AGREEMENT AND PLAN OF MERGER
This
Agreement and Plan of Merger (this “Agreement”) is made and entered into as of
August 1, 2006 (the “Agreement Date”), by and among (i) OccuLogix, Inc., a
Delaware corporation (“Parent”), (ii) OccuLogix Mergeco, Inc., a Delaware
corporation and a wholly owned Subsidiary of Parent (“Merger Sub”), (iii) Solx,
Inc., a Delaware corporation (the “Company”) and (iv) Xxxx X. Xxxxx, Xxxx
Xxxxxxxx and Xxxxx X. Xxxxx, acting, in each case, in his capacity as a member
of the Stockholder Representative Committee referred to herein. Capitalized
terms used herein without definition shall have the respective meanings set
forth in Section 10.2.
WHEREAS,
on March 26, 2006, Parent and the Company entered into a letter of intent
outlining Parent’s expression of interest in exploring with the Company and its
stockholders the basis for an acquisition by Parent of 100% of the Company
(the
“Letter of Intent”);
WHEREAS,
as contemplated in the Letter of Intent, on April 4, 2006, Parent advanced
to
the Company a bridge loan in the principal amount of $2,000,000, which bridge
loan is evidenced by a promissory note of the Company which provides, among
other things, that Parent shall have the right to acquire 10% of the issued
and
outstanding capital stock of the Company on a fully diluted basis under certain
conditions, including if the principal amount of such bridge loan shall remain
outstanding and owing after October 2, 2006;
WHEREAS,
the board of directors of Parent (the “Parent Board”) has approved and adopted
the form of this Agreement and the consummation of the transactions contemplated
hereby, including the merger of Merger Sub with and into the Company (the
“Merger”), following which the Company shall continue as the surviving
corporation (the “Surviving Corporation”);
WHEREAS,
the Parent Board has considered carefully the terms of this Agreement and has
determined that the terms and conditions of the transactions contemplated
hereby, including the Merger, are fair and advisable and in the best interests
of Parent and the holders of the shares of Common Stock, par value $.001 per
share, of Parent (“Parent Common Stock”);
WHEREAS,
the board of directors of the Company (the “Company Board”) has approved and
adopted the form of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger, and has determined to submit the
execution and delivery of this Agreement and the certificate of merger,
substantially in the form attached hereto as Exhibit A (the “Merger
Certificate”), and has authorized and approved the performance of the
transactions contemplated hereby and thereby to the holders of the shares of
Common Stock, par value $.001 per share, of the Company (the “Company Common
Stock”) for their approval by majority written consent in accordance with
Section 228 of the Delaware General Corporation Law (“Delaware Law”) and to the
holder of the shares of Series A Preferred Stock, par value $.001 per share,
of
the Company (the “Series A Preferred Stock”) for its approval by unanimous
written consent in accordance with the Amended and Restated Certificate of
Incorporation of the Company dated June 14, 2004 (the “Company Certificate of
Incorporation”), the Amended and Restated Stockholders Agreement, dated as of
June 17, 2004, by and among the Company, Boston Scientific Corporation and
the
stockholders listed on Exhibit A thereto (the “Stockholders Agreement”), and
Section 228 of Delaware Law; and
WHEREAS,
the Company Board has considered carefully the terms of this Agreement and
has
determined that the terms and conditions of the transactions contemplated
hereby, including the Merger, are fair, advisable and in the best interests
of
the Company and the Company Stockholders, and the Company Board recommends
that
the Company Stockholders vote for the approval of this Agreement and the
transactions contemplated hereby, including the Merger.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained and intending to be legally bound hereby, Parent,
Merger Sub, the Company and the members of the Stockholder Representative
Committee hereby agree as follows:
ARTICLE I
THE
MERGER
1.1 The
Merger.
Subject
to the other terms and conditions of this Agreement, including those set forth
in Article 7 hereof, the Merger shall be consummated under the following
circumstances:
(a) Merger
Certificate.
(i) Within
five (5) business days after the Agreement Date, the Company shall deliver
to
Parent the Merger Certificate, executed by authorized and appropriate officers
of the Company. The Merger Certificate shall be retained by Parent and filed
with the Delaware Secretary of State upon the closing of the
Merger.
(ii) The
Company hereby appoints, and agrees to take all such other further action as
is
required to appoint, Xxxxx Xxxxxxxx, effective as of the Agreement Date, a
Vice
President and Assistant Secretary of the Company solely for the purpose of
executing the Merger Certificate on the Company’s behalf and filing the Merger
Certificate with the Delaware Secretary of State; provided, however, that such
person shall resign as a Vice President and Assistant Secretary of the Company
immediately following the filing of the Merger Certificate with the Delaware
Secretary of State or the termination of this Agreement (and in the absence
or
delay of such resignation, upon such filing or termination, the Company may
remove such person from such position); provided, further, that, in the event
that, at any time after the Agreement Date, Parent elects to replace Xxxxx
Xxxxxxxx with another employee or agent of Parent for this purpose and so
notifies the Company, the Company agrees to promptly appoint such replacement
a
Vice President and Assistant Secretary of the Company for such purpose,
effective upon the resignation of Xxxxx Xxxxxxxx.
(iii) Upon
the
terms hereof and subject to the conditions set forth herein, and in accordance
with Delaware Law, at the Effective Time (as defined in Section 1.1(b)), Merger
Sub shall be merged with and into the Company and, as a result of the Merger,
the separate corporate existence of Merger Sub shall cease, and the Company
shall continue as the Surviving Corporation.
(b) Consummation
of the Merger; Effective Time.
Subject
to the fulfillment or waiver of all of the conditions contained in Article
7, a
closing (the “Closing”) will be held at the offices of Rackemann, Xxxxxx &
Xxxxxxxx, Professional Corporation, in Boston, Massachusetts (or such other
place as the parties may agree). For greater certainty, the date on which the
Closing is actually held is referred to herein as the “Closing Date.” On the
Closing Date, Parent, Merger Sub and the Company shall cause the Merger to
be
consummated by filing the Merger Certificate with the Delaware Secretary of
State. The term “Effective Time” means the date and time of the acceptance by
the Delaware Secretary of State of the filing of the Merger Certificate with
the
Delaware Secretary of State (or such later time as may be agreed by each of
the
parties hereto and specified in the Merger Certificate in accordance with
Delaware Law).
1.2 Effect
of the Merger.
At the
Effective Time, the effect of the Merger shall be as provided in the Merger
Certificate and as provided by the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, upon
the
consummation of the Merger, all the property (including Intellectual Property
and licenses to Intellectual Property), rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of those corporations shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving
Corporation.
1.3 Charter;
Bylaws.
(a) At
the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
(the “Surviving Corporation Charter”) shall be the Certificate of Incorporation
of Merger Sub, as amended by the Merger Certificate.
(b) At
the
Effective Time, the bylaws of the Surviving Corporation shall be the bylaws
of
Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended as provided by Delaware Law, the Surviving Corporation
Charter and such bylaws.
1.4 Directors
and Officers.
The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Surviving Corporation Charter and the bylaws of the
Surviving Corporation, and until their respective successors are duly elected
and qualified or until their earlier death, disability, resignation or removal.
The officers of the Company immediately prior to the Effective Time shall be
the
initial officers of the Surviving Corporation, in each case, until their
respective successors are duly elected or appointed and qualified or until
their
earlier death, disability, resignation or removal.
1.5 Closing
Date Consideration; Committee Reimbursement Amount.
(a) The
consideration to be paid by Parent to the Participating Rights Holders at the
Closing in connection with the Merger shall be the amount of the Closing Payment
Amount allocated to each of the Participating Rights Holders pursuant to Section
2.1.
(b) $100,000
of the cash portion of the Closing Payment Amount (together with any additional
amounts deposited with the Stockholder Representative Committee pursuant to
Section 1.6(b), the “Committee Reimbursement Amount”) shall not be paid to the
Participating Rights Holders at the Closing but instead shall be deposited
by
Parent with the Stockholder Representative Committee, to be held by the
Stockholder Representative Committee for the payment of expenses, charges and
liabilities incurred by the Stockholder Representative Committee in performing
its duties pursuant to this Agreement. The portion of the Committee
Reimbursement Amount contributed on behalf of each Participating Rights Holder
shall be proportionate to the amount of the Closing Payment Amount which such
Participating Rights Holder otherwise would be entitled to receive but for
the
application of this Section 1.5(b). Any amount of the Committee Reimbursement
Amount that has not been consumed by the Stockholder Representative Committee,
in accordance with the terms of this Agreement prior to the later of (i) the
end
of the period during which Parent, the Surviving Corporation and their
respective Affiliates, and each of their respective directors, officers,
employees and representatives, may make claims for indemnification pursuant
to
Section 9.2 and (ii) the date on which all such indemnification claims, if
any,
have been discharged in full, shall be distributed by the Stockholder
Representative Committee to the Participating Rights Holders pro rata, based
on
their respective rights to participate in the Closing Payment Amount. The
Committee Reimbursement Amount shall be subject to increase from time to time,
as provided in Section 2.5.
(c) $180,000
of the cash portion of the Closing Payment Amount shall not be paid to
Participating Rights Holders at Closing but instead shall be paid to the
employees of the Company in the amounts set forth on Schedule
1.5(c).
1.6 Form
of Consideration Payable by Parent.
(a) Parent
Common Stock.
Subject
to the provisions of Sections 1.5(b) and 1.6(b), the Closing Payment Amount
will
be satisfied by (i) the payment to the Participating Rights Holders, in cash,
of
$7,000,000 and (ii) the issuance to the Participating Rights Holders of an
aggregate of 8,400,000 shares of Parent Common Stock, with any fraction of
a
share of Parent Common Stock being treated as provided in Section 1.6(b) below;
provided that such number of shares of Parent Common Stock shall not exceed,
on
an undiluted basis, 19.9% of the shares of Parent Common Stock that are issued
and outstanding immediately prior to the Closing. To the extent that 8,400,000
shares of Parent Common Stock would exceed the aforementioned limit, then Parent
shall issue to the Participating Rights Holders that number of shares of Parent
Common Stock as shall equal, on an undiluted basis, 19.9% of the issued and
outstanding shares of Parent Common Stock and shall pay to the Participating
Rights Holders, in cash, the amount equal to the Reference Market Value on
the
Closing Date multiplied by the difference between (x) 8,400,000 and (y) that
number of shares of Parent Common Stock as shall equal, on an undiluted basis,
19.9% of the issued and outstanding shares of Parent Common Stock.
(b) No
Fractional Shares.
No
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued. However, instead, an amount in cash equal to the value of
all
such fractional shares, based on the Reference Market Value on the Closing
Date,
shall be deposited by Parent with the Stockholder Representative Committee
as
additional Committee Reimbursement Amount.
(c) Securities
Act and Stock Exchange Legends.
Any
certificate issued to any Participating Rights Holders representing shares
of
Parent Common Stock shall be imprinted with the following legends (or the
substantial equivalents thereof):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF, IN WHOLE
OR
IN PART, OTHER THAN PURSUANT TO REGISTRATION UNDER SAID ACT OR IN CONFORMITY
WITH THE LIMITATIONS OF RULE 144 OR OTHER SIMILAR RULE OR EXEMPTION AS THEN
IN
EFFECT, WITHOUT FIRST OBTAINING (I) IF REASONABLY REQUIRED BY THE COMPANY,
A
WRITTEN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, WHICH MAY BE COUNSEL
TO
THE COMPANY, TO THE EFFECT THAT THE CONTEMPLATED SALE OR OTHER DISPOSITION
WILL
NOT BE IN VIOLATION OF SAID ACT, OR (II) A ‘NO-ACTION’ OR INTERPRETIVE LETTER
FROM THE STAFF OF THE U.S. SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT
THAT
SUCH STAFF WILL TAKE NO ACTION IN RESPECT OF THE CONTEMPLATED SALE OR OTHER
DISPOSITION.”
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (THE “TSX”) BUT CANNOT BE TRADED THROUGH THE FACILITIES OF THE TSX
SINCE THEY ARE NOT FREELY TRANSFERABLE. CONSEQUENTLY, DELIVERY OF ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON THE TSX.”
Parent
shall cause such legend to be removed in connection with any resale of such
shares of Parent Common Stock that is made in compliance with, or pursuant
to a
valid exemption from, the registration provisions of the Securities Act.
(d) Contractual
Restriction Legend.
Any
certificate issued to any Participating Rights Holders representing shares
of
Parent Common Stock shall be imprinted with the following legend (or the
substantial equivalent thereof):
“50%
OF
THESE SECURITIES ARE SUBJECT TO A LOCK-UP AGREEMENT WHICH WILL TERMINATE ON
■
AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF
UNTIL SUCH DATE, AND 50% OF THESE SECURITIES ARE SUBJECT TO A LOCK-UP AGREEMENT
WHICH WILL TERMINATE ON ■ AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL SUCH DATE. AS OF ■, THIS LEGEND WILL
BE OF NO FORCE OR EFFECT.”
1.7 Holdback
Amount Payment.
(a) Subject
to Section 1.7(d), on the first anniversary of the Closing Date, Parent shall
pay $3,000,000 from the Holdback Amount in cash to the Participating Rights
Holders, allocated to each of them pursuant to Section 2.1.
(b) Subject
to Section 1.7(d), on the second anniversary of the Closing Date, Parent shall
pay $5,000,000 from the Holdback Amount in cash to the Participating Rights
Holders, allocated to each of them pursuant to Section 2.1.
(c) Subject
to Section 1.7(d), no later than ten (10) calendar days after Parent and the
Surviving Corporation reasonably believe that the FDA Milestone has been
achieved, Parent shall pay $5,000,000 from the Holdback Amount (the “FDA
Milestone Payment”) in cash to the Participating Rights Holders, allocated to
each of them pursuant to Section 2.1. For greater certainty, such portion of
the
Holdback Amount shall not be payable until and unless the FDA Milestone is
achieved. If the FDA Milestone Payment is not made, the Holdback Amount shall
be
reduced by $5,000,000.
(d) A
portion
of the Holdback Amount otherwise payable to the Participating Rights Holders
pursuant to Sections 1.7(a), 1.7(b) or 1.7(c) (the “Indemnity Holdback Amount”)
shall not be paid to such Participating Rights Holders if there is outstanding
any indemnification claim or claims pursuant to Sections 9.2 or 9.3. The
Indemnity Holdback Amount shall not exceed the lesser of (i) the aggregate
amount of all such indemnification claims then outstanding and (ii) the
difference between the Maximum Indemnification Amount and the aggregate amount
of all indemnification claims pursuant to Sections 9.2 or 9.3, if any, that
were
paid or satisfied by, or on behalf of, any of the Company Stockholders or the
other Participating Rights Holders.
1.8 Security
for Holdback Amount Payment.
To
evidence the indebtedness of Parent to the Participating Rights Holders in
the
aggregate amount of the Holdback Amount, Parent shall deliver, at the Closing,
to the member of the Stockholder Representative Committee designated as the
single member thereof upon whose instruction Parent and the Surviving
Corporation are entitled to rely pursuant to Section 2.5, a duly executed,
non-interest-bearing promissory note of Parent, in favor of the Stockholder
Representative Committee on behalf of the Participating Rights Holders, in
the
principal amount of the Holdback Amount and in form and substance satisfactory
to the Company, acting reasonably (the “Promissory Note”). As security for its
obligations under the Promissory Note from time to time, immediately following
the Closing, Parent shall cause the Surviving Corporation to provide, in favor
of the Stockholder Representative Committee on behalf of the Participating
Rights Holders, a guaranty of the performance of Parent’s obligations under the
Promissory Note from time to time, which guaranty shall be secured by an
assignment by the Company of its Intellectual Property. Such guaranty and
assignment shall be in form and substance satisfactory to the Stockholder
Representative Committee, acting reasonably, and together with the Promissory
Note, collectively, are referred to herein as the “Security
Agreements”.
ARTICLE II
CONVERSION
OF SECURITIES; EXCHANGE OF CERTIFICATES; PAYMENTS
2.1 Conversion
of Securities.
(a) Common
Stock.
Each
share of the Company Common Stock issued and outstanding immediately prior
to
the Effective Time and held by Participating Rights Holders will be converted
at
the Effective Time into the right to receive from Parent (i) in accordance
with
Section 1.6, the Per Share Common Cash Closing Payment and the Per Share Common
Stock Closing Payment and (ii) in accordance with Section 1.7, the Per Share
Common Holdback Amount. Notwithstanding the foregoing, (x) in lieu of the Per
Share Common Stock Closing Payment contemplated in clause (i) of the immediately
preceding sentence, each share of Company Common Stock held by Xxxx Xxxx
XxXxxxxx (“XxXxxxxx”),
immediately prior to the Effective Time will be converted at the Effective
Time
into the right to receive from Parent, in addition to the Per Share Common
Cash
Closing Payment and the Per Share Common Holdback Amount, an amount in cash
equal to the Per Share Common Stock Closing Payment multiplied by the Reference
Market Value (the aggregate amount of additional cash payable to McHallam with
respect to all her shares of Company Common Stock as a result of the foregoing
provision being hereinafter referred to as the “McHallam
Additional Cash”
and
the
aggregate number of shares of Parent Common Stock that would have been payable
to McHallam but for the foregoing provision being hereinafter referred to as
the
“Reallocated
Shares”)
and
(y) the cash portion of the Merger Consideration otherwise payable to Xxxx
Xxxxx
pursuant to clause (i) of the immediately preceding sentence shall be decreased
by the McHallam Additional Cash and the Parent Common Stock portion of such
Merger Consideration shall be increased by the Reallocated Shares. All such
shares of Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease
to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Per Share Common Closing Payment upon the surrender of
such
certificate in accordance with Section 2.2 and this Section 2.1. Notwithstanding
the foregoing, in accordance with Section 1.5(b), $100,000 of the cash portion
of the Closing Payment Amount shall be deposited by Parent with the Stockholder
Representative Committee as Committee Reimbursement Amount.
(b) Preferred
Stock.
Each
share of the Series A Preferred Stock issued and outstanding immediately prior
to the Effective Time and held by Participating Rights Holders will be converted
at the Effective Time into the right to receive (i) in accordance with Section
1.6, the Per Share Preferred Cash Closing Payment and the Per Share Preferred
Stock Closing Payment associated with such series of Company Preferred Stock
and
(2) the Per Share Common Cash Closing Payment and the Per Share Common Stock
Closing Payment that would otherwise be payable with respect to the number
of
shares of Company Common Stock into which such share of the Series A Preferred
Stock is convertible immediately prior to the Effective Time and (ii) in
accordance with Section 1.7, an amount equal to the Per Share Common Holdback
Amount that would otherwise be payable with respect to the number of shares
of
Company Common Stock into which such share of the Series A Preferred Stock
is
convertible immediately prior to the Effective Time; provided, however, that
in
no event shall any amount be paid pursuant to this Section 2.1(b) with respect
to any share of the Series A Preferred Stock in excess of the maximum amount
that is distributable with respect to such share upon a liquidation of the
Company, or any other event deemed to be a liquidation of the Company, pursuant
to the Company Certificate of Incorporation as in effect immediately prior
to
the Effective Time. All shares of the Series A Preferred Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of the Series A Preferred Stock shall cease to
have
any rights with respect thereto, except the right to receive the Per Share
Preferred Closing Payment, the Per Share Common Closing Payment and the Per
Share Common Holdback Amount. Notwithstanding the foregoing, in accordance
with
Section 1.5(b), $100,000 of the cash portion of the Closing Payment Amount
shall
be deposited by Parent with the Stockholder Representative Committee as
Committee Reimbursement Amount.
(c) Disposition
of Options.
All
options to purchase Company Common Stock issued under the Company’s
Non-Qualified Stock Option Plan (the “Company Option Plan”) or otherwise listed
in Section 3.2(c) of the Company Disclosure Schedule, whether or not
exercisable, whether or not vested, and whether or not performance-based, which
are outstanding at the Effective Time (each a “Company Option”), shall not be
assumed by the Surviving Corporation or Parent but shall instead be converted
at
the Effective Time into the right to receive, in accordance with Sections 1.6
and 1.7, payment of an amount equal to the excess, if any, of the aggregate
Per
Share Common Closing Payment and the aggregate Per Share Common Holdback Amount
that would be payable with respect to all shares of Company Common Stock that
would be issuable upon exercise of such Company Option (the “Option Shares”)
over the aggregate exercise price otherwise payable by the holder to acquire
such Option Shares. Notwithstanding the foregoing, in accordance with Section
1.5(b), $100,000 of the cash portion of the Closing Payment Amount shall be
deposited by Parent with the Stockholder Representative Committee as Committee
Reimbursement Amount.
(d) Treasury
Stock.
Each
share of Company Common Stock or Company Preferred Stock held in the treasury
of
the Company immediately prior to the Effective Time shall be canceled and
extinguished at the Effective Time without any conversion thereof, and no
payment shall be made with respect thereto.
(e) Stock
of Merger Sub.
