AGREEMENT AND PLAN OF MERGER by and among DOSE MEDICAL CORPORATION, a Delaware corporation, GLAUKOS CORPORATION, a Delaware corporation, GKOS Merger sub, inc. a Delaware corporation, and FORTIS ADVISORS LLC in its capacity as the Stockholders’...
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
by and among
DOSE MEDICAL CORPORATION,
a Delaware corporation,
GLAUKOS CORPORATION,
a Delaware corporation,
GKOS Merger sub, inc.
a Delaware corporation,
and
FORTIS ADVISORS LLC
in its capacity as the Stockholders’ Representative
Dated as of June 19, 2019
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of June 19, 2019 (the “Agreement Date”), by and among DOSE Medical Corporation, a Delaware corporation (the “Company”), Glaukos Corporation, a Delaware corporation (“Purchaser”), GKOS Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Purchaser (“Merger Sub”), and Fortis Advisors LLC, a Delaware limited liability company, solely in its capacity as the representative of the Participating Holders (the “Stockholders’ Representative”). Each of the Company, Purchaser, Merger Sub and the Stockholders’ Representative being a “Party,” and collectively, the “Parties.”
BACKGROUND
WHEREAS, the Stockholders collectively own 100% of the issued and outstanding shares of Common Stock of the Company and the Participating Holders collectively own 100% of the issued and outstanding equity of the Company;
WHEREAS, the Parties intend that Merger Sub be merged with and into the Company (the “Merger”), with the Company surviving the Merger on the terms and subject to the conditions set forth herein. The Merger and the other transactions contemplated by this Agreement are collectively referred to as the “Transactions;”
WHEREAS, the respective boards of directors of Purchaser, Merger Sub and the Company have determined that this Agreement and the Transactions are in the best interests of Purchaser, Merger Sub and the Company, respectively, and have approved this Agreement and the Transactions;
WHEREAS, the board of directors of the Company has recommended this Agreement for adoption and approval by the Stockholders;
WHEREAS, concurrent with the execution and delivery of this Agreement, and as a condition and inducement to Purchaser’s willingness to enter into this Agreement, each of the Stockholders set forth on Schedule A (each, a “Key Stockholder” and together, the “Key Stockholders”) is executing and delivering to Purchaser a voting agreement in form acceptable to Purchaser (each, a “Voting Agreement” and together, the “Voting Agreements”), pursuant to which each such Key Stockholder has, among other things, (i) agreed to vote his, her or its shares of Common Stock in favor of approval and adoption of this Agreement and the Transactions, (ii) granted Purchaser an irrevocable proxy to vote such shares in a manner consistent with the terms of the Voting Agreements, (iii) agreed to vote against any Alternative Transaction (as defined in the Voting Agreement), and (iv) agreed not to transfer any of his, her or its shares of Common Stock from the Agreement Date until the Effective Time (as defined herein);
WHEREAS, the Participating Holders desire to appoint the Stockholders’ Representative to act as the Stockholders’ Representative in the capacities described in this Agreement in connection with the Transactions; and
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW, THEREFORE, in consideration of the above premises and the mutual representations, warranties, covenants and agreements in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
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1. Definitions |
“Adjustment Amount” means an amount (which amount may be a positive or negative number) equal to the sum of (a) the difference between the Estimated Closing Working Capital and the Final Working Capital (which amount may be a positive or negative number), (b) the difference between the Estimated Closing Cash and the Final Closing Cash (which amount may be a positive or negative number), (c) the difference between the Estimated Closing Indebtedness and the Final Closing Indebtedness (which amount may be a positive or negative number), and (d) the difference between the Estimated Closing Transaction Expenses and the Final Closing Transaction Expenses (which amount may be a positive or negative number).
“Affiliate” means, with respect to any Person, any other Person controlling, controlled by, or under common control with such other Person.
“Aggregate Exercise Price” means the aggregate of (a) sum of (i) the exercise price per share under each Option multiplied by (ii) the maximum number of shares of Common Stock covered by each such Option and (b) the sum of (i) the exercise price per share under each Warrant multiplied by (ii) the maximum number of shares of Common Stock covered by each such Warrant.
“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in San Clemente, California are authorized or required by Law to close.
“Buyout Option” means Purchaser’s option, exercisable in Purchaser’s sole discretion, to pay to the Stockholders’ Representative’s designee for further distribution to the Participating Holders a one-time lump sum payment to buyout or forgo any future amounts due or to become due in connection with (a) the Royalty Payment, (b) the EU Milestone, (c) the First Annual Net Sales Milestone and (c) the Second Annual Net Sales Milestone associated with the Protein Based Product and/or the Steroid Based Product.
“Buyout Option Amount” means (a) $30 million with respect to a Protein Based Product that qualifies as Product 1 or $40 million with respect to a Protein Based Product that qualifies as Product 1+ and (b) $10 million with respect to a Steroid Based Product that qualifies as Product 2 or $15 million with respect to a Steroid Based Product that qualifies as Product 2+.
“Cash” means the aggregate cash and cash equivalents (including deposits in transit, marketable securities, credit card receivables, and short term investments and reduced for all outstanding uncleared checks, drafts and wires, and excluding any security deposits or other restricted amounts) in the accounts of the Company determined in a manner consistent with the Company Accounting Principles.
“Change in Control” means the sale of all or substantially all the assets of a Person; any merger, consolidation or acquisition of a Person with, by or into another corporation, entity or person; or any change in the ownership of more than fifty percent (50%) of the voting capital stock of a Person in one or more related transactions.
“Closing Merger Consideration” means an amount equal to the sum of the following amounts, without duplication: (a) the Initial Merger Consideration; (b) the Aggregate Exercise Price; and (iii) the Estimated Closing Cash.
“Closing Per Share Merger Consideration” means (a) the Closing Merger Consideration, divided by (b) the Fully Diluted Share Number.
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“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means shares of the common stock, $0.001 par value per share, of the Company.
“Company Accounting Principles” means the accounting principles utilized prior to the Effective Time in preparing the financial statements of the Company, applied consistently throughout the relevant period.
“Company Certificate” means a certificate that immediately prior to the Effective Time represented shares of Common Stock.
“Company Disclosure Schedule” means the disclosure schedules of the Company attached to this Agreement and incorporated by reference in this Agreement.
“Company Material Adverse Effect” means an event, circumstance, condition or change that has had or is reasonably likely to have, individually or in the aggregate (taking into account all other events, circumstances, conditions or changes) a material adverse effect on (a) the business, assets, liabilities, results of operations or condition (financial or otherwise) of the Company, taken as a whole, or (b) the ability of the Company or the Participating Holders to consummate the Transactions; provided, however, that, solely with respect to clause (a) of this definition, a Company Material Adverse Effect does not include a material adverse effect, (i) caused by events, conditions, circumstances or changes that generally affect the economy as a whole, the financial, banking or securities markets or the industry in which the Company operates to the extent those events, conditions, circumstances or changes do not affect the Company, taken as a whole, disproportionately as compared to other participants in the industry in which the Company operate, or (ii) caused by any change in Law, in GAAP (or in any interpretation thereof) or the Company Accounting Principles, or (iii) arising from any action or inaction expressly required to be taken (or not taken) by the Company pursuant to this Agreement or any other Transaction Document or otherwise approved in writing pursuant to this Agreement by or taken (or not taken) at the request or direction of Purchaser, or (iv) resulting from earthquakes, hurricanes or other natural disasters or from the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or resulting from the occurrence of any military or terrorist attack upon the United States or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States in each case to the extent those events, conditions, circumstances, or changes do not affect the Company, taken as a whole, disproportionately, or (v) failure of the Company to meet or achieve results set forth in any internal projections; provided, however, that the underlying developments, factors, events, circumstances, conditions and changes may be taken into consideration in connection with the determination as to whether a Company Material Adverse Effect has occurred, or (vi) any item or items disclosed in the Company Disclosure Schedule with reasonable specificity, or (vii) resulting from the announcement or disclosure of the existence of this Agreement or any other Transaction Document or the disclosure or pendency of the Transactions, other than any such announcement or disclosure made by the Company, any Participating Holder or any of their respective representatives or agents in breach of this Agreement.
“Confidentiality Agreement” means that certain Confidentiality Agreement by and between Purchaser and the Company.
“Contract” means any legally binding contract, lease or other property agreement, license, indenture, note, bond, agreement, permit, concession, franchise, commitment, purchase order, mortgage, partnership or joint venture agreement, instrument or any legally binding agreement to enter into any of the foregoing (in each case, whether written or oral) to which a Person is a party or by which any of its
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assets are bound.
“Copyrights” means all works of authorship (whether or not copyrightable), worldwide registered and unregistered copyrights and all applications to register the same, including all compilations, moral rights, database rights and other documentation related to any of the foregoing.
“Damages” means any and all losses, damages, claims, penalties, fines, liabilities, amounts paid in settlement, costs and expenses (including settlement and court costs and reasonable attorneys’ fees and expenses), but excluding any punitive damages (other than punitive damages payable to a third party in connection with a Third Party Claim).
“DGCL” means the Delaware General Corporation Law.
“Environmental Law” means any applicable Law relating to pollution or the protection of the environment or natural resources, or public or worker health or safety (as they relate to exposure to Hazardous Substances) including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.. § 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.) and the regulations promulgated pursuant thereto.
“Environmental Permits” means the Governmental Authorizations required under applicable Environmental Laws necessary to operate the business of the Company or to occupy the Leased Real Property.
“EU Milestone” is satisfied upon the Surviving Company receiving regulatory approval prior to the 10th anniversary of the Closing Date from the EU European Medicines Agency for the first Protein Based Product and/or the first Steroid Based Product. Upon satisfaction of the EU Milestone for the first Protein Based Product, Purchaser will pay $2.5 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders. Upon satisfaction of the EU Milestone for the first Steroid Based Product, Purchaser will pay $1.25 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders.
“FDA Milestone” is satisfied upon the Surviving Company receiving regulatory approval prior to the 10th anniversary of the Closing Date from the US Food and Drug Administration for the first Protein Based Product and/or the first Steroid Based Product. Upon satisfaction of the FDA Milestone for the first Protein Based Product, Purchaser will pay $10 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders if the Protein Based Product is a Product 1 or $15 million if the Protein Based Product is Product 1+. Upon satisfaction of the FDA Milestone for the first Steroid Based Product, Purchaser will pay $5 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders if the Steroid Based Product is a Product 2 or $7.5 million if the Steroid Based Product is a Product 2+.
