AGREEMENT AND PLAN OF MERGER AND REORGANIZATION BY AND AMONG DROPCAR, INC., ABC MERGER SUB, INC., AND AYRO, INC. Dated as of December 19, 2019
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
AND
AYRO, INC.
Dated as of December 19, 2019
|
|
Exhibits
|
Exhibit
A
|
Certain
Definitions
|
|
Exhibit
B-1
|
Form of
Company Voting Agreement
|
|
Exhibit
B-2
|
Form of
Parent Voting Agreement
|
|
Exhibit
C
|
Form of
Subscription Agreement
|
|
Exhibit
D
|
Form of
Lock-up Agreement
|
|
Exhibit
E
|
Form of
Certificate of Merger
|
|
Exhibit
F
|
[Reserved]
|
|
Exhibit
G-1
|
Form of
Amended and Restated Parent Certificate of
Incorporation
|
|
Exhibit
G-2
|
Form of
Amended and Restated Parent Bylaws
|
|
Exhibit H
|
Parent Asset Purchase Agreement
|
|
Exhibit
I
|
Form of
FIRPTA Notice
|
|
Exhibit
J-1
|
Employment
Agreement- ▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
Exhibit
J-2
|
Amendment
to Employment Agreement – ▇▇▇▇▇▇ ▇▇▇▇▇
|
|
|
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, is
made and entered into as of December 19, 2019 (this
“Agreement”),
by and among DROPCAR, INC.,
a Delaware corporation (“Parent”),
ABC MERGER SUB, INC., a
Delaware corporation (“Merger Sub”),
and AYRO, INC., a Delaware
corporation (“Company”). Parent,
Merger Sub and Company are each a “Party” and
referred to collectively herein as the “Parties.” Certain
capitalized terms used in this Agreement are defined in
Exhibit
A.
RECITALS:
WHEREAS, this Agreement contemplates a merger of Merger Sub
with and into Company, with Company remaining as the surviving
corporation after the merger (the “Merger”),
whereby the stockholders of the Company (the “Company
Stockholders”) will receive common stock of the Parent
(“Parent
Common Stock”) in exchange for their capital stock of
the Company (“Company Capital
Stock”);
WHEREAS, the Parties intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”), and
the regulations thereunder, and to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a) of the
Code;
WHEREAS, pursuant to the terms and conditions of this
Agreement, the holders of the outstanding Company Capital Stock
immediately prior to the Effective Time (including, for the
avoidance of doubt, any Company Capital Stock issuable pursuant to
the terms of the Bridge Notes and the Company Pre-Closing
Financing) will own approximately 80% of the issued and outstanding
Parent Common Stock immediately following the Effective Time and
the holders of the outstanding Parent Common Stock immediately
prior to the Merger will own approximately 20% of the issued and
outstanding Parent Common Stock immediately following the Effective
Time;
WHEREAS, the board of directors of Parent (i) has determined
that the Merger is fair to, and in the best interests of, Parent
and its stockholders, (ii) has approved this Agreement, the Merger,
the issuance of shares of Parent Common Stock to the Company
Stockholders pursuant to the terms of this Agreement and the other
actions contemplated by this Agreement, (iii) has approved the
Parent Charter Amendment, Reverse Split and Parent Legacy Business
Disposition; and (iv) has determined to recommend that the
stockholders of Parent vote to approve the Parent Stockholder
Approval Matters and such other actions as contemplated by this
Agreement;
WHEREAS, the board of directors of Merger Sub (i) has
determined that the Merger is fair to, and in the best interests
of, Merger Sub and its sole stockholder, (ii) has approved this
Agreement, the Merger, and the other actions contemplated by this
Agreement and has deemed this Agreement advisable and (iii) has
determined to recommend that its sole stockholder vote to adopt
this Agreement and thereby approve the Merger and such other
actions as contemplated by this Agreement;
WHEREAS, the board of directors of Company (i) has
determined that the Merger is advisable and fair to, and in the
best interests of, Company and the Company Stockholders, (ii) has
approved this Agreement, the Merger and the other transactions
contemplated by this Agreement and the agreements entered into in
connection herewith (the “Transactions”)
and has deemed this Agreement advisable and (iii) has determined to
recommend that the Company Stockholders vote or consent to approve
the Company Stockholder Matters;
WHEREAS, as a condition to the willingness of, and an
inducement to each of Parent and the Company to enter into this
Agreement, contemporaneously with the execution and delivery of
this Agreement, each of the Company Voting Agreement Signatories is
entering into a voting agreement, in favor of Parent, in
substantially the form of Exhibit B-1
attached hereto (the “Company Voting
Agreements”), and each of the Parent Voting Agreement
Signatories is entering into a voting agreement, in favor of the
Company, in substantially the form of Exhibit B-2
attached hereto (individually, the “Parent Voting
Agreements” and collectively, the “Voting
Agreement”) under which the Voting Agreement
Signatories will agree, with respect to their Company Capital Stock
or Parent Capital Stock, as applicable, to vote as stockholders in
favor of the Company Stockholder Matters or Parent Stockholder
Approval Matters, as applicable, pursuant to the terms and
conditions of the Voting Agreements, as applicable;
WHEREAS, simultaneously with the execution of this
Agreement, Company has issued and sold convertible notes (the
“Bridge
Notes”) to certain accredited investors for aggregate
gross proceeds to the Company of $1,000,000;
WHEREAS, immediately prior to the execution and delivery of
this Agreement, and as a condition of the willingness of Parent and
Merger Sub to enter into this Agreement, certain investors have
executed the Subscription Agreement, in the form attached hereto as
Exhibit
C, with the Company, pursuant to which such investors have
agreed to purchase certain shares of Company Capital Stock prior to
the Closing in connection with the Company Pre-Closing
Financing;
WHEREAS, as a condition to the consummation of the Merger,
Parent will immediately prior to the Effective Time enter into an
executive employment agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇, the current
Chief Executive Officer of the Company, substantially in the form
attached hereto as Exhibit
J-1;
WHEREAS, Company will immediately prior to the Effective
Time enter into an amendment to the employment agreement with
▇▇▇▇▇▇ ▇▇▇▇▇, the current Chief Financial Officer of the Company,
substantially in the form attached hereto as Exhibit
J-2;
WHEREAS, as a condition to the willingness of, and an
inducement to each of Parent and Company to enter into this
Agreement, each of the Lock-up Signatories is entering into a
lock-up agreement, in substantially the form of Exhibit D
attached hereto (the “Lock-up
Agreements”), with respect to the shares of Parent
Common Stock held by each Lock-up Signatory from time to time
(including shares of Parent Common Stock issued as Merger
Consideration pursuant to the terms of this
Agreement).
2
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants herein contained, and for
other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as
follows:
ARTICLE
I.
THE
MERGER
Section
1.01 The
Merger. Subject to
and upon the terms and conditions of this Agreement and the
Delaware General Corporation Law (the “DGCL”),
Merger Sub will be merged with and into Company at the Effective
Time. From and after the Effective Time, the separate
corporate existence of Merger Sub will cease, and Company will
continue as the surviving corporation. Company, as the
surviving corporation after the Merger, is hereinafter sometimes
referred to as the “Surviving
Corporation.”
Section
1.02 Closing;
Effective Time. Unless this Agreement has been
terminated and the Transactions herein contemplated have been
abandoned pursuant to Section 7.01 of this Agreement and, subject
to the satisfaction or waiver of the conditions set forth in
Article VI of this Agreement, the consummation of the Merger (the
“Closing”)
will take place at the offices of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 10:00
a.m. on a date to be specified by the Parties which will be no
later than three Business Days after satisfaction or waiver of the
conditions set forth in Article VI (other than those conditions
that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of each such conditions), or
at such other time, date and place as Parent and Company may
mutually agree in writing. The date on which the Closing
actually takes place is referred to as the
“Closing
Date.” On the
Closing Date, the Parties will cause the Merger to be consummated
by executing and filing a Certificate of Merger in accordance with
the relevant provisions of the DGCL (the “Certificate
of Merger”), in
substantially the form of Exhibit
E attached hereto, together
with any required related certificates, with the Secretary of State
of the State of Delaware, in such form as required by, and executed
in accordance with the relevant provisions of, the DGCL. The Merger
will become effective at the time of the filing of such Certificate
of Merger with the Secretary of State of the State of Delaware or
at such later time as may be specified in such Certificate of
Merger with the consent of Parent and Company (the time as of which
the Merger becomes effective being referred to as the
“Effective
Time”).
Section
1.03 Effect
of the Merger. At
the Effective Time, the effect of the Merger will be as provided in
this Agreement, the Certificate of Merger and the applicable
provisions of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all
the property, rights, privileges, powers and franchises of Company
will vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of Company will become the debts,
liabilities, obligations and duties of the Surviving
Corporation.
Section
1.04 Certificate
of Incorporation; Bylaws; Reverse Split; Parent Name Change; Parent
Certificate of Incorporation and Bylaws. Unless otherwise determined by Parent
and Company:
3
(a) the
certificate of incorporation of the Surviving Corporation will be
the certificate of incorporation of Company until thereafter
amended as provided by the DGCL and such certificate of
incorporation;
(b) [reserved];
and
(c) immediately
prior to the Effective Time, Parent will take all actions necessary
to (i) cause its name to be changed to Ayro, Inc., (ii) obtain a
new trading symbol consistent with such name, (iii) effect the
Reverse Split to the extent applicable, (iv) amend and restate its
certificate of incorporation in the form attached hereto as
Exhibit
G-1, and (v) amend and restate
its bylaws in the form attached hereto as Exhibit
G-2.
Section
1.05 Directors
and Officers of the Surviving Corporation and
Parent. Unless
otherwise determined by Parent and Company, the parties will take
all action such that:
(a) the
Parent shall be the sole stockholder of the Surviving Corporation
immediately following the Effective Time;
(b) unless
otherwise determined by Company prior to the Effective Time, the
officers of Company immediately prior to the Effective Time will be
the officers of the Surviving Corporation immediately following the
Effective Time until such time as their respective successors are
duly elected or appointed; and
(c) the
directors and officers of Parent immediately following the
Effective Time shall be elected and appointed in accordance with
Section 5.11.
Section
1.06 Conversion
of Company Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger
Sub, Company, any stockholder of Company or any other
Person:
(a) Conversion
of Company Capital Stock. Each
share of Company Capital Stock issued and outstanding immediately
prior to, and contingent upon the occurrence of, the Effective Time
(excluding any shares to be cancelled pursuant to Section 1.06(c)
and any Dissenting Shares to be treated in accordance with Section
1.07 but including any shares of Company Capital Stock issued
pursuant to the Company Pre-Closing Financing) will be cancelled
and converted into and represent the right to receive a number of
shares of validly issued, fully paid and nonassessable shares of
common stock of Parent, $0.0001 par value per share
(“Parent
Common Stock”) equal to
the Exchange Ratio (the “Merger
Consideration”), with any
resulting fractional shares to be rounded up to the nearest whole
share.
(b) Merger
Sub Common Stock. Each share of Merger Sub Common Stock
then outstanding will be converted into one share of common stock
of the Surviving Corporation. Each stock certificate of
Merger Sub evidencing ownership of any such shares will, as of the
Effective Time, evidence ownership of one hundred percent (100%) of
the capital stock of Surviving Corporation.
4
(c) Cancellation. Each
share of Company Capital Stock held in the treasury of Company and
each share of Company Capital Stock owned by Parent or by any
direct or indirect wholly owned Subsidiary of Company or Parent
immediately prior to the Effective Time will, by virtue of the
Merger and without any action on the part of the holder thereof,
cease to be outstanding, be canceled and extinguished without any
conversion thereof and without payment of any consideration
therefor and cease to exist.
(d) Adjustments
to Exchange Ratio. The Exchange Ratio will be
appropriately adjusted to reflect fully the effect of any stock
split, reverse split (including the Reverse Stock Split
contemplated by this Agreement), stock dividend (including any
dividend or distribution of securities convertible into Parent
Common Stock or Company Capital Stock), reorganization,
recapitalization or other like change with respect to Parent Common
Stock or Company Capital Stock or issuance of Parent Common Stock
or Company Capital Stock occurring after the date hereof and prior
to the Effective Time.
(e) Fractional
Shares. No fraction of a
share of Parent Common Stock will be issued in connection with the
Merger, and any fractional shares will be rounded up to the nearest
whole share.
(f) Company
Options. All Company Options
outstanding immediately prior to the Effective Time under the
Company Plan shall be treated in accordance with Section
5.29.
(g) Company
Warrants. All Company Warrants
outstanding immediately prior to the Effective Time shall be
treated in accordance with Section 5.30.
(h) Restrictions.
If any shares of Company Capital Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any
applicable restricted stock purchase agreement or other Contract
with Company or under which Company has any rights, then the shares
of Parent Common Stock issued in exchange for such shares of
Company Capital Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the
book-entry representing such shares of Parent Common Stock may
accordingly be marked with appropriate legends. Company will take
all action that may be necessary to ensure that, from and after the
Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock
purchase agreement or other Contract.
Section
1.07 Dissenting
Shares. For purposes
of this Agreement, “Dissenting
Shares” mean any shares
of Company Capital Stock outstanding immediately prior to the
Effective Time and held by a person who has not voted such shares
of Company Capital Stock in favor of the adoption of this Agreement
and the Merger, has properly demanded appraisal for such shares in
accordance with the DGCL and has not effectively withdrawn or
forfeited such demand for appraisal. Notwithstanding anything
to the contrary contained herein, Dissenting Shares will not be
converted into a right to receive the Merger Consideration unless
such holder fails to perfect or withdraws or otherwise loses its
rights to appraisal or it is determined that such holder does not
have appraisal rights in accordance with the DGCL. If,
after the Effective Time, such holder fails to perfect or withdraws
or loses its right to appraisal, or if it is determined that such
holder does not have appraisal rights, such shares will be treated
as if they had been converted as of the Effective Time into the
right to receive the Merger Consideration (if any). Company will
give Parent prompt notice of any demands received by Company for
appraisal of shares of Company Capital Stock, withdrawals of such
demands, and any other instruments that relate to such demands
received by Company. Company shall control all negotiations and
proceedings with respect to such demands, provided, however, (i) Company shall keep Parent reasonably
apprised of all material events, circumstances or changes with
respect to any such demand following the making thereof (ii) the
Company will not, except with prior written consent of Parent (such
consent not to be unreasonably withheld, conditioned or delayed),
make any payment with respect to, or settle or offer to settle, any
such demands, unless and to the extent required to do so under
applicable Legal Requirements.
5
Section
1.08 Payment
of Merger Consideration.
(a) Exchange
Agent. On or prior
to the Closing Date, Parent will select Parent’s transfer
agent or another reputable bank or trust company reasonably
acceptable to Company to act as exchange agent in connection with
the Merger (the “Exchange
Agent”). As
soon as practicable after the Effective Time, Parent will issue and
cause to be deposited with the Exchange Agent non-certificated
shares of Parent Common Stock represented by book-entry issuable
pursuant to Section 1.06(a). The shares of Parent Common
Stock so deposited with the Exchange Agent, together with any
dividends or distributions received by the Exchange Agent with
respect to such shares, are referred to collectively as the
“Exchange
Fund.”
(b) Exchange
Procedures. As soon
as reasonably practicable after the Effective Time, Parent will
cause the Exchange Agent to mail to the record holders of Company
Capital Stock a letter of transmittal in customary form and
containing such provisions on which Parent and the Company may
mutually agree. Upon delivery of a duly executed letter
of transmittal and such other documents as may be reasonably
required by the Exchange Agent or Parent, the holder of such
Company Capital Stock will be entitled to receive in exchange
therefor non-certificated shares of Parent Common Stock represented
by book-entry (via DRS) equal to the number of whole shares of
Parent Common Stock that such holder has the right to receive
pursuant to the provisions of Section 1.06(a) and any certificates
representing shares of Company Capital Stock (a
“Company Stock
Certificate”) will be
cancelled. Until surrendered as contemplated by this Section
1.08(b), each Company Stock Certificate held by a Company
Stockholder will be deemed, from and after the Effective Time, to
represent only the right to receive the Merger Consideration. If
any Company Stock Certificate has been lost, stolen or destroyed,
the Exchange Agent will require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate
affidavit and to deliver a bond as indemnity against any claim that
may be made against the Exchange Agent, Parent or the Surviving
Corporation with respect to such Company Stock
Certificate.
(c) Transfers
of Ownership. If any
shares of Parent Common Stock are to be issued in a name other than
that of the record holder of the Company Capital Stock exchanged
therefor, it will be a condition of the issuance thereof that
Parent shall have received appropriate instruments of transfer and
that the Person requesting such exchange will have paid to Parent
or any Person designated by it any transfer or other taxes required
by reason of the issuance of the shares of Parent Common Stock in
any name other than that of the record holder of the Company
Capital Stock, or established to the satisfaction of Parent or any
agent designated by it that such tax has been paid or is not
payable.
6
(d) Unclaimed
Portion of the Exchange Fund.
(i)
Any
portion of the Exchange Fund that remains undistributed as of the
date 180 days after the date on which the Merger becomes effective
will be delivered to Parent upon demand, and any holders of Company
Capital Stock who have not theretofore delivered a letter of
transmittal to the Exchange Agent in accordance with this Section
1.08 will thereafter look only to Parent for satisfaction of their
claims for Parent Common Stock.
(ii)
Neither
Parent nor the Surviving Corporation will be liable to any holder
or former holder of Company Capital Stock or to any other Person
with respect to any shares of Parent Common Stock delivered to any
public official pursuant to any applicable abandoned property law,
escheat law or similar Legal Requirement.
(e) Withholding
Rights. Each of the
Exchange Agent, Parent and the Surviving Corporation will be
entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Capital Stock such amounts as are required
to be deducted or withheld therefrom under the Code or any
provision of state, local or foreign tax law or under any other
applicable Legal Requirement. To the extent such amounts
are so deducted or withheld and timely paid to the appropriate
Governmental Body, such amounts will be treated for all purposes
under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
Section
1.09 Stock
Transfer Books. At
the Effective Time: (a) all Company Capital Stock
outstanding immediately prior to the Effective Time will
automatically be canceled and retired and cease to exist, and all
holders of Company Capital Stock that were outstanding immediately
prior to the Effective Time will cease to have any rights as
stockholders of the Company; and (b) the transfer books of Company
will be closed with respect to all Company Capital Stock
outstanding immediately prior to the Effective Time. No
further transfer of any such Company Capital Stock will be made on
such transfer books after the Effective Time. No
further transfer of Company Capital Stock will be made on such
stock transfer books after the Effective Time. If, after the
Effective Time, a valid Company Stock Certificate is presented to
the Exchange Agent or to the Surviving Corporation or Parent, such
Company Stock Certificate will be canceled and exchanged as
provided in Sections 1.06 and 1.08.
7
Section
1.10 No
Further Rights. The
Merger Consideration delivered in exchange for Company Capital
Stock in accordance with the terms of this Agreement will be deemed
to have been issued in full satisfaction of all rights pertaining
to the Company Capital Stock.
Section
1.11 Tax Consequences. For United States federal income tax
purposes, the Merger is intended to constitute a reorganization
within the meaning of Section 368(a) of the Code. The
parties to this Agreement hereby adopt this Agreement as a
“plan of reorganization” within the meaning of Sections
1.368-2(g) of the Treasury Regulations, and intend to report
consistently with the foregoing, including by filing the statement
required by Section 1.368-3(a) of the Treasury
Regulations.
Section
1.12 Additional
Actions. If, at any
time after the Effective Time, any further action is necessary,
desirable or proper to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and
franchises of Company and Merger Sub, the Surviving Corporation and
its proper officers and directors or their designees are fully
authorized (to the fullest extent allowed under applicable Legal
Requirements) to execute and deliver, in the name and on behalf of
either Company or Merger Sub, all deeds, bills of sale, assignments
and assurances and do, in the name and on behalf of Company or
Merger Sub, all other acts and things necessary, desirable or
proper to vest, perfect or confirm its right, title or interest in,
to or under any of the rights, privileges, powers, franchises,
properties or assets of Company or Merger Sub, as applicable, and
otherwise to carry out the purposes of this
Agreement.
Section
1.13 Parent
Preferred Stock. At the
Effective Time, all of the outstanding shares of Parent Series H-4
Preferred Stock will be automatically converted into an aggregate
of 2,368,188 shares of Parent Common Stock.
ARTICLE II.
REPRESENTATIONS AND
WARRANTIES OF COMPANY
Except
as set forth in the corresponding sections or subsections of the
Company Disclosure Schedule, the Company represents and warrants to
Parent and Merger Sub as follows:
Section
2.01 Organization
and Qualification; Charter Documents.
(a) Part
2.01(a) of the Company Disclosure Schedule identifies each
Subsidiary of Company and indicates its jurisdiction of
organization. Neither Company nor any of the Entities
identified in Part 2.01(a) of the Company Disclosure Schedule owns
any capital stock of, or any equity interest of any nature in, any
other Entity, other than the Entities identified in Part 2.01(a) of
the Company Disclosure Schedule. None of the Acquired
Companies has agreed or is obligated to make, or is bound by, any
Contract under which it may become obligated to make, any future
investment in or capital contribution to any other
Entity.
(b) Each
of the Acquired Companies is a corporation, limited liability
company or similar entity duly organized, validly existing and, in
jurisdictions that recognize the concept, is in good standing under
the laws of the jurisdiction of its incorporation, formation or
other establishment, as applicable, and has all necessary
corporate, or other entity, power and authority: (i) to
conduct its business in the manner in which its business is
currently being conducted; (ii) to own and use its assets in the
manner in which its assets are currently owned and used; and (iii)
to perform its obligations under all Contracts by which it is
bound.
8
(c) Each
of the Acquired Companies (in jurisdictions that recognize the
following concepts) is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such
qualification except where the failure to be so qualified would
not, individually or in the aggregate, have a Company Material
Adverse Effect.
(d) Company
has made available to Parent accurate and complete copies
of: (a) the certificate of incorporation, bylaws or other
charter and organizational documents of each Acquired Company,
including all amendments thereto; (b) the stock or other ownership
records of each Acquired Company; and (c) the minutes and other
records of the meetings and other proceedings (including any
actions taken by written consent or otherwise without a meeting) of
the stockholders, members or partners, as applicable, of each
Acquired Company, the board of directors or other governing body of
each Acquired Company and all committees of the board of directors
of each Acquired Company. The books of account, stock or
other ownership records, minute books and other records of the
Acquired Companies are accurate in all material respects,
up-to-date and complete in all material respects, and have been
maintained in accordance with prudent business
practices.
Section
2.02 Capital
Structure.
(a) The
authorized capital stock of Company consists of 26,347,500 shares
of Company Common Stock, par value, $0.001, of which 11,992,545
shares are issued and outstanding (which includes 63,695 shares of
restricted stock) as of the close of business on the day prior to
the date hereof and 3,272,500 shares of Series Seed-1 Preferred
Stock of the Company of which 3,272,500 shares are issued and
outstanding, 2,200,000 shares of Series Seed 2 Preferred Stock of
which 1,907,683 shares are issued and outstanding, and 3,000,000
shares of Series Seed 3 Preferred Stock of which 303,500 shares are
issued and outstanding (collectively, the
“Company
Preferred Stock”). No shares of capital stock
are held in Company’s treasury. All outstanding
shares of Company Capital Stock are duly authorized, validly
issued, fully paid and non-assessable and were issued in compliance
with all applicable federal and state securities Legal
Requirements.
(b) As
of the date of this Agreement, Company has reserved an aggregate of
6,410,000 shares of Company Common Stock for issuance to employees,
consultants and non-employee directors pursuant to Company’s
stock option plans (“Company
Stock Option Plans”),
under which options were outstanding for an aggregate of 6,230,000
shares. 1,693,000 shares of Company Common Stock are reserved for
issuance to holders of warrants to purchase Company Common Stock
upon their exercise. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are
issuable, would be duly authorized, validly issued, fully paid and
non-assessable. Part 2.02(b) of the Company Disclosure Schedule
lists each holder of Company Capital Stock and the number and type
of shares of Company Capital Stock held by such holder, each
outstanding Company Option and Company Warrant, the name of the
holder of such Company Option or Company Warrant, the number of
shares subject to such Company Option or Company Warrant, the
exercise price of such Company Option or Company Warrant, the
vesting schedule of such Company Option or Company Warrant and
whether the exercisability of such Company Option or Company
Warrant will be accelerated in any way by the transactions
contemplated by this Agreement, indicating the extent of
acceleration, if any. Except as set forth in Part 2.02(b) of the
Company Disclosure Schedule, all Company Options terminate if not
exercised within 90 days following cessation of service, other than
in cases of death or disability. 5,483,682 shares of Company Common
Stock are issuable upon conversion of the Company Preferred
Stock.
9
(c) Reserved.
(d) Except
as set forth in Part 2.02(d) of the Company Disclosure
Schedule: (i) none of the outstanding shares of Company
Capital Stock are entitled or subject to any preemptive right,
right of repurchase or forfeiture, right of participation, right of
maintenance or any similar right; (ii) none of the outstanding
shares of Company Capital Stock are subject to any right of first
refusal granted by the Company; (iii) there are no outstanding
bonds, debentures, notes or other indebtedness of the Acquired
Companies having a right to vote on any matters on which the
stockholders of Company have a right to vote; (iv) there is no
Contract to which the Acquired Companies are a party relating to
the voting or registration of, or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or from
granting any option or similar right with respect to), any shares
of Company Capital Stock. None of the Acquired Companies
is under any obligation, or is bound by any Contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise
acquire any outstanding shares of Company Capital Stock or other
securities.
Section
2.03 Authority;
Non-Contravention; Approvals.
