to the stockholders of the Company. In
addition, each Company stock option and common stock purchase warrant issued and
outstanding immediately prior to the Effective Time shall be converted into and
represent the right to receive such number of Parent stock options (the “Parent
Options”) and Parent Bridge Warrants as is equal to the Common Conversion Ratio
(as defined in Section 1.8(b) and a corresponding number of shares of Parent
Common Stock shall be reserved for issuance upon the exercise of the Parent
Options and Parent Bridge Warrants. Notwithstanding the foregoing, the number of
shares of Parent Common Stock issuable to the Company Stockholders upon
conversion of their Company Shares, and the number of shares reserved for
issuance upon the exercise of Parent Options and Parent Bridge Warrants may be
adjusted in accordance with Section 1.11(e).
(b) The
“Common Conversion Ratio” shall be 13.7706-for-1. Stockholders of record
of the Company as of the Closing Date shall be entitled to receive
immediately all of
the shares of Parent Common Stock into which their Company Shares were converted
pursuant to this Section 1.8 (the “Merger Shares”).
(c) Each
issued and outstanding share of common stock, par value $0.001 per share, of the
Acquisition Subsidiary shall be converted into one validly issued, fully paid
and nonassessable share of Surviving Corporation Common Stock.
(a) For
purposes of this Agreement, “Dissenting Shares” means Company Shares held as of
the Effective Time by a Company Stockholder who has not voted such Company
Shares in favor of the adoption of this Agreement and the Merger and with
respect to which appraisal shall have been duly demanded and perfected in
accordance with Section 262 of the GCL and not effectively withdrawn or
forfeited prior to the Effective Time. Dissenting Shares shall not be
converted into or represent the right to receive shares of Parent Common Stock
unless such Company Stockholder’s right to appraisal shall have ceased in
accordance with Section 262 of the GCL. If such Company Stockholder
has so forfeited or withdrawn his, her or its right to appraisal of Dissenting
Shares, then, (i) as of the occurrence of such event, such holder’s
Dissenting Shares shall cease to be Dissenting Shares and shall be converted
into and represent the right to receive the Merger Shares issuable in respect of
such Company Shares pursuant to Section 1.8, and (ii) promptly
following the occurrence of such event, the Parent shall deliver to such Company
Stockholder a certificate representing the Merger Shares to which such holder is
entitled pursuant to Section 1.8.
-4-
(b) The
Company shall give the Parent prompt notice of any written demands for appraisal
of any Company Shares, withdrawals of such demands, and any other instruments
that relate to such demands received by the Company. The Company
shall not, except with the prior written consent of the Parent, make any payment
with respect to any demands for appraisal of Company Shares or offer to settle
or settle any such demands.
(a) As of the
Effective Time, all stock options to purchase Company Shares issued by the
Company, whether vested or unvested (the “Company Options”), shall automatically
become Parent Options without further action by the holder thereof. Each Parent
Option shall constitute an option to acquire such number of shares of Parent
Common Stock as is equal to the number of Company Shares subject to the
unexercised portion of the Company Option multiplied by the Common Conversion
Ratio (with any fraction resulting from such multiplication to be rounded to the
nearest whole number, and with 0.5 shares rounded upward to the nearest whole
number). The exercise price per share of each Parent Option shall be
equal to the exercise price of the Company Option divided by the Common
Conversion Ratio and the terms of such Parent Options shall otherwise remain the
same. The Parent Options shall be granted under the Company's
2007 Employee, Director and Consultant Stock Plan, as amended (the
“2007 Plan”), which shall be adopted and assumed in writing by the Parent in
connection with the Merger, and under the 2007 Plan’s terms, exercisability,
vesting schedule, and status as an “incentive stock option” under Section 422 of
the Code, if applicable. It is the intention of the Parties that any Company
Options intended to be “incentive stock options” under Section 422 of the Code
shall remain incentive stock options as Parent Options.
-5-
(b) As
soon as practicable after the Effective Time, the Parent or the Surviving
Corporation shall take appropriate actions to collect the Company Options and
the agreements evidencing the Company Options, which shall be deemed to be
canceled and shall entitle the holder to exchange the Company Options for Parent
Options.
(c) 5,915,615
shares of Parent Common Stock shall be reserved for issuance under the 2007 Plan
being assumed by Parent at Closing, and shall be issued upon the exercise of the
Parent Options in accordance with this Section 1.11. No additional
Options shall at any time hereafter be granted under the 2007 Plan.
(d) Upon
the Closing of the Merger, Parent Bridge Warrants to purchase an aggregate of
600,000 shares of Parent Common Stock at a price of $1.00 per share will be
granted to the holders of Company common stock purchase warrants (the “Company
Warrants”). 600,000 shares of Parent Common
Stock shall be reserved for issuance upon the exercise of the Parent Bridge
Warrants. As of the Effective Time, any and all outstanding Company
Warrants to purchase capital stock of the Company, whether vested or unvested,
shall be canceled.
(e) In
the event that any issued and outstanding Company Options or Company Warrants
are exercised prior to the Effective Time, the number of outstanding Company
Shares shall be increased by the number of Company Shares issued upon exercise
of Company Options and Company Warrants, and the number of outstanding Company
Options and Company Warrants shall be reduced by the same number, as applicable.
This will result in a decrease in the aggregate number of shares of Parent
Common Stock reserved for issuance upon exercise of the Parent Options and
Parent Bridge Warrants, and an increase in the number of shares of Parent Common
Stock issuable to Company Stockholders at the Effective
Time. Accordingly, regardless of the exercise of any Company
Warrants, the total number of shares of Parent Common Stock issuable to Company
Stockholders, and, upon exercise, to the holders of Parent Options and Parent
Warrants, in connection with the Merger (in accordance with Section 1.5 and this
Section 1.11) shall remain constant.
1.12 [Intentionally
Omitted].
(a) The
certificate of incorporation of the Company in effect immediately prior to the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation until duly amended or repealed.
(b) The
bylaws of the Company in effect immediately prior to the Effective Time shall be
the bylaws of the Surviving Corporation until duly amended or
repealed.
-6-
-7-
ARTICLE
II
The
Company represents and warrants to the Parent that the statements contained in
this Article II are true and correct, except as set forth in the disclosure
schedule provided by the Company to the Parent on the date hereof and accepted
in writing by the Parent (the “Disclosure Schedule”). The Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article II, and except to the extent
that it is clear from the context thereof that such disclosure also applies to
any other paragraph, the disclosures in any paragraph of the Disclosure Schedule
shall qualify only the corresponding paragraph in this Article II. For purposes of this
Article II, the phrase “to the knowledge of the Company” or any phrase of
similar import shall be deemed to refer to the actual knowledge of the executive
officers of the Company, as well as any other knowledge which such executive
officers would have possessed had they made reasonable inquiry with respect to
the matter in question.
2.1 Organization, Qualification
and Corporate Power. The Company is a corporation duly
organized, validly existing and in corporate and tax good standing under the
laws of the State of Delaware. The Company is duly qualified to
conduct business and is in corporate and tax good standing under the laws of
each jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification, except where the failure
to be so qualified or in good standing, individually or in the aggregate, has
not had and would not reasonably be expected to have a Company Material Adverse
Effect (as defined below). The Company has all requisite corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. The Company has
furnished or made available to the Parent complete and accurate copies of its
certificate of incorporation and bylaws. The Company is not in
default under or in violation of any provision of its certificate of
incorporation, as amended to date, or its bylaws, as amended to
date. For purposes of this Agreement, “Company Material Adverse
Effect” means a material adverse effect on the assets, business, condition
(financial or otherwise), results of operations or future prospects of the
Company taken as a whole.
-8-
-9-
-10-
(a) For
purposes of this Agreement, the following terms shall have the following
meanings:
(i) “Taxes”
means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, unemployment insurance, social security,
business license, business organization, environmental, workers compensation,
payroll, profits, license, lease, service, service use, severance, stamp,
occupation, windfall profits, customs, duties, franchise and other taxes imposed
by the United States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United States or any
such government, and any interest, fines, penalties, assessments or additions to
tax resulting from, attributable to or incurred in connection with any tax or
any contest or dispute thereof.
-11-
(ii) “Tax
Returns” means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(b) The
Company has filed on a timely basis all Tax Returns that it was required to
file, and all such Tax Returns were complete and accurate in all material
respects. The Company has not ever been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns. The Company has paid on a timely
basis all Taxes that were due and payable. The unpaid Taxes of the
Company for tax periods through the Company Balance Sheet Date do not exceed the
accruals and reserves for Taxes (excluding accruals and reserves for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the Company Balance Sheet. The Company has not had any
actual or potential liability for any Tax obligation of any taxpayer (including
without limitation any affiliated group of corporations or other entities that
included the Company during a prior period). All Taxes that the
Company is or was required by law to withhold or collect have been duly withheld
or collected and, to the extent required, have been paid to the proper
Governmental Entity.
(c) The
Company has delivered or made available to the Parent complete and accurate
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company since the date of the
Company’s incorporation in Delaware (the “Organization Date”). No
examination or audit of any Tax Return of the Company by any Governmental Entity
is currently in progress or, to the knowledge of the Company, threatened or
contemplated. The Company has not been informed by any jurisdiction that the
jurisdiction believes that the Company was required to file any Tax Return that
was not filed. The Company has not waived any statute of limitations
with respect to Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency.
(d) The
Company: (i) is not a “consenting corporation” within the meaning of
Section 341(f) of the Code, and none of the assets of the Company are
subject to an election under Section 341(f) of the Code; (ii) has not
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(l)(A)(ii) of the Code; (iii) has not made any payments,
is not obligated to make any payments, nor is it a party to any agreement that
could obligate it to make any payments that may be treated as an “excess
parachute payment” under Section 280G of the Code; (iv) has no actual
or potential liability for any Taxes of any person (other than the Company)
under Treasury Regulation Section 1.1502-6 (or any similar provision of
federal, state, local, or foreign law), or as a transferee or successor, by
contract, or otherwise; and (v) has not been required to make a basis
reduction pursuant to Treasury Regulation Section 1.1502-20(b) or Treasury
Regulation Section 1.337(d)-2(b).
