MERGER AGREEMENT
EXHIBIT
10.1
MERGER
AGREEMENT
This
merger agreement is entered into as of January 30th, 2007, between Velcera
Pharmaceuticals, Inc.,
a
Delaware corporation (“Velcera”),
Denali
Sciences, Inc., a
Delaware corporation (“Denali”),
and
Denali Acquisition
Corp.,
a
Delaware corporation (“MergerCo”).
The
Boards of Directors of Velcera, Denali and MergerCo have determined that it
is
in the best interests of those corporations and their respective stockholders
to
consummate the merger of MergerCo with and into Velcera with Velcera as the
surviving corporation (the “Merger”);
Denali,
as the sole stockholder of MergerCo, has approved this agreement, the Merger
and
the transactions contemplated by this agreement pursuant to action taken by
written consent in accordance with the requirements of the Delaware General
Corporation Law (“DGCL”)
and
the Bylaws of MergerCo;
Pursuant
to the Merger, among other things, the outstanding shares of Velcera common
stock shall be converted into an identical number of shares of Denali common
stock upon the Effective Time (as defined herein);
The
parties to this agreement intend to adopt this agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code
of 1986, as amended (the “Code”)
and
the regulations promulgated thereunder, and intend that the Merger and the
transactions contemplated by this agreement be undertaken pursuant to that
plan;
and
The
parties to this agreement intend that the Merger qualify as a “reorganization,”
within the meaning of Section 368(a) of the Code, and that Denali, MergerCo
and
Velcera will each be a “party to a reorganization,” within the meaning of
Section 368(b) of the Code, with respect to the Merger.
The
parties therefore agree as follows:
ARTICLE I
MERGER
Subject
to the satisfaction or waiver of the conditions set forth in Article VI,
at the
Effective Time, (i) MergerCo will merge with and into Velcera, and (ii) Velcera
will become a wholly-owned subsidiary of Denali. The term “Surviving
Company”
as
used
herein shall mean Velcera, as a wholly-owned subsidiary of Denali after giving
effect to the Merger. The Merger will be effected pursuant to a certificate
of
merger in accordance with the provisions of, and with the effect provided in,
Section 251 of the DGCL. The Merger shall be effective when a certificate of
merger, in substantially the form attached hereto as Exhibit
A,
is
filed with the Delaware Secretary of State (the “Effective
Time”).
As
used herein, the term “Effective
Date”
shall
mean the date on which the certificate of merger is filed with the Delaware
Secretary of State.
1.1 Effects
of Merger.
(a) From
and
after the Effective Time and until further amended in accordance with law,
(i)
the Certificate of Incorporation of Velcera as in effect immediately prior
to
the Effective Time shall be the Certificate of Incorporation of the Surviving
Company, and (ii) the Bylaws of Velcera as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Company.
(b) Denali,
Velcera and MergerCo shall each use their best efforts to take all such action
as may be necessary or appropriate to effectuate the Merger in accordance with
the DGCL at the Effective Time. If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
agreement and to vest the Surviving Company with full right, title and
possession to all properties, rights, privileges, immunities, powers and
franchises of either Velcera or MergerCo, the officers of the Surviving Company
are fully authorized in the name of Denali, Velcera and MergerCo or otherwise
to
take, and shall take, all such lawful and necessary action.
(c) Subject
to the provisions of Article VI
and
Article VII hereof,
the closing of the transactions contemplated hereby (the “Closing”)
shall
take place on or before March 31, 2007, at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx
Xxxx, Xxx Xxxx, or such other time and place as Velcera and Denali mutually
agree (the “Closing
Date”).
On
the Closing Date, to effect the Merger, the parties hereto will cause the
Certificate of Merger to be filed with the Delaware Secretary of State in
accordance with the DGCL.
1.2 Effect
on Velcera Capital Stock and MergerCo Capital Stock.
To
effectuate the Merger, and subject to the terms of this agreement, at the
Effective Time:
(a) Each
share of Velcera common stock issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares) shall automatically be converted
into the same number of shares of Denali common stock;
(b) All
shares of common stock of MergerCo issued and outstanding immediately prior
to
the Effective Time will be converted into and become one validly issued, fully
paid and nonassessable share of common stock of the Surviving Company.
(c) On
the
Effective Date, Denali shall assume all of Velcera’s rights and obligations with
respect to outstanding stock options (the “Options”)
issued
pursuant to Velcera’s 2003 Stock Incentive Plan (the “Stock
Incentive Plan”).
Each
Option shall, from and after the Effective Time, evidence the right to purchase
a number of shares of Denali common stock equal to the same number of shares
of
Velcera common stock into which such Option is exercisable immediately prior
to
the Effective Date.
(d) On
the
Effective Date, Denali shall assume the rights and obligations with respect
to
outstanding warrants (the “Warrants”),
to
purchase shares of Velcera common stock. Each Warrant shall, from and after
the
Effective Time, evidence the right to purchase a number of shares of Denali
common stock equal to the same number of shares of Velcera common stock into
which such Warrant is exercisable immediately prior to the Effective Date.
1.3 Rights
of Holders of Velcera Common Stock.
On
and
after the Effective Date and until surrendered for exchange, each outstanding
stock certificate that immediately prior to the Effective Date represented
shares of Velcera common stock (except Dissenting Shares) shall be deemed for
all purposes, to evidence ownership of and to represent the same number of
shares of Denali common stock into which such shares of Velcera common Stock
shall have been converted pursuant to this agreement. The record holder of
each
such outstanding certificate representing shares of Velcera common stock, shall,
after the Effective Date, be entitled to vote the shares of Denali common stock
into which such shares of Velcera common stock shall have been converted on
any
matters on which the holders of record of Denali common stock, as of any date
subsequent to the Effective Date, shall be entitled to vote. In any matters
relating to such certificates of Velcera common stock, Denali may rely
conclusively upon the record of stockholders maintained by Velcera containing
the names and addresses of the holders of record of Velcera common stock on
the
Effective Date.