(a) Company
has the requisite corporate power and authority to enter into this
Agreement and, subject to the Required Company Stockholder Vote, to
perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this
Agreement by Company, the performance by Company of its obligations
hereunder and the consummation by Company of the Transactions have
been duly authorized by all necessary corporate action on the part
of Company, subject only to the Required Company Stockholder Vote
and the filing and recordation of the Certificate of Merger
pursuant to the DGCL. The affirmative vote of the
holders of a majority in voting power of the outstanding shares of
all Company Capital Stock (the “Required
Company Stockholder Vote”), is the only vote of the holders of any
class or series of Company Capital Stock necessary to adopt this
Agreement and approve the Merger and the other
Transactions. This Agreement has been duly executed and
delivered by Company and, assuming the due authorization, execution
and delivery by Parent and Merger Sub, constitutes the valid and
binding obligation of Company, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy and
other similar laws and general principles of
equity.
10
(b) Company’s
board of directors, by resolutions duly adopted by vote at a
meeting of all directors of Company duly called and held and, as of
the date of this Agreement, not subsequently rescinded or modified
in any way, has, as of the date of this Agreement (i) approved this
Agreement and the Merger, and determined that this Agreement and
the Transactions, including the Merger, are fair to, and in the
best interests of, the Company Stockholders, and (ii) resolved to
recommend that the Company Stockholders adopt this Agreement and
approve the Merger and all other Transactions and directed that
such matters be submitted for consideration of the Company
Stockholders at the Company Stockholders’
Meeting.
(c) The
execution and delivery of this Agreement by Company does not, and
the performance of this Agreement by Company will not, (i) conflict
with or violate the certificate of incorporation or bylaws of
Company or the equivalent organizational documents of any of its
Subsidiaries, (ii) subject to obtaining the Required Company
Stockholder Vote and compliance with the requirements set forth in
Section 2.03(d) below, conflict with or violate any Legal
Requirement applicable to Company or any of its Subsidiaries or by
which its or any of their respective properties is bound or
affected, except for any such conflicts or violations that would
not, individually or in the aggregate, have a Company Material
Adverse Effect or would not prevent or materially delay the
consummation of the Merger, (iii) require an Acquired Company to
make any filing with or give any notice to a Person, to obtain any
Consent from a Person, or result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or impair Company’s rights or
alter the rights or obligations of any third party under, or give
to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance
on any of the properties or assets of Company or any of its
Subsidiaries pursuant to, any Company Contract (as defined below),
except as would not, individually or in the aggregate, have a
Company Material Adverse Effect or prevent or materially delay the
Merger or (iv) result in the creation of any Encumbrance (other
than Permitted Encumbrances) on any of the properties or assets of
any Acquired Company, except as would not, individually or in the
aggregate, have a Company Material Adverse Effect or prevent or
materially delay the Merger.
(d) No
material consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Body is
required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the
Transactions, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (ii)
the filing of the S-4 Registration Statement and the Proxy
Statement/Prospectus with the Securities and Exchange Commission
(“SEC”)
in accordance with the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”); (iii) such
Consents, orders, registrations, declarations and filings as may be
required under applicable federal and state securities laws and
(iv) such Consents as may be required under (A) the HSR Act or (B)
any other Legal Requirements that are designed or intended to
prohibit, restrict, or regulate actions having the purpose or
effect of monopolization or restraint of trade or significant
impediments or lessening of competition or creation or
strengthening of a dominant position through merger or acquisition
(“Foreign
Antitrust Laws” and,
together with the HSR Act, the “Antitrust
Laws”), in any case that
are applicable to the transactions contemplated by this
Agreement.
11
Section
2.04 Anti-Takeover
Statutes Not Applicable. The board of directors of Company has
taken all actions so that no state takeover statute or similar
Legal Requirement applies or purports to apply to the execution,
delivery or performance of this Agreement or to the consummation of
the Merger or the other Transactions. The board of
directors of Company has taken all action necessary to render
inapplicable to this Agreement and the Transactions Section 203 of
the DGCL.
Section
2.05 Company
Financial Statements; No Undisclosed Liabilities.
(a) The
audited consolidated financial statements (including any related
notes thereto) representing the financial condition of Company as
of December 31, 2018 and December 31, 2017 and the unaudited
financial statements (including the notes thereto) representing the
financial condition of Company as of September 30, 2019
(collectively, the “Company
Financials”), including
any available quarterly financial statements (including any related
notes thereto), (i) were prepared in accordance with United States
generally accepted accounting principles
(“GAAP”)
applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto), (ii) fairly
presented the consolidated financial position of Company and its
Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not, or are not expected to be, material in
amount, and (iii) are consistent with, and have been prepared from,
the books and records of Company. The balance sheet of
Company as of September 30, 2019 is hereinafter referred to as the
“Company
Balance Sheet.”
Notwithstanding the foregoing, unaudited financial statements are
subject to normal recurring year-end adjustments (the effect of
which will not, individual or in the aggregate, be material) and
the absence of footnotes.
(b) Each
of Company and its Subsidiaries maintains a system of internal
accounting controls designed to provide reasonable assurance
that: (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences. Company and each of its Subsidiaries
maintains internal controls over financial reporting that provides
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP.
12
(c) Since
January 1, 2017 (the “Company Lookback
Date”), there have been
no formal investigations regarding financial reporting or
accounting policies and practices discussed with, reviewed by or
initiated at the direction of the chief executive officer, chief
financial officer or general counsel of Company, the board of
directors of Company or any committee thereof. Since the
Company Lookback Date, neither the Company nor its independent
auditors have identified (i) any significant deficiency or material
weakness in the system of internal accounting controls utilized by
Company, (ii) any fraud, whether or not material, that involves
Company’s management or other employees who have a role in
the preparation of financial statements or the internal accounting
controls utilized by Company, or (iii) any claim or allegation
regarding any of the foregoing.
(d) Except
as disclosed in the Company Financials, neither Company nor any of
its Subsidiaries has any liabilities, Indebtedness, obligation,
expense, claim, deficiency, guaranty, or endorsement of any kind,
whether accrued, absolute, contingent, matured, or unmatured
(whether or not required to be reflected in the financial
statements in accordance with GAAP) (each, a
“Liability”)
except Liabilities (i) identified in the Company Balance Sheet,
(ii) incurred in connection with the Transactions, (iii) described
on Part 2.05(d) of the Company Disclosure Schedule, (iv) incurred
since the date of the Company Balance Sheet in the ordinary course
of business consistent with past practices, (v) in respect of the
Bridge Notes for principle and accrued and unpaid interest, which
shall be converted into newly issued, fully paid and non-assessable
Company Common Stock immediately prior to the Effective Time or
(vi) would not have, individually or in the aggregate, a Company
Material Adverse Effect.
Section
2.06 Absence
Of Certain Changes Or Events. Since the date of the Company Balance
Sheet through the date of this Agreement and other than with
respect to the negotiation, execution and performance of this
Agreement, each of the Acquired Companies has conducted its
business only in the ordinary course of business consistent with
past practice, and there has not been: (a) any event that has
had a Company Material Adverse Effect, (b) any material change by
Company in its accounting methods, principles or practices, except
as required by concurrent changes in GAAP or as disclosed in the
notes to the Company Financials, (c) any revaluation by Company of
any of its assets having a Company Material Adverse Effect, or
writing off notes or accounts receivable other than in the ordinary
course of business or (d) any other action, event or occurrence
that would have required the consent of Parent pursuant to Section
4.01 of this Agreement had such action, event or occurrence taken
place after the execution and delivery of this
Agreement.
Section
2.07 Taxes.
(a) Each
of the income and other material Tax Returns that any Acquired
Company was required to file under applicable Legal
Requirements: (i) has been timely filed on or before the
applicable due date (including any extensions of such due date) and
(ii) is true and complete in all material respects. All
material Taxes due and payable by Company or its Subsidiaries have
been timely paid, except to the extent such amounts are being
contested in good faith by Company or are properly reserved for on
the books or records of Company and its Subsidiaries. No
extension of time with respect to any date on which a Tax Return
was required to be filed by an Acquired Company is in force (except
where such Tax Return was filed), and no waiver or agreement by or
with respect to an Acquired Company is in force for the extension
of time for the payment, collection or assessment of any Taxes, and
no request has been made by an Acquired Company in writing for any
such extension or waiver (except, in each case, in connection with
any request for extension of time for filing Tax
Returns). There are no liens for Taxes on any asset of
an Acquired Company other than liens for Taxes not yet due and
payable, Taxes contested in good faith or that are otherwise not
material and reserved against in accordance with
GAAP. No deficiency with respect to Taxes has been
proposed, asserted or assessed in writing against Company or its
Subsidiaries which has not been fully paid or adequately reserved
or reflected in the Company Financials.
13
(b) The
unpaid Taxes of the Acquired Companies have been accrued on the
Company Balance Sheet in accordance with GAAP. Since the
Company Lookback Date, the Acquired Companies have not incurred any
material liability for Taxes outside of the ordinary course of
business or otherwise inconsistent with past custom or
practice.
(c) No
Acquired Company will be required to include any material item of
income in, or exclude any material item of deduction or credit
from, the computation of taxable income for any taxable period (or
portion thereof) ending after the Closing Date, as a result of any
(i) change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) “closing agreement”
as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date, (iii) installment sale or
open transaction disposition made on or prior to the Closing Date,
(iv) prepaid amount received on or prior to the Closing Date
outside of the ordinary course of business, (v) deferred
intercompany gain or excess loss account described in the Treasury
Regulations under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign Tax law) with respect
to a transaction occurring on or prior to the Closing Date, or (vi)
election under Section 108(i) of the Code made on or prior to the
Closing Date.
(d) No
closing agreements, private letter rulings, technical advice
memoranda or similar agreements or rulings have been entered into
by any Acquired Company with any taxing authority or issued by any
taxing authority to an Acquired Company. There are no
outstanding rulings of, or request for rulings with, any
Governmental Body addressed to an Acquired Company that are, or if
issued would be, binding on an Acquired Company.
(e) No
Acquired Company is a party to any Contract with any third party
relating to allocating or sharing the payment of, or liability for,
Taxes or Tax benefits (other than pursuant to customary provisions
included in credit agreements, leases, and agreements entered with
employees, in each case, not primarily related to Taxes and entered
into in the ordinary course of business). No Acquired
Company has any liability for the Taxes of any third party under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Legal Requirement) as a transferee or
successor or otherwise by operation of Legal
Requirements.
14
(f) No
Acquired Company has been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code or of
any group that has filed a combined, consolidated or unitary Tax
return under state, local or foreign Tax Legal Requirement (other
than a group the common parent of which was Company).
(g) None
of the Acquired Companies is a “controlled foreign
corporation” within the meaning of Section 957 of the Code or
a “passive foreign investment company” within the
meaning of Section 1297 of the Code.
(h) No
Acquired Company has participated in, or is currently participating
in, a “listed transaction” within the meaning of
Treasury Regulation Section 1.6011-4(b)(2). Company has
disclosed on its respective United States federal income Tax
Returns all positions taken therein that could give rise to a
substantial understatement of United States federal income Tax
within the meaning of Section 6662 of the Code.
(i) Each
Acquired Company is not (and has not been for the five-year period
ending at the Effective Time) a “United States real property
holding corporation” as defined in Section 897(c)(2) of the
Code and the applicable Treasury Regulations.
(j) No
Acquired Company has distributed stock of another Person, or has
had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code.
(k) No
Acquired Company has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying
under Section 368 of the Code. No Acquired Company is
aware of any agreement, plan or other circumstance that would
prevent the Merger from qualifying as a reorganization under
Section 368 of the Code.
Section
2.08 Intellectual
Property. To the knowledge of
Company, Company and its Subsidiaries own, or have rights to use,
all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade dress, trade
secrets, know-how, software, inventions, copyrights, licenses and
other intellectual property rights that are necessary or required
for, or used in connection with, their respective businesses as
presently conducted or as presently proposed to be conducted and
which the failure to so have would reasonably be expected to have a
Company Material Adverse Effect (collectively, the
“Company Owned
IP Rights”). Neither
Company nor any of its Subsidiaries has received, during the last
three (3) years, a written notice of a claim or otherwise has any
knowledge that the Company Owned IP Rights violate or infringe upon
the rights of any Person.
Section
2.09 Compliance
with Legal Requirements.
(a) Company
and its Subsidiaries are not and have not been at any time in
conflict with (i) any Legal Requirement, order, judgment or decree
applicable to Company or any of its Subsidiaries or by which
Company or any of its Subsidiaries are bound or affected (or to
which the parent of Company is bound), or (ii) any Contract to
which Company or any of its Subsidiaries is a party or by which
Company or any of its Subsidiaries or its or any of their
respective properties is bound or affected, except for any
immaterial conflicts, defaults or violations. To
Company’s knowledge, no investigation or review by any
Governmental Body is pending or, to the knowledge of Company,
threatened against Company or its Subsidiaries.
15
(b) Company
and its Subsidiaries hold all permits, licenses, registrations,
authorizations, variances, exemptions, orders and approvals from
Governmental Bodies which are necessary to the operation of the
business of Company and its Subsidiaries taken as a whole
(collectively, the “Company
Permits”). Company and its Subsidiaries
are in compliance in all material respects with the terms of the
Company Permits. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending or, to the knowledge of Company, threatened, which seeks to
revoke or limit any Company Permit. The rights and benefits of each
Company Permit will be available to the Surviving Corporation
immediately after the Effective Time on terms substantially
identical to those enjoyed by Company immediately prior to the
Effective Time.
(c) None
of the Acquired Companies, and to the knowledge of Company, no
Representative of any of the Acquired Companies on their behalf
with respect to any matter relating to any of the Acquired
Companies, has: (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended or (iii)
made any other unlawful payment.
Section
2.10 Legal
Proceedings; Orders.
(a) Except
as set forth in Part 2.10(a) of the Company Disclosure Schedule,
there is no pending Legal Proceeding, and no Person has threatened
to commence any Legal Proceeding: (i) that involves any of the
Acquired Companies, any business of any of the Acquired Companies
or any of the assets owned, leased or used by any of the Acquired
Companies, or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with,
the Merger or any of the other Transactions. None of the Legal
Proceedings identified in Part 2.10(a) of the Company Disclosure
Schedule has had or, if adversely determined, would reasonably be
expected to have or result in a Company Material Adverse Effect. To
the knowledge of Company, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that would
reasonably be expected to give rise to or serve as a basis for the
commencement of any Legal Proceeding of the type described in
clause “(i)” or clause “(ii)” of the first
sentence of this Section 2.10(a).
(b) There
is no Order to which any of the Acquired Companies, or the assets
owned or used by any of the Acquired Companies is
subject. To the knowledge of Company, no officer or
other key employee of any of the Acquired Companies is subject to
any Order that prohibits such officer or other employee from
engaging in or continuing any conduct, activity or practice
relating to the business of any of the Acquired
Companies.
16
Section
2.11 Brokers’
and Finders’ Fees. Except as set forth in Part 2.11 of
the Company Disclosure Schedule, no broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Merger or any of the other
Transactions based upon arrangements made by or on behalf of any of
the Acquired Companies.
Section
2.12 Employee
Benefit Plans.
(a) Part
2.12(a) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, a
complete and accurate list of each material Employee Benefit Plan
which is currently sponsored, maintained, contributed to, or
required to be contributed to or with respect to which any
potential liability is borne by any Acquired Company or any ERISA
Affiliate of any Acquired Company (collectively, the
“Company
Employee Plans”). No Acquired Company nor, to
the knowledge of Company, any other person or entity, has made any
commitment to modify, change or terminate any Company Employee
Plan, other than with respect to a modification, change or
termination required by Legal Requirements. With respect
to each material Company Employee Plan, Company has made available
to Parent accurate and complete copies of the following documents:
(i) the plan document and any related trust agreement, including
amendments thereto; (ii) any current summary plan descriptions and
other material communications to participants relating to the plan;
(iii) each plan trust, insurance, annuity or other funding contract
or service provider agreement related thereto; (iv) the most recent
plan financial statements and actuarial or other valuation reports
prepared with respect thereto, if any; (v) the most recent IRS
determination or opinion letter, if any; (vi) copies of the most
recent plan year nondiscrimination and coverage testing results for
each plan subject to such testing requirements; and (vii) the most
recent annual reports (Form 5500) and all schedules attached
thereto for each Company Employee Plan that is subject to ERISA and
Code reporting requirements.
(b) Each
Company Employee Plan is being, and has been, administered in
accordance with its terms and in compliance with the requirements
prescribed by any and all Legal Requirements (including ERISA and
the Code), in all material respects. No Acquired Company
is in material default under or material violation of, and has no
knowledge of any material defaults or material violations by any
other party to, any of Company Employee Plans. All
contributions required to be made by any Acquired Company or any
ERISA Affiliate of any Acquired Company to any Company Employee
Plan have been timely paid or accrued on the most recent Company
Financials on file with the SEC, if required under
GAAP. Any Company Employee Plan intended to be qualified
under Section 401(a) of the Code has either obtained from the
Internal Revenue Service a favorable determination letter or
opinion letter as to its qualified status under the Code, and to
the knowledge of Company, no event has occurred and no condition
exists with respect to the form or operation of such Company
Employee Plan that would cause the loss of such
qualification.
(c) No
Company Employee Plan provides retiree medical or other retiree
welfare benefits to any person, except as required by COBRA. No
suit, administrative proceeding or action has been brought, or to
the knowledge of Company, is threatened against or with respect to
any such Company Employee Plan, including any audit or inquiry by
the Internal Revenue Service or the United States Department of
Labor (other than routine claims for benefits arising under such
plans).
17
(d) No
Acquired Company nor any ERISA Affiliate of any Acquired Company
has, during the past six (6) years from the date hereof,
maintained, established, sponsored, participated in or contributed
to, or is obligated to contribute to, or otherwise incurred any
obligation or liability (including any contingent liability) under,
any “multiemployer plan” (as defined in Section 3(37)
of ERISA) or any “pension plan” (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the
Code. No Acquired Company nor any ERISA Affiliate of any
Acquired Company has, as of the date of this Agreement, any actual
or potential withdrawal liability (including any contingent
liability) for any complete or partial withdrawal (as defined in
Sections 4203 and 4205 of ERISA) from any multiemployer
plan.
(e) Except
as set forth in Part 2.12(e) of the Company Disclosure Schedule,
consummation of the Merger will not (i) entitle any current or
former employee or other service provider of any Acquired Company
or any ERISA Affiliate of any Acquired Company to severance
benefits or any other payment (including unemployment compensation,
golden parachute, bonus or benefits under any Company Employee
Plan); (ii) accelerate the time of payment or vesting of any such
benefits or increase the amount of compensation due any such
employee or service provider; (iii) result in the forgiveness of
any indebtedness; (iv) result in any obligation to fund future
benefits under any Company Employee Plan; or (v) result in the
imposition of any restrictions with respect to the amendment or
termination of any of Company Employee Plans. No benefit payable or
that may become payable by any Acquired Company pursuant to any
Company Employee Plan in connection with the transactions as a
result of or arising under this Agreement will constitute an
“excess parachute payment” (as defined in Section
280G(b)(1) of the Code) subject to the imposition of an excise Tax
under Section 4999 of the Code or the deduction for which would be
disallowed by reason of Section 280G of the
Code.
Section
2.13 Title
to Assets; Real Property.
(a) The
Acquired Companies own, and have good, valid and marketable title
to, or, in the case of leased assets, valid leasehold interests in
or other rights to use, all tangible assets purported to be owned
or leased by them. All of said assets are owned by the
Acquired Companies free and clear of any Encumbrances, except for
Permitted Encumbrances.
(b) All
material items of equipment and other tangible assets owned by or
leased to the Acquired Companies are adequate for the uses to which
they are being put, are in good condition and repair (ordinary wear
and tear excepted) and are adequate for the conduct of the business
of the Acquired Companies in the manner in which such businesses
are currently being conducted immediately prior to the Effective
Time. The Acquired Companies do not own and have never
owned any real property or any interest in real
property. Part 2.13(b) of the Company Disclosure
Schedule sets forth a complete and accurate list of all real
property leases to which Company is a party.
18
Section
2.14 Environmental
Matters.
(a) No
substance that has been designated by any Governmental Body or by
applicable federal, state or local Legal Requirement, to be
radioactive, toxic, hazardous or otherwise a danger to health
(through exposure in the environment) or the environment,
including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and
Recovery Act of 1976, as amended, and the regulations promulgated
pursuant to said laws (a “Hazardous
Material”), has been
released, as a result of the deliberate actions of Company or any
of its Subsidiaries, or, to Company’s knowledge, as a result
of any actions of any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and
surface water thereof, that Company or any of its Subsidiaries
currently owns, operates, occupies or leases, in such quantities as
would cause a Company Material Adverse Effect.
(b) Neither
Company nor any of its Subsidiaries has, since the Company Lookback
Date, transported, stored, used, manufactured, disposed of, or
released Hazardous Materials (collectively,
“Hazardous
Material Activities”) in
material violation of any Legal Requirement in effect on or before
the date hereof.
(c) Company
and its Subsidiaries currently hold all environmental approvals,
permits, licenses, clearances and consents (the
“Company
Environmental Permits”)
necessary for the conduct of Company’s and its
Subsidiaries’ Hazardous Material Activities and other
businesses of Company and its Subsidiaries as such activities and
businesses are currently being conducted, except where the failure
to so hold would not have a Company Material Adverse
Effect.
(d) No
material action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the
knowledge of Company, threatened concerning any Company
Environmental Permit, Hazardous Material or any Hazardous Material
Activity of Company or any of its
Subsidiaries.
Section
2.15 Labor
Matters.
(a) To
the Company’s knowledge, no key employee or group of
employees has threatened to terminate employment with Company or
has plans to terminate such employment.
(b) Except
as disclosed in Part 2.15(b) of the Company Disclosure Schedule,
the Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims
of unfair labor practices or other collective bargaining
disputes.
(c) Except
as disclosed in Part 2.15(c) of the Company Disclosure Schedule,
neither Company nor any of its Subsidiaries is a party to any
written or oral: (i) agreement with any current or former
employee the benefits of which are contingent upon, or the terms of
which will be materially altered by, the consummation of the Merger
or other Transactions; (ii) agreement with any current or former
employee of Company providing any term of employment or
compensation guarantee extending for a period longer than one year
from the date hereof or for the payment of compensation in excess
of $50,000 per annum; or (iii) agreement or plan the benefits of
which will be increased, or the vesting of the benefits of which
will be accelerated, upon the consummation of the
Merger.
19
Section
2.16 Company
Contracts.
(a) Except
for Excluded Contracts or as set forth in Part 2.16 of the Company
Disclosure Schedule, neither Company nor any of its Subsidiaries is
a party to or is bound by:
(i)
any
management, employment, severance, retention, transaction bonus,
change in control, consulting, relocation, repatriation or
expatriation agreement or other similar Contract between: (i)
any of the Acquired Companies or any of their ERISA Affiliates; and
(ii) any active, retired or former employees, directors or
consultants of any Acquired Company or any of their ERISA
Affiliates, other than any such Contract that is terminable
“at will” (or following a notice period imposed by
applicable Legal Requirements) without any obligation on the part
of any Acquired Company or any of their ERISA Affiliates to make
any severance, termination, change in control or similar payment or
to provide any benefit, other than severance payments required to
be made by any Acquired Company under applicable foreign Legal
Requirements;
(ii)
any
Contracts identified or required to be identified in Part 2.13(b)
of the Company Disclosure Schedule;
(iii)
any
Contract with any distributor, reseller or sales representative
with an annual value in excess of $50,000;
(iv)
any
Contract with any manufacturer, vendor, or other Person for the
supply of materials or performance of services by such third party
to Company in relation to the manufacture of the Company’s
products or product candidates with an annual value in excess of
$50,000;
(v)
any
agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the
Transactions or the value of any of the benefits of which will be
calculated on the basis of any of the Transactions;
20
(vi)
any
Contract incorporating or relating to any guaranty, any warranty,
any sharing of liabilities or any indemnity not entered into in the
ordinary course of business, including any indemnification
agreements between Company or any of its Subsidiaries and any of
its officers or directors;
(vii)
any
Contract imposing, by its express terms, any material restriction
on the right or ability of any Acquired Company: (A) to
compete with any other Person; (B) to acquire any product or other
asset or any services from any other Person; or (C) to develop,
sell, supply, distribute, offer, support or service any product or
any technology or other asset to or for any other
Person;
(viii)
any
Contract currently in force relating to the disposition or
acquisition of assets not in the ordinary course of business or any
ownership interest in any corporation, partnership, joint venture
or other business enterprise;
(ix)
any
mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the
borrowing of money or extension of credit in excess of
$50,000;
(x)
any
joint marketing or development agreement;
(xi)
any
commercial Contract that would reasonably be expected to have a
material effect on the ability of the Company to perform any of its
material obligations under this Agreement, or to consummate any of
the transactions contemplated by this Agreement, that is not set
forth on Part 2.03 of the Company Disclosure Schedule;
(xii)
any
Contract that provides for: (A) any right of first refusal,
right of first negotiation, right of first notification or similar
right with respect to any securities or assets of any Acquired
Company; or (B) any “no shop” provision or similar
exclusivity provision with respect to any securities or assets of
any Acquired Company; or
(xiii)
any
Contract that contemplates or involves the payment or delivery of
cash or other consideration in an amount or having a value in
excess of $50,000 in the aggregate, or contemplates or involves the
performance of services having a value in excess of $50,000 in the
aggregate other than any arrangement or agreement expressly
contemplated or provided for under this Agreement.
