Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization, dated as of December
7, 2005 (this "Agreement"), is by and among (i) ActivBiotics, Inc., a Delaware
corporation ("ABI"), (ii) Metaphore Acquisition Co., a Delaware corporation that
is a wholly-owned subsidiary of ABI ("Merger Sub"), (iii) Metaphore
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and (iv) the
Stockholder Representatives (as defined in Section 4.7 hereof) for the limited
purposes specifically set forth herein and in their capacity as such.
WHEREAS, the parties hereto desire to consummate a combination of ABI and
the Company by merging Merger Sub with and into the Company with the Company
being the surviving entity and becoming a wholly-owned subsidiary of ABI (the
"Merger"), subject to the terms and conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has (i) determined that the
Merger is fair to, and in the best interests of, its stockholders, and (ii)
approved and adopted this Agreement, the Merger and the transactions
contemplated hereby, and directed the submission of the Merger, this Agreement
and the transactions contemplated hereby to its stockholders for their approval
in accordance with the DGCL (as defined in Section 3.1 hereof);
WHEREAS, the Boards of Directors of ABI and Merger Sub, having determined
that the Merger is desirable, have approved the transactions contemplated by
this Agreement, and ABI, as the sole stockholder of Merger Sub, has voted to
adopt this Agreement; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger constitute a reorganization within the meaning of Section 368(a) of
the Code (as defined in Section 1.1 hereof).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements, covenants, representations and warranties hereinafter set forth, the
parties hereto agree as follows:
1. DEFINITIONS.
1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following respective meanings:
"ABI Charter" means the Sixth Amended and Restated Certificate of
Incorporation of ABI, in substantially the form of Exhibit A hereto, to be filed
by ABI with the Secretary of State of the State of Delaware immediately prior to
the Effective Time.
"ABI Common Stock" means the common stock, par value $0.01 per share, of
ABI.
"ABI Conversion Shares" means shares of ABI Common Stock issuable or issued
upon the conversion of shares of ABI Preferred Stock.
"ABI Intellectual Property" means (i) ABI Patents and (ii) all Intellectual
Property (other than ABI Patents) owned by, licensed to or controlled by ABI or
any of its Subsidiaries at any time on or prior to the Effective Time.
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"ABI Net Cash Balance" means the difference obtained by subtracting (i) all
Indebtedness and all other accrued liabilities, all contingent liabilities, all
Taxes owed, all expenditures incurred or accrued but not yet paid and all other
payment obligations (whether due and payable currently or in the future) by ABI
(but excluding from all of the items covered by this clause (i) all expenditures
incurred or accrued by, and all payment obligations incurred by, ABI between
October 21, 2005 and the Closing Date in connection with ABI's ongoing
peripheral vascular disease program and all other amounts listed on Schedule 1.1
of the ABI Disclosure Schedule) from (ii) all cash and cash equivalents.
"ABI Patents" means those United States, international and foreign patents
and patent applications (including provisional applications), in each case that
are listed in Schedule 7.11(a) of the ABI Disclosure Schedule, and all reissues,
divisions, renewals, extensions, provisions, continuations, foreign
counterparts, and continuations-in-part thereof.
"ABI Preferred Stock" means the Series C-2 Convertible Preferred Stock, par
value $0.01 per share, of ABI, the terms, powers, preferences and privileges of
which are set forth in the ABI Charter.
"ABI Registered Intellectual Property" means those United States,
international and foreign: (a) patents and patent applications (including
provisional applications), in each case that are listed in Schedule 7.11(c) of
the ABI Disclosure Schedule; (b) registered trademarks, registered service
marks, applications to register trademarks or service marks, intent-to-use
applications, or other registrations or applications related to trademarks or
service marks, in each case that are listed in Schedule 7.11(c) of the ABI
Disclosure Schedule; and (c) registered copyrights and applications for
copyright registration, in each case that are listed on Schedule 7.11(c) of the
ABI Disclosure Schedule.
"ABI Stock" means, collectively, the ABI Preferred Stock and the ABI Common
Stock (including any ABI Conversion Shares).
"Affiliate" means, with respect to any person, any other person (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such person or (ii) who is a
family member or relative of such person. For purposes of this definition, a
person that owns more than fifty percent (50%) of the equity interests of any
other person shall be deemed to control such other person.
"Affiliated Group" has the meaning ascribed to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Aggregate Consideration Shares" means an aggregate number of shares of ABI
Preferred Stock and ABI Common Stock equal to the Maximum Number of Merger
Shares, subject to adjustment pursuant to, and in accordance with, the
provisions of Section 3.7(c) hereof. Of such aggregate number of shares, the
number of shares to which the Stockholders (other than holders of Dissenting
Shares) collectively are entitled to receive pursuant to Section 3.6(a) hereof
shall be in the form of shares of ABI Preferred Stock, and the number of shares
that will be subject to, and issuable upon exercise of, all Assumed Options and
Assumed Warrants pursuant to Section 5.1 hereof shall be in the form of shares
of ABI Common Stock.
"Aggregate Contingent Consideration" means any and all Contingent
Consideration Amounts payable in cash pursuant to, and in accordance with,
Section 3.8 hereof.
"Assumed Options" shall have the meaning set forth in Section 5.1(b)
hereof.
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"Assumed Warrants" shall have the meaning set forth in Section 5.1(c)
hereof.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, inclusive of Section 4980B of the Code and Sections 601 through 608
of ERISA.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the common stock, par value $0.0119 per share,
of the Company.
"Company Intellectual Property" means (i) Company Patents and (ii) all
Intellectual Property (other than Company Patents) owned by, licensed to or
controlled by the Company at any time on or prior to the Effective Time.
"Company Net Cash Balance" means the difference obtained by subtracting (i)
all Indebtedness and all other accrued liabilities, all contingent liabilities,
all Taxes owed, all expenditures incurred or accrued but not yet paid and all
other payment obligations (whether due and payable currently or in the future)
by the Company (but excluding from all of the items covered by this clause (i)
the amounts set forth in Schedule 1.1 of the Company Disclosure Schedule) from
(ii) all cash and cash equivalents.
"Company Options" means stock options exercisable for Company Common Stock.
"Company Patents" means those United States, international and foreign
patents and patent applications (including provisional applications), in each
case that are listed in Schedule 6.10 of the Company Disclosure Schedule, and
all reissues, divisions, renewals, extensions, provisions, continuations,
foreign counterparts, and continuations-in-part thereof.
"Company Preferred Stock" means any or all, as the context may require or
allow, of the Company Series A Preferred Stock, the Company Series B Preferred
Stock, the Company Series C-1 Preferred Stock, the Company Series C-2 Preferred
Stock, and the Company Series D Preferred Stock.
"Company Registered Intellectual Property" means those United States,
international and foreign: (a) patents and patent applications (including
provisional applications), in each case that are listed in Schedule 6.10 of the
Company Disclosure Schedule; (b) registered trademarks, registered service
marks, applications to register trademarks or service marks, intent-to-use
applications, or other registrations or applications related to trademarks or
service marks, in each case that are listed in Schedule 6.10 of the Company
Disclosure Schedule; and (c) registered copyrights and applications for
copyright registration, in each case that are listed on Schedule 6.10 of the
Company Disclosure Schedule.
"Company Series A Preferred Stock" means the Series A Convertible Preferred
Stock, par value $1.00 per share, of the Company.
"Company Series B Preferred Stock" means the Series B Convertible Preferred
Stock, par value $1.00 per share, of the Company.
"Company Series C-1 Preferred Stock" means the Series C-1 Convertible
Preferred Stock, par value $1.00 per share, of the Company.
"Company Series C-2 Preferred Stock" means the Series C-2 Convertible
Preferred Stock, par value $1.00 per share, of the Company.
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"Company Series D Preferred Stock" means the Series D Convertible Preferred
Stock, par value $1.00 per share, of the Company.
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Option Plan" means the Metaphore Pharmaceuticals, Inc. 1998
Stock Option Plan, as amended and in effect immediately prior to the Effective
Time.
"Company Warrants" means warrants exercisable for Company Common Stock.
"Damages" means all damages, losses, claims, demands, actions, causes of
action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"Designated ABI Stockholders" means the persons whose signatures are set
forth on the signature pages to the Designated ABI Stockholders Agreement.
"Designated ABI Stockholders Agreement" means that certain Designated ABI
Stockholders Agreement, dated of even date herewith, among ABI and the
Designated ABI Stockholders, in substantially the form attached hereto as
Exhibit B, pursuant to which the signatories thereto who are stockholders of ABI
have, among other things, agreed to vote in favor of (or consent to) the Merger
and the transactions contemplated by this Agreement.
"Designated Company Stockholders" means the stockholders of the Company
whose signatures are set forth on the signature pages to the Designated Company
Stockholders Agreement.
"Designated Company Stockholders Agreement" means that certain Designated
Company Stockholders Agreement, dated of even date herewith, among the Company
and the Designated Company Stockholders, in substantially the form attached
hereto as Exhibit C, pursuant to which the signatories thereto who are
stockholders of the Company have, among other things, agreed to vote in favor of
(or consent to) the Merger and the transactions contemplated by this Agreement.
"FDA" means the United States Food and Drug Administration.
"Indebtedness," as applied to any person, means (a) all indebtedness of
such person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
accounts payable, notes payable and accrued expenses of such person, (f) all
indebtedness or liabilities of such person that would be required to be
reflected on a balance sheet or referred to in the notes thereto in accordance
with generally accepted accounting principles, (g) all indebtedness, liabilities
or obligations of such person that are identified in Schedule 6.11 of the
Company Disclosure Schedule or Schedule 7.12 of the ABI Disclosure Schedule, as
the case may be, as "Indebtedness," (h) all other obligations of such person
under leases that have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which such
person is liable as lessee, (i) any liability of such person in respect of
banker's acceptances or letters
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of credit, and (j) all indebtedness referred to in clauses (a), (b), (c), (d),
(e), (f), (g), (h) or (i) hereof that is directly or indirectly guaranteed by
such person or which such person has agreed (contingently or otherwise) to
purchase or otherwise acquire or in respect of which such person has otherwise
assured a creditor against loss.
"Intellectual Property" means any or all of the following and all rights
in, arising out of, or associated therewith: (a) all United States,
international and foreign patents and patent applications and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (b) all inventions (whether patentable or not),
invention disclosures, improvements, drug candidates, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (c) all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto throughout the world; (d) all industrial designs and any registration
and applications therefor throughout the world; (e) all trade names, logos,
common law trademarks and service marks, trademark and service ▇▇▇▇ registration
and applications therefor throughout the world; (f) all databases and data
collections and all rights therein throughout the world; and (g) any similar or
equivalent rights to any of the foregoing anywhere in the world.
"knowledge," when used to qualify a representation or warranty in this
Agreement, has the following meaning: Where a representation or warranty is made
to the best of the Company's knowledge, or with a similar qualification, the
Company will be conclusively deemed to have knowledge of any matter with respect
to which the Company's chief executive, operating, scientific and/or financial
officers has actual knowledge. Where a representation or warranty is made to the
best of ABI's knowledge, or with a similar qualification, ABI will be
conclusively deemed to have knowledge of any matter with respect to which ABI's
chief executive, scientific and/or financial officers has actual knowledge.
"Liens" means any and all liens, claims, mortgages, security interests,
pledges, options, rights of first offer or refusal, charges, encumbrances,
limitations on voting rights, and restrictions on transfer of any kind, except
(i) in the case of references to securities, those arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws, (ii)
mechanic's, materialmen's and similar liens, (iii) liens for Taxes not yet due
and payable and (iv) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation.
"Material Adverse Effect" means, with reference to any person, any material
adverse effect on the condition (financial or otherwise), operations, business,
assets (including intangible assets), rights, liabilities or obligations of such
person, or on such person's ability to consummate the transactions hereby
contemplated.
"Maximum Number of Merger Shares" means a number of shares equal to the
quotient (rounded down to the nearest whole number) of $36,665,763.70 divided by
the Series C-2 Price Per Share.
"Merger Consideration" means, collectively, the Aggregate Consideration
Shares and the Aggregate Contingent Consideration.
"Merger Consideration Percentage" means (i) with respect to each holder of
record of Company Stock, the percentage set forth next to such holder's name on
Schedule 3.6(a) of the Company Disclosure Schedule under the caption "Merger
Consideration Percentage," (ii) with respect to each Assumed Option, the
percentage set forth next to the description of such Assumed Option on Schedule
5.1(a) of the Company Disclosure Schedule under the caption "Merger
Consideration Percentage" and (iii) with respect to each Assumed Warrant, the
percentage set forth next to the description of such Assumed
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Warrant on Schedule 5.1(a) of the Company Disclosure Schedule under the caption
"Merger Consideration Percentage."
"Net Sales" means, with respect to a Product, (i) gross revenues from the
sale of such Product by ABI or its Subsidiaries or Affiliates to third parties
that are not Affiliates in any country in which the sale of such Product would,
absent a license, infringe a Valid Claim (as defined below) in such country,
less discounts, refunds, rebates, replacement or credits allowed to purchasers
for return of product or as reimbursement for damaged product, freight and other
shipping charges, custom duties, sales and use taxes and any other governmental
tax or charge (except income taxes) imposed on or at the time of the production,
importation, exportation, use, transportation, or sale of product, including any
value added taxes (VAT), and/or (ii) any royalty payment actually received by
ABI or its Subsidiaries or Affiliates in connection with the sale of such
Product by a licensee, sublicensee or partner of ABI or any of its Subsidiaries
or Affiliates in any country in which the sale of such Product would, absent a
license, infringe a Valid Claim in such country. If a Product is sold in
combination with other products or components, then "Net Sales" shall be
determined by multiplying the amounts received for such combination product in
any country by the fraction A/A+B where A is the average sale price in the
preceding calendar quarter of such Product in that country when sold separately
in finished form and B is the average sale price in the preceding calendar
quarter of the other element in that country sold separately in finished form In
the event such Product or such other products or components were not separately
invoiced or priced during the applicable quarterly period, the Net Sales
computation shall be based on the relative proportion of the price for the
combination product that is attributable to the Product based on the fair market
price charged for such Product and other products or other components in prior
calendar quarters. If no pricing history whatsoever is available, then the value
of the Product shall be determined in good faith by ABI. Any provision of a
Product or a combination product for compassionate use or to support clinical
trials shall not give rise to any Net Sales. As used herein, "Valid Claim" means
a claim in an issued, unexpired U.S. or foreign patent within the Company
Intellectual Property or in a pending U.S. or foreign patent application within
the Company Intellectual Property, excepting claims that (a) have been finally
cancelled, withdrawn or abandoned by any administrative agency or other body of
competent jurisdiction, (b) have been revoked, held invalid or declared
unpatentable or unenforceable in a decision of a court or other body of
competent jurisdiction that is unappealable or unappealed within the time
allowed for appeal, (c) have been rendered unenforceable through disclaimer or
otherwise or (d) are lost through an interference proceeding.