(e) None
of the assets of the Company: (i) is property that is required to be
treated as being owned by any other person pursuant to the provisions of former
Section 168(f)(8) of the Code; (ii) is “tax-exempt use property”
within the meaning of Section 168(h) of the Code; or (iii) directly or
indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code.
-12-
(f) The
Company has not undergone a change in its method of accounting resulting in an
adjustment to its taxable income pursuant to Section 481 of the
Code.
(g) No
state or federal “net operating loss” of the Company determined as of the
Closing Date is subject to limitation on its use pursuant to Section 382 of
the Code or comparable provisions of state law as a result of any “ownership
change” within the meaning of Section 382(g) of the Code or comparable
provisions of any state law occurring prior to the Closing Date.
(a) the
lease or sublease is legal, valid, binding, enforceable and in full force and
effect;
(b) the
lease or sublease will continue to be legal, valid, binding, enforceable and in
full force and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing;
(c) neither
the Company nor, to the knowledge of the Company, any other party, is in breach
or violation of, or default under, any such lease or sublease, and no event has
occurred, is pending or, to the knowledge of the Company, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Company or, to the knowledge of the Company, any other
party under such lease or sublease;
(d) the
Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold; and
-13-
(e) to
the knowledge of the Company, there is no Security Interest, easement, covenant
or other restriction applicable to the real property subject to such lease,
except for recorded easements, covenants and other restrictions which do not
materially impair the current uses or the occupancy by the Company of the
property subject thereto.
(a) Section
2.13 of the Disclosure Schedule lists the following agreements (written or oral)
to which the Company is a party as of the date of this Agreement:
(i) any
agreement (or group of related agreements) for the lease of personal property
from or to third parties providing for lease payments in excess of $50,000 per
annum or having a remaining term longer than 12 months;
(ii) any
agreement (or group of related agreements) for the purchase or sale of products
or for the furnishing or receipt of services (A) which calls for
performance over a period of more than one year, (B) which involves more
than the sum of $50,000, or (C) in which the Company has granted
manufacturing rights, “most favored nation” pricing provisions or exclusive
marketing or distribution rights relating to any products or territory or has
agreed to purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;
(iii) any
agreement which, to the knowledge of the Company, establishes a partnership or
joint venture;
(iv) other
than the Bridge Notes and the Convertible Notes, any agreement (or group of
related agreements) under which it has created, incurred, assumed or guaranteed
(or may create, incur, assume or guarantee) indebtedness (including capitalized
lease obligations) involving more than $50,000 or under which it has imposed (or
may impose) a Security Interest on any of its assets, tangible or
intangible;
(v) any
agreement concerning confidentiality or noncompetition;
(vi) any
employment or consulting agreement;
(vii) any
agreement involving any officer, director or stockholder of the Company or any
affiliate, as defined in Rule 12b-2 under Exchange Act, thereof (an
“Affiliate”);
(viii) any
agreement under which the consequences of a default or termination would
reasonably be expected to have a Company Material Adverse Effect;
(ix) any
agreement which contains any provisions requiring the Company to indemnify any
other party thereto (excluding indemnities contained in agreements for the
purchase, sale or license of products entered into in the Ordinary Course of
Business);
-14-
(x) any
other agreement (or group of related agreements) either involving more than
$50,000 or not entered into in the Ordinary Course of Business; and
(xi) any
agreement, other than as contemplated by this Agreement and the Bridge Loan,
relating to the sales of securities of the Company to which the Company is a
party.
(b) The
Company has delivered or made available to the Parent a complete and accurate
copy of each agreement listed in Section 2.13 of the Disclosure
Schedule. With respect to each agreement so listed, and except as set
forth in Section 2.13 of the Disclosure Schedule: (i) the
agreement is legal, valid, binding and enforceable and in full force and effect;
(ii) the agreement will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in
accordance with the terms thereof as in effect immediately prior to the Closing;
and (iii) the Company is not nor, to the knowledge of the Company, is any
other party, in breach or violation of, or default under, any such agreement,
and no event has occurred, is pending or, to the knowledge of the Company, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by the Company or, to the knowledge of the
Company, any other party under such contract.
-15-
(a) Section
2.18 of the Disclosure Schedule contains a list of all employees of the Company
whose annual rate of compensation exceeds $75,000 per year, along with the
position and the annual rate of compensation of each such
person. Section 2.18 of the Disclosure Schedule contains a list of
all employees of the Company who are a party to a non-competition agreement with
the Company; copies of such agreements have previously been delivered to the
Parent. To the knowledge of the Company, no key employee or group of
employees has any plans to terminate employment with the Company.
(b) The
Company is not party to or bound by any collective bargaining agreement, nor has
any of them experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes. To the knowledge
of the Company, no organizational effort has been made or threatened, either
currently or within the past two years, by or on behalf of any labor union with
respect to employees of the Company. To the knowledge of the Company
there are no circumstances or facts which could individually or collectively
give rise to a suit based on discrimination of any kind.
(a) For
purposes of this Agreement, the following terms shall have the following
meanings:
(i) “Employee
Benefit Plan” means any “employee pension benefit plan” (as defined in
Section 3(2) of ERISA), any “employee welfare benefit plan” (as defined in
Section 3(1) of ERISA), and any other written or oral plan, agreement or
arrangement involving direct or indirect compensation, including without
limitation insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation.
(ii) “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
-16-
(iii) “ERISA
Affiliate” means any entity which is, or at any applicable time was, a member of
(1) a controlled group of corporations (as defined in Section 414(b)
of the Code), (2) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (3) an affiliated service
group (as defined under Section 414(m) of the Code or the regulations under
Section 414(o) of the Code), any of which includes or included the
Company.
(b) Section 2.19(b)
of the Disclosure Schedule contains a complete and accurate list of all Employee
Benefit Plans maintained, or contributed to, by the Company or any ERISA
Affiliate. Complete and accurate copies of (i) all Employee
Benefit Plans which have been reduced to writing, (ii) written summaries of
all unwritten Employee Benefit Plans, (iii) all related trust agreements,
insurance contracts and summary plan descriptions, and (iv) all annual
reports filed on IRS Form 5500, 5500C or 5500R and (for all funded plans) all
plan financial statements for the last five plan years for each Employee Benefit
Plan, have been delivered or made available to the Parent. Each
Employee Benefit Plan has been administered in all material respects in
accordance with its terms and each of the Company and the ERISA Affiliates has
in all material respects met its obligations with respect to such Employee
Benefit Plan and has made all required contributions thereto. The
Company, each ERISA Affiliate and each Employee Benefit Plan are in compliance
in all material respects with the currently applicable provisions of ERISA and
the Code and the regulations thereunder (including without limitation
Section 4980 B of the Code, Subtitle K, Chapter 100 of the Code and
Sections 601 through 608 and Section 701 et seq. of
ERISA). All filings and reports as to each Employee Benefit Plan
required to have been submitted to the Internal Revenue Service or to the United
States Department of Labor have been duly submitted.
(c) To
the knowledge of the Company, there are no Legal Proceedings (except claims for
benefits payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders) against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any material
liability.
(d) All
the Employee Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the
Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code,
no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred, that would adversely affect its qualification
or materially increase its cost. Each Employee Benefit Plan which is
required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code
has been tested for compliance with, and satisfies the requirements of,
Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year
ending prior to the Closing Date.
(e) Neither
the Company nor any ERISA Affiliate has ever maintained an Employee Benefit Plan
subject to Section 412 of the Code or Title IV of ERISA.
(f) At
no time has the Company or any ERISA Affiliate been obligated to contribute to
any “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA).
-17-
(g) There
are no unfunded obligations under any Employee Benefit Plan providing benefits
after termination of employment to any employee of the Company (or to any
beneficiary of any such employee), including but not limited to retiree health
coverage and deferred compensation, but excluding continuation of health
coverage required to be continued under Section 4980B of the Code or other
applicable law and insurance conversion privileges under state
law. The assets of each Employee Benefit Plan which is funded are
reported at their fair market value on the books and records of such Employee
Benefit Plan.
(h) No
act or omission has occurred and no condition exists with respect to any
Employee Benefit Plan maintained by the Company or any ERISA Affiliate that
would subject the Company or any ERISA Affiliate to (i) any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code or (ii)
any contractual indemnification or contribution obligation protecting any
fiduciary, insurer or service provider with respect to any Employee Benefit
Plan.
(i) No
Employee Benefit Plan is funded by, associated with or related to a “voluntary
employee’s beneficiary association” within the meaning of Section 501(c)(9)
of the Code.
(j) Each
Employee Benefit Plan is amendable and terminable unilaterally by the Company at
any time without liability to the Company as a result thereof and no Employee
Benefit Plan, plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
the Company from amending or terminating any such Employee Benefit
Plan.
(k) Section
2.19(k) of the Disclosure Schedule discloses each: (i) agreement with any
stockholder, director, executive officer or other key employee of the Company
(A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Company
of the nature of any of the transactions contemplated by this Agreement,
(B) providing any term of employment or compensation guarantee or
(C) providing severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee;
(ii) agreement, plan or arrangement under which any person may receive
payments from the Company that may be subject to the tax imposed by
Section 4999 of the Code or included in the determination of such person’s
“parachute payment” under Section 280G of the Code; and
(iii) agreement or plan binding the Company, including without limitation
any stock option plan, stock appreciation right plan, restricted stock plan,
stock purchase plan, severance benefit plan or Employee Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. The accruals for vacation, sickness and disability
expenses are accounted for on the Company Interim Balance Sheet and are adequate
and materially reflect the expenses associated therewith in accordance with
GAAP.
