EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SOMANTA INCORPORATED,
XXXXXXXX OPTICAL CORP.,
SOMANTA MERGER SUB, INC.
SOMANTA PHARMACEUTICALS, INC.
AND
THE PRINCIPAL PARENT SHAREHOLDERS
DATED AS OF OCTOBER 20, 2005
TABLE OF CONTENTS
Page No.
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ARTICLE I THE MERGER..........................................................1
1.1. The Merger..................................................1
1.2. Closing; Effective Time.....................................2
1.3. Effects of Merger...........................................2
1.4. Certificate of Incorporation................................2
1.5. Bylaws......................................................2
1.6. Directors and Officers......................................2
ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK; CASH DIVIDEND...............3
2.1. Conversion of Capital Stock.................................3
2.2. Exchange of Certificates....................................3
2.3. Treatment of Options........................................4
2.4. Dissenting Shares...........................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................5
3.1. Organization and Qualification; Subsidiaries................5
3.2. Authority to Execute and Perform Agreement..................5
3.3. Binding Effect..............................................5
3.4. Capitalization..............................................5
3.5. Vote Required; Board Approval...............................6
3.6. Litigation..................................................6
3.7. Title to Properties; Absence of Liens.......................6
3.8. Compliance with Laws........................................6
3.9. Consents and Approvals......................................7
3.10. Company Material Contracts..................................7
3.11. Taxes.......................................................7
3.12. Environmental Matters.......................................8
3.13. Real Property...............................................8
3.14. Broker's Fees...............................................8
3.15. Labor Matters...............................................8
3.16. Full Disclosure.............................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............9
4.1. Organization and Qualification; Subsidiaries................9
4.2. Authority to Execute and Perform Agreement..................9
4.3. Binding Effect..............................................9
4.4. Capitalization.............................................10
4.5. Vote Required; Board Approval..............................10
4.6. SEC Reports and Financial Statements.......................11
4.7. No Material Adverse Change.................................11
4.8. Litigation.................................................12
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4.9. Title to Properties; Absence of Liens......................12
4.10. Compliance with Laws.......................................12
4.11. Intellectual Property......................................12
4.12. Non-Contravention..........................................12
4.13. Consents and Approvals.....................................12
4.14. Employee Benefit Plans.....................................12
4.15. Parent Material Contracts..................................12
4.16. Taxes......................................................12
4.17. Environmental Matters......................................14
4.18. Real Property..............................................15
4.19. Broker's Fees..............................................15
4.20. Labor Matters..............................................15
4.21. Articles of Incorporation, Bylaws, and Minute Books........15
4.22. Full Disclosure............................................15
ARTICLE V ADDITIONAL AGREEMENTS OF THE PARTIES...............................15
5.1. Assumption of Options, Option Plan and Warrants............15
5.2. Actions of the Parent Pending Closing......................16
5.3. Company Stockholder Approval...............................18
5.4. Parent and Merger Sub Stockholder Approval;
Information Statement......................................18
5.5. Efforts; Consents..........................................18
5.6. Filing of Tax Returns; Payment of Taxes....................19
5.7. Confidentiality............................................19
5.8. Notification of Certain Matters............................19
5.9. Non-Solicitation...........................................20
5.10. Further Assurances.........................................20
5.11. Public Disclosure..........................................21
5.12. Board of Directors.........................................21
5.13. Reincorporation............................................21
5.14. Piggy-back Registration Rights.............................21
ARTICLE VI CONDITIONS TO CLOSING.............................................21
6.1. Conditions to Each Party's Obligations to Consummate
the Transactions...........................................21
6.2. Conditions to Obligations of the Company to Consummate
the Transactions...........................................22
6.3. Conditions to Obligations of Parent and Merger Sub to
Consummate the Transactions................................23
ARTICLE VII TERMINATION......................................................24
7.1. Termination................................................24
7.2. Effect of Termination......................................24
7.3. Expenses; Termination Fees.................................25
ARTICLE VIII INDEMNIFICATION AND ESCROW......................................26
8.1. Indemnification............................................26
8.2. Third Party Claims.........................................26
8.3. No Contribution............................................27
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8.4. Payment....................................................27
8.5. Time Limitation on Indemnification.........................27
8.6. No Waiver..................................................27
ARTICLE IX MISCELLANEOUS.....................................................28
9.1. Certain Definitions; Rules of Construction.................28
9.2. Waivers and Amendments.....................................32
9.3. Governing Law..............................................32
9.4. Notices....................................................33
9.5. Section Headings...........................................33
9.6. Counterparts...............................................34
9.7. Assignments................................................34
9.8. Entire Agreement; Enforceability...........................34
9.9. Severability...............................................34
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 20, 2005, is entered into by and among Somanta Incorporated, a Delaware
corporation (the "Company"), Xxxxxxxx Optical Corp., a New Jersey corporation
("Xxxxxxxx"), Somanta Pharmaceuticals, Inc., a Delaware corporation
("Pharmaceuticals"), Somanta Merger Sub, Inc., a Delaware corporation and
direct, wholly-owned subsidiary of Pharmaceuticals ("Merger Sub") and the
Principal Parent Shareholders. For purposes of this Agreement, the term "Parent"
shall refer to Xxxxxxxx prior to the Reincorporation Date and shall refer to
Pharmaceuticals after the Reincorporation Date.
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of the Company, Parent and
Merger Sub have each approved the merger of Merger Sub with and into the
Company, with the Company surviving as a wholly-owned subsidiary of Parent (the
"Merger"), on the terms and conditions contained herein and in accordance with
the New Jersey Business Corporations Act (the "NJBCA") and the Delaware General
Corporation Law (the "DGCL"), and have determined that the Merger and the
transactions contemplated herein are advisable and in the best interest of their
respective corporations and stockholders.
WHEREAS, prior to the Closing, Xxxxxxxx will merge with and into
Somanta Pharmaceuticals, Inc. for the sole purpose of changing Xxxxxxxx' place
of domicile from New Jersey to Delaware (the "Reincorporation"). The date on
which such merger shall become effective shall be referred to as the
"Reincorporation Date."
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger qualify as a reorganization under the provisions of Section 368(a) and
Section 351 of the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 and Section 351 of the Code.
NOW THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time, Merger Sub shall be merged with and into
the Company in accordance with the applicable provisions of the DGCL and in
accordance with this Agreement, and the separate existence of Merger Sub shall
cease. The Company shall be the surviving corporation in the Merger (hereinafter
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sometimes referred to as the "Surviving Corporation"), and shall continue under
the laws of Delaware. As a result of the Merger, the Company shall become a
direct, wholly-owned subsidiary of Parent.
1.2. Closing; Effective Time. Subject to the satisfaction or waiver
of all of the conditions to Closing contained in Article VI, the closing of the
Merger (the "Closing"), shall take place at the offices of Xxxxx & Xxxxxxx LLP,
000 X. Xxxxxxxx, 00xx Xxxxx, Xxx Xxxxx, XX 00000, as soon as practicable (but
not later than 5 Business Days) after the satisfaction or waiver of the
conditions to Closing contained in Article VI (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions), unless another date or place is
agreed to in writing by the parties hereto. The date on which the Closing
actually occurs is hereinafter referred to as the "Closing Date." As soon as is
practicable after the Closing, the parties hereto shall cause the Merger to be
consummated by delivering to the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger"), in such form as required
by, and executed and acknowledged in accordance with, the relevant provisions of
the DGCL. The Merger shall become effective as of the date and at such time (the
"Effective Time") as the Certificate of Merger is filed with the Secretary of
State of the State of Delaware with respect to the Merger.
1.3. Effects of Merger. The Merger shall have the effects set forth
in the applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4. Certificate of Incorporation. The Certificate of Incorporation
of the Company in effect immediately prior to the Effective Time shall become,
from and after the Effective Time, the Certificate of Incorporation of the
Surviving Corporation, until amended or repealed in accordance with the terms
thereof and with Applicable Laws.
1.5. Bylaws. The Bylaws of the Company in effect immediately prior
to the Effective Time shall become, from and after the Effective Time, the
Bylaws of the Surviving Corporation, until thereafter amended or repealed in
accordance with the terms thereof and with Applicable Laws.
1.6. Directors and Officers. The directors and officers of the
Company immediately prior to the Effective Time shall become, from and after the
Effective Time, the directors and officers of the Surviving Corporation, each to
hold office from the Effective Time in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualify, or they resign or are
removed.
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ARTICLE II
EFFECT OF THE MERGER ON CAPITAL STOCK; CASH DIVIDEND
2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the parties or the
registered holders of any shares of capital stock of the Company (each a
"Company Stockholder," and collectively, the "Company Stockholders"):
(a) Each issued and outstanding share of common stock,
par value $0.001 per share, of Merger Sub shall be converted into and become one
fully paid and non-assessable share of common stock, par value $0.001 per share,
of the Surviving Corporation.
(b) Each issued and outstanding share of common stock,
par value $0.001 per share, of the Company (the "Company Common Stock"), other
than Dissenting Shares (as defined in Section 2.4), shall be converted into the
right to receive one (1) share of common stock, par value $ 0.001 per share, of
the Parent (the "Parent Common Stock"), payable to the registered holder
thereof, upon satisfaction of the exchange procedures set forth in this Article
II. The number of shares of Parent Common Stock issued to each Company
Stockholder in accordance with this Section 2.1(b) shall hereafter be referred
to as the "Merger Shares" with respect to such Company Stockholder. At the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each registered holder of shares of Company Common Stock shall cease
to have any rights with respect thereto, except the right to receive the Merger
Shares.
(c) No fraction of a share of Parent Common Stock will be
issued, but in lieu of such issuance, each holder of Company Common Stock who
would otherwise be entitled to a fraction of a share of Parent Common Stock as a
result of the conversion and exchange of shares contemplated by this Article II
shall receive from Parent one (1) additional share of Parent Common Stock. The
fractional share interest of each Company Stockholder shall be aggregated such
that no Company Stockholder shall receive more than the one (1) share of Parent
Common Stock with respect to any interest in fractional shares.