(b) Company
has made available to Parent an accurate and complete copy of each
Contract listed or required to be listed in Part 2.16 of the
Company Disclosure Schedule (any such Contract, a
“Company
Contract”). Except as disclosed in Part
2.16 of the Company Disclosure Schedule, neither Company nor any of
its Subsidiaries, nor to the Company’s knowledge any other
party to a Company Contract, has breached or violated in any
material respect or materially defaulted under, or received written
notice that it has breached, violated or defaulted under, any of
the terms or conditions of any of the Company
Contracts. To the knowledge of Company, no event has
occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) would reasonably be expected
to: (i) result in a violation or breach in any material
respect of any of the provisions of any Company Contract; (ii) give
any Person the right to declare a default in any material respect
under any Company Contract; (iii) give any Person the right to
receive or require a rebate, chargeback, penalty or change in
delivery schedule under any Company Contract; (iv) give any Person
the right to accelerate the maturity or performance of any Company
Contract; or (v) give any Person the right to cancel, terminate or
modify any Company Contract. Each Company Contract is
valid, binding, enforceable and in full force and effect, except as
enforceability may be limited by bankruptcy and other similar laws
and general principles of equity.
21
Section
2.17 Books
and Records. The
minute books of Company and its Subsidiaries made available to
Parent or counsel for Parent are the only minute books of Company
and contain accurate summaries, in all material respects, of all
meetings of the board of directors (or committees thereof) and
stockholders or actions by written consent since the time of
incorporation of Company or such Subsidiaries, as the case may
be. The books and records of Company accurately reflect
in all material respects the assets, liabilities, business,
financial condition and results of operations of Company and have
been maintained in accordance with good business and bookkeeping
practices.
Section
2.18 Insurance.
(a) The
Company or its Subsidiaries maintain all policies of fire, theft,
casualty, general liability, workers compensation, business
interruption, environmental, product liability and automobile
insurance policies and bond and surety arrangements and other forms
of insurance (the “Company
Insurance Policies”) in
such amounts, with such deductibles and against such risks and
losses that are necessary for the operation of the Company’s
and its Subsidiaries’ businesses in all material
respects. The Company Insurance Policies are in full
force and effect, maintained with reputable companies against loss
relating to the business, operations and properties and such other
risks as companies engaged in similar business as the Acquired
Companies would, in accordance with good business practice,
customarily insure. All premiums due and payable under
such Company Insurance Policies have been paid on a timely basis,
and each Acquired Company is in compliance in all material respects
with all other terms thereof. True, complete and correct
copies, of such Company Insurance Policies, or summaries of all
terms material thereof, have been made available to
Parent.
(b) There
are no material claims pending under any Company Insurance Policies
as to which coverage has been questioned, denied or disputed. All
material claims thereunder have been filed in a due and timely
fashion and no Acquired Company has been refused insurance for
which it has applied or had any policy of insurance terminated
(other than at its request), nor has any Acquired Company received
notice from any insurance carrier that: (i) such insurance
will be canceled or that coverage thereunder will be reduced or
eliminated; or (ii) premium costs with respect to such insurance
will be increased, other than premium increases in the ordinary
course of business applicable on their terms to all holders of
similar policies.
22
Section
2.19 Interested
Party Transactions. No event has occurred during the past
three years that would be required to be reported by Company as a
Certain Relationship or Related Transaction pursuant to Item 404 of
Regulation S-K, if Company were required to report such information
in periodic reports pursuant to the Exchange
Act.
Section
2.20 Subscription
Agreement. The Subscription
Agreement has not been amended or modified in any manner prior to
the date of this Agreement. Neither the Company nor, to the
knowledge of the Company, any of its Affiliates has entered into
any agreement, side letter or other arrangement relating to the
Company Pre-Closing Financing other than as set forth in the
Subscription Agreement or a term sheet for the Bridge Notes. The
respective obligations and agreements contained in the Subscription
Agreement have not been withdrawn or rescinded in any respect. The
Subscription Agreement is in full force and effect and represents a
valid, binding and enforceable obligation of the Company and, to
the knowledge of the Company, of each party thereto, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar Laws relating to creditors’ rights and general
principles of equity. No event has occurred which, with or without
notice, lapse of time or both, would constitute a breach or default
on the part of the Company or, to the knowledge of the Company, any
other party thereto, under the Subscription Agreement. To the
knowledge of the Company, no party thereto will be unable to
satisfy on a timely basis any term of the Subscription Agreement.
There are no conditions precedent related to the consummation of
the Company Pre-Closing Financing, other than the satisfaction or
waiver of the conditions expressly set forth in the Subscription
Agreement. To the knowledge of the Company, the proceeds of the
Company Pre-Closing Financing will be made available to the Company
prior to the consummation of the Merger.
Section
2.21 Disclosure;
Company Information. The information relating to Company
or its Subsidiaries to be supplied by or on behalf of Company for
inclusion or incorporation by reference in the S-4
Registration Statement and the Proxy Statement/Prospectus will not,
on the date of filing thereof or the date that it is first mailed
to the Parent stockholders, as applicable, or at the time of the
Parent Stockholders’ Meeting or at the time of any amendment
or supplement thereof, contain any untrue statement of any 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 are made, not false or
misleading at the time and in light of the circumstances under
which such statement is made. Notwithstanding the foregoing, no
representation is made by Company with respect to the information
that has been or will be supplied by Parent and Merger Sub or any
of their Representatives for inclusion in the S-4 Registration
Statement and the Proxy
Statement/Prospectus.
23
ARTICLE
III.
REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
Except
as set forth in the corresponding sections or subsections of the
Company Disclosure Schedule and except for any disclosure set forth
in any of the Parent SEC Documents (excluding any “risk
factor” sections thereof), Parent and Merger Sub represent
and warrant to Company as follows:
Section
3.01 Organization
and Qualification.
(a) Part
3.01(a) of the Parent Disclosure Schedule identifies each
Subsidiary of Parent and indicates its jurisdiction of
organization. Neither Parent nor any of the Entities
identified in Part 3.01(a) of the Parent Disclosure Schedule owns
any capital stock of, or any equity interest of any nature in, any
other Entity, other than the Entities identified in Part 3.01(a) of
the Parent Disclosure Schedule. None of the Acquiring
Companies has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future
investment in or capital contribution to any other
Entity.
(b) Parent
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, Merger Sub is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and Parent and Merger Sub
have all necessary corporate power and authority: (i) to
conduct their businesses in the manner in which their businesses
are currently being conducted; (ii) to own and use their assets in
the manner in which their assets are currently owned and used; and
(iii) to perform their obligations under all Contracts by which
they are bound.
(c) Each
of Parent and Merger Sub (in jurisdictions that recognize the
following concepts) is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such
qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(d) Parent
has made available to Company accurate and complete copies
of: (a) the certificate of incorporation, bylaws or other
charter and organizational documents of Parent and its
Subsidiaries, including all amendments thereto; (b) the stock or
other ownership records of Parent and its Subsidiaries; and (c) the
minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise
without a meeting) of the stockholders, members or partners, as
applicable, of Parent and its Subsidiaries, the board of directors
or other governing body of Parent and its Subsidiaries and all
committees of the board of directors of Parent and its
Subsidiaries. The books of account, stock or other
ownership records, minute books and other records of Parent and its
Subsidiaries are accurate, up-to-date and complete in all material
respects, and have been maintained in accordance with prudent
business practices.
Section
3.02 Capital
Structure.
(a) The
authorized capital stock of Parent consists of 100,000,000 shares
of Parent Common Stock, par value, $0.0001, of which 4,061,882
shares are issued and outstanding (which includes zero shares of
restricted stock) as of the close of business on the day prior to
the date hereof and 5,000,000 shares of Preferred Stock, par value
$0.0001 per share (“Parent
Preferred Stock”), of
which 41,947 shares are issued and outstanding as of the close of
business on the day prior to the date hereof. No shares
of capital stock are held in Parent’s
treasury. All outstanding shares of Parent Capital Stock
are duly authorized, validly issued, fully paid and non-assessable
and were issued in compliance with all applicable federal and state
securities laws.
24
(b) As
of the date of this Agreement, Parent had reserved an aggregate of
706,629 shares of Parent Common Stock, net of exercises, for
issuance to employees, consultants and non-employee directors
pursuant to the Parent Stock Option Plan, under which options were
outstanding for an aggregate of 380,396 shares. 4,057,506 shares of
Parent Common Stock are reserved for issuance to holders of
warrants to purchase Parent Common Stock upon their
exercise. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and
non-assessable. Part 3.02(b) of the Parent Disclosure Schedule
lists each outstanding option to purchase shares of Parent Capital
Stock (a “Parent
Option”), and the name of
the holder thereof, the number of shares subject thereto, the
exercise price thereof and the vesting schedule and
post-termination exercise period thereof. There are 3,810,269
shares of Parent Common Stock issuable upon conversion of the
Parent Preferred Stock.
(c) The
shares of Parent Common Stock issuable as Merger Consideration,
upon issuance on the terms and conditions contemplated in this
Agreement, would be duly authorized, validly issued, fully paid and
non-assessable.
(d) Except
as set forth in Part 3.02(d) of the Parent Disclosure
Schedule: (i) none of the outstanding shares of Parent Capital
Stock are entitled or subject to any preemptive right, right of
repurchase or forfeiture, right of participation, right of
maintenance or any similar right; (ii) none of the outstanding
shares of Parent Capital Stock are subject to any right of first
refusal in favor of Parent; (iii) there are no outstanding bonds,
debentures, notes or other indebtedness of the Acquiring Companies
having a right to vote on any matters on which the stockholders of
Parent have a right to vote; (iv) there is no Contract to which the
Acquiring Companies are a party relating to the voting or
registration of, or restricting any Person from purchasing,
selling, pledging or otherwise disposing of (or from granting any
option or similar right with respect to), any shares of Parent
Capital Stock. None of the Acquiring Companies is under
any obligation, or is bound by any Contract pursuant to which it
may become obligated, to repurchase, redeem or otherwise acquire
any outstanding shares of Parent Capital Stock or other
securities.
Section
3.03 Authority;
Non-Contravention; Approvals.
(a) Parent
has the requisite corporate power and authority to enter into this
Agreement and, subject to Parent Stockholder Approval, to perform
its obligations hereunder and to consummate the Parent
Transactions. The execution and delivery by Parent of
this Agreement, the performance by Parent of its obligations
hereunder and the consummation by Parent of the Parent Transactions
have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, subject only to Parent Stockholder
Approval, to adoption of this Agreement by Parent as sole
stockholder of Merger Sub immediately following the execution
hereof, the filing and recordation of an amended and restated
certificate of incorporation reflecting the matters contemplated
pursuant to Section 1.04(c) (the “Parent
Charter Amendment”) and
the filing and recordation of the Certificate of Merger pursuant to
the DGCL. The affirmative vote of the holders of a
majority in voting power of the outstanding shares of Parent Common
Stock outstanding on the applicable record date
(“Parent
Stockholder Approval”) is
the only vote of the holders of any class or series of Parent
Capital Stock necessary to adopt or approve the Parent Stockholder
Approval Matters (except that the approval of the issuance of the
shares of Parent Common Stock to the Company Stockholders at the
Effective Time only requires the affirmative vote of a majority of
the votes cast assuming that a quorum is present at the Parent
Stockholder Meeting). This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming the
due authorization, execution and delivery of this Agreement by
Company, this Agreement constitutes the valid and binding
obligation of Parent and Merger Sub, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy
and other similar laws and general principles of
equity.
25
(b) Parent’s
board of directors, by resolutions duly adopted by a unanimous vote
at a meeting of all directors of Parent duly called and held, or by
unanimous written consent of the board of directors of
Parent, and, as of the date of this Agreement, not
subsequently rescinded or modified in any way, has, as of the date
of this Agreement (i) approved this Agreement and the Merger, and
determined that this Agreement and the Parent Transactions,
including the Merger, are fair to, and in the best interests of
Parent’s stockholders, and (ii) resolved to recommend that
Parent’s stockholders approve the Parent Stockholder Approval
Matters and directed that such matters be submitted for
consideration of the stockholders of Parent at the Parent
Stockholders’ Meeting. The board of directors of
Merger Sub has approved and declared advisable this Agreement and
the Merger and submitted this Agreement to Parent, as its sole
stockholder for adoption thereby. Immediately following
the execution of this Agreement, Parent in its capacity as the sole
stockholder of Merger Sub, shall execute a written consent adopting
this Agreement.
(c) The
execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance of this Agreement by Parent or Merger
Sub will not, (i) conflict with or violate the certificate of
incorporation or bylaws of Parent or Merger Sub, (ii) subject to
obtaining Parent Stockholder Approval and compliance with the
requirements set forth in Section 3.03(d) below, conflict with or
violate any Legal Requirement, order, judgment or decree applicable
to Parent or Merger Sub or by which their respective properties are
bound or affected, except for any such conflicts or violations that
would not have a Parent Material Adverse Effect or would not
prevent or materially delay the consummation of the Merger, (iii)
require an Acquiring Company to make any filing with or give any
notice to or obtain any Consent from a Person pursuant to any
Parent Contract, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become
a default) under, or impair Parent’s rights or alter the
rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or Encumbrance on any of
the properties or assets of Parent pursuant to, any Parent Contract
or (iv) otherwise result in the creation of any Encumbrance on any
of the properties or assets of Parent.
(d) No
consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Body is required by or
with respect to Parent in connection with the execution and
delivery of this Agreement or the consummation of the Parent
Transactions, except for (i) the filing with the SEC of any
outstanding periodic reports due under the Exchange Act, (ii) the
filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, (iii) the filing of the S-4 Registration
Statement and the Proxy Statement/Prospectus with the SEC in
accordance with the Exchange Act, (iv) the filing of Current
Reports on Form 8-K with the SEC within four business days after
the execution of this Agreement and the Closing Date, (v) the
filing of the Parent Charter Amendment with the Secretary of State
of the State of Delaware in accordance with Section 5.15, (vii)
such approvals as may be required under applicable state securities
or “blue sky” laws or the rules and regulations of
Nasdaq or other applicable national securities exchange or
over-the-counter market and (viii) such consents as may be required
under the Antitrust Laws, in any case that are applicable to the
transactions contemplated by this Agreement.
26
Section
3.04 Anti-Takeover
Statutes Not Applicable. The board of directors of Parent has
taken all actions so that no state takeover statute or similar
Legal Requirement applies or purports to apply to the execution,
delivery or performance of this Agreement or to the consummation of
the Merger or the other Transactions. The board of
directors of Parent has taken all action necessary to render
inapplicable to this Agreement and the Transactions Section 203 of
the DGCL.
Section
3.05 SEC
Filings; Parent Financial Statements; No Undisclosed
Liabilities.
(a) Parent
has made available to Company accurate and complete copies of all
registration statements, proxy statements, Certifications (as
defined below) and other statements, reports, schedules, forms and
other documents filed by Parent with or furnished by Parent to the
SEC since January 1, 2017 (the “Parent
Lookback Date”) (the
“Parent SEC
Documents”), other than
such documents that can be obtained on the SEC’s website
at ▇▇▇.▇▇▇.▇▇▇
(the “SEC
Website”). All
Parent SEC Documents have been timely filed and, as of the time a
Parent SEC Document was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on
the date of such filing): (i) each of the Parent SEC Documents
complied in all material respects with the applicable requirements
of the Securities Act of 1933, as amended (the
“Securities
Act”), or the Exchange
Act (as the case may be) and (ii) none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. Each of the certifications and statements
relating to the Parent SEC Documents required by: (1) the
SEC’s Order dated June 27, 2002 pursuant to Section 21(a)(1)
of the Exchange Act (File No. 4-460); (2) Rule 13a-14 or 15d-14
under the Exchange Act; or (3) 18 U.S.C. §1350 (Section 906 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) is accurate and complete (the
“Certifications”),
and complied as to form and content with all applicable Legal
Requirements in effect at the time such Parent Certification was
filed with or furnished to the SEC. As used in this
Section 3.05, the term “file” and variations thereof
will be broadly construed to include any manner in which a document
or information is furnished, supplied or otherwise made available
to the SEC.
27
(b) Except
for such comment letters or correspondence as can be obtained on
the SEC Website or which Parent has made available in a data room
for review by Company, from the Parent Lookback Date through the
date hereof, Parent has not received any comment letter from the
SEC or the staff thereof or any correspondence from the Nasdaq or
the staff thereof relating to the delisting or maintenance of
listing of the Parent Common Stock on the Nasdaq. Except as
disclosed in the Parent SEC Documents or documents that Parent has
made available in a data room for review by Company, Parent has no
unresolved SEC comments. As of the date of this Agreement, Parent
is in compliance in all material respects with the applicable
listing and governance rules and regulations of the
Nasdaq.
(c) Since
the Parent Lookback Date, there have been no formal internal
investigations regarding financial reporting or accounting policies
and practices discussed with, reviewed by or initiated at the
direction of the chief executive officer or chief financial officer
of Parent, the board of directors of Parent or any committee
thereof, other than ordinary course audits or reviews of accounting
policies and practices or internal controls required by the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(d) Parent
is in compliance in all material respects with the applicable
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are effective as of the
date of this Agreement.
(e) Parent
and its Subsidiaries maintain disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange
Act. Such disclosure controls and procedures are
designed to ensure that all material information (both financial
and non-financial) required to be disclosed by Parent in the
reports that it files, submits or furnishes under the Exchange Act
is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all
such information is accumulated and communicated to Parent’s
management as appropriate to allow timely decisions regarding
required disclosure and to make the Certifications.
(f) The
financial statements (including any related notes) contained or
incorporated by reference in the Parent SEC Documents (the
“Parent
Financials”): (i)
complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with GAAP (except as may be indicated in the
notes to such financial statements or, in the case of unaudited
financial statements, as permitted by the SEC, and except that the
unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end adjustments that are not
reasonably expected to be material in amount) applied on a
consistent basis unless otherwise noted therein throughout the
periods indicated; (iii) fairly present the consolidated financial
position of Parent as of the respective dates thereof and the
consolidated results of operations and cash flows of Parent for the
periods covered thereby. Parent has not effected any
securitization transactions or “off-balance sheet
arrangements” (as defined in Item 303(c) of SEC Regulation
S-K). Other than as expressly disclosed in the Parent
SEC Documents filed prior to the date hereof, there has been no
material change in Parent’s accounting methods or principles
that would be required to be disclosed in Parent’s Financials
in accordance with GAAP.
28
(g) Except
as disclosed in the Parent Financials, neither Parent nor any of
its Subsidiaries has any Liabilities that are, individually or in
the aggregate, material to the business, results of operations or
financial condition of Parent and its Subsidiaries taken as a
whole, except Liabilities (i) identified in the Parent Financials,
(ii) incurred in connection with the Parent Transactions, (iii)
disclosed in Part 3.05(g) of the Parent Disclosure Schedule, (iv)
set forth in any Parent Contract, or (v) incurred since the date of
the Parent Unaudited Interim Balance Sheet in the ordinary
course of business.
Section
3.06 Absence
of Certain Changes or Events.
Since the date of the most recent periodic report on Form 10-Q
filed by Parent with the SEC through the date of this Agreement,
each of the Acquiring Companies has conducted its business in the
ordinary course of business, and (a) there has not been any event
that has had a Parent Material Adverse Effect; (b) no Acquiring
Company has entered into or amended any material terms of any
Contract, in each case providing for new obligations in excess of
$25,000 or (c) incurred any Indebtedness.
Section
3.07 Taxes.
(a) Each
of the income and other material Tax Returns that any Acquiring
Company was required to file under applicable Legal
Requirements: (i) has been timely filed on or before the
applicable due date (including any extensions of such due date) and
(ii) is true and complete in all material respects. All
material Taxes due and payable by Parent or its Subsidiaries have
been timely paid, except to the extent such amounts are being
contested in good faith by Parent or are properly reserved for on
the books or records of Parent and its Subsidiaries. No
extension of time with respect to any date on which a Tax Return
was required to be filed by an Acquiring Company is in force
(except where such Tax Return was filed), and no waiver or
agreement by or with respect to an Acquiring Company is in force
for the extension of time for the payment, collection or assessment
of any Taxes, and no request has been made by an Acquiring Company
in writing for any such extension or waiver (except, in each case,
in connection with any request for extension of time for filing Tax
Returns). There are no liens for Taxes on any asset of
an Acquiring Company other than liens for Taxes not yet due and
payable, Taxes contested in good faith or that are otherwise not
material and reserved against in accordance with
GAAP. No deficiency with respect to Taxes has been
proposed, asserted or assessed in writing against Parent or its
Subsidiaries which has not been fully paid or adequately reserved
or reflected in the Parent Financials.
(b) The
unpaid Taxes of the Acquiring Companies have been accrued on the
Parent Financials in accordance with GAAP. Since the
Parent Lookback Date, the Acquiring Companies have not incurred any
material liability for Taxes outside of the ordinary course of
business or otherwise inconsistent with past custom or
practice.
29
(c) No
Acquiring Company will be required to include any material item of
income in, or exclude any material item of deduction or credit
from, the computation of taxable income for any taxable period (or
portion thereof) ending after the Closing Date, as a result of any
(i) change in method of accounting for a taxable period ending on
or prior to the Closing Date, (ii) “closing agreement”
as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date, (iii) installment sale or
open transaction disposition made on or prior to the Closing Date,
(iv) prepaid amount received on or prior to the Closing Date
outside of the ordinary course of business, (v) deferred
intercompany gain or excess loss account described in the Treasury
Regulations under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign Tax law) with respect
to a transaction occurring on or prior to the Closing Date, or (vi)
election under Section 108(i) of the Code made on or prior to the
Closing Date.
(d) No
closing agreements, private letter rulings, technical advice
memoranda or similar agreements or rulings have been entered into
by any Acquiring Company with any taxing authority or issued by any
taxing authority to an Acquiring Company. There are no
outstanding rulings of, or request for rulings with, any
Governmental Body addressed to an Acquiring Company that are, or if
issued would be, binding on an Acquiring Company.
(e) No
Acquiring Company is a party to any Contract with any third party
relating to allocating or sharing the payment of, or liability for,
Taxes or Tax benefits (other than pursuant to customary provisions
included in credit agreements, leases, and agreements entered with
employees, in each case, not primarily related to Taxes and entered
into in the ordinary course of business). No Acquiring
Company has any liability for the Taxes of any third party under
Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Legal Requirement) as a transferee or
successor or otherwise by operation of Legal
Requirements.
(f) No
Acquiring Company has been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code or of
any group that has filed a combined, consolidated or unitary Tax
return under state, local or foreign Tax Legal Requirement (other
than a group the common parent of which was Parent).
(g) None
of the Acquiring Companies is a “controlled foreign
corporation” within the meaning of Section 957 of the Code or
a “passive foreign investment company” within the
meaning of Section 1297 of the Code.
(h) No
Acquiring Company has participated in, or is currently
participating in, a “listed transaction” within the
meaning of Treasury Regulation Section
1.6011-4(b)(2). Parent has disclosed on its respective
United States federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
United States federal income Tax within the meaning of Section 6662
of the Code.
30
(i) Each
Acquiring Company is not (and has not been for the five-year period
ending at the Effective Time) a “United States real property
holding corporation” as defined in Section 897(c)(2) of the
Code and the applicable Treasury Regulations.
(j) No
Acquiring Company has distributed stock of another Person, or has
had its stock distributed by another Person, in a transaction that
was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code.
(k) No
Acquiring Company has taken or agreed to take any action that would
prevent the Merger from constituting a reorganization qualifying
under Section 368 of the Code. No Acquiring Company is
aware of any agreement, plan or other circumstance that would
prevent the Merger from qualifying as a reorganization under
Section 368 of the Code.
Section
3.08 Intellectual
Property. To the knowledge of
Parent, Parent and its Subsidiaries own, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade dress, trade secrets, know-how,
software, inventions, copyrights, licenses and other intellectual
property rights that are necessary or required for, or used in
connection with, their respective businesses and which the failure
to so have would reasonably be expected to have a Parent Material
Adverse Effect (collectively, the “Parent Owned
IP Rights”). Neither
Parent nor any of its Subsidiaries has received, during the three
(3) years prior to the date of this Agreement, a written notice of
a claim or otherwise has any knowledge that the Parent Owned IP
Rights violate or infringe upon the rights of any Person, except as
would not have or reasonably be expected to have a Parent Material
Adverse Effect.
Section
3.09 Compliance
with Legal Requirements.
(a) Parent
and its Subsidiaries are not and have not been at any time in
conflict with (i) any Legal Requirement, order, judgment or decree
applicable to Parent or any of its Subsidiaries or by which Parent
or any of its Subsidiaries are bound or affected), or (ii) any
Contract to which Parent or any of its Subsidiaries is a party or
by which Parent or any of its Subsidiaries or its or any of their
respective properties is bound or affected, except for any
immaterial conflicts, defaults or violations. To
Parent’s knowledge, no investigation or review by any
Governmental Body is pending or, to the knowledge of Parent,
threatened against Parent or its Subsidiaries.
(b) Parent
and its Subsidiaries hold all permits, licenses, registrations,
authorizations, variances, exemptions, orders and approvals from
Governmental Bodies that are necessary to the operation of the
business of Parent and its Subsidiaries taken as a whole
(collectively, the “Parent
Permits”). Parent and its Subsidiaries
are in compliance in all material respects with the terms of the
Parent Permits. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending or, to the knowledge of Parent, threatened, which seeks to
revoke or limit any Parent Permit. Except as set forth in Part
3.09(b) of the Parent Disclosure Schedule, the rights and benefits
of each Parent Permit will be available to the Surviving
Corporation immediately after the Effective Time on terms
substantially identical to those enjoyed by Parent immediately
prior to the Effective Time.