-18-
(a) The
Company has complied with all applicable Environmental Laws (as defined below),
except for violations of Environmental Laws that, individually or in the
aggregate, have not had and would not reasonably be expected to have a Company
Material Adverse Effect. There is no pending or, to the knowledge of
the Company, threatened civil or criminal litigation, written notice of
violation, formal administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Company, except for litigation, notices of violations, formal
administrative proceedings or investigations, inquiries or information requests
that, individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect. For purposes of
this Agreement, “Environmental Law” means any federal, state or local law,
statute, rule or regulation or the common law relating to the environment,
including without limitation any statute, regulation, administrative decision or
order pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
materials or substances, or solid or hazardous waste, including without
limitation emissions, discharges, injections, spills, escapes or dumping of
pollutants, contaminants or chemicals; (v) the protection of wild life,
marine life and wetlands, including without limitation all endangered and
threatened species; (vi) storage tanks, vessels, containers, abandoned or
discarded barrels, and other closed receptacles; (vii) health and safety of
employees and other persons; and (viii) manufacturing, processing, using,
distributing, treating, storing, disposing, transporting or handling of
materials regulated under any law as pollutants, contaminants, toxic or
hazardous materials or substances or oil or petroleum products or solid or
hazardous waste. As used above, the terms “release” and “environment”
shall have the meaning set forth in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”).
(b) Set
forth in Section 2.20(b) of the Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company (whether conducted by or on
behalf of the Company or a third party, and whether done at the initiative of
the Company or directed by a Governmental Entity or other third party) which
were issued or conducted during the past five years and which the Company has
possession of or access to. A complete and accurate copy of each such
document has been provided to the Parent.
(c) To the
knowledge of the Company, there is no material environmental liability with
respect to any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by the Company.
-19-
(a) The
Company owns, is licensed or otherwise possesses legally enforceable rights to
use, license and exploit all issued patents, copyrights, trademarks, service
marks, trade names, trade secrets, and registered domain names and all
applications for registration therefor (collectively, the "Intellectual Property
Rights") and all computer programs and other computer software, databases,
know-how, proprietary technology, formulae, and development tools, together with
all goodwill related to any of the foregoing (collectively, the "Intellectual
Property"), in each case as is necessary to conduct its business as presently
conducted, the absence of which would be considered reasonably likely to result
in a Company Material Adverse Effect.
-20-
(b) Section
2.27(b) of the Disclosure Schedule sets forth, with respect to all issued
patents and all registered copyrights, trademarks, service marks and domain
names registered with any Governmental Entity or for which an application for
registration has been filed with any Governmental Entity, (i) the registration
or application number, the date filed and the title, if applicable, of the
registration or application and (ii) the names of the jurisdictions covered
by the applicable registration or application. Section 2.27(b) of the
Disclosure Schedule identifies each agreement currently in effect containing any
ongoing royalty or payment obligations of the Company in excess of $50,000 per
annum with respect to Intellectual Property Rights and Intellectual Property
that are licensed or otherwise made available to the Company.
(c) Except
as set forth on Section 2.27(c) of the Disclosure Schedule, all Intellectual
Property Rights that have been registered with any Governmental Entity are valid
and subsisting, except as would not reasonably be expected to have a Company
Material Adverse Effect. As of the Effective Date, in connection with such
registered Intellectual Property Rights, all necessary registration, maintenance
and renewal fees will have been paid and all necessary documents and
certificates will have been filed with the relevant Governmental
Entities.
(d) The
Company is not nor will, as a result of the consummation of the Merger or other
transactions contemplated by this Agreement be, in breach in any material
respect of any license, sublicense or other agreement relating to the
Intellectual Property Rights, or any licenses, sublicenses or other agreements
as to which the Company is a party and pursuant to which the Company uses any
patents, copyrights (including software), trademarks or other intellectual
property rights of or owned by third parties (the "Third Party Intellectual
Property Rights"), the breach of which would be reasonably likely to result in a
Company Material Adverse Effect.
(e) Except
as set forth on Section 2.27(e) of the Disclosure Schedule, the Company has not
been named as a defendant in any suit, action or proceeding which involves a
claim of infringement or misappropriation of any Third Party Intellectual
Property Right and the Company has not received any notice or other
communication (in writing or otherwise) of any actual or alleged infringement,
misappropriation or unlawful or unauthorized use of any Third Party Intellectual
Property. With respect to its marketed products, the Company does not, to its
knowledge, infringe any third party intellectual property rights. With respect
to its product candidates and products in research or development, after the
same are marketed, the Company will not, to its knowledge, infringe any third
party intellectual property rights.
(f) To
the knowledge of the Company, except as set forth on Section 2.27(f) of the
Disclosure Schedule, no other person is infringing, misappropriating or making
any unlawful or unauthorized use of any Intellectual Property Rights in a manner
that has a material impact on the business of the Company, except for such
infringement, misappropriation or unlawful or unauthorized use as would be
reasonably expected to have a Company Material Adverse Effect.
-21-
ARTICLE
III
Each of
the Parent and the Acquisition Subsidiary represents and warrants to the Company
that the statements contained in this Article III are true and correct,
except as set forth in the disclosure schedule provided by the Parent and the
Acquisition Subsidiary to the Company on the date hereof and accepted in writing
by the Company (the “Parent Disclosure Schedule”). The Parent
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III, and except
to the extent that it is clear from the context thereof that such disclosure
also applies to any other paragraph, the disclosures in any paragraph of the
Parent Disclosure Schedule shall qualify only the corresponding paragraph in
this Article III. For purposes of this
Article III, the phrase “to the knowledge of the Parent” or any phrase of
similar import shall be deemed to refer to the actual knowledge of the executive
officers of the Parent, as well as any other knowledge which such executive
officers would have possessed had they made reasonable inquiry with respect to
the matter in question.
3.1 Organization, Qualification
and Corporate Power. Parent is a “shell company” as defined
under Section 12(b)(2) of the General Rules and Regulations under the Exchange
Act. Each of the Parent and Split-Off Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada, and the Acquisition Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Each of the Parent and the Parent Subsidiaries is duly
qualified to conduct business and is in corporate and tax good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except where
the failure to be so qualified or in good standing would not have a Parent
Material Adverse Effect (as defined below). Each of the Parent and
the Parent Subsidiaries has all requisite corporate power and authority to carry
on the businesses in which it is engaged and to own and use the properties owned
and used by it. The Parent has furnished or made available to the
Company complete and accurate copies of its articles of incorporation and
bylaws, and the organizational documents of the Parent
Subsidiaries. Neither the Parent nor any Parent Subsidiary is in
default under or in violation of any provision of its articles of incorporation,
as amended to date, or its bylaws, as amended to date. For purposes
of this Agreement, “Parent Material Adverse Effect” means a material adverse
effect on the assets, business, condition (financial or otherwise), results of
operations or future prospects of the Parent and its Subsidiaries, taken as a
whole.
-22-
-23-
(a) Parent
has no Subsidiaries other than the Acquisition Subsidiary and the Split-Off
Subsidiary. Each of the Acquisition Subsidiary and the Split-Off
Subsidiary is a corporation duly organized, validly existing and in corporate
and tax good standing under the laws of the jurisdiction of its
incorporation. The Acquisition Subsidiary was formed solely to
effectuate the Merger, the Split-Off Subsidiary was formed solely to effectuate
the Split-Off, and neither of them has conducted any business operations since
its organization. The Parent has delivered or made available to the
Company complete and accurate copies of the charter, bylaws or other
organizational documents of the Acquisition Subsidiary and the Split-Off
Subsidiary. Each of the Acquisition Subsidiary and the Split-Off Subsidiary has
no assets other than minimal paid-in capital, it has no liabilities or other
obligations, and it is not in default under or in violation of any provision of
its charter, bylaws or other organizational documents. All of the
issued and outstanding shares of capital stock of the Acquisition Subsidiary and
the Split-Off Subsidiary are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. All shares of the
Acquisition Subsidiary and the Split-Off Subsidiary are owned by Parent, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), claims, Security Interests, options,
warrants, rights, contracts, calls, commitments, equities and
demands. There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which the Parent, the Split-Off Subsidiary
or the Acquisition Subsidiary is a party or which are binding on any of them
providing for the issuance, disposition or acquisition of any capital stock of
any Parent Subsidiary. There are no outstanding stock appreciation,
phantom stock or similar rights with respect to the Acquisition Subsidiary or
the Split-Off Subsidiary. There are no voting trusts, proxies or
other agreements or understandings with respect to the voting of any capital
stock of the Acquisition Subsidiary or the Split-Off Subsidiary.
-24-
(b) At
all times from April 2, 2003, which was the date of incorporation of the Parent,
through the date of this Agreement, the business and operations of the Parent
have been conducted exclusively through the Parent.
(c) The
Parent does not control directly or indirectly or have any direct or indirect
participation or similar interest in any corporation, partnership or limited
liability company, joint venture, trust or business association which is not a
Subsidiary.
(a) and
the conduct and operations of their respective businesses, are in compliance
with each applicable law (including rules and regulations thereunder) of any
federal, state, local or foreign government, or any Governmental Entity, except
for any violations or defaults that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Parent Material Adverse
Effect;
-25-
(b) has
complied with all federal and state securities laws and regulations, including
being current in all of its reporting obligations under such federal and state
securities laws and regulations;
(c) has
not, and the past and present officers, directors and Affiliates of the Parent
have not, been the subject of, nor does any officer or director of the Parent
have any reason to believe that Parent or any of its officers, directors or
Affiliates will be the subject of, any civil or criminal proceeding or
investigation by any federal or state agency alleging a violation of securities
laws;
(d) has
not been the subject of any voluntary or involuntary bankruptcy proceeding, nor
has it been a party to any material litigation;
(e) has
not, and the past and present officers, directors and Affiliates have not, been
the subject of, nor does any officer or director of the Parent have any reason
to believe that the Parent or any of its officers, directors or affiliates will
be the subject of, any civil, criminal or administrative investigation or
proceeding brought by any federal or state agency having regulatory authority
over such entity or person; and
(f) does
not and will not on the Closing, have any liabilities, contingent or otherwise,
including but not limited to notes payable and accounts payable, and is not a
party to any executory agreements.
(a) The
audited financial statements and unaudited interim financial statements of the
Parent included in the Parent Reports (collectively, the “Parent Financial
Statements”) (i) complied as to form in all material respects with applicable
accounting requirements and, as appropriate, the published rules and regulations
of the SEC with respect thereto when filed, (ii) were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered thereby
(except as may be indicated therein or in the notes thereto, and in the case of
quarterly financial statements, as permitted by Form 10-Q under the Exchange
Act), (iii) fairly present the consolidated financial condition, results of
operations and cash flows of the Parent as of the respective dates thereof and
for the periods referred to therein, and (iv) are consistent with the books and
records of the Parent.