“First Annual Net Sales Milestone” is satisfied upon the first to occur, during the ten (10) year period following the Closing Date, of (a) the annual Net Sales of the first Protein Based Product and the first Steroid Based Product in the aggregate exceeds $100 million in any given fiscal year or (b) the cumulative Net Sales of the first Protein Based Product and the first Steroid Based Product in the aggregate exceeds $400 million. Upon satisfaction of the First Annual Net Sales Milestone, Purchaser will pay $7.5 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders.
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“Fully Diluted Share Number” means (a) the aggregate number of shares of Common Stock outstanding immediately prior to the Effective Time (other than shares of Common Stock owned by the Company which are to be cancelled and retired in accordance with Section 4.2), plus (b) the aggregate number of shares of Common Stock issuable upon the exercise in full of all Options (whether vested or unvested) outstanding immediately prior to the Effective Time (other than Options that are cancelled without payment in accordance with Section 4.4(a)), plus (c) the aggregate number of shares of Common Stock issuable upon the exercise in full of all Warrants outstanding immediately prior to the Effective Time (other than Warrants that are cancelled without payment in accordance with Section 4.5(a)).
“Fundamental Representations” means Sections 6.1(a) (Organization and Good Standing), 6.1(b) (Power and Authorization; Enforceability), 6.1(c) (No Conflicts), 6.1(d) (Capitalization), 6.3(a) (Organization and Good Standing), 6.3(b) (Power and Authorization; Enforceability), and 6.3(c) (No Conflicts).
“GAAP” means United States generally accepted accounting principles as in effect at an applicable time, applied consistently throughout a specific period.
“Governmental Authorization” means any approval, consent, license, permit or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Laws.
“Governmental Body” means (a) the United States federal government or the government of any other country, or (b) the government of any state, commonwealth, province, county, city, territory, or possession or (c) any political subdivision, courts, arbitral panel, departments, commissions, boards, bureaus, tribunals, agencies or other instrumentalities of any of the foregoing in subparts (a) and (b).
“Hazardous Substance” means any material, chemical, emission or substance that has been listed, regulated, defined or designated by any Governmental Body to be radioactive, toxic, hazardous, a pollutant, a contaminant, or for which liability or standards of conduct may be imposed, or is otherwise considered a danger to health, reproduction or the environment.
“Indebtedness” means with respect to any Person, without duplication, all indebtedness for borrowed money, whether evidenced by notes, bonds, debentures or similar instruments, guarantees related thereto, all obligations in respect of capital leases, all obligations in respect of letters of credit, bankers’ acceptance or similar credit transactions, all obligations secured by a contractual encumbrance, any liability or obligation under any deferred compensation, severance or employment plan or arrangement, underfunded benefit plan, or deferred purchase price of goods or services, and any accrued interest, fees or penalties related to any of the above.
“Independent Auditing Firm” means Deloitte, LLP.
“Initial Merger Consideration” means two million five hundred thousand dollars ($2,500,000).
“Intellectual Property” means all of the following: (a) Patents; (b) Trademarks; (c) Internet domain names; (d) Copyrights, including in computer software and databases; (e) registrations and applications for any of the foregoing (a) through (d); and (f) trade secrets, know-how and confidential and proprietary information (including information about customers, suppliers, distributors and resellers, research in progress, product or service testing information, data, designs, manufacturing and production processes and techniques, formulae, recipes, compositions, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, drawings, schematics, blueprints, flow charts and strategies).
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“IOP System Milestone Payments” means the Milestone Payments set forth in that certain IOP System Purchase Agreement, dated as of April 12, 2017, by and between the Company and Purchaser (the “IOP System Purchase Agreement”).
“Knowledge” means with respect to the Company the actual knowledge of Xxxxx Xxxxxxx, the Company’s Chief Executive Officer, after reasonable inquiry in connection with both the operation of the business in the ordinary course or in connection with the Transactions.
“Laws” means any federal, national, provincial, state, local, United States, foreign or other law (both common and statutory law and civil and criminal law), statute, rule, regulation, treaty, ordinance, convention, rule, code, decree, judgment, writ, regulatory code (including statutory instruments, guidance notes, circulars, directives, decisions, rules, regulations or restrictions) or other order, or other requirement or rule of law of any Governmental Body.
“List of Participating Holders” means a schedule setting forth, for each Participating Holder, as applicable, (a) such Person’s name and, to the Company’s Knowledge as of the date of delivery, address, (b) the number of shares of Common Stock, and the number of shares of Common Stock issuable upon exercise of Options and/or Warrants, as applicable, held by such Person and the respective Company Certificate numbers held by each as of immediately prior to the Effective Time, (c) the total amount of cash payable to such Person at the Closing, and (d) such Person’s Pro Rata Portion of the Milestone Merger Consideration, Royalty Payments, Buyout Option Amount and Stockholders’ Representative Amount payable to such Person.
“Merger Consideration” means the payments that a Participating Holder is entitled to receive pursuant to the Merger, including the Closing Merger Consideration, all Milestone Merger Consideration, all Royalty Payments and all Buyout Option Amounts, if and to the extent the foregoing become payable in accordance with the terms of this Agreement.
“Milestone Event” means satisfaction of any of: (a) the FDA Milestone for a Protein Based Product; (b) the FDA Milestone for a Steroid Based Product, (c) the EU Milestone for a Protein Based Product; (d) the EU Milestone for a Steroid Based Product; (e) the First Annual Net Sales Milestone; and (f) the Second Annual Net Sales Milestone.
“Milestone Merger Consideration” means all payments made to the Participating Holders pursuant to any Milestone Event.
“Net Sales” means, with respect to a given period of time, total gross sales of Product 1, Product 1+, Product 2, Product 2+, and Product 3 (each a “Retinal Product” and collectively, the “Retinal Products”), as applicable, by Purchaser and its Affiliates in such period to third party customers after the Closing Date, less the following deductions which are actually incurred, allowed, paid, accrued or specifically allocated to such gross sales amounts of each of the respective Retinal Products, as applicable:
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credits or allowances actually granted for damaged such Retinal Products, returns or rejections of such Retinal Products, price adjustments and billing errors; |
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normal and customary trade, cash and quantity discounts, allowances and credits; |
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governmental and other rebates (or equivalents thereof) granted to managed healthcare organizations; pharmacy benefit managers (or equivalents thereof), federal, state/provincial, local and other governments, their agencies and purchasers or |
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reimbursers; or to trade customers; |
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distribution services agreement fees allowed or paid to third party distributors; |
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transportation costs, including without limitation any insurance costs, for outbound freight related to the delivery of such Retinal Products to the extent included in the gross amount invoiced; |
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sales taxes, value added taxes and other taxes (other than taxes on income) applied to the sale of such Retinal Products to the extent included in the gross amount invoiced; and |
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any other items that reduce gross sales amounts as required by GAAP. |
Sales of any such Retinal Products between or among Purchaser and its Affiliates shall be excluded from the computation of Net Sales, but the subsequent final sales of such Retinal Products to third parties by such Affiliates shall be included in the computation of Net Sales.
“Option” means any option to purchase Common Stock outstanding as of immediately prior to the Effective Time.
“Optionholder” means a holder of an Option.
“Participating Holders” means those persons (other than the Company) who, immediately prior to the Effective Time, were holders of Common Stock, Options or Warrants and whose interests therein, as the result of the Merger, are converted into a right to receive a portion of the Merger Consideration.
“Party” and “Parties” means the parties to this Agreement.
“Patents” means all inventions (whether or not patentable or reduced to practice), all worldwide issued patents and pending patent applications, patent disclosures, and rights related thereto.
“Per Share Amount” means the amount determined by dividing the applicable payment by the Fully Diluted Share Number.
“Person” means an individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, unincorporated organization, association, organization or other entity or form of business enterprise or Governmental Body.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of any Straddle Period that ends on the Closing Date.
“Pro Rata Portion” means, with respect to each Participating Holder, the amount allocated to such Participating Holder using a fraction (a) the numerator of which is the aggregate number of shares of Common Stock held by such Participating Holders (including any shares of Common Stock issuable pursuant to Options or Warrants) immediately prior to the Effective Time, and (b) the denominator of which is the Fully Diluted Share Number.
“Product 1” mean all protein based products developed by the Company for the treatment of AMD, RVO or DME that (a) contain one of the following active pharmaceutical ingredients: Anti-VEGF or Tyrosine Kinase Inhibitor (“TKI”); and (b) use a delivery technology (regardless of delivery duration) described in the Company’s invention disclosures and patent applications prepared and/or filed with the
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USPTO, prior to the Closing Date, a copy of which shall be delivered to Purchaser at or before the Closing (the “Product 1 Filings”).
“Product 1+” means all Product 1 products that also (a) contain one of the following active pharmaceutical ingredients: Aflibercept or Axitinib (TKI); (b) have a duration of delivery of at least 5 months; and (c) deliver implants that are pre-loaded into a small gauge (25 gauge or smaller) needle.
“Product 2” means all steroid based products developed by the Company for the treatment of DME that possess at least the following characteristics: (a) contains a steroid as the primary active pharmaceutical ingredient; and (b) use a delivery technology (regardless of delivery duration) described in the Company’s invention disclosures and patent applications prepared and/or filed with the USPTO, prior to the Closing Date, a copy of which shall be delivered to Purchaser at or before the Closing (the “Product 2 Filings”).
“Product 2+” means all Product 2 products that also (a) contain Triamcinolone Acetonide as the primary active pharmaceutical ingredient; (b) have a duration of delivery of at least 5 months; and (c) deliver implants that are pre-loaded into a small gauge (25 gauge or smaller) needle.
“Product 3” means all products developed by the Company other than Product 1, Product 1+, Product 2 or Product 2+ that use the Company’s technology described in the Company’s invention disclosures and patent applications prepared and/or filed with the USPTO, prior to the Closing Date, a copy of which shall be delivered to Purchaser at or before the Closing (the “Product 3 Filings”).
“Protein Based Product” means the first of Product 1 or Product 1+ to satisfy the FDA Milestone and/or the EU Milestone, but in no event shall there be more than one Protein Based Product for any Milestone Event.