"Optionholders" means the holders of Company Options that are outstanding
immediately prior to the Effective Time and that are assumed by ABI pursuant to
Section 5.1 hereof.
"person" means any natural person, entity, or association, including
without limitation any corporation, partnership, limited liability company,
government (or agency or subdivision thereof), trust, joint venture or
proprietorship.
"Product" means a product that contains as one or more active
pharmaceutical ingredients any of the compounds that are specifically identified
by name and chemical structure on Exhibit D attached hereto.
"PTO" means the United States Patent and Trademark Office.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
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"Series C Investment Documents" means, collectively, (a) the Series C
Stockholders Agreement, (b) the Series C Stock Restriction Agreement and (c) the
ABI Charter, in each case as amended and in effect from time to time.
"Series C Stock Restriction Agreement" means the Third Amended and Restated
Stock Restriction Agreement, in substantially the form of Exhibit E hereto, to
be entered into, at the Closing, by and among ABI and certain stockholders of
ABI for purposes of, among other things, providing for the ability of the
Stockholders to become parties thereto and become subject to all of the benefits
and obligations thereunder that are applicable to Preferred Stockholders (as
such term is defined therein).
"Series C Stockholders Agreement" means the Fourth Amended and Restated
Stockholders' Agreement, in substantially the form of Exhibit F hereto, to be
entered into, at the Closing, by and among ABI and certain stockholders of ABI
for purposes of, among other things, providing for the ability of the
Stockholders to become parties thereto and become subject to all of the benefits
and obligations thereunder that are applicable to Investors (as such term is
defined therein).
"Series C-2 Price Per Share" means $0.4517, subject to adjustment to
reflect stock splits, stock dividends, reverse stock splits, and other
recapitalizations, reorganizations and other similar events affecting the
capital stock of ABI and occurring after the date of this Agreement (other than
the transactions contemplated hereby).
"Stockholders" means the record holders of shares of Company Stock
outstanding immediately prior to the Effective Time.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any other
person a majority (by number of votes) of the outstanding shares or other equity
interests of any class or classes of which will at the time be owned by such
person or by a Subsidiary of such person, if the holders of such shares or other
equity interests (a) are ordinarily, in the absence of contingencies, entitled
to vote for the election of a majority of the directors (or persons performing
similar functions) of the issuer thereof, even though the right so to vote has
been suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency. With respect to ABI, the term "Subsidiary" or "Subsidiaries" (i)
shall include ABI Canada (as defined in Section 7.7 hereof) and (ii) shall not
include the Company or the Surviving Corporation if and to the extent that such
term is used or being used with reference to any period of time, or any event
occurring or arising at any time, on or prior to the Closing.
"Tax" or "Taxes" means any federal, state, local, or foreign, or other tax,
levy, fee or impost of any kind whatsoever (including any interest, penalties or
additions to tax, in respect thereof) including, without limitation, income,
profits or gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, windfall profit,
environmental, customs, duties, real property, personal property, capital stock,
intangibles, social security, unemployment, disability, payroll, license and
employee taxes.
"Tax Return" means any return, declaration, report, claim for refund,
information return, or other document filed or required to be filed (including
any related or supporting estimates, elections, schedules, statements,
information, exhibits or other documentation filed or required to be filed) in
connection with the determination, assessment or collection of any Tax or the
administration of any laws, regulations or administrative requirements relating
to any Tax.
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"Warrantholders" means the holders of Company Warrants that are outstanding
immediately prior to the Effective Time and that are assumed by ABI pursuant to
Section 5.1 hereof.
2. CLOSING; MERGER. Subject to the other provisions of this Agreement, the
closing of the transactions contemplated under this Agreement (the "Closing")
will be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other location as the parties mutually
agree upon), on such date as the parties mutually agree upon (but in any event
no later than the sixth business day) after satisfaction or waiver of the
conditions set forth in Sections 10 through 12 hereof (the date on which the
Closing actually occurs is hereinafter referred to as the "Closing Date"). On
the Closing Date, Merger Sub and the Company will execute a Certificate of
Merger, substantially in the form of the attached Exhibit G (the "Merger
Certificate"), and will file it with the Delaware Secretary of State in order to
cause the Merger to be effected in accordance with the laws of the State of
Delaware. The Merger will be effective upon the filing of the Merger Certificate
(the "Effective Time"). For all purposes, all of the document deliveries and
other actions to occur at the Closing will be conclusively presumed to have
occurred at the same time, immediately before the Effective Time.
3. EFFECT OF MERGER. At the Effective Time, automatically and without
further action:
3.1. SURVIVING CORPORATION. Merger Sub will be merged with and into
the Company and the separate existence of Merger Sub will cease. The Company
will continue in existence as the surviving corporation in the Merger (the
"Surviving Corporation"). The effect of the Merger will be as provided in the
applicable provisions of the Delaware General Corporation Law (the "DGCL").
Without limiting the generality of the foregoing, and subject thereto, except as
otherwise provided herein, all of the property, rights, privileges, powers, and
franchises of Merger Sub and the Company, respectively, will vest in the
Surviving Corporation, and all of the debts, liabilities, and duties of Merger
Sub and the Company, respectively, will become the debts, liabilities, and
duties of the Surviving Corporation.
3.2. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
the Surviving Corporation shall be the same as the Certificate of Incorporation
of the Merger Sub immediately prior to the Effective Time, except that the name
of the corporation set forth therein shall be changed to the name of the
Company. After the Effective Time, the Certificate of Incorporation of the
Surviving Corporation may be changed at any time and from time to time as
provided therein or in accordance with applicable law.
3.3. BY-LAWS. The by-laws of the Surviving Corporation shall be the
same as the by-laws of the Merger Sub immediately prior to the Effective Time,
except that the name of the corporation set forth therein shall be changed to
the name of the Company. After the Effective Time, the by-laws of the Surviving
Corporation may be changed at any time and from time to time as provided therein
or in accordance with applicable law.
3.4. DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
from and after the Effective Time, each to hold office until the next annual
meeting of stockholders of the Surviving Corporation and his or her successor is
duly elected and qualified or until his or her earlier death, resignation or
removal. The officers of Merger Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation from and after the Effective
Time, each to hold office until his or her death, resignation or removal or
otherwise ceasing to be an officer. Each current director and officer of the
Company shall submit his or her resignation at the Closing, each such
resignation to be effective as of the Effective Time.
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3.5. CONVERSION OF MERGER SUB'S SHARES. Each share of the common
stock, par value $0.01 per share, of Merger Sub that was issued and outstanding
immediately before the Effective Time will be converted into and become one
share of the common stock, par value $ 0.01 per share, of the Surviving
Corporation.
3.6. CONVERSION OF COMPANY STOCK; DISSENTING SHARES.
(A) CANCELLATION OF COMPANY STOCK. At the Effective Time, all shares
of Company Stock issued, outstanding and held by each Stockholder immediately
before the Effective Time (other than any Dissenting Shares (as defined in
Section 3.6(c) hereof) shall be cancelled and extinguished and automatically
become and be converted into the right of such Stockholder to receive (i)
subject to the provisions of this Section 3.6(a) and Sections 3.6(c) and 4.9
hereof, a portion of the Aggregate Consideration Shares equal to that number of
shares of ABI Preferred Stock set forth opposite such Stockholder's name on
Schedule 3.6(a) of the Company Disclosure Schedule and (ii) subject to the
provisions of this Section 3.6(a) and Sections 3.6(c), 3.8, 3.9, 4.2 and 4.3
hereof, cash payments each equal to such Stockholder's Merger Consideration
Percentage of each Contingent Consideration Amount, if any, that ABI is required
to pay pursuant to Section 3.8 hereof (it being understood that the right of
such Stockholder to receive any such cash payments is a contingent right that is
dependent, among other things, on whether ABI is required to pay such Contingent
Consideration Amount pursuant to Section 3.8 hereof). In the event of any
adjustment to the number of Aggregate Consideration Shares pursuant to, and in
accordance with, the provisions of Section 3.7(c) hereof, then, in lieu of the
shares of ABI Preferred Stock that each Stockholder would otherwise have had the
right to receive pursuant to the foregoing provisions of this Section 3.6(a),
such Stockholder shall have the right to receive, subject to the provisions set
forth below in this Section 3.6(a) and to the provisions of Sections 3.6(c) and
4.9 hereof, that number of shares of ABI Preferred Stock as shall be equal to
such Stockholder's Merger Consideration Percentage of the total number of
Aggregate Consideration Shares (after giving effect to any such adjustment
pursuant to Section 3.7(c) hereof). Notwithstanding anything in this Section
3.6(a) to the contrary, no fractional shares of ABI Stock shall be issued in
connection with the Merger, but cash payments shall be made in lieu of such
fractional shares pursuant to, and in accordance with, the provisions of Section
4.9 hereof. Schedule 3.6(a) of the Company Disclosure Schedule sets forth (i)
the name and address of each stockholder of the Company as of the date hereof,
(ii) the Merger Consideration Percentage applicable to each stockholder of the
Company, and (iii) the number of shares of ABI Preferred Stock that each
stockholder of the Company would have the right to receive if the Merger were
being consummated on the date hereof. At the Closing, the Company shall deliver
to ABI an updated Schedule 3.6(a) of the Company Disclosure Schedule to reflect
(i) the name and address of each Stockholder, (ii) the Merger Consideration
Percentage applicable to each Stockholder and (iii) the number of shares of ABI
Preferred Stock that each Stockholder has the right to receive pursuant to the
Merger. From and after the Closing, any reference in this Agreement to Schedule
3.6(a) of the Company Disclosure Schedule shall be deemed to be a reference to
such updated Schedule 3.6(a) of the Company Disclosure Schedule, if any.
(B) CANCELLATION OF TREASURY STOCK, ETC. At the Effective Time, each
share of Company Stock held directly or indirectly by the Company, if any, will
be canceled and will cease to exist, and no payment will be made with respect
thereto.
(C) DISSENTING SHARES. Each share of Company Stock that, immediately
before the Effective Time, was held by any person who has duly exercised the
appraisal rights afforded to dissenting stockholders pursuant to Section 262 of
the DGCL (such shares, collectively, "Dissenting Shares") will, at the Effective
Time, be cancelled but shall not entitle the holder thereof to receive the
consideration referred to in Section 3.6(a) hereof. Instead, the holders of
Dissenting Shares will be
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entitled to receive payment of the appraised value of such Dissenting Shares
subject to, and in accordance with, the provisions of such Section 262, except
that all Dissenting Shares held by Stockholders who withdraw, fail to perfect,
or otherwise lose their appraisal rights with respect to Dissenting Shares will
thereupon be deemed to entitle the holder thereof to receive the consideration
referred to in Section 3.6(a) hereof. The Company shall give ABI (i) prompt
notice of any written demands under Section 262 of the DGCL with respect to any
shares of Company Stock, any withdrawal of any such demand and any other
instruments served pursuant to the DGCL and received by the Company and (ii) the
right to participate in all negotiations and proceedings with respect to any
such demands. The Company shall cooperate with ABI concerning, and shall not,
except with the prior written consent of ABI, voluntarily make any payment with
respect to, or offer to settle or settle, any such demands. In the event that
any Stockholder exercises his, her or its appraisal rights pursuant to Section
262 of the DGCL, then ABI shall be entitled to seek indemnification from the
Stockholders pursuant to, and in accordance with, the provisions of Section 13
hereof in connection with any Damages suffered or incurred by ABI in connection
with such exercise of appraisal rights.
3.7. UNAUDITED BALANCE SHEETS; NET CASH BALANCES; ADJUSTMENT.
(A) COMPANY UNAUDITED BALANCE SHEETS AND COMPANY NET CASH BALANCES. At
the Closing, the Company shall deliver to ABI (i) (A) an unaudited balance sheet
of the Company as of November 30, 2005 (the "Company November 30 Unaudited
Balance Sheet") and a calculation of the Company Net Cash Balance as of November
30, 2005 (the "Company November 30 Unaudited Net Cash Balance"), and (B) a
certificate signed by the President and Chief Financial Officer of the Company
certifying (1) that the Company November 30 Unaudited Balance Sheet was prepared
in accordance with generally accepted accounting principles, consistently
applied, except for the absence of footnotes and subject to adjustments
consisting of normal year-end accruals, the effect of which, both individually
and in the aggregate, is not material, (2) that the Company November 30
Unaudited Balance Sheet fairly and accurately presents the financial condition
of the Company as of November 30, 2005, (3) as to the amount of the Company
November 30 Unaudited Net Cash Balance and (4) as to the amount of any
liabilities not included or reflected in the Company November 30 Unaudited
Balance Sheet that were taken into account for purpose of calculating the
Company November 30 Unaudited Net Cash Balance, and (ii) an unaudited balance
sheet of the Company as of the close of business on the day immediately prior to
the Closing Date (the "Company Closing Unaudited Balance Sheet" and together
with the Company November 30 Unaudited Balance Sheet, each, a "Company Unaudited
Balance Sheet") and a calculation of the Company Net Cash Balance as of the
close of the business on the day immediately prior to the Closing Date (the
"Company Closing Unaudited Net Cash Balance" and together with the Company
November 30 Unaudited Net Cash Balance, each, a "Company Unaudited Net Cash
Balance"), and (B) a certificate signed by the President and Chief Financial
Officer of the Company certifying (1) that the Company Closing Unaudited Balance
Sheet was prepared in accordance with generally accepted accounting principles,
consistently applied, except for the absence of footnotes and subject to
adjustments consisting of normal year-end accruals, the effect of which, both
individually and in the aggregate, is not material, (2) that the Company Closing
Unaudited Balance Sheet fairly and accurately presents the financial condition
of the Company as of the date thereof, (3) as to the amount of the Company
Closing Unaudited Net Cash Balance, and (4) as to the amount of any liabilities
not included or reflected in the Company Closing Unaudited Balance Sheet that
were taken into account for purpose of calculating the Company Closing Unaudited
Net Cash Balance. Together with each certificate delivered by the Company
pursuant to this Section 3.7(a), the Company shall deliver, or cause to be
delivered, to ABI a schedule showing in adequate and sufficient detail the
calculation of each of the Company November 30 Unaudited Net Cash Balance and
the Company Closing Unaudited Net Cash Balance.