(b) The
Parent has designed and maintains a system of internal controls over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
sufficient to provide reasonable assurances regarding the reliability of
financial reporting for the Parent and its Subsidiaries. The Parent
(i) has designed and maintains disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to reasonably
ensure that material information required to be disclosed by the Parent in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms and is accumulated and communicated to the Parent’s management as
appropriate to allow timely decisions regarding required disclosure and
(ii) has disclosed to the Parent’s auditors and the Board of Directors of
the Parent (and made summaries of such disclosures available to Parent)
(A) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting that are reasonably
likely to adversely affect in any material respect the Parent’s ability to
record, process, summarize and report financial information and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Parent’s internal controls over financial
reporting. The Parent is in compliance in all material respects with
all effective provisions of the Xxxxxxxx-Xxxxx Act.
-26-
(c) Neither
the Parent nor any Subsidiary nor, to the knowledge of the Parent, any director,
officer, auditor, accountant or representative of the Parent or any Subsidiary
has received or otherwise had or obtained knowledge of any substantive
complaint, allegation, assertion or claim, whether written or oral, that the
Parent or any Subsidiary has engaged in questionable accounting or auditing
practices. No current or former attorney representing the Parent or
any Subsidiary has reported evidence of a material violation of securities laws,
breach of fiduciary duty or similar violation by the Parent or any Subsidiary,
or any of their respective officers, directors, employees or agents, to the
current Board of Directors of the Parent or any committee thereof or to any
current director or executive officer of the Parent.
(d) To
the knowledge of the Parent, no employee of the Parent or any Subsidiary has
provided or is providing information to any law enforcement agency regarding the
commission or possible commission of any crime or the violation or possible
violation of any applicable legal requirements of the type described in
Section 806 of the Xxxxxxxx-Xxxxx Act by the Parent or any Subsidiary.
Neither the Parent nor any Subsidiary nor, to the knowledge of the Parent, any
director, officer, employee, contractor, subcontractor or agent of the Parent or
any Subsidiary, has discharged, demoted, suspended, threatened, harassed or in
any other manner discriminated against an employee of the Parent or any Parent
Subsidiary in the terms and conditions of employment because of any lawful act
of such employee described in Section 806 of the Xxxxxxxx-Xxxxx
Act.
-27-
(a) Each
of the Parent and the Subsidiaries has filed on a timely basis all Tax Returns
that it was required to file, and all such Tax Returns were complete and
accurate in all material respects. Neither the Parent nor any Subsidiary is or
has ever been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns, other than
a group of which only the Parent and the Subsidiaries are or were
members. Each of the Parent and the Parent Subsidiaries has paid on a
timely basis all Taxes that were due and payable. The unpaid Taxes of
the Parent and the Parent Subsidiaries for tax periods through the date of the
balance sheet contained in the most recent Parent Report do not exceed the
accruals and reserves for Taxes (excluding accruals and reserves for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on such balance sheet. Neither the Parent nor any Parent
Subsidiary has any actual or potential liability for any Tax obligation of any
taxpayer (including without limitation any affiliated group of corporations or
other entities that included the Parent or any Parent Subsidiary during a prior
period) other than the Parent and the Parent Subsidiaries. All Taxes
that the Parent or any Parent Subsidiary is or was required by law to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Entity.
(b) The
Parent has delivered or made available to the Company complete and accurate
copies of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Parent or any Subsidiary since
April 2, 2003. No examination or audit of any Tax Return of the
Parent or any Parent Subsidiary by any Governmental Entity is currently in
progress or, to the knowledge of the Parent, threatened or
contemplated. Neither the Parent nor any Parent Subsidiary has been
informed by any jurisdiction that the jurisdiction believes that the Parent or
such Subsidiary was required to file any Tax Return that was not
filed. Neither the Parent nor any Parent Subsidiary has waived any
statute of limitations with respect to Taxes or agreed to an extension of time
with respect to a Tax assessment or deficiency.
(c) Neither
the Parent nor any Parent Subsidiary: (i) is a “consenting corporation”
within the meaning of Section 341(f) of the Code, and none of the assets of
the Parent or the Parent Subsidiaries are subject to an election under
Section 341(f) of the Code; (ii) has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(l)(A)(ii) of
the Code; (iii) has made any payments, is obligated to make any payments,
or is a party to any agreement that could obligate it to make any payments that
may be treated as an “excess parachute payment” under Section 280G of the
Code; (iv) has any actual or potential liability for any Taxes of any
person (other than the Parent and its Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of federal, state, local, or
foreign law), or as a transferee or successor, by contract, or otherwise; or
(v) is or has been required to make a basis reduction pursuant to Treasury
Regulation Section 1.1502-20(b) or Treasury Regulation
Section 1.337(d)-2(b).
-28-
(d) None
of the assets of the Parent or any Subsidiary: (i) is property that is
required to be treated as being owned by any other person pursuant to the
provisions of former Section 168(f)(8) of the Code; (ii) is
“tax-exempt use property” within the meaning of Section 168(h) of the Code;
or (iii) directly or indirectly secures any debt the interest on which is
tax exempt under Section 103(a) of the Code.
(e) Neither
the Parent nor any Subsidiary has undergone a change in its method of accounting
resulting in an adjustment to its taxable income pursuant to Section 481 of
the Code.
(f) No
state or federal “net operating loss” of the Parent determined as of the Closing
Date is subject to limitation on its use pursuant to Section 382 of the
Code or comparable provisions of state law as a result of any “ownership change”
within the meaning of Section 382(g) of the Code or comparable provisions
of any state law occurring prior to the Closing Date.
(a) the
lease or sublease is legal, valid, binding, enforceable and in full force and
effect;
(b) the
lease or sublease will continue to be legal, valid, binding, enforceable and in
full force and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing;
(c) neither
the Parent nor any Parent Subsidiary nor, to the knowledge of the Parent, any
other party, is in breach or violation of, or default under, any such lease or
sublease, and no event has occurred, is pending or, to the knowledge of the
Parent, is threatened, which, after the giving of notice, with lapse of time, or
otherwise, would constitute a breach or default by the Parent or any Parent
Subsidiary or, to the knowledge of the Parent, any other party under such lease
or sublease;
-29-
(d) neither
the Parent nor any Parent Subsidiary has assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold; and
(e) the
Parent is not aware of any Security Interest, easement, covenant or other
restriction applicable to the real property subject to such lease, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or the occupancy by the Parent or a Parent Subsidiary of
the property subject thereto.
(a) Section
3.16 of the Parent Disclosure Schedule lists the following agreements (written
or oral) to which the Parent or any Parent Subsidiary is a party as of the date
of this Agreement:
(i) any
agreement (or group of related agreements) for the lease of personal property
from or to third parties;
(ii) any
agreement (or group of related agreements) for the purchase or sale of products
or for the furnishing or receipt of services;
(iii) any
agreement establishing a partnership or joint venture;
(iv) any
agreement (or group of related agreements) under which it has created, incurred,
assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness
(including capitalized lease obligations) involving more than $5,000 or under
which it has imposed (or may impose) a Security Interest on any of its assets,
tangible or intangible;
(v) any
agreement concerning confidentiality or noncompetition;
(vi) any
employment or consulting agreement;
(vii) any
agreement involving any current or former officer, director or stockholder of
the Parent or any Affiliate thereof;
(viii) any
agreement under which the consequences of a default or termination would
reasonably be expected to have a Parent Material Adverse Effect;
(ix) any
agreement which contains any provisions requiring the Parent or any Parent
Subsidiary to indemnify any other party thereto (excluding indemnities contained
in agreements for the purchase, sale or license of products entered into in the
Ordinary Course of Business);
-30-
(x) any
other agreement (or group of related agreements) either involving more than
$5,000 or not entered into in the Ordinary Course of Business; and
(xi)
any agreement, other than as contemplated by the Private Placement Offering,
this Agreement and the Split-Off, relating to the sales of securities of Parent
or any Parent Subsidiary to which the Parent or such Subsidiary is a
party.
(b) The
Parent has delivered or made available to the Company a complete and accurate
copy of each agreement listed in Section 3.16 of the Parent Disclosure
Schedule. With respect to each agreement so
listed: (i) the agreement is legal, valid, binding and
enforceable and in full force and effect; (ii) the agreement will continue
to be legal, valid, binding and enforceable and in full force and effect
immediately following the Closing in accordance with the terms thereof as in
effect immediately prior to the Closing; and (iii) neither the Parent nor
any Parent Subsidiary nor, to the knowledge of the Parent, any other party, is
in breach or violation of, or default under, any such agreement, and no event
has occurred, is pending or, to the knowledge of the Parent, is threatened,
which, after the giving of notice, with lapse of time, or otherwise, would
constitute a breach or default by the Parent or any Parent Subsidiary or, to the
knowledge of the Parent, any other party under such contract.
-31-
(a) The
Parent Reports contain all material information concerning the employees of
Parent.
(b) Neither
the Parent nor any Parent Subsidiary is a party to or bound by any collective
bargaining agreement, nor have any of them experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining
disputes. The Parent has no knowledge of any organizational effort
made or threatened, either currently or since the date of organization of the
Parent, by or on behalf of any labor union with respect to employees of the
Parent or any Parent Subsidiary.
(a) Section 3.22(a)
of the Parent Disclosure Schedule contains a complete and accurate list of all
Employee Benefit Plans maintained, or contributed to, by the Parent, any Parent
Subsidiary or any ERISA Affiliate. Complete and accurate copies of
(i) all Employee Benefit Plans which have been reduced to writing,
(ii) written summaries of all unwritten Employee Benefit Plans,
(iii) all related trust agreements, insurance contracts and summary plan
descriptions, and (iv) all annual reports filed on IRS Form 5500, 5500C or
5500R and (for all funded plans) all plan financial statements for the last five
plan years for each Employee Benefit Plan, have been delivered or made available
to the Parent. Each Employee Benefit Plan has been administered in
all material respects in accordance with its terms and each of the Parent, the
Parent Subsidiaries and the ERISA Affiliates has in all material respects met
its obligations with respect to such Employee Benefit Plan and has made all
required contributions thereto. The Parent, each Subsidiary of the
Parent, each ERISA Affiliate and each Employee Benefit Plan are in compliance in
all material respects with the currently applicable provisions of ERISA and the
Code and the regulations thereunder (including without limitation
Section 4980 B of the Code, Subtitle K, Chapter 100 of the Code and
Sections 601 through 608 and Section 701 et seq. of
ERISA). All filings and reports as to each Employee Benefit Plan
required to have been submitted to the Internal Revenue Service or to the United
States Department of Labor have been duly submitted.