Each
share of common stock of Merger Sub issued and outstanding immediately prior
to
the Effective Time shall be converted into one (1) validly issued fully paid
and
non-assessable share of common stock of the Surviving Corporation.
(f) Fractional
Shares.
No
holder of Company Common Stock, the Series A Preferred Stock, Company Options
or
Company Warrants, after aggregation of all Parent Common Stock issuable to
such
holder at the Effective Time, shall be entitled to a fractional share of Parent
Common Stock, but instead, any such fractional shares shall be treated as set
forth in Section 1.6(b).
2.2 Exchange
of Certificates and Instruments for Closing Payment Amount.
(a) Exchange
Procedures.
(i) Within
a
reasonable period of time prior to the Closing, Parent will deliver to the
Company forms of the transmittal materials which Parent or its transfer agent
will reasonably require from Participating Rights Holders, which transmittal
materials may include any certifications Parent may request with respect to
compliance with any withholding obligations of Parent or the Surviving
Corporation under the Code. The Company will distribute such transmittal
materials to Participating Rights Holders. As promptly as practicable following
the Effective Time, Parent will deliver to each Participating Rights Holder
who
has completed such transmittal materials and returned them to Parent at or
prior
to the Closing, together with the certificate or certificates representing
outstanding shares of Company Common Stock or the Series A Preferred Stock
(the
“Certificates”) or certificates or instruments representing outstanding Company
Options or Company Warrants (“Derivative Instruments”), (x) a certificate
representing shares of Parent Common Stock issued in respect of such
Certificates or Derivative Instruments and (y) a check (or, at Parent’s
election, a wire transfer to the extent that the aggregate amount owed to any
such holder at the Closing is in excess of $500,000) representing the cash
portion of the Closing Payment Amount to which such Participating Rights Holder
is entitled; provided that such payment made by Parent by check may be made
by
delivering such checks on the Closing Date to the Stockholder Representative
Committee, which, in turn, shall distribute such checks to the appropriate
Participating Rights Holders. The delivery of such certificates and such checks
(or wire transfers, as applicable) by Parent to the Stockholder Representative
Committee shall be deemed, for all purposes, to have satisfied in full Parent’s
Closing Payment Amount obligation to such Participating Rights Holders, and
Parent shall have no further obligation for such payments. Parent shall not
be
required to pay any amount of the Closing Payment Amount to any Participating
Rights Holder until receipt from such Participating Rights Holder of properly
completed and executed transmittal materials in the form delivered by Parent.
Parent shall be entitled to rely solely and entirely on the information
contained in the Capitalization Certificate and any transmittal materials
delivered hereunder for purposes of satisfying Parent’s obligation to deliver
the Closing Payment Amount hereunder.
(ii) On
a
Holdback Payment Date, Parent shall deliver to the member of the Stockholder
Representative Committee, designated as the single member thereof upon whose
instruction Parent and the Surviving Corporation are entitled to rely pursuant
to Section 2.5, the portion of the Holdback Amount payable on such Holdback
Payment Date pursuant to Section 1.7. Parent shall make such payment in the
form
of checks, made payable to each of the Participating Rights Holders,
representing that portion of the Holdback Amount to which such Participating
Rights Holder is entitled on such Holdback Payment Date. The Stockholder
Representative Committee, in turn, shall distribute such checks to the
appropriate Participating Rights Holders. For greater certainty, the aggregate
amount represented by such checks shall not exceed the total amount of the
Holdback Amount payable by Parent to Participating Rights Holders on such
Holdback Payment Date. The delivery of checks by Parent to the Stockholder
Representative Committee pursuant to this Section 2.2(a)(ii) shall be deemed,
upon receipt and acceptance thereof by the member of the Stockholder
Representative Committee designated as the single member thereof upon whose
instruction Parent and the Surviving Corporation are entitled to rely pursuant
to Section 2.5, for all purposes, to have satisfied, in full, Parent’s
obligation to pay the Holdback Amount to the Participating Rights Holders in
accordance with Sections 1.7(a) or 1.7(b), as applicable, and Parent shall
have
no further obligations for such payments. For purposes of satisfying Parent’s
obligation to pay the Holdback Amount pursuant to Sections 1.7(a) or 1.7(b),
as
applicable, Parent shall be entitled to rely solely and entirely on the
information contained in the Capitalization Certificate.
(iii) As
promptly as practicable after the Effective Time, Parent or its transfer agent
will send to each Participating Rights Holder who does not submit completed
transmittal materials to Parent at or before the Closing, as permitted by
Section 2.2(a)(i) above, transmittal materials for use in exchanging his, her
or
its Certificates or Derivative Instruments for the applicable portion of the
Closing Payment Amount and the Holdback Amount payable, if any, into which
such
shares of Company Common Stock or the Series A Preferred Stock (other than
any
Dissenting Shares), Company Options or Company Warrants have been converted.
Until surrendered as contemplated by this Section 2.2, each Certificate or
Derivative Instrument shall be deemed at any time after the Effective Time
to
represent only the right to receive, upon such surrender, the applicable amounts
of Merger Consideration payable pursuant to Section 2.1. Upon receipt of the
completed transmittal materials and the applicable Certificates and Derivative
Instruments, Parent will issue to the Participating Rights Holder a certificate
representing shares of Parent Common Stock and deliver to the Participating
Rights Holder a check (or, at Parent’s election, a wire transfer, to the extent
that the aggregate amount owed to such Participating Rights Holder as of the
Closing is in excess of $500,000) representing (i) the cash portion of the
Closing Payment Amount to which such Participating Rights Holder is entitled
and
(ii) if and when payable, that portion of the Holdback Amount to which such
Participating Rights Holder is entitled.
(b) No
Further Rights in Certificates or Derivative Instruments.
After
the Effective Time, holders of Company Common Stock, the Series A Preferred
Stock, Company Options or Company Warrants outstanding immediately prior to
the
Effective Time will cease to be, and will have no rights as, stockholders or
rights holders of the Company or the Surviving Corporation, other than (i)
in
the case of holders of shares of Company Common Stock and the Series A Preferred
Stock (other than Dissenting Shares) and holders of Company Options and Company
Warrants, the rights to receive the applicable portions of the Merger
Consideration to be issued at the Closing, (ii) in the case of holders of
Dissenting Shares, the rights afforded under Section 262 of Delaware Law, and
(iii) rights under this Agreement and the Security Agreements.
(c) No
Liability.
None of
Parent, the Surviving Corporation or the Company shall be liable to any holder
of Company Common Stock, the Series A Preferred Stock, Company Options or
Company Warrants for any portion of the Merger Consideration delivered to an
appropriate public official pursuant to any abandoned property, escheat or
similar law.
(d) Withholding
Rights.
Each of
the Surviving Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Company Common Stock, the Series A Preferred Stock, Company Options
or
Company Warrants such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law, regardless of the form of consideration that Parent
issues in accordance with Section 1.6. To the extent that amounts are so
withheld by the Surviving Corporation or Parent, as the case may be, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to such holder in respect of which such deduction and withholding
was
made by the Surviving Corporation or Parent, as the case may be.
2.3 Stock
Transfer Books.
At the
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registration of transfers of the stock of the Company,
including Company Common Stock and the Series A Preferred Stock, thereafter
on
the records of the Company. From and after the Effective Time, the holders
of
certificates representing shares of stock of the Company outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to
such
shares except as otherwise provided herein or by any applicable
laws.
2.4 Dissenting
Shares.
(a) Notwithstanding
any provision of this Agreement to the contrary, Dissenting Shares shall not
be
converted into, or represent, the right to receive any portion of the amounts
to
be paid pursuant to Section 2.1, but the holders thereof shall only be entitled
to such rights as are granted by Delaware Law (or California Law, if
applicable). All Dissenting Shares held by Company Stockholders who shall have
failed to perfect, or who effectively shall have withdrawn or lost, their
dissenters’ rights shall thereupon be deemed to have been converted into, and to
have become exchangeable for, as of the later of the Effective Time or the
occurrence of such event, the right to receive an appropriate portion of the
Merger Consideration to be paid pursuant to Section 2.1, without any interest
thereon, upon surrender, in the manner provided in Section 2.2, of the
Certificates that formerly evidenced such shares.
(b) The
Company shall give Parent (i) prompt notice of any demands for fair value of
shares of Company Common Stock or the Series A Preferred Stock received by
the
Company, withdrawals of such demands and any other instruments served pursuant
to Delaware Law (or California Law, if applicable), if any, and received by
the
Company and (ii) the opportunity to direct all negotiations and proceedings
with
respect to all such demands for fair value under Delaware Law (or California
Law, if applicable). The Company shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for the fair
value of shares of Company Common Stock or the Series A Preferred Stock or
settle or offer to settle any such demands, other than by operation of law
or
pursuant to a final order of a court of competent jurisdiction.
2.5 Stockholder
Representative Committee.
(a) Appointment
of Stockholder Representative Committee.
Each of
Xxxx X. Xxxxx, Xxxx Xxxxxxxx and Xxxxx X. Xxxxx is hereby appointed, effective
from and after the Effective Time, to act as the Stockholder Representative
Committee under this Agreement in accordance with the terms of this Section
2.5.
The members of the Stockholder Representative Committee shall be required to
designate (and notify Parent of such designation) a single member of the
Stockholder Representative Committee upon whose instruction Parent and the
Surviving Corporation shall be entitled to rely, without any investigation
or
inquiry, as having been taken or not taken upon the authority of the Stockholder
Representative Committee. In the event that one (1) or two (2) members of the
Stockholder Representative Committee cease to be members as a result of death,
resignation, incapacity or removal, then the remaining member(s) of the
Stockholder Representative Committee shall appoint the successor member(s)
as
soon as practicable. In the event that there are no members of the Stockholder
Representative Committee at any time from and after the Effective Time as a
result of death, resignation, incapacity or removal, then those individuals
holding the positions of President, Secretary and Treasurer of the Company
immediately prior to the Effective Time shall be automatically deemed to be
appointed as successor members of the Stockholder Representative Committee
and
Parent shall be entitled to rely, without any investigation or inquiry, on
the
instruction of such individuals.
(b) Authority
After the Effective Time.
From
and after the Effective Time, the Stockholder Representative Committee shall
be
authorized, on behalf of the Company Stockholders, to:
(i) take
all
actions required by, and exercise all rights granted to, the Stockholder
Representative Committee in this Agreement or the Security
Agreements;
(ii) receive
all notices or other documents given or to be given to the Stockholder
Representative Committee by Parent pursuant to this Agreement or the Security
Agreements;
(iii) negotiate,
undertake, compromise, defend, resolve and settle any suit, proceeding or
dispute arising under this Agreement or the Security Agreements;
(iv) execute
and deliver all agreements, certificates and documents required or deemed
appropriate by the Stockholder Representative Committee in connection with
any
of the transactions contemplated by this Agreement (including executing and
delivering the Security Agreements);
(v) engage
special counsel, accountants and other advisors and incur such other expenses
in
connection with any of the transactions contemplated by any of this Agreement
or
the Security Agreements;
(vi) apply
the
Committee Reimbursement Amount to the payment of, or to the reimbursement of
the
Stockholder Representative Committee for, the expenses, charges and liabilities
which the Stockholder Representative Committee may incur pursuant to this
Section 2.5;
(vii) take
such
other action as the Stockholder Representative Committee may deem appropriate,
including:
(A) agreeing
to any modification or amendment of any of this Agreement or the Security
Agreements and executing and delivering an agreement of such modification or
amendment;
(B) taking
any actions required or permitted under any of the Security Agreements;
and
(C) all
such
other matters as the Stockholder Representative Committee may deem necessary
or
appropriate to carry out the intents and purposes of any of this Agreement
or
the Security Agreements.
(c) Reimbursement
of Expenses.
The
members of the Stockholder Representative Committee shall be entitled to receive
reimbursement out of the Committee Reimbursement Amount for any and all
expenses, charges and liabilities, including reasonable attorneys’ fees,
incurred by the Stockholder Representative Committee in the performance or
discharge of its obligations, or the exercise of its rights, under this
Agreement (the “SRC Expenses”). The Committee Reimbursement Amount shall be used
only for the payment of the SRC Expenses.
(d) Release
from Liability; Indemnification; Authority of Stockholder Representative
Committee.
Each
Participating Rights Holder hereby releases the Stockholder Representative
Committee, and each of its members, from, and each Participating Rights Holder
agrees to indemnify the Stockholder Representative Committee and each of its
members, against, liability for any action taken or not taken by him, her or
it
in his, her or its capacity as such agent, except for the liability of the
Stockholder Representative Committee, or any member thereof, to a Participating
Rights Holder for loss which such holder may suffer from the willful misconduct
or gross negligence of the Stockholder Representative Committee or such member
in carrying out his, her or its duties hereunder. By virtue of the adoption
of
this Agreement and the approval of the Merger by the stockholders of the
Company, each Participating Rights Holder (regardless of whether or not such
Participating Rights Holder votes in favor of the adoption of the Agreement
and
the approval of the Merger, whether at a meeting or by written consent in lieu
thereof) appoints, as of the date of this Agreement, the Stockholder
Representative Committee as his, her or its true and lawful agent and
attorney-in-fact to enter into any agreement in connection with the transactions
contemplated by this Agreement, to exercise all or any of the powers, authority
and discretion conferred on him under any such agreement, to give and receive
notices on his, her or its behalf and to be his, her or its exclusive
representative with respect to any matter, suit, claim, action or proceeding
arising with respect to any transaction contemplated by any such agreement,
including, without limitation, the defense, settlement or compromise of any
claim, action or proceeding for which Parent or the Surviving Corporation may
be
entitled to indemnification under Article 9 hereof, and, by virtue of its
approval of this Agreement, the Stockholder Representative Committee agrees
to
act as, and to undertake the duties and responsibilities of, such agent and
attorney-in-fact. All actions, decisions and instructions of the Stockholder
Representative Committee shall be conclusive and binding upon all of the
Participating Rights Holders.
(e) Reduction
of Holdback Amount Payments to Replenish Committee Reimbursement
Amount.
Upon
written notice delivered to Parent no less than 20 business days prior to the
making of any payment of the Holdback Amount pursuant to Section 1.7, the
Stockholder Representative Committee shall be entitled to cause Parent to deduct
an amount from the amount of the Holdback Amount then to be paid to the
Participating Rights Holders, sufficient to (i) replenish the Committee
Reimbursement Amount to a maximum of $100,000 or (ii) pay the SRC Expenses
previously incurred by the Stockholder Representative Committee and not
previously discharged out of the Committee Reimbursement Amount, and to deposit
such amount with the Stockholder Representative Committee. For greater
certainty, the Committee Reimbursement Amount may not exceed $100,000 at any
given time. Any deductions pursuant to this Section 2.5(e) shall be borne by
the
Participating Rights Holders pro rata, based on the portion of the Closing
Payment Amount paid to each of them. In connection with any such deductions
by
Parent pursuant to this Section 2.5(e), the Stockholder Representative Committee
hereby releases Parent from, and agrees to indemnify Parent against, liability
for any action taken by Parent at the direction of the Stockholder
Representative Committee in accordance with this Section 2.5(e).
(f) Release
from Liability; Indemnification.
By
virtue of the adoption of this Agreement and the approval of the Merger by
the
stockholders of the Company, each Participating Rights Holder hereby (i)
releases Parent, the Surviving Corporation and their respective Affiliates,
and
each of their respective directors, officers, employees and representatives,
from and against any and all liability for any action taken or not taken by
it,
him or her at the direction of the Stockholder Representative Committee and
(ii)
agrees to hold Parent, the Surviving Corporation and their respective
Affiliates, and each of their respective directors, officers, employees and
representatives, harmless from and against any claims made by any other
Participating Rights Holders with respect to any action taken or not taken
by
it, him or her at the direction of the Stockholder Representative
Committee.
ARTICLE III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Parent as follows as of each of (i)
the Agreement Date and (ii) the Closing Date, except as specifically
contemplated by this Agreement or as set forth on the Company Disclosure
Schedule. Notwithstanding any other provision of this Agreement or the Company
Disclosure Schedule, each exception set forth in the Company Disclosure Schedule
will be deemed to qualify only each representation and warranty set forth in
this Agreement (x) that is specifically identified (by cross-reference or
otherwise) in the Company Disclosure Schedule as being qualified by such
exception or (y) with respect to which the relevance of such exception is
readily apparent on the face of the disclosure of such exception set forth
in
the Company Disclosure Schedule.
3.1 Organization,
Good Standing and Qualification.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction
in
which the failure to so qualify would have a Material Adverse Effect. The
Company has all requisite corporate power and authority to own and operate
its
properties and assets, to execute and deliver this Agreement, to perform its
obligations under, and to carry out the provisions of, this Agreement and to
carry on its business as currently conducted and as currently proposed to be
conducted.
3.2 Capitalization
and Voting Rights.
(a) The
authorized capital of the Company consists of (except as otherwise disclosed
in
the Company Disclosure Schedule):
(i) 1,000,000
shares of Company Preferred Stock, all of which shares have been designated
Series A Preferred Stock. The respective rights, restrictions, privileges and
preferences of the Company Preferred Stock are as stated in the form of the
Company Certificate of Incorporation; and
(ii) 4,000,000
shares of Company Common Stock.
(b) The
number of shares of each series of Company Preferred Stock and of Company Common
Stock issued and outstanding is set forth on Section 3.2(b) of the Company
Disclosure Schedule.
(c) Except
as
set forth in Section 3.2(c) of the Company Disclosure Schedule, there are not
outstanding any options, warrants, instruments, rights (including conversion
or
pre-emptive rights and rights of first refusal), proxy or stockholder
agreements, or other agreements or instruments of any kind, including
convertible debt instruments, for the purchase or acquisition from the Company
of any Securities. Except for the Stockholders Agreement and the bylaws of
the
Company, the Company is not a party or subject to any agreement or
understanding, and, to the Company’s knowledge, there is no agreement or
understanding between any other persons that affects or relates to the voting
or
giving of written consents with respect to any Security or by a director of
the
Company.
(d) All
of
the issued and outstanding shares of Company Common Stock and Company Preferred
Stock (i) have been duly authorized and validly issued and are fully paid and
non-assessable and (ii) were issued in compliance with all applicable state
and
federal laws concerning the issuance of securities.
(e) Except
as
set forth in Section 3.2(e) of the Company Disclosure Schedule, each share
of
the Series A Preferred Stock is presently convertible into Company Common Stock
on a one-for-one basis, and the consummation of the transactions contemplated
hereunder will not result in any anti-dilution adjustment or other similar
adjustment to the outstanding shares of the Series A Preferred
Stock.
(f) Section
3.2(f) of the Company Disclosure Schedule sets forth the name and address of
each Securityholder and the Securities beneficially owned by each
Securityholder, and, in the case of options, warrants, instruments and other
rights to acquire capital stock of the Company, (i) the per-share exercise
price
payable therefor, (ii) the number of shares of the Company’s capital stock as to
which each option, warrant, instrument or other right is vested or exercisable
as of the Agreement Date, (iii) whether the holder of such option, warrant,
instrument or other right is an employee of the Company, (iv) whether the
vesting of such option, warrant, instrument or other right shall be accelerated
by a change of control of the Company, including as a result of the Merger
and
(v) whether or not any such options, warrants, instruments or other rights
are
intended to be “incentive stock options” as such term is defined in the
Code.
3.3 Subsidiaries.
The
Company does not own or control, directly or indirectly, any interest in any
other corporation, association, partnership, limited liability company or other
business entity. The Company is not a participant in any joint venture or
similar arrangement.
3.4 Authorization;
Binding Obligations; Governmental Consents.
(a) Except
for the Initial Stockholder Approval, all corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, and the performance
of
all obligations of the Company hereunder, have been taken prior to the Agreement
Date. This Agreement is a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights and (ii) as limited by
laws relating to the availability of specific performance, injunctive relief
or
other equitable remedies.
(b) No
consent, approval, permit, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state
or
local Governmental Authority on the part of the Company is required in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the filing of merger
documents with the Delaware Secretary of State, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable state and federal securities laws and the securities
laws of any foreign country in connection with the issuance of Parent Common
Stock in the Merger, (iii) such filings as may be required under the HSR Act
or
any applicable state or foreign anti-takeover and similar laws and (iv) such
other consents, authorizations, filings, approvals and registrations which,
if
not obtained or made, would not have a Material Adverse Effect on the Company
and would not prevent, or materially alter or delay, any of the transactions
contemplated by this Agreement.
3.5 Financial
Statements.
(a) The
Company has made available to Parent, and included in the Company Disclosure
Schedule are, the Financial Statements. The Financial Statements are complete
and correct in all material respects and, except as set forth on Section 3.5(a)
of the Company Disclosure Schedule, have been prepared in accordance with GAAP.