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1.4 Procedure
for Exchange of Velcera Common Stock.
(a) After
the
Effective Time, holders of certificates evidencing outstanding shares of Velcera
common stock (except Dissenting Shares), upon surrender of such certificates
to
the Secretary of Denali, shall be entitled to receive certificates representing
the number of shares of Denali common stock. Denali shall not be obligated
to
deliver any such shares of Denali common stock to which any former holder of
shares of Velcera common stock is entitled until such holder surrenders the
certificate or certificates representing such shares. Upon surrender, each
certificate evidencing Velcera common stock shall be canceled. If there is
a
transfer of Velcera common stock ownership which is not registered in the
transfer records of Velcera, a certificate representing the proper number of
shares of Denali common stock may be issued to a person other than the person
in
whose name the certificate so surrendered is registered if: (1) upon
presentation to the Secretary of Denali, such certificate shall be properly
endorsed or otherwise be in proper form for transfer, (2) the person requesting
such payment shall pay any transfer or other taxes required by reason of the
issuance of shares of Denali common stock to a person other than the registered
holder of such certificate or establish to the reasonable satisfaction of Denali
that such tax has been paid or is not applicable, and (3) the issuance of such
Denali common stock shall not, in the sole discretion of Denali, violate the
requirements of the Regulation D “safe harbor” of the Securities Act of 1933, as
amended, including the rules and regulations promulgated thereunder (the
“Securities
Act”)
with
respect to the private placement of Denali common stock that precedes from
the
Merger.
(b) All
shares of Denali common stock issued upon the surrender of Velcera common stock
in accordance with the above terms shall be deemed to have been issued and
paid
in full satisfaction of all rights pertaining to such shares of Velcera common
stock.
(c) Shares
of
Denali common stock issued pursuant to the Merger will not be transferable
except (1) pursuant to an effective registration statement under the
Securities Act or (2) upon receipt by Denali of a written opinion of
counsel for the holder reasonably satisfactory to Denali to the effect that
the
proposed transfer is exempt from the registration requirements of the Securities
Act and relevant state securities laws. Restrictive legends shall be placed
on
all certificates representing shares of Denali common stock containing the
identical language to the restrictive legend placed on each corresponding
Velcera common stock certificate being surrendered. The rights and obligations,
including without limitation, the restrictions on transferability, of Velcera
set forth in the subscription agreements between Velcera and the Velcera
stockholders who purchased common stock pursuant to Velcera’s 2004 private
placement offering of 2,031,626 shares of common stock will inure to the benefit
of Denali.
(d) In
the
event any certificate for Velcera common stock has been lost, stolen or
destroyed, Denali shall issue and pay in exchange for such lost, stolen or
destroyed certificate, promptly following its receipt of an affidavit of that
fact by the holder thereof, such shares of the Denali common stock.
1.5 Dissenting
Shares.
Shares
of common stock of Velcera held by stockholders of Velcera who have properly
exercised and preserved appraisal rights with respect to those shares in
accordance with Section 262 of the DGCL (“Dissenting
Shares”)
shall
not be converted into shares of Denali common stock pursuant to Section
1.2
above,
and the holders thereof shall be entitled only to such rights as are granted
by
Section 262 of the DGCL. Each holder of Dissenting Shares who becomes entitled
to payment for such shares pursuant to Section 262 of the DGCL shall receive
payment from the Surviving Company in accordance with such laws; provided,
however,
that if
any holder of Dissenting Shares shall have effectively withdrawn such holder’s
demand for appraisal of such shares or lost such holder’s right to appraisal and
payment of such shares under Section 262 of the DGCL, such holder shall forfeit
the right to appraisal of such shares and each such share shall thereupon be
deemed to have been canceled, exchanged, as of the Effective Time, into one
share of Denali common stock as provided in Section
1.2
above.
Any payments with respect of Dissenting Shares will be deemed made by the
Surviving Company.
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1.6 Directors
and Officers of the Surviving Corporation.
From and
after the Effective Time, the directors and officers of the Surviving Company
shall be the persons who were directors and officers of Velcera immediately
prior to the Effective Time, respectively. These directors and officers of
the
Surviving Company shall hold office for the term specified in, and subject
to
the provisions contained in, the Certificate of Incorporation and Bylaws of
the
Surviving Company and applicable law.
1.7 Directors
and Officers of Denali.
At the
Closing, the board of directors of Denali shall, subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended, including
the
rules and regulations promulgated thereunder (the “Exchange
Act”),
take
the following action, to be effective upon the Effective Time: (i) increase
the
size of the Board of Directors of Denali to seven (7) persons; (ii) elect to
the
board of directors of Denali the persons who were directors of Velcera
immediately prior to the Closing; and (iii) appoint as the officers of Denali
those who were the officers of Velcera immediately prior to the Closing, or,
in
either case with regard to clauses (ii) and (iii), such other persons designated
by Velcera. All of the persons serving as directors of Denali immediately prior
to the Closing shall resign immediately following the election of the new
directors, and the officers of Denali immediately prior to the Closing shall
resign at the Closing from all of their positions with Denali, all subject
to
compliance with Rule 14f-1 promulgated under the Exchange Act. Subject to
applicable law, Denali shall take all action reasonably requested by Velcera,
but consistent with the Certificate of Incorporation and Bylaws of Denali,
that
is reasonably necessary to effect any such election or appointment of the
designees of Velcera to Denali’s board of directors, including promptly
hereafter mailing to Denali’s stockholders an information statement containing
the information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. Velcera shall supply Denali all information with respect
to it and its nominees, officers, directors and Affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section
1.7
are in
addition to and shall not limit any rights which Velcera or any of its
Affiliates may have as a holder or beneficial owner of shares of capital stock
of Denali as a matter of law with respect to the election of directors or
otherwise. “Affiliate”
has
the
meaning as defined in Rule 12b-2 promulgated under the Exchange Act, as such
regulation is in effect on the date hereof.