(b) To
the knowledge of the Parent, there are no Legal Proceedings (except claims for
benefits payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders) against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any material
liability.
-32-
(c) All
the Employee Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the
Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code,
no such determination letter has been revoked and revocation has not been
threatened, and no such Employee Benefit Plan has been amended since the date of
its most recent determination letter or application therefor in any respect, and
no act or omission has occurred, that would adversely affect its qualification
or materially increase its cost. Each Employee Benefit Plan which is
required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code
has been tested for compliance with, and satisfies the requirements of,
Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year
ending prior to the Closing Date.
(d) Neither
the Parent, any Parent Subsidiary, nor any ERISA Affiliate has ever maintained
an Employee Benefit Plan subject to Section 412 of the Code or Title IV of
ERISA.
(e) At
no time has the Parent, any Parent Subsidiary or any ERISA Affiliate been
obligated to contribute to any “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA).
(f) There
are no unfunded obligations under any Employee Benefit Plan providing benefits
after termination of employment to any employee of the Parent or any Parent
Subsidiary (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under
Section 4980B of the Code or other applicable law and insurance conversion
privileges under state law. The assets of each Employee Benefit Plan
which is funded are reported at their fair market value on the books and records
of such Employee Benefit Plan.
(g) No
act or omission has occurred and no condition exists with respect to any
Employee Benefit Plan maintained by the Parent, any Parent Subsidiary or any
ERISA Affiliate that would subject the Parent, any Parent Subsidiary or any
ERISA Affiliate to (i) any material fine, penalty, tax or liability of any kind
imposed under ERISA or the Code or (ii) any contractual indemnification or
contribution obligation protecting any fiduciary, insurer or service provider
with respect to any Employee Benefit Plan.
(h) No
Employee Benefit Plan is funded by, associated with or related to a “voluntary
employee’s beneficiary association” within the meaning of Section 501(c)(9)
of the Code.
(i) Each
Employee Benefit Plan is amendable and terminable unilaterally by the Parent at
any time without liability to the Parent as a result thereof and no Employee
Benefit Plan, plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
the Parent from amending or terminating any such Employee Benefit
Plan.
-33-
(j) Section
3.22(j) of the Parent Disclosure Schedule discloses
each: (i) agreement with any stockholder, director, executive
officer or other key employee of the Parent or any Parent Subsidiary
(A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving the Parent or
any Parent Subsidiary of the nature of any of the transactions contemplated by
this Agreement, (B) providing any term of employment or compensation
guarantee or (C) providing severance benefits or other benefits after the
termination of employment of such director, executive officer or key employee;
(ii) agreement, plan or arrangement under which any person may receive
payments from the Parent or any Parent Subsidiary that may be subject to the tax
imposed by Section 4999 of the Code or included in the determination of
such person’s “parachute payment” under Section 280G of the Code; and
(iii) agreement or plan binding the Parent or any Parent Subsidiary,
including without limitation any stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase plan, severance benefit plan or
Employee Benefit Plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. The accruals for vacation, sickness
and disability expenses are accounted for on the Most Recent Balance Sheet and
are adequate and materially reflect the expenses associated therewith in
accordance with GAAP.
(a) Each
of the Parent and the Parent Subsidiaries has complied with all applicable
Environmental Laws, except for violations of Environmental Laws that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Parent Material Adverse Effect. There is no
pending or, to the knowledge of the Parent, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Parent or any Parent Subsidiary,
except for litigation, notices of violations, formal administrative proceedings
or investigations, inquiries or information requests that, individually or in
the aggregate, have not had and would not reasonably be expected to have a
Parent Material Adverse Effect.
(b) Set
forth in Section 3.23(b) of the Parent Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Parent or a Parent Subsidiary (whether
conducted by or on behalf of the Parent or a Parent Subsidiary or a
third party, and whether done at the initiative of the Parent or a Parent
Subsidiary or directed by a Governmental Entity or other third party) which were
issued or conducted during the past five years and which the Parent has
possession of or access to. A complete and accurate copy of each such
document has been provided to the Parent.
(c) The
Parent is not aware of any material environmental liability of any solid or
hazardous waste transporter or treatment, storage or disposal facility that has
been used by the Parent or any Parent Subsidiary.
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(a) The
Parent (i) is not an “investment company” as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code; (ii) has no present
plan or intention to liquidate the Surviving Corporation or to merge the
Surviving Corporation with or into any other corporation or entity, or to sell
or otherwise dispose of the stock of the Surviving Corporation which Parent will
acquire in the Merger, or to cause the Surviving Corporation to sell or
otherwise dispose of its assets, all except in the ordinary course of business
or if such liquidation, merger, disposition is described in
Section 368(a)(2)(C) or Treasury Regulation Section 1.368-2(d)(4) or
Section 1368-2(k); and (iii) has no present plan or intention,
following the Merger, to issue any additional shares of stock of the Surviving
Corporation or to create any new class of stock of the Surviving
Corporation.
(b) The
Acquisition Subsidiary is a wholly-owned subsidiary of the Parent, formed solely
for the purpose of engaging in the Merger, and will carry on no business prior
to the Merger.
(c) Immediately
prior to the Merger, the Parent will be in control of Acquisition Subsidiary
within the meaning of Section 368(c) of the Code.
(d) Immediately
following the Merger, the Surviving Corporation will hold at least 90% of the
fair market value of the net assets and at least 70% of the fair market value of
the gross assets held by the Company immediately prior to the Merger (for
purposes of this representation, amounts used by the Company to pay
reorganization expenses, if any, will be included as assets of the Company held
immediately prior to the Merger).
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(e) The
Parent has no present plan or intention to reacquire any of the Merger
Shares.
(f) The
Acquisition Subsidiary will have no liabilities assumed by the Surviving
Corporation and will not transfer to the Surviving Corporation any assets
subject to liabilities in the Merger.
(g) Following
the Merger, the Surviving Corporation will continue the Company’s historic
business or use a significant portion of the Company’s historic business assets
in a business as required by Section 368 of the Code and the Treasury
Regulations promulgated thereunder.
(h) The
Split-Off Agreement will constitute a legally binding obligation among the
Parent, the Split-Off Subsidiary and Buyers prior to the Effective Time;
immediately following consummation of the Merger, Parent will distribute the
stock of the Split-Off Subsidiary to Buyers in cancellation of the Purchase
Price Shares (as such term is defined in the Split-Off Agreement); no property
other than the capital stock of the Split-Off Subsidiary will be distributed by
Parent to Buyer in connection with or following the Merger; upon execution of
the Split-Off Agreement, Buyer will have no right to sell or transfer the
Purchase Price Shares to any person without Parent's prior written consent, and
Parent will not consent (nor will it permit others to consent) to any such sale
or transfer; upon execution of the Split-Off Agreement, there will be no other
plan, arrangement, agreement, contract, intention, or understanding, whether
written or verbal and whether or not enforceable in law or equity, that would
permit Buyer to vote the Purchase Price Shares or receive any property or other
distributions from Parent with respect to the Purchase Price Shares other than
the capital stock of the Split-Off Subsidiary.
-36-
-37-
ARTICLE
IV
(a) Each
Party shall use its Reasonable Best Efforts to obtain, at its expense, all
waivers, permits, consents, approvals or other authorizations from Governmental
Entities, and to effect all registrations, filings and notices with or to
Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.
(b) The
Company shall use its Reasonable Best Efforts to obtain, at its expense, all
such waivers, consents or approvals from third parties, and to give all such
notices to third parties, as are required to be listed in Section 2.4 of
the Disclosure Schedule.
(a) issue
or sell, or redeem or repurchase, any stock or other securities of the Company
or any Company Warrants, Company Options or other rights to acquire any such
stock or other securities (except pursuant to the conversion or exercise of
convertible securities or Company Options or Company Warrants outstanding on the
date hereof), or amend any of the terms of (including without limitation the
vesting of) any such convertible securities or Company Options or Company
Warrants;
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(b) split,
combine or reclassify any shares of its capital stock; declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock;
(c) create,
incur or assume any indebtedness (including obligations in respect of capital
leases) except in the Ordinary Course of Business or in connection with the
transactions contemplated by this Agreement or the Bridge Loan; assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person or entity; or
make any loans, advances or capital contributions to, or investments in, any
other person or entity;
(d) enter
into, adopt or amend any Employee Benefit Plan or any employment or severance
agreement or arrangement or (except for normal increases in the Ordinary Course
of Business for employees who are not Affiliates) increase in any manner the
compensation or fringe benefits of, or materially modify the employment terms
of, its directors, officers or employees, generally or individually, or pay any
bonus or other benefit to its directors, officers or employees;
(e) acquire,
sell, lease, license or dispose of any assets or property (including without
limitation any shares or other equity interests in or securities of any
corporation, partnership, association or other business organization or division
thereof), other than purchases and sales of assets in the Ordinary Course of
Business;
(f)
mortgage or pledge any of its property or assets or subject
any such property or assets to any Security Interest;
(g) discharge
or satisfy any Security Interest or pay any obligation or liability other than
in the Ordinary Course of Business;
(h) amend
its charter, by-laws or other organizational documents;
(i)
change in any material respect its
accounting methods, principles or practices, except insofar as may be required
by a generally applicable change in GAAP;
(j)
enter into, amend, terminate, take or omit
to take any action that would constitute a violation of or default under, or
waive any rights under, any material contract or agreement;
(k) institute
or settle any Legal Proceeding;
(l)
take any action or fail to take any action permitted by this Agreement with the
knowledge that such action or failure to take action would result in
(i) any of the representations and warranties of the Company set forth in
this Agreement becoming untrue or (ii) any of the conditions to the Merger
set forth in Article V not being satisfied; or
-39-
(m) agree
in writing or otherwise to take any of the foregoing actions.