The Financial Statements accurately set out and describe the financial condition
of the Company on a consolidated basis as of the dates and during the periods
indicated therein, subject, in the case of the unaudited financial statements,
to normal year-end audit adjustments which are neither individually nor in
the
aggregate material. Except as set forth on Section 3.5(a) of the Company
Disclosure Schedule, the Company maintains and will continue to maintain a
standard system of accounting established and administered in accordance with
GAAP.
(b) Except
for Indebtedness reflected in the Financial Statements, the Company has no
Indebtedness in excess of $100,000 in the aggregate outstanding at the date
hereof. Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, the Company is not in default with respect to any outstanding
Indebtedness or any instrument relating thereto, nor is there any event which,
with the passage of time or giving of notice, or both, would (i) result in
a
default under or termination of any such instrument, (ii) cause the Indebtedness
under such instrument to become due and payable prior to its stated maturity
or
(iii) give rise to any other remedies by a counterparty to any such instrument,
and no such Indebtedness or any instrument or agreement relating thereto
purports to limit the issuance of any Securities by the Company or the operation
of the business of the Company. Complete and correct copies of all instruments
(including all amendments, supplements, waivers and consents) relating to any
Indebtedness of the Company have been furnished to Parent.
(c) The
current liabilities (as such term is understood under GAAP) of the Company
as of
June 30, 2006 do not exceed $4,030,400.
3.6 Liabilities.
Except
as set forth in Section 3.6 of the Company Disclosure Schedule, the Company
has
no material liabilities not disclosed in the Financial Statements, and, to
the
best of its knowledge, the Company knows of no material contingent liabilities
not disclosed in the Financial Statements, except current liabilities incurred
in the ordinary course of business consistent with past practice subsequent
to
the Financial Statements.
3.7 Litigation.
Except
as set forth on Section 3.7 of the Company Disclosure Schedule, there is no
action, suit, proceeding or investigation pending or, to the knowledge of the
Company, currently threatened against the Company or any of its officers or
directors, nor is the Company aware that there is any basis for any of the
foregoing. The foregoing includes actions, suits, proceedings or investigations
pending or, to the knowledge of the Company, threatened (or any basis therefor
known to the Company) involving the prior employment of any of the Company’s
employees, the use by any of the Company’s employees in connection with the
Company’s business of any information or techniques allegedly proprietary to any
of his or her former employers or the obligations of any of the Company’s
employees under any agreements with prior employers. The Company is not a party
or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company currently pending or that the Company
intends to initiate.
3.8 Intellectual
Property.
(a) Section
3.8(a) of the Company Disclosure Schedule sets forth a complete and accurate
list of (i) all Intellectual Property owned, licensed or used by the Company,
all applications therefor and all licenses, assignments and other agreements
relating thereto to which the Company is a party and (ii) all written agreements
relating to technology, know-how and processes which the Company has licensed
or
authorized for use by others.
(b) The
operation of the business of the Company as currently conducted, or as currently
contemplated by the Company to be conducted, does not interfere with, conflict
with, infringe upon, misappropriate or otherwise violate the Intellectual
Property rights of any third party, and no action or claim is pending or, to
the
knowledge of the Company, threatened, alleging that the operation of such
business interferes with, conflicts with, infringes upon, misappropriates or
otherwise violates the Intellectual Property rights of any third party, and,
to
the knowledge of the Company, there is no basis therefor.
(c) The
Company is the sole owner of the entire right, title and interest in and to,
or
has a valid license or other legal right under, Company Owned Intellectual
Property and the Company Licensed Intellectual Property used in the operation
of
its business as currently conducted or as currently proposed by the Company
to
be conducted, subject to the terms of the license agreements governing the
Company Licensed Intellectual Property.
(d) There
are
no outstanding options, licenses or agreements of any kind relating to the
Company’s Intellectual Property, nor is the Company bound by, or a party to, any
options, licenses or agreements of any kind with respect to Intellectual
Property other than Company Licensed Intellectual Property.
(e) The
Company has no present knowledge from which it could reasonably conclude that
the Company Owned Intellectual Property and any Intellectual Property licensed
to the Company under the Company Licensed Intellectual Property, are invalid
or
unenforceable, and the same have not been adjudged invalid or unenforceable,
in
whole or in part. The Company Owned Intellectual Property and the Company
Licensed Intellectual Property constitute all of the Intellectual Property
used
in, and necessary for, the operation of the business of the Company as currently
conducted or as currently proposed by the Company to be conducted. The Company
has complied with all of its obligations of confidentiality in respect of the
claimed trade secrets or proprietary information of others and knows of no
violation of such obligations of confidentiality as are owed to it.
(f) Except
as
set forth in Section 3.8(f) of the Company Disclosure Schedule, no claims or
actions have been asserted, are pending or, to the knowledge of the Company,
threatened against the Company (i) based upon or challenging or seeking to
deny
or restrict the ownership by the Company, or license rights of the Company,
of
any of the Company Owned Intellectual Property or Company Licensed Intellectual
Property, (ii) alleging that any services provided by, processes used by or
products manufactured or sold by the Company infringe or misappropriate any
Intellectual Property right of any third party or (iii) alleging that the
Company Licensed Intellectual Property is being licensed or sublicensed in
conflict with the terms of any license or other agreement, and, to the knowledge
of the Company, there is no basis for such a claim.
(g) As
of the
Agreement Date, to the knowledge of the Company, no person is engaging in any
activity that infringes or misappropriates the Company Owned Intellectual
Property or Company Licensed Intellectual Property. Except as set forth in
Section 3.8(g) of the Company Disclosure Schedule, the Company has not granted
any license or other right to any third party with respect to the Company Owned
Intellectual Property or Company Licensed Intellectual Property. The execution,
delivery and performance of this Agreement by the Company, and the consummation
of the transactions contemplated by this Agreement, will not breach, violate
or
conflict with any instrument or agreement concerning the Company Owned
Intellectual Property, will not cause the forfeiture or termination, or give
rise to a right of forfeiture or termination, of any of the Company Owned
Intellectual Property or materially impair the right of Parent to license,
or to
bring any action for the infringement of, any material Company Owned
Intellectual Property.
(h) The
Company has delivered or made available to Parent correct and complete copies
of
all the licenses of the Company Licensed Intellectual Property, other than
licenses of commercial off-the-shelf computer software. With respect to each
such license:
(i) such
license is valid and binding and in full force and effect and represents the
entire agreement between the respective licensor and licensee with respect
to
the subject matter of such license;
(i) such
license will not cease to be valid and binding and in full force and effect
on
terms identical in all material respects to those currently in effect as a
result of the consummation of the transactions contemplated by this Agreement,
nor will the consummation of the transactions contemplated by this Agreement
constitute a material breach or default under such license or otherwise so
as to
give the licensor or any other person a right to terminate such
license;
(ii) except
as
set forth in Section 3.8(h)(iii) of the Company Disclosure Schedule, the Company
has not (A) received any notice of termination or cancellation under such
license, (B) received any notice of breach or default under such license, which
breach has not been cured or (C) granted to any other third party any rights,
adverse or otherwise, under such license that would constitute a material breach
of such license; and
(iii) neither
the Company nor, to the knowledge of the Company, any other party to such
license is in material breach or default thereof, and, to the knowledge of
the
Company, no event has occurred that, with notice or lapse of time, or both,
would constitute such a material breach or default or permit termination,
modification or acceleration under such license.
(iv) Except
as
set forth in Section 3.8(i) of the Company Disclosure Schedule, the Company
has
no knowledge that any of its respective employees, officers, directors, agents
or consultants is (i) subject to confidentiality restrictions in favor of any
third person, the breach of which could subject the Company to any liability
or
(ii) obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with their duties
to
the Company, or that would conflict with the Company’s business as currently
conducted or currently proposed to be conducted. Each employee and officer
of,
and consultant to, the Company has executed a proprietary information and
inventions (or similar) agreement containing substantially the same material
terms as those set forth in the form of agreement attached as Exhibit B hereto.
No current or former employee or officer of, or consultant to, the Company
has
excluded works or inventions made prior to his or her employment or relationship
with the Company from his or her assignment of inventions pursuant to such
employee, officer or consultant’s proprietary information and inventions
agreement.
(j) The
Company has taken reasonable steps in accordance with normal industry practice
to maintain the confidentiality of its trade secrets and other confidential
Intellectual Property. To the knowledge of the Company, (i) there has been
no
misappropriation of any material trade secrets or other material confidential
Company Owned Intellectual Property by any person, (ii) no employee, independent
contractor or agent of the Company has misappropriated any trade secrets of
any
other person in the course of such performance as an employee, independent
contractor or agent and (iii) no employee, independent contractor or agent
of
the Company is in material default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Company Owned Intellectual
Property.
(k) None
of
the execution or delivery of this Agreement, the carrying on of the Company’s
business by the employees of, and consultants to, the Company or the conduct
of
the Company’s business, as currently conducted or as currently proposed to be
conducted, will, to the knowledge of the Company, conflict with or result in
a
breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated. Except to the extent already validly assigned to the Company, the
Company does not believe that it is, or will be, necessary to utilize any
inventions or proprietary information of any of its respective employees (or
people it currently intends to hire) made prior to their employment by the
Company.
3.9 Compliance
with Other Instruments.
Except
as set forth in Section 3.9 of the Company Disclosure Schedule, the Company
is
not in violation or default of any provision of the Company Certificate of
Incorporation or bylaws, or of any mortgage, indenture, contract, agreement,
instrument, judgment, order, writ, decree or contract to which it is a party
or
by which it is bound that could reasonably be expected to result in a Material
Adverse Effect or, to the Company’s knowledge, of any provision of any federal
or state statute, rule or regulation applicable to the Company that could
reasonably be expected to result in a Material Adverse Effect. The execution,
delivery and performance of this Agreement will not result in any such violation
or be in conflict with or constitute, with or without the passage of time or
giving of notice, or both, either a default under any such provision,
instrument, judgment, order, writ, decree or material contract or result in
the
creation of any mortgage, pledge, lien, charge or encumbrance upon any of the
properties or assets of the Company or the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, authorization or approval
applicable to the business, operations or any of the assets or properties of
the
Company.
3.10 Agreements;
Actions.
(a) Except
as
set forth in Section 3.10(a) of the Company Disclosure Schedule, there are
no
agreements, understandings or proposed transactions between the Company and
any
of its officers, directors, Affiliates or any Affiliate thereof.
(b) Section
3.10(b) of the Company Disclosure Schedule sets forth all agreements,
understandings, instruments, contracts, proposed transactions, judgments,
orders, writs or decrees to which the Company is a party or by which it is
bound
that involve (i) obligations (contingent or otherwise) of, or payments to,
the
Company in excess of $50,000 or that may not be extinguished on thirty (30)
days
notice or less, (ii) the license, assignment or transfer of any patent,
copyright, trade secret or other proprietary right to or from the Company (other
than licenses to the Company arising from the purchase of off-the-shelf or
other
standard products), (iii) the manufacture, marketing, sale or distribution
of
any products of the Company, in any jurisdiction, or any restrictions on the
Company’s exclusive rights to develop, manufacture, assemble, distribute, market
and sell its products, (iv) indemnification by the Company with respect to
infringements of proprietary rights (other than indemnification obligations
arising from purchase, sale or license agreements entered into in the ordinary
course of business), (v) any supply agreements or (vi) other agreements that
are
otherwise material to the business of the Company.
(c) The
Company has delivered, or has caused to be delivered, to Parent correct and
complete copies of each contract, agreement or other arrangement listed in
Section 3.10 of the Company Disclosure Schedule, as such contracts, agreements
and arrangements are amended to date. Except as set forth in Section 3.10(c)
of
the Company Disclosure Schedule, each such contract, agreement or other
arrangement is a valid, binding and enforceable obligation of the Company,
and,
to the knowledge of the Company, of the other party or parties thereto, and
is
in full force and effect. Except as set forth in Section 3.10(c) of the Company
Disclosure Schedule, neither the Company nor, to the knowledge of the Company,
the other party or parties thereto is in breach or non-compliance, or, to the
knowledge of the Company, is considered to be in breach or non-compliance by
the
other party thereto, of any term of any such contract, agreement or other
arrangement. Except as set forth in Section 3.10(c) of the Company Disclosure
Schedule, the Company has not received notice of any default or threat thereof
with respect to any such contract, agreement or other arrangement, and the
Company does not have any reasonable basis for suspecting that any such default
exists or will arise. Subject to obtaining any necessary consents by the other
party or parties to any such contract, agreement or other arrangement (as
further set forth in Section 3.10(c) of the Company Disclosure Schedule), no
contract, agreement or other arrangement listed in Section 3.10 of the Company
Disclosure Schedule includes or incorporates any provision, the effect of which
would be to enlarge or accelerate any obligations of the Company or give
additional rights to any other party thereto or will, in any other way, be
adversely affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
(d) Except
as
set forth in Section 3.10(d) of the Company Disclosure Schedule, the Company
has
not (i) declared or paid any dividends or authorized or made any distribution
upon or with respect to any class or series of its capital stock, (ii) incurred
any Indebtedness for money borrowed or any other liabilities individually in
excess of $50,000 or, in the case of Indebtedness or liabilities individually
less than $50,000, in excess of $250,000 in the aggregate, (iii) made any loans
or advances to any person, other than ordinary advances for travel expenses
or
(iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other
than in the ordinary course of business.
(e) For
the
purposes of Section 3.10(b), all liabilities, agreements, understandings,
instruments, contracts and proposed transactions involving the same person
(or
persons the Company has reason to believe are affiliated with one another)
shall
be aggregated for the purpose of meeting the individual minimum dollar amounts
of the provisions of Section 3.10(b).
3.11 Related-Party
Transactions.
Except
as set forth in Section 3.11 of the Company Disclosure Schedule, no employee,
officer or director of, or consultant to, the Company, or any member of his
or
her immediate family, is indebted to the Company, nor is the Company indebted
(or committed to make loans or extend or guarantee credit) to any of them,
other
than (a) for payment of salary or fees (in the case of consultants) for services
rendered, (b) reimbursement for reasonable expenses incurred on behalf of the
Company and (c) for other standard employee benefits made generally available
to
all employees (including stock option agreements outstanding under the Company
Option Plan). Except as set forth in Section 3.11 of the Company Disclosure
Schedule, to the knowledge of the Company, none of such persons has any direct
or indirect ownership interest in any firm or corporation with which the Company
is Affiliated or with which the Company has a business relationship, or any
firm
or corporation that competes with the Company, except that employees, officers
or directors of the Company and members of their respective immediate families
may own stock in publicly traded companies that may compete with the Company.
No
member of the immediate family of any officer or director of the Company is
directly or indirectly interested in any material contract with the Company.
Except as may be disclosed in the Financial Statements, the Company is not
a
guarantor or indemnitor of any Indebtedness of any other person.
3.12 Changes.
Except
as reflected in the Financial Statements provided to Parent, since the date
of
such Financial Statements, there has not been:
(a) Any
change in the assets, liabilities, financial condition or operations of the
Company from that reflected in the Financial Statements, other than changes
in
the ordinary course of business consistent with past practice, none of which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect;
(b) Any
resignation or termination of any key officers or employees of the
Company;
(c) Any
material change, except in the ordinary course of business consistent with
past
practice, in the contingent obligations of the Company by way of guaranty,
endorsement, indemnity, warranty or otherwise;
(d) Any
damage, destruction or loss, whether or not covered by insurance, which has
had,
or could reasonably be expected to have, a Material Adverse Effect;
(e) Any
waiver by the Company of a right or of a debt owed to it;
(f) Any
direct or indirect loans made by the Company to any stockholder, employee,
officer or director of the Company, other than advances made in the ordinary
course of business consistent with past practice;
(g) Any
material change in any compensation arrangement or agreement with any employee,
officer, director or stockholder of the Company, except as set forth in Section
3.12(g) of the Company Disclosure Schedule;
(h) Any
declaration or payment of any dividend or other distribution of the assets
of
the Company;
(i) Any
labor
organization activity;
(j) Any
Indebtedness, obligation or liability incurred, assumed or guaranteed by the
Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business consistent with past
practice;
(k) Any
sale,
assignment, transfer or license of any patents, trademarks, copyrights, trade
secrets or other intangible assets of the Company;
(l) Any
change in any material agreement to which the Company is a party, or by which
it
is bound, which has had, or could reasonably be expected to have, a Material
Adverse Effect; or
(m) Except
as
set forth in Section 3.12(m) of the Company Disclosure Schedule, to the
knowledge of the Company, any other event or condition of any character that,
either individually or cumulatively, has had, or could reasonably be expected
to
have, a Material Adverse Effect.
3.13 Compliance
with Laws; Permits.
The
Company is not in violation of any applicable statute, rule, regulation, order,
judgment, decree, writ or restriction of any domestic or foreign government
or
any instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties that could reasonably be expected to result
in a Material Adverse Effect. The Company has all Permits necessary for the
conduct of its business as now being conducted by it. As of the date hereof,
no
suspension or cancellation of any of the Permits is pending or, to the knowledge
of the Company, threatened.
3.14 Environmental,
Zoning and Safety Laws.
Except
as set forth in Section 3.14 of the Company Disclosure Schedule, (a) neither
the
activities carried on by the Company at the facilities, offices or properties
leased by the Company nor, to the knowledge of the Company, such facilities,
offices or properties, are in material violation of any Environmental Laws,
or
any other zoning, health or safety law or regulation, (b) neither the Company
nor, to the knowledge of the Company, any operator of its past or present
properties is or has been in violation, or alleged violation, of, or has any
liability or threatened liability under, any Environmental Laws, (c) none of
the
properties currently or formerly owned, leased or operated by the Company
(including soils and surface and ground waters) are contaminated with any
Hazardous Substance, (d) the Company is not actually, potentially or allegedly
liable for any off-site contamination by Hazardous Substances, (e) the Company
is not actually, potentially or allegedly liable under any Environmental Law
(including pending or threatened liens), (f) the Company has all Environmental
Permits, (g) the Company has always been, and continues to be, in compliance
with its Environmental Permits and (h) neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will
require any investigation, remediation or other action with respect to Hazardous
Substances, or any notice to or consent of Governmental Authorities or third
parties, pursuant to any applicable Environmental Law or Environmental Permit.
Attached as Section 3.14 of the Company Disclosure Schedule are all reports
and
other analyses in the Company’s possession relating to the condition of the
property on which the Company conducts, or has conducted, any
operations.
3.15 Manufacturing
and Marketing Rights.
Except
as set forth in Section 3.15 of the Company Disclosure Schedule, the Company
has
not granted rights to manufacture, produce, assemble, license, market or sell
its products to any other person and is not bound by any agreement that affects
the Company’s exclusive right to develop, manufacture, assemble, distribute,
market or sell its products.
3.16 Disclosure.
The
Company has provided Parent with all the information that Parent has requested
for deciding whether to execute and deliver this Agreement. Neither this
Agreement (including all the exhibits and schedules hereto) nor any of the
other
statements or certificates made or delivered in connection herewith contains
any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein not misleading in light of the circumstances
under
which they were made. Except as set forth in this Agreement, to the knowledge
of
the Company, there is no material fact that the Company has not disclosed to
Parent and of which any of its officers, directors or executive employees is
aware that could reasonably be expected to result in a Material Adverse Effect
on the Company or which could reasonably be expected to be material to
Parent.
3.17 Registration
or First Offer Rights.
Except
as set forth in Section 3.17 of the Company Disclosure Schedule, the Company
has
not granted or agreed to grant any registration rights, including piggyback
rights, or any right of first offer to any person.
3.18 Insurance.
The
Company maintains the insurance policies and binders which are set forth in
Section 3.18 of the Company Disclosure Schedule. Such policies and binders
are
in full force and effect, and the Company has complied in all material respects
with each of such insurance policies and binders (including with respect to
the
payment of premiums) and has not been notified by any of its insurers, and
does
not have any reason to believe, that such policies will not be renewed on
substantially the terms currently in effect.
3.19 Employee
Benefit Plans.
(a) Identification
of Plans.
Except
as disclosed in Section 3.19(a) of the Company Disclosure Schedule, the Company
does not currently maintain or contribute to, and does not have any outstanding
liability to or in respect of or obligation under, any pension, profit-sharing,
deferred compensation, bonus, stock option, employment, share appreciation
right, severance, group or individual health, dental, medical, life insurance,
survivor benefit or similar plan, policy, arrangement or agreement, whether
formal or informal, written or oral, for the benefit of any current or former
director, officer or employee of, or consultant to, the Company. Each of the
arrangements set forth in Section 3.19(a) of the Company Disclosure Schedule
is
herein referred to as an “Employee Benefit Plan”, except that any such
arrangement which is a multi-employer plan shall be treated as an Employee
Benefit Plan only for purposes of Sections 3.19(d)(ii) and (vi) and 3.19(g)
below.
(b) Delivery
of Documents.