ARTICLE II
REPRESENTATIONS
AND WARRANTIES OF DENALI AND MERGERCO
Denali
and MergerCo hereby represent and warrant to Velcera as follows:
2.1 Organization
and Qualification
.
Denali
and MergerCo each are, and on the Effective Date will be, corporations duly
organized, validly existing and in good standing under the laws of the State
of
Delaware, and each has, and on the Effective Date will have, the requisite
corporate power to carry on their respective businesses as now conducted. The
copies of the Certificate of Incorporation and Bylaws of Denali and MergerCo
that have been made available to Velcera on or prior to the date of this
agreement are correct and complete copies of such documents as in effect as
of
the date hereof, and shall be in effect on the Effective Date.
2.2 Authority
Relative to this Agreement; Non-Contravention.
Each
of
Denali and MergerCo has the requisite corporate power and authority to enter
into this agreement, and to carry out its obligations hereunder. The execution
and delivery of this agreement by Denali and MergerCo, and the consummation
by
Denali and MergerCo of the transactions contemplated hereby have been duly
authorized by the boards of directors of Denali and MergerCo. No further
corporate proceedings on the part of Denali or MergerCo are necessary to
authorize the execution and delivery of this agreement and the consummation
of
the transactions contemplated hereby. This agreement has been duly executed
and
delivered by Denali and MergerCo and, assuming it is a valid and binding
obligation of Velcera, constitutes a valid and binding obligation of Denali
and
MergerCo enforceable in accordance with its terms except as enforcement may
be
limited by general principles of equity whether applied in a court of law or
a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors’ rights and remedies generally. Except for (a) approvals under
applicable Blue Sky laws
and the
filing of Form D with the Securities and Exchange Commission (“SEC”)
and (b)
the filing of the Certificate of Merger with the Delaware Secretary of State,
no
authorization, consent or approval of, or filing with, any public body, court
or
authority is necessary on the part of Denali or MergerCo for the consummation
by
Denali or MergerCo of the transactions contemplated by this agreement, except
for such authorizations, consents, approvals and filings as to which the failure
to obtain or make the same would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect on Denali or MergerCo, or adversely affect
the
consummation of the transactions contemplated hereby. For the purposes of this
agreement “Material
Adverse Effect”
shall,
with respect to an entity, mean a material adverse effect on the business,
operations, results of operations or financial condition of such entity on
a
consolidated basis.
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2.3 No
Conflicts.
Neither
Denali nor MergerCo is subject to, or obligated under, any provision of (a)
their respective Certificates of Incorporation or Bylaws, (b) any agreement,
arrangement or understanding, (c) any license, franchise or permit, nor (d)
any
law, regulation, order, judgment or decree, which would conflict with, be
breached or violated, or in respect of which a right of termination or
acceleration or any security interest, charge or encumbrance on any of their
respective assets would be created, by the execution, delivery or performance
of
this agreement or the consummation of the transactions contemplated hereby,
other than any such conflicts, breaches, violations, rights of termination
or
acceleration or security interests, charges or encumbrances which, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect
on
Denali
or
MergerCo.
2.4 Capitalization.
(a) As
of the
date hereof, Denali is, and on the Effective Date will be, authorized to issue
75,000,000 shares of common stock, par value $.001 per share, and 10,000,000
shares of preferred stock, par value $.001 per share, of which 125,000 shares
of
common stock and no shares of preferred stock are currently issued and
outstanding. The issued and outstanding shares of common stock of Denali are,
and on the Effective Date will be, duly authorized, validly issued, fully paid
and nonassessable and not issued in violation of any preemptive rights and,
to
Denali’s Knowledge (as defined below), free from any restrictions on transfer
(other than restrictions under the Securities Act or state securities laws)
or
any option, lien, pledge, security interest, encumbrance or charge of any kind.
Denali has, and on the Effective Date will have, no other equity securities
or
securities containing any equity features authorized, issued or outstanding.
There are no agreements or other rights or arrangements existing which provide
for the sale or issuance of capital stock by Denali and there are no rights,
subscriptions, warrants, options, conversion rights or agreements of any kind
outstanding to purchase or otherwise acquire from Denali any shares of capital
stock or other securities of Denali of any kind, and there will not be any
such
agreements prior to or on the Effective Date. There are, and on the Effective
Date there will be, no agreements or other obligations (contingent or otherwise)
which may require Denali to repurchase or otherwise acquire any shares of its
capital stock other
than the Redemption Agreement (as defined below).
For the
purposes of this agreement, “Knowledge”
means,
with respect to an individual, that such individual is actually aware of a
particular fact or other matter, with no obligation to conduct any inquiry
or
other investigation to determine the accuracy of such fact or other matter.
A
Person other than an individual shall be deemed to have Knowledge of a
particular fact or other matter if the officers, directors or other management
personnel of such Person had Knowledge of such fact or other matter.
“Person”
means
any individual, corporation (including any non-profit corporation), general
or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, governmental authority or other
entity.
(b) Denali
is
not a party to, and, to Denali’s Knowledge, there do not exist, any voting
trusts, proxies, or other contracts with respect to the voting of shares of
capital stock of Denali.
5
(c) The
authorized capital of MergerCo consists of 1,000 shares of common stock, par
value $.001 per share, all of which are, and on the Effective Date will be,
issued and outstanding and held of record by Denali. The issued and outstanding
shares of capital stock of MergerCo are, and on the Effective Date will be,
duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive rights, and, to Denali’s Knowledge, free
from any restrictions on transfer (other than restrictions under the Securities
Act or state securities laws) or any option, lien, pledge, security interest,
encumbrance or charge of any kind. There are no rights, subscriptions, warrants,
options, conversion rights or agreements of any kind outstanding to purchase
or
otherwise acquire from MergerCo any shares of capital stock or other securities
of MergerCo of any kind, and there will not be any such agreements prior to
or
on the Effective Date. There are, and on the Effective Date there will be,
no
agreements or other obligations (contingent or otherwise) which may require
MergerCo to repurchase or otherwise acquire any shares of its capital stock.