(a) The
Company shall permit representatives of the Parent to have full access (at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company) to all premises, properties, financial and
accounting records, contracts, other records and documents, and personnel, of or
pertaining to the Company.
(b) Each
of the Parent and the Acquisition Subsidiary (i) shall treat and hold as
confidential any Company Confidential Information (as defined below),
(ii) shall not use any of the Company Confidential Information except in
connection with this Agreement, and (iii) if this Agreement is terminated
for any reason whatsoever, shall return to the Company all tangible embodiments
(and all copies) thereof which are in its possession. For purposes of
this Agreement, “Company Confidential Information” means any information of the
Company that is furnished to the Parent or the Acquisition Subsidiary by the
Company in connection with this Agreement; provided, however, that it
shall not include any information (A) which, at the time of disclosure, is
available publicly other than as a result of disclosure by the Parent, the
Acquisition Subsidiary or their respective directors, officers, employees,
agents or advisors, (B) which, after disclosure, becomes available publicly
through no fault of the Parent or the Acquisition Subsidiary or their respective
directors, officers, employees, agents or advisors, (C) which the Parent or
the Acquisition Subsidiary knew or to which the Parent or the Acquisition
Subsidiary had access prior to disclosure, provided that the source of such
information is not known by the Parent or the Acquisition Subsidiary to be bound
by a confidentiality obligation to the Company, or (D) which the Parent or
the Acquisition Subsidiary rightfully obtains from a source other than the
Company provided that the source of such information is not known by the Parent
or the Acquisition Subsidiary to be bound by a confidentiality obligation to the
Company.
(a) issue
or sell, or redeem or repurchase, any stock or other securities of the Parent or
any rights, warrants or options to acquire any such stock or other securities,
except as contemplated by, and in connection with, the Private Placement
Offering and the Merger;
(b) split,
combine or reclassify any shares of its capital stock; declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, except as contemplated by,
and in connection with, the Stock Split;
-40-
(c) create,
incur or assume any indebtedness (including obligations in respect of capital
leases); assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person or entity; or make any loans, advances or capital contributions to, or
investments in, any other person or entity;
(d) enter
into, adopt or amend any Employee Benefit Plan or any employment or severance
agreement or arrangement or (except for normal increases in the Ordinary Course
of Business for employees who are not Affiliates) increase in any manner the
compensation or fringe benefits of, or materially modify the employment terms
of, its directors, officers or employees, generally or individually, or pay any
bonus or other benefit to its directors, officers or employees, except for the
adoption of Parent’s 2010 Stock Option Plan (the “Parent Option Plan”) covering
3,500,000 shares of Parent Common Stock;
(e) acquire,
sell, lease, license or dispose of any assets or property (including without
limitation any shares or other equity interests in or securities of any Parent
Subsidiary or any corporation, partnership, association or other business
organization or division thereof), except as contemplated by, and in connection
with, the Split-Off;
(f) mortgage
or pledge any of its property or assets or subject any such property or assets
to any Security Interest;
(g) discharge
or satisfy any Security Interest or pay any obligation or liability other than
in the Ordinary Course of Business;
(h) amend
its charter, by-laws or other organizational documents except that Parent shall
adopt such new by-laws as shall be mutually agreed to by the Parent and the
Company.
(i) change
in any material respect its accounting methods, principles or practices, except
insofar as may be required by a generally applicable change in
GAAP;
(j) enter
into, amend, terminate, take or omit to take any action that would constitute a
violation of or default under, or waive any rights under, any material contract
or agreement;
(k) institute
or settle any Legal Proceeding;
(l) take
any action or fail to take any action permitted by this Agreement with the
knowledge that such action or failure to take action would result in
(i) any of the representations and warranties of the Parent and/or the
Acquisition Subsidiary set forth in this Agreement becoming untrue in any
material respect or (ii) any of the conditions to the Merger set forth in
Article V not being satisfied; or
(m) agree
in writing or otherwise to take any of the foregoing actions.
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(a) The
Parent shall (and shall cause the Acquisition Subsidiary to) permit
representatives of the Company to have full access (at all reasonable times, and
in a manner so as not to interfere with the normal business operations of the
Parent and the Acquisition Subsidiary) to all premises, properties, financial
and accounting records, contracts, other records and documents, and personnel,
of or pertaining to the Parent and the Acquisition Subsidiary.
(b) The
Company (i) shall treat and hold as confidential any Parent Confidential
Information (as defined below), (ii) shall not use any of the Parent
Confidential Information except in connection with this Agreement, and
(iii) if this Agreement is terminated for any reason whatsoever, shall
return to the Parent all tangible embodiments (and all copies) thereof which are
in its possession. For purposes of this Agreement, “Parent
Confidential Information” means any information of the Parent or any Parent
Subsidiary that is furnished to the Company by the Parent or the Acquisition
Subsidiary in connection with this Agreement; provided, however, that it
shall not include any information (A) which, at the time of disclosure, is
available publicly other than as a result of disclosure by the Company or its
directors, officers, employees, agents or advisors, (B) which, after
disclosure, becomes available publicly through no fault of the Company or its
directors, officers, employees, agents or advisors, (C) which the Company
knew or to which the Company had access prior to disclosure, provided that the
sources of such information is not known by the Company to be bound by a
confidentiality obligation to Parent or any Parent Subsidiary or (D) which
the Company rightfully obtains from a source other than the Parent or an Parent
Subsidiary, provided that the source of such information is not known by the
Company to be bound by a confidentiality obligation to Parent or any Parent
Subsidiary.
(a) Except
as otherwise contemplated by this Agreement, the Parent shall not, for a period
of three years after the Effective Time, take any action to alter or impair any
exculpatory or indemnification provisions now existing in the certificate of
incorporation or bylaws of the Company for the benefit of any individual who
served as a director or officer of the Company at any time prior to the
Effective Time, except for any changes which may be required to conform with
changes in applicable law and any changes which do not affect the application of
such provisions to acts or omissions of such individuals prior to the Effective
Time.
-42-
(b) From
and after the Effective Time, the Parent agrees that it will, and will cause the
Surviving Corporation to, indemnify and hold harmless each present and former
director and officer of the Company (the “Indemnified Executives”) against any
costs or expenses (including attorneys’ fees), judgments, fines, losses, claims,
damages, liabilities or amounts paid in settlement incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under Nevada or Delaware law, as applicable (and the Parent and the
Surviving Corporation shall also advance expenses as incurred to the fullest
extent permitted under Nevada or Delaware law, as applicable,
provided the Indemnified Executive to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Executive is not entitled to indemnification).
-43-
ARTICLE
V
(a) this
Agreement and the Merger shall have received the approval of at least 80% of the
votes represented by the outstanding Company Shares entitled to vote on this
Agreement and the Merger;
(b) the
completion of the offer and sale of the Private Placement Offering;
(c) satisfactory
completion by Parent and Company of all necessary legal due
diligence;
(d) consummation
of all required definitive instruments and agreements including, but not limited
to, the Merger Agreement, in forms acceptable to the Company and
Parent;
(e) the
Company and Parent obtaining all necessary board, shareholder, and third party
consents; and
(f) that
there be no injunction or order in effect by any governmental authority
prohibiting the Merger.
(a) the
number of Dissenting Shares shall not exceed 20% of the number of outstanding
Company Shares as of the Effective Time;
-44-
(b) the
Company shall have obtained (and shall have provided copies thereof to the
Parent) all waivers, permits, consents, approvals or other authorizations, and
effected all of the registrations, filings and notices, referred to in
Section 4.2 which are required on the part of the Company, except for any
the failure of which to obtain or effect does not, individually or in the
aggregate, have a Company Material Adverse Effect or a material adverse effect
on the ability of the Parties to consummate the transactions contemplated by
this Agreement;
(c) the
representations and warranties of the Company set forth in this Agreement (when
read without regard to any qualification as to materiality or Material Adverse
Effect contained therein) shall be true and correct as of the date of this
Agreement and shall be true and correct as of the Effective Time as though made
as of the Effective Time (provided, however, that to the extent such
representation and warranty expressly relates to an earlier date, such
representation and warranty shall be true and correct as of such earlier date),
except for any untrue or incorrect representation and warranty that,
individually or in the aggregate, does not have a Company Material Adverse
Effect or a material adverse effect on the ability of the Parties to consummate
the transactions contemplated by this Agreement;
(d) the
Company shall have performed or complied in all material respects with its
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the Effective Time;
(e) no
Legal Proceeding shall be pending wherein an unfavorable judgment, order,
decree, stipulation or injunction would (i) prevent consummation of any of
the transactions contemplated by this Agreement, or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, and no such judgment, order, decree, stipulation or injunction
shall be in effect;
(f) the
Company shall have delivered to the Parent and the Acquisition Subsidiary a
certificate (the “Company Certificate”) to the effect that each of the
conditions specified in clauses (a ) and (c) (with respect to the Company’s
due diligence of the Parent) of Section 5.1 and clauses (a) through (e)
(insofar as clause (e) relates to Legal Proceedings involving the Company)
of this Section 5.2 is satisfied in all respects;
(g) the
Company’s officers, directors and 5% shareholders shall enter into lock-up
agreements with the Parent pursuant to which they shall have agreed to certain
restrictions on the sale or other disposition of the Parent Common Stock
acquired by them prior to the Merger for a term equal to the earlier of (i)
twelve months from the Closing Date; or (ii) six months following the effective
date of the Registration Statement;
(h) the
Company Stockholders shall have agreed not to engage in any Prohibited
Transactions;
(i) the
Parent shall have received from Xxxxxxx Xxxxxx & Xxxx LLP, counsel to the
Company, an opinion with respect to the matters set forth in Exhibit C
attached hereto, addressed to the Parent and the Placement Agent and dated as of
the Closing Date;
(j) that
there have been no material adverse changes to the Company’s business since the
date of this Agreement; and
-45-
(k) the
Company shall have provided audited financial statements from an independent
accounting firm, qualified to conduct public company audits, for the year ended
December 31, 2009 and the operating results and period end financial condition
reflected therein shall not have been materially different from the unaudited
financial statements already provided for the same period.