The
Company has heretofore delivered to the Parent true, correct and complete copies
of each Employee Benefit Plan and, with respect to each such Employee Benefit
Plan, true, correct and complete copies of (i) any associated trust, custodial,
insurance or service agreements, (ii) any annual report, actuarial report or
disclosure materials (including specifically any summary plan descriptions)
submitted to any governmental agency or distributed to participants or
beneficiaries thereunder in the current calendar year or any of the three (3)
preceding calendar years and (iii) the most recently received IRS determination
letters, if any, and any governmental advisory opinions, rulings, compliance
statements, closing agreements or similar materials specific to such Employee
Benefit Plan.
(c) Compliance
with Terms and Law.
Each
Employee Benefit Plan is, and has heretofore been, maintained and operated
in
material compliance with the terms of such Employee Benefit Plan and in material
compliance with the requirements prescribed (whether as a matter of substantive
law or as necessary to secure favorable tax treatment) by any and all applicable
statutes, governmental or court orders or governmental rules or regulations
in
effect from time to time, including ERISA and the Code, and applicable to such
Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Code and each trust or other entity intended to
qualify as a “voluntary employee benefit association” within the meaning of
Section 501(c)(9) of the Code and associated with any Employee Benefit Plan
is
expressly identified as such in Section 3.19(c) of the Company Disclosure
Schedule and has been determined to be so qualified by the IRS, may rely on
an
opinion letter issued by the IRS with respect to a standardized prototype plan
adopted in accordance with the requirements for such reliance, or has time
remaining for application to the IRS for a determination of the qualified status
of such Employee Benefit Plan, and, to the knowledge of the Company, nothing
has
occurred as to each which has resulted, or is likely to result in, the
revocation or denial of such determination or which, to the knowledge of the
Company, would not reasonably be expected to be resolved without such revocation
or denial under the compliance resolution programs of the IRS to preserve such
qualification.
(d) Absence
of Certain Events and Arrangements.
Except
as set forth in Section 3.19(d) of the Company Disclosure Schedule:
(i) there
is
no pending or, to the knowledge of the Company, threatened legal action,
proceeding or investigation, other than routine claims for benefits, concerning
any Employee Benefit Plan or, to the knowledge of the Company, any fiduciary
or
service provider thereof, and, to the knowledge of the Company, there is no
basis for any such legal action or proceeding;
(ii) no
liability (contingent or otherwise) to the PBGC or any multi-employer plan
has
been incurred by the Company (other than insurance premiums satisfied in due
course);
(iii) no
reportable event, or event or condition which presents a material risk of
termination by the PBGC has occurred with respect to any Employee Benefit
Plan;
(iv) no
Employee Benefit Plan or any party in interest with respect thereof has, to
the
knowledge of the Company, engaged in a prohibited transaction which could
subject the Company or any of its Subsidiaries directly or indirectly to
liability under Section 409 or 502(i) of ERISA or Section 4975 of the
Code;
(v) no
Employee Benefit Plan provides welfare benefits subsequent to termination of
employment to employees or their beneficiaries, except to the extent required
by
applicable state laws and Title I, Part 6 of ERISA;
(vi) the
Company has not announced any intention to modify or terminate any Employee
Benefit Plan or adopt any arrangement or program which, once established, would
come within the definition of an Employee Benefit Plan; and
(vii) the
Company has not undertaken to maintain any Employee Benefit Plan for any period
of time, and each Employee Benefit Plan is terminable at the sole discretion
of
the sponsor thereof, subject only to such constraints as may be imposed by
applicable law.
(e) Funding
of Certain Plans.
With
respect to each Employee Benefit Plan for which a separate fund of assets is
or
is required to be maintained, full and timely payment has been made of all
amounts required of the Company under the terms of each such Employee Benefit
Plan or applicable law, through the Closing Date, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any such Employee Benefit Plan.
The current value of the assets of each Employee Benefit Plan, as of the end
of
the most recently ended plan year of that Employee Benefit Plan, equals or
exceeds the current value of all benefits liabilities under that Employee
Benefit Plan.
(f) Effect
of Transactions.
The
execution and delivery of this Agreement and the consummation of the Merger
and
the other transactions contemplated by this Agreement will not, by themselves
or
in combination with any other event (regardless of whether that other event
has
or will occur), result in any payment (whether of severance pay or otherwise)
becoming due from or under any Employee Benefit Plan (including any employment
agreement) to any current or former director, officer or employee of, or
consultant to, the Company or result in the vesting, acceleration of payment
or
increases in the amount of any benefit payable to or in respect of any such
current or former director, officer or employee of, or consultant to, the
Company.
(g) Multi-employer
Plans.
No
Employee Benefit Plan is a multi-employer plan.
(h) Definitions.
For
purposes of this Section 3.19, “multi-employer plan”, “party in interest”,
“current value”, “reportable event” and “benefit liability” have the same
meanings assigned such terms under Sections 3, 4043(b) or 4001(a) of ERISA,
and
“affiliate” means any entity which, under Section 414 of the Code, is treated as
a single employer with the Company, determined, however, without regard to
this
Agreement.
3.20 FDA
and Regulatory Matters.
(a) (i)
With
respect to the Company Products and, to the extent applicable, products
currently under development by the Company (collectively, the “Products”), (A)
except as set forth on Section 3.20 of the Company Disclosure Schedule, the
Company has obtained all necessary and applicable approvals, clearances,
authorizations, licenses and registrations required by United States or foreign
governments or government agencies, to permit the design, development,
pre-clinical and clinical testing, manufacture, labeling, sale, distribution
and
promotion of the Products in jurisdictions where it currently conducts such
activities or contemplates conducting such activities (the “Activities to Date”)
with respect to each Product (collectively, the “Company Licenses”), (B) the
Company is in material compliance with all terms and conditions of each Company
License and with all applicable Laws pertaining to the Activities to Date with
respect to each Product which is not required to be the subject of a Company
License, (C) the Company is in compliance with all applicable Laws regarding
registration, license, certification for each site at which a Product is
manufactured, labeled, sold or distributed and (D) to the extent any Product
has
been exported from the United States, the Company has exported such Product
in
compliance in all material respects with applicable Law; (ii) all manufacturing
operations performed by or on behalf of the Company have been, and are being,
conducted in all material respects in compliance with the Quality Systems
regulations of the FDA and, to the extent applicable to the Company, counterpart
regulations in the European Union, Canada and all other countries where
compliance is required; (iii) all non-clinical laboratory studies of Products
under development, sponsored by the Company and intended to be used to support
regulatory clearance or approval, have been and are being conducted in
compliance with the FDA’s Good Laboratory Practice for Non-Clinical Studies
regulations (21 CFR Part 58) in the United States and, to the extent applicable
to the Company, counterpart regulations in the European Union, Canada and all
other countries; and (iv) the Company is in compliance with all applicable
reporting requirements for all Company Licenses or plant registrations described
in clause (i) above, including, but not limited to, applicable adverse event
reporting requirements in the United States and outside of the United States
under applicable Law.
(b) The
Company is in compliance with all requirements of the FDA and non-United States
equivalent agencies and similar state and local Laws applicable to the
maintenance, compilation and filing of reports, including medical device
reports, with regard to the Products. Section 3.20(b) of the Company Disclosure
Schedule sets forth a list of all applicable adverse event reports related
to
the Products, including any Medical Device Reports (as defined in 21 CFR 803).
Set forth on Section 3.20(b) of the Company Disclosure Schedule are complaint
review and analysis reports of the Company through the date hereof, including
information regarding complaints by product and root cause analysis of closed
complaints, and such reports are correct in all material respects.
(c) The
Company has not received any written notice or other written communication
from
the FDA or any other Governmental Authority (i) contesting the pre-market
clearance or approval of, the uses of or the labeling and promotion of any
of
the Products or (ii) otherwise alleging any violation of any Laws by the
Company.
(d) There
have been no recalls, field notifications or seizures ordered or adverse
regulatory actions taken (or, to the knowledge of the Company, threatened)
by
the FDA or any other Governmental Authority with respect to any of the Products,
including any facilities where any such Products are produced, processed,
packaged or stored, and the Company has not, within the last three (3) years,
either voluntarily or at the request of any Governmental Authority, initiated
or
participated in a recall of any Product or provided post-sale warnings regarding
any Product.
(e) The
Company has conducted, and is continuing to conduct, all of its clinical trials
with reasonable care and in accordance with all applicable Laws and the stated
protocols for such clinical trials.
(f) All
filings with and submissions to the FDA and any corollary entity in any other
jurisdiction made by the Company with regard to the Products, whether oral,
written or electronically delivered, were true, accurate and complete as of
the
date made and, to the extent required to be updated, as so updated, remain
true,
accurate and complete as of the date hereof and do not materially misstate
any
of the statements or information included therein or omit to state a material
fact necessary to make the statements therein not misleading.
3.21 Brokers;
Expenses.
No
finder, broker, agent or other similar intermediary has acted for or on behalf
of the Company or its stockholders in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated
hereby.
3.22 Consents.
Except
as set forth in Section 3.22 of the Company Disclosure Schedule, no permit,
approval, authorization or consent of any person (excluding Governmental
Authorities) is required in connection with the execution, delivery and
performance by the Company of this Agreement or the consummation of the Merger
or the other transactions contemplated hereby.
3.23 Taxes.
(a) Filing
of Tax Returns and Payment of Taxes.
The
Company has timely filed all Tax Returns required to be filed by it, each such
Tax Return has been prepared in compliance with all applicable laws and
regulations, and all such Tax Returns are true, accurate and complete in all
respects. All Taxes that have become due and payable by the Company have been
timely paid, and the Company is not and will not be liable for any additional
Taxes in respect of any Taxable period or any portion thereof ending on or
before the date of the unaudited consolidated financial statements forming
part
of the Financial Statements included in the Company Disclosure Schedule in
an
amount that exceeds the corresponding reserve therefor separately identified
in
Section 3.23(a) of the Company Disclosure Schedule, if any, as reflected in
such
Financial Statements, and any Taxes of the Company arising after such date
and
at or before the Effective Time have been or will be incurred in the ordinary
course of the Company’s business. The Company has delivered to Parent true,
correct and complete copies of all Tax Returns with respect to income Taxes
filed by or with respect to it with respect to Taxable periods ended on or
after
December 31, 1999 (the “Delivered Tax Returns”), and has delivered or made
available to the Parent all relevant documents and information with respect
thereto, including without limitation work papers, records, examination reports,
and statements of deficiencies proposed, assessed against or agreed to by the
Company.
(b) Deficiencies.
No
deficiency or adjustment in respect of Taxes has been proposed, asserted or
assessed by any Taxation Authority against the Company. There are no outstanding
refund claims with respect to any Tax or Tax Return of the Company.
(c) Liens.
There
are no liens for Taxes (other than current Taxes not yet due and payable) on
any
of the assets of the Company.
(d) Extensions
to Statute of Limitations for Assessment of Taxes.
The
Company has not consented to extend the time in which any Tax may be assessed
or
collected by any Taxation Authority.
(e) Extensions
of the Time for Filing Tax Returns.
The
Company has not requested or been granted an extension of the time for filing
any Tax Return that has not yet been filed, except as described in Section
3.23(e) of the Company Disclosure Schedule.
(f) Pending
Proceedings.
There
is no action, suit, Taxation Authority proceeding, or audit with respect to
any
Tax now in progress, pending or, to the knowledge of the Company, threatened
against or with respect to the Company.
(g) No
Failures to File Tax Returns.
No
claim has ever been made by a Taxation Authority in a jurisdiction where the
Company does not pay Tax or file Tax Returns that the Company is or may be
subject to Taxes assessed by such jurisdiction.
(h) Tax
Attributes, Etc.
Set
forth in Section 3.23(h) of the Company Disclosure Schedule are the net
operating loss, net capital loss, credit, minimum Tax, charitable contribution
and other Tax carryforwards (by type of carryforward and expiration date, if
any) of the Company. Except as set forth in Section 3.23(h) of the Company
Disclosure Schedule, none of those carryforwards are presently subject to
limitation under Sections 382, 383, or 384 of the Code, or the federal
consolidated return regulations, or any analogous provision of foreign, state,
or local Tax Law.
(i) Elections.
All
elections with respect to Taxes affecting the Company that were not made in
the
Delivered Tax Returns are described in Section 3.23(i) of the Company Disclosure
Schedule.
(j) Membership
in Affiliated Groups, Liability for Taxes of Other Persons, Etc.
The
Company has never been a member of any affiliated group of corporations (as
defined in Section 1504(a) of the Code) or filed or been included in a combined,
consolidated or unitary Tax Return. The Company is neither a party to, nor
bound
by, any Tax sharing or allocation agreement. The Company is not presently
liable, nor does the Company have any potential liability, for the Taxes of
another person (i) under Treasury Regulations Section 1.1502-6 (or comparable
provision of state, local or foreign law), (ii) as transferee or successor
or
(iii) by contract of indemnity or otherwise.
(k) Adjustments
under Section 481.
The
Company will not be required, as a result of a change in method of accounting
for any period ending on or before or including the Effective Time, to include
any adjustment under Section 481(c) of the Code (or any similar or corresponding
provision or requirement under any other Tax Law) in Taxable income for any
period ending on or after the Effective Time.
(l) Withholding
Taxes.
The
Company has timely withheld and timely paid all Taxes which are required to
have
been withheld and paid by it in connection with amounts paid or owing to any
employee, independent contractor, creditor or other person.
(m) Permanent
Establishments and Branches Outside the United States.
The
Company does not have a permanent establishment in any country with which the
United States of America has a relevant Tax treaty, as defined in such relevant
Tax treaty, and does not otherwise operate or conduct business through any
branch in any country other than the United States.
(n) U.S.
Real Property Holding Corporation.
The
Company is not and has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2), during the applicable
period specified in Code Section 897(c)(1)(A)(ii).
(o) Safe
Harbor Lease Property.
None of
the property owned or used by the Company is subject to a Tax benefit transfer
lease executed in accordance with Section 168(f)(8) of the Internal Revenue
Code
of 1954, as amended by the Economic Recovery Tax Act of 1981.
(p) Tax-Exempt
Use Property.
None of
the property owned by the Company is “tax-exempt use property” within the
meaning of Section 168(h) of the Code.
(q) Security
for Tax-Exempt Obligations.
None of
the assets of the Company directly or indirectly secures any Indebtedness,
the
interest on which is tax-exempt under Section 103(a) of the Code, and the
Company is not directly or indirectly an obligor or a guarantor with respect
to
any such Indebtedness.
(r) Parachute
Payments, Etc.
The
Company has not made any payments, is not obligated to make any payments, and
is
not a party to any agreement that under certain circumstances could obligate
it
to make any payments, that will not be deductible under Code Sections 162(m)
or
280G.
(s) Rulings.
There
are no outstanding rulings of, or requests for rulings by, any Taxation
Authority addressed to the Company that are, or if issued would be, binding
on
the Company.
(t) Divisive
Transactions.
The
Company has never been either a “distributing corporation” or a “controlled
corporation” in connection with a distribution of stock qualifying for tax-free
treatment, in whole or in part, pursuant to Section 355 of the
Code.
(u) Section
83(b) Elections.
All
persons who have purchased shares of the Company’s stock that at the time of
such purchase were subject to a substantial risk of forfeiture under Section
83
of the Code have timely filed elections under Section 83(b) of the Code and
any
analogous provisions of applicable state and local Tax Laws.
3.24 Books
and Records.
The
books of account, minute books, stock record books and other records of the
Company, all of which have been made available to Parent, are complete and
correct and have been maintained in accordance with sound business practices
and
the requirements, including the maintenance of an adequate system of internal
controls. The minute books of the Company contain minutes of all meetings of
the
board of directors, of committees of directors and of stockholders since the
date of incorporation of the Company and reflect all corporate actions and
transactions referred to in such minutes accurately in all material respects.
On
the Closing Date, all such books and records shall be in the possession of
the
Company.
3.25 Employees.
The
Company has no collective bargaining agreements with any of its employees.
There
is no labor union organizing activity pending or, to the Company’s knowledge,
threatened with respect to the Company. To the Company’s knowledge and except as
set forth in Section 3.25 of the Company Disclosure Schedule, no employee of
the
Company, nor any consultant with whom the Company has contracted, is in
violation of any term of any employment contract, proprietary information
agreement or any other agreement relating to the right of any such individual
to
be employed by, or to contract with, the Company because of the nature of the
business to be conducted by the Company; and to the Company’s knowledge, the
continued employment by the Company of its present employees, and the
performance of the Company’s contracts with its independent contractors, will
not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. Except as set forth in Section
3.25 of the Company Disclosure Schedule, no employee of the Company has been
granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any key group of
employees, intends to terminate his, her or its employment with the Company,
nor
does the Company have a present intention to terminate the employment of any
officer, key employee or key group of employees.
3.26 Obligations
of Management.
Except
as set forth in Section 3.26 of the Company Disclosure Schedule, each executive
officer of the Company is currently devoting 100% of his or her business time
to
the conduct of the business of the Company. The Company is not aware of any
officer or key employee of the Company planning to work less than full time
at
the Company in the future.
3.27 Title
to Properties and Assets; Liens, Etc.
The
Company has good and marketable title to all of its properties and assets,
including the properties and assets reflected in the most recent balance sheet
included in the Financial Statements, and good title to its leasehold estates,
in each case, not subject to any mortgage, pledge, lien, lease, encumbrance
or
charge, other than (a) those resulting from Taxes which have not yet become
delinquent, (b) minor liens and encumbrances which do not materially detract
from the value of the property subject thereto or materially impair the
operations of the Company or (c) those that have otherwise arisen in the
ordinary course of business. All facilities, machinery, equipment, fixtures,
vehicles and other properties owned, leased or used by the Company are in good
operating condition and repair and, subject to normal wear and tear, are
reasonably fit and usable for the purposes for which they are being used. The
Company is in compliance with all material terms of each lease to which it
is a
party or is otherwise bound.
3.28 Information
Supplied.
As of
the time such is supplied to Parent, none of the information supplied, or to
be
supplied, by the Company for inclusion or incorporation by reference in any
registration statement, permit application or proxy statement in connection
with
the issuance of Parent Common Stock pursuant to Section 1.6, will contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein in
light of the circumstances under which they were made not misleading.
Notwithstanding the foregoing, the Company makes no representation, warranty
or
covenant with respect to any information supplied or required to be supplied
by
Parent which is contained in or omitted from any of the foregoing
documents.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
Parent
and Merger Sub, jointly and severally, hereby represent and warrant to the
Company as of the Agreement Date, and (except with respect to the
representations and warranties in Section 4.5) as of the Closing Date, as
follows, subject, in each case, to such exceptions as are specifically expressed
in this Agreement:
4.1 Organization,
Good Standing and Qualification.
Each of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted. Each
of
Parent and Merger Sub is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure to so qualify would have
a
Material Adverse Effect. Each of Parent and Merger Sub has all requisite
corporate power and authority to own and operate its respective properties
and
assets, to execute and deliver this Agreement, to carry out the provisions
of
this Agreement, and to perform its respective obligations under, and carry
out
the provisions of, this Agreement, and to carry on its respective business
as
currently conducted and as currently proposed to be conducted.
4.2 Authorization;
Binding Obligations; Governmental Consents.
(a) All
corporate actions on the part of Parent and Merger Sub and their respective
officers, directors and stockholders, that are necessary for the authorization,
execution and delivery of this Agreement and the performance of all obligations
of Parent and Merger Sub hereunder, have been taken. This Agreement is a valid
and binding obligation of Parent and Merger Sub, enforceable against them in
accordance with its terms, except as such enforcement may be limited by (x)
the
effect of bankruptcy, insolvency, reorganization, receivership, conservatorship,
arrangement, moratorium or other laws affecting or relating to the rights of
creditors generally or (y) the rules governing the availability of specific
performance, injunctive relief or other equitable remedies and general
principles of equity, regardless of whether considered in a proceeding in law
or
equity.
(b) No
consent, approval, permit, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state
or
local Governmental Authority on the part of Parent or Merger Sub is required
in
connection with the execution and delivery of this Agreement or the consummation
by Parent or Merger Sub of the transactions contemplated hereby, except for
(i)
the filing of merger documents with the Delaware Secretary of State, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state and federal securities laws
and the securities laws of any foreign country in connection with the issuance
of Parent Common Stock in connection with the Merger, (iii) such filings as
may
be required under the HSR Act or any applicable state or foreign anti-takeover
and similar laws, (iv) the approval of the Toronto Stock Exchange for the
listing of the Parent Common Stock to be issued pursuant hereto and the filing
of a Notification Form: Change in the Number of Shares Outstanding with The
NASDAQ Stock Market, Inc., and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have
a
Material Adverse Effect on Parent and would not prevent, or materially alter
or
delay any of the transactions contemplated by this Agreement.
4.3 Compliance
with Other Instruments.
Neither
the execution, delivery and performance of this Agreement nor the issuance
of
Parent Common Stock in connection with the Merger will (a) violate the
Certificate of Incorporation or bylaws of Parent or Merger Sub, (b) breach
or
result in a violation of any Law applicable to Parent or Merger Sub or the
transactions contemplated by this Agreement or (c) constitute a material breach
of the terms, conditions, provisions of, or constitute a default under, any
judgment, order, or decree of any court or arbitrator to which Parent or Merger
Sub is a party or any material contract of Parent.