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Each Company Unaudited Balance Sheet and the calculation of each
Company Unaudited Net Cash Balance shall have been prepared in consultation and
agreement with ABI and ABI's representatives after ABI and ABI's representatives
have had access (consistent with the provisions reflected in Section 9.1 hereof)
to financial information and personnel relevant to the preparation of such
Company Unaudited Balance Sheet and the calculation of such Company Unaudited
Net Cash Balance. No less than three (3) business days prior to the Closing, the
Company shall have prepared and delivered to ABI (x) a draft of each Company
Unaudited Balance Sheet that the Company expects to deliver at the Closing, (y)
a draft computation of each Company Unaudited Net Cash Balance and (z) a written
description of those items and amounts that the Company anticipates could change
in each Company Unaudited Balance Sheet and each Company Unaudited Net Cash
Balance computation from the drafts thereof delivered by the Company pursuant to
this Section 3.7(a). Such drafts of each Company Unaudited Balance Sheet and the
computation of each Company Unaudited Net Cash Balance shall be prepared by the
Company in good faith and shall reflect all expenses and liabilities that the
Company reasonably anticipates will be reflected in such Company Unaudited
Balance Sheet and the computation of such Company Unaudited Net Cash Balance
that will be delivered by the Company at the Closing pursuant to this Section
3.7(a).
(B) ABI UNAUDITED BALANCE SHEET AND ABI NET CASH BALANCE. At the
Closing, ABI shall deliver to the Company (i) an unaudited balance sheet of ABI
as of November 30, 2005 (the "ABI Unaudited Balance Sheet") and a calculation of
the ABI Net Cash Balance as of November 30, 2005 (the "ABI Unaudited Net Cash
Balance"), and (ii) a certificate signed by the President and Chief Financial
Officer of ABI certifying (A) that the ABI Unaudited Balance Sheet was prepared
in accordance with generally accepted accounting principles, consistently
applied, except for the absence of footnotes and subject to adjustments
consisting of normal year-end accruals, the effect of which, both individually
and in the aggregate, is not material, (B) that the ABI Unaudited Balance Sheet
fairly and accurately presents the financial condition of ABI as of November 30,
2005, (C) as to the amount of the ABI Unaudited Net Cash Balance and (D) as to
the amount of any liabilities not included or reflected in the ABI Unaudited
Balance Sheet that were taken into account for purpose of calculating the ABI
Unaudited Net Cash Balance. Together with such certificate delivered by ABI
pursuant to this Section 3.7(b), ABI shall deliver, or cause to be delivered, to
the Company a schedule showing in adequate and sufficient detail the calculation
of each of the ABI Unaudited Net Cash Balance. The ABI Unaudited Balance Sheet
and the calculation of the ABI Unaudited Net Cash Balance shall have been
prepared in consultation and agreement with the Company and the Company's
representatives after the Company and the Company's representatives have had
access (consistent with the provisions reflected in Section 9.1 hereof) to
financial information and personnel relevant to the preparation of the ABI
Unaudited Balance Sheet and the calculation of the ABI Unaudited Net Cash
Balance. No less than three (3) business days prior to the Closing, ABI shall
have prepared and delivered to the Company (x) a draft of the ABI Unaudited
Balance Sheet that ABI expects to deliver at the Closing, (y) a draft
computation of the ABI Unaudited Net Cash Balance and (z) a written description
of those items and amounts that the Company anticipates could change in the ABI
Unaudited Balance Sheet and the ABI Unaudited Net Cash Balance computation from
the drafts thereof delivered by the Company pursuant to this Section 3.7(b).
Such drafts of the ABI Unaudited Balance Sheet and the computation of the ABI
Unaudited Net Cash Balance shall be prepared by ABI in good faith and shall
reflect all expenses and liabilities that ABI reasonably anticipates will be
reflected in the ABI Unaudited Balance Sheet and the computation of the ABI
Unaudited Net Cash Balance that will be delivered by ABI at the Closing pursuant
to this Section 3.7(b).
(C) ADJUSTMENT TO NUMBER OF AGGREGATE CONSIDERATION SHARES. In the
event that the amount of the Company November 30 Unaudited Net Cash Balance as
set forth in the documents and certificate delivered by the Company at the
Closing in accordance with Section 3.7(a)
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hereof is less than $19,000,000, then the total number of Aggregate
Consideration Shares shall be equal to (i) the Maximum Number of Merger Shares
less (ii) the quotient (rounded down to the nearest whole number) obtained by
dividing (A) an amount equal to $19,000,000 less the amount of the Company
November 30 Unaudited Net Cash Balance by (B) the Series C-2 Price Per Share. In
the event that the amount of the ABI Unaudited Net Cash Balance as set forth in
the documents and certificate delivered by ABI at the Closing in accordance with
Section 3.7(b) hereof is less than $5,000,000, then the total number of
Aggregate Consideration Shares shall be equal to the (i) the Maximum Number of
Merger Shares plus (ii) the quotient (rounded down to the nearest whole number)
obtained by dividing (A) an amount equal to $5,000,000 less the amount of the
ABI Unaudited Net Cash Balance by (B) the Series C-2 Price Per Share.
3.8. AGGREGATE CONTINGENT CONSIDERATION. Subject to the limitations
set forth herein, ABI may be required to pay certain contingent consideration in
connection with the Merger as follows:
(A) CONTINGENT CONSIDERATION AMOUNTS. If the Board of Directors of ABI
or any of its Affiliates (including the Surviving Corporation), or if any
partner, licensee or sublicensee of ABI, at any time determines to market and
sell a Product, then, subject to the provisions set forth below in this Section
3.8, ABI shall be required to provide to each Stockholder and, if any, to each
Assumed Option Exercising Holder and each Assumed Warrant Exercising Holder
contingent consideration in the form of a portion of each Contingent
Consideration Amount (as defined below), if any, with respect to such Product.
The portion of each Contingent Consideration Amount, if any, with respect to
such Product required to be provided to each Stockholder shall be determined
pursuant to, and in accordance with, the provisions of Section 3.6(a) hereof,
and the portion of such Contingent Consideration Amount, if any, with respect to
such Product required to be provided to each Assumed Option Exercising Holder,
if any, and to each Assumed Warrant Exercising Holder, if any, shall be
determined pursuant to, and in accordance with, the provisions of Section 5.1
hereof. For purposes hereof, the term "Contingent Consideration Amount" shall
mean, with respect to each Product, a payment amount equal to, subject to the
provisions set forth below in this Section 3.8 and in Section 3.9 hereof, ten
percent (10%) of the Net Sales of such Product during any calendar quarter. All
Contingent Consideration Amounts in connection with all Products in all
countries of the world in each calendar quarter shall be paid by ABI to the
Stockholders and, if any, to the Assumed Option Exercising Holders and the
Assumed Warrant Exercising Holders within sixty (60) days after the close of the
applicable calendar quarter in the form of cash payments in U.S. dollars. The
Board of Directors of ABI or any of its Affiliates shall make any determination
as to whether or not to market and sell a Product after evaluating the risks,
costs, potential rewards and investment required in connection with marketing
and selling a Product as compared to the risks, costs, potential rewards and
investment required in connection with marketing and selling other products.
(B) REDUCTION OF CONTINGENT CONSIDERATION AMOUNTS.
(I) PAYMENTS TO PFIZER. In the event that, in connection with the
sale of any Product by ABI or any of its Affiliates, Subsidiaries, partners,
licensees or sublicensees in any country of the world during any calendar
quarter, there is any payment due or owing from ABI, any Affiliate of ABI, the
Surviving Corporation or the Company to Pfizer, Inc. pursuant to that certain
License Agreement, dated December 19, 2003, by and between Pfizer, Inc. and the
Company, the Contingent Payment Amount in connection with Net Sales of such
Product in such country and during such calendar quarter shall be reduced, on a
dollar-for-dollar basis, by the amount of any such payment due or owing to
Pfizer, Inc.
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(II) PAYMENTS IN RESPECT OF THIRD PARTY PATENTS AND TECHNOLOGY.
If (a) ABI reasonably determines that (i) the use of Company Intellectual
Property necessary for the manufacture, use or sale of a Product infringes a
valid issued and unexpired patent of a third party that is not an Affiliate of
ABI (each, a "Blocking Third Party Patent") or (ii) a complementary technology
owned by a third party that is not an Affiliate of ABI is necessary for the use
of Company Intellectual Property necessary for the manufacture, use or sale of a
Product (a "Complementary Technology"), and (b) ABI in-licenses such Blocking
Third Party Patent or Complementary Technology pursuant to terms requiring ABI
to make payments to such third party, then fifty percent (50%) of the amount of
any payments that ABI is required to pay in connection with such in-licensed
Blocking Third Party Patent or Complementary Technology shall be offset by ABI
against any and all amounts that ABI would otherwise be required to pay pursuant
to Section 3.8(a) hereof (after giving effect to any other adjustments thereto
pursuant to this Section 3.8(b)) with respect to such Product, provided that in
no event shall any and all amounts that ABI would otherwise be required to pay
pursuant to Section 3.8(a) hereof (after giving effect to any other adjustments
thereto pursuant to this Section 3.8(b)) during any calendar quarter be reduced
by more than fifty percent (50%) pursuant to this Section 3.8(b)(ii). ABI agrees
that any in-license of any Blocking Third Party Patent or Complementary
Technology pursuant to this Section 3.8(b)(ii) shall be on arms' length terms.
3.9. DELIVERY OF REPORTS; AUDIT RIGHTS; INTEREST. Simultaneously with
the payment by ABI of any Contingent Consideration Amount pursuant to Section
3.8 hereof, ABI shall deliver to the Stockholder Representatives a report
indicating the appropriate calculation(s) for each payment, including with
respect to the Contingent Consideration Amounts for each Product an accounting
of the deductions from Net Sales permitted by the definition thereof, and the
total amounts owed. ABI will keep records in sufficient detail to enable the
Stockholder Representatives to verify the accuracy of any report delivered
pursuant to this Section 3.9 for a period of not less than two (2) years after
the end of the calendar quarter to which such records apply. Subject to the
execution of a standard form confidentiality and non-disclosure agreement, an
independent certified public accountant selected by the Stockholder
Representatives shall have reasonable access to the records of ABI, during
reasonable business hours, upon not less than five (5) business days' notice to
ABI, solely for the purpose of verifying the accuracy of any report delivered by
ABI pursuant to this Section 3.9, and not more than once during any twelve (12)
consecutive month period. The accountant selected by the Stockholder
Representatives shall not disclose any information other than information
relating solely to the accuracy of the reports and payments made under Section
3.8 hereof. Any audits under this Section 3.9 shall be at the expense of the
Stockholders and, if any, the Assumed Option Exercising Holders and the Assumed
Warrant Exercising Holders, provided, however, that (i) if ABI has underpaid
Contingent Consideration Amounts due under this Agreement by more than five
percent (5%), ABI shall reimburse the Stockholders and, if any, the Assumed
Option Exercising Holders and the Assumed Warrant Exercising Holders for the
cost of such audit, and (ii) if ABI has overpaid any Contingent Consideration
Amount due under this Agreement, ABI shall be entitled to set off from any
future Contingent Consideration Amounts payable by it under Section 3.8 hereof
any overpayment of Contingent Consideration Amounts made by it under this
Agreement, together with interest thereon at the same annual rate as is
applicable to underpayments of Contingent Consideration Amounts. Any
underpayment of Contingent Consideration Amounts due under this Agreement shall
be made immediately to each Stockholder and, if any, to each Assumed Option
Exercising Holder and each Assumed Warrant Exercising Holder entitled to such
payment in accordance with Section 3.8(a) hereof. Any Contingent Consideration
Amounts not paid when due under this Agreement shall bear interest at an annual
rate equal to the prime rate established by the Wall Street Journal as of the
date such amount is due until the date such amount is paid in full.
4. PROCEDURES.
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4.1. CERTIFICATES. After the Effective Time, stock certificates (each,
a "Certificate," and collectively, the "Certificates") representing shares of
Company Stock will be conclusively deemed to represent the right of the
registered holder thereof to receive the portion of the Merger Consideration
that such registered holder is entitled to receive pursuant to Section 3.6(a)
hereof upon surrender, in accordance with the provisions of Section 4.2 hereof,
of all Certificates registered in the name of such registered holder.
4.2. EXCHANGE OF CERTIFICATES; LETTER OF TRANSMITTAL.
(A) As promptly as practicable before or after the Effective Time, ABI
(or its designee or exchange agent) will send to each Stockholder a letter of
transmittal, in substantially the form attached hereto as Exhibit H, for use in
exchanging all Certificates registered in the name of such Stockholder for the
Merger Consideration to which such Stockholder may be entitled as determined in
accordance with the provisions of this Agreement. Upon surrender by a
Stockholder of all Certificates (or lost certificate affidavits) registered in
the name of such Stockholder to ABI (or its designee), together with a duly
executed letter of transmittal, such Stockholder will be entitled to receive, in
exchange for all of such Certificates, the portion of the Merger Consideration
to which such Stockholder may be entitled (as determined in accordance with the
provisions of this Agreement), and such Certificates will be canceled. It is
intended that such letter of transmittal will contain provisions requiring each
executing Stockholder thereof to, among other things, (a) acknowledge and agree
to be bound by the terms of this Agreement, including this Section 4.2 and
Sections 1 (Definitions), 3.6 (Cancellation of Company Stock; Dissenting
Shares), 3.7 (Aggregate Consideration Shares), 3.8 (Aggregate Contingent
Consideration), 3.9 (Delivery of Reports; Audit Rights; Interest), 4.7
(Stockholder Representatives), 4.8 (Effect of Stockholder Approval), 13
(Indemnification) and 14 (Releases) hereof, and Schedule 3.6(a) of the Company
Disclosure Schedule, (b) make certain representations and warranties with
respect to such executing Stockholder and the shares of Company Stock owned or
held by such executing Stockholder, (c) waive all appraisal or dissenters
rights, and (d) deliver original Certificates (or an affidavit of loss and
indemnity) together with blank stock powers and other instruments of transfer,
in each case in a form reasonably satisfactory to ABI and as a condition
precedent to ABI's obligation to issue shares of ABI Preferred Stock to such
Stockholder. Such letter of transmittal will also contain provisions stating
that each executing Stockholder thereof agrees, by virtue of executing and
delivering such letter of transmittal, to become a party to each of the Series C
Stockholders Agreement and the Series C Stock Restriction Agreement.