31
(c) None
of the Acquiring Companies, and to the knowledge of Parent, no
Representative of any of the Acquiring Companies on their behalf
with respect to any matter relating to any of the Acquiring
Companies, has: (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended or (iii)
made any other unlawful payment.
Section
3.10 Legal
Proceedings; Orders.
(a) Except
as set forth in Part 3.10(a) of the Parent Disclosure Schedule,
there is no pending Legal Proceeding, and no Person has threatened
in writing to commence any Legal Proceeding: (i) that involves
any of the Acquiring Companies, any business of any of the
Acquiring Companies or any of the assets owned, leased or used by
any of the Acquiring Companies or (ii) that challenges, or that may
have the effect of preventing, delaying, making illegal or
otherwise interfering with, the Merger or any of the other Parent
Transactions. Except as set forth in Part 3.10(a)(i) of
the Parent Disclosure Schedule, none of the Legal Proceedings
identified in Part 3.10(a) of the Parent Disclosure Schedule has
had or, if adversely determined, would reasonably be expected to
have or result in a Parent Material Adverse Effect. To
the knowledge of Parent, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that would
reasonably be expected to give rise to or serve as a basis for the
commencement of any Legal Proceeding of the type described in
clause “(i)” or clause “(ii)” of the first
sentence of this Section 3.10(a).
(b) There
is no Order to which any of the Acquiring Companies, or any
material assets owned or used by any of the Acquiring Companies, is
subject. To the knowledge of Parent, no officer or other
key employee of any of the Acquiring Companies is subject to any
Order that prohibits such officer or other key employee from
engaging in or continuing any conduct, activity or practice
relating to the business of any of the Acquiring
Companies.
Section
3.11 Brokers’
and Finders’ Fees. Except as set forth in Part 3.11 of
the Parent Disclosure Schedule, no broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the Merger or any of the other
Transactions based upon arrangements made by or on behalf of any of
the Acquiring Companies.
Section
3.12 Employee
Benefit Plans.
(a) Part
3.12(a) of the Parent Disclosure Schedule sets forth, as of the
date of this Agreement, a complete and accurate list of each
material Employee Benefit Plan which is currently sponsored,
maintained, contributed to, or required to be contributed to or
with respect to which any potential liability is borne by Parent or
any ERISA Affiliate of Parent (collectively, the
“Parent
Employee Plans”). Neither Parent nor, to the
knowledge of Parent, any other person or entity, has made any
commitment to modify, change or terminate any Parent Employee Plan,
other than with respect to a modification, change or termination
required by Legal Requirements. With respect to each
material Parent Employee Plan, Parent has made available to Company
accurate and complete copies of the following documents: (i) the
plan document and any related trust agreement, including amendments
thereto; (ii) any current summary plan descriptions and other
material communications to participants relating to the plan; (iii)
each plan trust, insurance, annuity or other funding contract or
service provider agreement related thereto; (iv) the most recent
plan financial statements and actuarial or other valuation reports
prepared with respect thereto, if any; (v) the most recent IRS
determination or opinion letter, if any; (vi) copies of the most
recent plan year nondiscrimination and coverage testing results for
each plan subject to such testing requirements; and (vii) the most
recent annual reports (Form 5500) and all schedules attached
thereto for each Parent Employee Plan that is subject to ERISA and
Code reporting requirements.
32
(b) Each
Parent Employee Plan is being, and has been, administered in
accordance with its terms and in compliance with the requirements
prescribed by any and all Legal Requirements (including ERISA and
the Code), in all material respects. Parent is not in
material default under or material violation of, and has no
knowledge of any material defaults or material violations by any
other party to, any of Parent Employee Plans. All
contributions required to be made by Parent or any ERISA Affiliate
to any Parent Employee Plan have been timely paid or accrued on the
most recent Parent Financials on file with the SEC, if required
under GAAP. Any Parent Employee Plan intended to be
qualified under Section 401(a) of the Code has either obtained from
the Internal Revenue Service a favorable determination letter or
opinion letter as to its qualified status under the Code, and to
the knowledge of Parent, no event has occurred and no condition
exists with respect to the form or operation of such Parent
Employee Plan that would cause the loss of such
qualification.
(c) No
Parent Employee Plan provides retiree
medical or other retiree welfare benefits to any person, except as
required by COBRA. No suit, administrative proceeding or action has
been brought, or to the knowledge of Parent, is threatened against or with respect to any
such Parent Employee Plan,
including any audit or inquiry by the Internal Revenue Service or
the United States Department of Labor (other than routine claims
for benefits arising under such
plans).
(d) Neither
Parent nor any ERISA Affiliate of Parent has, during the past six
(6) years from the date hereof, maintained, established, sponsored,
participated in or contributed to, or is obligated to contribute
to, or otherwise incurred any obligation or liability (including
any contingent liability) under, any “multiemployer
plan” (as defined in Section 3(37) of ERISA) or any
“pension plan” (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA or Section 412 of the
Code. Neither Parent nor any ERISA Affiliate has, as of
the date of this Agreement, any actual or potential withdrawal
liability (including any contingent liability) for any complete or
partial withdrawal (as defined in Sections 4203 and 4205 of ERISA)
from any multiemployer plan.
(e) Except
as set forth in Part 3.12(e) of the Parent Disclosure Schedule,
consummation of the Merger will not (i) entitle any current or
former employee or other service provider of Parent or any ERISA
Affiliate to severance benefits or any other payment (including
unemployment compensation, golden parachute, bonus or benefits
under any Parent Employee Plan); (ii) accelerate the time of
payment or vesting of any such benefits or increase the amount of
compensation due any such employee or service provider; (iii)
result in the forgiveness of any indebtedness; (iv) result in any
obligation to fund future benefits under any Parent Employee Plan;
or (v) result in the imposition of any restrictions with respect to
the amendment or termination of any of Parent Employee Plans. No
benefit payable or that may become payable by Parent pursuant to
any Parent Employee Plan in connection with the Parent
Transactions or as a result of or arising under this Agreement
will constitute an “excess parachute payment” (as
defined in Section 280G(b)(1) of the Code) subject to the
imposition of an excise Tax under Section 4999 of the Code or the
deduction for which would be disallowed by reason of Section 280G
of the Code.
33
Section
3.13 Title
to Assets; Real Property.
(a) The
Acquiring Companies own, and have good, valid and marketable title
to, or, in the case of leased assets, valid leasehold interests in
or other rights to use, all tangible assets purported to be owned
or leased by them. All of said assets are owned or
leased by the Acquiring Companies free and clear of any
Encumbrances, except for Permitted Encumbrances.
(b) The
Acquiring Companies do not own and have never owned any real
property or any interest in real property. Part 3.13(b) of the
Parent Disclosure Schedule sets forth a complete and accurate list
of all real property leases to which Parent is a
party.
Section
3.14 Environmental
Matters.
(a) No
Hazardous Material has been released as a result of the deliberate
actions of Parent or any of its Subsidiaries, or, to Parent’s
knowledge, as a result of any actions of any third party or
otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that Parent
or any of its Subsidiaries currently owns, operates, occupies or
leases, in such quantities as would cause a Parent Material Adverse
Effect.
(b) Neither
Parent nor any of its Subsidiaries has engaged in Hazardous
Material Activities in material violation of any Legal Requirement
in effect on or before the date hereof.
(c) Parent
and its Subsidiaries currently hold all environmental approvals,
permits, licenses, clearances and consents (the
“Parent
Environmental Permits”)
necessary for the conduct of Parent’s and its
Subsidiaries’ Hazardous Material Activities and other
businesses of Parent and its Subsidiaries as such activities and
businesses are currently being conducted, except where the failure
to so hold would not have a Parent Material Adverse
Effect.
(d) No
material action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or, to the
knowledge of Parent, threatened, concerning any Parent
Environmental Permit, Hazardous Material or any Hazardous Material
Activity of Parent or any of its
Subsidiaries.
34
Section
3.15 Labor
Matters.
(a) To
the Parent’s knowledge, no key employee or group of employees
has threatened to terminate employment with Parent or has plans to
terminate such employment.
(b) Except
as disclosed in Part 3.15(b) of the Parent Disclosure Schedule, the
Parent is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims
of unfair labor practices or other collective bargaining
disputes.
(c) Except
as disclosed in Part 3.15(c) of the Parent Disclosure Schedule,
neither Parent nor any of its Subsidiaries is a party to any
written or oral: (i) agreement with any current or former employee
the benefits of which are contingent upon, or the terms of which
will be materially altered by, the consummation of the Merger or
other Transactions; (ii) agreement with any current or former
employee of Parent providing any term of employment or compensation
guarantee extending for a period longer than one year from the date
hereof or for the payment of compensation in excess of $100,000 per
annum; or (iii) agreement or plan the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, upon the consummation of the Merger.
Section
3.16 Parent
Contracts.
(a) Except
for Excluded Contracts or as set forth in the most recent exhibit
list on Parent’s Form 10-K for the year ended December 31,
2018 or subsequently filed with the SEC pursuant to any current or
periodic report and available on the SEC Website or 3.16 of the
Parent Disclosure Schedule, neither Parent nor any of its
Subsidiaries is a party to or is bound by:
(i)
any
management, employment, severance, retention, transaction bonus,
change in control, material consulting, relocation, repatriation or
expatriation agreement or other similar Contract between: (i)
any of the Acquiring Companies and (ii) any active, retired or
former employees, directors or material consultants of any
Acquiring Company, other than any such Contract that is (x)
terminable “at will” (or following a notice period
imposed by applicable Legal Requirements or, in the case of
consulting agreements, following the notice period required in the
Contract), or (y) without any obligation on the part of any
Acquiring Company, other than severance payments required to be
made by any Acquiring Company under applicable Legal
Requirements;
(ii)
any
Contracts identified or required to be identified in Part 3.13(b)
of the Parent Disclosure Schedule;
35
(iii)
any
Contract with any distributor, reseller or sales representative
with an annual value in excess of $25,000;
(iv)
any
Contract with any manufacturer, vendor, or other Person for the
supply of materials or performance of services by such third party
to Parent in relation to the manufacture of the Parent’s
products or product candidates with an annual value in excess of
$25,000;
(v)
any
agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the
Parent Transactions or the value of any of the benefits of which
will be calculated on the basis of any of the Parent
Transactions;
(vi)
any
Contract incorporating or relating to any guaranty, any warranty,
any sharing of liabilities or any indemnity not entered into in the
ordinary course of business, including any indemnification
agreements between Parent or any of its Subsidiaries and any of its
officers or directors;
(vii)
any
Contract imposing, by its express terms, any material restriction
on the right or ability of any Acquiring Company: (A) to
compete with any other Person; (B) to acquire any product or other
asset or any services from any other Person; or (C) to develop,
sell, supply, distribute, offer, support or service any product or
any technology or other asset to or for any other
Person;
(viii)
any
Contract currently in force relating to the disposition or
acquisition of assets not in the ordinary course of business or any
ownership interest in any corporation, partnership, joint venture
or other business enterprise;
(ix)
any
mortgages, indentures, loans or credit agreements, security
agreements or other agreements or instruments relating to the
borrowing of money or extension of credit;
(x)
any
joint marketing or development agreement;
(xi)
any
commercial Contract that would reasonably be expected to have a
material effect on the ability of Parent to perform any of its
material obligations under this Agreement, or to consummate any of
the transactions contemplated by this Agreement, that is not set
forth on Part 3.03 of the Parent Disclosure Schedule;
(xii)
any
Contract that provides for: (A) any right of first refusal,
right of first negotiation, right of first notification or similar
right with respect to any securities or assets of any Acquiring
Company; or (B) any “no shop” provision or similar
exclusivity provision with respect to any securities or assets of
any Acquiring Company;
36
(xiii)
any
Contract that contemplates or involves the payment or delivery of
cash or other consideration in an amount or having a value in
excess of $25,000 in the aggregate, or contemplates or involves the
performance of services having a value in excess of $25,000 in the
aggregate, in each case following the date of this Agreement, other
than any arrangement or agreement expressly contemplated or
provided for under this Agreement; or
(xiv)
any
Contract that does not allow Parent or Subsidiary to terminate the
Contract for convenience with no more than sixty (60) days prior
notice to the other party and without the payment of any rebate,
chargeback, penalty or other amount to such third party in
connection with any such termination in an amount or having a value
in excess of $25,000 in the aggregate.
(b) Parent
has made available to Company an accurate and complete copy of each
Contract listed or required to be listed in Part 3.16 of the Parent
Disclosure Schedule (any such Contract, including any Contract that
would be listed in Part 3.16 but for its inclusion in the most
recent exhibit list of Parent’s Form 10-K for the year ended
December 31, 2018 or as an exhibit to any current or periodic
report subsequently filed with the SEC, but excluding Excluded
Contracts, a “Parent
Contract”). Neither Parent nor any of its
Subsidiaries, nor to Parent’s knowledge any other party to a
Parent Contract, has, since the Parent Lookback Date, breached or
violated in any material respect or materially defaulted under, or
received written notice that it has breached, violated or defaulted
under, any of the terms or conditions of any of the Parent
Contracts. To the knowledge of Parent, no event has
occurred, and, no circumstance or condition exists, that (with or
without notice or lapse of time) would reasonably be expected
to: (i) result in a violation or breach in any material
respect of any of the provisions of any Parent Contract or (ii)
give any Person the right to declare a default in any material
respect under any Parent Contract, except for any immaterial
violations, breaches or defaults. To Parent’s
knowledge, each Parent Contract is valid, binding, enforceable and
in full force and effect, except as enforceability may be limited
by bankruptcy and other similar laws and general principles of
equity.
Section
3.17 Insurance.
(a) Part
3.17(a) of the Parent Disclosure Schedule sets forth each material
insurance policy (the “Parent
Insurance Policies”) to
which Parent or its Subsidiaries is a party. Parent or
its Subsidiaries maintain all Parent Insurance Policies in such
amounts, with such deductibles and against such risks and losses
that are reasonably adequate for the operation of Parent’s
and its Subsidiaries’ businesses in all material
respects. To Parent’s knowledge, such Parent
Insurance Policies are in full force and effect, maintained with
reputable companies against loss relating to the business,
operations and properties and such other risks as companies engaged
in similar business as the Acquiring Companies would, in accordance
with good business practice, customarily insure. Since
the Parent Lookback Date, all premiums due and payable under such
Parent Insurance Policies have been paid on a timely basis and each
Acquiring Company is in compliance in all material respects with
all other terms thereof. True, complete and correct
copies, of such Parent Insurance Policies, or summaries of all
terms material thereof, have been made available to the
Company.
37
(b) There
are no material claims pending under any Parent Insurance Policies
as to which coverage has been questioned, denied or disputed. Since
the Parent Lookback Date, all material claims thereunder have been
filed in a due and timely fashion and no Acquiring Company has been
refused insurance for which it has applied or had any policy of
insurance terminated (other than at its request), nor has any
Acquiring Company received notice from any insurance carrier
that: (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated; or (ii) premium costs
with respect to such insurance will be increased, other than
premium increases in the ordinary course of business applicable on
their terms to all holders of similar
policies.
Section
3.18 Interested
Party Transactions. Except as set forth in the SEC
Documents, no event has occurred during the Parent Lookback Period
that would be required to be reported by Parent as a Certain
Relationship or Related Transaction pursuant to Item 404 of
Regulation S-K.
Section
3.19 Opinion
of Financial Advisor. The board of directors of Parent has
received an opinion of Gemini Valuation Services, LLC, financial
advisor to Parent, dated the date of this Agreement, to the effect
that the Exchange Ratio is fair to Parent from a financial point of
view. Parent will furnish an accurate and complete copy
of said opinion to Company for informational purposes only promptly
after the date hereof.
Section
3.20 Shell
Company Status. Parent is not currently, and has
never been, an issuer identified in Rule 144(i)(1)(i) of the
Securities Act.
Section
3.21 Valid
Issuance. The Parent
Common Stock to be issued in the Merger will, when issued in
accordance with the provisions of this Agreement be validly issued,
fully paid and nonassessable.
Section
3.22 Disclosure;
Parent Information. The
information relating to Parent or its Subsidiaries to be supplied
by or on behalf of Parent for inclusion or incorporation by
reference in the S-4 Registration Statement and the Proxy
Statement/Prospectus will not, on the date of filing thereof or the
date it is first mailed to Parent stockholders, as applicable, or
at the time of the Parent Stockholders’ Meeting, contain any
untrue statement of any 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 are made, not false or misleading at the time and in
light of the circumstances under which such statement is
made. The S-4 Registration Statement and the Proxy
Statement/Prospectus will comply in all material respects as to
form with the requirements of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing,
no representation is made by Parent or Merger Sub with respect to
the information that has been or will be supplied by the Company or
any of it Representatives for inclusion in the S-4 Registration
Statement and the Proxy Statement/Prospectus.
38
ARTICLE IV.
CONDUCT OF BUSINESS
PENDING THE MERGER
Section
4.01 Conduct
of Company Business. During the period from the date of
this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time (the
“Pre-Closing
Period”), Company agrees,
except to the extent that Parent consents in writing (such consent
not to be unreasonably withheld, conditioned or delayed), as set
forth on Part 4.01 of the Company Disclosure Schedule, as expressly
permitted by this Agreement or by applicable Legal Requirements, to
carry on its business in accordance with good commercial practice
and to carry on its business in the usual, regular and ordinary
course, consistent with past practice, to pay its debts and Taxes
when due subject to good faith disputes over such debts or Taxes,
to pay or perform other obligations when due, and use its
commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep
available the services of its present officers and employees and
preserve its relationships with customers, suppliers, distributors,
licensors, licensees, and others with which it has business
dealings. In addition, without limiting the foregoing,
other than as expressly contemplated by this Agreement or in
connection with the Company Pre-Closing Financing, without
obtaining the written consent of Parent, which shall not be
unreasonably withheld (and in which event, if Parent has not
objected in writing to any request for consent within three (3)
calendar days of its receipt thereof, such consent shall be deemed
irrevocably granted), Company will not, and will not permit its
Subsidiaries to, do any of the following:
(a) except
as contemplated by Section 5.24, amend or otherwise change its
certificate of incorporation or bylaws, or otherwise alter its
corporate structure through merger, liquidation, reorganization or
otherwise, or form any subsidiary;
(b) issue,
sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), other than the issuance of
shares of common stock issuable pursuant to employee stock options
under currently existing employee stock option plans or pursuant to
currently outstanding warrants, as the case may be, which options,
warrants or rights, as the case may be, are outstanding on the date
hereof) to the extent such issuances comply with all applicable
Legal Requirements;
(c) redeem,
repurchase or otherwise acquire, directly or indirectly, any shares
of Company Capital Stock;
(d) incur
any Indebtedness or sell, pledge, dispose of or create an
Encumbrance over any assets (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past
practice, and (ii) dispositions of obsolete or worthless
assets);
39
(e) accelerate,
amend or change the period (or permit any acceleration, amendment
or change) of exercisability of options or warrants or authorize
cash payments in exchange for any options, except as may be
required under any Company Stock Option Plan, Contract or this
Agreement or as may be required by applicable Legal
Requirements;
(f) (i)
declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of any of its capital stock; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii)
amend the terms of, repurchase, redeem or otherwise acquire, or
permit any Subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its Subsidiaries (except
pursuant to any Contract to which an Acquired Company is a party as
of the date of this Agreement), or propose to do any of the
foregoing;
(g) sell,
assign, transfer, license, sublicense or otherwise dispose of any
Company IP Rights (other than non-exclusive licenses in the
ordinary course of business consistent with past
practice);
(h) (i)
acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization
or division thereof or any other material property or assets, or
allow any material property or assets to become subject to any
Encumbrance; (ii) enter into or amend any material terms of any
Company Contract (other than solely to decrease any payment
obligation of the Acquired Company) or grant any release or
relinquishment of any material rights under any Company Contract,
with new obligations or losses of rights in excess of $50,000 in
the aggregate; (iii) authorize any capital expenditures or purchase
of fixed assets which are, in the aggregate, in excess of $50,000,
taken as a whole; or (iv) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.02(h);
(i) forgive
any loans to any Person, including its employees, officers,
directors or Affiliates;
(j) (i)
increase the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable or to become payable to its
directors, officers, employees or consultants; (ii) grant any
severance or termination pay to, or enter into or amend any
employment or severance agreement with, any
director, officer, employee or consultant; (iii)
establish, adopt, enter into, or amend any Employee Benefit Plan,
except, in each of the subsections (i) – (iii) for bonus
awards in the ordinary course of business consistent with past
practice or bonus awards contingent upon the completion of the
Transactions or payments, including any severance, termination or
change of control payments, in compliance with any such agreements
or plans existing as of the date of this Agreement and the plans,
agreements or terms of which were made available to Parent prior to
the date hereof, or except as required by Legal
Requirements;
40
(k) hire
any directors, officers, employees or consultants or terminate any
directors or officers, except in each case, in the ordinary course
of business and in a manner consistent with past
practice;
(l) take
any action, other than as required by applicable Legal Requirements
or GAAP, to change accounting policies or procedures;
(m) make
or change any material Tax election inconsistent with past
practices, adopt or change any Tax accounting method, or settle or
compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations for
any assessment of any Tax;
(n) pay,
discharge, satisfy, modify or renegotiate any claims or
Liabilities, other than the payment, discharge or satisfaction of
liabilities reflected or reserved against in the financial
statements of Company, or payments, discharges or satisfactions
made in the ordinary course of business and consistent with past
practice;
(o) enter
into any material partnership arrangements, joint development
agreements or strategic alliances;
(p) accelerate
the collection of, or otherwise modify Company’s customary
accounting or treatment of, any receivables outside the ordinary
course of business consistent with past practice,
(q) initiate
any litigation, action, suit, proceeding, claim or arbitration or
settle or agree to settle any litigation, action, suit, proceeding,
claim or arbitration, in each case where Company is claiming, or
would be reasonably likely to receive or become obligated for a
liability, of more than $50,000 individually;
(r) dispose
of any assets or otherwise take any actions other than in the
ordinary course of business consistent with past practice;
or
(s) take,
or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through 4.01(r) above.
Section
4.02 Conduct
of Parent Business. During the Pre-Closing Period, Parent
agrees, except to the extent that Company consents in writing (such
consent not to be unreasonably withheld, conditioned or delayed),
as set forth on Part 4.02 of the Company Disclosure Schedule, as
expressly permitted by this Agreement, in connection with a Parent
Legacy Business Disposition or by applicable Legal Requirements, to
carry on its business in accordance with good commercial practice
and to carry on its business in the usual, regular and ordinary
course, in substantially the same manner as heretofore conducted,
to pay its debts and Taxes when due subject to good faith disputes
over such debts or Taxes, to pay or perform other material
obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to preserve intact its
present business organization, preserve its relationships with key
customers, suppliers, distributors, licensors, licensees and others
with which it has business dealings. In addition,
without limiting the foregoing, other than as set forth on Part
4.02 of the Company Disclosure Schedule or as expressly
contemplated by this Agreement, without obtaining the written
consent of Company, which shall not be unreasonably withheld,
conditioned or delayed (and in which event, if Company has not
objected in writing to any request for consent within three (3)
calendar days of its receipt thereof, such consent shall be deemed
irrevocably granted), Parent will not, and will not permit its
Subsidiaries to, do any of the following:
41
(a) except
as expressly contemplated by Section 1.04(c), amend or otherwise
change its certificate of incorporation or bylaws, or otherwise
alter its corporate structure through merger, liquidation,
reorganization or otherwise, or form any subsidiary;
(b) issue,
sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), other than (i) the issuance of
shares of common stock issuable pursuant to employee stock options
under currently existing employee stock option plans or pursuant to
currently outstanding warrants, as the case may be, which options,
warrants or rights, as the case may be, are outstanding on the date
hereof) or (ii) the issuance of shares of common stock issuable
pursuant to equity grants to members of the Parent board of
directors in an amount not to exceed 600,000 shares of Parent
Common Stock in the aggregate, in each case, to the extent such
issuances comply with all applicable Legal
Requirements;
(c) redeem,
repurchase or otherwise acquire, directly or indirectly, any shares
of Parent Capital Stock;
(d) incur
any Indebtedness or sell, pledge, dispose of or create an
Encumbrance over any assets (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past
practice, and (ii) dispositions of obsolete or worthless
assets);
(e) accelerate,
amend or change the period (or permit any acceleration, amendment
or change) of exercisability of options or warrants or authorize
cash payments in exchange for any options, except as may be
required under the Parent Stock Option Plan, any Contract or this
Agreement or as may be required by applicable Legal
Requirements;
(f) other
than in connection with the Reverse Stock Split and Section 1.13,
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock; (ii) split,
combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock or (iii) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
Subsidiaries (except pursuant to any Contract to which an Acquiring
Company is a party as of the date of this Agreement), or propose to
do any of the foregoing;
42
(g) sell,
assign, transfer, license, sublicense or otherwise dispose of any
Parent IP Rights (other than non-exclusive licenses in the ordinary
course of business consistent with past practice);
(h) (i)
acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization
or division thereof or any other material property or assets, or
allow any material property or assets to become subject to any
Encumbrance; (ii) enter into or amend any material terms of any
Parent Contract (other than solely to decrease any payment
obligation of the Acquiring Company) or grant any release or
relinquishment of any material rights under any Parent Contract,
with new obligations or losses of rights in excess of $50,000 in
the aggregate; (iii) authorize any capital expenditures or purchase
of fixed assets which are, in the aggregate, in excess of $50,000,
taken as a whole; or (iv) enter into or amend any contract,
agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.02(h);
(i) forgive
any loans to any Person, including its employees, officers,
directors or Affiliates;
(j) (i)
increase the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable or to become payable to its
directors, officers, employees or consultants; (ii) grant any
severance or termination pay to, or enter into or amend any
employment or severance agreement with, any
director, officer, employee or consultant; (iii)
establish, adopt, enter into, or amend any Employee Benefit Plan,
except, in each of the subsections (i) – (iii) for bonus
awards in the ordinary course of business consistent with past
practice or bonus awards contingent upon the completion of the
Transactions or payments, including any severance, termination or
change of control payments, in compliance with any such agreements
or plans existing as of the date of this Agreement and the plans,
agreements or terms of which were made available to the Company
prior to the date hereof, or except as required by Legal
Requirements;
(k) hire
any directors, officers, employees or consultants or terminate any
directors or officers, except in each case, in the ordinary course
of business and in a manner consistent with past
practice;
(l) take
any action, other than as required by applicable Legal Requirements
or GAAP, to change accounting policies or procedures;
(m) make
or change any material Tax election inconsistent with past
practices, adopt or change any Tax accounting method, or settle or
compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations for
any assessment of any Tax;
(n) pay,
discharge, satisfy, modify or renegotiate any claims or
Liabilities, other than the payment, discharge or satisfaction of
liabilities reflected or reserved against in the financial
statements of Parent, or payments, discharges or satisfactions made
in the ordinary course of business and consistent with past
practice;
43
(o) enter
into any material partnership arrangements, joint development
agreements or strategic alliances;
(p) accelerate
the collection of, or otherwise modify Parent’s customary
accounting or treatment of, any receivables outside the ordinary
course of business consistent with past practice,
(q) initiate
any litigation, action, suit, proceeding, claim or arbitration or
settle or agree to settle any litigation, action, suit, proceeding,
claim or arbitration, in each case where Parent is claiming, or
would be reasonably likely to receive or become obligated for a
liability, of more than $50,000 individually;
(r) dispose
of any assets or otherwise take any actions other than in the
ordinary course of business consistent with past
practice;
(s) take
any action that would cause the representation in Section 3.21 to
become inaccurate; or
(t) take,
or agree in writing or otherwise to take, any of the actions
described in Sections 4.02(a) through 4.02(s) above.