“PTO Filings” means, collectively, the Product 1 Filings, Product 2 Filings and the Product 3 Filings.
“Remedies Exception” means applicable bankruptcy, insolvency, reorganization, moratorium and other similar existing or future Laws relating to or limiting creditors’ rights generally, and general principles of equity relating to the availability of specific performance and injunctive and other forms of equitable relief.
“Representative” or “Representatives” means, with respect to a particular Person, any director, member, limited or general partner, officer, employee, agent, consultant, advisor or other representative of such Person, including outside legal counsel, accountants and financial advisors.
“Royalty Payment” means a quarterly royalty payment of five percent (5%) of the global Net Sales for the first Protein Based Product and the first Steroid Based Product and Product 3, if any, payable to the Stockholders’ Representative’s designee for further distribution to the Participating Holders until the later of (a) the 10th anniversary of the applicable FDA Milestone Event or EU Milestone Event for the respective Protein Based Product or Steroid Based Product in the US jurisdiction or the EU jurisdiction and (b) the date such Protein Based Product, Steroid Based Product or Product 3 is no longer covered by a valid patent claim in the respective US jurisdiction or the EU jurisdiction.
“Second Annual Net Sales Milestone” is satisfied upon the first to occur, during the ten (10) year period following the Closing Date, of (a) the annual Net Sales of the first Protein Based Product and the first Steroid Based Product in the aggregate exceeds $250 million in any given fiscal year or (b) the cumulative Net Sales of the first Protein Based Product and the first Steroid Based Product in the
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aggregate exceeds $1 billion. Upon satisfaction of the Second Annual Net Sales Milestone, Purchaser will pay an additional $20 million to the Stockholders’ Representative’s designee for further distribution to the Participating Holders.
“Set-Off Rights” means, subject to the limitations in Article 9 (including Section 9.6), Purchaser’s right, without duplication, to reduce the Milestone Merger Consideration and/or Royalty Payments (to the extent payable hereunder and unpaid) for an indemnification claim made under Article 9 to the extent that any Purchaser Indemnified Party has made a valid and timely indemnification claim for Damages under Article 9 (including any such Damages in respect of any Third Party Claim) prior to the time the applicable Milestone Merger Consideration payment and/or Royalty Payment is due to be paid by Purchaser pursuant to this Agreement. For the avoidance of doubt, the Set-Off Rights may be applied to any payments made with respect the Buyout Option, Product 1 Change in Control Buyout Payment, Product 2 Change in Control Buyout Payment or any payment related to a Retinal Products Sale.
“Steroid Based Product” means the first of Product 2 or Product 2+ to satisfy the FDA Milestone and/or the EU Milestone, but in no event shall there be more than one Steroid Based Product for any Milestone Event.
“Stockholders” means all of the holders of Common Stock immediately prior to the Effective Time.
“Stockholders’ Representative Amount” means an amount equal to one hundred fifty thousand dollars ($150,000), which amount shall be paid by Purchaser to the Stockholders’ Representative out of the Initial Merger Consideration for the benefit of the Participating Holders to be used to satisfy costs, expenses and/or liabilities of the Stockholders’ Representative (and/or the Participating Holders) in connection with its performance of its duties and responsibilities as the Stockholders’ Representative under this Agreement.
“Straddle Period” means any taxable period that includes (but does not end on) the Closing Date.
“Tax” or “Taxes” means all federal, state, local or foreign income Taxes (including any Tax on or based upon net income, gross income, or income as specially defined, or earnings, profits, or selected items of income, earnings or profits) and all gross receipts, sales, use, ad valorem, transfer, franchise, license, capital stock, escheat or abandoned property, withholding, social security, unemployment, disability, or windfall profits Taxes, alternative or add-in minimum Taxes or any Tax of any kind whatsoever, together with any interest and any penalties and additions to Tax, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of another Person.
“Tax Agreement” means an agreement the principal purpose of which is the sharing or allocation of, or indemnification for, Taxes.
“Tax Return” means all federal, state, local, provincial and foreign return, declaration, report, or information return or statement relating to Taxes, including any schedules and amendments thereto.
“Trademarks” means all trademarks, service marks, trade dress, trade names or corporate names, logos, packaging design, slogans, internet domain names and social media identifications and any other and other indicia of source, together with all of the goodwill associated therewith.
“Transaction Expenses” means the sum of any fees, costs and expenses incurred by or on behalf
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of the Company in connection with the drafting, negotiation, execution and delivery of this Agreement and the other Transaction Documents and the consummation of the Transactions, including (i) all legal, accounting, investment banking, advisor, consultant and other fees and expenses owed by the Company including any expenses related to the Stockholders’ Representative, (ii) all sale, change-of-control, retention or similar bonuses or payments to current or former employees and other service providers of the Company (and the employer-side Taxes associated with any such payments), and (iii) the fees and expenses incurred in connection with the obligations to obtain the Tail Policy.
“US PTO” means the United States Patent and Trademark Office.
“Warrants” means all warrants to purchase Common Stock outstanding as of immediately prior to the Effective Time.
“Warrantholder” means a holder of a Warrant.
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2.2 Effective Time of the Merger. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place at 11:59 p.m., Pacific Time, no later than three (3) Business Days after the last of the conditions to Closing set forth in Article 8 have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), at the offices of O’Melveny & Xxxxx LLP, 000 Xxxxxxx Xxxxxx Xx., 00xx Xxxxx, Xxxxxxx Xxxxx, XX 00000, or at such other time or on such other date or at such other place as Purchaser and the Company may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”). On the Closing Date, the Company and Purchaser shall cause the Certificate of Merger in the form of Exhibit A (the “Certificate of Merger”) to be executed and filed with the Secretary of State of the State of Delaware as provided in the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been so filed or at any later time agreed to in writing by the Company and Purchaser and specified in the Certificate of Merger (the “Effective Time”). |
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2.3 Charter Documents. The certificate of incorporation of the Surviving Corporation shall be amended at the Effective Time to read as set forth in Exhibit B and, as so amended, such certificate shall be the certificate of incorporation of the Surviving Corporation until changed or amended as provided in such certificate or by applicable Law. The bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until changed or amended as provided in such bylaws or by applicable Law. |
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2.5 Officers. The officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation immediately after the Effective Time, until the earlier of their resignation or removal in accordance with applicable Law, the certificate of incorporation and the bylaws of the Surviving Corporation. |
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3.1 Closing Statement. |
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(a) Delivery of Estimated Closing Statement. No later than three (3) Business Days prior to the Closing, the Company will deliver to Purchaser (i) the List of Participating Holders and (ii) a certificate signed by an authorized officer of the Company attaching an itemized statement (the “Estimated Closing Statement”) setting forth in reasonable detail the Company’s good faith estimates of (A) Cash of the Company as of the Closing Date (the “Estimated Closing Cash”), (B) Indebtedness of the Company as of the Closing Date (the “Estimated Closing Indebtedness”), and (C) Transaction Expenses as of the Closing Date (the “Estimated Closing Transaction Expenses”). The Company and Purchaser each agrees to provide, upon the other’s request, reasonable access (including electronic access, to the extent available), to the applicable books, records, properties and personnel of the Company or Purchaser, as applicable, for purposes of verifying the information in the Estimated Closing Statement. |
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(b) Delivery of Closing Statement. As promptly as practicable, but no later than sixty (60) days after the Effective Time, Purchaser will deliver, or cause the Surviving Company to deliver, to the Stockholders’ Representative a certificate signed by an authorized officer of Purchaser (the “Closing Statement Certificate”) attaching an itemized statement (the “Closing Statement”) setting forth Purchaser’s calculation of (i) the Cash of the Company as of the Closing Date (the “Closing Cash”), (ii) the Indebtedness of the Company as of the Closing Date (the “Closing Indebtedness”), and (iii) Transaction Expenses as of the Closing Date (the “Closing Transaction Expenses”). Purchaser will provide the Stockholders’ Representative and its Representatives with reasonable access (including electronic access, to the extent available), during normal business hours, to the relevant books, records, properties and personnel of the Surviving Company (and personnel of Purchaser to the extent involved in the preparation of the Closing Statement), for the purpose of assisting the Stockholders’ Representative and its Representatives in their review of the amounts set forth in the Closing Statement. |
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(c) Notice of Dispute. If the Stockholders’ Representative disputes Purchaser’s calculation of the Closing Cash, the Closing Indebtedness and/or the Closing Transaction Expenses (the “Disputed Items”), the Stockholders’ Representative will deliver to Purchaser within thirty (30) days of its receipt of the Closing Statement a reasonably detailed notice specifying the Disputed Items, and the Stockholders’ Representative will be deemed to have agreed with all amounts contained in the Closing Statement that are not disputed. If no notice of Disputed Items is delivered to Purchaser on or prior to the expiration of such thirty (30) day period, the Closing Statement and the calculations set forth therein will be deemed accepted by the Stockholders’ Representative and will be final, conclusive and binding on the Parties. If any such notice of Disputed Items is timely provided, Purchaser and the Stockholders’ Representative will use commercially reasonable efforts for a period of thirty (30) days after Purchaser’s receipt of the notice of Disputed Items from the Stockholders’ Representative (or such longer period as they may mutually agree in writing) (the “Consultation Period”) to resolve the Disputed Items. |
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(d) Dispute Resolution. If Purchaser and the Stockholders’ Representative do not reach a final resolution of all Disputed Items within the Consultation Period, then any remaining Disputed Items will be submitted to the final and binding determination of the Independent Auditing Firm. The Independent Auditing Firm will be instructed to resolve only the Disputed Items that were not settled in writing during the Consultation Period and will be instructed to resolve such Disputed Items within thirty |
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(30) Business Days after submission. The Independent Auditing Firm will have the right, but not the obligation, to request information or ask questions of Purchaser and the Stockholders’ Representative as it sees fit. The Independent Auditing Firm’s determination will be made solely in accordance with the terms of this Agreement and based solely on the submissions and supporting materials provided by Purchaser and the Stockholders’ Representative in accordance with the terms and procedures set forth in this Agreement. The Independent Auditing Firm’s determination of the Disputed Items will be deemed final, conclusive and binding on the Parties. The fees, costs and expenses of the Independent Auditing Firm shall be divided equally between Purchaser, on the one hand, and the Stockholders’ Representative (on behalf of the Participating Holders), on the other hand. The Parties agree that the procedure set forth in this Section 3.1 will be the sole and exclusive method for resolving the Disputed Items, provided that this provision will not prohibit any Party from instituting legal proceedings to enforce the ruling of the Independent Auditing Firm. |
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(e) Adjustment to Merger Consideration. |
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(i) Upon receipt by Purchaser of the Stockholders’ Representative’s written notice of agreement and/or resolution of all Disputed Items in accordance with Sections 3.1(c) or 3.1(d), (i) the calculation of the Closing Cash will be final, conclusive and binding on the Parties and will be the “Final Closing Cash,” (ii) the calculation of the Closing Indebtedness will be final, conclusive and binding on the Parties and will be the “Final Closing Indebtedness,” and (ii) the calculation of the Closing Transaction Expenses will be final, conclusive and binding on the Parties and will be the “Final Closing Transaction Expenses.” |