(B) Shares of ABI Preferred Stock issued pursuant to the Merger shall
be deemed to have been issued at the Effective Time. If any certificate
representing shares of ABI Preferred Stock are to be issued in a name other than
that in which the certificate surrendered is registered, it shall be a condition
of such exchange that the person requesting such exchange shall deliver to ABI
(or its designee or exchange agent) all documents necessary to evidence and
effect such transfer and shall pay to ABI (or its designee or exchange agent)
any transfer or other taxes required by reason of the issuance of a certificate
representing shares of ABI Preferred Stock in a name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of ABI (or its designee or exchange agent) that such tax has been
paid or is not applicable.
4.3. NO TRANSFERS.
(A) After the Effective Time, no transfers of shares of Company Stock
will be made in the stock transfer books of the Company. If, after the Effective
Time, Certificates are presented (for transfer or otherwise) to the Surviving
Corporation or its transfer agent for Company Stock, they will be canceled and
exchanged for the portion of the Merger Consideration deliverable in respect
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thereof (or returned to the presenting person, if such certificate represents
Dissenting Shares), provided that each person surrendering the Certificate or
Certificates complies with all of the provisions of Section 4.2 hereof and this
Section 4.3.
(B) The right of each Stockholder to receive the portion of the
Aggregate Contingent Consideration, if any, to which such Stockholder is
entitled pursuant to this Agreement upon consummation of the Merger: (i) shall
be personal to such Stockholder; (ii) shall not be transferable by such
Stockholder or any person claiming under such Stockholder, whether by sale,
assignment, pledge or otherwise, except as set forth below in this Section
4.3(b), and any other purported transfer shall be void and of no force or
effect; (iii) shall not constitute or represent any equity or ownership interest
in ABI or the Surviving Corporation; and (iv) shall not entitle such Stockholder
to any voting or dividend rights, rights to any other distributions or other
rights common to stockholders. Notwithstanding the foregoing, this Agreement
shall not restrict any Stockholder from transferring such Stockholder's right to
receive the portion of the Aggregate Contingent Consideration, if any, to which
such Stockholder is entitled pursuant to this Agreement upon consummation of the
Merger (A) to other entities controlled by such Stockholder, (B) in the case of
any Stockholder that is a corporation, general partnership, limited partnership,
limited liability company or venture capital firm, to such Stockholder's
stockholders, partners, members or other holders of equity securities in such
Stockholder, as applicable, (C) in connection with tax, estate or financial
planning or (D) upon the death of such Stockholder or (E) by operation of law,
provided that, (1) such Stockholder (or in the event of death, if applicable,
such Stockholder's executor or legal representative) provides to ABI and the
Stockholder Representatives prompt written notice of such transfer, which
written notice shall be given in accordance with the provisions of Section 16.5
hereof and shall set forth the name and address of each transferee, (2) such
Stockholder does not receive any consideration in connection with such transfer,
(3) any such permitted transferee agrees to assume all of the obligations of
such Stockholder under this Agreement to the extent such obligations are
applicable to the portion of the Aggregate Contingent Consideration so
transferred to such permitted transferee, and (4) such transfer shall not
violate, or cause ABI to be in violation, of any federal or state securities
laws, as determined in good faith by ABI's legal counsel. Subsequent transfers
by any such transferee of the right to receive a portion of the Aggregate
Contingent Consideration shall also be made pursuant to, and in accordance with,
all of the provisions of this Section 4.3(b) to the same extent as if each such
transferee were a Stockholder.
(C) Except for any consideration provided or paid (or to be provided
or paid) pursuant to Sections 3.8, 3.9 and 5.1 hereof to the Assumed Option
Exercising Holders and/or the Assumed Warrant Exercising Holders, if any, or to
any permitted transferees thereof pursuant to Section 5.1 hereof, and except for
any consideration provided or paid (or to be provided or paid) pursuant to this
Agreement to any person to whom the right to receive such consideration has been
transferred pursuant to, and in accordance with, the provisions of Section
4.2(b) hereof or Section 4.3(b) hereof and, if applicable, this Section 4.3(c),
all consideration provided or paid (or to be provided or paid) pursuant to this
Agreement shall be paid to those Stockholders that are listed on Schedule 3.6(a)
of the Company Disclosure Schedule at the address provided for such Stockholders
in such Schedule 3.6(a) or at such other address (or in the case of wire
transfers, in accordance with such wire transfer instructions) as the
Stockholder Representatives shall provide to ABI by giving written notice
thereof in accordance with the provisions of Section 16.5 hereof. Any portion of
the Aggregate Contingent Consideration paid (or to be paid) pursuant to this
Agreement to any person to whom the right to receive an appropriate portion of
the Aggregate Contingent Consideration has been properly transferred pursuant
to, and in accordance with, the provisions of Section 4.3(b) hereof shall be
paid by ABI to such person at the address provided to ABI for such person
pursuant to, and in accordance with, the provisions of Section 4.3(b) hereof or
at such other address (or in the case of wire transfers, in accordance with such
wire transfer instructions) as the Stockholder Representatives shall provide to
ABI by giving written notice thereof in accordance with the
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provisions of Section 16.5 hereof. Prior to making any payment of any portion of
the Aggregate Contingent Consideration, ABI shall have the right to request the
Stockholder Representatives to provide to ABI the name of each person to whom a
payment is to be made (or the full name of any specific person that ABI may
request or inquire about), the address of such person (or in the case of any
payment by wire transfer, wire transfer instructions for such person) and the
amount to be paid to such person, and upon receipt of such information from the
Stockholder Representatives in accordance with the provisions of Section 16.5
hereof ABI shall have the right to make payment of such portion of the Aggregate
Contingent Consideration in accordance with such information. ABI shall have no
liability of any kind whatsoever to the Stockholder Representatives, any
Stockholder, any transferee of any Stockholder or any other person in connection
with any portion of the Aggregate Contingent Consideration paid by ABI pursuant
to, and in accordance with, the provisions of this Section 4.3(c). ABI shall
also have no liability of any kind whatsoever to the Stockholder
Representatives, any Stockholder, any transferee of any Stockholder or any other
person in connection with any delay by ABI in making any payment of any portion
of the Aggregate Contingent Consideration if and to the extent that such delay
is caused by the failure of the Stockholder Representatives to provide to ABI on
a timely basis any information that ABI has requested the Stockholder
Representatives pursuant to this Section 4.3(c).
4.4. TERMINATION OF RIGHTS; ABANDONED PROPERTY. After the Effective
Time, holders of Company Stock will cease to be, and will have no rights as,
stockholders of the Company, other than (i) in the case of shares other than
Dissenting Shares, the rights to receive the Merger Consideration, as provided
in this Agreement, and (ii) in the case of Dissenting Shares, the rights
afforded to the holders thereof under Section 262 of the DGCL. Until surrendered
for cancellation in accordance with the provisions of Section 4.2 hereof, each
Certificate representing shares of Company Stock shall, from and after the
Effective Time, represent (i) in the case of shares other than Dissenting
Shares, the right of the applicable Stockholder to receive the Merger
Consideration and (ii) in the case of Dissenting Shares, the rights afforded to
the holders thereof under the applicable provisions of the DGCL. Neither ABI nor
the Company nor any other person will be liable to any holder or former holder
of shares of Company Stock for any shares, or any dividends or other
distributions with respect thereto, properly delivered to a public official
pursuant to applicable abandoned property, escheat, or similar laws.
4.5. LOST CERTIFICATES, ETC. In the event that any Certificate has
been lost, stolen, or destroyed, then upon receipt by ABI of appropriate
evidence as to such loss, theft, or destruction, and to the ownership of such
Certificate by the person claiming such Certificate to be lost, stolen, or
destroyed, the receipt by ABI (or its designee) of appropriate and customary
indemnification and the surrender pursuant to Section 4.2 hereof by such person
of all other Certificates registered in the name of such person that have not
been lost, stolen or destroyed, then such person shall be entitled to receive
the appropriate portion of the Merger Consideration pursuant to the provisions
of Section 3.6(a) hereof, subject to the requirements of Section 4.2 hereof.
4.6. DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividend or other distribution declared with respect to ABI Preferred Stock with
a record date after the Effective Time shall be paid to holders of unsurrendered
Certificates until such holders surrender such Certificates or comply with
Section 4.5 hereof. In addition, no portion of the Aggregate Contingent
Consideration payable to holders of unsurrendered Certificates shall be paid to
such holders until such holders surrender such Certificates or otherwise comply
with Section 4.5 hereof. Upon the surrender of such Certificates in accordance
with Section 4.2 hereof and upon compliance with all of the provisions of
Section 4.2 or Section 4.5 hereof, as applicable, and all of the provisions of
Section 4.3 hereof, there shall be paid to such holders, promptly after such
surrender, the amount of dividends or other distributions declared with respect
to ABI Stock with a record date after the Effective Time, and the amount of any
portion of the Aggregate Contingent Consideration to which such holders may be
entitled pursuant to this Agreement,
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and, in each case, not previously paid solely because of the failure to
surrender such Certificates for exchange. No interest shall be paid or shall
accrue on any such amounts, except to the extent required by Section 3.9 hereof.
4.7. STOCKHOLDER REPRESENTATIVES.
(A) In order to efficiently administer the transactions contemplated
hereby, including (i) the defense and/or settlement of any claims for which the
Stockholders may be required to indemnify the ABI Indemnified Parties (as
defined in Section 13.3 hereof) pursuant to Section 13 hereof, (ii) the exercise
of the rights hereunder of Stockholders and, if any, the Assumed Option
Exercising Holders and the Assumed Warrant Exercising Holders, and (iii) the
orderly distribution of the Merger Consideration from ABI to the Stockholders
and, if any, the Assumed Option Exercising Holders and the Assumed Warrant
Exercising Holders, each of the Company, the Stockholders, the Optionholders,
the Warrantholders and, if any, the Assumed Option Exercising Holders and the
Assumed Warrant Exercising Holders hereby designates ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ph.D., acting by majority vote, as the
representatives of the Stockholders, the Optionholders, the Warrantholders and,
if any, the Assumed Option Exercising Holders and the Assumed Warrant Exercising
Holders (in such capacity, the "Stockholder Representatives").
(B) The Company, the Stockholders, the Optionholders, the
Warrantholders and, if any, the Assumed Option Exercising Holders and the
Assumed Warrant Exercising Holders hereby authorize the Stockholder
Representatives, acting by majority vote, (i) to take all action necessary in
connection with the defense and/or settlement of any claims for which the
Stockholders may be required to indemnify the ABI Indemnified Parties pursuant
to Section 13 hereof, (ii) to determine the Stockholders and, if any, the
Assumed Option Exercising Holders and the Assumed Warrant Exercising Holders to
whom Merger Consideration from ABI shall be distributed, the amount of
consideration to be so distributed, and the address of such Stockholders and, if
any, such Assumed Option Exercising Holders and such Assumed Warrant Exercising
Holders, and to receive such Merger Consideration and distribute it pursuant to
Section 3.6 and Section 5.1 hereof, (iii) to amend, modify, change, waive or
supplement any provision of this Agreement at any time and from time to time
after the Effective Time, including, without limitation, Sections 3.6(a), 3.8,
3.9, 5.1 and 13 hereof, and thereby change, modify or amend any of the rights
and obligations under this Agreement of the Stockholders, the Optionholders, the
Warrantholders and, if any, the Assumed Option Exercising Holders and the
Assumed Warrant Exercising Holders, (iv) to give and receive all notices
required to be given under this Agreement to or from the Stockholders, the
Optionholders, the Warrantholders and, if any, the Assumed Option Exercising
Holders and the Assumed Warrant Exercising Holders, and (iv) to take any and all
additional action as is contemplated to be taken by or on behalf of the
Stockholders, the Optionholders, the Warrantholders and, if any, the Assumed
Option Exercising Holders and the Assumed Warrant Exercising Holders by the
terms of this Agreement or to enforce against ABI its obligations under the
terms of this Agreement. In order for any action, consent, approval or
determination taken or made by the Stockholder Representatives to be valid,
binding and enforceable, it must be taken or made by majority vote of the
Stockholder Representatives. None of the Stockholder Representatives shall have
any power or authority to take any action individually without the others, and,
in the event that any of the Stockholder Representatives takes any action
individually without the others, such action shall not be binding or of any
force or effect whatsoever.
(C) In the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Ph.D. or their respective substitutes as one of the Stockholder
Representatives, dies, becomes unable to perform his responsibilities hereunder
or resigns from such position, those Stockholders (other than holders of
Dissenting Shares), Optionholders and Warrantholders that, collectively, held
shares of
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Company Stock immediately prior to the Effective Time representing more than
fifty percent (50%) of the voting power of all shares of Company Stock then
outstanding (the number of shares of Company Stock then outstanding being
calculated for purposes of this Section 4.7(c) as if all Assumed Options and
Assumed Warrants had been exercised immediately prior to the Effective Time),
voting together as a single class, shall select another representative to fill
such vacancy and such substituted representative shall be deemed to a
Stockholder Representative for all purposes of this Agreement and the documents
delivered pursuant hereto.
(D) All decisions and actions by a majority of the Stockholder
Representatives, including without limitation any agreement between a majority
of the Stockholder Representatives and ABI relating to the defense or settlement
of any claims for which the Stockholders may be required to indemnify the ABI
Indemnified Parties pursuant to Section 13 hereof, shall be binding upon all of
the Stockholders, the Optionholders, the Warrantholders and, if any, the Assumed
Option Exercising Holders and the Assumed Warrant Exercising Holders, and no
Stockholder, Optionholder, Warrantholder or, if any, Assumed Option Exercising
Holder or Assumed Warrant Exercising Holder shall have the right to object,
dissent, protest or otherwise contest the same. No Stockholder Representative
shall have any liability to any Stockholder, any Optionholder, any
Warrantholder, any Assumed Option Exercising Holder or any Assumed Warrant
Exercising Holder for any act done or omitted hereunder as a Stockholder
Representative while acting in good faith and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith.