ARTICLE V.
ADDITIONAL
AGREEMENTS
Section
5.01 Proxy
Statement/Prospectus.
(a) As
promptly as reasonably practicable following the date of this
Agreement, Parent shall prepare and file with the SEC a proxy
statement to be sent to the stockholders of each of Parent and the
Company relating to the meeting of stockholders, and a Registration
Statement on Form S-4 (including a prospectus) (including all
amendments thereto, “S-4
Registration Statement”)
in connection with the issuance of shares of Parent Common Stock in
the Merger, of which such proxy statement will form a part (such
proxy statement and prospectus constituting a part thereof, the
“Proxy
Statement/Prospectus”),
and each of the Company and Parent shall, or shall cause their
respective Affiliates to, prepare and file with the SEC all other
documents to be filed by Parent with the SEC in connection with the
Merger and other transactions contemplated hereby (the
“Other
Filings”) as required by
the Securities Act or the Exchange Act. Parent and the Company
shall cooperate with each other in connection with the preparation
of the S-4 Registration Statement, the Proxy Statement/Prospectus
and any Other Filings. Each Party shall as promptly as reasonably
practicable notify the other Party of the receipt of any oral or
written comments from the staff of the SEC on the S-4 Registration
Statement or any Other Filing. Parent and the Company shall also
use their commercially reasonable efforts to satisfy prior to the
effective date of the S-4 Registration Statement all necessary
state securities Law or “blue sky” notice requirements
in connection with the Merger and to consummate the other
transactions contemplated hereby.
44
(b) Parent
covenants and agrees that the S-4 Registration Statement and
Proxy Statement/Prospectus, including any pro forma financial
statements included therein (and the letter to stockholders, notice
of meeting and form of proxy included therewith), will not, at the
time that the S-4 Registration Statement and Proxy
Statement/Prospectus or any amendment or supplement thereto is
filed with the SEC or the Proxy Statement/Prospectus is first
mailed to the stockholders of Parent, at the time of the Parent
Stockholders’ Meeting and at the Effective Time, 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 made therein, in light of the circumstances under
which they were made, not misleading. Company represents, covenants
and agrees that the information provided by Company or its
Subsidiaries to Parent for inclusion in the S-4 Registration
Statement and Proxy Statement/Prospectus (including the Company
Financials) will not 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 such information not
misleading. Notwithstanding the foregoing, Parent makes no
covenant, representation or warranty with respect to statements
made in the S-4 Registration Statement or Proxy
Statement/Prospectus (and the letter to stockholders, notice of
meeting and form of proxy included therewith), if any, based on
information furnished in writing by Company specifically for
inclusion therein. Each of the Parties shall use commercially
reasonable efforts to cause the S-4 Registration Statement and
Proxy Statement/Prospectus to comply with the applicable rules and
regulations promulgated by the SEC and to respond promptly to any
comments of the SEC or its staff. Each of the Parties shall use
commercially reasonable efforts to cause the S-4 Registration
Statement to be declared effective as soon as possible and the
Proxy Statement/Prospectus to be mailed to Parent’s
stockholders as promptly as practicable after the SEC declares the
S-4 Registration Statement to be effective. Each Party shall
promptly furnish to the other Party all information concerning such
Party and such Party’s Subsidiaries and such Party’s
stockholders that may be required or reasonably requested in
connection with any action contemplated by this Section 5.01. If
any event relating to Parent or Company occurs, or if Parent or
Company becomes aware of any information, that should be disclosed
in an amendment or supplement to the S-4 Registration Statement
and/or Proxy Statement/Prospectus, then Parent or Company, as
applicable, shall promptly inform the other party thereof and shall
cooperate with one another in filing such amendment or supplement
with the SEC and, if appropriate, in mailing such amendment or
supplement to Parent’s stockholders. No filing of, or
amendment or supplement to, the S-4 Registration Statement and/or
Proxy Statement/Prospectus will be made by Parent without the prior
written consent of Company, which shall not be unreasonably
withheld, conditioned or delayed.
(c) Company
shall reasonably cooperate with Parent and provide, and require its
Representatives, advisors, accountants and attorneys to provide,
Parent and its Representatives, advisors, accountants and
attorneys, with all true, correct and complete information
regarding Company that is required by law to be included in the S-4
Registration Statement and/or the Proxy Statement/Prospectus or
reasonably requested from Company to be included in the S-4
Registration Statement and/or the Proxy Statement/Prospectus. The
information provided by the Company to be included in the S-4
Registration Statement and/or the Proxy Statement/Prospectus shall
not 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 made therein, in light of the
circumstances under which they were made, not
misleading.
45
Section
5.02 Company
Stockholder Written Consent.
(a) As
promptly as practicable, and in any event within five business
days, following the date that the S-4 Registration Statement is
declared effective (the “Company
Vote Deadline”), the
Company shall obtain the approval by written consent from Company
stockholders sufficient for the Required Company Stockholder Vote
in lieu of a meeting pursuant to Section 228 of the DGCL
(“Company
Stockholder Written Consent”) for purposes of (i) adopting this
Agreement and approving the Merger, and all other Transactions (ii)
acknowledging that the approval given thereby is irrevocable and
that such Company Stockholder is aware of its rights to demand
appraisal for its shares pursuant to Section 262 of the DGCL, a
copy of which was attached thereto, and that such Company
Stockholder has received and read a copy of Section 262 of the DGCL
and (iii) acknowledging that by its approval of the Merger it is
not entitled to appraisal rights with respect to its shares in
connection with the Merger and thereby waives any rights to receive
payment of the fair value of its Company Capital Stock under the
DGCL (collectively, the “Company
Stockholder Matters”).
Under no circumstances shall the Company assert that any other
approval or consent is necessary by its stockholders to approve
this Agreement and the Transactions.
(b) Company
agrees that (i) Company’s board of directors shall recommend
that the holders of Company Capital Stock vote (or take action by
written consent) to approve the Company Stockholder Matters and
shall use commercially reasonable efforts to solicit such approval
within the timeframe set forth in Section 5.02(a) above (the
recommendation of Company’s board of directors that Company
Stockholders vote to approve the Company Stockholder Matters being
referred to as the “Company
Board Recommendation”);
and (ii) the Company Board Recommendation shall not be withdrawn or
modified in a manner adverse to Parent, and no resolution by the
board of directors of Company or any committee thereof to withdraw
or modify the Company Board Recommendation in a manner adverse to
Parent shall be adopted or proposed.
(c) Reserved.
(d) Reserved.
(e) Promptly
following receipt of the Required Company Stockholder Vote, the
Company shall prepare and mail a notice (the
“Stockholder
Notice”) to every
stockholder of the Company that did not execute the Company
Stockholder Written Consent. The Stockholder Notice shall
(i) be a statement to the effect that the Company Board
determined that the Merger is advisable in accordance with
Section 251(b) of the DGCL and in the best interests of the
stockholders of the Company and approved and adopted this
Agreement, the Merger and the other Transactions, (ii) provide
the stockholders of the Company to whom it is sent with notice of
the actions taken in the Company Stockholder Written Consent,
including the adoption and approval of this Agreement, the Merger
and the other Transactions in accordance with Section 228(e)
of the DGCL and the certificate of incorporation and bylaws of the
Company and (iii) include a description of the appraisal
rights of the Company’s stockholders available under the
DGCL, along with such other information as is required thereunder
and pursuant to applicable Law and a copy of Section 262 of the
DGCL. All materials (including any amendments thereto) submitted to
the stockholders of the Company in accordance with this
Section 5.02(e) shall be subject to Parent’s advance
review and reasonable approval.
46
Section
5.03 Parent
Stockholders’ Meeting.
(a) Parent
shall (i) take all action necessary under applicable
Legal Requirements to call, give notice of and hold a meeting of
the holders of Parent Common Stock (such meeting, the
“Parent
Stockholders’ Meeting”) to vote on the Merger, the issuance
of Parent Common Stock in the Merger, the Parent Legacy
Business Disposition and the Parent Charter Amendment, including
for purposes of effectuating the Reverse Split (collectively, the
“Parent
Stockholder Approval Matters”) and (ii) mail to Parent Stockholders as
of the record date established for the Parent Stockholders’
Meeting, the S-4 Registration Statement and the Proxy
Statement/Prospectus. The Parent Stockholders’
Meeting shall be held as promptly as practicable, and in any event
within 45 days, following the date that SEC declares the S-4
Registration Statement to be effective. Parent shall take
reasonable measures to ensure that all proxies solicited in
connection with the Parent Stockholders’ Meeting are
solicited in compliance with all applicable Legal Requirements.
Notwithstanding anything to the contrary contained herein, if on a
date preceding the date on which or the date on which the Parent
Stockholders’ Meeting is scheduled, Parent reasonably
believes that (A) it will not receive proxies sufficient to obtain
the Parent Stockholder Approval, whether or not a quorum would be
present or (B) it will not have sufficient shares of Parent
Common Stock represented (either in person or by proxy) to
constitute a quorum necessary to conduct the business of the Parent
Stockholders’ Meeting, Parent may, in its sole discretion,
postpone or adjourn, or make one or more successive postponements
or adjournments of, the Parent Stockholders’ Meeting as long
as the date of the Parent Stockholders’ Meeting is not
postponed or adjourned more than an aggregate of 60 calendar days
in connection with any postponements or adjournments in reliance on
the preceding sentence.
(b) Parent
agrees that, subject to Section 5.03(c): (i) Parent’s board
of directors shall recommend that the holders of Parent Common
Stock vote to approve the Parent Stockholder Approval Matters and
shall use commercially reasonable efforts to solicit such approval
within the timeframe set forth in Section 5.03(a) above; (ii) the
Proxy Statement/Prospectus shall include a statement to the effect
that the board of directors of Parent recommends that
Parent’s stockholders vote to approve the Parent Stockholder
Approval Matters (the recommendation of Parent’s board of
directors that Parent’s stockholders vote to approve the
Parent Stockholder Approval Matters being referred to as the
“Parent
Board Recommendation”);
(iii) the Parent Board Recommendation shall not be withdrawn or
modified in a manner adverse to Company, and no resolution by the
board of directors of Parent or any committee thereof to withdraw
or modify the Parent Board Recommendation in a manner adverse to
Company shall be adopted or proposed; and (iv) Parent shall use its
commercially reasonable efforts to obtain from its stockholders the
Parent Stockholder Approval, including by soliciting proxies in
favor thereof.
47
(c) Notwithstanding
anything to the contrary contained in Section 5.03(b), at any time
prior to the approval of the Parent Stockholder Approval Matters by
the Parent Stockholder Approval, the Parent Board Recommendation
may be withdrawn or modified (a “Parent
Change in Recommendation”) if the board of directors of Parent
concludes in good faith, after having consulted with Parent’s
outside legal counsel and financial advisors, that as a result of
Parent’s receipt of an Acquisition Proposal that did not
result from a violation of Section 5.13 that constitutes a Parent
Superior Offer, the withdrawal or modification of the Parent Board
Recommendation is required in order for the board of directors of
Parent to comply with its fiduciary obligations to Parent’s
stockholders under applicable Legal Requirements;
provided, however, that prior to Parent taking any action permitted
under this Section 5.03(c), Parent shall provide Company with ten
(10) Business Days’ prior written notice advising the Company
that it intends to effect such withdrawal or modification to the
Parent Board Recommendation and specifying, in reasonable detail,
the reasons therefor (including, in the case of an Acquisition
Proposal, the information required by Section 5.13(b)) and during
such ten (10) Business Day period, (i) Parent shall negotiate, and
cause its Representatives to negotiate, with Company in good faith
(to the extent Company wishes to negotiate) to enable Company to
determine whether to propose revisions to the terms of this
Agreement such that it would obviate the need for Parent’s
board of directors to effect such withdrawal or modification, and
(ii) Parent shall consider in good faith any proposal by Company to
amend the terms and conditions of this Agreement in a manner that
would obviate the need to effect such withdrawal or change of the
Parent Board Recommendation.
(d) Notwithstanding
the occurrence of any Parent Change in Recommendation, Parent shall
nonetheless submit this Agreement to the Parent Stockholders for
adoption at the Parent Stockholders Meeting unless this Agreement
is terminated in accordance with Article VII prior to the Parent
Stockholders Meeting.
(e) Nothing
contained in this Agreement shall prohibit Parent or its board of
directors from (i) taking and disclosing to the stockholders of
Parent a position as contemplated by Rule 14e-2(a) under the
Exchange Act or complying with the provisions of Rule 14d-9 under
the Exchange Act (other than Rule 14d-9(f) under the Exchange Act)
or (ii) making a “stop, look and listen” communication
to the stockholders of Parent pursuant to Rule 14d-9(f) under the
Exchange Act, in each case provided Parent has otherwise complied
with the terms of this Section 5.03, provided, however, that any disclosure made by Parent or its board
of directors pursuant to Rules 14d-9 or 14e-2(a) will be limited to
a statement that Parent is unable to take a position with respect
to the bidder’s tender offer unless the board of directors of
Parent determines in good faith, after consultation with its
outside legal counsel, that such statement would result in a breach
of its fiduciary duties under applicable Legal Requirements;
provided, further, that (A) in the case of each of the foregoing
clauses (i) and (ii), any such disclosure or public statement shall
be deemed to be a Parent Change in Recommendation subject to the
terms and conditions of this Agreement unless Parent’s board
of directors reaffirms the Parent Board Recommendation in such
disclosure or public statement; and (B) Parent shall not affect a
Parent Change in Recommendation unless specifically permitted
pursuant to the terms of Section 5.03(c).
48
Section
5.04 Access
to Information; Confidentiality. From the date of this Agreement until
the earlier of the Effective Time or the termination of this
Agreement in accordance with Article VII, and upon reasonable
notice and subject to restrictions contained in confidentiality
agreements to which such party is subject, Company and Parent will
each afford to the officers, employees, accountants, counsel and
other Representatives of the other party, reasonable access, during
the Pre-Closing Period, to all its properties, books, contracts,
commitments and records (including, without limitation, Tax
records) and, during such period, Company and Parent each will
furnish promptly to the other all information concerning its
business, properties and personnel as such other party may
reasonably request, and each will make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other’s business,
properties and personnel as either party may reasonably
request; provided, that each of Company and Parent reserves the
right to withhold any information if access to such information
would be reasonably likely to result in any such party forfeiting
attorney-client privilege between it and its counsel with respect
to such information, in which event such party shall cause such
information to be delivered in a form or summary, including any
redactions that may be necessary, so as to provide as much
requested information as reasonably practicable while retaining
such privilege. Without limiting the generality of the
foregoing, during the Pre-Closing Period, the Company and Parent
will promptly provide the other party with copies
of: (a) all material operating and financial reports
prepared by Company or Parent (or their respective
Representatives), as applicable, for such party’s senior
management, including copies of any sales forecasts, marketing
plans, development plans, discount reports, write-off reports,
hiring reports and capital expenditure reports; (b) any written
materials or communications sent by or on behalf of such party to
its stockholders; (c) any material notice, document or other
communication sent by or on behalf of any of such party to any
third party to any Company Contract or Parent Contract, as
applicable, or sent to Company or Parent by any third party to any
Company Contract or Parent Contract, as applicable, (other than any
communication that relates solely to routine commercial
transactions and that is of the type sent in the ordinary course of
business and consistent with past practices); (d) any notice,
report or other document filed with or sent to any Governmental
Body in connection with the Merger or any of the other
Transactions; and (e) any material notice, report or other document
received from any Governmental Body. Each party will
keep such information confidential in accordance with the terms of
the currently effective confidentiality agreement (the
“Confidentiality
Agreement”) between
Parent and Company; provided, that the Company may make disclosure of such
information to its stockholders or other third parties as may be
reasonably necessary to enable the Company to comply with its
obligations under this Agreement, including without limitation
under Section 5.02 hereof.
Section
5.05 Regulatory
Approvals and Related Matters.
Each Party shall use commercially reasonable efforts to file or
otherwise submit, as soon as practicable after the date of this
Agreement, all applications, notices, reports and other documents
reasonably required to be filed by such Party with or otherwise
submitted by such Party to any Governmental Body with respect to
the Merger, and to submit promptly any additional information
requested by any such Governmental Body. Without limiting the
generality of the foregoing, the Parties shall, promptly after the
date of this Agreement, prepare and file, if any, (a) the
notification and report forms required to be filed under the HSR
Act and (b) any notification or other document required to be
filed in connection with the Merger under any applicable foreign
Legal Requirement relating to antitrust or competition matters.
Parent and Company shall respond as promptly as is practicable to
respond in compliance with: (i) any inquiries or requests
received from the Federal Trade Commission or the Department of
Justice for additional information or documentation; and
(ii) any inquiries or requests received from any state
attorney general, foreign antitrust or competition authority or
other Governmental Body in connection with antitrust or competition
matters.
49
Section
5.06 Director
Indemnification and Insurance.
(a) From
and after the Effective Time, Parent and the Surviving Corporation
will fulfill and honor in all respects the obligations of Company
and Parent which exist prior to the date hereof to indemnify
Company’s and Parent’s present and former directors and
officers and their heirs, executors and assigns (each, a
“D&O
Indemnified Party”). The
Company directors and officers who become directors and officers of
the Surviving Corporation and Parent will enter into Parent’s
standard indemnification agreement, which will be in addition to
any other contractual rights to indemnification. The
certificate of incorporation and/or bylaws of the Surviving
Corporation will contain provisions at least as favorable as the
provisions relating to the indemnification and elimination of
liability for monetary damages set forth in the certificate of
incorporation and/or bylaws of Company, and the provisions relating
to the indemnification and elimination of liability for monetary
damages set forth in the certificate of incorporation and/or bylaws
of Company and certificate of incorporation and bylaws of Parent
will not be amended, repealed or otherwise modified for a period of
six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, at the
Effective Time, were directors, officers, employees or agents of
Company or Parent, unless such modification is required by Legal
Requirements.
(b) Prior
to the Effective Time, Parent will purchase, at Parent’s sole
expense, a prepaid directors and officers liability
“tail” policy on Parent’s existing directors and
officers for a period of six (6) years.
(c) This
Section 5.06 will survive any termination of this Agreement and the
consummation of the Merger at the Effective Time, is intended to
benefit Company, the Surviving Corporation, Parent and the D&O
Indemnified Parties, and will be binding on all successors and
assigns of Parent and the Surviving Corporation.
Section
5.07 Notification
of Certain Matters.
(a) Company
will give prompt notice to Parent, and Parent will give prompt
notice to Company, of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be
reasonably likely to cause any representation or warranty contained
in this Agreement to be untrue or inaccurate such that the
conditions set forth in Section 6.02(a) or Section 6.03(a), as
applicable, would fail to be satisfied as of the Closing; (ii) any
failure of Company or Parent, as the case may be, materially to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder such that the conditions
set forth in Section 6.02(b) or Section 6.03(b), as applicable,
would fail to be satisfied as of the Closing and (iii) whether any
holder of shares of Parent Capital Stock or any security or other
right convertible into or exercisable for shares of Parent Capital
Stock has made any demand or request for the repurchase of any such
share, security or right; provided, however, that the delivery of any notice pursuant to this
Section 5.07 will not limit or otherwise affect the remedies
available hereunder to the party receiving such
notice.
50
(b) Each
of Company and Parent will give prompt notice to the other
of: (i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the Merger or other Transactions; (ii) any notice
or other communication from any Governmental Body in connection
with the Merger or other Transactions; (iii) any litigation
relating to or involving or otherwise affecting Company or Parent
that relates to the Merger or other Transactions; (iv) the
occurrence of a default or event that, with notice or lapse of time
or both, will become a default under a Company Contract or a Parent
Contract, as applicable; and (v) any change that would be
considered reasonably likely to result in a Company Material
Adverse Effect or Parent Material Adverse Effect.
Section
5.08 Stockholder
Litigation. From and
after the date of this Agreement until the earlier of the Effective
Time or the date, if any, on which this Agreement is terminated
pursuant to Article VII, Parent shall promptly notify Company of
any litigation brought, or threatened, against Parent and/or
members of the board of directors of Parent or any of its officers
relating to the Transactions or otherwise and shall keep Company
informed on a reasonably current basis with respect to the status
thereof. From and after the date of this Agreement until
the earlier of the Effective Time or the date, if any, on which
this Agreement is terminated pursuant to Article VII, Company shall
promptly notify Parent of any litigation brought, or threatened,
against Company and/or members of the board of directors of Company
or any of its officers relating to the Transactions or otherwise
and shall keep Parent informed on a reasonably current basis with
respect to the status thereof. Each Party shall give the other
Party the right to review and comment on all material filings or
responses to be made by such Party in connection with the foregoing
and, no settlement shall be agreed to in connection with the
foregoing without the other Party's prior written consent (such
consent not to be unreasonably withheld, conditioned or
delayed).
Section
5.09 Public
Announcements. Parent and Company will consult with
each other before issuing any press release or otherwise making any
public statements with respect to the Merger or this Agreement and
will not issue any such press release or make any disclosure (to
any customers or employees of such Party, to the public or
otherwise) regarding this Agreement and/or the Transactions without
the prior consent of the other party, which will not be
unreasonably withheld or delayed; provided, however, that, on the advice of legal counsel, Parent may
comply with any SEC requirements under the Securities Act or
Exchange Act which requires any disclosure without the consent of
Company.
51
Section
5.10 Conveyance
Taxes. Parent and
Company will cooperate in the preparation, execution and filing of
all returns, questionnaires, applications or other documents
regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the Transactions that
are required or permitted to be filed on or before the Effective
Time.
Section
5.11 Board
of Directors and Officers of Parent.
(a) Parent
will take all actions necessary, in consultation with Company, to
cause the board of directors of Parent, immediately after the
Effective Time, to consist of seven (7) members, three (3) of which
will be appointed by the Parent and shall include ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as
Chairman, one (1) of which will be designated by the lead investor
in the Company Pre-Closing Financing, and the remaining three (3)
of which shall be appointed by the Company; provided, however, upon
the Company’s achievement of the business milestones set
forth on Schedule
5.11(a) (the
“Milestones”),
the Company shall be permitted to nominate additional members.
Prior to the mailing of the Proxy Statement/Prospectus, Parent
shall provide executed resignation letters (effective as of the
Effective Time) for all members of the board of directors who will
no longer be members of the board of directors of Parent effective
immediately after the Effective Time; provided, however, the parties acknowledge that so long as Parent
remains a public reporting company, the board of directors of
Parent will continue to satisfy applicable securities laws,
including, without limitation, maintaining an independent audit
committee, and the nominations by Company and Parent hereunder will
allow Parent to comply with such applicable Legal
Requirements. Each new member of the board of directors
of Parent that was not a member of the board of directors of Parent
immediately before the Effective Time shall enter into an
indemnification agreement with Parent, on a form to be mutually
agreed between Parent and Company (and absent such agreement, on
Parent’s form indemnification agreement), within fifteen (15)
days of their appointment.
(b) Parent
will take all actions necessary to cause each of the existing
officers of Parent to resign effective as of the Effective Time.
The officers of the Company immediately prior to the Effective Time
shall be the officers of the Parent as of the Effective
Time.
Section
5.12 Parent
Non-Solicitation.