2.2. Exchange of Certificates.
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(a) Immediately prior to the Closing, Parent shall
deposit, or shall cause to be deposited, with Xxxxx & Xxxxxxx LLP (the "Exchange
Agent), for the benefit of the Company Stockholders certificates in the names of
each such Company Stockholder evidencing the number of Merger Shares to be
issued to such Company Stockholder in accordance with this Article II. As soon
as reasonably practicable after the Effective Time, Parent will instruct the
Exchange Agent to mail to each holder of record of a certificate or certificates
which, immediately prior to the Effective Time evidenced outstanding Company
Common Stock (collectively, the "Company Certificates") other than Dissenting
Shares (if applicable), a letter of transmittal containing instructions for use
in effecting the surrender of such Company Certificates to the Exchange Agent in
exchange for certificates evidencing the relevant number of Merger Shares. Upon
due surrender of such Company Certificates, each such Company Stockholder will
be entitled to receive certificates evidencing the number of Merger Shares to be
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issued to such Company Stockholder in accordance with Section 2.1, and the
Company Certificate so surrendered shall be forthwith cancelled. Until
surrendered as contemplated by this Section 2.2, each Company Certificate
evidencing Company Common Stock shall be deemed at any time after the Effective
Time to evidence only the right to receive, upon such surrender, the Merger
Shares. No interest shall be paid on the Merger Shares. All Merger Shares issued
upon exchange of the shares of Company Common Stock in accordance with the terms
hereof shall be deemed to have been issued or paid in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(b) It is understood that the certificates evidencing the
Merger Shares will bear the legends set forth below:
(i) The Securities represented hereby have not
been registered under the Securities Act of 1933, as amended (the "Act"), or
under the securities laws of any other jurisdictions. These securities are
subject to restrictions on transferability and resale and may not be transferred
or resold except as permitted under the Act and the applicable state securities
laws, pursuant to registration or exemption therefrom. Investors should be aware
that they may be required to bear the financial risks of this investment for an
indefinite period of time. The issuer of these securities may require an opinion
of counsel in form and substance satisfactory to the issuer to the effect that
any proposed transfer or resale is in compliance with the Act and any applicable
state securities laws;
(ii) Any additional legend required by applicable
law.
The legend set forth in (i) above shall be removed by Parent from any
certificate evidencing such Merger Consideration upon delivery to the Parent of
an opinion by counsel, reasonably satisfactory to the Parent, that a
registration statement under the 1933 Act is at that time in effect with respect
to the legended security or that such security can be freely transferred without
such a registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued such Merger Shares.
2.3. Treatment of Options. At the Effective Time, Parent shall
assume: (i) all outstanding options to purchase capital stock of the Company,
including, without limitation, all rights and obligations related thereto (the
"Options") in accordance with the terms of the applicable Option and (ii) the
Company's 2005 Equity Incentive Plan, each in accordance with Section 5.1
hereof.
2.4. Dissenting Shares. Notwithstanding anything contained in this
Agreement to the contrary, shares of Company Common Stock that are held by any
Company Stockholder who has not voted in favor of the Merger or consented
thereto in writing, and who has demanded appraisal rights in accordance with the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Shares, but shall become the right to receive such consideration as
may be determined to be due in respect of such Dissenting Shares pursuant to the
DGCL; provided, however, that any holder of Dissenting Shares who shall have
failed to perfect or shall have withdrawn or lost his or her rights to appraisal
of such Dissenting Shares, in each case under the DGCL, shall forfeit the right
to appraisal of such Dissenting Shares, and such Dissenting Shares shall be
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deemed to have been converted into the right to receive, as of the Effective
Time, the Merger Shares with respect to such Company Stockholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
3.1. Organization and Qualification; Subsidiaries. The Company and
each Subsidiary of the Company (collectively, the "Company Subsidiaries") is a
corporation, limited liability company or other legal entity duly incorporated
or organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has requisite power and authority
and governmental approvals to own, lease and operate its properties and to carry
on its business as currently conducted. The Company and each Company Subsidiary
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the ownership or leasing of its property or the conduct of
its business requires such qualification or licensing, except where the failure
to be so qualified or licensed or in good standing would not, individually or in
the aggregate, have a Company Material Adverse Effect. "Company Material Adverse
Effect," as used in this Agreement, shall mean any change, effect, event or
occurrence that is materially adverse to the condition (financial or otherwise),
assets, properties, business or operations of the Company and the Company
Subsidiaries, taken as a whole.
3.2. Authority to Execute and Perform Agreement. The Company has
the requisite power and all authority required to enter into, execute and
deliver this Agreement and the Transaction Documents to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby (collectively, the "Transactions").
The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the Transactions have been duly authorized by all
necessary corporate action.
3.3. Binding Effect. This Agreement has been validly executed and
delivered by the Company and, assuming the due execution and delivery hereof by
Xxxxxxxx, Pharmaceuticals and Merger Sub, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general applicability affecting or relating to enforcement of creditors' rights
generally, and (ii) general equitable principles (regardless of whether such
enforceability is considered in equity or at law).
3.4. Capitalization.
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(a) As of the date hereof, (i) 18,230,000 shares of
common stock, par value $0.001 per share, of the Company are authorized, of
which 13,697,834 shares of common stock are issued and outstanding, all of which
are validly issued, fully paid and non-assessable, (ii) 10,000 shares of
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preferred stock, par value $0.001 per share, of the Company are authorized, none
of which is issued or outstanding. The Company has no other authorized, issued
or outstanding class of capital stock.
(b) There are no existing options, rights, subscriptions,
warrants, unsatisfied preemptive rights, calls or commitments relating to (i)
the authorized and unissued capital stock of the Company or any Company
Subsidiary, or (ii) any securities or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire
from the Company or any Company Subsidiary, any shares of capital stock of the
Company or any Company Subsidiary and no such convertible or exchangeable
securities or obligations are outstanding, other than 2,032,166 shares of common
stock of the Company reserved for issuance upon exercise of outstanding options
granted pursuant to the Company's 2005 Equity Incentive Plan.
3.5. Vote Required; Board Approval. The only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
Merger is the affirmative vote of the holders of a majority of the outstanding
shares of common stock of the Company. The Board of Directors of the Company, by
resolutions duly adopted at a meeting duly called and held at which a quorum was
present or by the unanimous written consent in lieu of such a meeting, has
approved this Agreement, the Merger and the Transactions in accordance with the
requirements of the DGCL.
3.6. Litigation. There are no judicial, governmental,
administrative or arbitral actions, suits or proceedings or investigations
(collectively, "Legal Proceedings") pending or, to the Knowledge of the Company
or any Company Subsidiary, threatened against or involving the Company, any
Company Subsidiary, or any of their respective property or assets. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
governmental or regulatory body or arbitration tribunal against or involving the
Company or any Company Subsidiary.
3.7. Title to Properties; Absence of Liens. The Company and each
Company Subsidiary has good and marketable title to all of their respective
assets and properties, whether real, personal or fixed, free and clear of all
Liens, except (i) for Liens set forth on Schedule 3.7 hereto, (ii) for Liens for
Taxes not yet due and payable or which the Company or any Company Subsidiary is
contesting in good faith and for which adequate reserves have been established,
(iii) for such properties and assets as may have been sold since the date hereof
in the ordinary course of business, and (iv) for Liens not securing debt that do
not materially detract from the value or materially interfere with the use of
the property subject thereto (collectively, "Permitted Liens").
3.8. Compliance with Laws. Neither the Company nor any Company
Subsidiary is in violation of, default under, or conflict with, any applicable
order, judgment, injunction, award, decree or writ of any Governmental Body or
court of competent jurisdiction (collectively, "Orders") or any Applicable Law,
except for any such violations that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
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3.9. Consents and Approvals. Except for (i) those consents,
approvals, authorizations, filings or notices set forth on Schedule 3.9, (ii)
applicable requirements of the Securities Act, the Exchange Act or state
securities or "blue sky" laws ("Blue Sky Laws"), and (iii) the Certificate of
Merger, no consent, approval or authorization of, filing with, or notice to, any
Governmental Body is required by the Company or any Company Subsidiary in
connection with the execution, delivery and performance by the Company of this
Agreement, each and every agreement contemplated hereby, and the consummation by
the Company of the Transactions.
3.10. Company Material Contracts. Neither the Company nor any
Company Subsidiary is in default under any Company Material Contract, nor to the
Knowledge of the Company and the Company Subsidiaries, does any condition exist
that, with notice or lapse of time or both, would constitute a default
thereunder. To the Knowledge of the Company and the Company Subsidiaries, no
other party to any such Company Material Contract is in default thereunder, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder. No approval or consent of any person is needed
in order that the Company Material Contracts continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
3.11. Taxes. Except as set forth in Schedule 3.11:
(a) Filing of Tax Returns. The Company and each Company
Subsidiary have timely filed, or have had timely filed on their behalf, with the
appropriate Taxing authorities all Tax Returns in respect of Taxes required to
be filed by them. The Tax Returns filed (including any amendments thereof) are
complete and accurate in all material respects. The Company and each Company
Subsidiary have not requested any extension of time within which to file any Tax
Return in respect of any Taxes, which Tax Return has not since been filed in a
timely manner. To the Knowledge of the Company, no claim has ever been made by
any Taxing authority in a jurisdiction where the Company or any Company
Subsidiary does not file Tax Returns, or has Tax Returns filed on their behalf,
that they are or may be subject to taxation by that jurisdiction, or liable for
Taxes owing to that jurisdiction.
(b) Payment of Taxes. All Taxes owed by the Company and
each Company Subsidiary (whether or not shown as due on any Tax Returns) have
been paid in full or adequate reserves on their respective books and/or records
have been established. The Company and each Company Subsidiary have withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party. The Company has made all required estimated
Tax payments sufficient to avoid any underpayment penalties. The unpaid Taxes of
the Company and each Company Subsidiary (A) do not, as of the Closing Date,
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect the timing differences between book and Tax income) set
forth on the face of the Company's and each Company Subsidiary's most recent
balance sheets (rather than any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company and each Company
Subsidiary in filing, or having filed on their behalf, their Tax Returns. The
charges, accruals and reserves on the books of the Company and each Company
Subsidiary in respect of any liability for Taxes (x) based on or measured by net
income for any years not finally determined, (y) with respect to which the
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applicable statute of limitations has not expired or (z) that has been
previously deferred, are adequate to satisfy any assessment for such Taxes for
any such years.