(E) By virtue of the adoption of this Agreement and the approval of
the Merger by the stockholders of the Company at a meeting of stockholders (or
by written consent in lieu of a meeting) pursuant to, and in accordance with,
the applicable provisions of the DGCL, each Stockholder that is not a holder of
Dissenting Shares (regardless of whether or not such Stockholder votes in favor
of the adoption of this Agreement and the approval of the Merger at such meeting
or by written consent), and each Optionholder, each Warrantholder and, if any,
each Assumed Option Exercising Holder and each Assumed Warrant Exercising Holder
(regardless of whether or not such Optionholder, Warrantholder, Assumed Option
Exercising Holder or Assumed Warrant Exercising Holder approves or otherwise
consents to this Agreement and the Merger), hereby agrees that:
(I) except in the case of gross negligence or willful misconduct
by ABI, ABI shall be able to rely conclusively on the instructions and decisions
of a majority of the Stockholder Representatives as to the settlement of any
claims for indemnification by the ABI Indemnified Parties pursuant to Section 13
hereof, or as to any other actions required or permitted to be taken by the
Stockholder Representatives hereunder, and no Stockholder, Optionholder,
Warrantholder or, if any, Assumed Option Exercising Holder or Assumed Warrant
Exercising Holder shall have any cause of action against ABI to the extent ABI
has relied upon the instructions or decisions of a majority of the Stockholder
Representatives;
(II) all actions, decisions and instructions of at least a
majority of the Stockholder Representatives shall be conclusive and binding upon
all of the Stockholders, the Optionholders, the Warrantholders and, if any, the
Assumed Option Exercising Holders and the Assumed Warrant Exercising Holders,
and no Stockholder, Optionholder, Warrantholder, Assumed Option Exercising
Holder or Assumed Warrant Exercising Holder shall have any cause of action
against any of the Stockholder Representatives for any action taken, decision
made or instruction given by the Stockholder Representatives, acting by majority
vote, under this Agreement, except for fraud or willful breach of this Agreement
by the Stockholder Representatives;
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(III) the provisions of this Section 4.7 are independent and
severable, are irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Stockholder, Optionholder,
Warrantholder, Assumed Option Exercising Holder or Assumed Warrant Exercising
Holder may have in connection with the transactions contemplated by this
Agreement;
(IV) remedies available at law for any breach of the provisions
of this Section 4.7 are inadequate; therefore, ABI, Merger Sub and/or the
Surviving Corporation shall be entitled to seek temporary and permanent
injunctive relief without the necessity of proving damages if either ABI, Merger
Sub and/or the Surviving Corporation brings an action to enforce the provisions
of this Section 4.7; and
(V) the provisions of this Section 4.7 shall be binding upon the
executors, heirs, legal representatives, personal representatives, successor
trustees, and successors of each Stockholder, Optionholder, Warrantholder and,
if any, Assumed Option Exercising Holder and Assumed Warrant Exercising Holder,
and any references in this Agreement to a Stockholder, an Optionholder, a
Warrantholder, an Assumed Option Exercising Holder or an Assumed Warrant
Exercising Holder shall mean and include the successors to such Stockholder's,
Optionholder's, Warrantholder's, Assumed Option Exercising Holder's or Assumed
Warrant Exercising Holder's, as the case may be, rights hereunder, whether
pursuant to testamentary disposition, the laws of descent and distribution or
otherwise.
(F) All fees and expenses incurred by the Stockholder Representatives
shall be paid by the Stockholders (other than holders of Dissenting Shares) and,
if any, the Assumed Option Exercising Holders and the Assumed Warrant Exercising
Holders in proportion to the amount of Merger Consideration to which each of
them is entitled; provided, that in no event shall any Stockholder, Assumed
Option Exercising Holder or Assumed Warrant Exercising Holder be liable for any
such fees or expenses in excess of the aggregate Merger Consideration paid to
such Stockholder or, if any, Assumed Option Exercising Holder or Assumed Warrant
Exercising Holder, as the case may be, without such Stockholder's or, if any,
Assumed Option Exercising Holder's or Assumed Warrant Exercising Holder's prior
written consent.
4.8. EFFECT OF STOCKHOLDER APPROVAL. Subject to the provisions of the
last sentence of this Section 4.8, the adoption of this Agreement and the
approval of the Merger by the stockholders of the Company at a meeting of
stockholders (or by written consent in lieu of a meeting) pursuant to, and in
accordance with, the applicable provisions of the DGCL, shall be deemed to
constitute approval by each Stockholder individually (regardless of whether or
not such Stockholder votes in favor of the adoption of this Agreement and the
approval of the Merger at such meeting or by written consent), to the same
extent as if such Stockholder were a party to this Agreement, of (i) all of the
provisions of this Agreement that pertain to the Stockholders, that impose
liabilities, obligations or burdens on the Stockholders (including, without
limitation, the indemnification provisions of Section 13 hereof and the release
provisions of Section 14 hereof) or that limit the rights of the Stockholders
(including, without limitation, with respect to the right of the Stockholders to
receive all or any portion of the Merger Consideration), (ii) the appointment of
the Stockholder Representatives as representatives of the Stockholders, the
Optionholders, the Warrantholders and, if any, the Assumed Option Exercising
Holders and the Assumed Warrant Exercising Holders, (iii) the grant to the
Stockholder Representatives of all of the powers, rights and privileges
contemplated under this Agreement (including, without limitation, those set
forth in Section 4.7 hereof) and (iv) the provisions of this Agreement
concerning the replacement and substitution of any of the Stockholder
Representatives. Notwithstanding the foregoing, the provisions of this Section
4.8 shall not apply to those Stockholders that duly exercise the appraisal
rights afforded to dissenting stockholders pursuant to Section 262 of the DGCL.
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4.9. NO FRACTIONAL SHARES. In lieu of the issuance of fractional
shares of ABI Stock, cash adjustments will be paid (without interest) to the
Stockholders in respect of any fractional share of ABI Stock that would
otherwise be issuable to them and the amount of such cash adjustments will be
determined by multiplying each relevant holder's fractional interest by the
Series C-2 Price Per Share. For purposes of determining whether, and in what
amounts, a particular Stockholder would be entitled to receive cash adjustments
under this Section 4.9, shares held of record by such holder and represented by
two or more certificates will be aggregated.
5. COMPANY OPTIONS AND COMPANY WARRANTS; SECURITIES LAWS TRANSFER
RESTRICTIONS; LEGENDS.
5.1. COMPANY OPTIONS AND COMPANY WARRANTS.
(A) Schedule 5.1(a) of the Company Disclosure Schedule sets forth
(i) each Company Option to be assumed by ABI pursuant to this Section 5.1 at the
Effective Time, (ii) the name and address of the holder of such Company Option,
(iii) the number of shares of Company Common Stock for which such Company Option
shall be vested and exercisable at any time on or prior to the first anniversary
of the Effective Time (in each case, the "Assumed Company Option Shares"), (iv)
the Merger Consideration Percentage with respect to the Assumed Company Option
Shares subject to such Company Option, (v) the aggregate exercise price required
to be paid pursuant to the terms of such Company Option in connection with the
exercise thereof for all of the Assumed Company Option Shares subject to such
Company Option and (vi) the total number of shares of ABI Common Stock for which
such Company Option will be exercisable during the term thereof as a result of
the assumption thereof by ABI pursuant to this Section 5.1. Schedule 5.1(a) of
the Company Disclosure Schedule also sets forth (1) each Company Warrant to be
assumed by ABI pursuant to this Section 5.1 at the Effective Time, (2) the name
and address of the holder of such Company Warrant, (3) the number of shares of
Company Common Stock for which such Company Warrant may be exercised (in each
case, the "Assumed Company Warrant Shares"), (4) the Merger Consideration
Percentage with respect to the Assumed Company Warrant Shares subject to such
Company Warrant, (5) the aggregate exercise price required to be paid pursuant
to the terms of such Company Warrant in connection with the exercise thereof for
all of the Assumed Company Warrant Shares subject to such Company Warrant and
(6) the total number of shares of ABI Common Stock for which such Company
Warrant will be exercisable during the term thereof as a result of the
assumption thereof by ABI pursuant to this Section 5.1. At the Closing, the
Company shall deliver to ABI an updated Schedule 5.1(a) of the Company
Disclosure Schedule setting forth the information called for by all of the
foregoing items (i)-(vi) and (1)-(6) of this Section 5.1(a) in the event that
there is any change or update to the information called for by any of the
foregoing items (i)-(vi) and (1)-(6) of this Section 5.1(a). From and after the
Closing, any reference in this Agreement to Schedule 5.1(a) of the Company
Disclosure Schedule shall be deemed to be a reference to such updated Schedule
5.1(a) of the Company Disclosure Schedule, if any.
(B) Subject to and upon the terms and condition of this Section
5.1, at the Effective Time ABI shall assume each Company Option described on
Schedule 5.1(a) of the Company Disclosure Schedule that remains outstanding at
the Effective Time (each such Company Option if and to the extent assumed by ABI
pursuant to this Section 5.1 with respect to the Assumed Company Option Shares
subject to such Company Option being referred to, for purposes of this
Agreement, as an "Assumed Option"). Each Assumed Option shall continue to have,
and be subject to, the same terms and conditions set forth in the Company Stock
Option Plan immediately prior to the Effective Time (including, without
limitation, any repurchase rights) and/or the stock option agreement between the
Company and the holder of such Assumed Option as in effect at the Effective
Time, except that (A) such Assumed Option shall no longer be exercisable for
shares of Company Common Stock but, in lieu
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thereof, shall be exercisable for that number of shares of ABI Common Stock set
forth on Schedule 5.1(a) of the Company Disclosure Schedule with respect to such
Assumed Option, subject to adjustment pursuant to the provisions set forth in
the last sentence of this Section 5.1(b), (B) the per share exercise price for
the shares of ABI Common Stock issuable upon exercise of such Assumed Option
shall be equal to the quotient (rounded up to the nearest whole cent) determined
by dividing (x) the amount set forth on Schedule 5.1(a) of the Company
Disclosure Schedule as the aggregate exercise price for all of the Assumed
Company Option Shares subject to such Assumed Option by (y) the aggregate number
of shares of ABI Common Stock for which such Assumed Option shall become
exercisable pursuant to the foregoing clause (A) of this Section 5.1(b), and (C)
if and when such Assumed Option is exercised by the holder thereof at any time
and from time to time after the Effective Time (such holder that exercises such
Assumed Option being referred to, for purposes of this Agreement, as an "Assumed
Option Exercising Holder"), such Assumed Option Exercising Holder shall
thereafter also be entitled to receive, subject to the provisions of this
Section 5.1 and Sections 3.8 and 3.9 hereof, with respect to any shares of ABI
Common Stock that are acquired by such Assumed Option Exercising Holder upon
exercise of such Assumed Option, a portion of the Aggregate Contingent
Consideration consisting of cash payments each equal to the product (rounded to
the nearest whole cent) of (i) a fraction, the numerator of which shall be the
number of such shares of ABI Common Stock acquired by such Assumed Option
Exercising Holder upon exercise of such Assumed Option and the denominator of
which shall be all shares of ABI Common Stock issued and/or issuable to such
Assumed Option Exercising Holder upon exercise of such Assumed Option and (ii)
such Assumed Option's Merger Consideration Percentage of each Contingent
Consideration Amount, if any, payable by ABI pursuant to Section 3.8 hereof (it
being understood that the right of such Assumed Option Exercising Holder to
receive such cash payments with respect to such shares of ABI Common Stock
acquired upon exercise of such Assumed Option is a contingent right that is
dependent, among other things, on whether ABI is required to pay such Contingent
Consideration Amount pursuant to Section 3.8 hereof). In the event of any
adjustment to the number of Aggregate Consideration Shares pursuant to, and in
accordance with, the provisions of Section 3.7(c) hereof, then, in lieu of the
shares of ABI Common Stock that otherwise would be subject to each Assumed
Option pursuant to clause (A) of this Section 5.1(b), the total number of shares
of ABI Common Stock subject to each Assumed Option shall be equal to such
Assumed Option's Merger Consideration Percentage of the total number of
Aggregate Consideration Shares (after giving effect to any such adjustment
pursuant to Section 3.7(c) hereof), rounded down to the nearest whole number of
shares of ABI Common Stock.