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(ii) In the event that: |
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(1) the amount of the Final Closing Cash exceeds the Estimated Closing Cash by more than $25,000, Purchaser shall deliver to the Stockholders’ Representative’s designee for further distribution to each of the Participating Holders in accordance with the List of Participating Holders an amount equal to the Final Closing Cash minus the Estimated Closing Cash; if the Estimated Closing Cash exceeds the Final Closing Cash by more than $25,000, then Purchaser shall be entitled to exercise its Set-Off Rights in an amount equal to such excess; if the difference between the Final Closing Cash and Estimated Closing Cash is less than $25,000 in either direction, no further payments or adjustments shall be made with respect thereto. |
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(2) the amount of the Final Closing Indebtedness exceeds the Estimated Closing Indebtedness, then Purchaser shall be entitled to offset any amounts due to the Participating Holders pursuant to Section 3.1(e)(ii) or exercise its Set-Off Rights in an amount equal to such excess amount; if the amount of the Estimated Closing Indebtedness exceeds the Final Closing Indebtedness, Purchaser shall deliver to the Stockholders’ Representative’s designee for further distribution to each of the Participating Holders in accordance with the List of Participating Holders an amount equal to such excess. |
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(3) the amount of the Final Closing Transaction Expenses exceeds the Estimated Closing Transaction Expenses, then Purchaser shall be entitled to offset any amounts due to the Participating Holders pursuant to Section 3.1(e)(ii) or exercise its Set-Off Rights in an amount equal to such excess amount; if the amount of the Estimated Closing Transaction Expenses exceeds the Final Closing Transaction Expenses, Purchaser shall deliver to the Stockholders’ Representative’s designee for further distribution to each |
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of the Participating Holders in accordance with the List of Participating Holders an amount equal to such excess. |
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3.4 Payments. The Closing Merger Consideration shall be due and payable on the Closing Date. All payments shall be made in US Dollars by wire transfer to the account(s) designated by the Stockholders’ Representative’s designee in writing, which shall then be further distributed to the Participating Holders. Upon satisfaction of any Milestone Event, Purchaser shall notify the Stockholders’ Representative in writing within twenty (20) Business Days (each a “Milestone Notice”). Within ten (10) Business Days of receipt of any Milestone Notice, the Stockholders’ Representative shall deliver to Purchaser an updated List of Participating Holders (each such update, an “Updated List of Participating Holders”) or, if no updated List of Participating Holders is received within such ten (10) Business Day period, the last delivered List of Participating Holders shall be deemed final for purposes of payment with respect to such Milestone Event. Each Milestone Merger Consideration payment, if any, shall (i) be due and payable within five (5) Business Days after receipt of an Updated List of Participating Holders or, in |
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the event no Updated List of Participating Holders is delivered, within fifteen (15) Business Days of delivery of the Milestone Notice and (ii) shall be paid by wire transfer to the account(s) designated by the Stockholders’ Representative’s designee and shall be directed to the Stockholders’ Representative’s designee for further distribution to the Participating Holders. Each Royalty Payment, if any, shall be due and payable within sixty-five (65) days after the last day of each applicable fiscal quarter to which such Royalty Payment relates. Purchaser shall cause the Surviving Company, acting in good faith, to use commercially reasonable judgment and efforts to accomplish each Milestone Event after giving due consideration to the costs and expenses related to achieving each such Milestone Event compared to the likelihood of achieving commercial viability and reasonable profitability of a Protein Based Product or a Steroid Based Product. |
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3.5 Buyout Option and Change in Control. |
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(a) Notwithstanding any other provision of this Agreement, in the event Purchaser elects, in its sole discretion following the FDA Milestone for any Protein Based Product or Steroid Based Product, to exercise the Buyout Option with respect to either the Protein Based Product or the Steroid Based Product, Purchaser shall have no obligation to make any payments related to any EU Milestone, Royalty Payments, First Annual Net Sales Milestone, Second Annual Net Sales Milestone or any other contingent or milestone payments related to such Protein Based Product or such Steroid Based Product, as applicable, that would have otherwise become payable. For clarity, Purchaser may elect to exercise the Buyout Option for either the first Protein Based Product or the first Steroid Based Product independently, and may exercise the Buyout Option as to both the first Protein Based Product and the first Steroid Based Product. If Purchaser exercises the Buyout Option with respect to both the Protein Based Product and the Steroid Based Product, then such Buyout Option will also terminate any Royalty Payments due or to become due for any Product 3. Purchaser shall notify the Stockholders’ Representative of Purchaser’s desire to exercise a Buyout Option in writing, specifying therein which Buyout Option is being exercised thereby, and pay the applicable Buyout Option Amount to the Stockholders’ Representative’s designee for further distribution to the Participating Holders within ten (10) Business Days after such notice is deemed delivered to the Stockholders’ Representative as provided herein. |
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(b) In the event there is a Change in Control of Purchaser after either Product 1 or a Product 1+ has satisfied the FDA Milestone, Purchaser shall pay the Buyout Option Amount with respect to such Product 1 or Product 1+, as applicable, in connection with the closing of such Change in Control of Purchaser (any such payment, a “Product 1 Change in Control Buyout Payment”). Any Product 1 Change in Control Buyout Payment that becomes due and payable pursuant to this Section 3.5(b) shall be paid in connection with, and no later than fifteen (15) Business Days following, the closing of such Change in Control of Purchaser. If a Product 1 Change in Control Buyout Payment is made, Purchaser shall have no obligation to make any payments with respect to the EU Milestone, Royalty Payments, First Annual Net Sales Milestone, Second Annual Net Sales Milestone or any other contingent or milestone payments for any Protein Based Product that otherwise is or would have become payable. In the event that neither a Product 1 nor a Product 1+ has satisfied the FDA Milestone prior to the closing of a Change in Control of Purchaser, no amounts will be paid in connection with such Change in Control of Purchaser and the acquiring Person in such Change in Control of Purchaser shall assume all obligations under this Agreement with respect to such Milestone Merger Consideration. |
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(c) In the event there is a Change in Control of Purchaser after either a Product 2 or a Product 2+ has satisfied the FDA Milestone, Purchaser shall pay the Buyout Option Amount with respect to such Product 2 or Product 2+, as applicable, in connection with the closing of such Change in Control of Purchaser (any such payment, a “Product 2 Change in Control Buyout Payment”). Any Product 2 Change in Control Buyout Payment that becomes due and payable pursuant to this Section 3.5(c) shall be paid in connection with, and no later than fifteen (15) Business Days following, the closing of such Change |
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in Control of Purchaser. If a Product 2 Change in Control Buyout Payment is made, Purchaser shall have no obligation to make any payments with respect to the EU Milestone, Royalty Payments, First Annual Net Sales Milestone, Second Annual Net Sales Milestone or any other contingent or milestone payments for any Steroid Based Product that otherwise is or would have become payable. In the event that neither a Product 2 or Product 2+ has satisfied the FDA Milestone prior to the closing of a Change in Control of Purchaser, no amounts will be paid in connection with such Change in Control of Purchaser and the acquiring Person in such Change in Control of Purchaser shall assume all obligations under this Agreement with respect to such Milestone Merger Consideration. |
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(d) In the event Purchaser makes both a Product 1 Change in Control Buyout Payment and a Product 2 Change in Control Buyout Payment, Purchaser shall have no obligations to pay any Royalty Payments due or to become due for any Product 3. |
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(e) Except in connection with a Change in Control of Purchaser, in the event (i) there is a Change in Control of Surviving Corporation (or its successor in interest) or (ii) Purchaser or Surviving Corporation (or its successor in interest) enters into a transaction in which the assets transferred, sold or assigned include all or substantially all of the assets related to the Retinal Products (collectively, the “Retinal Products Sale”), then if either a Protein Based Product or a Steroid Based Product has satisfied its respective FDA Milestone, Purchaser shall pay the aggregate of (i) the Buyout Option Amount for Product 1 (unless the FDA Milestone for Product 1+ has been satisfied prior to such sale, in which case Purchaser shall pay the Buyout Option Amount for Product 1+), (ii) the Buyout Option Amount for Product 2 (unless the FDA Milestone for Product 2+ has been satisfied prior to such sale, in which case Purchaser shall pay the Buyout Option Amount for Product 2+), (iii) the FDA Milestone payment for Product 1 (to the extent Purchaser has not already paid an FDA Milestone payment for Product 1 or Product 1+) and (iv) the FDA Milestone payment for Product 2 (to the extent Purchaser has not already paid an FDA Milestone payment for Product 2 or Product 2+). Any payment related to the Retinal Products Sale shall be paid in connection with, and no later than fifteen (15) Business Days following, the closing of such Retinal Products Sale. Notwithstanding the foregoing, nothing in this Section 3.5(e) shall be deemed to apply in a corporate restructuring of Purchaser or the Surviving Corporation and its Affiliates or transfer of the Retinal Products to an Affiliate of Purchaser or the Surviving Corporation. |
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3.6 IOP System Milestone Payments. Notwithstanding anything to the contrary contained herein, all the Parties hereto acknowledge and agree that any amounts that become due and payable after the Closing Date in connection with the IOP System Milestone Payments from Purchaser to the Company shall be paid by Purchaser to the Stockholders’ Representative’s designee for distribution to the Participating Holders (in lieu of payment to the Company). The terms and conditions of such IOP System Milestone Payments shall be made in accordance with provisions of the IOP System Purchase Agreement. |
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3.7 Report. From the Closing Date until the earlier of (a) satisfaction of all Milestone Events or (b) the ten (10) year anniversary of the Closing Date, the Stockholders’ Representative shall have the right on an annual basis, on behalf of the Participating Holders, to request a written report showing an accounting of the Surviving Corporation’s progress with respect to (i) achieving the FDA Milestone and EU Milestone with respect to a Protein Based Product and Steroid Based Product and (ii) the Surviving Corporation’s then-current annual Net Sales of the Protein Based Product and Steroid Based Product. |
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4. CONVERSION OF COMMON STOCK |
Subject to the terms and conditions of this Agreement, by virtue of the Merger and without any action on the part of Purchaser, Merger Sub, the Company, or the Participating Holders:
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4.4 Treatment of Options and Corporate Actions. |
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(a) At the Effective Time, each Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested or exercisable, shall be, by virtue of the Merger, cancelled and each Optionholder shall cease to have any rights with respect thereto other than the right to receive with respect to such Options, upon delivery of a Letter of Transmittal representing such Options, (i) an amount in cash, without interest, equal to the product of (x) the aggregate number of shares of Common Stock subject to such Option, multiplied by (y) the excess of the Closing Per Share Merger Consideration over the per share exercise price under such Option, (ii) any amounts that may become payable to Participating Holders in the future from the Stockholders’ Representative Amount not used by the Stockholders’ Representative pursuant to Section 5.3, and (iii) any amounts that may become payable to Participating Holders in the future from all other Merger Consideration as provided in this Agreement, in each case, as to the extent of the applicable Option and at the respective times and subject to the contingencies specified herein. After the Effective Time, each Optionholder shall only be entitled to the payments described in this Section 4.4(a). |