2.5 Exchange
Act Reports.
Prior
to
the date of this agreement, Velcera has reviewed (a) Denali’s Registration
Statement on Form 10-SB/A as filed with the SEC on December 30, 2005 (b)
Denali’s Annual Report on Form 10-KSB for the fiscal year ended December 31,
2005, and (c) Denali’s Quarterly Reports on Form 10-QSB for the quarters ended
March 31, 2006, June 30, 2006, and September 30, 2006, as filed with the SEC
(collectively, the “Denali
SEC Filings”).
As of
their respective dates or as subsequently amended prior to the date hereof,
each
of the Denali SEC Filings (i) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading and (ii) complied as to form in all material respects
with the applicable rules and regulations of the SEC. Since its Form 10-SB/A,
Denali has timely filed all reports that it has been required to file with
the
SEC pursuant to Section 13(a), 14(a), 14(c) and 15(d) of the Exchange Act.
The
financial statements (including footnotes thereto) included in or incorporated
by reference into the Denali SEC Filings have been prepared in accordance with
United States generally accepted accounting principles as in effect from time
to
time (“GAAP”)
applied on a consistent basis during the periods involved (except as otherwise
noted therein) and fairly present, in all material respects, the financial
condition of Denali as of the dates thereof and results of operations for the
periods referred to therein.
2.6 Litigation.
There
are
no actions, suits, proceedings, orders or investigations pending or, to the
Knowledge of Denali, threatened against Denali, MergerCo, or Denali’s officers,
directors, employees or Affiliates, individually or in the aggregate, at law
or
in equity, or before or by any federal, state or other governmental department,
court, commission, board, bureau, agency or instrumentality, domestic or
foreign, and to the Knowledge of Denali, there is no reasonable basis for any
proceeding, claim, action or governmental investigation directly or indirectly
involving Denali, MergerCo, or Denali’s officers, directors, employees or
affiliates, individually or in the aggregate. Neither Denali nor MergerCo is
a
party to any order, judgment or decree issued by any federal, state or other
governmental department, court, commission, board, bureau, agency or
instrumentality, domestic or foreign.
2.7 Subsidiaries.
MergerCo is Denali’s only subsidiary, direct or indirect.
2.8 No
Brokers or Finders.
Neither Denali, MergerCo, nor any of their officers, directors, employees or
Affiliates have employed any broker, finder, investment banker or investment
advisor or Person performing a similar function, or incurred any liability
for
brokerage commissions, finders’ fees, investment advisory fees or similar
compensation in connection with the Merger.
2.9 Tax
Matters.
Denali
has timely filed (or has had timely filed on its behalf) all returns,
declarations, reports, estimates, information returns, and statements, including
any schedules and amendments to such documents (“Denali
Returns”),
required to be filed or sent by it in respect of any taxes or required to be
filed or sent by it by any taxing authority having jurisdiction. All such Denali
Returns are complete and accurate in all material respects and Denali has timely
and properly paid (or has had paid on its behalf) all taxes required to be
paid
by it.
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2.10 Contracts
and Commitments.
Except as set forth on Schedule
2.10,
Denali
is not a party to any contract, agreement, arrangement or other understanding,
whether written or oral.
2.11 Compliance
with Laws.
Except
for any noncompliance that would not reasonably be expected to have a Material
Adverse Effect on Denali, Denali and its officers, directors, agents and
employees have complied with all applicable laws, regulations and other
requirements, and no claims have been filed against Denali, and Denali has
not
received any notice, alleging a violation of any such laws, regulations or
other
requirements. Denali is not relying on any exemption from or deferral of any
such applicable law, regulation or other requirement that would not be available
to Velcera after it acquires Denali’s properties, assets and
business.
2.12 Validity
of the Denali Common Stock.
The
shares of Denali common stock to be issued to holders of Velcera common stock
pursuant to this agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable.
2.13 No
Business
Operations.
Since
their respective inception dates, neither Denali, nor MergerCo, have had any
employees, revenues, or conducted any business operations.
2.14 Real
Property.
Denali
does not own or lease any real property.
2.15 Insurance.
Denali
does not own or maintain any insurance policies.
2.16 No
Undisclosed Liabilities.
Except
as
set forth on Schedule
2.17
hereto,
Denali has no liabilities, whether accrued, absolute, contingent, unliquidated
or otherwise.
2.17 Tax
Free
Reorganization.
Neither
Denali nor, to Denali’s Knowledge, any of its Affiliates has through the date of
this agreement taken or agreed to take any action that would prevent the Merger
from qualifying as a reorganization under Section 368(a) of the Code.
2.18 Full
Disclosure.
The
representations and warranties of Denali and MergerCo contained in this
agreement (and in any schedule, exhibit, certificate or other instrument to
be
delivered under this agreement) are true and correct in all material respects,
and such representations and warranties do not omit any material fact necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading. There is no fact of which Denali or
MergerCo has Knowledge that has not been disclosed to Velcera pursuant to this
agreement, including the schedules hereto, all taken together as a whole, which
has had or could reasonably be expected to have a Material Adverse Effect on
Denali or MergerCo, or materially adversely affect the ability of Denali or
MergerCo to consummate in a timely manner the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF VELCERA
3.1 Organization
and Qualification.
Velcera
is, and on the Effective Date will be, a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has,
and on the Effective Date will have, the requisite corporate power to carry
on
its business as now conducted. The copies of the Certificate of Incorporation
and Bylaws of Velcera that has been made available to Denali and MergerCo on
or
prior to the date of this agreement are correct and complete copies of such
documents as in effect as of the date hereof, and shall be in effect on the
Effective Date.
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3.2 Authority
Relative to this Agreement; Non-Contravention.