(C) Subject to and upon the terms and conditions of this Section
5.1, at the Effective Time ABI shall assume each Company Warrant described on
Schedule 5.1(a) of the Company Disclosure Schedule that remains outstanding at
the Effective Time (each such Company Warrant to the extent assumed by ABI
pursuant to this Section 5.1 with respect to the Assumed Company Warrant Shares
subject to such Company Warrant being referred to, for purposes of this
Agreement, as an "Assumed Warrant"). Each Assumed Warrant shall continue to
have, and be subject to, the same terms and conditions set forth in the
applicable warrant instrument or warrant agreement as in effect at the Effective
Time, except that (A) such Assumed Warrant shall no longer be exercisable for
shares of Company Common Stock but, in lieu thereof, shall be exercisable for
that number of shares of ABI Common Stock set forth on Schedule 5.1(a) of the
Company Disclosure Schedule with respect to such Assumed Warrant, subject to
adjustment pursuant to the provisions set forth in the last sentence of this
Section 5.1(c), (B) the per share exercise price for the shares of ABI Common
Stock issuable upon exercise of such Assumed Warrant shall be equal to the
quotient (rounded up to the nearest whole cent) determined by dividing (x) the
amount set forth on Schedule 5.1(a) of the Company Disclosure Schedule as the
aggregate exercise price for all of the Assumed Company Warrant Shares subject
to such Assumed Warrant by (y) the aggregate number of shares of ABI Common
Stock for which such Assumed Warrant shall become exercisable pursuant to the
foregoing clause (A) of this Section 5.1(c), and (C) if and when such Assumed
Warrant is exercised by the holder thereof at any time and from time to time
after the
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Effective Time (such holder that exercises such Assumed Warrant being referred
to, for purposes of this Agreement, as an "Assumed Warrant Exercising Holder"),
such Assumed Warrant Exercising Holder shall thereafter also be entitled to
receive, subject to the provisions of this Section 5.1 and Sections 3.8 and 3.9
hereof, with respect to any shares of ABI Common Stock that are acquired by such
Assumed Warrant Exercising Holder upon exercise of such Assumed Warrant, a
portion of the Aggregate Contingent Consideration consisting of cash payments
each equal to the product (rounded to the nearest whole cent) of (i) a fraction,
the numerator of which shall be the number of such shares of ABI Common Stock
acquired by such Assumed Warrant Exercising Holder upon exercise of such Assumed
Warrant and the denominator of which shall be all shares of ABI Common Stock
issued and/or issuable to such Assumed Warrant Exercising Holder upon exercise
of such Assumed Warrant and (ii) such Assumed Warrant's Merger Consideration
Percentage of each Contingent Consideration Amount, if any, payable by ABI
pursuant to Section 3.8 hereof (it being understood that the right of such
Assumed Warrant Exercising Holder to receive such cash payments with respect to
such shares of ABI Common Stock acquired upon exercise of such Assumed Warrant
is a contingent right that is dependent, among other things, on whether ABI is
required to pay such Contingent Consideration Amount pursuant to Section 3.8
hereof). In the event of any adjustment to the number of Aggregate Consideration
Shares pursuant to, and in accordance with, the provisions of Section 3.7(c)
hereof, then, in lieu of the shares of ABI Common Stock that otherwise would be
subject to each Assumed Warrant pursuant to clause (A) of this Section 5.1(c),
the total number of shares of ABI Common Stock subject to each Assumed Warrant
shall be equal to such Assumed Warrant's Merger Consideration Percentage of the
total number of Aggregate Consideration Shares (after giving effect to any such
adjustment pursuant to Section 3.7(c) hereof), rounded down to the nearest whole
number of shares of ABI Common Stock.
(D) As soon as practicable after the Effective Time, ABI shall
deliver to the Optionholders and the Warrantholders appropriate notice
evidencing the assumption of the Assumed Options and the Assumed Warrants
pursuant to this Section 5.1 and setting forth the rights, limitations and
conditions applicable to the Optionholders, the Warrantholders, the Assumed
Option Exercising Holders and the Assumed Warrant Exercising Holders as a result
of such assumption in accordance with the terms of this Section 5.1 hereof.
(E) ABI shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of ABI Common Stock for delivery upon
exercise of Assumed Options and Assumed Warrants.
(F) ABI shall not assume any Company Options other than the
Assumed Options. Without limiting the generality of the foregoing provisions of
this Section 5.1(f), none of the Company Options listed on Schedule 5.1(f) of
the Company Disclosure Schedule shall be assumed by ABI, even if such Company
Options remain outstanding immediately before the Effective Time and are fully
vested and exercisable immediately before the Effective Time (such options are
hereinafter referred to, collectively, as the "Company Former Employee Options"
and each individually as a "Company Former Employee Option"). All Company
Options that are not Assumed Options or Company Former Employee Options shall
have been exercised or terminated prior to the Closing Date. All Company Former
Employee Options shall continue to be exercisable and shall terminate in
accordance with their respective terms as in effect on the date of this
Agreement.
(G) ABI shall not assume any Company Warrants other than the
Assumed Warrants. All Company Warrants that are not Assumed Warrants shall have
been exercised or terminated prior to the Closing Date.
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(H) The Company shall have taken all necessary action to
implement and carry out the provisions of this Section 5.1, including, without
limitation, (i) amending the Company Stock Option Plan prior to the Closing to
clarify or provide that all Company Options that are subject to the Company
Stock Option Plan and that remain outstanding and exercisable immediately after
the consummation of any merger or acquisition of the Company in which the
Company is not the surviving entity shall automatically (without any act or
action by the holder thereof, the Company or the acquiring or surviving entity
in connection with such merger or acquisition) be modified so that such Company
Options shall thereafter be exercisable by the holder thereof only if, and on
such terms and conditions as, such acquiring or surviving entity has agreed to
assume such Company Options in connection with such merger or acquisition of the
Company, (ii) obtaining prior to the Closing the consent of each holder of a
Company Option that is subject to the Company Stock Option Plan to the amendment
to the Company Stock Option Plan contemplated in the foregoing clause (i), but
only if such consent is legally required, (iii) obtaining prior to the Closing
the consent of each holder of an Assumed Option that is not subject to the
Company Stock Option Plan to any amendment or modification to such Assumed
Option (or any agreement that sets forth the terms and conditions of such
Assumed Option) that may be required so that, after the Effective Time, the
terms and conditions of such Assumed Option are consistent with the provisions
of this Section 5.1 as it applies to such Assumed Option, but only if such
consent is legally required to implement the provisions of this Section 5.1 to
such Assumed Option, and (iv) terminating or canceling, as of the Effective
Time, each Company Option (other than Assumed Options and Company Former
Employee Options) that is outstanding immediately before the Effective Time and
each Company Warrant (other than Assumed Warrants) that is outstanding
immediately before the Effective Time. At or prior to the Closing, the Company
shall have delivered to ABI true, correct and complete copies of the Company
Stock Option Plan, the stock option agreement pertaining to each Assumed Option,
any other agreement, instrument or document that pertains or relates to any
Assumed Option, the warrant instrument or agreement that pertains or relates to
each Assumed Warrant, and any other agreement, instrument or document that
pertains or relates to any Assumed Warrant, all of the foregoing as amended and
in effect at the Closing.
(I) The right of each Assumed Option Exercising Holder and of
each Assumed Warrant Exercising Holder to receive the portion of the Aggregate
Contingent Consideration, if any, to which such Assumed Option Exercising Holder
or Assumed Warrant Exercising Holder, as the case may be, is entitled pursuant
to the Merger: (i) shall be personal to such Assumed Option Exercising Holder or
Assumed Warrant Exercising Holder, as the case may be; (ii) shall not be
transferable by such Assumed Option Exercising Holder or Assumed Warrant
Exercising Holder, as the case may be, or any person claiming under such Assumed
Option Exercising Holder or Assumed Warrant Exercising Holder, as the case may
be, whether by sale, assignment, pledge or otherwise, except as set forth below
in this Section 5.1(i), and any other purported transfer shall be void and of no
force or effect; (iii) shall not constitute or represent any equity or ownership
interest in ABI or the Surviving Corporation; and (iv) shall not entitle such
Assumed Option Exercising Holder or Assumed Warrant Exercising Holder, as the
case may be, to any voting or dividend rights, rights to any other distributions
or other rights common to stockholders. Notwithstanding the foregoing, this
Agreement shall not restrict any Assumed Option Exercising Holder or any Assumed
Warrant Exercising Holder from transferring such Assumed Option Exercising
Holder's or Assumed Warrant Exercising Holder's, as the case may be, right to
receive the portion of the Aggregate Contingent Consideration, if any, to which
such Assumed Option Exercising Holder or Assumed Warrant Exercising Holder, as
the case may be, is entitled pursuant to the Merger (A) to other entities
controlled by such Assumed Option Exercising Holder or Assumed Warrant
Exercising Holder, as the case may be, (B) in connection with tax, estate or
financial planning or (C) upon the death of such Assumed Option Exercising
Holder or Assumed Warrant Exercising Holder, as the case may be, or (D) by
operation of law, provided that, (1) such Assumed Option Exercising Holder or
Assumed Warrant Exercising Holder, as the case may be, (or in the event of
death, if applicable, the executor or
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legal representative of such Assumed Option Exercising Holder or Assumed Warrant
Exercising Holder, as the case may be) provides to ABI and the Stockholder
Representatives prompt written notice of such transfer, which written notice
shall be given in accordance with the provisions of Section 16.5 hereof and
shall set forth the name and address of each transferee, (2) such Assumed Option
Exercising Holder or Assumed Warrant Exercising Holder, as the case may be, does
not receive any consideration in connection with such transfer, (3) any such
permitted transferee agrees to assume all of the obligations of such Assumed
Option Exercising Holder or Assumed Warrant Exercising Holder, as the case may
be, under this Agreement to the extent such obligations are applicable to the
portion of the Aggregate Contingent Consideration so transferred to such
permitted transferee, and (4) such transfer shall not violate, or cause ABI to
be in violation, of any federal or state securities laws, as determined in good
faith by ABI's legal counsel. Subsequent transfers by any such transferee of the
right to receive a portion of the Aggregate Contingent Consideration shall also
be made pursuant to, and in accordance with, all of the provisions of this
Section 5.1(i) to the same extent as if each such transferee were an Assumed
Option Exercising Holder or Assumed Warrant Exercising Holder, as the case may
be.
(J) All consideration provided or paid (or to be provided or
paid) pursuant to this Agreement to any Assumed Option Exercising Holder or any
Assumed Warrant Exercising Holder shall be paid properly to such Assumed Option
Exercising Holder or Assumed Warrant Exercising Holder, as the case may be, at
the address provided for such Assumed Option Exercising Holder or Assumed
Warrant Exercising Holder, as the case may be, in Schedule 5.1(a) of the Company
Disclosure Schedule or at such other address (or in the case of wire transfers,
in accordance with such wire transfer instructions) as the Stockholder
Representatives shall provide to ABI by giving written notice thereof in
accordance with the provisions of Section 16.5 hereof. Any portion of the
Aggregate Contingent Consideration paid (or to be paid) pursuant to this
Agreement to any person to whom the right to receive an appropriate portion of
the Aggregate Contingent Consideration has been properly transferred pursuant
to, and in accordance with, the provisions of Section 5.1(i) hereof shall be
paid by ABI to such person at the address provided to ABI for such person
pursuant to, and in accordance with, the provisions of Section 5.1(i) hereof or
at such other address (or in the case of wire transfers, in accordance with such
wire transfer instructions) as the Stockholder Representatives shall provide to
ABI by giving written notice thereof in accordance with the provisions of
Section 16.5 hereof. Prior to making any payment of any portion of the Aggregate
Contingent Consideration, ABI shall have the right to request the Stockholder
Representatives to provide to ABI the name of each person to whom a payment is
to be made (or the full name of any specific person that ABI may request or
inquire about), the address of such person (or in the case of any payment by
wire transfer, wire transfer instructions for such person) and the amount to be
paid to such person, and upon receipt of such information from the Stockholder
Representatives in accordance with the provisions of Section 16.5 hereof ABI
shall have the right to make payment of such portion of the Aggregate Contingent
Consideration in accordance with such information. ABI shall have no liability
of any kind whatsoever to the Stockholder Representatives, any Assumed Option
Exercising Holder, any Assumed Warrant Exercising Holder, any transferee of any
Assumed Option Exercising Holder or of any Assumed Warrant Exercising Holder or
any other person in connection with any portion of the Aggregate Contingent
Consideration paid by ABI pursuant to, and in accordance with, the provisions of
this Section 5.1(j). ABI shall also have no liability of any kind whatsoever to
the Stockholder Representatives, any Assumed Option Exercising Holder, any
Assumed Warrant Exercising Holder, any transferee of any Assumed Option
Exercising Holder or of any Assumed Warrant Exercising Holder or any other
person in connection with any delay by ABI in making any payment of any portion
of the Aggregate Contingent Consideration if and to the extent that such delay
is caused by the failure of the Stockholder Representatives to provide to ABI on
a timely basis any information that ABI has requested the Stockholder
Representatives pursuant to this Section 5.1(j).
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(K) The assumption by ABI of each Assumed Option and each Assumed
Warrant pursuant to this Section 5.1 is subject to the condition precedent that
the applicable Optionholder or Warrantholder, as the case may be, be deemed to
have approved individually (regardless of whether or not such Optionholder or
Warrantholder, as the case may be, approves or otherwise consents to this
Agreement and the Merger), to the same extent as if such Optionholder or
Warrantholder, as the case may be, were a party to this Agreement, of (i) in the
case of such Optionholder, all of the provisions of this Agreement that pertain
to the Assumed Options and the Optionholders, that grant rights to, or that
impose liabilities, obligations or burdens on, the Optionholders (including,
without limitation, the provisions of Section 5.1 hereof and the release
provisions of Section 14 hereof) or that limit the rights of the Optionholders,
(ii) in the case of such Warrantholder, all of the provisions of this Agreement
that pertain to the Assumed Warrants and the Warrantholders, that grant rights
to, or that impose liabilities, obligations or burdens on, the Warrantholders
(including, without limitation, the provisions of Section 5.1 hereof and the
release provisions of Section 14 hereof) or that limit the rights of the
Warrantholders, (iii) the appointment of the Stockholder Representatives as
representatives of the Stockholders, the Optionholders, the Warrantholders and,
if any, the Assumed Option Exercising Holders and the Assumed Warrant Exercising
Holders, (iv) the grant to the Stockholder Representatives of all of the powers,
rights and privileges contemplated under this Agreement (including, without
limitation, those set forth in Section 4.7 hereof) and (v) the provisions of
this Agreement concerning the replacement and substitution of any of the
Stockholder Representatives.
(L) Notwithstanding anything express or implied in this Agreement
(including, without limitation, this Section 5.1), the Company Stock Option Plan
or any stock option agreement pertaining to any Assumed Option to the contrary,
it shall be a condition precedent to the obligation of ABI to issue shares of
ABI Common Stock upon exercise of any Assumed Option that the applicable Assumed
Option Exercising Holder execute and deliver documentation in form and substance
reasonably satisfactory to ABI and its legal counsel pursuant to which such
Assumed Option Exercising Holder agrees to be bound by the provisions of this
Section 5.1 and any other provisions of this Agreement that, by their own terms,
are applicable to Assumed Option Exercising Holders, including, without
limitation, the provisions of Sections 1 (Definitions), 3.8 (Aggregate
Contingent Consideration), 3.9 (Delivery of Reports; Audit Rights; Interest),
4.7 (Stockholder Representatives) and 14 (Releases) hereof, and Schedule 5.1(a)
of the Company Disclosure Schedule.