(c) Audits, Investigations or Claims. There is no dispute
or claim which has not been resolved concerning any Tax liability of the Company
or any Company Subsidiary either (A) claimed or raised by any Taxing authority
in writing or (B) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Company or any Company Subsidiary has
Knowledge. There is no currently pending audit of any Tax Return of the Company
or any Company Subsidiary by any Taxing authority, and neither the Company nor
any Company Subsidiary has ever been notified in writing that any Taxing
authority intends to audit any Tax Return of the Company or any Company
Subsidiary. Neither the Company nor any Company Subsidiary has executed any
outstanding waivers or consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
3.12. Environmental Matters. (i) the Company and each Company
Subsidiary are in compliance in all material respects with applicable
Environmental Laws; (ii) the Company and each Company Subsidiary have all
Permits required pursuant to Environmental Laws and are in compliance in all
material respects with the terms thereof; (iii) there are no past or present
events, activities, practices, incidents, actions or plans in connection with
the operations of the Company or any Company Subsidiary which have given rise to
or are reasonably likely to give rise to any material liability on the part of
the Company or any Company Subsidiary under any Environmental Law; (iv) neither
the Company nor any Company Subsidiary has generated, used, transported,
treated, stored, released or disposed of, or has suffered or permitted anyone
else to generate, use, transport, treat, store, release or dispose of any
Hazardous Substance in violation of any Environmental Laws; (v) there has not
been any generation, use, transportation, treatment, storage, release or
disposal of any Hazardous Substance in connection with the conduct of the
business of the Company or any Company Subsidiary or the use of any property or
facility by the Company or any Company Subsidiary, or to the Knowledge of
Company and all Company Subsidiaries, any nearby or adjacent properties, in each
case, which has created or might reasonably be expected to create any material
liability under any Environmental Law or which would require reporting to or
notification of any Governmental Body; and (vi) to the Knowledge of the Company
and the Company Subsidiaries, no asbestos containing materials or
polychlorinated biphenyl or underground storage tank is contained in or located
at any facility now or previously owned or leased by the Company or any Company
Subsidiary.
3.13. Real Property. Neither the Company nor any Company Subsidiary
owns, or has owned, any real property or any interest in any real property.
3.14. Broker's Fees. No broker, finder, agent or similar
intermediary has acted on behalf of the Company or any Company Subsidiary in
connection with this Agreement or the Transactions, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the Company
or Company Subsidiary.
3.15. Labor Matters. The Company and each of the Company
Subsidiaries is not now, and has not been in the last five years, bound by or
party to any collective bargaining agreement and, to the Knowledge of the
Company and the Company Subsidiaries, no application for certification of a
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collective bargaining agent is pending. The Company and each of the Company
Subsidiaries is in compliance with all Applicable Laws applicable to the Company
and each of the Company Subsidiaries affecting employment practices and terms
and conditions of employment.
3.16. Full Disclosure. This Agreement (including the disclosure
schedules) does not (i) contain any representation, warranty or information that
is false or misleading with respect to any material fact, or (ii) omit to state
any material fact necessary in order to make the representations, warranties and
information contained herein, in the context in which made or provided, not
false or misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Company as follows:
4.1. Organization and Qualification; Subsidiaries. Parent and each
Subsidiary of the Parent, including, without limitation, Merger Sub
(collectively, the "Parent Subsidiaries") is a corporation, limited liability
company or other legal entity duly incorporated or organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, has requisite power and authority and governmental approvals to
own, lease and operate its properties and to carry on its business as currently
conducted. The Parent and each Parent Subsidiary is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the
ownership or leasing of its property or the conduct of its business requires
such qualification or licensing, except where the failure to be so qualified or
licensed or in good standing would not, individually or in the aggregate, have a
Parent Material Adverse Effect. "Parent Material Adverse Effect," as used in
this Agreement, shall mean any change, effect, event or occurrence that is
materially adverse to the condition (financial or otherwise), assets,
properties, business or operations of the Parent and the Parent Subsidiaries,
taken as a whole. Merger Sub is the wholly-owned Subsidiary of Parent, and
except for activities incident to or contemplated by this Agreement, Merger Sub
has not engaged in any business activities of any type or kind whatsoever.
4.2. Authority to Execute and Perform Agreement. Each of the Parent
and Merger Sub has the requisite power and all authority required to enter into,
execute and deliver this Agreement and the Transaction Documents to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the Transactions. The execution, delivery and performance by each of the Parent
and Merger Sub of this Agreement and the consummation by the Parent and Merger
Sub of the Transactions have been duly authorized by all necessary corporate
action.
4.3. Binding Effect. This Agreement has been validly executed and
delivered by the Parent and Merger Sub and, assuming the due execution and
delivery hereof by the Company, constitutes a valid and binding obligation of
each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub
9
in accordance with its terms, except to the extent such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability affecting or relating to enforcement of
creditors' rights generally, and (ii) general equitable principles (regardless
of whether such enforceability is considered in equity or at law).
4.4. Capitalization.
--------------
(a) As of the date hereof and on the Closing Date, (i)
100,000,000 shares of common stock, par value $0.001 per share, of Parent are
authorized, of which 41,588,235 shares of common stock are issued and
outstanding, all of which are validly issued, fully paid and non-assessable. The
Parent has no other authorized, issued or outstanding class of capital stock.
Immediately prior to the Closing and after the Reincorporation (giving effect to
the Reincorporation and the exchange of shares effected thereby) 100,000,000
shares of common stock, par value $0.001 per share, of Parent will be
authorized, of which 570,518 shares of common stock will be issued and
outstanding, all of which will be fully paid and non-assessable, and 20,000,000
shares of preferred stock, par value $0.001 per share, of Parent will be
authorized, none of which will be issued or outstanding.
(b) Immediately after giving effect to the Merger, Parent
will own free and clear of any Liens all of the outstanding capital stock of the
Surviving Corporation. There are no obligations, contingent or otherwise, of the
Parent or Merger Sub, to repurchase, redeem or acquire shares of the Parent or
Merger Sub.
(c) There are no existing options, rights, subscriptions,
warrants, unsatisfied preemptive rights, calls or commitments relating to (i)
the authorized and unissued capital stock of the Parent or Merger Sub, or (ii)
any securities or obligations convertible into or exchangeable for, or giving
any Person any right to subscribe for or acquire from the Parent or Merger Sub,
any shares of capital stock of the Parent or Merger Sub and no such convertible
or exchangeable securities or obligations are outstanding.
(d) Each outstanding share of capital stock of Merger Sub
is validly issued, fully paid and non-assessable and each such share is owned by
the Parent free and clear of Liens.
(e) The outstanding shares of the capital stock of the
Parent and Merger Sub have been issued in full compliance with the registration
and prospectus delivery requirements of the Securities Act or in compliance with
applicable exemptions therefrom, and the registration and qualification
requirements of all applicable securities laws of states of the United States.
(f) The Merger Shares, when paid for and then issued, as
provided in this Agreement, will be duly authorized and validly issued, fully
paid and nonassessable, and will be free of any Liens or encumbrances and of
restrictions on transfer, other than restrictions on transfer under applicable
state and federal securities laws or the Transaction Documents.
4.5. Vote Required; Board Approval. The only vote of the holders of
any class or series of the Parent's capital stock necessary to effect the Merger
is the affirmative vote of the holders of a majority of the outstanding shares
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of common stock of the Parent approving the Reincorporation. The Board of
Directors of each of Parent and Merger Sub, by resolutions duly adopted at a
meeting duly called and held at which a quorum was present or by the unanimous
written consent in lieu of such a meeting, has approved this Agreement, the
Reincorporation, the Merger and the Transactions in accordance with the
requirements of the NJBCA and DGCL.
4.6. SEC Reports and Financial Statements.
------------------------------------
(a) Each form, report, schedule, registration statement,
proxy statement, information statement, exhibit and any other document required
to be filed by the Parent with the Securities and Exchange Commission (the
"SEC") since January 1, 2000 (as such documents have been amended prior to the
date hereof, the "SEC Reports"), as of their respective dates, was timely filed
and complied in all material respects with the applicable requirements of the
Securities Act and Exchange Act. None of the SEC Reports, as of their respective
dates, contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except for such statements, if any, as have been modified or
superseded by subsequent filings prior to the date hereof.
(b) The consolidated financial statements of the Parent
included in such SEC Reports and any notes related thereto comply as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-QSB of the SEC)
and fairly present in all material respects (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end
adjustments none of which are or will be material in amount, individually or in
the aggregate) the consolidated financial position of the Company and the
Company Subsidiaries as at the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended.
(c) Neither the Parent nor any of the Parent Subsidiaries
have any direct or indirect Liabilities that were not fully and adequately
reflected or reserved against on the balance sheet or described in the notes to
the audited financial statements of Parent. Neither the Parent nor any Parent
Subsidiary has any Knowledge of any circumstance, condition, event or
arrangement that has taken place at any time that may hereafter give rise to any
Liabilities.
4.7. No Material Adverse Change. Since December 31, 2004, each of
the Parent and the Parent Subsidiaries have conducted their respective
businesses in the ordinary course, consistent with past practice, and there has
been no change in the business, properties, assets, operations or condition
(financial or otherwise) of the Parent or any of the Parent Subsidiaries which
has resulted or reasonably could be expected to result in or which the Parent or
any Parent Subsidiary has reason to believe could reasonably be expected to
result in a Parent Material Adverse Effect, and neither the Parent nor any of
the Parent Subsidiaries has any Knowledge of any such change that is threatened,
nor has there been any damage, destruction or loss affecting the assets,
properties, business, operations or condition (financial or otherwise) of the
Parent or any of the Parent Subsidiaries, whether or not covered by insurance
which has resulted or reasonably could be expected to result in or which the
11
Parent or any Parent Subsidiary has reason to believe could reasonably be
expected to result in a Parent Material Adverse Effect. Since December 31, 2004,
neither the Parent nor any of the Parent Subsidiaries has taken, directly or
indirectly, any of the actions identified in Section 5.2.
4.8. Litigation. There are no Legal Proceedings pending or, to the
Knowledge of the Parent or any Parent Subsidiary, threatened against or
involving the Parent, any Parent Subsidiary, or any of their respective property
or assets. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, governmental or regulatory body or arbitration tribunal
against or involving the Parent or any Parent Subsidiary.
4.9. Title to Properties; Absence of Liens. The Parent and each
Parent Subsidiary has good and marketable title to all of their respective
assets and properties, whether real, personal or fixed, free and clear of all
Liens, except for Liens for Taxes not yet due and payable or which the Parent or
any Parent Subsidiary is contesting in good faith and for which adequate
reserves have been established.
4.10. Compliance with Laws. Neither the Parent nor any Parent
Subsidiary is in violation of, default under, or conflict with, any applicable
Order or any Applicable Law.
4.11. Intellectual Property. Neither Parent nor any Parent
Subsidiary owns, licenses or otherwise has any rights in or to any Intellectual
Property.