4.4 Brokers.
Parent
and Merger Sub have not incurred, nor will they incur, any liability for
brokerage or finders’ fees or agents’ commissions in connection with this
Agreement or the consummation of the transactions contemplated hereby or
thereby.
ARTICLE V
CONDUCT
OF BUSINESS PENDING THE MERGER
AND
RELATED COVENANTS
5.1 Conduct
of Business of the Company.
The
Company covenants and agrees that, during the period beginning on the Agreement
Date and ending upon the earlier to occur of (i) the Effective Time and (ii)
the
termination of this Agreement, unless the Parent shall otherwise agree in
writing, the business of the Company shall be conducted only in, and the Company
shall not take any action except in, the ordinary course of business and in
a
manner consistent with past practice; and the Company shall use commercially
reasonable efforts to preserve intact its business organization, to keep
available the services of the current officers and employees of and consultants
to the Company; and to preserve the current relationships of the Company with
customers, suppliers and other persons with which the Company has significant
business relations. Without limiting the foregoing, the Company shall not,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of the Parent, with it being understood that each of
such
clauses below shall constitute an independent obligation of the Company, not
qualified by any other such clause, and shall be deemed to be
cumulative:
(a) Charter
Documents.
Cause
or permit any amendments to the Company Certificate of Incorporation or
bylaws;
(b) Dividends;
Repurchases; Changes in Capital Stock.
Except
as may be otherwise specifically contemplated in this Agreement, (i) declare
or
pay any dividends on, or make any other distributions (whether in cash, stock
or
property) in respect of, any of its capital stock, (ii) issue or authorize
the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (iii) repurchase or otherwise acquire, directly
or indirectly, any shares of its capital stock (other than pursuant to
repurchase rights of the Company that permit the Company to repurchase
securities from the holders thereof at the original purchase price therefor
in
connection with the termination of services of such holder as an employee of
or
consultant to the Company) or (iv) issue or authorize the issuance of Securities
other than for the purpose of effecting a Financing;
(c) Stock
Option Plans, Warrants, Etc.
Accelerate, except with respect to grants already outstanding pursuant to the
existing terms thereof, amend or change the period of exercisability or vesting
of options or other rights granted under the Company Option Plan, establish
any
new or additional stock option plan, amend the Company Option Plan (including
by
increasing the number of shares of Company Common Stock subject to the grant
of
options thereunder), grant any options, warrants or other rights to acquire
shares of capital stock of the Company, including Company Common Stock or the
Series A Preferred Stock;
(d) Material
Contracts.
Enter
into any material contract or commitment (other than as required in the ordinary
course of business), or violate, amend or otherwise modify or waive (other
than
as required in the ordinary course of business) any of the terms of any
agreements, understandings, instruments or contracts which are material to
the
business of the Company as currently conducted and as proposed to be conducted
other than (x) contracts that are entered into in the ordinary course of
business, or (y) contracts which are terminable by the Company upon less than
ninety (90) days’ notice without penalty or surviving obligations. For purposes
of this Section 5.1(d), the parties hereto acknowledge that any such actions
with respect to any contract or commitment having a value in excess of $25,000
shall not be deemed to be in the ordinary course of business. Notwithstanding
the foregoing, the Company may enter into service agreements, provided that
(i)
any such agreement shall be terminable by the Company within ninety (90) days
after the Effective Date, (ii) any such agreement shall be entered into in
good
faith by the Company on commercially reasonable terms and (iii) the Company
shall not enter into any such agreement which would cause the total amount
required to be paid to terminate all such agreements to exceed $25,000 in the
aggregate, without the prior written consent of Parent (which consent will
not
be unreasonably delayed or withheld);
(e) Issuance
of Securities.
Issue,
deliver or sell, or authorize or propose the issuance, delivery or sale of,
or
purchase or propose the purchase of, any shares of its capital stock or
securities or other instruments (including notes or other evidences of
Indebtedness) convertible into, or subscriptions, rights, warrants or options
to
acquire, or other agreements or commitments of any character obligating it
to
issue, any such shares or other convertible instruments or securities, other
than (i) shares of Company Common Stock issuable upon conversion of shares
of
the Series A Preferred Stock or (ii) shares of Company Common Stock issuable
upon exercise of Company Options.
(f) Intellectual
Property.
(i) Sell,
license, assign or transfer any Intellectual Property of the Company to any
other person other than Parent or encumber any Intellectual Property of the
Company; or
(ii) License,
or otherwise acquire, any Intellectual Property not owned by the Company or
Parent from any third party on terms requiring any royalty payments or imposing
other obligations on the Company (other than pursuant to “shrink-wrap” licenses
for off-the-shelf software);
(g) Marketing
or Other Rights.
Enter
into or amend any agreement pursuant to which any other party is granted
manufacturing, marketing or other development or distribution rights of any
type
or scope with respect to any of the Company’s products or technology, other than
agreements that (i) are terminable within ninety (90) days and (ii) would not
require any payment upon its termination, or enter into any agreement that
would
limit the ability of the Surviving Corporation, Parent or any of their
respective Affiliates to operate in a specific area of business or specific
geographic area after the consummation of the Merger;
(h) Dispositions;
Obligations.
Except
for the sale of the Company’s inventory in the ordinary course of business,
sell, lease, license or otherwise dispose of or encumber any of its properties
or assets which are material, individually or in the aggregate, taken as a
whole, or otherwise incur obligations that would become obligations of Parent
at
the Effective Time;
(i) Indebtedness.
Incur
any Indebtedness (other than to Parent) for borrowed money or guarantee any
such
Indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, provided that the Company may incur Permitted Indebtedness
up to an aggregate amount of $15,000;
(j) Leases.
Enter
into any operating lease with an annual commitment in excess of $15,000 or
with
a duration of more than one (1) year;
(k) Capital
Expenditures.
Make
any capital expenditures, capital additions or capital improvements in excess
of
$15,000, except as otherwise expressly permitted by this Agreement;
(l) Insurance.
Materially reduce the amount of any material insurance coverage provided by
existing insurance policies;
(m) Termination
or Waiver.
Terminate or waive any right of substantial value, other than in the ordinary
course of business;
(n) Employee
Benefit Plans; New Hires; Pay Increases.
Adopt
or amend any employee benefit, pay any special bonuses or special remuneration
to any employee or director (other than pre-existing obligations) or increase
the salaries, bonuses or wage rates of its employees;
(o) Severance
Arrangements.
Adopt
or approve any severance, bonus or benefit acceleration arrangements (whether
individually or more broadly) that could be triggered after the consummation
of
the Merger;
(p) Lawsuits.
Commence a lawsuit other than (i) for the routine collection of bills, (ii)
in
such cases where it, in good faith, determines that failure to commence suit
would result in the material impairment of a valuable aspect of its business,
provided that it consults with the Parent prior to the filing of such a suit,
or
(iii) with respect to this Agreement;
(q) Acquisitions.
Acquire, or agree to acquire, by merging or consolidating with, or by purchasing
a substantial portion of the assets of, or by any other manner, any business
or
any corporation, partnership, association or other business organization or
division thereof;
(r) Taxes.
Make or
change any election in respect of Taxes, adopt or request permission of any
Taxation Authority to change any accounting method in respect of Taxes, enter
into any closing agreement in respect of Taxes, settle any claim or assessment
in respect of Taxes, surrender or allow to expire any right to claim a refund
of
Taxes, consent to any extension or waiver of the limitation period applicable
to
any claim or assessment in respect of Taxes, or take (or permit any Subsidiary
to take) any such actions with respect to any Subsidiary;
(s) Notices.
Fail to
give any notices and other information required to be given to the employees
of
the Company, any collective bargaining unit representing any group of employees
of the Company, or any applicable Governmental Authority under the Worker
Adjustment and Retraining Act (the WARN Act), the National Labor Relations
Act,
the Code, the Consolidated Omnibus Reconciliation Act (COBRA) or other
applicable law in connection with the transactions provided for in this
Agreement;
(t) Other
Transactions.
Merge
or consolidate with any entity other than Parent, Merger Sub or an Affiliate
of
Parent, or liquidate, dissolve or effect a recapitalization or reorganization
in
any form of transaction;
(u) Confidentiality
Agreements.
Hire or
retain, or continue to retain or employ, any employee or consultant having
access to confidential or proprietary information of the Company unless such
employee or consultant enters into, or has entered into, a proprietary
information and inventions agreement with the Company in the form of Exhibit
B
attached hereto, or amend or otherwise modify, or grant a waiver under, any
such
confidentiality or proprietary information agreement with any such
person;
(v) Related
Party Transactions.
Enter
into or be a party to any transaction with any director, officer, employee,
significant Company Stockholder or family member of, or consultant to, any
such
person, corporation or other entity which beneficially owns 10% or more of
the
equity interests of the Company, or has 10% or more of the voting power attached
to the shares of the capital stock of the Company;
(w) Principal
Business.
Engage
in any business other than the business being conducted by the Company on the
Agreement Date;
(x) Other
Activities.
Knowingly engage in any other activity which could reasonably be expected to
impair the ability of Parent, Merger Sub or the Company to consummate the
Merger;
(y) Subsidiaries.
Incorporate or otherwise acquire any Subsidiary; and
(z) General.
Authorize, commit to or agree to take, or voluntarily permit to occur, any
of
the foregoing actions.
5.2 Clinical
Trials.
From
time to time and at the reasonable request of Parent, the Company shall provide
Parent with updates concerning the progress of and developments in and results
of the Company's clinical trials. The Company shall furnish to Parent for its
review and comment, and the Company shall consult with Parent regarding,
clinical trial protocols, and any modifications thereto, for any of its proposed
clinical trials (the “Draft Protocols”) prior to finalizing such Draft Protocols
and engaging in such clinical trials. If Parent fails to comment or respond
to
the Company’s Draft Protocols within thirty (30) days of their receipt, then
Company shall be entitled to finalize such Draft Protocols and engage in the
clinical trials thereunder after expiration of such thirty (30)-day
period.
5.3 FDA
Approval Matters.
(a) The
Company shall notify Parent of any material communications with the FDA or
any
corollary entity in any other jurisdiction, including outside of the United
States of America, or any other Governmental Authority, whether written or
oral,
as soon as reasonably practicable, but in no event later than five (5) business
days after the receipt of such communication, and within such same time period,
the Company shall provide Parent with copies of any such written communications
and written summaries of any such oral communications. For purposes of this
Section 5.3(a), “material communications” with the FDA shall include any
communications in which the FDA or any corollary entity provides feedback,
comments, questions or other information to the Company which addresses, or
is
reasonably likely to impact, the development by the Company of the products
to
which such communication pertains or the timeline and prospects for approval
of
such products by the FDA or such corollary entity, as the case may be, whether
positive or adverse.
(b) From
time
to time and at the reasonable request of Parent, the Company shall provide
Parent with updates concerning the progress of the Company’s regulatory filings
and strategy for obtaining necessary regulatory approvals to market and sell
the
products of the Company. The Company shall furnish such updates to Parent for
its review and comment, and Parent shall provide such comments, if any, as
soon
as reasonably practicable but, in no event, later than thirty (30) business
days
after the receipt of such request for comment. The Company shall consult with
Parent regarding any material regulatory filing prior to finalizing such filings
and delivering them to the relevant regulatory authorities.
5.4 Notice
of Developments.
Parent,
on the one hand, and the Company, on the other hand, shall give prompt written
notice to the other party of any material development causing, or reasonably
likely to cause, a breach of any of its own representations and warranties
in
this Agreement.
5.5 Payment
of Taxes, Etc.
The
Company shall timely file all of its Tax Returns as they become due (taking
all
timely filed proper extension requests into account), all such Tax Returns
to be
true, correct and complete, and the Company shall timely pay and discharge,
as
they become due and payable, all Taxes (other than Taxes contested in good
faith
by the Company in appropriate proceedings), assessments and other governmental
charges or levies imposed upon it or its income or any of its property as well
as all claims of any kind (including claims for labor, materials and supplies)
that, if unpaid, may by law become a lien or charge upon its
properties.
5.6 Board
Observation Rights.
The
Company shall permit a representative of Parent to attend all meetings of the
Company Board in a non-voting observer capacity, other than those parts of
meetings of the Company Board, if any, at which a Superior Proposal will be
discussed. In this respect, the Company shall give such representative copies
of
all notices, minutes, consents and other materials that the Company provides
to
members of the Company Board, except to the extent that such notices, minutes,
consents and other materials relate to any Superior Proposal.
ARTICLE VI
ADDITIONAL
AGREEMENTS
6.1 Notices;
Consents; Filings.
From
and after the execution and delivery of this Agreement, the Company shall use
its best efforts, at the Company’s expense (which efforts and expenses shall not
be deemed to require the expenditure of unreasonable resources or monies by
the
Company), to obtain the consents described in Section 3.22 of the Company
Disclosure Schedule. In the event that the Company shall fail to obtain any
third party consent necessary for the consummation of the transactions
contemplated hereby, the Stockholder Representative Committee shall use
commercially reasonable efforts, and take any such actions reasonably requested
by Parent, to minimize any adverse effect upon the Company, the Surviving
Corporation and Parent, their respective Subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after
the
Effective Time, from the failure to obtain such consent; provided, however,
that
any such efforts used, or actions taken, by the Stockholder Representative
Committee shall not abrogate or derogate from any of the rights of Parent or
Merger Sub hereunder.
6.2 HSR
Act.
In the
event that Parent or the Company reasonably determines that it is required
to
make a pre-merger notification filing (an “Antitrust Filing”) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR
Act”), or any corresponding law or regulation of any foreign Governmental
Authority (a “Foreign Antitrust Filing”) with respect to the Merger and the
other transactions contemplated hereby, such party shall promptly notify the
other parties of such requirement, and, thereafter, each of the parties
will:
(a) as
promptly as is practicable, make its required filings under the HSR Act or
any
laws mandating a Foreign Antitrust Filing;
(b) as
promptly as is practicable after receiving any governmental request under the
HSR Act or any corresponding law or regulation of any foreign Governmental
Authority for additional information, documents or other materials, use its
commercially reasonable best efforts to comply with such request;
(c) cooperate
with the other parties in connection with resolving any governmental inquiry
or
investigation, whether domestic or foreign, relating to their respective HSR
Act
filings, Foreign Antitrust Filings, the Merger or any related inquiry or
investigation;
(d) promptly
inform the other parties of any communication with, and any proposed
understanding, agreement or undertaking with, any Governmental Authority (for
greater certainty, whether domestic or foreign) relating to their respective
HSR
Act filings, Foreign Antitrust Filings, the Merger or any related inquiry or
investigation; and
(e) to
the
extent reasonably practicable, give the other parties reasonable advance notice
of, and the opportunity to participate in (directly or through their
representatives), any meeting or conference with any Governmental Authority
(for
greater certainty, whether domestic or foreign) relating to their respective
HSR
Act filings, Foreign Antitrust Filings, the Merger or any related inquiry or
investigation.
6.3 Further
Assurances.
(a) Following
the execution and delivery of this Agreement, each of Parent and the Company
will:
(i) use
its
commercially reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Merger and the transactions contemplated hereby, including using
its commercially reasonable best efforts to obtain all permits, consents,
approvals, authorizations, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the Merger and the other transactions
contemplated hereby and to fulfill the conditions set forth in Article 7;
provided that Parent shall not be required by Section 6.2 or this Section 6.3(a)
to enter into any consent decree, hold separate orders or other arrangements
that would have such an effect or, in any event, any consent decree, hold
separate order or other arrangements that would require Parent or the Company
to
dispose of any existing assets of such party, and, in the event that Parent
elects to abandon its efforts to obtain approval under the HSR Act in accordance
with the terms of this Section 6.3(a), Parent shall promptly give notice of
such
abandonment to the Company. In case, at any time after the Effective Time,
any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their commercially reasonable best efforts to take all such action;
and
(ii) cooperate
and use its commercially reasonable best efforts to vigorously contest and
resist any action, including administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) that is in effect
and
that restricts, prevents or prohibits the consummation of the Merger and the
other transactions contemplated hereby, including by vigorously pursuing all
available avenues of administrative and judicial appeal.
(b) From
the
Agreement Date until the Effective Time, the Company will take all further
action that is necessary or desirable to carry out the purposes of this
Agreement, and the proper officers and directors of the Company shall use their
commercially reasonable best efforts to take all such action and shall refrain
from taking any actions which would be contrary to, inconsistent with or
against, or would frustrate the essential purposes of the Merger and the other
transactions contemplated by this Agreement.
6.4 Stockholder
Approval.
Following the execution and delivery of this Agreement, the Company will
promptly solicit and obtain the approval, by written consent, of the execution
and delivery by the Company of this Agreement, and the consummation of the
Merger and the other transactions contemplated hereby, by Company Stockholders
holding the requisite number of shares of each class of the capital stock of
the
Company required to approve the execution and delivery of this Agreement and
the
consummation of the Merger and the other transactions contemplated hereby (the
“Initial Stockholder Approval”). The Company shall take all other action
necessary or advisable to secure the vote or consent of Company Stockholders
required by Delaware Law to obtain such approval. The Company shall provide
notice of the availability of dissenters’, appraisal or similar rights in
compliance with Section 262 of Delaware Law at least 20 days prior to the
Closing Date.
6.5 Exclusivity.
(a) From
and
after the date of this Agreement until the Effective Time or termination of
this
Agreement pursuant to Article 8, the Company will not, nor will it authorize
or
permit any of its officers, directors, Affiliates or employees or any investment
banker, attorney or other advisor or representative retained by it to, directly
or indirectly, (i) solicit, initiate or induce the making, submission or
announcement of any Acquisition Proposal, (ii) participate in any discussions
or
negotiations regarding, or furnish to any person any non-public information
with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to,
any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to disclose the existence of these
provisions, (iv) endorse or recommend any Acquisition Proposal, provided that,
notwithstanding anything to the contrary set forth in this Agreement, nothing
in
this Agreement shall prevent the Company Board from recommending a Superior
Proposal or (v) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Superior Proposal; provided, however, that prior to the adoption of this
Agreement by the required Company Stockholder vote, this Section 6.5(a) shall
not prohibit the Company from furnishing non-public information regarding the
Company to, entering into a confidentiality agreement with or entering into
discussions with, any person or group in response to a Superior Proposal or
any
offer or proposal that the Company Board reasonably determines in good faith
is
reasonably likely to lead to a Superior Proposal submitted by such person or
group (and not withdrawn) or the Company Board from recommending that the
Company Stockholders approve a Superior Proposal if (1) neither the Company
nor
any representative of the Company shall have violated any of the restrictions
set forth in this Section 6.5, including obligations under clause (i) above,
(2)
the Company Board concludes in good faith, after consultation with its outside
legal counsel, that such action is required in order for the Company Board
to
comply with its fiduciary obligations to the Company Stockholders under Delaware
Law, (3) prior to furnishing any such non-public information to, or entering
into discussions with, such person or group, the Company gives Parent written
notice of the identity of such person or group and of the Company’s intention to
furnish non-public information to, or enter into discussions with, such person
or group and the Company receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all non-public written and oral information furnished to such
person or group by or on behalf of the Company and (4) contemporaneously with
furnishing any such non-public information to such person or group, the Company
furnishes such non-public information to Parent (to the extent such non-public
information has not been previously furnished by the Company to Parent);
provided, further, that the Company shall not consummate any transaction(s)
contemplated by any Superior Proposal unless and until the Company has first
terminated this Agreement pursuant to Section 8.1(g) hereof. The Company will,
and will cause its officers, directors, affiliates, employees, investment
bankers, attorneys and other advisors and representatives to, immediately cease
any and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposal. Without limiting
the foregoing, it is understood that any violation of the restrictions set
forth
in the preceding two sentences by any officer, director or employee of the
Company or any investment banker, attorney or other advisor or representative
of
the Company shall be deemed to be a breach of this Section 6.5 by the
Company.
(b) In
addition to the obligations of the Company set forth in Section 6.5(a), the
Company as promptly as practicable shall advise Parent in writing of any
Acquisition Proposal or of any request for non-public information or other
inquiry which the Company reasonably believes could lead to an Acquisition
Proposal, the material terms and conditions of such Acquisition Proposal (to
the
extent known) and the identity of the person or group making any such request,
inquiry or Acquisition Proposal. The Company agrees to keep Parent informed
on a
current basis of the status and details (including any material amendments
or
proposed amendments) of any such request, inquiry or Acquisition
Proposal.
6.6 Reasonable
Access.