(M) Notwithstanding anything express or implied in this Agreement
(including, without limitation, this Section 5.1) or any warrant agreement or
instrument pertaining to any Assumed Warrant to the contrary, it shall be a
condition precedent to the obligation of ABI to issue shares of ABI Common Stock
upon exercise of any Assumed Warrant that the applicable Assumed Warrant
Exercising Holder execute and deliver documentation in form and substance
reasonably satisfactory to ABI and its legal counsel pursuant to which such
Assumed Warrant Exercising Holder agrees to be bound by the provisions of this
Section 5.1 and any other provisions of this Agreement that, by their own terms,
are applicable to Assumed Warrant Exercising Holders, including, without
limitation, the provisions of Sections 1 (Definitions), 3.8 (Aggregate
Contingent Consideration), 3.9 (Delivery of Reports; Audit Rights; Interest),
4.7 (Stockholder Representatives) and 14 (Releases) hereof, and Schedule 5.1(a)
of the Company Disclosure Schedule.
5.2. TRANSFER RESTRICTIONS. No Stockholder shall sell, assign, pledge,
transfer or otherwise dispose or encumber any of those shares of ABI Stock
(including the ABI Conversion Shares) received by it, except (i) pursuant to an
effective registration statement under the Securities Act, (ii) pursuant to an
available exemption from registration under the Securities Act and applicable
state securities laws and, if requested by ABI, upon delivery of an opinion of
counsel reasonably satisfactory to ABI to the effect that the proposed transfer
is exempt from registration under the Securities Act and
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applicable state securities law or (iii) pursuant to the resale provisions of
Rule 144 (or any similar rule or regulation). Any transfer or purported transfer
in violation of this Section 5.2 shall be voidable by ABI. ABI shall not be
required or obligated to register any transfer of shares of stock in violation
of this Section 5.2. ABI may, and may instruct any transfer agent to, place such
stop transfer orders as may be required on the transfer books of ABI in order to
ensure compliance with the provisions of this Section 5.2.
5.3. LEGEND. To the extent applicable, each Certificate or other
document evidencing shares of ABI Stock (including the ABI Conversion Shares)
shall be endorsed with the legend set forth below, and each Stockholder
covenants that, except to the extent such restrictions are waived by ABI, it
shall not transfer the shares represented by any such Certificate without
complying with the restrictions on transfer described in this Agreement and the
legends endorsed on such Certificate:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
(I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT,
(II) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM SAID ACT OR (III) PURSUANT TO THE RESALE
PROVISIONS OF RULE 144 PROMULGATED UNDER SAID ACT."
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to ABI and Merger Sub as
follows, subject in each case to such exceptions as are set forth in the
attached Company Disclosure Schedule.
6.1. INCORPORATION; AUTHORITY. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own or lease and
operate its properties and to carry on its business as now conducted. The
Company has delivered to ABI complete and correct copies of its Certificate of
Incorporation and by-laws, in each case with all amendments thereto, which
Certificate of Incorporation and by-laws are in full force and effect.
6.2. AUTHORIZATION AND ENFORCEABILITY. The Company has all requisite
corporate power to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval of the Merger and this Agreement by the Company's stockholders. The
Board of Directors of the Company has (i) approved this Agreement and the
transactions contemplated hereby and (ii) determined that the Merger is in the
best interests of the stockholders of the Company and is on terms that are fair
to such stockholders. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies. The voting power of the shares of Company
Stock held of record by the Designated Company Stockholders is such
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that the affirmative vote (whether at a meeting of stockholders of the Company
or by written consent in lieu of a meeting) of all shares of Company Stock held
of record by the Designated Company Stockholders in favor of the adoption of
this Agreement and the approval of the Merger would be sufficient to constitute
the required stockholder approval of this Agreement and the Merger pursuant to,
and in accordance with, the terms of the Company's Certificate of Incorporation,
the Company's by-laws and the DGCL.
6.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION,
ETC. Except for the filing of the Merger Certificate and except as described on
Schedule 6.3 of the Company Disclosure Schedule, no consent, approval, or
authorization of or registration, designation, declaration, or filing with any
governmental authority, federal or other, or any other person, is required on
the part of the Company in connection with the execution, delivery, and
performance of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby. Except as described in Schedule 6.3 of the
Company Disclosure Schedule, the execution, delivery, and performance of this
Agreement and the consummation of such transactions will not violate (a) any
provision of the Company's Certificate of Incorporation or by-laws, as amended
and in effect, (b) any order, judgment, injunction, award or decree of any court
or state or federal governmental or regulatory body applicable to the Company,
or (c) any judgment, decree, order, statute, rule, regulation, agreement,
instrument, or other obligation to which the Company is a party or by or to
which it or any of its assets is bound or subject, which violation will not have
a Material Adverse Effect on the Company.
6.4. CAPITALIZATION. The authorized and outstanding capital stock and
other securities of the Company as of the date hereof are as set forth in
Schedule 6.4 of the Company Disclosure Schedule. All of such outstanding shares
of capital stock of the Company are duly authorized, validly issued, fully paid
and non-assessable, and all of such outstanding shares and other securities are
owned of record as set forth in Schedule 6.4 of the Company Disclosure Schedule,
and were issued in compliance with all applicable laws, including securities
laws, and all applicable preemptive or similar rights of any person. The Company
is not aware of any person who has a valid right to rescind any purchase of any
shares of the Company's capital stock or other securities.
Other than as set forth on Schedule 6.4 of the Company Disclosure Schedule,
there are no agreements or other obligations to which the Company is a party or
by which it is bound to purchase or sell any shares of its capital stock or
other securities, and no outstanding convertible or exchangeable securities,
options, warrants or other rights to acquire from the Company any shares of its
capital stock or other securities. Schedule 6.4 of the Company Disclosure
Schedule sets forth the name of each person who holds any option, warrant or
other right to acquire shares of the Company's capital stock or other
securities, the number and type of shares or securities subject to such option
or right, the per-share exercise price payable therefor and, in the case of
warrants, the priority and amount of consideration to be payable upon exercise
thereof.
6.5. QUALIFICATION. The Company is duly qualified and in good standing
as a foreign corporation in all jurisdictions in which the character of its
owned or leased properties or the nature of its activities makes such
qualification necessary, except for such failures to be so qualified or in good
standing as would not, either individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the Company.
6.6. SUBSIDIARIES. The Company does not have any Subsidiaries or own
any legal and/or beneficial interests in or to any other business enterprise or
other person.
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6.7. FINANCIAL STATEMENTS. Attached to Schedule 6.7 of the Company
Disclosure Schedule are copies of (i) the audited balance sheets of the Company
as of December 31, 2002, 2003 and 2004, and the related audited statements of
income and retained earnings and cash flows, respectively, of the Company, for
the fiscal years ended on such dates, certified by PriceWaterhouseCoopers or
Deloitte & Touche LLP, as applicable, independent public accountants and (ii)
the unaudited balance sheet of the Company as of September 30, 2005, and the
related unaudited statements of income and retained earnings and cash flows,
respectively, of the Company, for the 9-month period, respectively, ended on
such dates (such balance sheet as of September 30, 2005, the "Company's Most
Recent Balance Sheet"). Each of such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior periods; each of such balance sheets presents fairly and
accurately in all material respects the financial condition of the Company as of
its respective date; and each of such statements of income and retained earnings
and cash flows, respectively, presents fairly and accurately in all material
respects the results of operations and retained earnings, or cash flows, as the
case may be, of the Company for the period covered thereby; in each case,
subject, with respect to the unaudited financial statements referred to in
clause (ii) of this section, to the absence of footnote disclosure and to
normal, recurring end-of-period adjustments, the effect of which, both
individually and in the aggregate, is not and will not be material.
6.8. ABSENCE OF CERTAIN CHANGES. Since the date of the Company's Most
Recent Balance Sheet, except as disclosed on Schedule 6.8 of the Company
Disclosure Schedule, there has not been any: (i) change in the assets,
liabilities, sales, income, or business of the Company or in its relationships
with suppliers, customers, or lessors, other than changes that were both in the
ordinary course of business and have not caused, either in any case or in the
aggregate, a Material Adverse Effect on the Company; (ii) acquisition or
disposition by the Company of any material asset or property; (iii) damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting, either in any case or in the aggregate, the business or any
material property of the Company; (iv) declaration, setting aside or payment of
any dividend or any other distributions in respect of any shares of capital
stock of the Company; (v) issuance of any shares of the capital stock of the
Company or any direct or indirect redemption, purchase, or other acquisition by
the Company of any such capital stock; (vi) loss of the services of any officer
or key employee or consultant, or any increase in the compensation, pension, or
other benefits payable or to become payable by the Company to any of its
officers or key employees or consultants, or any bonus payments or arrangements
made to or with any of them; (vii) forgiveness or cancellation of any debts or
claims by the Company or any waivers of any rights; (viii) entry by the Company
into any transaction with any of its Affiliates; (ix) incurrence by the Company
of any obligations or liabilities, whether absolute, accrued, contingent or
otherwise (including without limitation liabilities as guarantor or otherwise
with respect to obligations of others), other than obligations and liabilities
incurred in the ordinary course of business with persons other than Affiliates
of the Company; (x) incurrence or imposition of any Lien on any of the assets,
tangible or intangible, of the Company; or (xi) discharge or satisfaction by the
Company of any Lien or payment by the Company of any obligation or liability
(fixed or contingent) other than (A) current liabilities included in the
Company's Most Recent Balance Sheet, (B) current liabilities to persons other
than Affiliates of the Company incurred since the date of the Company's Most
Recent Balance Sheet in the ordinary course of business, and (C) current
liabilities incurred in connection with the transactions contemplated hereby and
as disclosed in Schedule 6.8 of the Company Disclosure Schedule.
6.9. PROPERTIES AND ASSETS; INVENTORY.
(A) The Company has good and marketable title or leasehold title,
as the case may be, to all of its assets and properties that it purports to own
or lease, including without limitation all those reflected in the Company's Most
Recent Balance Sheet (except for properties or assets sold,
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consumed, or otherwise disposed of in the ordinary course of business since the
date of the Company's Most Recent Balance Sheet), all free and clear of Liens on
the Company's interest therein. All such properties and assets are in "as-is"
condition and repair, reasonable wear-and-tear excepted, and are sufficient to
carry on the business of the Company as presently conducted. To the Company's
knowledge, Schedule 6.9 of the Company Disclosure Schedule sets forth a complete
and correct list of all capital assets of the Company.
(B) The Company does not own any real property. The Company has
not received any notice that either the whole or any portion of any real
property leased by it is to be condemned, requisitioned, or otherwise taken by
any public authority or is to be the subject of any public improvements that may
result in special assessments against or otherwise affect such real property.
Schedule 6.9 of the Company Disclosure Schedule sets forth a complete and
correct description of all leases of real property to which the Company is a
party. Complete and correct copies of all such leases have been delivered to
ABI. Each such lease is valid and subsisting and no event or condition exists
that constitutes, or after notice or lapse of time or both could constitute, a
default thereunder by the Company, or to the best of its knowledge, any other
person. The leasehold interests of the Company are subject to no Lien, and the
Company is in quiet possession of the properties covered by such leases.
(C) Schedule 6.9 of the Company Disclosure Schedule sets forth a
complete and correct description of the Company's inventory of M40403, one of
the compounds set forth on Exhibit D attached hereto, including, without
limitation, the amount and expiration and/or retest date of all such inventory.
6.10. INTELLECTUAL PROPERTY.
(A) Schedule 6.10(a) of the Company Disclosure Schedule lists all
inter partes proceedings or actions known to the Company before any court or
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any Company Intellectual Property. Except as set forth in Schedule
6.10(a) of the Company Disclosure Schedule, to the best of the Company's
knowledge, no Company Intellectual Property is the subject of any inter partes
proceeding or outstanding decree, order, judgment, agreement, or stipulation
restricting in any manner the use, transfer, or licensing thereof by the
Company, or which may affect the validity, use or enforceability of such Company
Intellectual Property.
(B) Except as set forth in Schedule 6.10(b) of the Company Disclosure
Schedule, with respect to each item of Company Registered Intellectual Property,
necessary registration, maintenance and renewal fees in connection with such
Company Registered Intellectual Property have been made and all necessary
documents and certificates in connection with such Company Registered
Intellectual Property have been filed with the relevant patent authorities in
the United States for the purposes of maintaining such Company Registered
Intellectual Property and, to the best of the Company's knowledge, no
information material to patentability under applicable law has been withheld
from the examining office that would constitute fraud or inequitable conduct.
(C) All Company Registered Intellectual Property is listed on Schedule
6.10(c) of the Company Disclosure Schedule. The Company owns and has good and
exclusive title, or the Company exclusively licenses, in each case free and
clear of any Lien, all Company Registered Intellectual Property listed on
Schedule 6.10(c) of the Company Disclosure Schedule (for purposes of this
Section 6.10(c), joint ownership with third parties of such Company Registered
Intellectual Property constitutes "good and exclusive title").
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(D) To the extent that any work, invention, or material has been
developed or created by a third party for the Company, the Company has a written
agreement with such third party with respect thereto and the Company (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has a valid
license to use, all Company Intellectual Property in such work, material or
invention by operation of law or by valid assignment or by agreement, as the
case may be.
(E) Except as set forth on Schedule 6.10(e) of the Company Disclosure
Schedule, the Company has not transferred ownership of, or granted any license
with respect to, any Company Intellectual Property to any third party. Schedule
6.10(e) of the Company Disclosure Schedule lists all contracts, licenses and
agreements to which the Company is a party that are currently in effect (i) with
respect to Company Intellectual Property licensed or offered to any third party;
or (ii) pursuant to which a third party has licensed or transferred any Company
Intellectual Property to the Company.
(F) To the best of the Company's knowledge, the contracts, licenses
and agreements listed on Schedule 6.10(e) of the Company Disclosure Schedule are
in full force and effect. The consummation of the transactions contemplated by
this Agreement will neither violate nor result in the breach, modification,
cancellation, termination, or suspension of such contracts, licenses and
agreements listed on Schedule 6.10(e) of the Company Disclosure Schedule. The
Company is in material compliance with, and has not materially breached any term
any of such contracts, licenses and agreements listed on Schedule 6.10(e) of the
Company Disclosure Schedule and, to the knowledge of the Company, all other
parties to such contracts, licenses and agreements listed on Schedule 6.10(e) of
the Company Disclosure Schedule are in compliance with, and have not breached
any term of, such contracts, licenses and agreements. To the best of the
Company's knowledge, following the Closing Date, the Surviving Corporation will
be permitted to exercise all of the Company's rights under the contracts,
licenses and agreements listed on Schedule 6.10(e) of the Company Disclosure
Schedule without the payment of any additional funds other than ongoing fees,
royalties or payments which the Company would otherwise be required to pay.