4.12. Non-Contravention. The execution and delivery of this
Agreement and the Transaction Documents by the Parent and Merger Sub, the
performance by each of Parent and Merger Sub of its obligations hereunder and
thereunder, and the consummation of the Transactions by the Parent will not (i)
violate or conflict with any provision of the Articles of Incorporation or
Bylaws of the Parent and Merger Sub or equivalent organizational documents of
any other Parent Subsidiary, (ii) violate any Applicable Laws, or (iii) result
in the creation or imposition of any Lien upon any of the property or assets of
the Parent or any of the Parent Subsidiaries pursuant to any provision of any
contract or Lien.
4.13. Consents and Approvals. Except for (i) those consents,
approvals, authorizations, filings or notices set forth on Schedule 4.13, (ii)
applicable requirements of the Securities Act, the Exchange Act or Blue Sky
Laws, and (iii) the Certificate of Merger, no consent, approval or authorization
of, filing with, or notice to, any Governmental Body is required by the Parent
or any Parent Subsidiary in connection with the execution, delivery and
performance by the Parent of this Agreement, each and every agreement
contemplated hereby, and the consummation by the Parent and Merger Sub of the
Transactions.
4.14. Employee Benefit Plans. Since January 1, 1999, neither the
Parent nor any Parent Subsidiary has sponsored, maintained or contributed to any
Benefit Plan.
4.15. Parent Material Contracts. Neither the Parent nor any Parent
Subsidiary is a party to any Material Contract.
4.16. Taxes. Except as set forth in Schedule 4.16:
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(a) Filing of Tax Returns. The Parent and each Parent
Subsidiary have timely filed, or have had timely filed on their behalf, with the
appropriate Taxing authorities all Tax Returns in respect of Taxes required to
be filed by them. The Tax Returns filed (including any amendments thereof) are
complete and accurate in all material respects. The Parent and each Parent
Subsidiary have not requested any extension of time within which to file any Tax
Return in respect of any Taxes, which Tax Return has not since been filed in a
timely manner. To the Knowledge of the Parent, no claim has ever been made by
any Taxing authority in a jurisdiction where the Parent or any Parent Subsidiary
does not file Tax Returns, or has Tax Returns filed on their behalf, that they
are or may be subject to taxation by that jurisdiction, or liable for Taxes
owing to that jurisdiction.
(b) Payment of Taxes. All Taxes owed by the Parent and
each Parent Subsidiary (whether or not shown as due on any Tax Returns) have
been paid in full or adequate reserves on their respective books and/or records
have been established. The Parent and each Parent Subsidiary have withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party. The Parent has made all required estimated
Tax payments sufficient to avoid any underpayment penalties. The unpaid Taxes of
the Parent and each Parent Subsidiary (A) do not, as of the Closing Date, exceed
the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect the timing differences between book and Tax income) set
forth on the face of the Parent's and each Parent Subsidiary's most recent
balance sheets (rather than any notes thereto) and (B) do not exceed that
reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Parent and each Parent
Subsidiary in filing, or having filed on their behalf, their Tax Returns. The
charges, accruals and reserves on the books of the Parent and each Parent
Subsidiary in respect of any liability for Taxes (x) based on or measured by net
income for any years not finally determined, (y) with respect to which the
applicable statute of limitations has not expired or (z) that has been
previously deferred, are adequate to satisfy any assessment for such Taxes for
any such years.
(c) Audits, Investigations or Claims. There is no dispute
or claim which has not been resolved concerning any Tax liability of the Parent
or any Parent Subsidiary either (A) claimed or raised by any Taxing authority in
writing or (B) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Parent or any Parent Subsidiary has
Knowledge. There is no currently pending audit of any Tax Return of the Parent
or any Parent Subsidiary by any Taxing authority, and neither the Parent nor any
Parent Subsidiary has ever been notified in writing that any Taxing authority
intends to audit any Tax Return of the Parent or any Parent Subsidiary. Neither
the Parent nor any Parent Subsidiary has executed any outstanding waivers or
consents regarding the application of the statute of limitations with respect to
any Taxes or Tax Returns.
(d) Lien. There are no encumbrances for Taxes (other than
for current Taxes not yet due and payable) on any assets of the Parent or any
Parent Subsidiary.
(e) Tax Elections. The Parent and each Parent Subsidiary
(i) have not agreed, or are required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise; (ii)
have not made an election pursuant to Code Sections 338 or 336(e) or the
13
regulations thereunder or any comparable provisions of any foreign or state or
local income tax law; (iii) are not subject to any constructive elections under
Code Section 338 or the regulations thereunder; (iv) have not made any payments,
are obligated to make any payments, or are a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under ss.280G and ss.162(m) of the Code; and (v) have not made any of
the foregoing elections or are required to apply any of the foregoing rules
under any comparable state or local income Tax provision.
(f) Prior Affiliated Groups. The Parent and each Parent
Subsidiary (A) have never been a member of an affiliated group of corporations
within the meaning of Section 1504 of the Code (other than a group the common
parent of which was the Parent) and (B) do not have any liability for the Taxes
of any person (other than any of the Parent and the Parent Subsidiaries) under
Treas. Reg. ss.1502-6 (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract or otherwise. Neither the Parent nor
any Parent Subsidiary is a successor to any other person by way of merger,
reorganization or similar transaction, other than the Reincorporation.
(g) Tax Sharing Agreements. Neither the Parent nor any
Parent Subsidiary is a party to any Tax allocation, indemnity or sharing or
similar agreement.
(h) Section 355. Neither the Parent nor any Parent
Subsidiary has distributed the stock of a "controlled corporation" (within the
meaning of that term as used in Section 355(a) of the Code) in a transaction
subject to Section 355 of the Code within the past two years.
(i) Partnerships. Neither the Parent nor any Parent
Subsidiary owns an interest in a partnership for Tax purposes.
4.17. Environmental Matters. (i) the Parent and each Parent
Subsidiary are in compliance in all material respects with applicable
Environmental Laws; (ii) the Parent and each Parent Subsidiary have all Permits
required pursuant to Environmental Laws and are in compliance in all material
respects with the terms thereof; (iii) there are no past or present events,
activities, practices, incidents, actions or plans in connection with the
operations of the Parent or any Parent Subsidiary which have given rise to or
are reasonably likely to give rise to any liability on the part of the Parent or
any Parent Subsidiary under any Environmental Law; (iv) neither the Parent nor
any Parent Subsidiary has generated, used, transported, treated, stored,
released or disposed of, or has suffered or permitted anyone else to generate,
use, transport, treat, store, release or dispose of any Hazardous Substance in
violation of any Environmental Laws; (v) there has not been any generation, use,
transportation, treatment, storage, release or disposal of any Hazardous
Substance in connection with the conduct of the business of the Parent or any
Parent Subsidiary or the use of any property or facility by the Parent or any
Parent Subsidiary, or to the Knowledge of Parent and all Parent Subsidiaries,
any nearby or adjacent properties, in each case, which has created or might
reasonably be expected to create any material liability under any Environmental
Law or which would require reporting to or notification of any Governmental
Body; and (vi) no asbestos containing materials or polychlorinated biphenyl or
underground storage tank is contained in or located at any facility now or
previously owned or leased by the Parent or any Parent Subsidiary.
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4.18. Real Property. Neither the Parent nor any Parent Subsidiary
owns, or has owned, any real property or any interest in any real property.
4.19. Broker's Fees. No broker, finder, agent or similar
intermediary has acted on behalf of the Parent or any Parent Subsidiary in
connection with this Agreement or the Transactions, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the Parent
or Parent Subsidiary, except for the fee to [Xxxxxxxx and Xxxxxxxx] that shall
not become due or payable until such time as the Parent has closed an equity
financing with gross proceeds to Parent of at least $10,000,000 after the
Closing.
4.20. Labor Matters. The Parent and each of the Parent Subsidiaries
is not now, and has not been in the last five years, bound by or party to any
collective bargaining agreement and, to the Knowledge of the Parent and the
Parent Subsidiaries, no application for certification of a collective bargaining
agent is pending. The Parent and each of the Parent Subsidiaries is in
compliance with all Applicable Laws applicable to the Parent and each of the
Parent Subsidiaries affecting employment practices and terms and conditions of
employment.
4.21. Articles of Incorporation, Bylaws, and Minute Books. The
copies of the Articles of Incorporation and of the Bylaws of Parent which have
been delivered to the Company are true, correct and complete copies thereof. The
corporate minutes of Parent, which have been delivered to the Company, are
complete and accurate minutes of all meetings and accurate consents in lieu of
meetings of the Board of Directors (and any committee thereof) and of the
shareholders of Parent since the date of incorporation and accurately reflects
all transactions referred to in such minutes and consents in lieu of meetings.
Parent has delivered to Company all books, records, agreements and other
material information of Parent relating to the business of Parent (the "Parent
Information"). All documents furnished or caused to be furnished to the Company
by Parent are true and correct copies, and there are no amendments or
modifications thereto except as set forth in such documents.
4.22. Full Disclosure. This Agreement (including the disclosure
schedules) and the SEC Reports, do not (i) with respect to Parent or any Parent
Subsidiary, contain any representation, warranty or information that is false or
misleading with respect to any material fact, or (ii) with respect to Parent or
any Parent Subsidiary, omit to state any material fact necessary in order to
make the representations, warranties and information contained herein (including
the disclosure schedule) and the SEC Reports, in the context in which made or
provided, not false or misleading.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1. Assumption of Options, Option Plan and Warrants.
-----------------------------------------------
(a) At the Effective Time, each outstanding Option,
whether or not vested, shall, by virtue of the Merger, be assumed by Parent.
Each Option so assumed by Parent under this Agreement will continue to have, and
be subject to, the same terms and conditions of such Option immediately prior to
15
the Effective Time (including, without limitation, any repurchase rights or
vesting provisions and provisions regarding the acceleration of vesting and
exercisability on certain transactions), except that each Option will be
exercisable (or will become exercisable in accordance with its terms) for that
number of whole shares of common stock of the Parent equal to the number of
shares of common stock of the Company that were issuable upon exercise (assuming
full vesting) of such Option, immediately prior to the Effective Time. At the
Effective Time, (x) all references in the related stock option agreements to the
Company shall be deemed to refer to Parent and (y) Parent shall assume all of
the Company's obligations with respect to the Options as so amended. As promptly
as reasonably practicable after the Effective Time, Parent shall issue to each
holder of an outstanding Option a certificate evidencing the foregoing
assumption and adjustments by Parent.