From
and after the Agreement Date until the Effective Time or the termination of
this
Agreement pursuant to Article 8, whichever occurs earlier, the Company will
afford to Parent and its authorized representatives, upon reasonable notice,
reasonable access during normal business hours to all properties, books,
records, contracts and documents of the Company as Parent and such authorized
representatives may reasonably request and an opportunity to make such
investigations as Parent and such authorized representatives reasonably request,
and the Company will furnish or cause to be furnished to Parent and its
authorized representatives all such information with respect to the affairs
and
businesses of the Company as they may reasonably request. All information
obtained by Parent pursuant to this Section 6.6 shall be kept confidential
in
accordance with the Confidentiality and Non-Disclosure Agreement, dated March
30, 2006, between Parent and the Company (the “Confidentiality Agreement”). No
investigation pursuant to this Section 6.6 shall affect any representation
or
warranty in this Agreement of any party hereto or any condition to the
obligations of the parties hereto.
6.7 Public
Announcements.
Prior
to the consummation of the Merger, Parent shall not issue any press release
or
otherwise make any public statements with respect to this Agreement or the
transactions contemplated hereby without having first provided a copy of any
such announcement to the Company, except as may be required by (i) Law, (ii)
the
SEC or any Canadian securities regulatory authorities, (iii) the Securities
Act,
the Exchange Act or other applicable securities laws or (iv) any listing
agreement with the NASDAQ National Market System or the Toronto Stock Exchange
to which the Parent is subject. Nothing herein, express or implied, shall
require Parent to consult with the Company regarding a public announcement
following the consummation of the Merger. The Company and the Company
Stockholders shall not, without the prior written consent of Parent, issue
any
press release or otherwise make any public statements with respect to this
Agreement, the Merger or the other transactions contemplated hereby, except
as
may be required by Law.
6.8 GAAP
Accounting.
As soon
as reasonably practicable after the Agreement Date, the Company shall use
reasonable efforts to implement and maintain a standard system of accounting
established and administered in accordance with GAAP and prepare its financial
statements in accordance with GAAP.
6.9 Parent
Efforts.
After
the Effective Time, Parent shall pursue the FDA Milestone diligently and shall
use its best efforts and undertake all necessary tasks and activities, provided
that they are commercially reasonable, in order to ensure that the FDA Milestone
is attained.
ARTICLE VII
CONDITIONS
TO THE MERGER
7.1 Conditions
to the Obligations of Each Party.
The
obligations of the Company, Parent and Merger Sub to consummate the Merger
are
subject to the satisfaction of each of the following conditions:
(a) no
order,
stay, decree, judgment or injunction shall have been entered, issued or enforced
by any court of competent jurisdiction which prohibits the consummation of
the
Merger, and there shall not be any action taken by any Governmental Authority,
or any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal
or
substantially deprives Parent, the Company or the Participating Rights Holders
of any of the anticipated benefits of the Merger or the related transactions,
taken as a whole;
(b) all
actions by or in respect of or filings with any Governmental Authority required
to permit the consummation of the Merger in accordance with the terms hereof
shall have been obtained (other than those actions or filings which, if not
obtained or made prior to the consummation of the Merger, would not have a
Material Adverse Effect on the Company prior to or after the Effective Time
or a
Material Adverse Effect on Parent after the Effective Time or be reasonably
likely to subject the Company, Parent, Merger Sub, or any of their respective
Subsidiaries or any of their respective officers or directors to substantial
penalties or criminal liability); and
(c) the
Initial Stockholder Approval shall have been obtained.
7.2 Conditions
to the Obligations of Parent and Merger Sub.
The
obligations of Parent and Merger Sub to consummate the Merger are subject to
the
satisfaction of the following further conditions (any one of which may be waived
in whole or part by Parent, in its sole discretion, by giving written notice
to
the Company in compliance with Section 10.1):
(a) the
Company shall have performed all of its obligations hereunder required to be
performed by it at or prior to the Effective Time and (ii) Parent shall have
received a certificate signed by an executive officer of the Company to the
foregoing effect;
(b) each
of
the representations and warranties of the Company contained in this Agreement
shall have been true and correct in all material respects at the time originally
made and shall be true and correct as of the Effective Time with the same force
and effect as if such representations and warranties had been made at and as
of
the Effective Time and (ii) the Company shall deliver to Parent at the Closing
a
certificate, dated as of the Closing Date and signed by the Company’s President
and Chief Executive Officer, certifying to that effect;
(c) each
of
the Participating Rights Holders shall deliver to Parent at the Closing a signed
certificate, dated as of the Closing Date, certifying that he, she or it (i)
is
experienced in evaluating and investing in securities, (ii) is able to fend
for
himself, herself or itself, (iii) can bear the economic risk of his, her or
its
investment in Parent Company Stock that he, she or it will receive as his,
her
or its portion of the Merger Consideration, (iv) has such knowledge and
experience in financial or business matters that he, she or it is capable of
evaluating the merits and risks of such investment and (v) is an “Accredited
Investor” as such term is defined in Regulation D under the Securities
Act;
(d) each
of
the Participating Rights Holders shall enter into a lock-up agreement with
Parent, in form and substance satisfactory to Parent, acting reasonably,
pursuant to which such Participating Rights Holder covenants that he, she or
it
will not, without the prior written consent of Parent which may be withheld
in
its sole discretion, offer, sell, contract to sell, pledge or otherwise dispose
of, or enter into any transaction which is designed to, or might reasonably
be
expected to, result in the disposition of (whether by actual disposition or
effective economic disposition) any of the shares of Parent Common Stock issued
to him, her or it in full or partial payment of his, her or its proportionate
share of the Merger Consideration; provided that 50% of such shares shall become
free of such restriction on the 180th day following the Closing Date and,
provided, further, that, the balance of such shares shall become free of such
restriction on the anniversary of the Closing Date;
(e) any
persons or other officers of the Company hired after the Agreement Date and
responsible for oversight of any of the (i) research and development, (ii)
operations, (iii) clinical and (iv) general management functions of the Company,
and any replacements for such persons or officers of the Company, shall have
executed and delivered non-competition agreements with Parent in form and
substance satisfactory to Parent, acting reasonably;
(f) Xxxx
Xxxxx shall have executed and delivered an employment agreement with Parent
in
form and substance reasonably satisfactory to Parent and Xxxx Xxxxx, provided
that the employment agreement currently in effect between Xxxx Xxxxx and the
Company shall be terminated immediately prior to the Effective Time, with no
cash payment or other compensation being made to him thereunder as a consequence
of this Agreement or the transactions contemplated hereby, including the
Merger;
(g) no
Material Adverse Effect shall have occurred or been discovered by Parent since
the Agreement Date;
(h) no
injunction or other decree shall have been issued by any court of competent
jurisdiction prohibiting the sale of any of the Company Products by the Company
or Parent on the basis of any rights held by a third party (including any rights
of any third party in any Intellectual Property);
(i) Rackemann,
Xxxxxx & Xxxxxxxx, Professional Corporation, or other legal counsel to the
Company approved by Parent, in its sole discretion, will have issued a legal
opinion substantially in the form attached hereto as Exhibit C;
(j) the
Company shall have delivered a properly executed statement, dated as of the
Closing Date, in a form reasonably acceptable to Parent conforming to the
requirements of Treasury Regulation Section 1.1445-2(c)(3);
(k) the
Company shall have delivered to Parent and Merger Sub a certificate that sets
forth the information required to be set forth on Section 3.2 of the Company
Disclosure Schedule as of the Effective Time (the “Capitalization Certificate”),
and the Capitalization Certificate shall be deemed to be a representation and
warranty of the Company hereunder;
(l) the
Company shall have obtained the consent or approval of each person whose consent
or approval shall be required in connection with the Merger under all notes,
bonds, mortgages, indentures, contracts, agreements, leases, licenses, permits,
franchises and other instruments or obligations to which it is a
party;
(m) any
and
all rights, warrants, options or other instruments or rights to purchase shares
of capital stock of the Company, including Company Common Stock or the Series
A
Preferred Stock, (other than Company Options and Company Warrants, which shall
be converted into the right to receive a portion of the Merger Consideration
in
accordance with Section 2.1) outstanding immediately prior to the Closing,
whether or not exercisable, whether or not vested, and whether or not
performance- based, shall have been exercised, terminated or waived, and all
outstanding convertible notes shall have been cancelled or converted into
capital stock of the Company;
(n) holders
of no more than 1.0% of the aggregate outstanding shares of Company Common
Stock, as of the Effective Time, shall have elected to, or continue to have
contingent rights to, exercise dissenters’, appraisal or similar rights under
Delaware Law (or California Law, if applicable), with respect to such
shares;
(o) the
Company Option Plan, and all outstanding Company Options and all agreements
relating thereto, shall be terminated and no longer be of any force or
effect;
(p) the
Company shall have obtained from the Trustees of Boston University an
acknowledgement and agreement, in form and substance satisfactory to Parent,
acting reasonably, that the Trustees of Boston University have no ownership
or
other claim in any of the Intellectual Property made, created or developed,
on
or prior to the Closing Date, under or pursuant to, or in connection with,
the
Incubation Agreement or the Sponsored Research Agreement;
(q) The
Company shall have obtained from Xx. Xxxxxxx Xxxxx a waiver, in form and
substance satisfactory to Parent, acting reasonably, of any claim by Xx. Xxxxxxx
Xxxxx under the Employment Agreement dated as of November 1, 2001 between Xx.
Xxxxxxx Xxxxx and the Company, as amended to date, that the consummation of
the
transactions contemplated by this Agreement constitutes “Good Reason” as defined
in such Employment Agreement; and
(r) The
Parent Common Stock to be issued hereunder shall have been conditionally
approved for listing on the Toronto Stock Exchange, subject only to notice
of
issuance and the satisfaction of the standard filing requirements and payment
of
requisite filing fees.
7.3 Conditions
to the Obligations of the Company.
The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions (any one of which may be waived
in whole or part by the Company, in its sole discretion, by giving written
notice to Parent in compliance with Section 10.1) :
(a) Parent
and Merger Sub shall have performed all of their respective material obligations
hereunder required to be performed by them at or prior to the Effective Time
and
(ii) the Company shall have received a certificate from each of Parent and
Merger Sub, each signed by an executive officer of Parent or Merger Sub, as
appropriate, to the foregoing effect;
(b) each
of
the representations and warranties of Parent and Merger Sub contained in this
Agreement shall have been true and correct in all material respects at the
time
made and shall be true and correct in all material respects as of the Effective
Time with the same force and effect as if such representations and warranties
had been made at and as of the Effective Time;
(c) Parent
shall execute and deliver a registration rights agreement, in a form
satisfactory to the Company and Parent, acting reasonably, pursuant to which
Parent shall agree (i) to file with the SEC, within 30 days of the Closing
Date,
a registration statement on Form S-3 covering the resale of the shares of Parent
Company Stock issued as all or a part of the Merger Consideration, (ii) to
use
commercially reasonable efforts to cause such registration statement to be
declared by the SEC within 90 days of the Closing Date, in the event that the
SEC does not conduct a review of such registration statement, and within 120
days of the Closing Date, in the event that the SEC conducts a review of such
registration statement and (iii) to provide customary piggy back registration
rights to the Participating Rights Holders as of and after the Effective
Time;
(d) Parent
shall execute and deliver the Promissory Note; and
(e) Torys
LLP
or other legal counsel to Parent and Merger Sub approved by the Company, in
its
sole discretion, will have issued a legal opinion substantially in the form
attached hereto as Exhibit D.
ARTICLE VIII
TERMINATION
8.1 Termination.
This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of
this
Agreement and the transactions contemplated hereby by the Company
Stockholders:
(a) by
duly
authorized mutual written consent executed by each of Parent, Merger Sub and
the
Company;
(b) by
Parent
or by the Company, if the Effective Time shall not have occurred before the
thirty-first (31st) day (the “Termination Date”) after the Agreement Date;
provided, however, that (i) in the event that (x) one or both of Parent and
the
Company (or any stockholder thereof) are required or deem it advisable to make
an Antitrust Filing under the HSR Act, or under similar foreign statutes or
regulations, or seek any other governmental approvals or authorizations as
may
be reasonably necessary in connection with the closing of the Merger, or the
payment of the consideration required to be paid to the Participating Rights
Holders in connection with the Merger, including any filings or notifications
as
may be reasonably necessary that are to be made with or to the SEC or under
Delaware Law (including any filings necessary to satisfy any of the conditions
set forth in Section 1.6 hereof), the Termination Date shall be delayed, without
further action of the parties, until the tenth (10th) business day after the
date on which any applicable waiting periods thereunder have expired or been
terminated or such other approvals and authorizations are received and (ii)
the
right to terminate this Agreement under this Section 8.1(b) shall not be
available to Parent in the event that the failure of the Effective Time to
occur
on or before such date arises out of or is related to Parent’s failure to
fulfill any obligation under this Agreement and the right to terminate this
Agreement under this Section 8.1(b) shall not be available to the Company in
the
event that the failure of the Effective Time to occur on or before such date
arises out of or is related to the failure by the Company or any of the Company
Stockholders to fulfill any obligation under this Agreement;
(c) automatically
if there shall be any law that makes the consummation of the Merger illegal
or
otherwise prohibited or if any court of competent jurisdiction or Governmental
Authority shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and
non-appealable;
(d) by
Parent, by giving written notice to the Company at any time prior to the
Closing, in the event that the Company has given Parent any notice pursuant
to
Section 5.4, if the breach or breaches described in such notice would,
individually or in the aggregate, render any condition to the Merger contained
in Sections 7.1 or 7.2 hereof impossible of being satisfied;
(e) by
the
Company, by giving written notice to Parent at any time prior to the Closing
in
the event that Parent has given the Company any notice pursuant to Section
5.4,
if the breach or breaches described in such notice would, individually or in
the
aggregate, render any condition to the Merger contained in Sections 7.1 or
7.3
hereof impossible of being satisfied;
(f) automatically,
in the event that Parent delivers notice of abandonment of its efforts under
the
HSR Act in accordance with Section 6.3(a); or
(g) by
the
Company, in the event that the Company Board has received a Superior Proposal
prior to the adoption and approval of this Agreement and the transactions
contemplated hereby by the Company Stockholders and adopts a resolution electing
to terminate the Agreement under this Section 8.1(g); provided that any
termination under this Section 8.1(g) shall not be effective until the Company
has made payment of the fee and expenses required by Section
8.3(c).
8.2 Effect
of Termination.
Except
as provided in Section 8.1 hereof, in the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of Parent, Merger
Sub or the Company or any of their respective officers, directors or
stockholders, and all rights and obligations of any party hereto shall cease,
except for liabilities arising from a breach of this Agreement prior to such
termination; provided that the provisions of this Article 8 and Articles 9
and
10 shall survive the termination of this Agreement for any reason.
8.3 Expenses;
Termination Fee.
(a) If
the
Company terminates this Agreement pursuant to Sections 8.1(b) or 8.1(e), then
Parent shall pay to the Company, within one (1) business day after request
by
the Company (accompanied by reasonably detailed documentation to the extent
reasonably requested by Parent) from time to time, all of the Company’s
out-of-pocket expenses and fees incurred in connection with this Agreement
and
the transactions contemplated hereby (including all reasonable fees and expenses
of counsel, financial advisors, accountants, experts and
consultants).
(b) If
Parent
terminates this Agreement pursuant to Sections 8.1(b) or 8.1(d), then the
Company shall pay to Parent, within one (1) business day after request by Parent
(accompanied by reasonably detailed documentation to the extent reasonably
requested by the Company) from time to time, all of Parent’s out-of-pocket
expenses and fees incurred in connection with this Agreement and the
transactions contemplated hereby (including all reasonable fees and expenses
of
counsel, financial advisors, accountants, experts and consultants).
(c) Notwithstanding
anything to the contrary in Section 8.2, if the Company terminates this
Agreement pursuant to Section 8.1(g), then, at the sole option of Parent, the
indebtedness of the Company evidenced by the Company Promissory Note may be
converted immediately into that number of Conversion Shares (as such term is
defined in the Company Promissory Note) as shall be equal to 10% of the issued
and outstanding capital stock of the Company on a Fully Diluted Basis (as such
term is defined in the Company Promissory Note), and, upon such conversion,
if
any, Parent shall have all of the rights and benefits under the Company
Promissory Note to which Parent would have been entitled, if and as though
Parent had exercised its right of conversion pursuant to Section 3.2 of the
Company Promissory Note.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification
by Parent and Merger Sub.
Subject
to the limitations set forth in Section 9.5 hereof, from and after the Effective
Time, Parent and the Surviving Corporation, jointly and severally, will
indemnify, defend, and hold harmless each of the Company Stockholders, the
Participating Rights Holders and each of their respective directors, officers,
employees, representatives and other Affiliates, from and against any and all
Damages related to or arising out of or in connection with any breach by Parent
or Merger Sub of any representation, warranty, covenant, agreement, obligation
or undertaking made by Parent or Merger Sub in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument, certificate,
or
other document delivered by or on behalf of Parent or Merger Sub in connection
with this Agreement, the Merger or any of the other transactions contemplated
hereby.
9.2 Indemnification
by the Participating Rights Holders.
Subject
to the limitations set forth in Section 9.5 hereof and the methods of payment
specified in Section 9.4, by virtue of the approval of the execution and
delivery by the Company of this Agreement, from and after the Effective Time,
each of the Company Stockholders (regardless of whether or not such Company
Stockholder has actually voted his, her or its shares of Company Common Stock
or
the Series A Preferred Stock in favor of the execution and delivery by the
Company of this Agreement and the Merger) and the other Participating Rights
Holders shall be deemed to have agreed, severally (as provided in Section 9.4
below and pro rata as set forth in Section 1.7(d)) and not jointly, to
indemnify, defend and hold harmless Parent, the Surviving Corporation and their
respective Affiliates, and each of their respective directors, officers,
employees and representatives, from and against any and all Damages related
to
or arising out of or in connection with:
(a) any
breach by the Company or any Company Stockholder of any representation,
warranty, covenant, agreement, obligation or undertaking made by such party
in
or pursuant to this Agreement, or any other agreement, instrument, certificate
or other document delivered by or on behalf of the Company or any Participating
Rights Holder in connection with this Agreement, the Merger or any of the other
transactions contemplated hereby, including the Capitalization
Certificate;
(b) any
obligation or liability of the Company to any employee, former employee or
beneficiary of any Employee Benefit Plan, including those arising in connection
with or by virtue of the employment up to and including the Closing Date or
termination of employment of any such employee or former employee by the Company
prior to the Closing Date (collectively, “Benefit Claims”);
(c) any
actual or alleged liability of the Company, the Surviving Corporation or any
of
their respective Affiliates for death or injury to person or property as a
result of any actual or alleged defect in any product manufactured or sold
by
the Company at or prior to the Effective Time, or any actual or alleged
warranty, recall or similar liability for any product sold by or for the Company
at or prior to the Effective Time, or any statutory liability of the Company,
the Surviving Corporation or any of their respective Affiliates or any liability
of the Company, the Surviving Corporation or any of their respective Affiliates
assessed with respect to any failure to warn arising out of products sold at
or
prior to the Effective Time (collectively, “Product Liability
Claims”);
(d) any
liability of the Company, the Surviving Corporation or any of their respective
Affiliates under any Environmental Laws relating to any occurrences at or prior
to the Effective Time (collectively, “Environmental Claims”);
(e) any
of
the matters described in Section 3.7 of the Company Disclosure Schedule (the
“Known Claims”);
(f) any
payments made by Parent, Merger Sub or the Surviving Corporation after the
Effective Time with respect to any Dissenting Shares to the extent that such
payments exceed the portion of the Closing Payment Amount to which the holders
of such Dissenting Shares would have been entitled had such Dissenting Shares
not been Dissenting Shares, with any claims made pursuant to this Section 9.2(f)
being referred to hereafter sometimes as the “Appraisal Claims”;
(g) any
costs
and expenses paid or payable by the Company in connection with the preparation,
negotiation, execution and delivery of this Agreement and the agreements and
other documents related to this Agreement, including, without limitation, the
Company Promissory Note and the Security Agreements, and the consummation of
the
transactions contemplated hereby and thereby (including any fees and expenses
of
legal counsel, financial advisors and consultants) (collectively, “Transaction
Cost Claims”), but only to the extent that such fees exceed $150,000 in the
aggregate;
(h) any
claim, allegation or assertion that the development, manufacture, use,
marketing, distribution or sale of the Company Products (“Company Activities”)
infringes or violates (either directly or indirectly such as by inducement
or
contribution) any Intellectual Property of any third party, provided that such
claim, allegation or assertion is not a result of any action taken by Parent
or
the Surviving Corporation after the Effective Time that deviates materially
from
the Company Activities as undertaken or contemplated by the Company (wherein
“contemplated” means a definitive intention to undertake) as evidenced by the
written records of the Company as of the Effective Time and which action causes
the Company Activities to infringe or violate any Intellectual Property of
any
third party (collectively “Intellectual Property Claims”);
(i) any
breach of any representation or warranty in Section 3.23 of this Agreement
and
(ii) to the extent not duplicative of clause (i), any actual or asserted
liability for Taxes of or owed by the Company or any Subsidiary of the Company
in respect of any full or partial Tax period ending on or prior to the Closing
Date (claims for indemnification under this Section 9.2(i) are referred to
herein as “Tax Claims”); provided that for purposes of applying this
subparagraph (i), Parent and the Company shall use appropriate methods to
allocate liability in respect of any Taxes of the Company or any Subsidiary
of
the Company attributable to any Tax period that includes but ends after the
Closing Date (each, a “Straddle Period”), which appropriate methods shall
include the following:
(A) for
any
income Taxes or any transactional Taxes, including Taxes based on sales or
revenue, the allocation of Taxes to pre- and post-Closing portions of a Straddle
Period shall be determined using a closing-of-the-books method assuming that
the
applicable Straddle Period consists of two Taxable periods, one ending at the
close of the Closing Date and one beginning at the opening of the day after
the
Closing Date, and
(B) for
any
Taxes based on net worth, capital, intangibles, or similar items, and for any
real estate Taxes or other property or tangible asset-based Taxes, the
allocation of Taxes to pre- and post-Closing portions of a Straddle Period
shall
be determined on a per diem basis taking into account the number of days in
the
Straddle Period through and including the Closing Date and the number of days
in
the entire Straddle Period; or
(j) any
claims made by any Company Stockholder based upon any alleged breach of
fiduciary or other duty by any officer, director or stockholder of the Company
in connection with this Agreement or the transactions contemplated hereby,
or
any claims by any officer, director or stockholder of the Company to
indemnification by the Company or the Surviving Corporation with respect to
any
such claims (collectively, “Fiduciary Duty Claims”).