Velcera
has the requisite corporate power and authority to enter into this agreement,
and to carry out its obligations hereunder. The execution and delivery of this
agreement by Velcera, and the consummation by Velcera of the transactions
contemplated hereby have been duly authorized by its board of directors. No
further corporate proceedings on the part of Velcera are necessary to authorize
the execution and delivery of this agreement and the consummation of the
transactions contemplated hereby. This agreement has been duly executed and
delivered by Velcera and, assuming it is a valid and binding obligation of
Denali and MergerCo, constitutes a valid and binding obligation of Velcera
enforceable in accordance with its terms except as enforcement may be limited
by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors’
rights and remedies generally. Except for (a) approvals under applicable Blue
Sky laws
and the
filing of Form D with the SEC
and (b)
the filing of the certificate of merger with the Delaware Secretary of State,
no
authorization, consent or approval of, or filing with, any public body, court
or
authority is necessary on the part of Velcera for the consummation by Velcera
of
the transactions contemplated by this agreement, except for such authorizations,
consents, approvals and filings as to which the failure to obtain or make the
same would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect on Velcera, or adversely affect the consummation of the
transactions contemplated hereby.
3.3 No
Conflicts.
Velcera
is not subject to, or obligated under, any provision of (a) its Certificate
of
Incorporation or Bylaws, (b) any agreement, arrangement or understanding, (c)
any license, franchise or permit, or (d) any law, regulation, order, judgment
or
decree, which would conflict with, be breached or violated, or in respect of
which a right of termination or acceleration or any security interest, charge
or
encumbrance on any of their respective assets would be created, by the
execution, delivery or performance of this agreement or the consummation of
the
transactions contemplated hereby, other than any such conflicts, breaches,
violations, rights of termination or acceleration or security interests, charges
or encumbrances which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Denali or MergerCo.
ARTICLE IV
CONDUCT
OF BUSINESS PENDING THE MERGER
4.1 Conduct
of Business by Denali
and
MergerCo.
From
the
date of this agreement to the Effective Date, unless Velcera shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by other
provisions of this agreement, including but not limited to this Section
4.1,
neither
Denali nor MergerCo shall, directly or indirectly, (a) amend its Certificate
of
Incorporation or Bylaws, (b) split, combine or reclassify any outstanding shares
of capital stock of Denali, (c) declare, set aside, make or pay any dividend
or
distribution in cash, stock, property or otherwise with respect to the capital
stock of Denali, (d) issue or sell any additional shares of, or options,
warrants, conversions, privileges or rights of any kind to acquire any shares
of, any of its capital stock, (e) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation, partnership,
joint
venture or other business organization or division or material assets thereof
or
(f) make or change any material tax elections.
ARTICLE V
ADDITIONAL
COVENANTS AND AGREEMENTS
5.1 Governmental
Filings.
Subject
to the terms provided herein, each party will use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this agreement. Each
party will use all reasonable efforts and will cooperate with the other party
in
the preparation and filing, as soon as practicable, of all filings, applications
or other documents required under applicable laws, including, but not limited
to, the Exchange Act, to consummate the transactions contemplated by this
agreement. Prior to submitting each filing, application, registration statement
or other document with the applicable regulatory authority, each party will,
to
the extent practicable, provide the other party with an opportunity to review
and comment on each such application, registration statement or other document
to the extent permitted by applicable law. Each party will use all reasonable
efforts and will cooperate with the other party in taking any other actions
necessary to obtain such regulatory or other approvals and consents at the
earliest practicable time, including participating in any required hearings
or
proceedings.
8
5.2 Expenses.
Except
as
otherwise provided in this agreement, all costs and expenses incurred in
connection with this agreement and the transactions contemplated hereby shall
be
paid by the party incurring such costs and expenses.
5.3 Due
Diligence; Access to Information.
To the
extent not previously provided, Denali shall afford to Velcera and its
authorized representatives the opportunity to conduct and complete a due
diligence investigation of Denali. In light of the foregoing, Denali shall
disclose and make available (together with the right to copy) to Velcera and
its
officers, employees, attorneys, accountants and other representatives
(hereinafter collectively referred to as “Representatives”),
all
books, papers, and records relating to the assets, stock, properties,
operations, obligations and liabilities of Denali and MergerCo.
5.4 Tax
Treatment.
It is
intended by the parties hereto that the Merger shall constitute a reorganization
within the meaning of Section 368(a) of the Code. Each of the parties hereto
adopts this agreement as a “plan of reorganization” within the meaning of
Treasury Regulation § 1.368-2(g) and 1.368-3(a). Both prior to and after the
Closing, each party’s books and records shall be maintained, and all federal,
state and local income tax returns and schedules thereto shall be filed in
a
manner consistent with the Merger being qualified as a reverse triangular merger
under Section 368(a)(2)(E) of the Code (and comparable provisions of any
applicable state or local laws); except to the extent the Merger is determined
in a final administrative or judicial decision not to qualify as a
reorganization within the meaning of Code Section 368(a).
5.5 Press
Releases.
Velcera
and Denali shall agree with each other as to the form and substance of any
press
release or public announcement related to this agreement or the transactions
contemplated hereby; provided, however, that nothing contained herein shall
prohibit either party, following notification to the other party, from making
any disclosure which is required by law or regulation. If any such press release
or public announcement is so required, the party making such disclosure shall
consult with the other party prior to making such disclosure, and the parties
shall use all reasonable efforts, acting in good faith, to agree upon a text
for
such disclosure which is satisfactory to both parties.
5.6 Securities
Reports.
Denali
shall timely file with the SEC all reports and other documents required to
be
filed under the Securities Act or Exchange Act. All such reports and documents
(i) shall not, as of the date of such filing, contain any untrue statement
of
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) shall comply as to form, in
all
material respects, with the applicable rules and regulations of the SEC.
5.7 Private
Placement.