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(b) At or prior to the Effective Time, the Company and the board of directors of the Company, as applicable, shall adopt any resolutions and take any actions necessary to effectuate the provisions of Section 4.4(a). |
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4.5 Treatment of Warrants and Corporate Actions. |
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(a) At the Effective Time, each Warrant that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested or exercisable, shall be, by virtue of the Merger, cancelled and each Warrantholder shall cease to have any rights with respect thereto other than the right to receive with respect to such Warrant, upon delivery of a Letter of Transmittal representing such Warrant, (i) an amount in cash, without interest, equal to the product of (x) the aggregate number of shares of Common Stock subject to such Warrant, multiplied by (y) the excess of the Closing Per Share Merger Consideration over the per share exercise price under such Warrant, (ii) any amounts that may become |
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payable to Participating Holders in the future from the Stockholders’ Representative Amount not used by the Stockholders’ Representative pursuant to Section 5.3, and (iii) any amounts that may become payable to Participating Holders in the future from all other Merger Consideration as provided in this Agreement, in each case, as to the extent of the applicable Warrant and at the respective times and subject to the contingencies specified herein. After the Effective Time, each Warrantholder shall only be entitled to the payments described in this Section 4.5(a). |
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(b) At or prior to the Effective Time, the Company and the board of directors of the Company, as applicable, shall adopt any resolutions and take any actions necessary to effectuate the provisions of Section 4.5(a). |
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4.6 No Further Rights. All Common Stock, Options and Warrants, when cancelled and/or converted pursuant hereto, shall no longer be outstanding and shall automatically be cancelled and retired, and each Participating Holder shall cease to have any rights with respect thereto, except the right to receive the amount of Merger Consideration with respect to such Common Stock, Options and Warrants set forth in this Agreement. |
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5. THE STOCKHOLDERS’ REPRESENTATIVE |
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5.1 The Stockholders’ Representative Duties. The Stockholders’ Representative shall serve as representative of the Participating Holders with full power and authority to take all actions under this Agreement and the other Transaction Documents on behalf of the Participating Holders. Each Participating Holder irrevocably appoints the Stockholders’ Representative as the exclusive agent, proxy and attorney-in-fact for such Participating Holder for all purposes of this Agreement, including full power and authority on such Participating Holder’s behalf (i) to consummate the Transactions, (ii) to execute and deliver on behalf of such Participating Holders any amendment to this Agreement or waiver of any of its provisions, (iii) to receive on behalf of and to and disburse to each Participating Holder all amounts payable hereunder, (iv) to take all other actions required or permitted to be taken by or on behalf of such Participating Holder in connection with this Agreement, (v) to negotiate, settle, compromise and otherwise handle any adjustment, dispute or payment hereunder or pursuant hereto, including all claims for indemnification made by any Indemnified Party pursuant hereto, (vi) to do each and every act and exercise any and all rights that such Participating Holder or the Participating Holders collectively are permitted or required to do or exercise under this Agreement, and (vii) to take all other actions that are necessary or appropriate in the judgment of the Stockholders’ Representative in connection with this Agreement, the other Transaction Documents or the Stockholders’ Representative Engagement Agreement (each of (i) through (vii) above, an “Authorized Action”). Notwithstanding the foregoing, the Stockholders’ Representative shall have no obligation to act on behalf of the Participating Holders, except as expressly provided herein and in the Stockholders’ Representative Engagement Agreement (as defined below), and for purposes of clarity, there |
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are no obligations of the Stockholders’ Representative in any ancillary agreement, schedule, exhibit or the Company Disclosure Schedule. Each Participating Holder agrees that such agency and proxy and the powers, immunities and rights to indemnification granted to the Stockholders’ Representative Group (as defined below) are coupled with an interest, are therefore irrevocable without the consent of the Stockholders’ Representative and shall survive the death, incapacity or bankruptcy of any Participating Holder and shall be binding on any successor thereto. |
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5.2 Replacement Stockholders’ Representative. The Stockholders’ Representative shall not commence proceedings to liquidate, dissolve or wind up its affairs or to terminate is position as the Stockholders’ Representative without providing to Purchaser and each Participating Holder prior written notice of its intention to do so. Upon receipt of such notice, a Participating Holder or group of Participating Holders who represent a majority of the outstanding shares of Common Stock of the Company immediately prior to the Effective Time shall have the right, and hereby agree, to appoint a substitute Person (which may or may not be a Participating Holder) to act as the “Stockholders’ Representative” with all of the same rights, powers and authority to act on behalf of the Participating Holders as the initial Stockholders’ Representative has hereunder. Upon the provision of at least ten (10) Business Days’ prior written notice to each Participating Holder and Purchaser, the Stockholders’ Representative may designate one of its Affiliates or, with the prior written consent of Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), a Person other than one of its Affiliates as its successor, which successor shall have all of the same rights, powers and authority to act on behalf of the Participating Holders as the initial Stockholders’ Representative has pursuant hereto. The immunities and rights to indemnification shall survive the resignation or removal of the Stockholders’ Representative or any member of the Advisory Group (as defined below) and the Closing and/or any termination of this Agreement. |
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5.3 Expenses. Any expenses or liabilities incurred by the Stockholders’ Representative in performing its duties in such capacity under this Agreement or other Transaction Documents shall be reimbursed to the Stockholders’ Representative from the Stockholders’ Representative Amount. If the Stockholders’ Representative Amount becomes exhausted, the Stockholders’ Representative may from time to time submit invoices to the Participating Holders covering their Pro Rata Amount of such expenses and/or liabilities and, upon the request of any Participating Holder, shall provide such Participating Holder with an accounting of all expenses paid. The Stockholders’ Representative may, upon prior or contemporaneous written notice, offset any amounts determined by it to be owed to the Stockholders’ Representative against the Stockholders’ Representative Amount and against any amounts to be paid to the Participating Holders, including any Merger Consideration payments. The Stockholders’ Representative is not providing any investment supervision, recommendations or advice and shall have no responsibility or liability for any loss of principal of the Stockholders’ Representative Amount other than as a result of its gross negligence or willful misconduct. The Stockholders’ Representative is not acting as a withholding agent or in any similar capacity in connection with the Stockholders’ Representative Amount and has no tax reporting or income distribution obligations. The Participating Holders will not receive any interest on the Stockholders’ Representative Amount and assign to the Stockholders’ Representative any such interest. Subject to Advisory Group approval, the Stockholders’ Representative may contribute funds to the Stockholders’ Representative Amount from any consideration otherwise distributable to the Participating Holders. As soon as reasonably determined by the Stockholders’ Representative that the Stockholders’ Representative Amount is no longer required to be withheld, the Stockholders’ Representative shall distribute the remaining Stockholders’ Representative Amount (if any) to the Stockholders’ Representative’s designee for further distribution to the Participating Holders. |
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5.4 Liability. Certain Participating Holders have entered into an engagement agreement (the “Stockholders’ Representative Engagement Agreement”) with the Stockholders’ Representative to provide direction to the Stockholders’ Representative in connection with its services under this Agreement and the Stockholders’ Representative Engagement Agreement (such Stockholders, including their |
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individual representatives, collectively the “Advisory Group”). In dealing with this Agreement, the other Transaction Documents, the Stockholders’ Representative Engagement Agreement and any related notice, instrument, agreement or document, and in exercising or failing to exercise all or any of the powers conferred upon the Stockholders’ Representative hereunder or thereunder, (i) the Stockholders’ Representative and its agents, counsel, accountants, members, managers, directors, officers, employees, contractors, members of the Advisory Group (solely to the extent of their services in such capacity and not as Participating Holders) and other representatives (collectively, the “Stockholders’ Representative Group”), shall not assume or incur any liability or responsibility whatsoever (in each case, to the extent permitted by applicable Law) to Purchaser, the Surviving Corporation, any Participating Holder or any other Person, including by reason of any error in judgment or other act or omission performed or omitted under or in connection with this Agreement, the other Transaction Documents, the Stockholders’ Representative Engagement Agreement or any such other agreement, instrument or document, except to the extent such actions constituted fraud or intentional misconduct, and (ii) the Stockholders’ Representative shall be entitled to rely in good faith on the advice of counsel, public accountants or other independent experts experienced in the matter at issue, and any error in judgment or other act or omission of the Stockholders’ Representative pursuant to such advice shall in no event subject the Stockholders’ Representative to liability to Purchaser, the Surviving Corporation, any Participating Holder or any other Person. In no event will the Stockholders’ Representative (solely in its capacity as the Stockholders’ Representative and not in its capacity as a Participating Holder, if applicable) be liable under or in connection with this Agreement to any Participating Holder for any indirect, punitive, special or consequential damages. Each Participating Holder shall severally, but not jointly, based on such Participating Holders’ Pro Rata Portion of the Closing Merger Consideration, indemnify and hold harmless the Stockholders’ Representative Group from any and all losses, liabilities and expenses (including the reasonable fees and expenses of counsel) (such losses, liabilities and expenses, collectively, the “Stockholders’ Representative Expenses”). Such Stockholders’ Representative Expenses may be recovered first, from the Stockholders’ Representative Amount, second, from any distribution of the Merger Consideration otherwise distributable to the Participating Holders at the time of distribution, and third, directly from the Participating Holders arising out of or in connection with the Stockholders’ Representative’s execution and performance (solely in its capacity as the Stockholders’ Representative and not in its capacity as a Participating Holder, if any) of this Agreement, the other Transaction Documents and the Stockholders’ Representative Engagement Agreement, except for fraud or intentional misconduct. This indemnification will survive the termination of this Agreement and the other Transaction Documents. The Participating Holders acknowledge that the Stockholders’ Representative shall not be required to expend or risk its own funds or otherwise incur any financial liability in the exercise or performance of any of its powers, rights, duties or privileges or pursuant to this Agreement or the Transactions. Furthermore, the Stockholders’ Representative shall not be required to take any action unless the Stockholders’ Representative has been provided with funds, security or indemnities which, in its determination, are sufficient to protect the Stockholders’ Representative against the costs, expenses and liabilities which may be incurred by the Stockholders’ Representative in performing such actions. The Stockholders’ Representative shall be entitled to: (i) rely upon the List of Participating Holders or any Updated List of Participating Holders, (ii) rely upon any signature believed by it to be genuine, and (iii) reasonably assume that a signatory has proper authorization to sign on behalf of the applicable Participating Holder or other party. |