9.3 Third
Party Claims.
(a) In
the
event that any Indemnified Party desires to make a claim against an Indemnifying
Party (which term shall be deemed to include all Indemnifying Parties if more
than one) in connection with any third party litigation, arbitration, action,
suit, proceeding, claim or demand at any time instituted against or made upon
it
for which it may seek indemnification hereunder (a “Third Party Claim”), the
Indemnified Party will promptly notify the Indemnifying Party (or if the
Indemnifying Party is the Company, the Company Stockholders or the Participating
Rights Holders, the Stockholder Representative Committee) of such Third Party
Claim and of its claims of indemnification with respect thereto; provided that
failure to promptly give such notice will not relieve the Indemnifying Party
of
its indemnification obligations under this Section 9.3, except to the extent,
if
any, that the Indemnifying Party has actually been prejudiced
thereby.
(b) The
Indemnifying Party will have the right to assume the defense of the Third Party
Claim with counsel of its choice reasonably satisfactory to the Indemnified
Party by written notice to the Indemnified Party within twenty (20) days after
the Indemnifying Party has received notice of the Third Party Claim; provided,
however, that the Indemnifying Party must conduct the defense of the Third
Party
Claim actively and diligently thereafter in order to preserve its rights in
this
regard; and provided, further, that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the
Third Party Claim. In addition, in the event that the Indemnifying Party assumes
the defense of any Third Party Claim in accordance with this Section 9.3(b),
the
limitations on recovery set forth in Section 9.5 below shall not apply to any
Damages incurred by the Indemnified Party in connection with such Third Party
Claim.
(c) The
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (which consent will not be unreasonably
withheld or delayed) unless the judgment or proposed settlement (i) includes
an
unconditional release of all liability of each Indemnified Party with respect
to
such Third Party Claim and (ii) involves only the payment of money damages
that
are fully covered by the Indemnifying Party (including amounts deemed to be
paid
by the Participating Rights Holders pursuant to Section 9.4 by the withholding
by Parent, if any, of the Indemnity Holdback Amount pursuant to Section 1.7(d))
and does not impose an injunction or other equitable relief upon the Indemnified
Party. So long as the Indemnifying Party has assumed and is conducting the
defense of the Third Party Claim in accordance with Section 9.3(b), the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which consent will not be unreasonably
conditioned, withheld or delayed by the Indemnifying Party).
(d) In
the
event the Indemnifying Party fails to assume the defense of the Third Party
Claim in accordance with Section 9.3(b), (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter in to any settlement
with respect to, the Third Party Claim in any manner it reasonably and in good
faith may deem appropriate (and the Indemnified Party need not consult with,
or
obtain any consent from, the Indemnifying Party in connection therewith,
provided, however, that no admission of liability shall be made under this
Section 9.3(d) by an Indemnified Party on behalf of an Indemnifying Party
without first consulting with, and obtaining the consent of, such Indemnifying
Party, which consent will not be unreasonably conditioned, withheld or delayed
by such Indemnifying Party) and (ii) the Indemnifying Party will remain
responsible for any Damages the Indemnified Party may suffer as a result of
such
Third Party Claim to the extent subject to indemnification under this Article
9.
(e) Notwithstanding
the foregoing, Parent and the Surviving Corporation shall be responsible for
the
prosecution and defense of all Product Liability Claims and any claims relating
to the Intellectual Property of the Company (collectively, the “Parent-Handled
Claims”). Except to the extent that any such disclosure could cause a waiver of
applicable attorney-client privilege, the Stockholder Representative Committee
shall have the right to monitor the progress of Parent-Handled Claims, to review
on a timely basis all pleadings and other filings relating thereto and to
discuss with counsel to Parent and the Surviving Corporation such matters
relating to Parent-Handled Claims as may be reasonably appropriate. Parent
and
the Surviving Corporation shall pursue in good faith, through counsel of their
selection, the prosecution or defense of all Parent-Handled Claims.
(f) Parent
shall, to the extent that Parent and the Surviving Corporation are entitled
to
indemnification for Damages pursuant to this Article 9 and it could reasonably
be expected that Parent may recover a substantial portion of the Damages
relating to such Parent-Handled Claim pursuant to this Article 9, (i) provide
the Stockholder Representative Committee with access to appropriate employees
of
Parent and the Surviving Corporation for the purpose of discussing matters
relating to Parent-Handled Claims as the Stockholder Representative Committee
may from time to time reasonably request and (ii) permit the Stockholder
Representative Committee, upon its reasonable request, to participate in the
process of any settlement or other resolution of any Parent-Handled Claims
pursuant to this Article 9; provided that Parent shall be entitled to settle,
control, compromise or otherwise dispose of Parent-Handled Claims in its sole
discretion and without obtaining the consent of the Indemnified Party; provided,
further, that no admission of liability shall be made under this Section 9.3(f)
by Parent on behalf of an Indemnifying Party without first consulting with,
and
obtaining the consent of, such Indemnifying Party, which consent will not be
unreasonably conditioned, withheld or delayed by such Indemnifying
Party.
9.4 Payment
of Claims.
In the
event of any bona fide claim for indemnification hereunder, the Indemnified
Party will advise the Indemnifying Party that it is required to provide
indemnification therefor in writing. With respect to liquidated claims for
Damages, if within thirty (30) days the Indemnifying Party has not contested
such claim in writing, the Indemnifying Party will pay the full amount thereof,
subject to the limitations set forth in Section 9.5 and, except as set forth
in
the following sentence of this Section 9.4, within ten (10) days after the
expiration of such period. In order to satisfy any indemnification obligations
of the Company, the Company Stockholders and the Participating Rights Holders
pursuant to this Article 9, Parent, the Surviving Corporation and their
respective Affiliates (and the respective directors, officers, employees and
representatives of any of them) shall have the right to recover Damages that
have been incurred, or may be incurred, first from the Indemnity Holdback Amount
which Parent is entitled to withhold pursuant to Section 1.7(d) and then by
setting off any indemnity payments owed by Parent and the Surviving Corporation
pursuant to Section 9.1. In the event that the aggregate of the Indemnity
Holdback Amount which Parent is entitled to withhold pursuant to Section 1.7(d)
and any indemnity payments owed by Parent and the Surviving Corporation pursuant
to Section 9.1 is less than the Damages incurred by any or all of Parent, the
Surviving Corporation and their respective Affiliates (and the respective
directors, officers, employees and representatives of any of them), none of
such
Indemnified Parties shall have any further recourse to any of the Company
Stockholders or the Participating Rights Holders. Notwithstanding anything
to
the contrary herein and for purposes of clarification, except in the case of
fraud, the liability of the Company Stockholders and the Participating Rights
Holders, including indemnification obligations and claims of Parent and the
Surviving Corporation and any Affiliate thereof and their respective
Representatives for Damages shall be limited solely to (and payable in the
order
set forth in the third sentence of this Section 9.4) (x) any indemnity payments
owed by Parent and the Surviving Corporation pursuant to Section 9.1 and (y)
the
Maximum Indemnification Amount (as defined in Section 9.5(b)) and payable solely
from monies in the Indemnity Holdback Amount, as adjusted downward if the FDA
Milestone Payment is not made, and once any payment from the Indemnity Holdback
Amount is released to the Participating Rights Holders (or the Closing Amount
has been paid to the Participating Rights Holders, except in the case of fraud
by the Company), Parent, the Surviving Corporation and any Affiliate thereof,
and their respective Representatives, shall have no further claim to any amount
under this Agreement from the Company Stockholders and the Participating Rights
Holders other than Parent and Surviving Corporation offsets against
indemnification payments pursuant to Section 9.1. All such recoveries from
the
Indemnity Holdback Amount and offsets against indemnification payments shall
be
made on a pro rata basis from all Participating Rights Holders in the same
proportions in which they would otherwise be entitled to receive payments of
the
Holdback Amount or indemnification payments, except that, to the extent of
any
claim arising under Section 9.2(a) that was caused by a breach of any
Participating Rights Holder, such recoveries shall be made severally from the
Participating Rights Holder responsible for such breach and no other
Participating Rights Holder shall have any liability. Any indemnification
obligations of Parent or Merger Sub pursuant to this Article 9 shall be paid,
at
Parent’s election, (i) in cash, (ii) by issuing Parent Common Stock (each share
of which shall be valued for such purpose at the Reference Market Value of
Parent Common Stock as of the date of such issuance), subject to the conditions
set forth in Section 1.6(b), (iii) by setting off against (i.e., reducing)
any
indemnification payments owed to Parent pursuant to this Article 9 or (iv)
through a combination of the methods specified in clauses (i), (ii) and (iii).
The parties agree that, for Tax purposes, to the greatest extent possible,
the
payment of any indemnity hereunder shall be treated as an adjustment to the
Merger Consideration paid by Parent hereunder.
Notwithstanding
anything to the contrary contained herein and except in the case of fraud,
the
sole and exclusive remedy of Parent, the Surviving Corporation and any Affiliate
thereof in respect of any and all claims relating to this Agreement, the
transactions contemplated hereby and any certificate, document or other
instrument delivered pursuant to or in connection with this Agreement shall
be
the rights to indemnification set forth in this Article IX and to make claims
against the Indemnity Holdback Amount and offsets against indemnification
payments in accordance with the terms of this Agreement.
9.5 Limitations
of Liability.
(a) Threshold.
No
Indemnifying Party will be required to indemnify an Indemnified Party hereunder
until such time as the aggregate amount of Damages for which (i) Parent, the
Surviving Corporation and their respective Affiliates, and each of the
directors, officers, employees or representatives, as applicable, on the one
hand, or (ii) the Company, the Company Stockholders and the Participating Rights
Holders and their respective directors, officers, employees or representatives,
as applicable, on the other hand, are otherwise entitled to indemnification
pursuant to this Agreement exceeds $150,000, at which time, the Indemnifying
Party shall be obligated to indemnify the Indemnified Party for the full amount
of such Damages subject to the limitations of this Article 9. Notwithstanding
anything to the contrary in this Section 9.5, the threshold limits imposed
by
this Section 9.5(a) shall not apply to any Damages arising out of or in
connection with any breach by the Company or any Participating Rights Holders
of
(x) any Special Representations, (y) any Special Claims or (z) any intentional
or willful breaches of this Agreement, or fraud or similar
circumstances.
(b) Maximum
Liability.
The
parties specifically agree that, notwithstanding any provision of this Agreement
to the contrary, the maximum aggregate liability of all of the Participating
Rights Holders, on the one hand, and Parent and the Surviving Corporation,
on
the other hand, for indemnification under this Article 9, except in the case
of
intentional or willful breach of this Agreement, fraud or similar circumstances,
will not exceed a maximum amount equal to 15% of the aggregate of the Closing
Payment Amount and the Holdback Amount (the “Maximum Indemnification Amount”),
which Maximum Indemnification Amount shall be reduced by 15% of $5,000,000
if
the FDA Milestone Payment is not made. For purposes of this Section 9.5(b),
the
Closing Payment Amount shall be deemed to be a dollar amount equal to (i)
8,400,000, multiplied by the Reference Market Value on the Closing Date, and
(ii) $7,000,000.
(c) Time
Limit.
(A) All
representations and warranties in this Agreement shall survive the Closing
and
shall expire on, and no Indemnifying Party will be liable for any Damages
hereunder with respect to a breach of such representations and warranties or
a
claim for indemnification pursuant to Section 9.2(a) unless a written claim
for
indemnification is given by the Indemnified Party to the Indemnifying Party
with
respect thereto prior to, the 540th day following the Closing Date; provided
that Tax Claims shall survive until the earlier of (i) the second anniversary
of
the Closing Date and (ii) sixty (60) days after the expiration of the applicable
statutes of limitations.
(B) All
claims for indemnification pursuant to Sections 9.2(b), 9.2(c), 9.2(d), 9.2(e),
9.2(f), 9.2(g), 9.2(h), 9.2(i) and 9.2(j) shall survive the Closing and shall
expire on, and no Indemnifying Party will be liable for any Damages hereunder
with respect to any such claim for indemnification unless a written claim for
indemnification is given by the Indemnified Party to the Indemnifying Party
with
respect thereto prior to, the second anniversary of the Closing Date
.
9.6 Right
to Bring Action; No Contribution.
Notwithstanding anything in this Article 9 or elsewhere in this Agreement to
the
contrary, only the Stockholder Representative Committee shall have the right,
power and authority to commence any action, suit or proceeding, including any
arbitration proceeding, by and on behalf of any or all Participating Rights
Holders against Parent or the Surviving Corporation, or any other Indemnified
Party, and in no event shall any Participating Rights Holder himself, herself
or
itself have the right to commence any action, suit or proceeding, including
any
arbitration proceeding, against Parent or the Surviving Corporation, or any
other Indemnified Party. Each Participating Rights Holder waives, and
acknowledges and agrees that he, she or it shall not have and shall not exercise
or assert (or attempt to exercise or assert), any right of contribution, right
of indemnity or other right or remedy against the Surviving Corporation in
connection with any indemnification obligation or any other liability to which
he may become subject under or in connection with this Agreement.
ARTICLE X
GENERAL
PROVISIONS
10.1 Notices.
All
notices, claims and demands hereunder, and all other communications which are
required to be given in writing pursuant to this Agreement, shall be in writing
and shall be given (and shall be deemed to have been duly given upon receipt)
by
delivery in person or facsimile (received at the facsimile machine to which
it
is transmitted prior to 5 p.m., local time, on a business day for the party
to
which it is sent, or if received after 5 p.m., local time, as of the next
business day) or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or
at
such other address for a party as shall be specified in a notice given in
accordance with this Section 10.1):
if
to
Parent or Merger Sub:
0000
Xxxxxxx Xxxxxx, Xxxxxxxx 0, Xxxxx 000
Xxxxxxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Chief Executive Officer
Facsimile:
000-000-0000
with
a
copy to:
Xxxxx
XXX
Xxxxx
0000, 00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxx-Xxxxxxxx
Xxxxxx
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention:
Xxxxx X. Chaikof
Facsimile:
416-865-7380
if
to the
Company:
Solx,
Inc.
0
Xxxxx
Xxxx’x Xxxxxx
Xxxxxx,
XX 00000
Attention:
President
Telephone:
000-000-0000
Facsimile:
000-000-0000
with
a
copy to:
Rackemann,
Xxxxxx & Xxxxxxxx, Professional Corporation
Xxx
Xxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxx, Esq.
Telephone:
000-000-0000
Facsimile:
617-542-7437
and
if to
the Stockholder Representative Committee:
Xxxx
X.
Xxxxx
Solx,
Inc.
0
Xxxxx
Xxxx’x Xxxxxx
Xxxxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
and:
Xxxx
Xxxxxxxx
0000
Xxxxxx Xxxx Xx X
Xxxxxxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
and:
Xxxxx
X.
Xxxxx
0000
Xxxxxxxxxxx Xxxxx
Xxx
Xxxx,
XX 00000
Telephone:
000-000-0000
Facsimile:
000-000-0000
10.2 Certain
Definitions.
For
purposes of this Agreement, the term:
“Acquisition
Proposal” means any bona fide offer or proposal (other than an offer or proposal
by Parent) relating to any Acquisition Transaction.
“Acquisition
Transaction” means (i) any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving the purchase
of
all or any significant portion of the capital stock or assets of the Company,
(ii) any agreement to enter into a business combination with the Company, (iii)
any agreement made, other than in the ordinary course of business, with regard
to the Intellectual Property owned or licensed by the Company and (iv) any
other
extraordinary business transaction involving, or otherwise relating to, the
Company or any Intellectual Property owned or licensed by the
Company.
“Affiliate”
means, with respect to any person, any person that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, such person. For greater certainty, until the consummation
of the Merger, the Company shall not be deemed, for any purposes of this
Agreement, to be an Affiliate of Parent or Merger Sub.
“California
Law” means the California Corporations Code of the State of California, as
amended.
“Closing
Payment Amount” means 8,400,000 shares of Parent Common Stock and
$7,000,000.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company
Disclosure Schedule” means the schedule of disclosures and exceptions to the
representations and warranties made by the Company in Article 3.
“Company
Licensed Intellectual Property” means all Intellectual Property licensed to the
Company by any third party.
“Company
Owned Intellectual Property” means all Intellectual Property owned by the
Company.
“Company
Preferred Stock” means shares of the preferred stock of the Company, par value
$.001 per share, including the Series A Preferred Stock.
“Company
Products” means, collectively, the Titanium Sapphire Laser, the Gold Shunt and
the Nanoparticles and the use thereof and any other product or process which
is
the subject matter of any patent or patent application owned by or licensed
to
the Company as of the Effective Time, each of which is sometimes referred to
herein as a “Company Product”.
“Company
Promissory Note” means the Convertible Unsecured Promissory Note of the Company,
in the principal amount of $2,000,000, dated April 4, 2006 and granted in favor
of Parent.
“Company
Stockholders” means holders of shares of capital stock of the Company, including
Company Common Stock and Company Preferred Stock.
“Company
Warrants” means all outstanding unexercised rights, warrants or options not
subject to the Company Option Plan to purchase shares of capital stock of the
Company immediately prior to the Effective Time.
“Damages”
means all damages, losses, costs and expenses actually incurred or suffered
by a
party with respect to, or relating to, an event, circumstance or state of facts.
Damages shall specifically include court costs and the reasonable fees and
expenses of legal counsel arising out of, or relating to, any direct or third
party claims, demands, actions, causes of action, suits, litigations,
arbitrations or liabilities.
“Dissenting
Shares” means shares of Company Common Stock or Company Preferred Stock that are
outstanding immediately prior to the Effective Time and which are held by
Company Stockholders who shall have not voted in favor of the Merger or
consented thereto in writing and who shall have exercised dissenters’ rights or
rights of appraisal for such shares of Company Common Stock or Company Preferred
Stock in accordance with Delaware Law (or California Law, if applicable) and
who, as of the Effective Time, have not effectively withdrawn or lost such
dissenters’ rights.
“Environmental
Law” means any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including those arising under any federal,
state or local statute, regulation, ordinance, order or decree relating to
the
environment, or any other zoning, health or safety law or
regulation.
“Environmental
Permit” means material permits, licenses and other authorizations required under
Environmental Law.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“FDA”
means the United States Food and Drug Administration.
“Holdback
Payment Date” means a date on which Parent pays a portion of the Holdback
Payment Amount in accordance with Section 1.7.
“Incubation
Agreement” means the Incubation Agreement, dated June 23, 2000, between the
Trustees of Boston University and the Company, as amended.
“FDA
Milestone” means the receipt by the Company, on or prior to December 31, 2007,
of written notice from the FDA granting final written approvals for the
marketing and sale of the Gold Shunt in the United States for the glaucoma
shunting indication, which approval shall not be subject to limitations that
would inhibit marketing or selling to a significant portion of the market
for
the approved indication.
“Financial
Statements” means unaudited consolidated financial statements of the Company
(including balance sheet, income statement and statement of cash flows) (i)
as
of the twelve months ended May 31, 2005, (ii) as of the seven months ended
December 31, 2005 and (iii) as of the fiscal quarter ended March 31, 2006
and a supplemental statement for the month ended April 30, 2006, which the
Company has made available to Parent and which are included in the Company
Disclosure Schedule.
“Financing”
means any equity financing for the account of the Company in which shares
of
Company Common Stock or Company Preferred Stock, or other equity securities,
directly or indirectly, convertible or exercisable into or exchangeable for
Company Common Stock or Company Preferred Stock, are issued.