Each of
Velcera and Denali shall take all necessary action on its part such that the
issuance of the Denali common stock to Velcera stockholders constitutes a valid
“private placement” under the Securities Act. Without limiting the generality of
the foregoing, Velcera shall (1) provide each Velcera stockholder with a
stockholder qualification questionnaire in the form reasonably acceptable to
both Denali and Velcera (a “Stockholder
Questionnaire”)
and
(2) use its best efforts to cause each Velcera stockholder to truthfully
attest
that (i) such stockholder is acquiring the Denali common stock for his, her
or
its sole account, for investment and not with a view to the resale or
distribution thereof and (ii) that stockholder either (A) is an “accredited
investor” as defined in Regulation D of the Securities Act, (B) has such
knowledge and experience in financial and business matters that the stockholder
is capable of evaluating the merits and risks of receiving the Denali common
stock, or (C) has appointed an appropriate person reasonably acceptable to
both
Denali and Velcera to act as the stockholder’s purchaser representative in
connection with evaluating the merits and risks of receiving the
Merger.
9
5.8 Velcera
Stockholder Written Consent; Materials to Stockholders.
(a) Velcera
shall use its best efforts to obtain, in lieu of holding a stockholder meeting,
the written consent of the number of Velcera stockholders necessary under its
Certificate of Incorporation, Bylaws, and the DGCL to approve this agreement
and
the Merger.
(b) Velcera
shall as promptly as practicable following the date of this agreement prepare
and mail to Velcera stockholders all information as may required to comply
with
the DGCL, the Securities Act and the Exchange Act.
5.9 NoSolicitation. Unless
and until this agreement shall have been terminated pursuant to Section
7.1,
neither
Denali nor its officers, directors or agents shall, directly or indirectly,
encourage, solicit or initiate discussions or negotiations with, or engage
in
negotiations or discussions with, or provide non-public information to, any
Person or group of Persons concerning any merger, sale of capital stock, sale
of
substantial assets or other business combination.
5.10 Failure
to Fulfill Conditions.
In
the
event that either of the parties hereto determines that a condition to its
respective obligations to consummate the transactions contemplated hereby cannot
be fulfilled on or prior to the termination of this agreement, it will promptly
notify the other party.
5.11 Notification
of Certain Matters.
On or
prior to the Effective Date, each party shall give prompt notice to the other
party of (i) the occurrence or failure to occur of any event or the discovery
of
any information, which occurrence, failure or discovery would be likely to
cause
any representation or warranty on its part contained in this agreement to be
untrue, inaccurate or incomplete after the date hereof in any material respect
or, in the case of any representation or warranty given as of a specific date,
would be likely to cause any such representation or warranty on its part
contained in this agreement to be untrue, inaccurate or incomplete in any
material respect as of such specific date, and (ii) any material failure of
such
party to comply with or satisfy any covenant or agreement to be complied with
or
satisfied by it hereunder.
5.12 Redemption
of Denali Shares.
Contemporaneously with the execution of this agreement, Xxxxxxx X. Xxxxxxxxx,
M.D., who holds approximately 97% of the outstanding common stock of Denali,
shall have entered into a redemption agreement with Denali in the form of
Exhibit
B
hereto
(the “Redemption
Agreement”)
pursuant to which Denali will redeem all shares of Denali common stock
beneficially held by him. Prior to the Closing, Denali shall use its best
efforts to cause the other Denali stockholders to enter into the Redemption
Agreement. The Denali stockholders who enter into the Redemption Agreement
will
receive, in exchange for their shares of Denali common stock, an aggregate
amount equal to $125,000 less Denali liabilities as of the Effective Date,
multiplied by the percent of outstanding shares of Denali common stock held
by
parties to the Redemption Agreement. The redemption of the Denali common stock
will become effective concurrently with the Effective Time, however the
completion of the Merger is a condition to the redemption. Other than the shares
of Denali common stock which will be issued to Velcera Stockholders hereunder,
upon the consummation of such redemption (assuming all Denali stockholders
enter
into the Redemption Agreement), there will be no other shares of Denali common
stock outstanding.
10
ARTICLE VI
CONDITIONS
6.1 Conditions
to Obligations of Each Party.
The
respective obligations of each party to effect the transactions contemplated
hereby are subject to the fulfillment or waiver at or prior to the Effective
Date of the following conditions:
(a) No
Prohibitive Change of Law.
There
shall have been no law, statute, rule or regulation, domestic or foreign,
enacted or promulgated which would prohibit or make illegal the consummation
of
the transactions contemplated hereby.
(b) Velcera
Stockholder Approval.
This
agreement and the Merger shall have been approved by the Stockholders of Velcera
in accordance with the DGCL.
(c) Section
14(f) Compliance.
Ten
days shall have elapsed since an information statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder has been filed with the SEC and transmitted to the
stockholders of Denali in accordance with said Rule 14f-1.
(d) Tax
Opinion.
Xxxxxx
Xxxxxxx Xxxxxx & Brand, LLP, counsel to Velcera, shall have issued an
opinion, which opinion may be based on customary reliance and subject to
customary qualifications, to the effect that for federal income tax purposes:
(i) the Merger will qualify as a reorganization under Section 368 of the Code;
and (ii) Velcera, Denali and MergerCo will each be a party to the reorganization
within the meaning of Section 368(b) of the Code.
(e) Adverse
Proceedings.
There
shall not be threatened, instituted or pending any action or proceeding before
any court or governmental authority or agency (i) challenging or seeking to
make illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated hereby or seeking
to
obtain material damages in connection with such transactions, (ii) seeking
to prohibit direct or indirect ownership or operation by Denali or MergerCo
of
all or a material portion of the business or assets of Velcera, or to compel
Denali or MergerCo or Velcera to dispose of or to hold separately all or a
material portion of the business or assets of Denali or MergerCo or of Velcera,
as a result of the transactions contemplated hereby; (iii) seeking to
invalidate or render unenforceable any material provision of this agreement
or
any of the other agreements attached as exhibits hereto or contemplated hereby,
or (iv) otherwise relating to and materially adversely affecting the
transactions contemplated hereby.
(f) Governmental
Action.