(a) Parent
agrees that, during the Pre-Closing Period, it shall not, and shall
not authorize any of its Representatives to, directly or
indirectly: (i) solicit, initiate or knowingly encourage, induce or
facilitate the communication, making, submission or announcement of
any Acquisition Proposal or Acquisition Inquiry or take any action
that could reasonably be expected to lead to an Acquisition
Proposal or Acquisition Inquiry; (ii) furnish any non-public
information regarding Parent to any Person in connection with or in
response to an Acquisition Proposal or Acquisition Inquiry; (iii)
engage in discussions (other than to inform any Person of the
existence of the provisions in this Section 5.12) or negotiations
with any Person with respect to any Acquisition Proposal or
Acquisition Inquiry; (iv) approve, endorse or recommend any
Acquisition Proposal (subject to Section 5.03); (v) execute or
enter into any letter of intent or any Contract contemplating or
otherwise relating to any Acquisition Transaction (other than a
confidentiality agreement permitted under this Section 5.12); or
(vi) publicly propose to do any of the foregoing; provided,
however, that, notwithstanding anything contained in this Section
5.12 and subject to compliance with this Section 5.12, prior to
obtaining the Parent Stockholder Approval, Parent may furnish
non-public information regarding Parent to, and enter into
discussions or negotiations with, any Person in response to a bona
fide Acquisition Proposal by such Person, which the Parent’s
board of directors determines in good faith, after consultation
with Parent’s outside financial advisors and outside legal
counsel, constitutes, or could be reasonably likely to result in, a
Parent Superior Offer (and is not withdrawn) if: (A) neither Parent
nor any of its Representatives shall have breached this Section
5.12 in any material respect, (B) the Parent’s board of
directors concludes in good faith based on the advice of outside
legal counsel, that the failure to take such action could be
reasonably likely to be inconsistent with the fiduciary duties of
the Parent’s board of directors under the DGCL; (C) Parent
receives from such Person an executed confidentiality agreement
containing provisions, in the aggregate, at least as favorable to
Parent as those contained in the Confidentiality Agreement; and (D)
substantially contemporaneously with furnishing any such nonpublic
information to such Person, Parent furnishes such nonpublic
information to the Company (to the extent such information has not
been previously furnished by Parent to the Company). Without
limiting the generality of the foregoing, Parent acknowledges and
agrees that, in the event any Representative of Parent (whether or
not such Representative is purporting to act on behalf of Parent)
takes any action that, if taken by Parent, would constitute a
breach of this Section 5.12, the taking of such action by such
Representative shall be deemed to constitute a breach of this
Section 5.12 by Parent for purposes of this Agreement.
52
(b) If
Parent or any Representative of Parent receives an Acquisition
Proposal or Acquisition Inquiry at any time during the Pre-Closing
Period, then Parent shall promptly (and in no event later than one
Business Day after Parent becomes aware of such Acquisition
Proposal or Acquisition Inquiry) advise the Company orally and in
writing of such Acquisition Proposal or Acquisition Inquiry
(including the identity of the Person making or submitting such
Acquisition Proposal or Acquisition Inquiry, and the material terms
thereof). Parent shall keep the Company reasonably informed with
respect to the status and material terms of any such Acquisition
Proposal or Acquisition Inquiry and any material modification or
proposed material modification thereto.
(c) Parent
shall immediately cease and cause to be terminated any existing
discussions, negotiations and communications with any Person that
relate to any Acquisition Proposal or Acquisition Inquiry that has
not already been terminated as of the date of this Agreement and
request the destruction or return of any nonpublic information of
Parent provided to such Person.
Section
5.13 Company
Non-Solicitation.
(a) Company
agrees that, during the Pre-Closing Period, it shall not, and shall
not authorize any of its Representatives to, directly or
indirectly: (i) solicit, initiate or knowingly encourage, induce or
facilitate the communication, making, submission or announcement of
any Acquisition Proposal or Acquisition Inquiry or take any action
that could reasonably be expected to lead to an Acquisition
Proposal or Acquisition Inquiry; (ii) furnish any non-public
information regarding Company to any Person in connection with or
in response to an Acquisition Proposal or Acquisition Inquiry;
(iii) engage in discussions (other than to inform any Person of the
existence of the provisions in this Section 5.13) or negotiations
with any Person with respect to any Acquisition Proposal or
Acquisition Inquiry; (iv) approve, endorse or recommend any
Acquisition Proposal; (v) execute or enter into any letter of
intent or any Contract contemplating or otherwise relating to any
Acquisition Transaction (other than a confidentiality agreement
permitted under this Section 5.13); or (vi) publicly propose to do
any of the foregoing; provided,
however, that, notwithstanding
anything contained in this Section 5.13 and subject to compliance
with this Section 5.13, prior to obtaining the Required Company
Stockholder Vote, Company may furnish non-public information
regarding Company to, and enter into discussions or negotiations
with, any Person in response to a bona fide Acquisition Proposal by
such Person, which the Company’s board of directors
determines in good faith, after consultation with Company’s
outside financial advisors and outside legal counsel, constitutes,
or could be reasonably likely to result in, a Company Superior
Offer (and is not withdrawn) if: (A) neither Company nor any of its
Representatives shall have breached this Section 5.13 in any
material respect; (B) the Company’s board of directors
concludes in good faith, based on the advice of outside legal
counsel, that the failure to take such action could be reasonably
likely to be inconsistent with the fiduciary duties of the
Company’s board of directors under the DGCL; (C) Company
receives from such Person an executed confidentiality agreement
containing provisions, in the aggregate, at least as favorable to
Company as those contained in the Confidentiality Agreement; and
(D) substantially contemporaneously with furnishing any such
nonpublic information to such Person, Company furnishes such
nonpublic information to the Parent (to the extent such information
has not been previously furnished by Company to the Parent).
Without limiting the generality of the foregoing, Company
acknowledges and agrees that, in the event any Representative of
Company (whether or not such Representative is purporting to act on
behalf of Company) takes any action that, if taken by Company,
would constitute a breach of this Section 5.13, the taking of such
action by such Representative shall be deemed to constitute a
breach of this Section 5.13 by Company for purposes of this
Agreement.
53
(b) If
Company or any Representative of Company receives an Acquisition
Proposal or Acquisition Inquiry at any time during the Pre-Closing
Period, then Company shall promptly (and in no event later than one
Business Day after Company becomes aware of such Acquisition
Proposal or Acquisition Inquiry) advise the Parent orally and in
writing of such Acquisition Proposal or Acquisition Inquiry
(including the identity of the Person making or submitting such
Acquisition Proposal or Acquisition Inquiry, and the material terms
thereof). Company shall keep the Parent reasonably informed with
respect to the status and material terms of any such Acquisition
Proposal or Acquisition Inquiry and any material modification or
proposed material modification thereto.
(c) Company
shall immediately cease and cause to be terminated any existing
discussions, negotiations and communications with any Person that
relate to any Acquisition Proposal or Acquisition Inquiry that has
not already been terminated as of the date of this Agreement and
request the destruction or return of any nonpublic information of
Company provided to such Person.
Section
5.14 Section
16 Matters. Subject
to the following sentence, prior to the Effective Time, Parent and
Company will take all such steps as may be required (to the extent
permitted under applicable Legal Requirements and no-action letters
issued by the SEC) to cause any acquisition of Parent Common Stock
(including derivative securities with respect to Parent Common
Stock) by each individual who is or will be subject to the
reporting requirements of Section 16(a) of the Exchange Act with
respect to Parent, to be exempt under Rule 16b-3 under the Exchange
Act. At least thirty (30) days prior to the Closing
Date, Company will furnish the following information to Parent for
each individual who, immediately after the Effective Time, will
become subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to Parent: (a) the Company
Capital Stock held by such individual and expected to be exchanged
for shares of Parent Common Stock pursuant to the Merger and (b)
the number of other derivative securities (if any) with respect to
Company Capital Stock held by such individual and expected to be
converted into shares of Parent Common Stock or derivative
securities with respect to Parent Common Stock in connection with
the Merger.
Section
5.15 Parent
Charter Amendment. Immediately prior to the Effective
Time, Parent will file the Parent Charter Amendment with the
Secretary of State of the State of Delaware to become effective
immediately prior to the Effective Time.
Section
5.16 Parent
Warrants. If
required by any applicable Parent Warrant, promptly after the date
of this Agreement, and in any event within twenty (20) Business
Days before the Effective Time, Parent shall deliver notice to the
holders of such Parent Warrants with respect to the Transactions
and the rights of the holders thereof in connection therewith,
subject to the review and approval of Company (not to be
unreasonably withheld).
Section
5.17 Allocation
Certificate. Company
will prepare and deliver to Parent at least two (2) Business Days
prior to the Closing Date a certificate signed by the Chief
Financial Officer and Secretary of Company in a form reasonably
acceptable to Parent which sets forth (i) a true and complete list
of the Company Stockholders immediately prior to the Effective Time
and the number and type of shares of Company Capital Stock owned by
each such Company Stockholder and (ii) the allocation of the Merger
Consideration among the Company Stockholder pursuant to the Merger
(the “Allocation
Certificate”).
Section
5.18 Employee
Benefit Matters. For purposes
of vesting, eligibility to participate, and level of benefits under
the benefit plans, programs, contracts or arrangements of Parent or
any of its Subsidiaries (including, following the Closing, the
Company and its Subsidiaries) providing benefits to any Continuing
Employee after the Closing (the “Post-Closing
Plans”), each employee
who continues to be employed by Parent, the Company or any of their
respective Subsidiaries immediately following the Closing
(“Continuing
Employees”) shall be
credited with his or her years of service with Parent, Company or
any of their respective Subsidiaries and their respective
predecessors; provided, however, that the foregoing shall not apply to the extent
that its application would result in a duplication of benefits. In
addition, and without limiting the generality of the foregoing, for
purposes of each Post-Closing Plan providing medical, dental,
pharmaceutical and/or vision benefits to a Continuing Employee,
Parent shall cause all pre-existing condition exclusions and
actively-at-work requirements of such Post-Closing Plan to be
waived for such Continuing Employee and his or her covered
dependents to the extent and unless such conditions would have been
waived or satisfied under the employee benefit plan whose coverage
is being replaced under the Post-Closing Plan, and Parent shall use
commercially reasonable efforts to cause any eligible expenses
incurred by a Continuing Employee and his or her covered dependents
during the portion of such plan year in which coverage is replaced
with coverage under a Post-Closing Plan to be taken into account
under such Post-Closing Plan with respect to the plan year in which
participation in such Post-Closing Plan begins for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such Continuing Employee and his or her
covered dependents for such plan year as if such amounts had been
paid in accordance with such Post-Closing Plan.
54
Section
5.19 Company
and Parent Disclosure Schedules. Each of Company and Parent may in its
discretion, for informational purposes only, supplement the
information set forth on the Company Disclosure Schedule or Parent
Disclosure Schedule, as applicable, with respect to any matter now
existing or hereafter arising that, if existing or occurring at or
prior to the date of this Agreement, would have been required to be
set forth or described in the Company Disclosure Schedule or Parent
Disclosure Schedule, as applicable, on the date of this Agreement
or that is necessary to correct any information in the Company
Disclosure Schedule or Parent Disclosure Schedule, as applicable,
which has been rendered inaccurate thereby promptly following
discovery thereof. Any such amended or supplemented
disclosure shall not be deemed to modify the representations and
warranties of Company, Parent or Merger Sub for purposes of Section
6.02(a) and 6.03(a) of this Agreement.
Section
5.20 Tax
Matters. Parent, Merger Sub and
Company shall treat, and shall not take any Tax reporting position
inconsistent with the treatment of, the Merger as a reorganization
within the meaning of Section 368(a) of the Code for U.S. federal,
state and other relevant Tax purposes, unless otherwise required
pursuant to a “determination” within the meaning of
Section 1313(a) of the Code.
Section
5.21 Reverse
Split. If
applicable, Parent shall submit to the holders of Parent Common
Stock at the Parent Stockholders’ Meeting a proposal to
approve and adopt the Parent Charter Amendment authorizing the
board of directors of Parent to effect a reverse stock split of all
outstanding shares of Parent Common Stock at a reverse stock split
ratio as mutually agreed to by Parent and Company (the
“Reverse
Split”) and within the
range approved by the holders of Parent Common Stock. If
applicable, Parent shall cause the Reverse Split to be implemented
and take effect immediately prior to the Effective Time. The
Reverse Split shall increase the per share price of Parent’s
Common Stock to a minimum of $5.00 per share.
Section
5.22 Lock-up
Agreements. During
the Pre-Closing Period, Company shall deliver a Company Lock-up
Agreement to each of the Company Stockholders that own greater than
five percent (5%) of Company Common Stock or securities
convertible, exercisable or exchangeable into Company Common Stock
and shall use its commercially reasonable efforts to cause these
Company Stockholders to enter into such Company Lock-up Agreement.
Notwithstanding the foregoing or any other provision of this
Agreement to contrary, the Company shall not be required to deliver
Lock-Up Agreements from any Company Stockholder or other Company
Lock-Up Signatory to the extent that the delivery of such Lock-Up
Agreements would, in the Company’s reasonable opinion after
consultation with its legal counsel, be detrimental to the
continued listing of Parent on the Nasdaq as of and subsequent to
the Effective Time.
Section
5.23 Listing. Parent
shall use its commercially reasonable efforts, (a) to the
extent required by the rules and regulations of Nasdaq, to prepare
and submit to Nasdaq a notification form for the listing of the
shares of Parent Common Stock to be issued in connection with the
Transactions, and to cause such shares to be approved for listing
(subject to official notice of issuance) and (b) to the extent
required by Nasdaq Marketplace Rule 5110, to file an initial
listing application for the Parent Common Stock on Nasdaq (the
“Nasdaq
Listing Application”) and
to cause such Nasdaq Listing Application to be conditionally
approved prior to the Effective Time. The Parties will use
commercially reasonable efforts to coordinate with respect to
compliance with Nasdaq rules and regulations. Parent agrees to pay
all Nasdaq fees associated with the Nasdaq Listing Application. The
Company will cooperate with Parent as reasonably requested by
Parent with respect to the Nasdaq Listing Application and promptly
furnish to Parent all information concerning the Company and its
stockholders that may be required or reasonably requested in
connection with any action contemplated by this
Section 5.23.
Section
5.24 Preferred
Stock. The Company shall
take all action required to effect the conversion of the Company
Preferred Stock into Company Common Stock pursuant to the Company
Stockholder Written Consent prior to the Closing
Date.
Section
5.25 [Reserved].
Section
5.26 Parent
Legacy Business Disposition.
Concurrently with the execution of this Agreement, the Parent shall
have entered into the asset purchase agreement attached hereto
as Exhibit
H (the
“Parent
Asset Purchase Agreement”) for the sale of substantially all of
Parent’s assets related to the business of Parent conducted
as of and prior to the date of this Agreement. In addition, such
Parent Asset Purchase Agreement shall provide for the assumption of
the liabilities set forth in Part 5.26 of the Parent Disclosure
Schedule. On the Closing Date, the Parent will consummate the
transactions contemplated by the Parent Asset Purchase Agreement
(the “Parent
Legacy Business Disposition”). For clarity, the obligation of the
Parent to consummate the Parent Legacy Business Disposition is
subject to the substantially simultaneous consummation of the other
Parent Transactions. The Parent shall not amend, modify or waive
any provisions of the Parent Asset Purchase Agreement without the
prior written consent of the Company, which consent shall not be
unreasonably withheld, delayed or conditioned. Prior to the
Closing, Parent shall (a) seek and obtain written agreements in
form and substance reasonably acceptable to Company from all
parties to Contracts that are transferred and assigned in
connection with the Parent Legacy Business Disposition releasing
Parent from any and all liabilities and obligations under such
Contracts, (b) obtain an independent third party valuation from a
credible firm of the business and assets transferred pursuant to
the Parent Asset Purchase Agreement (the “Parent
Legacy Business Valuation”), (c) provide evidence reasonably
satisfactory to Company that no material Tax will arise to Parent
as a result of the Parent Legacy Business Disposition and (d)
deliver to Company a schedule, which schedule shall be reasonably
acceptable to Company, setting forth the list of Contracts and
other assets and all related liabilities and obligations to be
transferred as part of the Parent Legacy Business
Disposition.
55
Section
5.27 Further
Assurances. Prior to the
Effective Time, the Parties will exercise their commercially
reasonable efforts to cause to be satisfied the conditions set
forth under Article VI. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of the
Company or Merger Sub, any deeds, bills of sale, assignments, or
assurances and to take and do, in the name and on behalf of the
Company or Merger Sub, any other actions and things to vest,
perfect, or confirm of record or otherwise in the Surviving
Corporation any and all right, title, and interest in, to and under
any of the rights, properties, or assets of the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.
Section
5.28 Stock
Incentive Plan. At the
Effective Time, Parent will adopt a stock incentive plan pursuant
to which 12.5% of the issued and outstanding shares of Parent
Common Stock post-Merger, on a fully diluted basis, shall be
reserved for issuance to employees, directors, consultants, and
other service providers. In addition, Parent shall grant restricted
stock units or equivalent grants in an amount equal to 5% of the
outstanding shares of Parent Common Stock post-Merger to ▇▇▇
▇▇▇▇▇▇, which grants shall vest over a period of eighteen (18)
months, with vesting contingent upon the achievement of the
Milestones.
Section
5.29 Company
Options. At the Effective Time, each Company Option that is
outstanding and unexercised immediately prior to the Effective Time
under the Company Option Plan, whether or not vested, will be
converted into and become an option to purchase Parent Common
Stock, and Parent shall assume the Company Option Plan. All rights
with respect to Company Common Stock under Company Options assumed
by Parent will thereupon be converted into rights with respect to
Parent Common Stock. Accordingly, from and after the Effective
Time: (i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock; (ii) the number of shares
of Parent Common Stock subject to each Company Option assumed by
Parent will be determined by multiplying (x) the number of shares
of Company Common Stock that were subject to such Company Option,
as in effect immediately prior to the Effective Time by (y) the
Exchange Ratio and rounding the resulting number down to the
nearest whole number of shares of Parent Common Stock; (iii) the
per share exercise price for the Parent Common Stock issuable upon
exercise of each Company Option assumed by Parent will be
determined by dividing (x) the per share exercise price of Company
Common Stock subject to such Company Option, as in effect
immediately prior to the Effective Time, by (y) the Exchange Ratio
and rounding the resulting exercise price up to the nearest whole
cent; and (iv) any restriction on the exercise of any Company
Option assumed by Parent will continue in full force and effect and
the term, exercisability, vesting schedule, status as an
“incentive stock option” under Section 422 of the Code,
if applicable, and other provisions of such Company Option will
otherwise remain unchanged; provided, however, that: (1) to the
extent provided under the terms of a Company Option, such Company
Option assumed by Parent in accordance with this Section 5.29 (a)
will, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, division or
subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or
other similar transaction with respect to Parent Common Stock
subsequent to the Effective Time; and (2) Parent’s board of
directors or a committee thereof will succeed to the authority and
responsibility of Company’s board of directors or any
committee thereof with respect to each Company Option assumed by
Parent. Notwithstanding anything to the contrary in this Section
5.29(a), the conversion of each Company Option (regardless of
whether such option qualifies as an “incentive stock
option” within the meaning of Section 422 of the Code) into
an option to purchase shares of Parent Common Stock will be made in
a manner consistent with Treasury Regulation Section 1.424-1, such
that the conversion of a Company Option will not constitute a
“modification” of such Company Option for purposes of
Section 409A or Section 424 of the Code. It is the intention of the
parties that each Company Option so assumed by Parent shall qualify
following the Effective Time as an incentive stock option as
defined in Section 422 of the Code to the extent permitted under
Section 422 of the Code and to the extent such Company Option
qualified as an incentive stock option prior to the Effective
Time.
56
Section
5.30 Company
Warrants. At the Effective
Time, each Company Warrant that is outstanding and unexercised
immediately prior to the Effective Time, will be converted into and
become a warrant to purchase Parent Common Stock. All rights with
respect to Company Common Stock under Company Warrants assumed by
Parent will thereupon be converted into rights with respect to
Parent Common Stock. Accordingly, from and after the Effective
Time: (i) each Company Warrant assumed by Parent may be exercised
solely for shares of Parent Common Stock; (ii) the number of shares
of Parent Common Stock subject to each Company Warrant assumed by
Parent will be determined by multiplying (x) the number of shares
of Company Common Stock that were subject to such Company Warrant,
as in effect immediately prior to the Effective Time by (y) the
Exchange Ratio and rounding the resulting number down to the
nearest whole number of shares of Parent Common Stock; (iii) the
per share exercise price for the Parent Common Stock issuable upon
exercise of each Company Warrant assumed by Parent will be
determined by dividing (x) the per share exercise price of Company
Common Stock subject to such Company Warrant, as in effect
immediately prior to the Effective Time, by (y) the Exchange Ratio
and rounding the resulting exercise price up to the nearest whole
cent; and (iv) any restriction on the exercise of any Company
Warrant assumed by Parent will continue in full force and effect
and the term, exercisability and other provisions of such Company
Warrant will otherwise remain unchanged; provided, however, that to
the extent provided under the terms of a Company Warrant, such
Company Warrant assumed by Parent in accordance with this Section
5.30(a) will, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, division or
subdivision of shares, stock dividend, reverse stock split,
consolidation of shares, reclassification, recapitalization or
other similar transaction with respect to Parent Common Stock
subsequent to the Effective Time.
ARTICLE
VI.
CONDITIONS TO THE
MERGER
Section
6.01 Conditions
to Obligation of Each Party to Effect the Merger. The respective obligations of each
party to effect the Merger will be subject to the satisfaction at
or prior to the Effective Time of the following
conditions:
(a) No
Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order (whether
temporary, preliminary or permanent) issued by any court of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger will be in effect, nor
will any proceeding brought by any administrative agency or
commission or other Governmental Body or instrumentality, domestic
or foreign, seeking any of the foregoing be pending; and there will
not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger,
which makes the consummation of the Merger
illegal.
57
(b) Governmental
Approvals. Any
waiting period applicable to the consummation of the Merger under
the HSR Act will have expired or been
terminated.
(c) Stockholder
Approvals. This
Agreement will have been duly adopted and the Merger, the
conversion of the Company Preferred Stock into Company Common Stock
and the other transactions contemplated by this Agreement will have
been duly approved by the Required Company Stockholder Vote, and
the Parent Stockholder Approval Matters will have been duly adopted
and approved by the Parent Stockholder
Approval.
(d) Stock
Exchange Listing. The shares of Parent Common Stock to
be issued in the Merger shall have been approved for listing on the
Nasdaq, subject to official notice of issuance.
(e) S-4
Registration Statement. The S-4
Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop
order.
(f) Company
Pre-Closing Financing. Company
shall have consummated the Company Pre-Closing Financing on or
prior to the Effective Date on the terms and conditions set forth
in the Subscription Agreement.
Section
6.02 Additional
Conditions to Obligations of Parent. The obligations of Parent to effect
the Merger are also subject to the following
conditions:
(a) Representations
and Warranties. The
representations and warranties of Company (i) that constitute the
Company Fundamental Representations shall have been true and
correct in all respects as of the date of this Agreement and shall
be true and correct in all respects on and as of the Closing Date
with the same force and effect as if made on and as of such date
(except to the extent such representations and warranties are
specifically made as of a particular date, in which case such
representations and warranties shall be true and correct as of such
date) and (ii) contained in this Agreement (other than the Company
Fundamental Representations) will be true and correct in all
respects on and as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date (except for those
representations and warranties which address matters only as of a
particular date, in which case such representations and warranties
shall be true and correct as of such date), except for those
inaccuracies that, individually or in the aggregate, do not
constitute a Company Material Adverse Effect; provided, however, for purposes of this clause (ii), all
“Company Material Adverse Effect” and other materiality
qualifications limiting the scope of the representations and
warranties of Company contained in this Agreement will be
disregarded. Parent will have received a certificate to
such effect signed by an officer of
Company.
(b) Agreements
and Covenants. Company will have performed or
complied with in all material respects its agreements and covenants
required by this Agreement to be performed or complied with by it
on or prior to the Effective Time. Parent will have
received a certificate to such effect signed by an officer of
Company.
58
(c) Officer’s
Certificate. Parent shall have
received a certificate executed by the Chief Executive Officer or
Chief Financial Officer of Company certifying (i) that the
conditions set forth in Sections 6.02(a), (b) and (d) have
been duly satisfied and (ii) that the information set forth in
the Allocation Certificate delivered by Company in accordance with
Section 5.19 is true and accurate in all respects as of the
Closing Date.
(d) Company
Material Adverse Effect. Since the date of this Agreement,
there will have been no change, occurrence or circumstance in the
business, results of operations or financial condition of Company
or any Subsidiary of Company having, individually or in the
aggregate, a Company Material Adverse Effect.
(e) FIRPTA
Certificate. Parent will have
received from Company applicable FIRPTA documentation, consisting
of (i) a notice to the IRS, in accordance with the requirements of
Section 1.897-2(h)(2) of the Treasury Regulations, dated as of the
Closing Date and executed by Company, together with written
authorization for Parent to deliver such notice form to the IRS on
behalf of Company after the Closing, and (ii) a FIRPTA Notification
Letter, in substantially the form of Exhibit
I attached hereto, dated as of
the Closing Date and executed by Company.
(f) Allocation
Certificate. The
Chief Financial Officer of Company will have executed and delivered
to Parent the Allocation Certificate.
(g) Lock-up
Agreements. Subject to the last
sentence of Section 5.22, the Lock-up Agreements executed by each
of the Company Lock-up Signatories shall be in full force and
effect.
(h) Preferred
Stock Conversion. The Company
Preferred Stock shall have been converted into Company Common
Stock.
(i) Dissenting
Shares. Less than 5% of the
shares of Company Capital Stock (on an as converted to Company
Common Stock basis) shall have exercised statutory appraisal rights
pursuant to Section 262 of the DGCL.