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5.5 Payment of Merger Consideration. The Stockholders’ Representative shall designate PNC Bank, National Association, to distribute to the Participating Holders, based on their respective Per Share Amount (net of any amounts owed by any Participating Holder to the Stockholders’ Representative), any portion of the Merger Consideration that it has not used to satisfy its liabilities or expenses as the Stockholders’ Representative or other obligations of the Participating Holder under this Agreement at the time or times the Stockholders’ Representative determines in its reasonable discretion. |
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5.6 Duties. At the request of the Stockholders’ Representative, each Participating Holder agrees to perform all such lawful acts and to execute and deliver all such further assignments, assumptions and other lawful documents as may reasonably be necessary or desirable to confirm and effect the Transactions. In the event that the Stockholders’ Representative is unable for any reason whatsoever to secure any Participating Holder’s signature to any document that any Participating Holder is required to execute pursuant to the foregoing, each Participating Holder hereby irrevocably designates and appoints the Stockholders’ Representative and its duly authorized officers and agents power of attorney to execute and file any such documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by such Participating Holder. This power of attorney will be deemed coupled with an interest and will be irrevocable. |
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5.7 Authorized Actions. Each Participating Holder agrees that Purchaser and the Surviving Corporation shall be entitled to rely on any Authorized Action taken by the Stockholders’ Representative, on behalf of each of the Participating Holders, and that each Authorized Action shall be binding on each Participating Holder and their successors as if expressly confirmed and ratified in writing as fully as if such Participating Holder had taken such Authorized Action. The Participating Holders agree to pay, severally and not jointly, in accordance with each Participating Holder’s Per Share Amount, and to indemnify and hold harmless, each of the Purchaser Indemnified Parties from and against, any Damages which they may suffer, sustain, or become subject to, as the result of any claim by such Participating Holder that an Authorized Action is not binding on, or enforceable against, such Participating Holder. In addition, each Participating Holder hereby releases and discharges Purchaser and the Surviving Corporation, from and against any liability or obligation arising out of or in connection with the Stockholders’ Representative’s failure to distribute any amounts actually received or held by the Stockholders’ Representative on the Participating Holders’ behalf to the Participating Holder. Payment of all amounts paid by Purchaser or the Surviving Corporation to the Stockholders’ Representative shall constitute payment by Purchaser or the Surviving Corporation, as applicable, to each of the Participating Holders and satisfaction of Purchaser’s or the Surviving Corporation’s obligation to pay such amount hereunder (notwithstanding any withholding by the Stockholders’ Representative). |
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action on the part of the Company or the Participating Holders is necessary to authorize the execution, delivery and performance by the Company of this Agreement and each other Company Transaction Document. The Company has duly executed and delivered this Agreement and each other Company Transaction Document. Assuming that this Agreement and each of the other Company Transaction Documents are valid and binding obligations of each of the other parties hereto and thereto, this Agreement and each other Company Transaction Document is the legal, valid and binding obligation of the Company, subject to the Remedies Exception. |
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unaudited income statement for each of the fiscal years then ended and (B) unaudited balance sheet as of March 31, 2019 (the “March Balance Sheet”), and the related unaudited income statement for the three (3) month period then ended (collectively, the “Financial Statements”). The Financial Statements (including the notes thereto, if any) have been prepared from the books and records of the Company, in a manner consistent with the Company Accounting Principles. |
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(i) event, condition, occurrence, contingency or development that has had or would reasonably be expected to have a Company Material Adverse Effect; |
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(ii) sale, assignment, transfer, hypothecation, conveyance, lease, or other disposition of any material asset or property of the Company, except in the ordinary course of business; |
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(iii) failure to pay when due any material liabilities arising out of the operations of the Company; |
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(iv) making or rescission of any Tax election of the Company or the settlement or compromise of any Tax liability of the Company; |
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(v) material change in the manner in which the Company’s business has been conducted; |
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(vi) license, sale, assignment or transfer of any Intellectual Property, or disclosure of any proprietary confidential information to any Person other than pursuant to a customary confidentiality agreement; |
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(vii) institution of, or entering into any settlement agreement in connection with, any material proceeding involving the Company; |
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(viii) entry into, amendment, termination or non-renewal of any Material Contract; or |
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(ix) agreement by or arrangement of the Company to do any of the foregoing. |
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(i) The Company Disclosure Schedule lists the following Contracts to which the Company is a party or by which any of its assets or properties are bound (collectively, the “Material Contracts”): |
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(1) any Contract relating to Indebtedness of the Company or any Contract under which the Company has guaranteed the Indebtedness of any other Person; |
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(2) any Contract providing for the sale, assignment, lease, license or other disposition of a Company asset with a value in excess of $25,000; |
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(3) any Contract granting an encumbrance upon any material asset of the Company or any Contract under which the Company incurs or is required to pay aggregate payments in excess of $25,000 per annum; |
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(4) any agreement pertaining to a partnership, limited liability company or joint venture in which the Company participates as a partner, member or joint venturer; |
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(5) any employment, severance or consulting Contract with respect to which the Company is a party; |
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(7) any Contract which prohibits the Company from freely engaging in business or otherwise including provisions on joint pricing, market or customer sharing, exclusivity or market classification. |
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(ii) Complete and correct copies of each written Material Contract (and a written summary of the material terms and conditions of any oral Material Contracts), together with all amendments and waivers, have been made available to Purchaser. Each Material Contract is in full force and effect and is valid, binding and enforceable against the Company and, to the Knowledge of the Company, the other party(ies) thereto in accordance with its terms, subject to the Remedies Exception. The Company is not currently in violation in any material respect of any Material Contract and, to the Knowledge of the Company, (A) all of the material covenants to be performed by any other party thereto have been performed in all material respects, and (B) no event has occurred which, with the giving of notice or lapse of time or both, would constitute a material |
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breach or default, result in a loss of any material rights or result in the creation of any material encumbrance under or pursuant to any Material Contract. |
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(ii) Except as set forth in the Company Disclosure Schedule, the Company has not granted or assigned to any Person any license or other rights to use any Owned Intellectual Property, other than licenses granted in the ordinary course of business to its resellers or distribution partners. |
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(iv) The Company has taken actions necessary and common in the industry to maintain and protect all of the Owned Intellectual Property, including the secrecy, confidentiality and value of trade secrets and other confidential information. |
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employee benefit plans, ERISA plans, non-qualified deferred compensation plans or other employment, retirement or compensation related plans or obligations or any existing or ongoing liabilities related thereto. |
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term. The Company has not received written notice of any dispute with such supplier or written notice that any such supplier intends to cease or reduce, restrict, suspend or adversely alter the supply of products to the Company. |
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6.3 Representations and Warranties of Purchaser and Merger Sub. Purchaser and Merger Sub hereby represent and warrant to the Company and the Participating Holders as set forth below. |
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(d) Compliance with Laws. Each of Purchaser and Merger Sub is currently in material compliance with all applicable Laws and Governmental Authorizations. |
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(f) Purchaser’s Due Diligence. Each of Purchaser and Merger Sub hereby acknowledges and agrees that, except for the express representations and warranties (i) of the Company expressly set forth in Section 6.1 of this Agreement (as qualified by the Company Disclosure Schedule) and (ii) in any other Transaction Document, including the Letters of Transmittal, it is relying on its own investigation and analysis in entering into this Agreement and consummating the Transactions. Each of Purchaser and Merger Sub is an informed and sophisticated participant in the Transactions and has undertaken such investigation, and has been provided with and has evaluated such information, as it has deemed necessary in connection with the execution, delivery and performance of this Agreement and the consummation of the Transactions. Nothing in this Section 6.2(f) shall constitute a waiver of, or be deemed to limit, any rights of Purchaser in the case of fraud. |
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7.2 Conduct of the Business. From the Agreement Date until the earlier of the Closing Date or the termination of this Agreement pursuant to Article 10, the Company shall conduct its business in the ordinary course and preserve the rights, franchises, goodwill and relationships of the Company’s employees, customers, lenders, regulators and others having business relationships with the Company, except if Purchaser shall have otherwise consented in writing. In addition, the Company agrees it shall not take any action that, if taken during the 12 months prior to the Agreement Date, would be required to be disclosed pursuant to Section 6.1(h). |
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director, employee or representative of the Company prior to the Effective Time with respect to any claim brought by any Purchaser Indemnified Party against any Participating Holder relating to this Agreement or the Transactions. Further, notwithstanding anything to the contrary herein, any Person (including any current or former directors, officers or employees) shall first seek recovery against the Tail Policy for any claim of exculpation or indemnification or expense advancement or reimbursement that is covered by the Tail Policy before pursuing any right of exculpation or indemnification or expense advancement or reimbursement directly against Purchaser or the Surviving Corporation. |
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(b) Books and Records; Cooperation. The Surviving Corporation and the Stockholders’ Representative shall, and shall cause their respective Representatives to, (i) provide the other party and its Representatives with such assistance as may be reasonably requested in connection with the preparation of any Tax Return or any audit or other examination by any taxing authority or judicial or administrative proceeding relating to Taxes with respect to the Company, and (ii) retain (until the expiration of the statute of limitations of the taxable periods to which the Tax Returns relate) and provide the other party and its Representatives with reasonable access to all records or information that may be relevant to such Tax Return, audit, examination or proceeding. |
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(d) Post-Closing Actions. None of Purchaser, the Surviving Corporation, the Company, or any Affiliate thereof shall, nor shall they cause the Company to, amend any previously filed Tax Returns for a Pre-Closing Tax Period without the prior written consent of the Stockholders’ |