(b) It is intended that the Options assumed by Parent
shall qualify following the Effective Time as incentive stock options as defined
in Section 422 of the Code to the extent the Options qualified as incentive
stock options immediately prior to the Effective Time and the provisions of this
Section 5.1 shall be applied consistently with such intent.
(c) At the Effective Time, Parent shall also assume the
Company's 2005 Equity Incentive Plan (the "2005 Plan") in accordance with the
terms of the 2005 Plan. At the Effective Time, (x) all references in the 2005
Plan to the Company shall be deemed to refer to Parent and (ii) Parent shall
assume all of the Company's obligations with respect to the 2005 Plan as so
amended.
5.2. Actions of the Parent Pending Closing. From the date hereof
until the Effective Time, unless otherwise agreed to in writing by the Company,
each of Parent and Merger Sub agree to conduct its business and operations only
in the ordinary course and in substantially the same manner as heretofore
conducted and shall continue to make timely filings as required by the SEC
pursuant to the Securities Act and the Exchange Act and shall not take any
action that will affect the quotation of common stock of the Parent on the over
the counter bulletin board. Without limiting the generality of the foregoing,
prior to the Effective Time, neither Parent nor any Parent Subsidiary shall,
without the prior written consent of the Company, directly or indirectly, do any
of the following:
(a) except to the extent required by Applicable Law or as
contemplated by this Agreement, amend or otherwise change the Articles of
Incorporation Bylaws or other similar organizational document of the Parent or
any Parent Subsidiary;
(b) issue or authorize or propose the issuance of, sell,
pledge or dispose of, grant or otherwise create, or agree to issue or authorize
or propose the issuance, sale, pledge, disposition, grant or creation of any
additional shares of, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of, its capital stock or any debt or
equity securities convertible into or exchangeable for such capital stock;
(c) purchase, redeem or otherwise acquire or retire, or
offer to purchase, redeem or otherwise acquire or retire, any shares of its
capital stock (including any security convertible or exchangeable into its
capital stock);
16
(d) enter into any Material Contract;
(e) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, reclassify, recapitalize, split, combine or exchange any
of its shares of capital stock;
(f) incur or become contingently liable with respect to
any indebtedness for borrowed money or guarantee any such indebtedness or issue
any debt securities;
(g) (i) increase the compensation payable or to become
payable to, or enter into any employment agreement with, any of its directors,
executive officers or employees, (ii) grant any severance or termination pay to
any director, officer or employee, (iii) enter into any severance agreement with
any director, officer or employee, (iv) establish, adopt, enter into, terminate,
withdraw from or amend in any material respect or take action to accelerate any
rights or benefits under any collective bargaining agreement, any stock option
plan or any employee Benefit Plan or policy, or (v) hire any employee or
consultant;
(h) take any action, other than reasonable actions in the
ordinary course of business and consistent with past practice, with respect to
accounting policies or procedures, except as may be required by GAAP;
(i) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other means, any business or any
corporation, partnership, association or other business entity;
(j) mortgage or otherwise encumber, subject to any Lien,
or sell, transfer or otherwise dispose of, any of its properties or assets that
are material, individually or in the aggregate;
(k) adopt a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization or other reorganization of the
Parent or Merger Sub;
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Parent or incurred in the
ordinary course of business and consistent with past practice;
(m) take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.2(a) through (l) above, or any action
which would make any of the representations or warranties of the Parent or the
Merger Sub contained in this Agreement untrue or incorrect in any material
respect or prevent the Parent or the Merger Sub from performing or cause the
Parent or the Merger Sub not to perform their respective covenants under this
Agreement in any material respect;
(n) waive, release, assign, settle or compromise any
material rights, claims or litigation (including any confidentiality agreement);
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(o) authorize any of, or commit or agree to take any of,
the foregoing actions; or
(p) make or change any Tax election, settle any audit,
claim or examination of Taxes, adopt or apply to change any method of accounting
or accounting practice for Tax purposes, file any amended Tax Return, enter into
any closing agreement or request a Tax ruling from a Tax authority, settle any
claims for Taxes, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Taxes, Tax Return
or claim for Taxes, or take any action or fail to take any action that would
have a material adverse effect on the Tax liability of the Parent or the Merger
Sub;
provided, however, that nothing in this Section 5.2 shall be construed to
preclude Xxxxxxxx from effecting the Reincorporation prior to the Closing.
5.3. Company Stockholder Approval. As soon as practicable after the
date hereof, the Company will take all steps necessary to solicit the written
consent of the requisite number of stockholders of the Company approving the
Merger and this Agreement in accordance with the provisions of the DGCL (the
"Company Consent"). Except as otherwise contemplated by this Agreement and
subject to the exercise of the fiduciary duties of the Company's directors, the
Board of Directors of the Company (i) shall recommend to the stockholders of the
Company that they approve the Merger, and (ii) shall use its reasonable best
efforts to obtain the Company Consent.
5.4. Parent and Merger Sub Stockholder Approval; Information
Statement. The Principal Shareholder of Parent and the Board of Directors of
Parent herby agree to approve by written consent the Reincorporation and related
agreements in accordance with the NJBCA. In addition, Parent hereby agrees to
approve by written consent the Merger and this Agreement on behalf of Merger Sub
as Merger Sub's sole stockholder in accordance with the DGCL. As soon as
practicable, but no later than 15 caledar days after the date of this Agreement,
Parent shall file with the SEC an information statement informing the remaining
Parent shareholders of such approval of the Reincorporation in accordance with
Schedule 14C under the Exchange Act (the "Information Statement"). Parent,
Merger Sub and the Company shall cooperate with each other in the preparation of
the Information Statement. As promptly as practicable after the filing of the
Information Statement with the SEC, the Parent shall mail the Information
Statement to the Parent shareholders together with a Schedule 14(f) notifying
such shareholders of a change in the majority of the Parent's Board of
Directors.
5.5. Efforts; Consents. Each party hereto agrees to use, and shall
cause its respective Subsidiaries to use, reasonable best efforts to take or
cause to be taken all actions necessary, proper or advisable to consummate the
Merger and the Transactions. Without limiting the generality of the foregoing,
each of the parties hereto shall use, and shall cause its respective
Subsidiaries to use, reasonable best efforts to obtain all authorizations,
consents, orders and approvals of Federal, state, and local regulatory bodies,
that are or may become necessary for the performance of its respective
obligations pursuant to this Agreement, the Transactions Documents and the
consummation of the Transactions, and shall cooperate fully in promptly seeking
to obtain such authorizations, consents, orders and approvals as may be
necessary for the performance of its respective obligations pursuant to this
Agreement, the Transaction Documents and the Transactions. The parties shall not
18
take, and shall cause their respective Subsidiaries not to take, any action
which would have the effect of delaying, impairing or impeding the receipt of
any required regulatory approvals, and the parties shall use, and shall cause
their respective Subsidiaries to use, reasonable best efforts to secure such
approvals as promptly as possible. The parties shall use, and shall cause their
respective Subsidiaries to use, reasonable best efforts not to take any action
or enter into any transaction which would result in a breach of any covenant
made by such party in this Agreement.
5.6. Filing of Tax Returns; Payment of Taxes. The Parent and Merger
Sub will prepare in a manner consistent with past practice of Parent and Merger
Sub, and timely file all Tax Returns required to be filed by Parent and Merger
Sub, the due date of which (without extensions) occurs on or before the Closing
Date and Parent and Merger Sub shall pay all Taxes due with respect to any such
Tax Returns.
5.7. Confidentiality. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by Applicable Law, (iii) necessary to secure any
required consents as to which the other party has been advised, or (iv)
consented to in writing by Parent and the Company, this Agreement and any
information or documents furnished in connection herewith shall be kept strictly
confidential by the Company and the Company Subsidiaries, Parent and the Parent
Subsidiaries, and their respective officers, directors, employees and agents.
Prior to any disclosure pursuant to the preceding sentence, the party intending
to make such disclosure shall consult with the other party to the extent
practicable regarding the nature and extent of the disclosure. Subject to the
preceding sentence, nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by Applicable Law. In the event the Merger is not consummated, Parent
and the Company shall return to the other all documents furnished by the other
and all copies thereof made by such party and will hold in absolute confidence
all information obtained from the other party except to the extent (i) such
party is required to disclose such information by Law or such disclosure is
necessary in connection with the pursuit or defense of a claim, (ii) such
information was known by such party prior to such disclosure or was thereafter
developed or obtained by such party independent of such disclosure, (iii) such
party received such information on a non-confidential basis from a source, other
than the other party, which is not known by such party to be bound by a
confidentiality obligation with respect thereto or (iv) such information becomes
generally available to the public or is otherwise no longer confidential. Prior
to any disclosure of information pursuant to the exception in clause (i) of the
preceding sentence, the party intending to disclose the same shall so notify the
party which provided the same to the extent practicable in order that such party
may seek a protective order or other appropriate remedy should it choose to do
so.
5.8. Notification of Certain Matters. Parent shall give prompt
notice to the Company if any of the following occurs after the date of this
Agreement: (i) receipt of any notice or other communication in writing from any
person alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement; (ii) receipt of
any notice or other communication from any Governmental Authority (including,
but not limited to, the NASD, the SEC or any securities exchange) in connection
with the transactions contemplated by this Agreement; (iii) the occurrence or
non-occurrence of any fact or event which could reasonably be expected to cause
any covenant, condition or agreement hereunder not to be complied with or
19
satisfied in any material respect; (iv) the commencement or threat of any
litigation involving or affecting the Parent or any Parent Subsidiary, or any of
their respective properties or assets; (v) the occurrence or non-occurrence of
any fact or event that causes or is reasonably likely to cause a breach by
Parent or Merger Sub of any provision of this Agreement, and (vi) the occurrence
of any event that, had it occurred prior to the date of this Agreement without
any additional disclosure hereunder, would have constituted a Parent Material
Adverse Effect.
5.9. Non-Solicitation.
----------------
(a) Neither the Parent nor Merger Sub, nor any of their respective
officers, directors, employees, agents, affiliates, accountants, counsel,
investment bankers, financial advisors or other representatives (collectively,
"Representatives") shall, (i) directly or indirectly, initiate, solicit or
encourage, or take any action to facilitate the making of, any Acquisition
Proposal, (ii) enter into any agreement or take any other action that by its
terms could reasonably be expected to adversely affect the ability of the
Parties hereto consummate the Merger, or (iii) directly or indirectly engage or
otherwise participate in any discussions or negotiations with, or provide any
information or data to, or afford any access to the properties, books or records
of the Parent or Merger Sub to, or otherwise assist, facilitate or encourage,
any person (other than the Company or any affiliate or associate thereof)
relating to any Acquisition Proposal.