(j) Company
Closing Cash. Company shall
have unencumbered, unrestricted cash on hand on the Closing, after
subtracting all outstanding liabilities computed in accordance with
GAAP, including without limitation, any outstanding indebtedness,
accounts payable, accrued expenses, Transaction Expenses,
severance, change of control or similar payments to employees, of
at least $2,000,000.
(k) Payoff
Letters. Parent will have
received payoff letters in such forms as Parent shall reasonably
request with respect to the Indebtedness of the Company set forth
in Part 6.02 of the Company Disclosure Schedule, which Indebtedness
is accurately and completely described in Part 2.05(d) of the
Company Disclosure Schedule (each, a “Payoff
Letter” and collectively,
the “Payoff
Letters”), which Payoff
Letter shall in each case have been executed and delivered by the
obligee with respect to such Indebtedness, and shall have received
evidence satisfactory to it that the payments required to
extinguish the related Indebtedness have been made or will be made
in connection with the Closing.
59
Section 6.03 Additional
Conditions to Obligations of Company. The obligation of Company to effect
the Merger is also subject to the following
conditions:
(a) Representations
and Warranties. The
representations and warranties of Parent and Merger Sub (i) that
constitute Parent Fundamental Representations will be true and
correct in all respects on and as of the Closing Date, with the
same force and effect as if made on and as of the Closing Date,
except for those representations and warranties which address
matters only as of a particular date (which will remain true and
correct in all material respects as of such date) and (ii)
contained in this Agreement (other than the Parent Fundamental
Representatives) will be true and correct in all respects on and as
of the Closing Date, with the same force and effect as if made on
and as of the Closing Date (except for those representations and
warranties which address matters only as of a particular date, in
which case such representations and warranties shall be true and
correct as of such date), except for those inaccuracies that,
individually or in the aggregate, do not constitute and would not
reasonably be expected to constitute a Parent Material Adverse
Effect; provided, however, for purposes of this clause (ii), all
“Parent Material Adverse Effect” and other materiality
qualifications limiting the scope of the representations and
warranties of Parent and Merger Sub contained in this Agreement
will be disregarded. Company will have received a
certificate to such effect signed by an officer of each of Parent
and Merger Sub.
(b) Agreements
and Covenants. Parent and Merger Sub will have
performed or complied with in all material respects its agreements
and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective
Time. Company will have received a certificate to such
effect signed by an officer of Parent.
(c) Parent
Material Adverse Effect. Since the date of this Agreement,
there will have been no change, occurrence or circumstance in the
business, results of operations or financial condition of Parent or
any Subsidiary of Parent having, individually or in the aggregate,
a Parent Material Adverse Effect, that is
continuing.
(d) Parent
Board of Directors and Officer Resignation
Letters. Company
will have received a duly executed copy of a resignation letter
from each of the resigning members of the board of directors of
Parent and each officer of Parent as contemplated by Section 5.11
and each of the Parent Subsidiaries, as applicable, pursuant to
which each such person will resign as a member of the board of
directors of Parent immediately following the Effective
Time.
(e) Lock-up
Agreements. The Lock-up
Agreements executed by each of the Parent Lock-up Signatories shall
be in full force and effect.
60
(f) Parent
Legacy Business Disposition.
All conditions to the consummation of the Parent Legacy Business
Disposition shall have been satisfied, and the Parent shall have
consummated the Parent Legacy Business Disposition pursuant to the
Parent Asset Purchase Agreement and Section 5.26 substantially
simultaneously with the Closing of this
Agreement.
(g) Parent
Cash. Parent shall have
unrestricted, unencumbered cash on hand on the Closing, after
subtracting all outstanding liabilities computed in accordance with
GAAP, including without limitation, any outstanding indebtedness,
accounts payable, accrued expenses, costs associated with
purchasing directors and officers tail policies pursuant to Section
5.06(c), Transaction Expenses, severance, change of control or
similar payments to employees, of at least
$2,500,000.
(h) Employment
Agreements. Parent shall have
executed and delivered to ▇▇▇▇▇▇ ▇▇▇▇▇▇ the employment agreement in
the form attached hereto as Exhibit
J-1 and such employment
agreement shall be in full force and effect as of the Effective
Time.
ARTICLE
VII.
TERMINATION
Section
7.01 Termination. This
Agreement may be terminated and the Merger may be abandoned, at any
time prior to the Effective Time, notwithstanding approval thereof
by the stockholders of Company and Parent:
(a) by
mutual written consent of Company and Parent duly authorized by
each of their respective boards of directors;
(b) by
either Parent or Company if the Merger has not been consummated by
the End Date (provided that the right to terminate this Agreement
under this Section 7.01(b) will not be available to any party whose
failure to fulfill any obligation under this Agreement has been a
primary cause of the failure of the Merger to occur on or before
such date); provided, however, in the event that the SEC has not concluded its
review of the S-4 Registration Statement by the date which is sixty
(60) days prior to the End Date, then either of Parent or the
Company shall be entitled to extend the End Date for an additional
sixty (60) days by providing written notice to the other
party;
(c) by
either Parent or Company if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission
will have issued a non-appealable final order, decree or ruling or
taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by
Parent if the Required Company Stockholder Vote shall not have been
obtained by the Company Vote Deadline; provided, however, that once the Required Company Stockholder Vote
has been obtained, Parent may not terminate this Agreement pursuant
to this Section 7.01(d); provided, further, that the right to terminate this Agreement under
this Section 7.01(d) will not be available if Parent’s
failure to fulfill any obligation under this Agreement has been a
primary cause of the failure of the Required Company Stockholder
Vote to be obtained at or before such time;
61
(e) by
either Parent or Company, if the Parent Stockholder’s Meeting
shall have been held (subject to any adjournment or postponement
permitted by Section 5.03(a)) and the Parent Stockholder Approval
contemplated by this Agreement will not have been obtained thereat
(provided that the right to terminate this Agreement under this
Section 7.01(e) will not be available to any party whose failure to
fulfill any obligation under this Agreement has been a primary
cause of the failure of the Parent Stockholder Approval to be
obtained thereat);
(f) by
Parent upon breach of any of the representations, warranties,
covenants or agreements on the part of Company set forth in this
Agreement, or if any representation or warranty of Company will
have become inaccurate, in either case such that the conditions set
forth in Section 6.02(a) or Section 6.02(b) would not be satisfied
as of the time of such breach or as of the time such representation
or warranty will have become inaccurate; provided, however, if such breach or inaccuracy is curable by
Company, then this Agreement will not terminate pursuant to this
Section 7.01(f) as a result of such particular breach or inaccuracy
unless the breach or inaccuracy remains uncured as of the tenth
(10th) Business Day following the date of written notice given by
Parent to Company of such breach or inaccuracy and its intention to
terminate the agreement pursuant to this Section 7.01(f);
provided, further that no termination may be made pursuant to this
Section 7.01(f) solely as a result of the failure of Company to
obtain the Required Company Stockholder Vote (in which case such
termination must be made pursuant to Section
7.01(d));
(g) by
Company upon breach of any of the representations, warranties,
covenants or agreements on the part of Parent or Merger Sub set
forth in this Agreement, or if any representation or warranty of
Parent or Merger Sub will have become inaccurate, in either case
such that the conditions set forth in Section 6.03(a) or Section
6.03(b) would not be satisfied as of the time of such breach or as
of the time such representation or warranty will have become
inaccurate; provided, however, if such breach or inaccuracy is curable by
Parent or Merger Sub, then this Agreement will not terminate
pursuant to this Section 7.01(g) as a result of such particular
breach or inaccuracy unless the breach or inaccuracy remains
uncured as of the tenth (10th) Business Day following the date of
written notice given by Company to Parent of such breach or
inaccuracy and its intention to terminate the agreement pursuant to
this Section 7.01(g); provided, further, that no termination may be made pursuant to this
Section 7.01(g) solely as a result of the failure of Parent to
obtain the Parent Stockholder Approval (in which case such
termination must be made pursuant to Section
7.01(e));
(h) by
Parent if the Required Company Stockholder Vote shall not have been
obtained by the Company Vote Deadline;
(i) by
Company if the board of directors of Parent has effected a Parent
Change in Recommendation; and
62
(j) by
Parent in connection with Parent entering into a definitive
agreement to effect a Parent Superior Offer.
Section
7.02 Effect
of Termination. In
the event of the termination of this Agreement pursuant to Section
7.01, then this Agreement will forthwith become void and there will
be no liability on the part of any party hereto or any of its
Affiliates, directors, officers or stockholders except (i) as set
forth in Sections 7.03, and Article VIII hereof and (ii) for any
liability for any willful breach of any representation, warranty,
covenant or obligation contained in this Agreement (for purposes of
this Section 7.02, a “willful breach” is an act or
omission with the actual knowledge that such act or omission would
cause a breach of this Agreement). No termination of
this Agreement will affect the obligations of the parties contained
in the Confidentiality Agreement, all of which obligations will, in
addition to this Article VII and Article VIII, survive termination
of this Agreement in accordance with its terms.
Section
7.03 Expenses;
Termination Fees.
(a) Except
as set forth in this Section 7.03, Article VIII or specifically set
forth elsewhere in this Agreement, all Transaction Costs shall be
paid by the Party incurring such expenses, whether or not the
Merger is consummated.
(b) If
this Agreement is terminated (i) by Parent pursuant to Section
7.01(d) or (ii) by Parent pursuant to Section 7.01(h), then Company
shall pay to Parent an amount equal to $1,000,000 (the
“Termination
Fee”), plus any amount
payable to Company pursuant to Section 7.03(e).
(c) If
this Agreement is terminated (i) by Company pursuant to Section
7.01(i) or (ii) by Parent pursuant to Section 7.01(j), then Parent
shall pay to Company the Termination Fee, plus any amount payable
to Parent pursuant to Section 7.03(e).
(d) If
(i) this Agreement is terminated by Parent or the Company pursuant
to Section 7.1(e), (ii) at any time after the date of this
Agreement and prior to the Parent Stockholders’ Meeting an
Acquisition Proposal with respect to Parent shall have been
publicly announced, disclosed or otherwise communicated to the
Parent board of directors (and shall not have been withdrawn) and
(iii) within twelve (12) months after the date of such termination,
Parent enters into a definitive agreement with respect to a
Subsequent Transaction or consummates a Subsequent Transaction,
then Parent shall pay to the Company, upon such entry into a
definitive agreement and/or consummation of a Subsequent
Transaction, the Termination Fee plus any amount payable to the
Company pursuant to Section 7.03(e).
(e) If
either Party fails to pay when due any amount payable by it under
this Section 7.03, then (i) such Party shall reimburse the other
Party for reasonable costs and expenses (including reasonable fees
and disbursements of counsel) incurred in connection with the
collection of such overdue amount and the enforcement by the other
Party of its rights under this Section 7.03 and (ii) such Party
shall pay to the other Party interest on such overdue amount (for
the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such overdue
amount is actually paid to the other Party in full) at a rate per
annum equal to the “prime rate” (as announced by Bank
of America or any successor thereto) in effect on the date such
overdue amount was originally required to be paid plus three
percent.
63
ARTICLE
VIII.
MISCELLANEOUS
Section 8.01 Notices. Any
notice or other communication required or permitted to be delivered
to any party under this Agreement will be in writing and will be
deemed properly delivered, given and received: (a) if
delivered by hand, when delivered; (b) if sent on a Business Day by
email before 11:59 p.m. (recipient’s time), when transmitted;
(c) if sent by email on a day other than a Business Day, or if sent
by email after 11:59 p.m. (recipient’s time), on the Business
Day following the date when transmitted; (d) if sent by registered,
certified or first class mail, the third Business Day after being
sent; and (e) if sent by overnight delivery via a national courier
service, one Business Day after being sent, in each case to the
address set forth beneath the name of such party below (or to such
other address as such party shall have specified in a written
notice given to the other parties hereto):
(a) If
to Company:
Ayro,
Inc.
▇▇▇
▇. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇
E-Mail:
▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇▇ and ▇▇▇▇.▇▇▇▇▇@▇▇▇▇.▇▇▇
With
a copy to:
▇▇▇▇▇▇
and ▇▇▇▇▇, LLP
▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
E-Mail: ▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(b) If
to Parent and Merger Sub:
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Chairman of the Board of Directors
Email:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With
a copy to:
Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Email:
▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
64
Section
8.02 Amendment. This
Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective boards of directors at any time
prior to the Effective Time; provided, however, that, after approval of the Merger by the
Required Company Stockholder Vote or the Parent Stockholder
Approval, as applicable, no amendment may be made which by Legal
Requirements requires further approval by such stockholders without
such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties
hereto.
Section
8.03 Headings. The
headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation
of this Agreement.
Section
8.04 Severability. If
any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in
any manner adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith
to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that Transactions are fulfilled to the extent
possible.
Section
8.05 Entire
Agreement. This
Agreement constitutes the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality
Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, is not intended to confer upon
any other person any rights or remedies
hereunder.
Section
8.06 Successors
and Assigns. This
Agreement will be binding upon: (a) Company and its successors
and assigns (if any); (b) Parent and its successors and assigns (if
any); and (c) Merger Sub and its successors and assigns (if any).
No party may assign this Agreement or any of its rights, interests
or obligations hereunder without the prior written approval of the
other parties hereto.
Section
8.07 Parties
In Interest. This
Agreement will be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, expressed or
implied, is intended to or will confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 5.06 (which is
intended to be for the benefit of the parties indemnified thereby
and may be enforced by such parties).
65
Section
8.08 Waiver. No
failure or delay on the part of any party hereto in the exercise of
any right hereunder will impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor will any single or partial
exercise of any such right preclude other or further exercise
thereof or of any other right. At any time prior to the
Effective Time, any party hereto may, with respect to any other
party hereto, (a) extend the time for the performance of any of the
obligations or other acts, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such
extension or waiver will be valid if set forth in an instrument in
writing signed by the party or parties to be
bound.
Section
8.09 Remedies Cumulative; Specific
Performance. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available. Each party to
this Agreement agrees that, in the event of any breach or
threatened breach by the other party of any covenant, obligation or
other provision set forth in this Agreement: (a) such party
will be entitled, without any proof of actual damages (and in
addition to any other remedy that may be available to it)
to: (i) a decree or order of specific performance or mandamus
to enforce the observance and performance of such covenant,
obligation or other provision; and (ii) an injunction restraining
such breach or threatened breach; and (b) such party will not be
required to provide any bond or other security in connection with
any such decree, order or injunction or in connection with any
related action or Legal Proceeding.
Section
8.10 Governing
Law; Venue; Waiver of Jury Trial.
(a) This
Agreement will be governed by, and construed in accordance with,
the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of
laws thereof.
(b) Any
action, suit or other Legal Proceeding relating to this Agreement
or the enforcement of any provision of this Agreement will be
brought or otherwise commenced exclusively in the state and federal
courts sitting in the City of New York, Borough of
Manhattan. Each party to this Agreement: (i)
expressly and irrevocably consents and submits to the exclusive
jurisdiction of such court (and each appellate court therefrom) in
connection with any such action, suit or Legal Proceeding; (ii)
agrees that such court will be deemed to be a convenient forum and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such action, suit or Legal Proceeding commenced
in any such court, any claim that such party is not subject
personally to the jurisdiction of such court, that such action,
suit or Legal Proceeding has been brought in an inconvenient forum,
that the venue of such action, suit or other Legal Proceeding is
improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS.
66
Section
8.11 Counterparts
and Exchanges by Electronic Transmission or
Facsimile. This
Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts and by facsimile
or electronic (i.e., PDF) transmission, each of which when executed
will be deemed to be an original but all of which taken together
will constitute one and the same agreement.
Section
8.12 Attorney
Fees. In any action
at law or suit in equity to enforce this Agreement or the rights of
any of the parties hereunder, the prevailing party in such action
or suit will be entitled to receive a reasonable sum for its
attorneys’ fees and all other reasonable costs and expenses
incurred in such action or suit.
Section
8.13 Cooperation. In
further of, and not in limitation of, any other provision of this
Agreement, each party hereto agrees to cooperate fully with the
other parties hereto and to execute and deliver such further
documents, certificates, agreements and instruments and to take
such other actions as may be reasonably requested by the other
parties hereto to evidence or reflect the Transactions and to carry
out the intent and purposes of this Agreement.
Section
8.14 Non-Survival
of Representations, Warranties.
The representations and warranties of the Company, Parent and
Merger Sub contained in this Agreement or any certificate or
instrument delivered pursuant to this Agreement shall terminate at
the Effective Time, and only the covenants that by their terms
survive the Effective Time and this Article VIII shall survive the
Effective Time.
Section
8.15 Construction.
(a) References
to “cash,” “dollars” or “$” are
to U.S. dollars.
(b) For
purposes of this Agreement, whenever the context requires: the
singular number will include the plural, and vice versa; the
masculine gender will include the feminine and neuter genders; the
feminine gender will include the masculine and neuter genders; and
the neuter gender will include masculine and feminine
genders.
(c) The
parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party will
not be applied in the construction or interpretation of this
Agreement.
(d) As
used in this Agreement, the words “include” and
“including,” and variations thereof, will not be deemed
to be terms of limitation, but rather will be deemed to be followed
by the words “without limitation.”
(e) Except
as otherwise indicated, all references in this Agreement to
“Sections,” “Exhibits” and
“Schedules” are intended to refer to Sections of this
Agreement and Exhibits or Schedules to this Agreement.
(f) Any
reference to legislation or to any provision of any legislation
shall include any modification, amendment, re-enactment thereof,
any legislative provision substituted therefore and all rules,
regulations, and statutory instruments issued or related to such
legislations.
67
(g) The
term “knowledge
of Company”, and all
variations thereof, will mean the actual knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇, and the knowledge such persons would reasonably
be expected to have after making reasonable inquiry of their direct
reports who are responsible for the subject matter of the
particular representation or warranty. The term
“knowledge
of Parent”, and all
variations thereof, will mean the actual knowledge of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and the knowledge
such persons would reasonably be expected to have after making
reasonable inquiry of their direct reports who are responsible for
the subject matter of the particular representation or
warranty.
(h) Whenever
the last day for the exercise of any privilege or the discharge of
any duty hereunder shall fall upon a Saturday, Sunday, or any date
on which banks in New York, New York are authorized or obligated by
Legal Requirements to be closed, the Party having such privilege or
duty may exercise such privilege or discharge such duty on the next
succeeding day which is a regular Business Day.
[Signature
Page Follows]
|
|
68
IN WITNESS WHEREOF, the undersigned parties have caused this
Agreement to be executed as of the date first written
above.
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
Name:
|
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
Title:
|
|
Chairman of the Board
|
|
|
|
|
|
ABC MERGER SUB, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
Name:
|
|
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
|
|
Title:
|
|
Chairman of the Board
|
|
|
|
|
|
AYRO, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇.
|
|
Name:
|
|
▇▇▇
▇▇▇▇▇▇
|
|
Title:
|
|
Chief Executive
Officer
|
[Signature Page to Agreement and Plan of Merger and
Reorganization]
|
|
69
EXHIBIT A
CERTAIN DEFINITIONS
For
purposes of the Agreement (including this Exhibit
A):
“Acquired
Companies” mean Company and its direct and indirect
Subsidiaries.
“Acquiring
Companies” mean Parent and its direct and indirect
Subsidiaries.
“Acquisition
Inquiry” means, with respect to a Party, an inquiry,
indication of interest or request for information (other than an
inquiry, indication of interest or request for information made or
submitted by the Company, on the one hand, or Parent, on the other
hand, to the other Party) that would reasonably be expected to lead
to an Acquisition Proposal.
“Acquisition
Proposal” means any offer, proposal or indication of
interest contemplating or which would reasonably be interpreted to
be lead to the contemplation of an Acquisition
Transaction.
“Acquisition
Transaction” means any transaction or series of
transactions involving:
(a)
any merger, consolidation, amalgamation, share exchange, business
combination, issuance of securities, acquisition of securities,
tender offer, exchange offer or other similar transaction (i) in
which Company (or its Subsidiaries) or Parent (or its Subsidiaries)
is a constituent corporation, (ii) in which a Person or
“group” (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires
beneficial or record ownership of securities representing more than
20% of the outstanding securities of any class of voting securities
of Company (or its Subsidiaries) or Parent (or its Subsidiaries),
or (iii) in which Company (or its Subsidiaries) or Parent (or its
Subsidiaries) issues securities representing more than 20% of the
outstanding securities of any class of voting securities of any
such Entity (other than as contemplated under this
Agreement);
(b)
any sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or assets that constitute
or account for 20% or more of the consolidated net revenues, net
income or assets of Company (or its Subsidiaries) or Parent (or its
Subsidiaries); or
(c)
any liquidation or dissolution of any of Company (or its
Subsidiaries) or Parent (or its Subsidiaries).
“Affiliates”
mean, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by or is under common control
with such Person.
“Business
Day” means a day other than a Saturday, Sunday or
other day on which banks located in New York, New York are
authorized or required by applicable Legal Requirements to
close.
“COBRA”
means the health care continuation and notice provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 and the
regulations thereunder or any state Legal Requirement governing
health care coverage extension or continuation.
“Company
Capital Stock” means the Company Common Stock and the
Company Preferred Stock.
“Company
Common Stock” means the Common Stock of the Company,
par value $0.001 per share.
“Company
Disclosure Schedule” means the disclosure schedule in
agreed form that has been delivered by Company to Parent on the
date of this Agreement.
“Company
Fundamental Representations” means the representations
and warranties of the Company set forth in Sections 2.01
(Organization and Qualification; Charter Documents), 2.02 (Capital
Structure), 2.03 (Authority; Non-Contravention; Approvals), and
2.11 (Brokers’ and Finders’ Fees).
“Company
IP Rights” mean all IP Rights owned solely or co-owned
by an Acquired Company or in which an Acquired Company has any
right, title or interest and which are used by an Acquired Company
in the ordinary course of its business.
“Company
Lock-up Agreement Signatories” means those Persons set
forth on Schedule A
identified as Company Lock-up Agreement Signatories.
“Company
Material Adverse Effect” means any effect, change,
event or circumstance (an “Effect”) that
(a) has or would reasonably be expected to have a material adverse
effect on the business, financial condition, operations or results
of operations of the Acquired Companies taken as a whole;
provided, however, that, in no event will any of
the following, alone or in combination, be deemed to constitute,
nor shall any of the following be taken into account in determining
whether there has occurred, a Company Material Adverse
Effect: Effects resulting from (i) conditions generally
affecting the industries in which the Acquired Companies operate
(ii) changes generally affecting the United States or global
economy or capital markets as a whole; (iii) any natural disaster
or any acts of terrorism, sabotage, military action or war or any
escalation or worsening thereof; or (iv) any changes (after the
date of this Agreement) in GAAP or applicable Legal Requirements,
and with respect to items (i) - (iv), only to the extent that,
individually or in the aggregate, such Effects do not have a
disproportionate impact on the Acquired Companies taken as a whole;
or (b) prevents the Company from consummating the
Merger.
“Company
Option” means an option to purchase shares of Company
Capital Stock.
“Company
Option Plan” means the AYRO, Inc. 2017 Long Term
Incentive Plan as established and maintained by the
Company.
“Company
Pre-Closing Financing” means an acquisition of Company
Common Stock to be consummated prior to the Closing with aggregate
gross cash proceeds to the Company of at least
$2,000,000.
“Company
Preferred Stock” means the Company’s Preferred
Stock, $0.001 par value per share.
“Company
Stockholders” mean the holders of Company Capital
Stock issued and outstanding immediately prior to the Effective
Time.
“Company
Superior Offer” means an unsolicited, bona fide
written Acquisition Proposal (with all references to 20% in the
definition of Acquisition Proposal being treated as references to
50% for these purposes) made by a third party that (a) was not
obtained or made as a direct or indirect result of a breach of (or
in violation of) this Agreement and (b) the terms of which the
board of directors of Company determines, in its reasonable
judgment after consulting in good faith with an independent
financial advisor and its outside legal counsel, to be more
favorable to its stockholders from a financial point of view than
the terms of the Merger, as well as the likelihood of the
consummation thereof, which consideration shall include whether any
financing is or may be required to consummate the transaction
contemplated by such proposal, and whether such financing is
committed and is reasonably capable of being obtained by the
applicable offeror.
“Company
Voting Agreement Signatories” means those Persons set
forth on Schedule B
identified as Company Voting Agreement Signatories.
“Company
Warrant” means a warrant to purchase shares of Company
Capital Stock.
“Consent”
means any approval, consent, ratification, permission, waiver or
authorization.
“Contract”
means any written agreement, contract, subcontract, lease,
understanding, arrangement, instrument, note, option, warranty,
purchase Order, license, sublicense, insurance policy, benefit plan
or legally binding commitment or undertaking of any
nature.
“Copyrights”
mean all copyrights and copyrightable works (including without
limitation databases and other compilations of information, mask
works and semiconductor chip rights), including all rights of
authorship, use, publication, reproduction, distribution,
performance, transformation, moral rights and rights of ownership
of copyrightable works and all registrations and rights to register
and obtain renewals and extensions of registrations, together with
all other interests accruing by reason of international
copyright.
“Employee
Benefit Plan” means each plan, program, policy,
contract, agreement or other arrangement providing for retirement,
pension, deferred compensation, severance, separation pay,
relocation benefits, termination pay, performance awards, bonus
compensation, incentive compensation, stock option, stock purchase,
stock bonus, phantom stock, stock appreciation right, supplemental
retirement, profit sharing, fringe benefits, cafeteria benefits,
medical benefits, life insurance, disability benefits, accident
benefits, salary continuation, accrued leave, vacation, sabbatical,
sick pay, sick leave, or other employee benefits, whether written
or unwritten, including each “voluntary employees’
beneficiary association” under Section 501(c)(9) of the Code
and each “employee benefit plan” within the meaning of
Section 3(3) of ERISA, in each case, for active, retired or former
employees, directors or consultants.