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Representative. In addition Purchaser and its Affiliates shall not make and shall not cause the Company or the Surviving Corporation to make an election pursuant to Sections 338 or 336(e) of the Code with respect to the Transactions. |
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7.8 Takeover Statutes. If any “fair price,” “moratorium,” “control share acquisition” or other form of antitakeover statute or regulation shall become applicable to the Transactions, the Company and Purchaser and the members of their respective boards of directors shall grant such approvals and take such actions as are reasonably necessary so that the Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the Transactions. |
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8. CONDITIONS TO CLOSING |
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(a) Requisite Stockholder Vote. This Agreement shall have been duly adopted by the Requisite Stockholder Vote. |
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(c) No Injunctions or Restraints; Illegality. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the Transactions illegal, otherwise restraining or prohibiting consummation of the Transactions or causing any part of the Transactions to be rescinded following completion thereof. |
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8.2 Conditions to Obligations of Purchaser and Merger Sub. The obligations of Purchaser and Merger Sub to consummate the Transactions shall be subject to the fulfillment or Purchaser’s waiver in writing, at or prior to the Closing, of each of the following conditions: |
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(c) No Company Material Adverse Effect. From the date of this Agreement until the Effective Time, there shall not have occurred any Company Material Adverse Effect. |
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(d) Dissenting Stockholders. No more than ten percent (10%) of the total issued and outstanding shares of Common Stock shall have elected to, or continue to have contingent rights to, exercise appraisal rights under the DGCL. |
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(e) Company Closing Deliveries. The Company shall have delivered each of the following to Purchaser and Merger Sub: |
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(i) Certificate of Merger. The Certificate of Merger, executed by the Company, and accompanied by, if required under the DGCL, an officer’s certificate, executed in accordance with the DGCL. |
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(ii) Company Certificates and Letters of Transmittal. The Company shall deliver to Purchaser Company Certificates representing at least 90% of the outstanding shares of Common Stock held of record by Stockholders as of immediately prior to the Effective Time accompanied by a Letter of Transmittal for such Stockholders. |
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(iii) Payoff Letters and Lien Releases. Payoff letter(s), if any, or other evidence relating to the payment of all Indebtedness and Transaction Expenses payable to third-parties, as contemplated herein, which were delivered prior to the Closing Date, and evidence of releases of all liens or encumbrances related to the assets and properties of the Company, if any. |
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(v) Certificate of Officer. A certificate, dated the Closing Date, signed by an officer of the Company, attesting to the completion of all necessary corporate action by the Company to execute and deliver this Agreement and Company Transaction Documents and to consummate the Transactions, and including copies of the certificate of incorporation and the bylaws of the Company and the corporate resolutions required in connection with this Agreement and other Company Transaction Documents. |
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(vi) Charter Documents; Good Standing Certificates. (i) A copy of the certificate of incorporation of the Company certified as of a recent date prior to the Closing Date by the Secretary of State of Delaware, and (ii) a certificate dated as of a recent date prior to the Closing Date, as to the good standing of the Company from the Secretary of State of Delaware. |
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(vii) Resignation. Letter of resignation from each officer, director and employee of the Company, pursuant to which each such Person resigns from each and every position such Person may hold at the Company with such resignation effective at or prior to the Closing. |
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(viii) PTO filings. The Company shall have delivered to Purchaser, at or prior to the Closing, a copy of each of the PTO filings. |
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(ix) Options and Warrants. The Company shall have delivered to Purchaser evidence reasonably satisfactory to Purchaser that (i) all notices required to be delivered to Optionholder and Warrantholders to effectuate the actions contemplated by Sections 4.4 and 4.5, respectively, have been duly delivered and (ii) all corporate action necessary to effectuate the actions contemplated by Sections 4.4 and 4.5 has been taken. |
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(c) Purchaser & Merger Sub Closing Deliveries. Purchaser shall have delivered each of the following to the Company: |
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(i) Certificate of Merger. The Certificate of Merger, executed by Merger Sub, executed in accordance with the DGCL. |
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(ii) Certificate of Officer. A certificate, dated the Closing Date, signed by an officer of Purchaser and Merger Sub, attesting to the completion of all necessary corporate action by Purchaser and Merger Sub to execute and deliver this Agreement and the Purchaser Transaction Documents and to consummate the Transactions, and including copies of the organizational documents of Purchaser and Merger Sub and all corporate resolutions required in connection with this Agreement or any other Purchaser Transaction Document. |
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(iii) Certified Charters; Good Standing Certificates. (i) A copy of the certificate of incorporation of Purchaser, certified as of a recent date prior to the Closing Date by the Secretary of State of the State of Delaware, (ii) a copy of the certificate of incorporation of Merger Sub, certified as of or a recent date prior to the Closing Date by the Secretary of State of the State of Delaware, (iii) a certificate dated as of a recent date prior to the Closing Date, as to the good standing of Purchaser from the Secretary of State of the State of Delaware, and (vi) a certificate dated as of a recent date prior to the Closing Date, as to the good standing of Merger Sub from the Secretary of State of the State of Delaware. |
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(iv) Distribution of Closing Merger Consideration. The Closing Merger Consideration as set forth herein. |
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9. INDEMNIFICATION |
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(b) any breach or nonfulfillment of any covenant or obligation of the Company, such Participating Holder or the Stockholders’ Representative in this Agreement; |
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(c) any Indebtedness of the Company as of the Closing Date, or any Transaction Expenses paid or payable by the Company after the Closing Date, in each case except those that are paid out of the Closing Merger Consideration at the Closing or resolved in the manner provided in Section 3.1 hereof; |
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(e) any and all Taxes of the Company or any Affiliate for all Pre-Closing Tax Periods and any Taxes of any other Person imposed on the Company as a successor, by Law, by contract or otherwise, which Taxes relate to an event or transaction occurring after April 2, 2010 and before the Closing; provided, however, that Participating Holders shall have no obligation to indemnify Purchaser Indemnified Parties against any Damages consisting of or related to (i) Taxes that are included in Final Closing Indebtedness or Final Closing Transaction Expenses, or (ii) Taxes resulting from (x) any breach of Section 7.6(d) of this Agreement or (y) any transactions occurring on the Closing Date after the Closing outside the ordinary course of business. |
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(a) any inaccuracy or breach of any representation or warranty made by Purchaser or Merger Sub in this Agreement; and |
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(b) any breach or nonfulfillment of any covenant or obligation of Purchaser or the Merger Sub or (or, after the Closing the Surviving Corporation) contained in this Agreement. |
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the Indemnified Party’s claim for indemnification but on or prior to the expiration date of such representation, warranty, covenant or indemnification obligation as provided elsewhere in this Agreement, which written notice shall specify in reasonable detail the basis of such claim (to the extent then ascertainable); provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure or its indemnification obligations are materially increased as a result of such failure. If the Indemnifying Party disputes its liability with respect to any such claim, the Indemnifying Party and the Indemnified Party shall proceed to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved in accordance with this Agreement. |
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(c) Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall not admit any liability with respect to, settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. If the Indemnifying Party assumes the defense of a Third Party Claim pursuant to the terms hereof, the Indemnified Party shall agree to any settlement, compromise or discharge of a Third Party Claim that the Indemnifying Party may reasonably recommend and that by its terms (i) provides solely for the payment of cash and obligates the Indemnifying Party to pay the full amount of such cash Damages in connection with such Third Party Claim, and (ii) releases the Indemnified Party and its Affiliates completely in connection with such Third Party Claim. |
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(a) Notwithstanding anything to the contrary in this Agreement, the amount of Damages that may be recovered by the Purchaser Indemnified Parties pursuant to any and all claims for indemnification made hereunder shall be limited, individually and in the aggregate, to an amount equal to the Merger Consideration actually received, or which is due and payable, by any such Participating Holder. |
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(c) Notwithstanding anything to the contrary in this Agreement, the Purchaser Indemnified Parties’ sole recourse for Damages pursuant to Section 9.1(a) shall be the Set-Off Rights to the extent provided in this Section 9.6(c); provided, however, that this Section 9.6(c) will not apply to Damages based on a breach or inaccuracy of the Fundamental Representations or in the case of fraud. Subject to the limits of indemnification set forth herein, if the Purchaser Indemnified Parties timely bring a claim for Damages, and such claim is pending but unresolved at the time any payment of Merger |
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Consideration would otherwise be due and payable under this Agreement, Purchaser may withhold against the full amount of the Merger Consideration then payable an amount equal to the bona fide amount then in dispute under such claim until such time as the dispute is finally resolved and the amount of Damages (if any) to which the Purchaser Indemnified Parties are entitled is finally determined. Following such final determination, Purchaser shall pay to the Stockholders’ Representative’s designee for the benefit of and further payment to the Participating Holders any such withheld amount minus the amount of the Damages (if any) to which the Purchaser Indemnified Parties are so entitled from such withheld payment. If such Damages, as so finally resolved, exceed the amount of such withheld payment, the Purchaser Indemnified Parties may withhold the balance of such Damages from future Merger Consideration payments as provided in the next sentence. If any Damages have been determined and finally resolved prior to a payment of Merger Consideration becoming due and payable under this Agreement, the Purchaser Indemnified Parties shall be entitled to exercise the Set-Off Rights against any then unpaid Merger Consideration payment that thereafter becomes due and payable under this Agreement. |
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(d) Notwithstanding any other representations and warranties in this Agreement, the Company makes no representation or warranty regarding the amount, value or condition of, or any limitations on, any Tax asset or attribute of the Company (e.g., tax basis of assets or net operating losses) arising in any Pre-Closing Tax Period (each, a “Tax Attribute”), or the ability of Purchaser or any of its Affiliates (including the Company or the Surviving Corporation, after the Closing) to utilize such Tax Attributes after the Closing. |
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(e) For purposes of this Article 9, any representation or warranty that is qualified by the words “Company Material Adverse Effect,” “material” or by any similar term or limitation, the failure of such representation or warranty to be true and correct and the amount of Damages subject to indemnification hereunder shall be determined as if the words “Company Material Adverse Effect,” “material” or similar term or limitation were not included therein. |