(b) Parent and Merger Sub and each of their Representatives shall
immediately cease and cause to be terminated all existing discussions and
negotiations, if any, with any other persons conducted heretofore with respect
to any Acquisition Proposal.
For purposes of this Agreement, an "Acquisition Proposal" means any
inquiry, proposal or offer from any person relating to (i) any direct or
indirect acquisition or purchase of a business that constitutes 50% or more of
the net revenues, net income or assets of the Parent and the Parent
Subsidiaries, taken as a whole, or 50% or more of the common stock or voting
power (or of securities or rights convertible into or exercisable for such
common stock or voting power) of the Parent, (ii) any tender offer or exchange
offer that if consummated would result in any person beneficially owning 50% or
more of the common stock or voting power (or of securities or rights convertible
into or exercisable for such common stock or voting power) of the Parent, or
(iii) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Parent, or any of
its Subsidiaries that constitutes 50% or more of the net revenues, net income or
assets of the Company, and its Subsidiaries taken as a whole, or that results in
the shareholders of Parent immediately prior to such transaction owning less
than 50% of the outstanding voting securities of Parent immediately after such
transaction, in each case other than the transactions contemplated by this
Agreement. Each of the transactions referred to in clauses (i) - (iii) of the
foregoing definition of Acquisition Proposal, other than the Merger proposed by
this Agreement, is referred to herein as an "Acquisition Transaction."
5.10. Further Assurances. At any time and from time to time after
the Closing, each party to this Agreement agrees to cooperate with each other
party and to execute and deliver such other documents, instruments of transfer
20
or assignment, files, books and records and do all such further acts as may be
reasonably required to consummate the Transactions.
5.11. Public Disclosure. Prior to the Closing, each party to this
Agreement shall consult with each other party before issuing any press release
or otherwise making any public statements, announcements or communications with
respect to this Agreement or any of the Transactions and shall not issue any
such press release or make any such public statement, announcement or
communication without the prior consent of the other parties, which consent
shall not be unreasonably withheld, except as may be required by Applicable Law.
5.12. Board of Directors. Prior to the Effective Time, the Board of
Directors of Parent, in accordance with applicable law, shall take all necessary
action (including the resignation of existing directors) to cause the Board of
Directors of Parent, as of the Effective Time, to consist of the following
individuals: Agamemnon X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxx Xxxxxx and Xxxxxxxx Xxx Xxxxx, each to hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify, or they resign or are removed.
5.13. Reincorporation. Xxxxxxxx shall take those actions necessary
to effect the Reincorporation, including, without limitation, obtaining a new
CUSIP number, notifying NASDAQ at least 10 days prior to the date such
Reincorporation is effective, and filing any necessary documents with the
Secretary of State of the State of New Jersey necessary to effect the
Reincorporation.
5.14. Piggy-back Registration Rights. Parent hereby grants the
Principal Parent Shareholders piggy-back registration rights with respect to the
shares of common stock of Parent held by each of them as of the Closing Date
such that the Parent will include any such shares of common stock in its next
registration statement filed by the Parent under the Securities Act (other than
registration statements on Form S-8 or Form S-4, or equivalent forms) to the
extent such shares are not tradable pursuant to Rule 144 promulgated under the
Securities Act by such Principal Parent Shareholder, subject to standard and
customary underwriter cutbacks.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Each Party's Obligations to Consummate the
Transactions. The respective obligations of each party to this Agreement to
consummate the Transactions shall be subject to the following conditions, unless
waived in writing prior to the Closing Date by such party:
(a) All consents, approvals, authorizations, orders and
action of any Governmental Body required to permit the consummation of the
Transactions shall have been obtained or made and shall be in full force and
effect.
(b) No action shall have been taken, and no statute,
rule, regulation, executive order, judgment, decree, or injunction shall have
been enacted, entered, promulgated or enforced (and not repealed, superseded,
lifted or otherwise made inapplicable), by any court or governmental or
21
regulatory agency of competent jurisdiction which restrains, enjoins or
otherwise prohibits the consummation of the Transactions (each party agreeing to
use its reasonable best efforts to avoid the effect of any such statute, rule,
regulation or order or to have any such order, judgment, decree or injunction
lifted).
6.2. Conditions to Obligations of the Company to Consummate the
Transactions.
The obligation of the Company to consummate the Transactions shall be
subject to the satisfaction of the following conditions, unless waived in
writing prior to the Closing Date by the Company:
(a) The representations and warranties of Parent and
Merger Sub contained herein that are qualified as to materiality or a Parent
Material Adverse Effect (or similar concept) shall be true and correct, and
those not so qualified shall be true and correct in all material respects, in
each case at and as of the Effective Time with the same force and effect as
though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date, in which
case as of such date).
(b) Parent and Merger Sub shall have performed, in all
material respects, all obligations and complied with all covenants required by
this Agreement to be performed or complied with, in all material respects, by
each of them prior to the Effective Time.
(c) Parent and Merger Sub shall have executed and
delivered to the Company a certificate, dated the date of Closing and signed by
an officer of Parent and Merger Sub, evidencing compliance with Sections 6.2(a)
and (b) hereof.
(d) The Company shall have completed its financial,
business and legal due diligence investigation of Parent to the Company's and
its counsel's satisfaction which shall be determined at the sole and absolute
discretion of the Company and its counsel.
(e) Definitive agreements obligating certain investors to
acquire at least $10,000,000 in capital stock of Parent shall have been executed
and delivered to Parent, subject only to the Closing of the Merger.
(f) Certificates evidencing the number of Merger Shares
to be issued to each Company Stockholder in the names of such Company
Stockholders as set forth on Exhibit A hereto shall have been delivered by
Parent or Parent's agent to counsel to the Company in accordance with Section
2.2.
(g) Holders of at least ninety percent (90%) of the
Company's outstanding capital stock shall have approved by written consent the
Merger and this Agreement in accordance with the DGCL.
(h) The Company Stockholders shall have received the
legal opinion of counsel to the Parent, in agreed upon form addressed to such
Stockholders.
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(i) The existing board of directors of Parent shall have
delivered resignations effective as of the Closing in a form reasonably
acceptable to counsel for the Company.
(j) The Reincorporation shall have been completed and
effective and any and all notices or other arrangements shall have been made
with any regulatory authority or other entity to enable Pharmaceuticals to
continue on as a public reporting company after the Reincorporation.
(k) The Company's independent registered public
accounting firm shall have completed the audit of the Company's financial
statements and shall have issued its opinion related thereto.
(l) Each of the Principal Parent Shareholders shall have
executed and delivered the Escrow Agreement.
(m) There shall not have occurred after the date hereof
any event or events that, individually or in the aggregate, constitute a Parent
Material Adverse Effect.
6.3. Conditions to Obligations of Parent and Merger Sub to
Consummate the Transactions. The obligation of Parent and Merger Sub to
consummate the Transactions shall be subject to the satisfaction of the
following conditions, unless waived in writing prior to the Closing Date by
Parent and Merger Sub:
(a) The representations and warranties of the Company
contained herein that are qualified as to materiality or a Company Material
Adverse Effect (or similar concept) shall be true and correct, and those not so
qualified shall be true and correct in all material respects, in each case at
and as of the Effective Time with the same force and effect as though made at
and as of the Effective Time (except to the extent a representation or warranty
speaks specifically as of an earlier date, in which case as of such date).
(b) The Company shall have performed, in all material
respects, all obligations and complied with all covenants required by this
Agreement to be performed or complied with, in all material respects, by it
prior to the Effective Time.
(c) The requisite number of stockholders of the Company
shall have approved by written consent the Merger and this Agreement in
accordance with the DGCL.
(d) There shall not have occurred after the date hereof
any event or events that, individually or in the aggregate, constitute a Company
Material Adverse Effect.
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ARTICLE VII
TERMINATION
7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the stockholders of the Company:
(a) by the mutual written consent of the parties to this
Agreement;
(b) by either the Company or Parent, by written notice to
the other if, for any reason, the Closing has not occurred prior to the close of
business on or before December 31, 2005; provided, however, that (i) the right
to terminate this Agreement pursuant to this Section 7.1(b) shall not be
available to the Company or Parent, as applicable, if the party seeking to
terminate the Agreement is responsible for the delay;
(c) by either the Company or Parent, by written notice to
the other, if any court of competent jurisdiction shall have issued an order,
judgment or decree (other than a temporary restraining order) restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment or decree
shall have become final and nonappealable;
(d) at the election of the Company, if (i) either Parent
or Merger Sub has materially breached any representation, warranty, covenant or
agreement contained in this Agreement, which breach has not been cured on or
before thirty (30) Business Days following delivery of written notice of such
breach by the Company to Parent or Merger Sub; provided, however, that the right
to terminate this Agreement pursuant to this Section 7.1(d) (i) shall not be
available to the Company if the Company at such time, is in material breach of
any representation, warranty, covenant or agreement set forth in this Agreement,
or (ii) if the Company or its counsel is not satisfied with the financial,
business or legal due diligence investigation of Parent or any item or issue
that is discovered in the course of such investigation as determined by the
Company or its counsel in its sole and absolute discretion; and
(e) at the election of Parent, if the Company has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach has not been cured on or before thirty
(30) Business Days following delivery of written notice to the Company of such
breach by Parent or Merger Sub; provided, however, that the right to terminate
this Agreement pursuant to this Section 7.1(e) shall not be available to Parent
if either Parent or Merger Sub, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement.
7.2. Effect of Termination. In the event of the termination of this
Agreement by either the Company or Parent pursuant to Section 7.1, (i) this
Agreement shall forthwith become void and have no further force or effect, and
(ii) there shall be no further liability under this Agreement on the part of
Parent or the Company, other than pursuant to the provisions of Section 5.7,
this Section 7.2 and Section 7.3. In addition, Xxxxxxxx shall immediately cease
using the name "Somanta Pharmaceuticals" or "Somanta," shall promptly dissolve
Somanta Pharmaceuticals, Inc. and shall assign to Somanta any rights it may have
obtained in the name "Somanta" or "Somanta Pharmaceuticals." In connection
24
therewith, Xxxxxxxx agrees to do those acts necessary to effect the foregoing,
including, without limitation, executing any relevant assignment or other
document effecting such transfer of rights.