“Fully-diluted
basis” means, with respect to the number of shares of Company Common Stock
outstanding as of a particular time, the sum of (i) the aggregate number
of
shares of Company Common Stock issued and outstanding at such time, (ii)
the
maximum number of shares of Company Common Stock issuable at such time upon
the
exercise of unexercised Company Options, Company Warrants and other options,
warrants or rights to acquire shares of Company Common Stock issued and
outstanding at such time (whether or not fully vested), and upon the conversion
of all convertible notes or other convertible securities outstanding at such
time, and (iii) the maximum number of shares of Company Common Stock issuable
at
such time upon the conversion of the Company Preferred Stock, including any
shares of Company Preferred Stock issuable upon exercise of the options,
warrants and other rights described in (ii) above.
“Fully-Diluted
Common Stock Number” means the number of shares of Company Common Stock
outstanding on a fully-diluted basis immediately prior to the Effective Time
(including Dissenting Shares, but excluding shares of Company Common Stock
and
Company Preferred Stock held by the Company, if any).
“GAAP”
means generally accepted accounting principles consistently
applied.
“Gold
Shunt” means the Company’s implantable device intended to reduce intraocular
pressure in the anterior chamber of the eye.
“Governmental
Authority” means any United States (federal, state or local) or foreign
government or governmental, regulatory or administrative authority, agency
or
commission or securities exchange.
“Hazardous
Substance” means (i) those substances defined in, or regulated under, the
following federal statutes and their state counterparts and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act, (ii) petroleum and petroleum products, including
crude oil and any fractions thereof, (iii) natural gas, synthetic gas and
any
mixtures thereof, (iv) polychlorinated biphenyls, asbestos and radon, (v)
any
other contaminant and (vi) any substance, material or waste regulated by
any
Governmental Authority pursuant to any Environmental Laws.
“Holdback
Amount” means $13,000,000, as adjusted pursuant to Section 1.7(c).
“Indebtedness”
means, as applied to any person, (i) all indebtedness for borrowed money,
whether current or funded, or secured or unsecured, (ii) all indebtedness for
the deferred purchase price of property or services represented by a note or
other security, (iii) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired (even
though the rights and remedies of the seller or lender under such agreement
in
the event of default are limited to repossession or sale of such property),
(iv)
all indebtedness secured by a purchase money mortgage or other lien to secure
all or part of the purchase price of property subject to such mortgage or lien,
(v) all obligations under leases which shall have been or must be, in accordance
with GAAP, recorded as capital leases in respect of which such person is liable
as lessee, (vi) any liability in respect of banker’s acceptances or letters of
credit and (vii) all indebtedness referred to in clause (i), (ii), (iii), (iv),
(v) or (vi) above which is, directly or indirectly, guaranteed by or which
such
person has agreed, contingently or otherwise, to purchase or otherwise acquire
or in respect of which it has otherwise assured a creditor against
loss.
“Indemnified
Party” means any person entitled to seek indemnification pursuant to Article
9.
“Indemnifying
Party” means any person against whom indemnification may be sought pursuant to
Article 9.
“Intellectual
Property” means intellectual property or proprietary rights of any description,
including (i) rights in any patent, patent application (including any
provisionals, continuations, divisions, continuations-in-part, extensions,
renewals, reissues, revivals and reexaminations, any national phase PCT
applications, any PCT international applications and all foreign counterparts),
copyright, industrial design, URL, domain name, trademark, service xxxx, logo,
trade dress or trade name, (ii) related registrations and applications for
registration, (iii) trade secrets, moral rights or publicity rights, (iv)
inventions, discoveries, improvements, modification, know-how, technique,
methodology, writing, work of authorship, design or data, whether or not
patented, patentable, copyrightable or reduced to practice, including any
inventions, discoveries, improvements, modification, know-how, technique,
methodology, writing, work of authorship, design or data embodied or disclosed
in any (1) computer source codes (human readable format) and object codes
(machine readable format), (2) specifications, (3) manufacturing, assembly,
test, installation, service and inspection instructions and procedures, (4)
engineering, programming, service and maintenance notes and logs, (5) technical,
operating and service and maintenance manuals and data, (6) hardware reference
manuals and (7) user documentation, help files or training materials and (v)
goodwill related to any of the foregoing.
“IRS”
means the Internal Revenue Service.
“Law”
means any United States or foreign judgment, decree, order, law, license,
statute, ordinance, rule or regulation.
“Material
Adverse Effect” means with respect to the Company or Parent, as the case may be,
any change or effect that, when taken individually or together with all other
adverse changes or effects, is or is reasonably likely to be materially adverse
to the business, results of operations and financial condition of the Company
or
Parent, as the case may be, and their respective Subsidiaries, taken as a
whole.
“Merger
Consideration” means the aggregate amount of the Purchase Price.
“Nanoparticles”
means the Company’s chromophores used to enhance the effect of the Titanium
Sapphire Laser in performing laser trabeculoplasty.
“Participating
Rights Holders” means those persons (other than the holders of Dissenting
Shares, the Company or Parent) who, immediately prior to the Effective Time,
will be holders of Company Common Stock, Company Preferred Stock, Company
Warrants or Company Options and whose interests therein, as the result of the
Merger, are converted into rights to receive a portion of the Closing Payment
Amount.
“PBGC”
means the Pension Benefit Guaranty Corporation created pursuant to
ERISA.
“Permits”
means all franchises, permits, licenses and any similar authority.
“Permitted
Indebtedness” means indebtedness, in an aggregate amount not to exceed $15,000,
that is not secured by a lien on, and does not in any way encumber, the assets
of the Company, including the Intellectual Property of the Company.
“Per
Share Common Cash Closing Payment” means the dollar amount equal to the quotient
obtained by dividing (x) $7,000,000 minus the Preferred Closing Cash Payment
Amount, by (y) the Fully-Diluted Common Stock Number.
“Per
Share Common Closing Payment” means the Per Share Common Cash Closing Payment
and the Per Share Common Stock Closing Payment.
“Per
Share Common Holdback Amount” means the amount equal to the quotient obtained by
dividing (x) the amount of the Holdback Amount, by (y) the Fully-Diluted Common
Stock Number.
“Per
Share Common Stock Closing Payment” means the number of shares of Parent Common
Stock equal to the quotient obtained by dividing (x) 8,400,000 minus the
Preferred Closing Stock Payment Amount, by (y) the Fully-Diluted Common Stock
Number.
“Per
Share Preferred Cash Closing Payment” means, with respect to each share of the
Series A Preferred Stock outstanding immediately prior to the Effective Time,
the cash portion of the Closing Payment Amount allocable to such share, in
preference to any share of Company Common Stock pursuant to the Company
Certificate of Incorporation as in effect immediately prior to the Effective
Time.
“Per
Share Preferred Closing Payment” means the Per Share Preferred Cash Closing
Payment and the Per Share Preferred Stock Closing Payment.
“Per
Share Preferred Stock Closing Payment” means, with respect to each share of the
Series A Preferred Stock outstanding immediately prior to the Effective Time,
the portion of the Closing Payment Amount which consists of shares of Parent
Common Stock, allocable to such share of the Series A Preferred Stock, in
preference to any share of Company Common Stock pursuant to the Company
Certificate of Incorporation as in effect immediately prior to the Effective
Time.
“Preferred
Closing Cash Payment Amount” means an amount equal to the sum of all Per Share
Preferred Cash Closing Payments for all outstanding shares of Series A Preferred
Stock.
“Preferred
Closing Stock Payment Amount” means a number of shares of Parent Common Stock
equal to the sum of all Per Share Preferred Stock Closing Payments for all
outstanding shares of Series A Preferred Stock.
“Purchase
Price” means the Closing Payment Amount plus the Holdback Amount.
“Reference
Market Value” means the average closing sale price of a share of Parent Common
Stock on the NASDAQ National Market System for the fifteen (15) consecutive
trading day period ending on the day immediately prior to the date on which
such
Reference Market Value is determined.
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities”
means shares of Company Common Stock and Company Preferred Stock and options,
warrants, convertible notes, rights of conversion and other rights to acquire
capital stock of the Company, and all shares issuable upon exercise or
conversion of Company Preferred Stock, options, warrants, convertible notes,
rights of conversion and other rights to acquire stock of the Company,
outstanding from time to time, whether or not then currently vested, exercisable
or convertible.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Securityholder”
means a holder of Securities.
“Special
Claims” means any Known Claims, Appraisal Claims, Tax Claims, Fiduciary Duty
Claims, Transaction Cost Claims, Intellectual Property Claims and claims
relating to a breach of Special Representations.
“Special
Representations” means any representations or warranties relating to the
Capitalization Certificate or contained in Sections 3.2, 3.8, 3.20 or
3.27.
“Sponsored
Research Agreement” means the Sponsored Research Agreement, dated August 23,
2005, between the Trustees of Boston University and the Company, relating to
manufacturing research supervised by Xxxxxxxxx Xxxxxx Xxxxxx.
“Stockholder
Representative Committee” means the group of individuals appointed to serve as
such under Section 2.5.
“Subsidiary
or Subsidiaries” of any person means any corporation, partnership, limited
liability company, association, trust, joint venture or other legal entity
of
which such person (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, more than 50% of the capital stock
or
other equity interests, the holders of which are generally entitled to vote
for
the election of the board of directors or other governing body of such
corporation, partnership, limited liability company, association, trust, joint
venture or other legal entity.
“Superior
Proposal” means an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company pursuant to which the Company Stockholders
immediately preceding such transaction hold less than 50% of the equity interest
in the surviving or resulting entity of such transaction; (ii) a sale or other
disposition by the Company of all or substantially all of its assets; or (iii)
the acquisition by any person or group (including by way of a tender offer
or an
exchange offer or issuance by the Company), directly or indirectly, of
beneficial ownership or a right to acquire beneficial ownership of shares
representing in excess of 50% of the voting power of the then outstanding shares
of capital stock of the Company, in each case, on terms that the Company Board
determines, in its reasonable judgment (after consultation with a reputable
financial advisor), to be more favorable to the Company Stockholders than the
terms of the Merger (after taking into account all relevant factors, including
all conditions to the offer, the timing of the transaction contemplated by
the
offer, the risk of non-consummation thereof and the need for any required
governmental or other consents, filings or approvals); provided, however, that
any such offer shall not be deemed to be a “Superior Proposal” if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely, in the reasonable judgment of the Company Board,
to
be obtained by such third party on a timely basis.
“Tax”
or
“Taxes” (and with correlative meaning, “Taxable”) means any United States
federal, state or local, or non-United States income, gross receipts, franchise,
estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
withholding, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, net worth, intangibles,
social security, unemployment, disability, payroll, license, employee or other
tax, or similar levy, of any kind whatsoever, including any interest, penalties
or additions to tax in respect of any of the foregoing.
“Tax
Return” means any return, declaration, report, claim for refund, information
return or other document (including any related or supporting estimates,
elections, schedules, statements or information) filed, or required to be filed,
in connection with the determination, assessment or collection of any Tax or
the
administration of any laws, regulations or administrative requirements relating
to any Tax.
“Taxation
Authority” means any Governmental Authority having any responsibility for (i)
the determination, assessment or collection or payment of any Tax or (ii) the
administration, implementation or enforcement of, or compliance with, any Law
relating to Tax.
“Titanium
Sapphire Laser” means the Company’s flashlamp pumped laser intended for use in
performing laser trabeculoplasty.
The
following table sets forth certain other defined terms and the Section of the
Agreement in which the meaning of each such term appears:
|
Section(s)
|
|
|
“Activities
to Date”
|
3.20(a)
|
|
“Agreement”
|
Preamble
|
|
“Agreement
Date”
|
Preamble
|
|
“Antitrust
Filing”
|
6.2
|
|
“Appraisal
Claims”
|
9.2(f)
|
|
“Benefit
Claims”
|
9.2(b)
|
|
“Capitalization
Certificate”
|
7.2(k)
|
|
“Certificates”
|
2.2(a)(i)
|
|
“Closing”
|
1.1(b)
|
|
“Closing
Date”
|
1.1(b)
|
|
“Committee
Reimbursement Amount”
|
1.5(b)
|
|
“Company”
|
Preamble
|
|
“Company
Activities”
|
9.2(h)
|
|
“Company
Board”
|
Preamble
|
|
“Company
Certificate of Incorporation”
|
Preamble
|
|
“Company
Common Stock”
|
Preamble
|
|
“Company
Licenses”
|
3.20(a)
|
|
“Company
Option”
|
2.1(c)
|
|
“Company
Option Plan”
|
2.1(c)
|
|
“Confidentiality
Agreement”
|
6.6
|
|
“Delaware
Law”
|
Preamble
|
|
“Delivered
Tax Returns”
|
3.23(a)
|
|
“Derivative
Instruments”
|
2.2(a)(i)
|
|
“Effective
Time”
|
1.1(b)
|
|
“Employee
Benefit Plan”
|
3.19(a)
|
|
“Environmental
Claims”
|
9.2(d)
|
|
“FDA
Milestone Payment”
|
1.7(c)
|
|
“Fiduciary
Duty Claims”
|
9.2(j)
|
|
“Foreign
Antitrust Filing”
|
6.2
|
|
“HSR
Act”
|
6.2
|
|
“Indemnity
Holdback Amount”
|
1.7(d)
|
|
“Initial
Stockholder Approval”
|
6.4
|
|
“Intellectual
Property Claims”
|
9.2(h)
|
|
“Known
Claims”
|
9.2(e)
|
|
“Maximum
Indemnification Amount”
|
9.5(b)
|
|
“McHallam”
|
2.1(a)
|
|
“McHallam
Additional Cash”
|
2.1(a)
|
|
“Merger”
|
Preamble
|
|
“Merger
Certificate”
|
1.1(a)(i)
|
|
“Merger
Sub”
|
Preamble
|
|
“Option
Shares”
|
2.1(c)
|
|
“Parent”
|
Preamble
|
|
“Parent
Board”
|
Preamble
|
|
“Parent
Common Stock”
|
Preamble
|
|
“Parent-Handled
Claims”
|
9.3(e)
|
|
“Promissory
Note”
|
1.8
|
|
“Product
Liability Claims”
|
9.2(c)
|
|
“Products”
|
3.20(a)
|
|
“Reallocated
Shares”
|
2.1(a)
|
|
“Security
Agreements”
|
1.8
|
|
“Series
A Preferred Stock”
|
Preamble
|
|
“SRC
Expenses”
|
2.5(c)
|
|
“Stockholders
Agreement”
|
Preamble
|
|
“Straddle
Period”
|
9.2(i)
|
|
“Surviving
Corporation”
|
Preamble
|
|
“Surviving
Corporation Charter”
|
1.3(a)
|
|
“Tax
Claims”
|
9.2(i)
|
|
“Termination
Date”
|
8.1(b)
|
|
“Third
Party Claim”
|
9.3(a)
|
|
“Transaction
Cost Claims”
|
9.2(g)
|
10.3 Payments.
As used
in each instance, in this Agreement, any and all references, of whatever kind
or
nature, to dollars are references to United States dollars.
10.4 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of applicable law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is
not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the Merger be consummated
as originally contemplated to the fullest extent possible.
10.5 Entire
Agreement; Assignment.
This
Agreement, together with the Confidentiality Agreement, constitutes the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersedes all prior agreements and undertakings, both written
and
oral, among the parties, or any of them, with respect to the subject matter
hereof and thereof. This Agreement shall not be assigned by operation of law
or
otherwise, except that Parent and Merger Sub may assign all or any of their
rights and obligations hereunder to (i) any Affiliate of Parent (provided,
that
no such assignment to an Affiliate shall relieve the assigning party of its
obligations hereunder), and (ii) Parent may assign all of its rights and
obligations hereunder to a person that acquires all of the capital stock, or
substantially all of the assets, of the Company or any division or business
unit
of Parent responsible for the business of the Company (provided that, in the
event of such an assignment, the amount of the Holdback Amount theretofore
unpaid, less the amount of the Indemnity Holdback Amount permitted to be
withheld pursuant to Section 1.7(b), if any, shall be paid immediately to the
Participating Rights Holders and allocated among them in accordance with Section
2.1, and provided, further, that such person assumes this Agreement, in writing,
and agrees to be bound by and to comply with all of the terms and conditions
hereof); provided that the Company’s prior written consent shall be required in
connection with any assignment pursuant to the foregoing clause (ii) if such
person, at the time of such proposed assignment, is actively engaged in
marketing and selling or in phase III clinical studies of a pharmaceutical
treatment for glaucoma that is competitive with the Company Products and does
not at such time maintain a surgical or medical device-related sales force.
Notwithstanding the foregoing, a change of control of Parent shall not be deemed
to be an assignment hereunder.
10.6 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and nothing in this Agreement, express or implied is intended to or
shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
10.7 Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
10.8 Governing
Law.
This
Agreement shall be governed by, and construed in accordance with the laws of
the
State of Delaware applicable to contracts executed in and to be performed in
that state.
10.9 Consent
to Jurisdiction.
(a) EACH
OF
PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE COURTS OF DELAWARE AND TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE STATE OF DELAWARE, FOR THE PURPOSE OF
ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH
OF
PARENT, THE COMPANY AND MERGER SUB HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN
RESPECT TO SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED EXCLUSIVELY
IN
ANY DELAWARE STATE OR FEDERAL COURT SITTING IN THE CITY OF WILMINGTON. EACH
OF
PARENT, THE COMPANY AND MERGER SUB AGREES THAT A FINAL JUDGMENT IN ANY ACTION
OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(b) EACH
OF
PARENT, THE COMPANY AND MERGER SUB IRREVOCABLY CONSENTS TO THE SERVICE OF THE
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS IN ANY OTHER ACTION OR PROCEEDING
RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, ON BEHALF OF ITSELF
OR ITS PROPERTY, BY THE PERSONAL DELIVERY OF COPIES OF SUCH PROCESS TO SUCH
PARTY. NOTHING IN THIS SECTION 10.9 SHALL AFFECT THE RIGHT OF ANY PARTY TO
SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
10.10 Headings;
Interpretation.
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement. Whenever the word “include,” “includes,” or “including” appears
in this Agreement, it shall be deemed in each instance to be followed by the
words “without limitation.”
10.11 Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which, when executed and delivered, shall be deemed to
be
an original but all of which taken together shall constitute one and the same
agreement.
10.12 Fees
and Expenses.
Except
as provided in Section 8.3, all costs and expenses incurred in connection with
this Agreement and the Merger by the Company or the Participating Rights Holders
shall be paid by the Company and the Participating Rights Holders, respectively,
subject to the provisions of Section 9.2(g). Except as provided in Section
8.3,
all costs and expenses incurred in connection with this Agreement and the Merger
by Parent or Merger Sub shall be paid by Parent.
10.13 Amendment.
This
Agreement may not be amended except by an instrument in writing, duly authorized
by the appropriate boards of directors, signed by Parent or its designee, Merger
Sub and the Company and by the Stockholder Representative
Committee.
10.14 Waiver.
At any
time prior to the Effective Time, Parent and the Company may agree to (a) extend
the time for the performance of any obligation or other act of the other
(including, in the case of Parent, Merger Sub) party hereto, (b) waive any
inaccuracy in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto and (c) waive compliance by the
other, as the case may be, with any agreement or condition contained herein.
Any
such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
[The
remainder of the page is intentionally left blank.]
-
-
IN
WITNESS WHEREOF, Parent, Merger Sub, the Company and the members of the
Stockholder Representative Committee have duly executed this Agreement as an
instrument under seal as of the date first above written.
|
|
||
|
By:
|
/s/ Xxxxx Xxxxxxxx
|
|
|
Name: Xxxxx
Xxxxxxxx
|
||
|
Title: Chief
Executive Officer
|
||
|
OCCULOGIX
MERGECO, INC.
|
||
|
By:
|
/s/ Xxxxx Xxxxxxxx
|
|
|
Name: Xxxxx
Xxxxxxxx
|
||
|
Title: President
|
||
|
SOLX,
INC.
|
||
|
By:
|
/s/ Xxxx X. Xxxxx
|
|
|
Name:
Xxxx X. Xxxxx
|
||
|
Title:
|
||
|
STOCKHOLDER REPRESENTATIVE COMMITTEE
|
||
| /s/ Xxxx X. Xxxxx | ||
|
Xxxx
X. Xxxxx
|
||
| /s/ Xxxx Xxxxxxxx | ||
|
Xxxx
Xxxxxxxx
|
||
| /s/ Xxxxx X. Xxxxx | ||
|
Xxxxx
X. Xxxxx
|
||
-
-
|
LIST
OF EXHIBITS
|
|
|
Exhibit
A
|
Merger
Certificate
|
|
Exhibit
B
|
Invention
and Non-Disclosure Agreement
|
|
Exhibit
C
|
Form
of Legal Opinion of Rackemann, Xxxxxx & Xxxxxxxx, Professional
Corporation
|
|
Exhibit
D
|
Form
of Legal Opinion of Torys LLP
|