There
shall not be any action taken, or any statute, rule, regulation, judgment,
order
or injunction proposed, enacted, entered, enforced, promulgated, issued or
deemed applicable to the transactions contemplated hereby, by any federal,
state
or other court, government or governmental authority or agency, that would
reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in Section
6.1(e).
(g) Market
Condition.
There
shall not have occurred any general suspension of trading on the New York Stock
Exchange, the Nasdaq Stock Markets, or any general bank moratorium or closing
or
any war, national emergency or other event affecting the economy or securities
trading markets in
any of
the foregoing cases generally
that would make completion of the Merger impossible.
(h) Representations
and Compliance.
The
representations of Denali, MergerCo, and Velcera contained in this agreement
were accurate as of the date of this agreement and are accurate as of the
Effective Time, in all respects (in the case of any representation containing
any materiality qualification) or in all material respects (in the case of
any
representation without any materiality qualification), except for
representations and warranties made as of a specific date, which shall be
accurate as of such date. Denali, MergerCo, and Velcera, respectively, shall
in
all material respects have performed each obligation and agreement and complied
with each covenant to be performed and complied with by them hereunder at or
prior to the Effective Date.
11
(i) Officer’s
Certificate.
Denali
and Velcera shall have furnished to each other a certificate of their respective
Chief Executive Officers, dated as of the Effective Date, in which such officer
shall certify that, to their Knowledge, the conditions set forth in Section
6.1(h)
have
been fulfilled with respect to their corporation.
(j) Secretary’s
Certificate.
Denali
and Velcera shall have furnished to each other (i) copies of the text of the
resolutions by which the corporate action necessary to approve this agreement
and the certificate of merger, which shall be accompanied by a certificate
of
the corporate secretary of each respective corporation dated as of the Closing
Date certifying to each other that such copies are true, correct and complete
copies of such resolutions and that such resolutions were duly adopted and
have
not been amended or rescinded, (ii) an incumbency certificate dated as of the
Closing Date executed by their respective corporate secretaries certifying
the
signature and office of the officer of their respective corporations who
executes this agreement and the certificate of merger, and (iii) a copy of
the
corporation’s respective Certificates of Incorporation, certified by the
Secretary of State of Delaware, with certificates from the Secretary of State
of
Delaware evidencing the good standing in such jurisdiction as of a day within
three business days prior to the Closing Date.
6.2 Additional
Conditions to Obligation of Velcera.
The
obligation of Velcera to consummate the transactions contemplated hereby in
accordance with the terms of this agreement is also subject to the fulfillment
or waiver of the following conditions:
(a) Filing
of SEC Reports.
Denali
shall have timely filed with the SEC all reports and other documents required
to
be filed under the Securities Act or Exchange Act, including without limitation,
its Form 10-KSB for the year ended December 31, 2006.
(b) Resignations.
Each of
the officers and directors of Denali immediately prior to the Effective Time
shall deliver duly executed resignations from their positions with Denali
effective immediately after the Effective Time.
(c) Denali
Redemption of Outstanding Shares.
The
Redemption Agreement between Denali and Xxxxxxx X. Xxxxxxxxx, M.D. shall be
in
full effect and no party thereto shall be in breach thereof or have threatened
to breach the Redemption Agreement.
(d) Denali
Liabilities.
Except
for the liabilities set forth on Schedule
2.17,
Denali
shall have no liabilities.
(e) Dissenters’
Rights.
Holders
of no more than 5% of the outstanding shares of Velcera common stock and shall
have validly exercised, or remained entitled to exercise, their appraisal rights
under Section 262 of the DGCL.
(f) Private
Placement.
Velcera
shall have completed a private placement offering of its common stock prior
to
or contemporaneously with the Merger, on such terms as are satisfactory to
Velcera in its sole discretion.
12
ARTICLE VII
TERMINATION,
AMENDMENT AND WAIVER
7.1 Termination.
This
agreement may be terminated prior to the Effective Date:
(a) by
mutual
consent of Velcera and Denali, if the board of directors of each so determines
by vote of a majority of the members of its entire board;
(b) by
either
Denali or Velcera, if any representation of the non-terminating party set forth
in this agreement was inaccurate when made or becomes inaccurate such that
the
condition set forth in Section
6.1(h)
could
not be satisfied by the non-terminating party;
(c) by
either
Denali or Velcera, if the non-terminating party fails to perform or comply
with
any of the obligations that it is required to perform or to comply with under
this agreement such that the condition set forth in Section 6.1(h)
could
not be satisfied by the non-terminating party;
(d) by
Velcera, if, Velcera fails to receive stockholder approval to the Merger as
required by the DGCL; and
(e) by
either
Velcera or Denali if the Closing Date is not on or before March 31, 2007, or
such later date as Velcera and Denali may mutually agree (except that a party
seeking to terminate this agreement pursuant to this clause may not do so if
the
failure to consummate the Merger by such date shall be due to the action or
failure to act of the party seeking to terminate this agreement in breach of
such party’s obligations under this agreement).
Any
party
desiring to terminate this agreement shall give prior written notice of such
termination and the reasons therefor to the other party.
ARTICLE VIII
GENERAL
PROVISIONS
8.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
sufficiently given if made by hand delivery, by facsimile, by overnight delivery
service for next business day delivery, or by registered or certified mail
(return receipt requested), in each case with delivery charges prepaid, to
the
parties at the following addresses (or at such other address for a party as
shall be specified by it by like notice):
|
If
to Velcera:
|
Velcera
Pharmaceuticals, Inc.
000
Xxxxxxxxx Xxxxx
Xxxxxxxxx,
Xxxxxxxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxxxx
Facsimile:
(000) 000-0000
|
|
If
to Denali
or
MergerCo:
|
Denali
Sciences, Inc. / Denali Acquisition Corp.
c/o
Paramount BioCapital Investments, LLC
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxxx Xxxxx
Facsimile:
(000) 000-0000
|
13
All
such
notices and other communications shall be deemed to have been duly given as
follows: when delivered by hand, if personally delivered, when received; (i)
if
delivered by registered or certified mail (return receipt requested), when
receipt acknowledged; or (ii) if sent by facsimile, on the day of transmission
or, if that day is not a business day, on the next business day; and the next
business day delivery after being timely delivered to a recognized overnight
delivery service.