(a) the
Parent shall have obtained (and shall have provided copies thereof to the
Company) all of the waivers, permits, consents, approvals or other
authorizations, and effected all of the registrations, filings and notices,
referred to in Section 4.2 which are required on the part of the Parent,
except for any the failure of which to obtain or effect does not, individually
or in the aggregate, have a Parent Material Adverse Effect or a material adverse
effect on the ability of the Parties to consummate the transactions contemplated
by this Agreement;
(b) the
representations and warranties of the Parent set forth in this Agreement (when
read without regard to any qualification as to materiality or Material Adverse
Effect contained therein) shall be true and correct as of the date of this
Agreement and shall be true and correct as of the Effective Time as though made
as of the Effective Time (provided, however, that to the extent such
representation or warranty expressly relates to an earlier date, such
representation and warranty shall be true and correct as of such earlier date),
except for any untrue or incorrect representation and warranty that,
individually or in the aggregate, do not have a Parent Material Adverse Effect
or a material adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement;
(c) each
of the Parent and the Acquisition Subsidiary shall have performed or complied
with its agreements and covenants required to be performed or complied with
under this Agreement as of or prior to the Effective Time;
(d) no
material Legal Proceedings shall be pending or threatened against Parent or the
Acquisition Subsidiary and no Legal Proceeding shall be pending wherein an
unfavorable judgment, order, decree, stipulation or injunction would
(i) prevent consummation of any of the transactions contemplated by this
Agreement, or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, and no such judgment, order,
decree, stipulation or injunction shall be in effect;
(e) the
Parent shall have delivered to the Company a certificate (the “Parent
Certificate”) to the effect that each of the conditions specified in clauses (b)
and (c) (with respect to the Parent’s due diligence of the Company) of Section
5.1 and clauses (a) through (d) (insofar as clause (d) relates to
Legal Proceedings involving the Parent and its Subsidiaries) of this
Section 5.3 is satisfied in all respects;
(f) the
Company shall have received from Gottbetter & Partners, LLP, counsel to the
Parent and the Acquisition Subsidiary, an opinion with respect to the matters
set forth in Exhibit
D attached hereto, addressed to the Company and the Placement Agent and
dated as of the Closing Date;
-46-
(g) the
total number of shares of Parent Common Stock issued and outstanding immediately
after the Effective Time, shall equal 7,000,000 shares, after giving effect to a
2.02898 for 1 forward stock split, the Split-Off, and the cancellation of
500,000 pre-split shares, but excluding (i) the shares of Parent Common Stock to
be issued to investors in the Private Placement Offering, (ii) the issuance of
the Merger Shares to be issued to Company Stockholders and the holders of the
Parent Options and Parent Bridge Warrants (upon the exercise of such Parent
Options and Parent Bridge Warrants) in connection with the Merger; and (iii) the
issuance of shares of Parent Common Stock underlying warrants (A) to be issued
to investors in the Private Placement Offering (upon the exercise thereof); and
(B) to be issued to the Placement agent in the Private Placement Offering (upon
the exercise of warrants to be issued to the Placement Agent in connection with
the sale of units under the Private Placement Offering).
(h) Xxxxx
Xxxxxxxx shall have an employment agreement mutually satisfactory to the
Company, the Parent and Xx. Xxxxxxxx;
(i) the
Parent shall have adopted the Parent Option Plan;
(j) the
Company shall have received a certificate of Parent’s transfer agent and
registrar certifying that as of the Closing Date there are 22,762,027 post-split
shares of Parent Common Stock issued and outstanding (without giving effect to
the cancellation of 1,014,490 shares of Parent Common Stock and the retirement,
pursuant to the Split-Off, of 14,747,555 post-split shares of Parent Common
Stock, such transactions to be effected immediately after the Effective Time,
after which cancelation and retirement there will be 7,000,000 shares of Parent
Common Stock issued and outstanding);
(k) contemporaneously
with the closing of the Merger, the Parent, the Split-Off Subsidiary, and the
Buyer shall execute the Split-Off Agreement, which Split-Off shall be effective
immediately following the Closing of the Merger;
(l) after
giving prior effect to the Split-Off, the Parent shall have no
liabilities;
(m) the
Parent shall have filed with the SEC and transmitted to its shareholders of
record at least 10 days prior to the Closing the information required by Rule
14f-1 under the Exchange Act; and
(n)
that there have been no material adverse changes to the
Parent’s business since the date of this Agreement.
-47-
ARTICLE
VI
(a) In
the event that a Party is entitled, or seeks to assert rights, to
indemnification under this Article VI, the Party seeking indemnification (the
“Indemnitee”) shall give written notification to the Party from whom
indemnification is sought (the “Indemnitor”) of the commencement of any suit or
proceeding relating to a third party claim for which indemnification pursuant to
this Article VI may be sought. Such notification shall be given
within 20 business days after receipt by the Indemnitee of notice of such suit
or proceeding, and shall describe in reasonable detail (to the extent known by
the Indemnitee) the facts constituting the basis for such suit or proceeding and
the amount of the claimed damages; provided, however, that no delay on the part
of the Indemnitee in notifying the Indemnitor shall relieve the Indemnitor of
any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure. Within 20 days
after delivery of such notification, the Indemnitor may, upon written notice
thereof to the Indemnitee, assume control of the defense of such suit or
proceeding with counsel reasonably satisfactory to the Indemnitee; provided that
the Indemnitor may not assume control of the defense of a suit or proceeding
involving criminal liability or in which equitable relief is sought against the
Indemnitee. If the Indemnitor does not so assume control of such
defense, the Indemnitee shall control such defense. The party not
controlling such defense (the “Non-Controlling Party”) may participate therein
at its own expense; provided that if the Indemnitor assumes control of such
defense and the Indemnitee reasonably concludes that the Indemnitor and the
Indemnitee have conflicting interests or different defenses available with
respect to such suit or proceeding, the reasonable fees and expenses of counsel
to the Indemnitee shall be considered “Damages” for purposes of this
Agreement. The party controlling such defense (the “Controlling
Party”) shall keep the Non-Controlling Party advised of the status of such suit
or proceeding and the defense thereof and shall consider in good faith
recommendations made by the Non-Controlling Party with respect
thereto. The Non-Controlling Party shall furnish the Controlling
Party with such information as it may have with respect to such suit or
proceeding (including copies of any summons, complaint or other pleading which
may have been served on such party and any written claim, demand, invoice,
billing or other document evidencing or asserting the same) and shall otherwise
cooperate with and assist the Controlling Party in the defense of such suit or
proceeding. The Indemnitor shall not agree to any settlement of, or
the entry of any judgment arising from, any such suit or proceeding without the
prior written consent of the Indemnitee, which shall not be unreasonably
withheld or delayed; provided that the consent of the Indemnitee shall not be
required if the Indemnitor agrees in writing to pay any amounts payable pursuant
to such settlement or judgment and such settlement or judgment includes a
complete release of the Indemnitee from further liability and has no other
materially adverse effect on the Indemnitee. The Indemnitee shall not
agree to any settlement of, or the entry of any judgment arising from, any such
suit or proceeding without the prior written consent of the Indemnitor, which
shall not be unreasonably withheld or delayed.
-48-
(b) In
order to seek indemnification under this Article VI, Indemnitee shall give
written notification (a “Claim Notice”) to the Indemnitor which contains (i) a
description and the amount (the “Claimed Amount”) of any Damages incurred or
reasonably expected to be incurred by the Indemnitee, (ii) a statement that the
Indemnitee is entitled to indemnification under this Article VI for such
Damages and a reasonable explanation of the basis therefor, and (iii) a demand
for payment (in the manner provided in paragraph (c) below) in the amount
of such Claimed Amount.
(c) Within
20 days after delivery of a Claim Notice, the Indemnitor shall deliver to the
Indemnitee a written response (the “Response”) in which Indemnitor
shall: (i) agree that the Indemnitee is entitled to receive all
of the Claimed Amount, (ii) agree that the Indemnitee is entitled to
receive part, but not all, of the Claimed Amount (the “Agreed Amount”), or
(iii) dispute that the Indemnitee is entitled to receive any of the Claimed
Amount. If the Indemnitor in the Response disputes its liability for
all or part of the Claimed Amount, the Indemnitor and the Indemnitee shall
follow the procedures set forth in Section 6.3(d) for the resolution of
such dispute (a “Dispute”).
(d) During
the 60-day period following the delivery of a Response that reflects a Dispute,
the Indemnitor and the Indemnitee shall use good faith efforts to resolve the
Dispute. If the Dispute is not resolved within such 60-day period,
the Indemnitor and the Indemnitee shall discuss in good faith the submission of
the Dispute to a mutually acceptable alternative dispute resolution procedure
(which may be non-binding or binding upon the parties, as they agree in advance)
(the “ADR Procedure”). In the event the Indemnitor and the Indemnitee
agree upon an ADR Procedure, such parties shall, in consultation with the chosen
dispute resolution service (the “ADR Service”), promptly agree upon a format and
timetable for the ADR Procedure, agree upon the rules applicable to the ADR
Procedure, and promptly undertake the ADR Procedure. The provisions
of this Section 6.3(d) shall not obligate the Indemnitor and the Indemnitee
to pursue an ADR Procedure or prevent either such party from pursuing the
Dispute in a court of competent jurisdiction; provided that, if the Indemnitor
and the Indemnitee agree to pursue an ADR Procedure, neither the Indemnitor nor
the Indemnitee may commence litigation or seek other remedies with respect to
the Dispute prior to the completion of such ADR Procedure. Any ADR
Procedure undertaken by the Indemnitor and the Indemnitee shall be considered a
compromise negotiation for purposes of federal and state rules of evidence, and
all statements, offers, opinions and disclosures (whether written or oral) made
in the course of the ADR Procedure by or on behalf of the Indemnitor, or any of
the Indemnifying Stockholders, the Indemnitee or the ADR Service shall be
treated as confidential and, where appropriate, as privileged work
product. Such statements, offers, opinions and disclosures shall not
be discoverable or admissible for any purposes in any litigation or other
proceeding relating to the Dispute (provided that this sentence shall not be
construed to exclude from discovery or admission any matter that is otherwise
discoverable or admissible). The fees and expenses of any ADR Service
used by the Indemnitor and the Indemnitee shall be considered
Damages.