“Encumbrance”
means any lien, pledge, hypothecation, charge, mortgage, easement,
encroachment, imperfection of title, title exception, title defect,
right of possession, lease, tenancy license, security interest,
encumbrance, community property interest or restriction of any
nature (including any restriction on the voting of any security,
any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset,
any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of
ownership of any asset).
“End
Date” means the date that is six (6) months after the
date of this Agreement.
“Entity”
means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any
company limited by shares, limited liability company or joint stock
company), firm, society or other enterprise, association,
organization or entity.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate” means any trade or business (whether or not
incorporated) that is or at any relevant time was treated as a
single employer with any Person within the meaning of Section 414
of the Code.
“Exchange
Ratio” means the following ratio (rounded to four
decimal places): the quotient obtained by dividing (a) the Company
Merger Shares by (b) the Company Outstanding Shares, in
which:
“Company Allocation Percentage”
means eighty percent (80.00%).
“Company Merger Shares” means the
product determined by multiplying (i) the Post-Closing Parent
Shares by (ii) the Company Allocation Percentage.
“Company Outstanding Shares” means
the total number of shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time and assuming,
without duplication, (i) the conversion of the Bridge Notes
immediately prior to the Effective Time (but excluding any warrants
issued in connection with the issuance of the Bridge Notes), (ii)
the consummation of the Company Pre-Closing Financing and the
issuance of all Company Capital Stock pursuant to the Company
Pre-Closing Financing Agreements immediately prior to the Effective
Time (but excluding any warrants (other than pre-funded warrants)
issued pursuant to th Pre-Closing Financing Areements); and (iii)
the issuance of all shares of Company Common Stock and the exercise
in full of all warrants issued pursuant to the Nominal Stock
Subscription Agreement.
“Parent Allocation Percentage”
means twenty percent (20.00%).
“Post-Closing Parent Shares” means
the quotient determined by dividing (i) the Parent Outstanding
Shares by (ii) the Parent Allocation Percentage.
“Parent Outstanding Shares” means
the total number of shares of Parent Common Stock outstanding
immediately prior to the Effective Time assuming, without
duplication, the full conversion of the Parent Series H-4 Preferred
Stock into 2,368,188 shares of Parent Common Stock immediately
prior to the Effective Time and the full conversion of the Parent
Series H-5 Preferred Stock into Parent Common Stock in accordance
with its terms (whether or not such shares of Parent Series H-5
Preferred Stock are actually converting into shares of Parent
Common Stock).
“Excluded
Contracts” means (i) any non-exclusive Contract
concerning “off-the-shelf” or similar computer software
that is available on commercially reasonable terms, (ii) standard
non-disclosure, confidentiality and material transfer Contracts
granting non-exclusive rights to IP Rights and entered into in the
Ordinary Course of Business, (iii) Contracts that have expired on
their own terms or were terminated and for which there are no
material outstanding obligations, and (v) purchase orders and
associated terms and conditions for which the underlying goods or
services have been delivered or received.
“Governmental
Body” means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district
or other jurisdiction of any nature; (b) federal, state, local,
municipal, foreign or other government; or (c) governmental or
quasi-governmental authority of any nature (including any
governmental division, regulatory agency, department, agency,
commission, instrumentality, official, ministry, fund, foundation,
center, organization, unit, body or Entity and any court or other
tribunal).
“HSR
Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
“Indebtedness”
means (i) all obligations for borrowed money and advancement of
funds; (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, contracts or arrangements (whether or not
convertible), (iii) all obligations for the deferred purchase price
of property or services (including any potential future earn-out,
purchase price adjustment, releases of “holdbacks” or
similar payments, but excluding any such obligations to the extent
there is cash being held by a third party in escrow exclusively for
purposes of satisfying such obligations) (“Deferred Purchase
Price”); (iv) all obligations arising out of any
financial hedging, swap or similar arrangements; (v) all
obligations as lessee that would be required to be capitalized in
accordance with GAAP, whether or not recorded; (vi) all
obligations in connection with any letter of credit, banker’s
acceptance, guarantee, surety, performance or appeal bond, or
similar credit transaction; (vii) interest payable with
respect to Indebtedness referred to in clause (i) through
(vi), and (viii) the aggregate amount of all prepayment
premiums, penalties, breakage costs, “make whole
amounts,” costs, expenses and other payment obligations of
such Person that would arise (whether or not then due and payable)
if all such items under clauses (i) through (vii) were
prepaid, extinguished, unwound and settled in full as of such
specified date. For purposes of determining the Deferred
Purchase Price obligations as of a specified date, such obligations
shall be deemed to be the maximum amount of Deferred Purchase Price
owing as of such specified date (whether or not then due and
payable) or potentially owing at a future date.
“IP
Rights” mean any and all of the following in any
country or region: (a) Copyrights, Patent Rights,
Trademark Rights, domain name registrations, Trade Secrets, and
other intellectual property rights; and (b) the right (whether at
law, in equity, by Contract or otherwise) to enjoy or otherwise
exploit any of the foregoing, including the rights to ▇▇▇ for and
remedies against past, present and future infringements of any or
all of the foregoing, and rights of priority and protection of
interests therein under the Legal Requirements of any jurisdiction
worldwide.
“Legal
Proceeding” means any action, suit, litigation,
arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing,
audit, examination or investigation commenced, brought, conducted
or heard by or before, or otherwise involving, any court or other
Governmental Body or any arbitrator or arbitration
panel.
“Legal
Requirements” mean any federal, state, local,
municipal, foreign or other law, statute, constitution, controlling
principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by
or under the authority of any Governmental Body.
“Lock-up
Agreement Signatories” means those Persons set forth
on Schedule
A.
“Merger
Sub Common Stock” means the Common Stock, $0.001 par
value per share, of the Merger Sub.
“Nasdaq”
means The Nasdaq Capital Market.
“Nominal Stock Subscription
Agreement” means that certain Stock Subscription
Agreement of even date herewith by and among the Company and Alpha
Capital Anstalt.
“Order”
means any order, writ, injunction, judgment or decree.
“Parent
Capital Stock” means Parent Common Stock and Parent
Preferred Stock.
“Parent
Disclosure Schedule” means the disclosure schedule
that has been delivered by Parent to Company on the date of this
Agreement.
“Parent
Fundamental Representations” means the representations
and warranties of the Company set forth in Sections 3.01
(Organization and Qualification), 3.02 (Capital Structure), 3.03
(Authority; Non-Contravention; Approvals), and 3.11 (Brokers’
and Finders’ Fees).
“Parent
IP Rights” mean all IP Rights of the Parent or its
Subsidiaries.
“Parent
Lock-up Agreement Signatories” means those Persons set
forth on Schedule A
identified as Parent Lock-up Agreement Signatories.
“Parent
Voting Agreement Signatories” means those Persons set
forth on Schedule B
identified as Parent Voting Agreement Signatories.
“Parent
Material Adverse Effect” means any Effect that,
considered together with all other Effects, (a) has a material
adverse effect on the business, financial condition, operations or
results of operations of Parent and its Subsidiaries taken as a
whole; provided,
however, that, in no event
will any of the following, alone or in combination, be deemed to
constitute, nor will any of the following be taken into account in
determining whether there has occurred, a Parent Material Adverse
Effect: Effects resulting (i) from conditions generally
affecting the industries in which Parent participates; (ii) changes
generally affecting the United States or global economy or capital
markets as a whole; (iii) changes in the trading price or trading
volume of Parent Common Stock (it being understood, however, that
any Effect causing or contributing to such changes in the trading
price or trading volume of Parent Common Stock may if not otherwise
to be disregarded pursuant to a different subclause of this
definition, constitute a Parent Material Adverse Effect and may be
taken into account in determining whether a Parent Material Adverse
Effect has occurred); (iv) any natural disaster or any acts of
terrorism, sabotage, military action or war or any escalation or
worsening thereof; (v) any changes (after the date of this
Agreement) in GAAP or applicable Legal Requirements, and with
respect to items (i), (ii), (iv) and (v), only to the extent that,
individually or in the aggregate, such Effects do not have a
disproportionate impact on the Acquired Companies taken as a whole;
(vi) changes resulting from the announcement or pendency of this
Agreement or the consummation of the Transactions or compliance
with the terms of this Agreement; (vii) any specific action taken
at the written request of the Company or expressly required by this
Agreement; (viii) continued losses from operations or decreases in
cash balances of any of the Acquiring Companies or on a
consolidated basis among the Acquiring Companies; or (b) prevents
Parent or Merger Sub from consummating the Merger.
“Parent
Series H-4 Preferred Stock” means the Series H-4
Preferred Stock, par value $0.0001 per share, of
Parent.
“Parent
Series H-5 Preferred Stock” means the Series H-5
Preferred Stock, par value $0.0001 per share, of
Parent.
“Parent
Stock Option Plan” means the Amended and Restated 2014
Equity Incentive Plan as amended and restated from time to
time.
“Parent
Superior Offer” means an unsolicited, bona fide
written Acquisition Proposal (with all references to 20% in the
definition of Acquisition Proposal being treated as references to
50% for these purposes) made by a third party that (a) was not
obtained or made as a direct or indirect result of a breach of (or
in violation of) this Agreement and (b) the terms of which the
board of directors of Parent determines, in its reasonable judgment
after consulting in good faith with an independent financial
advisor and its outside legal counsel, to be more favorable to its
stockholders from a financial point of view than the terms of the
Merger, as well as the likelihood of the consummation thereof,
which consideration shall include whether any financing is or may
be required to consummate the transaction contemplated by such
proposal, and whether such financing is committed and is reasonably
capable of being obtained by the applicable offeror.
“Parent
Transactions” means the Transactions and the Parent
Legacy Business Disposition.
“Parent Unaudited Interim
Balance Sheet” means the
balance sheet included in Parent’s Form 10-Q for the period
ended September 30, 2019.
“Parent
Warrant” means any warrant to purchase shares of
Parent Capital Stock.
“Patent
Rights” mean all issued patents, pending patent
applications and abandoned patents and patent applications provided
that they can be revived (which for purposes of this Agreement will
include utility models, design patents, industrial designs,
certificates of invention and applications for certificates of
invention and priority rights) in any country or region, including
all provisional applications, substitutions, continuations,
continuations-in-part, divisions, renewals, reissues,
re-examinations and extensions thereof.
“Permitted
Encumbrances” means (i) Encumbrances for Taxes,
assessments or other governmental charges or levies not yet
delinquent or that are being contested in good faith by appropriate
Legal Proceedings or that may thereafter be paid without penalty;
(ii) statutory Encumbrances of landlords or lessors under
rental agreements for amounts not delinquent, (iii)
mechanics’, carriers’, warehousemen’s,
workers’, repairers’ and similar Encumbrances imposed
by applicable Law or arising or incurred in the ordinary course of
business consistent with past practice with respect to amounts not
yet due and payable or being contested in good faith by appropriate
Legal Proceedings; (iv) Encumbrances incurred or deposits made
in the ordinary course of business consistent with past practice in
connection with workers’ compensation, unemployment insurance
or other types of social security; and (v) licenses and other
similar rights granted and obligations incurred in the ordinary
course of business consistent with past practice that are not
material to the operation of the applicable business, (vi)
Encumbrances or encumbrances of record affecting any owned or
leased real property, any matters that would be disclosed by a
survey of any owned or leased real property and any zoning, land
use, covenants, conditions and restrictions or similar matters
affecting any owned or leased real property, in each case that
would not be reasonably likely to materially interfere with the
present use or occupancy of such real property.
“Person”
means any person, Entity, Governmental Body, or group (as defined
in Section 13(d)(3) of the Exchange Act).
“Personal
Data” means a natural person’s name, street
address, telephone number, e-mail address, photograph, social
security number, driver’s license number, passport number, or
any other piece of information that allows the identification of a
natural person.
“Pre-Merger
Company Stockholders” means the record owners of the
outstanding Company Capital Stock immediately prior to the
Effective Date.
A
party’s “Representatives”
include each Person that is or becomes (a) a Subsidiary or other
controlled Affiliate of such party or (b) an officer, director,
employee, partner, attorney, advisor, accountant, agent or
representative of such party or of any such party’s
Subsidiaries or other controlled Affiliates.
“SEC
Documents” mean each report, registration statement,
proxy statement and other statements, reports, schedules, forms and
other documents filed by Parent with the SEC since the Parent
Lookback Date, including all amendments thereto.
An
Entity will be deemed to be a “Subsidiary” of
another Person if such Person directly or indirectly owns,
beneficially or of record, (a) an amount of voting securities of or
other interests in such Entity that is sufficient to enable such
Person to elect at least a majority of the members of such
Entity’s board of directors or other governing body, or (b)
at least 50% of the outstanding equity or financial interests of
such Entity.
“Subscription
Agreement” means the Subscription Agreement attached
hereto as Exhibit C,
among the Company and the Persons named therein, as amended or
modified from time to time, pursuant to which such Persons have
agreed to purchase the number of shares of Company Common Stock set
forth therein in connection with the Company Pre-Closing
Financing.
“Subsequent
Transaction” shall mean any Acquisition Transaction
(with all references to 20% in the definition of Acquisition
Transaction being treated as references to 50% for these
purposes).
“Tax”
and “Taxes” mean
any federal, state, local, or non-U.S. income, gross receipts,
license, payroll, employment, excise, escheat, severance, stamp,
occupation, premium, windfall profits, customs duties, capital
stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not and including any obligations to indemnify
or otherwise assume or succeed to the Tax liability of any other
Person.
“Tax
Return” means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
“Trade
Secrets” mean trade secrets, know-how, proprietary
information, inventions, discoveries, improvements, technology,
technical data and research and development, whether patentable or
not.
“Trademark
Rights” mean all material common law trademarks,
registered trademarks, applications for registration of trademarks,
material common law service marks, registered service marks,
applications for registration of service marks, trade names,
registered trade names and applications for registration of trade
names, and Internet domain name registrations; and including all
filings with the applicable Governmental Body indicating an intent
to use any of the foregoing if not registered or subject to a
pending application.
“Transaction
Costs” means the aggregate amount of costs and
expenses of a Person or any of its Subsidiaries incurred in
connection with the negotiation, preparation and execution of this
Agreement and the consummation of the Transactions, including (a)
any brokerage fees and commissions, finders’ fees or
financial advisory fees, any fees and expenses of counsel or
accountants payable by such Person or any of its Subsidiaries and
any transaction bonuses or similar items in connection with the
Transactions, (b) any bonus, severance, change-in-control payments
or similar payment obligations (including payments with
“single-trigger” provisions triggered at and as of the
consummation of the Transactions) that become due or payable to any
director, officer, employee or consultant of such Person in
connection with the consummation of the Transactions, (c) any
payments to third parties under any Contract to which such Person
or its Subsidiaries are a party triggered by the consummation of
the Transactions, or any payment or consideration arising under or
in relation to obtaining any consents, waivers or approvals of any
third party under any Contract to which such Person or its
Subsidiaries are a party required to be obtained in connection with
the consummation of the Transactions in order for any such Contract
to remain in full force and effect following the Closing or
resulting from agreed-upon modification or early termination of any
such Contract, in each case with respect to the foregoing matters
(a)-(c), to the extent unpaid; provided, Parent and Company shall
share equally all out of pocket costs and expenses, other than
attorneys’, accountants’ and other similar service
provider’s fees and expenses, incurred in relation to (A) the
filings by the Parties under any filing requirement under the HSR
Act and any foreign antitrust Legal Requirement applicable to this
Agreement and the Transactions; (B) the filing with the SEC of the
preliminary and definitive Proxy Statement (including any financial
statements and exhibits), including printer fees, and any
amendments or supplements thereto, and the printing and delivery of
such documents to the Parties’ stockholders; and (C) any fees
incurred in connection with obtaining Nasdaq approval for the
merger, the name and ticker symbol changes, and the listing of the
shares of Parent Common Stock to be issued, to the extent
contemplated by this Agreement.
“Voting
Agreement Signatories” means those Persons set forth
on Schedule
B.
|
|
Additionally,
the following terms have the meanings assigned to such terms in the
Sections of this Agreement set forth below opposite such
term:
|
Defined Word
|
Section of Agreement
|
|
“Acquired
Companies”
|
Exhibit
A
|
|
“Acquiring
Companies”
|
Exhibit
A
|
|
“Acquisition
Inquiry”
|
Exhibit
A
|
|
“Acquisition
Proposal”
|
Exhibit
A
|
|
“Acquisition
Transaction”
|
Exhibit
A
|
|
“Affiliates”
|
Exhibit
A
|
|
“Agreement”
|
Preamble
|
|
“Allocation
Certificate”
|
Section
5.17
|
|
“Antitrust
Laws”
|
Section
2.03(d)
|
|
“Business
Day”
|
Exhibit
A
|
|
“Certificate
of Merger”
|
Section
1.02
|
|
“Certifications”
|
Section
3.05(a)
|
|
“Closing
Date”
|
Section
1.02
|
|
“Closing”
|
Section
1.02
|
|
“COBRA”
|
Exhibit
A
|
|
“Code”
|
Recitals
|
|
“Company”
|
Preamble
|
|
“Company
Appointees”
|
Section
5.11(a)
|
|
“Company
Balance Sheet”
|
Section 2.05(a)
|
|
“Company
Board Recommendation”
|
Section 5.02(b)
|
|
“Company
Capital Stock”
|
Exhibit
A
|
|
“Company
Contract”
|
Section
2.16(b)
|
|
“Company
Disclosure Schedule”
|
Exhibit
A
|
|
“Company
Employee Plans”
|
Section
2.12(a)
|
|
“Company
Environmental Permits”
|
Section
2.14(c)
|
|
“Company
Financials”
|
Section
2.05(a)
|
|
“Company
Fundamental Representations”
|
Exhibit
A
|
|
“Company
Insurance
Policies”
|
Section
2.18(a)
|
|
“Company
IP Rights”
|
Exhibit
A
|
|
“Company
Lookback
Date”
|
Section
2.05(c)
|
|
“Company
Material Adverse Effect”
|
Exhibit
A
|
|
“Company
Option”
|
Section
2.02(b)
|
|
“Company
Owned IP Rights”
|
Section
2.08
|
|
“Company
Permits”
|
Section
2.09(b)
|
|
“Company
Stock Option Plans”
|
Section
2.02(b)
|
|
“Company
Stockholder Matters”
|
Section
5.02(a)
|
|
“Company
Stockholders”
|
Exhibit
A
|
|
“Company
Stockholder Written Consent”
|
Section
5.02(a)
|
|
“Company
Superior Offer”
|
Exhibit
A
|
|
“Company
Vote Deadline”
|
Section
5.02(a)
|
|
“Company
Voting
Agreements”
|
Recitals
|
|
“Confidentiality
Agreement”
|
Section 5.04
|
|
“Continuing
Employees”
|
Section
5.18
|
|
“Consent”
|
Exhibit
A
|
|
“Contract”
|
Exhibit
A
|
|
“Copyrights”
|
Exhibit
A
|
|
“Deferred
Purchase Price”
|
Exhibit
A
|
|
“DGCL”
|
Section
1.01
|
|
“D&O
Indemnified Party”
|
Section
5.06(a)
|
|
“Dissenting
Shares”
|
Section
1.07
|
|
“Effect”
|
Exhibit
A
|
|
“Effective
Time”
|
Section
1.02
|
|
“Employee
Benefit Plan”
|
Exhibit
A
|
|
“Encumbrance”
|
Exhibit
A
|
|
“End
Date”
|
Exhibit
A
|
|
“Entity”
|
Exhibit
A
|
|
“ERISA
Affiliate”
|
Exhibit
A
|
|
“ERISA”
|
Exhibit
A
|
|
“Exchange
Act”
|
Section
2.03(d)
|
|
“Exchange
Agent”
|
Section
1.08(a)
|
|
“Exchange
Ratio”
|
Exhibit
A
|
|
“Excluded
Contracts”
|
Exhibit
A
|
|
“Foreign
Antitrust Laws”
|
Section
2.03(d)
|
|
“GAAP”
|
Section
2.05(a)
|
|
“Governmental
Body”
|
Exhibit
A
|
|
“Hazardous
Material Activities”
|
Section
2.14(b)
|
|
“Hazardous
Material”
|
Section
2.14(a)
|
|
“HSR
Act”
|
Exhibit
A
|
|
“Indebtedness”
|
Exhibit
A
|
|
“IP
Rights”
|
Exhibit
A
|
|
“knowledge
of Company”
|
Section
8.15(g)
|
|
“knowledge
of Parent”
|
Section
8.15(g)
|
|
“Legal
Proceeding”
|
Exhibit
A
|
|
“Legal
Requirements”
|
Exhibit
A
|
|
“Liability”
|
Section
2.05(d)
|
|
“Lock-up
Agreements”
|
Recitals
|
|
“Lock-up
Agreement Signatories”
|
Exhibit
A
|
|
“Merger”
|
Recitals
|
|
“Merger
Consideration”
|
Section
1.06(a)
|
|
“Merger
Sub”
|
Preamble
|
|
“Merger
Sub Common Stock”
|
Exhibit
A
|
|
“Milestones”
|
Section
5.11(a)
|
|
“Nasdaq”
|
Exhibit
A
|
|
“Nasdaq
Listing Application”
|
Section
5.23
|
|
“Offering”
|
Section
6.02(g)(ii)
|
|
“Other
Filings”
|
Section
5.01(a)
|
|
“Order”
|
Exhibit
A
|
|
“Parent”
|
Preamble
|
|
“Parent
Asset Purchase Agreement”
|
Section
5.26
|
|
“Parent
Board Recommendation”
|
Section
5.03(b)
|
|
“Parent
Capital Stock”
|
Exhibit
A
|
|
“Parent
Change in Recommendation”
|
Section
5.03(c)
|
|
“Parent
Charter Amendment”
|
Section
3.03(a)
|
|
“Parent
Common Stock”
|
Section
1.06(a)
|
|
“Parent
Contract”
|
Section
3.16(b)
|
|
“Parent
Disclosure Schedule”
|
Exhibit
A
|
|
“Parent
Employee Plans”
|
Section
3.12(a)
|
|
“Parent
Environmental Permits”
|
Section
3.14(c)
|
|
“Parent
Financials”
|
Section
3.05(f)
|
|
“Parent
Fundamental Representations”
|
Exhibit
A
|
|
“Parent
Insurance Policies”
|
Section 3.17(a)
|
|
“Parent
IP Rights”
|
Exhibit A
|
|
“Parent
Legacy Business Disposition”
|
Section 5.26
|
|
“Parent
Legacy Business Valuation”
|
Section
5.26
|
|
“Parent
Lookback
Date”
|
Section
3.05(a)
|
|
“Parent
Material Adverse Effect”
|
Exhibit
A
|
|
“Parent
Option”
|
Section
3.02(b)
|
|
“Parent
Owned IP Rights”
|
Section
3.08
|
|
“Parent
Permits”
|
Section
3.09(b)
|
|
“Parent
Preferred Stock”
|
Section
3.02(a)
|
|
“Parent
SEC Documents”
|
Section
3.05(a)
|
|
“Parent
Series H-4 Preferred Stock”
|
Exhibit
A
|
|
“Parent
Stock Option Plan”
|
Exhibit
A
|
|
“Parent
Stockholder Approval Matters”
|
Section
5.03(a)
|
|
“Parent
Stockholder Approval”
|
Section
3.03(a)
|
|
“Parent
Superior Offer”
|
Exhibit
A
|
|
“Parent
Transactions”
|
Exhibit
A
|
|
“Parent
Voting
Agreements”
|
Recitals
|
|
“Parent
Unaudited Interim Balance Sheet”
|
Exhibit
A
|
|
“Parent
Warrant”
|
Exhibit
A
|
|
“Party”
or “Parties”
|
Preamble
|
|
“Patent
Rights”
|
Exhibit
A
|
|
“Permitted
Encumbrances”
|
Exhibit
A
|
|
“Person”
|
Exhibit
A
|
|
“Personal
Data”
|
Exhibit
A
|
|
“Post-Closing
Plans”
|
Section
5.18
|
|
“Pre-Closing
Period”
|
Section
4.01
|
|
“Pre-Merger
Company Stockholders”
|
Exhibit
A
|
|
“Proxy
Statement/Prospectus”
|
Section
5.01(a)
|
|
“Representatives”
|
Exhibit
A
|
|
“Required
Company
Stockholder Vote”
|
Section
2.03(a)
|
|
“Reverse
Split”
|
Section
5.21
|
|
“S-4
Registration Statement”
|
Section
5.01(a)
|
|
“SEC”
|
Section
2.03(d)
|
|
“SEC
Documents”
|
Exhibit
A
|
|
“SEC
Website”
|
Section
3.05(a)
|
|
“Securities
Act”
|
Section
3.05(a)
|
|
“Stockholder
Notice”
|
Section
5.02(e)
|
|
“Subsidiary”
|
Exhibit
A
|
|
“Surviving
Corporation”
|
Section
1.01
|
|
“Tax”
and “Taxes”
|
Exhibit
A
|
|
“Tax
Return”
|
Exhibit
A
|
|
“Termination
Fee”
|
Section
7.03(b)
|
|
“Trade
Secrets”
|
Exhibit
A
|
|
“Trademark
Rights”
|
Exhibit
A
|
|
“Transaction
Costs”
|
Exhibit
A
|
|
“Voting
Agreements”
|
Recitals
|
|
“Voting
Agreement Signatories”
|
Exhibit
A
|
|
|
|
|
|