8.2 No
Survival.
The
representations and warranties and obligations contained in this agreement
will
terminate at the Effective Time or on termination of this agreement in
accordance with Section
7.1,
except
that the obligations contained in Article I
and any
other obligation contained in this agreement requiring performance or compliance
after the Effective Time will survive the Effective Time indefinitely.
8.3 Interpretation.
The
headings contained in this agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this agreement.
References to Sections and Articles refer to Sections and Articles of this
agreement unless otherwise stated. Words such as “herein,” “hereinafter,”
“hereof,” “hereto,” “hereby” and “hereunder,” and words of like import, unless
the context requires otherwise, refer to this agreement (including the Schedules
hereto). As used in this agreement, the masculine, feminine and neuter genders
shall be deemed to include the others if the context requires.
8.4 Severability.
If
any
term, provision, covenant or restriction of this agreement is held by a court
of
competent jurisdiction to be invalid, void or unenforceable, the remainder
of
the terms, provisions, covenants and restrictions of this agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties shall negotiate in good faith to modify this
agreement and to preserve each party’s anticipated benefits under this
agreement.
8.5 Amendment.
This
agreement may not be amended or modified except by an instrument in writing
approved by the parties to this agreement and signed on behalf of each of the
parties hereto.
8.6 Waiver.
At
any
time prior to the Effective Date, any party hereto may (a) extend the time
for
the performance of any of the obligations or other acts of the other party
hereto or (b) waive compliance with any of the agreements of the other party
or
with any conditions to its own obligations, in each case only to the extent
such
obligations, agreements and conditions are intended for its benefit. Any such
extension or waiver shall only be effective if made in writing and duly executed
by the party giving such extension or waiver.
8.7 Miscellaneous.
This
agreement (together with all other documents and instruments referred to
herein): (a) constitutes the entire agreement, and supersedes all other prior
agreements and undertakings, both written and oral, among the parties, with
respect to the subject matter hereof; and (b) shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and assigns,
but shall not be assignable by either party hereto without the prior written
consent of the other party hereto.
8.8 Counterparts.
This
agreement may be executed in any number of counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. Signatures
delivered by facsimile and other electronic means of transmission shall be
valid
and binding to the same extent as original signatures.
8.9 Third
Party Beneficiaries.
Each
party hereto intends that this agreement,
except
as expressly provided herein, shall
not
benefit or create any right or cause of action in or on behalf of any person
other than the parties hereto.
14
8.10 Governing
Law.
This
agreement is governed by the internal laws of the State of Delaware without
regard to such state’s principles of conflicts of laws that would defer to the
substantive laws of another jurisdiction.
8.11 Jurisdiction;
Service of Process.
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this agreement must, to the extent such courts will accept
such jurisdiction, be brought
against any of the
parties in the courts of the State of Delaware, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Delaware,
and each of the parties consents to the jurisdiction of those courts (and of
the
appropriate appellate
courts) in any such action or proceeding and waives any objection to venue
laid
therein. Process
in any such action or proceeding may be served by sending or delivering a copy
of the process to the party to be served at the address and in the manner
provided for the giving of notices
in Section 8.1.
Nothing
in this Section 8.11,
however, affects the right of any party to serve legal process in any other
manner permitted by law.
[Remainder
of Page Left Intentionally Blank - Signature Page to Follow]
15
IN
WITNESS WHEREOF,
the
parties hereto have caused this agreement to be executed on the date first
written above by their respective officers.
|
VELCERA
PHARMACEUTICALS, INC.
By:
/s/Xxxxxx Xxxxxxxx
Title: Chief
Executive Officer
|
||
|
By:/s/Xxxxxxx
X. Xxxxx
Title:
Director
|
||
|
DENALI
ACQUISITION CORP.
By:/s/Xxxxxxx
X. Xxxxx
Title: Director
|
EXHIBIT A
CERTIFICATE
OF MERGER
of
VELCERA
PHARMACEUTICALS, INC.
and
DENALI
ACQUISITION CORP.
In
accordance with Section 251 of the General Corporation Law of the State of
Delaware, Velcera Pharmaceuticals, Inc. hereby certifies as
follows:
FIRST:
That the
name and state of incorporation of each of the constituent corporations of
the
merger is as follows:
|
NAME
|
STATE
OF INCORPORATION
|
|
|
Velcera
Pharmaceuticals, Inc.
|
Delaware
|
|
|
Denali
Acquisition Corp.
|
Delaware
|
SECOND:
That an
Agreement and Plan of Merger has been approved, adopted and executed by each
of
the constituent corporations in accordance with the requirements of Section
251
of the General Corporation Law of the State of Delaware.
THIRD:
That the
name of the surviving corporation of the merger is Velcera Pharmaceuticals,
Inc.
FOURTH:
The
certificate of incorporation of Velcera Pharmaceuticals, Inc. will be the
certificate of incorporation of the surviving corporation.
FIFTH:
The
executed Merger Agreement is on file at an office of the surviving corporation,
the address of which is 000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxxxx
00000.
SIXTH:.
That a
copy of the Merger Agreement will be furnished by the surviving corporation,
on
request and without cost, to any stockholder of any constituent
corporation.
The
undersigned corporation has caused this certificate of merger to be signed
on
___________, 2007.
|
VELCERA
PHARMACEUTICALS, INC.
By:
______________________________
Name: Xxxxxx
Xxxxxxxx
Title: Chief
Executive Officer
|
||
|
DENALI
ACQUISITION CORP.
By:
______________________________
Name: ____________________________
Title: _____________________________
|
EXHIBIT
B
Form
of Redemption Agreement