7.3. Expenses; Termination Fees.
--------------------------
(a) Except as set forth in this Section 7.3, all costs
and expenses incurred in connection with this Agreement and the Transaction
shall be paid by the party incurring such costs and expenses, whether or not the
Merger is consummated; provided, however, that the Principal Parent Shareholder
shall pay any and all costs and expenses incurred by Parent in connection with
this Agreement and the Transactions that exceed a total aggregate amount of
$30,000. For avoidance of doubt, Parent shall pay the first $30,000 of costs and
expenses incurred by Parent in connection with this Agreement and the
Transactions and the Principal Parent Shareholders, jointly and severally, shall
pay all costs and expenses incurred by Parent in connection with this Agreement
and the Transactions thereafter.
(b) The Parent agrees to pay the Company, in addition to
any other remedies that may be available to the Company, an amount equal to the
Company's Expenses if: (i) the Company terminates this Agreement pursuant to
Section 7.1(d)(i), provided that such termination is the result of a breach by
Parent or Merger Sub or any of their respective Representatives of either
Section 5.2 or Section 5.9, or (ii) if the Company executes a definitive
agreement with respect to an Acquisition Transaction with any Person (other than
Company) within two (2) months after the termination of this Agreement.
(c) All payments under this Section 7.3 shall be made by
wire transfer of immediately available funds to an account designated by the
party to whom such payment will be made.
(d) The term "Expenses" shall mean all out-of-pocket
expenses incurred by the Company and its affiliates in connection with this
Agreement, any letter of intent related to this Agreement, and the transactions
and due diligence contemplated hereby, including, without limitation, fees and
expenses of accountants, attorneys and financial advisors.
(e) The parties acknowledge that the agreements contained
in this Section 7.3 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, neither Parent nor the
Company would enter into this Agreement. Accordingly, if either party fails to
promptly pay any amounts owing pursuant to this Section 7.3 when due, then the
party from whom such payment is due shall in addition thereto pay to the other
party all costs and expenses (including fees and disbursements of counsel)
incurred in collecting such amounts, together with interest on such amounts (or
any unpaid portion thereof) from the date such payment was required to be made
until the date such payment is received by the party entitled to such payment
hereunder at the prime rate of Chase Manhattan as in effect from time to time
during such period.
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ARTICLE VIII
INDEMNIFICATION AND ESCROW
8.1. Indemnification. Subject to the terms and conditions contained
herein, the Principal Parent Shareholders (the "Indemnifying Parties") shall
jointly and severally indemnify, defend and hold harmless the Company, Merger
Sub and Parent, and their respective officers, directors, employees, agents,
shareholders and attorneys (all such persons and entities being collectively
referred to as the "Somanta Group" and individually as an "Indemnified Party")
from, against, for and in respect of any Losses (as defined below) to the extent
caused by, arising out of or otherwise related to: (i) any breach or inaccuracy
in any representation or warranty contained in Article IV of this Agreement;
(ii) any agreement or arrangement entered into between Xxxxxxxx or any Principal
Parent Shareholder, on the one hand, and DongXing Group, Co., Ltd. or any of its
affiliates, officers, directors, employees or agents, on the other hand; (iii)
any broker, finder or other agent claiming any form of payment, fee or other
compensation based on any agreement or arrangement entered into by Parent (prior
to the Closing Date) or any Principal Parent Shareholder, on the one hand, and
any such broker, finder or other agent, on the other hand; (iv) the conversion
of the Parent's convertible promissory notes in the principal amount of $ 50,000
that took place on April 1, 2005; (v) any violation of Section 16 of the
Exchange Act by Xxxxxxxx or any Principal Parent Shareholder; (vi) any violation
of the Xxxxxxxx-Xxxxx Act of 2002 by virtue of any loan or advance made to any
officer or director of Xxxxxxxx by Hisbshman; or (vii) the judgment in face
amount of $75,183.43 filed on April 16, 1992 in the New Jersey Superior Court
No. W-060037-88 in which the debtor is listed as Service Lube, Inc. In this
Agreement, the term "Losses" shall refer to any: damages (including
consequential, indirect and special damages), claim, demand, settlement,
judgment, award, fine, penalty, Tax, costs (including costs of investigation)
and expenses (including legal fees and expenses, whether relating to a
third-party claim, an action by an Indemnified Party to enforce its rights under
this Agreement or any other action, proceeding or claim), injury, decline or
diminution in value, lost opportunity, lost profits, liability (contingent or
otherwise) that any member of the Somanta Group may sustain or incur.
8.2. Third Party Claims.
------------------
The following provisions shall apply to any Claim subject to
indemnification which is (i) a suit, action or arbitration proceeding filed or
instituted by any third party, or (ii) any other form of proceeding or
assessment instituted by any Government Entity:
(a) Notice and Defense. The Indemnified Party will give
the Indemnifying Parties prompt written notice of any such Claim (and in any
event within ten days after the service of the summons or citation). After such
notice, the Indemnifying Parties shall take control of the defense and
investigation of such Claim and employ and engage attorneys of their own choice
to handle and defend the same, such attorneys to be reasonably satisfactory to
the Indemnified Party, at the Indemnifying Parties' cost, risk and expense
(unless the named parties to such Claim include both the Indemnifying Parties
and the Indemnified Party, and the Indemnified Party and its counsel determine
in good faith that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party and that joint representation would be inappropriate, in
26
which case the Indemnifying Party shall also pay the reasonable fees and
expenses of counsel selected by the Indemnified Party to represent the
Indemnified Party with respect to such Claim), and to compromise or settle such
Claim, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably withheld.
Failure to give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article VIII, except to the extent the Indemnifying Party
is prejudiced thereby.
(b) Failure to Defend. If the Indemnifying Parties fail
to assume the defense of such Claim within fifteen (15) days after receipt of
notice thereof pursuant to this Section 8.2, the Indemnified Party against which
such Claim has been filed or initiated will (upon delivering notice to such
effect to the Indemnifying Parties) have the right to undertake, at the
Indemnifying Parties' cost and expense, the defense, compromise or settlement of
such Claim on behalf of and for the account and risk of the Indemnifying Parties
and the Indemnifying Parties shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to judgment.
8.3. No Contribution. Each Principal Parent Shareholder waives,
acknowledges and agrees that such Principal Parent Shareholder shall not have
and shall not exercise or assert or attempt to exercise or assert, any right of
contribution or right of indemnity or any other right or remedy against the
Parent in connection with the obligations of indemnification under this Article
VIII or any other liability to which such Principal Parent Shareholder may
become subject under this Agreement of the transactions contemplated hereby.
8.4. Payment. Subject to the limitations set forth in this Article
VIII, the Indemnifying Party shall be obligated to pay the Indemnified Party any
amount due under this Article VIII. Upon judgment, determination, settlement or
compromise of any third party Claim, the Indemnifying Party shall pay promptly
on behalf of the Indemnified Party, and/or to the Indemnified Party in
reimbursement of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
8.5. Time Limitation on Indemnification. Except for any willful or
knowing breach or misrepresentation, as to which claims may be brought without
limitation as to time, no claim or action shall be brought by an Indemnified
Party against an Indemnifying Party under this Article VIII after the lapse of
twenty-four (24) months following the Closing Date.
8.6. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing.
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ARTICLE IX
MISCELLANEOUS
9.1. Certain Definitions; Rules of Construction. Definitions shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed to be references to Articles
and Sections of, and Exhibits and Schedules to, this Agreement unless the
context shall otherwise require. All Exhibits and Schedules attached hereto
shall be deemed incorporated herein as if set forth in full herein and, unless
otherwise defined therein, all terms used in any Exhibit or Schedule shall have
the meaning ascribed to such term in this Agreement. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise expressly
provided herein, any agreement, plan, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, plan, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and references to all attachments thereto and instruments
incorporated therein. For the purposes of this Agreement, the following terms
shall have the following meanings:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly or indirectly controls, is controlled by, or is under common
control with, such first Person. The term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Applicable Law" means any Federal, state or local law, regulation,
code, ordinance, statute, rule, Order, judgment, decree or other requirement of
a Governmental Body applicable to the business of the Company, Parent or Merger
Sub, as the context may require.
"Benefit Plan" means each deferred compensation, executive
compensation, incentive compensation, stock purchase or other stock-based
compensation plan, severance or termination pay, holiday, vacation or other
bonus plan or practice, hospitalization or other medical, life or other
insurance, supplemental unemployment benefits, profit sharing, pension, or
retirement plan, program, agreement, commitment or arrangement, and each other
employee Benefit Plan, program, agreement or arrangement, including, without
limitation, each "employee Benefit Plan" as such term is defined under Section
3(3) of ERISA.
"Business Day" means any day other than Saturday or Sunday or any other
day on which banks in the State of New York are permitted or obligated to be
closed for business.
"Claim" means any action, suit, claim, complaint, demand, litigation or
similar proceeding.
28
"Environmental Costs" means, without limitation, any actual or
potential investigation, cleanup, remediation, removal, or other response costs
(which without limitation shall include costs to cause a Person to come into
compliance with Environmental Laws), expenses (including without limitation fees
and disbursements of consultants, counsel, and other experts in connection with
any environmental investigation, testing, audits or studies, response actions,
or litigation), losses, liabilities or obligations (including without
limitation, liabilities or obligations under any lease or other contract),
payments, damages (including without limitation any actual, punitive or
consequential damages under any statutory laws, common law cause of action or
contractual obligations or otherwise, including without limitation damages (i)
of third parties for personal injury or property damage, or (ii) to natural
resources), civil or criminal fines or penalties, judgments, and amounts paid in
settlement arising out of or relating to or resulting from any Environmental
Matter.
"Environmental Laws" means all applicable statutes, rules, regulations,
ordinances, orders, decrees, judgments, permits, licenses, consents, approvals,
authorizations, and governmental requirements or directives or other obligations
lawfully imposed by Governmental Body under federal, state, local or common law,
indemnity agreements or other contractual obligations, in each case, pertaining
to the protection of the environment, protection of public health, protection of
worker health and safety, the treatment, emission and/or discharge of gaseous,
particulate and/or effluent pollutants, and/or the handling of hazardous
materials, including without limitation, the Clean Air Act, 42 U.S.C. ss. 7401,
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. ss. 9601, et seq., the Federal Water Pollution
Control Act, 33 U.S.C. ss. 1321, et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. ss. 6901, et seq. ("RCRA"), and the Toxic Substances Control Act, 15
U.S.C. ss. 2601, et seq.