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9.10 Exclusive Remedy. Following the Closing, except with respect to claims arising from fraud or intentional misrepresentation, the sole and exclusive remedy for any and all claims of the Purchaser Indemnified Parties for Damages arising out of or related to breaches of representations and warranties shall be the rights of indemnification set forth in Section 3.1 hereof and this Article 9 or injunctive relief, and no |
35
Purchaser Indemnified Party will have any other entitlement, remedy or recourse, whether in contract, tort or otherwise, it being agreed that all of such other entitlements, remedies and recourse are expressly waived and released by the Purchaser Indemnified Parties to the fullest extent permitted by Law. |
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10.1 Termination. This Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Effective Time: |
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(a) by the mutual written consent of Purchaser and the Company; |
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(b) by Purchaser by written notice to the Company if: |
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(i) neither Purchaser nor Merger Sub is then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Company pursuant to this Agreement that has given rise to the failure of any of the conditions specified in Article 8 and such breach, inaccuracy or failure has not been cured by the Company within ten (10) days of the Company’s receipt of written notice of such breach from Purchaser; or |
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(ii) any of the conditions set forth in Section 8.1 or Section 8.2 shall not have been fulfilled within thirty (30) days following the Agreement Date, unless such failure shall be due to the failure of Purchaser to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; |
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(c) by the Company by written notice to Purchaser if: |
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(i) the Company is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Purchaser or Merger Sub pursuant to this Agreement that has given rise to the failure of any of the conditions specified in Article 8 and such breach, inaccuracy or failure has not been cured by Purchaser or Merger Sub within ten (10) days of Purchaser’s or Merger Sub’s receipt of written notice of such breach from the Company; or |
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(ii) any of the conditions set forth in Section 8.1 or Section 8.3 shall not have been fulfilled within thirty (30) days following the Agreement Date, unless such failure shall be due to the failure of Holdco to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing. |
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10.2 Effect of Termination. In the event of the termination of this Agreement in accordance with this Article 10, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except: |
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(a) as set forth in this Article 10, the last sentence of Section 7.1 and Article 11 hereof; and |
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(b) that nothing herein shall relieve any party hereto from liability for any fraud or willful breach of any provision hereof. |
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11. GENERAL PROVISIONS |
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11.2 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. |
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11.3 Equitable Relief. Each of the Parties acknowledges and agrees that damages alone may be insufficient to compensate a Party for the breach of this Agreement by the other Party and that irreparable harm may result from such breach, and therefore, a Party will be entitled to injunctive relief or other equitable relief, as appropriate. |
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11.4 Severability. If any provision of this Agreement is found to be invalid or unenforceable, then the remainder of this Agreement will have full force and effect, and the invalid provision will be modified, or partially enforced, to the maximum extent permitted to effectuate the original objective. |
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11.5 Notices. All notices, requests, claims, demands and other communications under this Agreement will be in writing and will be deemed delivered if (i) delivered personally or (ii) sent by electronic mail with delivery receipt requested, provided delivery will not be considered effective until such delivery receipt is received by the sending Party, provided that notice to the Stockholders’ Representative shall be delivered solely by electronic mail. A Party may from time to time change its delivery address for notices under this Agreement by giving the other Parties written notice of such change in accordance with this paragraph. |
The Company:
DOSE Medical Corporation
Contact: Xxxxx Xxxxxxx
E-mail: xxxxxxxx@xxxxxxxxxxx.xxx
Stockholders’ Representative:
Fortis Advisors LLC
Contact: Notice Department
E-mail: xxxxxxx@xxxxxxxxx.xxx
Purchaser and Merger Sub:
Glaukos Corporation
Contact: Xxxxxx Xxxxx
E-mail: xxxxxx@xxxxxxx.xxx
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11.6 Waiver. Failure by any Party hereto to enforce any term of this Agreement will not be deemed a waiver of future enforcement of that or any other term in this Agreement or any other agreement that may be in place between the Parties. |
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11.7 Assignment. Except as provided hereunder, neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by any Party without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, conditioned or delayed); provided, however, that Purchaser, Merger Sub or any Affiliate may assign this Agreement and its rights and obligations hereunder without the consent of any Party in connection with the transfer or sale of all or substantially all of the business of such Purchaser to which this Agreement relates to a third party, whether by merger, sale of stock, sale of assets or otherwise or (b) to an Affiliate provided that Purchaser shall remain liable and responsible to the Participating Holders for the performance and observance of all such duties and obligations set forth herein, including the payment of any Milestone Merger Consideration. |
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11.8 Miscellaneous. This Agreement, including its exhibits and schedules, constitutes the entire agreement between the Parties with respect to the subject matter hereof and merges and supersedes all prior and contemporaneous agreements, understandings, negotiations, and discussions. The section headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement. This Agreement is not intended to confer any right or benefit on any third party (including, but not limited to, any employee or beneficiary of any party). No amendments or modifications will be effective unless in a writing signed by authorized representatives of each of the Parties. |
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11.9 Conflicts; Privileges. |
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(a) It is acknowledged by each of the Parties that the Company has retained Xxxx Xxxxx LLP (“RS”) to act as its counsel in connection with the negotiation and execution of this Agreement and the Transactions. RS may have represented and may currently represent certain of the other Parties (including the Participating Holders) in matters other than the negotiation and execution of this Agreement and the Transactions. In the course of such representation, RS may have come into possession of confidential information relating to one or more of such Parties. Each of the Parties acknowledges that RS is representing only the Company in the negotiation and execution of this Agreement and the Transactions. Pursuant to the Rules of Professional Conduct of the State Bar of California, an attorney must avoid representations in which the attorney has or had a relationship with another party interested in the representation without the informed consent of all parties affected. Each of the Parties hereby waives any actual or potential conflict of interest which may arise as a result of RS’s representation of such Parties in other matters, RS’s possession of such confidential information and the engagement of RS by the Company (to the exclusion of any and all other Parties) in connection with the negotiation and execution of this Agreement and the Transactions. Each of the Parties represents that such Party has had the opportunity to consult with independent counsel concerning the giving of this waiver. |
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(b) Purchaser hereby agrees that, in the event that a dispute arises after the Closing between Purchaser or any of its Affiliates (including after the Closing, the Surviving Corporation) and any Participating Holder or any of its Affiliates (including, prior to the Effective Time, the Company), that relates directly to the Transactions, RS may represent the Participating Holder or any such Affiliate in such dispute, even though the interests of the Participating Holder or such Affiliate may be directly adverse to Purchaser or any of its Affiliates (including, after the Closing, the Surviving Corporation), and even though RS may be handling ongoing matters for Purchaser or any of its Affiliates; provided, however that, in connection with such representation, RS does not use confidential information regarding Purchaser or its Affiliates, breach any attorney-client privilege owed to Purchaser or its Affiliates or use any information of Purchaser or its Affiliates that is otherwise protected by the attorney-client privilege between Purchaser or |
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its Affiliates and RS (whether such information or attorney-client privilege arose before or after the Closing). |
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(c) Purchaser, on behalf of itself and each of its Affiliates (including, after the Closing, the Surviving Corporation) further agrees that, as to all communications among RS and the Company that relate directly to the negotiation and execution of this Agreement and the Transactions, the attorney-client privilege, the expectation of client confidence and all other rights to any evidentiary privilege belong to the Company and may be controlled by the Stockholders’ Representative and shall not pass to or be claimed by Purchaser or the Surviving Corporation to the extent of any claims among them after the Closing. Notwithstanding the foregoing, in the event that a dispute arises between Purchaser or any of its Affiliates (including the Surviving Corporation) and any Person who is not a Party or an Affiliate thereof after the Closing, then the Surviving Corporation may assert the attorney-client privilege to prevent disclosure to such third party of confidential communications between RS and the Company prior to the Closing; provided, however, that the Surviving Corporation may not waive such privilege without the prior written consent of the Stockholders’ Representative. With respect to all communications that relate to matters other than the negotiation and execution of this Agreement and the Transactions, the attorney-client privilege, expectation of client confidence, and all other rights to any evidentiary privilege shall pass to the Surviving Corporation. |
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(d) Notwithstanding anything to the contrary in this Agreement, prior to the Closing, the Stockholders’ Representative shall be permitted to remove from the Company and its respective Affiliates any email, document and other records containing attorney-client privileged information relating to the negotiation and execution of this Agreement and the Transactions where the attorney-client privileged information relating to the Transactions is held jointly between one or more of the Company, on the one hand, and any Participating Holder or any of its Affiliates, on the other hand (“Jointly Privileged Information”). From and after the Closing, Purchaser shall cause the Surviving Corporation and its Affiliates to provide the Stockholders’ Representative copies (including electronic, digital or otherwise) of any Jointly Privileged Information that is inadvertently not removed prior to the Closing. The Stockholders’ Representative agrees that any email, document and other record temporarily removed for analysis to determine the presence of Jointly Privileged Information pursuant to the first sentence of this clause (d) shall be returned to the Surviving Corporation promptly following the completion of such review if it is determined by the Stockholders’ Representative that such email, document or other record does not contain Jointly Privileged Information. |
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11.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, and all of which together constitute one and the same instrument. |
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In witness whereof, intending to be legally bound, each of the Parties have executed this Agreement as of the Agreement Date.
“COMPANY”
DOSE Medical Corporation
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
[Signatures Continue on Next Page]
“PURCHASER”
Glaukos Corporation
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer and Senior Vice President, Corporate Development
“MERGER SUB”
GKOS Merger Sub, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Financial Officer
[Signatures Continue on Next Page]
“STOCKHOLDERS’ REPRESENTATIVE”
Fortis Advisors LLC
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Managing Director