-49-
(e) Notwithstanding
the other provisions of this Section 6.3, if a third party asserts (other
than by means of a lawsuit) that the Indemnitee is liable to such third party
for a monetary or other obligation which may constitute or result in Damages for
which such Indemnitee may be entitled to indemnification pursuant to this
Article VI, and the Indemnitee reasonably determines in good faith that it
has a valid business reason to fulfill such obligation, then (i)
Indemnitee shall be entitled to satisfy such obligation, with prior notice to
but without prior consent from the Indemnitor, (ii) Indemnitee may
subsequently make a claim for indemnification in accordance with the provisions
of this Article VI, and (iii) Indemnitee shall be reimbursed, in
accordance with the provisions of this Article VI, for any such Damages for
which it is entitled to indemnification pursuant to this Article VI
(subject to the right of the Indemnitor to dispute the Indemnitee’s entitlement
to indemnification, or the amount for which it is entitled to indemnification,
under the terms of this Article VI).
(a) Notwithstanding
anything to the contrary herein, no Party shall be entitled to recover, or be
indemnified for, Damages arising out of a misrepresentation or breach of
warranty set forth in Article II unless and until the aggregate of all such
Damages paid or payable by the Indemnitor collectively exceeds $50,000 (the
“Damages Threshold”) and then, if such aggregate threshold is reached, the
Indemnitee shall only be entitled to recover for Damages in excess of such
respective threshold; and in no event shall any Indemnitor be liable under this
Article VI for an aggregate amount in excess of $250,000.
-50-
ARTICLE
VII
For
purposes of this Agreement, each of the following defined terms is defined in
the Section of this Agreement indicated below.
Defined Term
|
Section
|
|
Acquisition
Subsidiary
|
Introduction
|
|
ADR
Procedure
|
6.3(d)
|
|
ADR
Service
|
6.3(d)
|
|
Affiliate
|
2.13(a)(vii)
|
|
Agreed
Amount
|
6.3(c)
|
|
Agreement
|
Introduction
|
|
Buyers
|
Introduction
|
|
CERCLA
|
2.20(a)
|
|
Certificate
of Merger
|
1.1
|
|
Certificates
|
1.10
|
|
Claim
Notice
|
6.3(b)
|
|
Claimed
Amount
|
6.3(b)
|
|
Claims
|
1.16
|
|
Closing
|
1.5
|
|
Closing
Date
|
1.5
|
|
Code
|
Introduction
|
|
Common
Conversion Ratio
|
1.8(b)
|
|
Company
|
Introduction
|
|
Company
Balance Sheet
|
2.6
|
|
Company
Balance Sheet Date
|
2.6
|
|
Company
Certificate
|
5.2(f)
|
|
Company
Confidential Information
|
4.5(b)
|
|
Company
Financial Statements
|
2.6
|
|
Company
Material Adverse Effect
|
2.1
|
|
Company
Options
|
1.11(a)
|
|
Company
Shares
|
1.6(d)
|
|
Company
Stockholders
|
1.6(d)
|
|
Company
Warrants
|
1.11(d)
|
|
Contemplated
Transactions
|
8.3
|
|
Controlling
Party
|
6.3(a)
|
|
Convertible
Notes
|
2.2
|
|
Current
Report
|
4.3
|
|
Damages
|
6.1
|
|
Damages
Threshold
|
6.5(a)
|
|
Defaulting
Party
|
8.6
|
|
Disclosure
Schedule
|
Article II
|
|
Dispute
|
6.3(c)
|
-51-
Defined Term
|
Section
|
|
Dissenting
Shares
|
1.9(a)
|
|
Effective
Time
|
1.1
|
|
Employee
Benefit Plan
|
2.19(a)(i)
|
|
Environmental
Law
|
2.20(a)
|
|
ERISA
|
2.19(a)(ii)
|
|
ERISA
Affiliate
|
2.19(a)(iii)
|
|
Escrow
Agent
|
1.6(g)
|
|
Escrow
Agreement
|
1.6(g)
|
|
Escrow
Shares
|
1.8(b)
|
|
Exchange
Act
|
2.6
|
|
Expected
Claim Notice
|
6.4
|
|
GAAP
|
2.6
|
|
GCL
|
1.1
|
|
Governmental
Entity
|
2.4
|
|
Indemnified
Executives
|
4.9(b)
|
|
Intellectual
Property
|
2.27(a)
|
|
Intellectual
Property Rights
|
2.27(a)
|
|
Legal
Proceeding
|
2.17
|
|
Loss
|
1.16
|
|
Merger
|
Introduction
|
|
Merger
Shares
|
1.8(b)
|
|
Non-Controlling
Party
|
6.3(a)
|
|
Non-Defaulting
Party
|
8.6
|
|
Ordinary
Course of Business
|
2.4
|
|
Organization
Date
|
2.9(c)
|
|
OTCBB
|
3.2
|
|
Parent
|
Introduction
|
|
Parent
Bridge Warrants
|
1.4
|
|
Parent
Certificate
|
5.3(e)
|
|
Parent
Common Stock
|
1.8(a)
|
|
Parent
Confidential Information
|
4.7(b)
|
|
Parent
Disclosure Schedule
|
Article
III
|
|
Parent
Financial Statements
|
3.8
|
|
Parent
Liabilities
|
1.16
|
|
Parent
Material Adverse Effect
|
3.1
|
|
Parent
Options
|
1.8(a)
|
|
Parent
Option Plan
|
4.6(d)
|
|
Parent
PPO Warrants
|
1.2
|
|
Parent
Reports
|
3.6
|
|
Parent
Subsidiary
|
2.5
|
|
Party
|
Introduction
|
|
Permits
|
2.23
|
|
Prohibited
Transaction
|
4.15
|
|
PPO
Price
|
Introduction
|
|
Private
Placement Offering
|
Introduction
|
-52-
Defined Term
|
Section
|
|
Reasonable
Best Efforts
|
4.1
|
|
Registration
Statement
|
1.2
|
|
Response
|
6.3(c)
|
|
SEC
|
1.16
|
|
Securities
Act
|
1.3(c)
|
|
Security
Interest
|
2.4
|
|
Share
Contribution
|
3.2
|
|
Split-Off
|
Introduction
|
|
Split-Off
Agreement
|
Introduction
|
|
Split-Off
Subsidiary
|
Introduction
|
|
Stockholder
Approval
|
2.3
|
|
Subsidiary
|
2.5
|
|
Surviving
Corporation
|
1.1
|
|
Tax
Returns
|
2.9(a)(ii)
|
|
Taxes
|
2.9(a)(i)
|
|
Transaction
Documentation
|
3.3
|
|
2010
Plan
|
1.11(a)
|
|
Value
|
6.3(c)
|
ARTICLE
VIII
(a) by
the Parent and the Acquisition Subsidiary if: (i) any of the
representations and warranties made in this Agreement by the Company shall not
be materially true and correct, when made or at any time prior to consummation
of the Contemplated Transactions as if made at and as of such time;
(ii) any of the conditions set forth in Section 5.2 hereof have not been
fulfilled in all material respects by the Closing Date; (iii) the Company
shall have failed to observe or perform any of its material obligations under
this Agreement; or (iv) as otherwise set forth herein; or
-53-
(b) by
the Company if: (i) any of the representations and warranties of the Parent
or the Acquisition Subsidiary shall not be materially true and correct when made
or at any time prior to consummation of the Contemplated Transactions as if made
at and as of such time; (ii) any of the conditions set forth in Section 5.3
hereof have not been fulfilled in all material respects by the Closing Date;
(iii) the Parent or the Acquisition Subsidiary shall have failed to observe
or perform any of their material respective obligations under this Agreement; or
(iv) as otherwise set forth herein.
ARTICLE
IX
-54-
If
to the Company or the Parent (subsequent to the Closing):
|
Copy
to (which copy shall not constitute notice hereunder):
|
|
InVivo
Therapeutics Corporation
|
Xxxxxxx
Xxxxx & Xxxx LLP
|
|
One
Broadway, 00xx
Xxxxx
|
Xxx
Xxxxx Xxxxxxx Xxxxx
|
|
Xxxxxxxxx,
Xx. 02142
|
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
|
|
Attn: Xxxxx
X. Xxxxxxxx, President
|
Xxx
Xxxx, XX 00000
|
|
Facsimile:
(000) 000-0000
|
Attn: Xxxxxxxx
X. Xxxxxxx
|
|
Facsimile:
(000) 000-0000
|
-55-
If
to the Parent or the Acquisition Subsidiary (prior to the Closing):
|
Copy
to (which copy shall not constitute notice hereunder):
|
|
Gottbetter
& Partners, LLP
|
||
000
Xxxxxx Xxxxx, Xxxxx 000
|
488
Madison Avenue, 00xx
Xxxxx
|
|
Xxxxxx
Xxxx, XX 00000
|
Xxx
Xxxx, XX 00000
|
|
Attn: Xxxxx
Xxxxxxxx, President
|
Attn:
Xxxx X. Xxxxxxxxxx, Esq.
|
|
Facsimile:
(000) 000-0000
|
Facsimile:
(000) 000-0000
|
Any Party
may give any notice, request, demand, claim or other communication hereunder
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the Party for whom it is
intended. Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set
forth.
-56-
(a) The
language used in this Agreement shall be deemed to be the language chosen by the
Parties to express their mutual intent, and no rule of strict construction shall
be applied against any Party.
[SIGNATURE
PAGE FOLLOWS]
-57-
PARENT:
|
||
By:
|
|
|
Name:
|
Xxxxx
Xxxxxxxx
|
|
Title:
|
President
and Chief Executive Officer
|
|
ACQUISITION
SUBSIDIARY:
|
||
INVIVO
THERAPEUTICS ACQUISITION CORP.
|
||
By:
|
|
|
Name:
|
Xxxxx
Xxxxxxxx
|
|
Title:
|
President
and Chief Executive Officer
|
|
COMPANY:
|
||
INVIVO
THERAPEUTICS CORPORATION
|
||
By:
|
|
|
Name:
|
Xxxxx
Xxxxxxxx
|
|
Title:
|
Chief
Executive
Officer
|
-58-