"Environmental Matter" means any matter arising out of, relating to, or
resulting from pollution, contamination, protection of the environment, human
health or safety, health or safety of employees, sanitation, and any matters
relating to emissions, discharges, disseminations, releases or threatened
releases, of Hazardous Substances into the air (indoor and outdoor), surface
water, groundwater, soil, land surface or subsurface, buildings, facilities,
real or personal property or fixtures or otherwise arising out of, relating to,
or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling, release or threatened release of
Hazardous Substances.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Facilities" means all real property owned, leased, operated or
controlled by a Person and any buildings, facilities, machinery, equipment,
furniture, leasehold and other improvements, fixtures, vehicles, structures, any
related capital items and other tangible property located on, in, under, or
above the real property of such Person.
"Governmental Body" means any court, administrative or regulatory
agency or commission or other governmental authority of competent jurisdiction.
29
"Government Agency" means (i) the United States Government, including
all departments and agencies of any branch of the United States Government, all
independent agencies or instrumentalities and all non-appropriated fund
activities within the United States Government and United States Government
corporations, and (ii) any state or local government, including all departments,
agents, agencies, branches, independent agencies or instrumentalities,
activities, and non-appropriated fund activities of or within a state or local
government and all state or local government corporations.
"Hazardous Substances" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, Xxxxxx Amendment
materials, lead, asbestos and asbestos-containing materials ("ACM"), building
construction materials and debris, polychlorinated biphenyls ("PCBs") and
PCB-containing equipment, radon and other radioactive elements, ionizing
radiation, electromagnetic field radiation and other non-ionizing radiation,
sonic forces and other natural forces, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and
urea formaldehyde foam insulation) that are regulated by any Environmental Laws.
"Intellectual Property" means all of the following as they are used in
connection with the business of a Person as presently conducted and as they
exist in all jurisdictions throughout the world, in each case, to the extent
owned by such Person:
(a) patents, patent applications and inventions, designs
and improvements described and claimed therein, patentable inventions and other
patent rights (including any divisions, continuations, continuations-in-part,
substitutions, or reissues thereof, whether or not patents are issued on any
such applications and whether or not any such applications are modified,
withdrawn, or resubmitted);
(b) trademarks, service marks, trade dress, trade names,
brand names, designs, logos, or corporate names, whether registered or
unregistered, and all registrations and applications for registration thereof;
(c) copyrights and mask works, including all renewals and
extensions thereof, copyright registrations and applications for registration
thereof;
(d) trade secrets, confidential business information and
other proprietary information, concepts, ideas, designs, research or development
information, processes, procedures, techniques, technical information,
specifications, operating and maintenance manuals, engineering drawings,
methods, know-how, technical data and databases, discoveries, inventions,
modifications, extensions, improvements, and other proprietary rights (whether
or not patentable or subject to copyright, mask work, or trade secret
protection);
(e) computer software programs, including, without
limitation, all source code, object code, and documentation related thereto; and
(f) Internet addresses, domain names, web sites, web
pages and similar rights and items.
30
"Knowledge," with respect to any Person, means the actual knowledge of
any of the officers of such Person after diligent inquiry.
"Lien" means any mortgage, pledge, lien, charge, easement, restrictive
covenant, encumbrance, voting or transfer restriction, or security interest.
"Material Contract" means all of the following contracts, agreements,
understandings or arrangements, whether or not in writing, to which a Person is
a party or by or to which any of them or any of their assets or properties are
bound or subject, with respect to: (i) any current or former officer, director,
stockholder, employee, consultant, agent or other representative or with an
entity in which any of the foregoing is a contracting person; (ii) any labor
union or association representing any employee; (iii) the purchase or sale of
materials, supplies, equipment, merchandise or services that contain an
escalation, renegotiation or redetermination clause calling for an aggregate
purchase or sale price or payments of more than $5,000 in any one case (or in
the aggregate, in the case of any related series of contracts and other
agreements); (iv) the sale of any of its assets or properties other than in the
ordinary course of business or for the grant to any person of any preferential
rights to purchase any of its assets or properties; (v) joint ventures,
strategic alliances or partnerships; (vi) an indemnity or sharing of any tax
liability of any third party; (vii) the purchase or sale price or payments of
more than $5,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) that cannot be canceled by
such Person with less than ninety days' notice without incurring liability,
premium or penalty; (viii) the sharing of fees, the rebating of charges or other
similar arrangements; (ix) obligations or liabilities of any kind to holders of
such Person securities as such; (x) covenants of such Person not to compete in
any line of business or with any person in any geographical area or covenants of
any other person not to compete with the such Person in any line of business or
in any geographical area; (xi) the acquisition by the such Person of any
operating business, including the assets or the capital stock of any other
person; (xii) options for the purchase of any asset, tangible or intangible,
requiring the payment to any person of a commission or fee; (xiii) the payment
of fees or other consideration on behalf of any officer or director of such
Person or to any other entity in which any of the foregoing has an interest;
(xiv) the borrowing of money; (xv) any purchase price or sale price or payments
of more than $5,000 in any one case (or in the aggregate, in the case of any
related series of contracts and other agreements) whether or not made in the
ordinary course of business; (xvi) the purchase or sale of material, supplies,
equipment, merchandise, intellectual property, real property, assets (whether
tangible or intangible) or services where the purchase or sale price, the
estimated purchase or sale price, the maximum order price, the maximum contract
price, or the ceiling price (whether in one case or in the aggregate, in the
case of a related series of contracts or other agreements) is more than $5,000,
and a party to the contract or the known end or ultimate user, seller, or
purchaser is any Government Agency; (xvii) any schedule contracts with the
United States General Services Administration or any multiple award schedule
contracts, basic agreements, basic ordering agreements, or blanket purchase
agreements with any Government Agency; and (xviii) any other contract, agreement
or arrangement that is material to the business of a Person.
"Person" means any individual, corporation, partnership, limited
liability company or partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government (including any agency
or political subdivision thereof).
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"Principal Parent Shareholders" means: (i) Xxxxxxxx Xxxxxxxx, (ii)
Xxxxxxxx Xxxxxxxx, (iii) Xxxxx Xxxxxxxx, (iv) Xxxxxxx Xxxxxxxx, (v) Xxxxxxx
Xxxxxxxx, and (vi) Xxxxxxx Xxxxxxxx.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" of any Person means any corporation, partnership, joint
venture or other legal entity of which such Person (either directly or through
or together with any other Subsidiary of such Person), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or similar governing body of such corporation, partnership, joint venture or
other legal entity.
"Tax" or "Taxes" means any taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added, transfer,
transfer gains, inventory, capital stock, license, withholding, payroll,
employment, social security (or similar), unemployment, excise, severance,
stamp, occupation, real or personal property, premium, windfall profits,
environmental (including taxes under Section 59A of the Code), customs duties,
registration, alternative or add-on minimum, and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
thereon whether disputed or not, imposed by any taxing authority (Federal,
state, local or foreign) and shall include any transferee liability in respect
of Taxes.
"Tax Return" means any returns, declarations, reports, estimates,
information returns or statements relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement and each of the agreements
and instruments contemplated hereby or thereby, including, without limitation,
the Certificate of Merger, the officer's certificate to be delivered by Parent
and Merger Sub pursuant to Section 6.2(c), and all documents, instruments or
agreements attached to or contemplated by any of the foregoing.
9.2. Waivers and Amendments. Subject to Applicable Law, this
Agreement may be amended, superseded, canceled, renewed or extended, and the
terms hereof may be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by or on behalf of the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
9.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS OF SUCH STATE, APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
32
9.4. Notices. Any notices or other communications required under
this Agreement shall be in writing and be effective upon delivery if given by
hand delivery or facsimile transmission or on the next day after given if
delivered by overnight courier, and shall be given at the addresses or facsimile
numbers set forth below, with copies provided as follows:
(a) if to the Company or Surviving Corporation:
Somanta Incorporated
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxx, Chairman
Fax: 000-000-0000
with a copy to:
Xxxxx & Xxxxxxx LLP
000 X. Xxxxxxxx
00xx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxx, Esq.
Fax: 000-000-0000
(b) if to Parent:
Xxxxxxxx Optical Corp.
000 Xxxxx Xxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxx
Fax: _________________
with copies to:
Xxxxxxx & Xxxxxx, P.C.
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxxx
Fax: 000-000-0000
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties to this Agreement in the manner herein
proved.
9.5. Section Headings. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
33
9.6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which,
together, shall constitute one and the same instrument.
9.7. Assignments. This Agreement, by operation of law or otherwise,
shall be binding upon and inure to the benefit of successors and legal
representatives of the parties hereto.
9.8. Entire Agreement; Enforceability. This Agreement and the
Transaction Documents, including the Exhibits and Schedules attached hereto and
thereto: (i) constitute the entire agreement among the parties with respect to
the Transactions and supersedes all prior agreements and understandings, both
written and oral, among the parties, with respect to the subject matter hereof
and thereof; and (ii) shall be binding upon, and are solely for the benefit of
each party hereto and nothing in this Agreement is intended to confer upon any
other Person any rights or remedy of any nature whatsoever hereunder or by
reason of this Agreement or any of the Transaction Documents.
9.9. Severability. Any term or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without rendering invalid, illegal or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be duly executed as of the date first above written.
SOMANTA INCORPORATED SOMANTA PHARMACEUTICALS, INC.
By: /s/ XXXXXXXX X. XXXXXXXXX By: /s/ XXXXXXXX XXXXXXXX
-------------------------------- ----------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx Name: Xxxxxxxx Xxxxxxxx
Title: Executive Chairman Title: President
XXXXXXXX OPTICAL CORP. SOMANTA MERGER SUB, INC.
By: /s/ XXXXXXXX XXXXXXXX By: /s/ XXXXXXXX XXXXXXXX
-------------------------------- ----------------------------------
Name: Xxxxxxxx Xxxxxxxx Name: Xxxxxxxx Xxxxxxxx
Title: President Title: President
"PRINCIPAL PARENT SHAREHOLDERS"
By: /s/ XXXXXXXX XXXXXXXX
--------------------------------
Xxxxxxxx Xxxxxxxx
By: /s/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx
By: /s/ XXXXX XXXXXXXX
--------------------------------
Xxxxx Xxxxxxxx
By: /s/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx
By: /s/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx
By: /s/ XXXXXXX XXXXXXXX
--------------------------------
Xxxxxxx Xxxxxxxx
35