(G) To the best of the Company's knowledge, Schedule 6.10(g) of the
Company Disclosure Schedule lists all contracts, licenses and agreements between
the Company and any third party wherein or whereby the Company has agreed to, or
assumed, any obligation or duty to warrant, indemnify, hold harmless or
otherwise assume or incur any obligation or liability with respect to the
infringement or misappropriation by the Company of any third party's
Intellectual Property.
(H) Except as set forth in Schedule 6.10(h) of the Company Disclosure
Schedule, the Company (including its executive officers, directors and, to the
best of the Company's knowledge, employees) has not received notice from any
third party that the operation of its business or any product or drug candidate
of the Company infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(I) Except as set forth in Schedule 6.10(i) of the Company Disclosure
Schedule, to the best of the Company's knowledge, (i) no person has nor is
infringing or misappropriating any Company Intellectual Property and (ii) there
have been, and are, no claims asserted against the Company or against any
licensee of the Company with respect to the Company Intellectual Property.
(J) The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of the Company
Intellectual Property as constitute trade secrets or other confidential
information. To the best of the Company's knowledge, no officer, director,
employee, or consultant of the Company is obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any court of
administrative agency, that (i) conflicts or
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may conflict with his agreements and obligations to use his best efforts to
promote the interest of the Company, (ii) conflicts or may conflict with the
business or operations of the Company, or (iii) restricts or may restrict the
use or disclosure of any information that may be useful to the Company.
(K) All of the representations and warranties of the Company with
respect to the Company's rights to the Company Intellectual Property are set
forth in this Section 6.10 and, notwithstanding anything to the contrary
contained herein, no other representation of warranty in this Agreement shall be
construed to relate to the Company's rights to the Company Intellectual
Property.
6.11. INDEBTEDNESS. At the date hereof, the Company has no
Indebtedness outstanding except as set forth in Schedule 6.11 of the Company
Disclosure Schedule. The Company is not in default with respect to any
outstanding Indebtedness or any agreement, instrument, or other obligation
relating thereto and no such Indebtedness or any agreement, instrument or other
obligation relating thereto purports to limit the issuance of any securities by
the Company, or (except as set forth on Schedule 6.11 of the Company Disclosure
Schedule) the operation of its businesses. Complete and correct copies of all
agreements, instruments, and other obligations (including all amendments,
supplements, waivers, and consents) relating to any Indebtedness of the Company
have been furnished to ABI.
6.12. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the Company's Most Recent Balance Sheet, or (b)
described on Schedule 6.12 of the Company Disclosure Schedule, the Company does
not have any liabilities or obligations of any nature, whether accrued,
absolute, contingent, or otherwise (including, without limitation, liabilities,
as guarantor or otherwise, in respect of obligations of others) that would be
required to be reflected or reserved against in a balance sheet prepared in
accordance with generally accepted accounting principles or referred to in the
notes thereto.
6.13. TAXES.
(A) ELECTIONS. Schedule 6.13 of the Company Disclosure Schedule lists
all material elections with respect to Taxes (including, without limitation, any
elections under Sections 108(b)(5), 338(g), 565, 936(a) or 936(e) of the Code or
Treasury Regulation Section 1.1502-20(g) or Treasury Regulation Section
1.1502-32(f)(2) as in effect prior to August 12, 1994) affecting the Company
have been provided to ABI in the Tax Returns and financial statements of the
Company, except for elections explicitly set forth in one or more of the Tax
Returns provided to ABI pursuant to Section 6.13(b) hereof.
(B) FILING OF TAX RETURNS AND PAYMENT OF TAXES. The Company has timely
filed (including application extensions granted without penalty) all Tax Returns
required to be filed by it at or prior to the Effective Time, each such Tax
Return has been prepared in compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects. All Taxes due
and payable by the Company have been paid, and the Company will not be liable
for any additional Taxes in respect of any taxable period ending on or before
the Closing Date in an amount that exceeds the corresponding reserve for unpaid
Taxes, if any, reflected in the Company's Most Recent Balance Sheet. The Company
has delivered to ABI true and complete copies of all Tax Returns filed by or
with respect to it with respect to taxable periods ended on or after December
31, 2001, and has delivered or made available to ABI true and complete copies of
all relevant material documents and information with respect thereto in the
possession of the Company, its tax advisers and its auditors, including without
limitation examination reports and statements of deficiencies assessed against
or agreed to by the Company with respect thereto.
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(C) AUDIT HISTORY. With respect to each taxable period of the Company
ended before December 31, 2001, either such taxable period has been audited by
the relevant taxing authority or the time for assessing or collecting Tax with
respect to each such taxable period has closed and such taxable period is not
subject to review by any relevant taxing authority.
(D) DEFICIENCIES. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been proposed,
asserted or assessed in writing by any taxing authority against the Company.
(E) LIENS. There are no Liens for Taxes (other than current Taxes not
yet due and payable) on the assets of the Company.
(F) EXTENSIONS TO STATUTE OF LIMITATIONS FOR ASSESSMENT OF TAXES. The
Company does not currently have in effect any consent to extend the time in
which any Tax may be assessed or collected by any taxing authority.
(G) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. Except as set forth
in Schedule 6.13(g) of the Company Disclosure Schedule, the Company has not
requested or been granted an extension of the time for filing any Tax Return to
a date on or after the Closing Date.
(H) PENDING PROCEEDINGS. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or to the
best of the Company's knowledge, threatened, against or with respect to (i) the
Company, or (ii) any Affiliated Group with respect to a taxable period during
which the Company was a member of such Affiliated Group.
(I) NO FAILURES TO FILE TAX RETURNS. No claim has ever been made by a
taxing authority in a jurisdiction where the Company does not pay Tax or file
Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction.
(J) MEMBERSHIP IN AFFILIATED GROUPS, ETC. The Company has never been a
member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(K) ADJUSTMENTS UNDER SECTION 481. The Company will not be required,
as a result of a change in method of accounting for any period ending on or
before the Closing Date other than as a result of the transactions contemplated
by this Agreement, to include any adjustment under Section 481(c) of the Code
(or any similar or corresponding provision or requirement under any Tax law) in
taxable income for any period ending on or after the Closing Date.
(L) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. The Company is
not a party to or bound by any Tax sharing or allocation agreement or has any
current or potential contractual obligation to indemnify any other person with
respect to Taxes.
(M) WITHHOLDING TAXES. The Company has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other person.
(N) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. Except as set forth
in Schedule 6.13(n) of the Company Disclosure Schedule, the Company does not
have a permanent establishment in any foreign country, as defined in the
relevant tax treaty between the United States of
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America and such foreign country, and does not otherwise operate or conduct
business through any branch in any foreign country.
(O) U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not and has
not been a United States real property holding corporation, within the meaning
of Code Section 897(c)(2), within the five-year period ending as of the date of
this Agreement.
(P) SAFE HARBOR LEASE PROPERTY. None of the property owned or used by
the Company is subject to a tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Tax Act of 1981.
(Q) TAX-EXEMPT USE PROPERTY. Except as set forth in Schedule 6.13(q)
of the Company Disclosure Schedule, none of the property owned by the Company is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(R) SECURITY FOR TAX-EXEMPT OBLIGATIONS. None of the assets of the
Company directly or indirectly secures any Indebtedness, the interest on which
is tax-exempt under Section 103(a) of the Code, and the Company is not directly
or indirectly an obligor or a guarantor with respect to any such Indebtedness.
(S) PARACHUTE PAYMENTS. The Company has not made any payments, is not
obligated to make any payments, and is not a party to any agreement that under
certain circumstances could obligate it to make any payments, that will not be
deductible under Code Section 280G.
6.14. EMPLOYEE BENEFIT PLANS.
(A) Except as described on Schedule 6.14(a) of the Company Disclosure
Schedule, the Company does not now maintain or contribute to, or have any
liability (contingent or otherwise) in respect of, any pension, profit-sharing,
deferred compensation, bonus, stock option, share appreciation right, severance,
group or individual health, dental, medical, life insurance, survivor benefit,
or similar plan, policy, or arrangement, whether formal or informal, for the
benefit of any director, officer, consultant or employee, whether active or
terminated, of the Company. Each of the arrangements set forth on Schedule
6.14(a) of the Company Disclosure Schedule is hereinafter referred to as a
"Company Employee Benefit Plan," except that any such arrangement that is a
multi-employer plan will be treated as a Company Employee Benefit Plan only for
purposes of Sections 6.14(d)(iv), (vi), and (vii) and 6.14(g) hereof.
(B) The Company has delivered or made available to ABI true, correct,
and complete copies of each Company Employee Benefit Plan, and with respect to
each such Plan (i) any associated trust, custodial, insurance, or service
agreements, (ii) any annual report, actuarial report, or disclosure materials
(including specifically any summary plan descriptions) submitted to any
governmental agency or distributed to participants or beneficiaries thereunder
in the current calendar year or any of the three preceding calendar years, and
(iii) the most recently received Internal Revenue Service ("IRS") determination
letters and any governmental advisory opinions or rulings.
(C) To the best of the Company's knowledge, each Company Employee
Benefit Plan is and has heretofore been maintained and operated in all material
respects with the terms of such Plan and with the requirements prescribed
(whether as a matter of substantive law or as necessary to secure favorable tax
treatment) by any and all statutes, governmental or court orders, and
governmental rules or regulations in effect from time to time, including, but
not limited to, the Employee Retirement
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Income Security Act of 1974, as amended ("ERISA"), and the Code, and applicable
to such Plan. Each Company Employee Benefit Plan that is intended to qualify
under Section 401(a) of the Code and each trust forming part of a Company
Employee Benefit Plan which is intended to qualify under Section 501(c)(9) of
the Code is specifically so identified in Schedule 6.14(a) of the Company
Disclosure Schedule and has been determined by the IRS to be so qualified, and
to the best of the Company's knowledge, nothing has occurred since the date of
the last such determination as to each such Plan or trust that has resulted or
is likely to result in the revocation of such determination as to such Plan or
trust, other than such failures as may be corrected without expenditure of more
than $10,000.
(D) (I) There is no pending, or to the best of the Company's
knowledge, threatened, legal action, proceeding, or investigation, other than
routine claims for benefits, concerning any Company Employee Benefit Plan, or to
the best of the Company's knowledge, any fiduciary or service provider thereof.
(II) No liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has been
incurred by the Company or any of its ERISA affiliates (other than insurance
premiums satisfied in due course).
(III) No reportable event, or event or condition that presents a
material risk of termination by the PBGC, has occurred with respect to any
Company Employee Benefit Plan, or any retirement plan of an ERISA affiliate of
the Company, which is subject to Title IV of ERISA.
(IV) To the best of the Company's knowledge, no Company Employee
Benefit Plan nor any party in interest with respect thereto, has engaged in a
prohibited transaction that could subject the Company directly or indirectly to
liability under Section 409 or 502(i) of ERISA or Section 4975 of the Code.
(V) No communication, report, or disclosure has been made that,
at the time made, did not reflect accurately in all material respects the terms
and operations of any Company Employee Benefit Plan.
(VI) Except as otherwise provided in agreements set forth on
Schedule 6.14(a) of the Company Disclosure Schedule entered into by the Company
with certain of its employees, no Company Employee Benefit Plan provides welfare
benefits subsequent to termination of employment to employees or their
beneficiaries, other than (A) coverage mandated by applicable law, (B) benefits
the full cost of which is borne by the current or former employees (or their
beneficiaries), and (C) benefits that have already been satisfied in full.
(VII) The Company has not undertaken to maintain any Company
Employee Benefit Plan for any period of time and each such Plan is terminable at
the sole discretion of the Company, subject only to such constraints as may be
imposed by applicable law.
(E) With respect to each Company Employee Benefit Plan for which a
separate fund of assets is or is required to be maintained, full payment has
been made of all amounts that the Company is required, under the terms of each
such Plan, to have paid as contributions to that Plan as of the Closing Date,
and no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any such
Plan. The current value of the assets of each such Company Employee Benefit
Plan, as of the end of the most recently ended plan year of that Plan, equaled
or exceeded the current value of all accrued benefits under that Plan.
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(F) Except as set forth on Schedule 6.14(f) of the Company Disclosure
Schedule, the execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Company Employee Benefit Plan
to any current or former director, officer, consultant, or employee of the
Company or result in the vesting, acceleration of payment, or increases in the
amount of any benefit payable to or in respect of any such current or former
director, officer, consultant, or employee.
(G) No Company Employee Benefit Plan is a multi-employer plan.
(H) For purposes of this Section 6.14, "multi-employer plan," "party
in interest," "current value," "accrued benefit," "reportable event," and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under
Section 414 of the Code is treated as a single employer with the Company.
6.15. SAFETY AND ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 6.15 of the Company Disclosure Schedule:
(A) None of the activities carried on by the Company at any plants,
offices, or properties in or on which the Company operates are in violation of
any zoning, health, or safety law or regulation, including without limitation
the Occupational Safety and Health Act of 1970, as amended, excluding only such
violations as will not, either individually or in the aggregate, have a Material
Adverse Effect on the Company.
(B) Neither the Company, nor to the best of the Company's knowledge,
any operator of any real property presently or formerly owned, leased, or
operated by the Company is in violation or alleged violation of any judgment,
decree, order, law, license, rule or regulation pertaining to environmental
matters, including without limitation the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Superfund Amendments and Reauthorization
Act of 1986 ("▇▇▇▇"), the Federal Clean Water Act, the Federal Clean Air Act,
the Toxic Substances Control Act, and applicable federal, state, foreign, and
local statutes, regulations, ordinances, orders, and decrees relating to
Hazardous Substances (as defined in Section 6.15(c) hereof), natural resources,
pollutants or protection of human health, safety, or the environment (all of the
foregoing, collectively, "Environmental Laws"), excluding only such violations
as will not, either individually or in the aggregate, have a Material Adverse
Effect on the Company.
(C) The Company has not received notice from any third party,
including without limitation any federal, state, foreign, or local governmental
authority, that (i) the Company has been identified by the United States
Environmental Protection Agency (the "EPA") as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇ (1986); (ii) any hazardous waste as defined by 42
U.S.C. Section 6903(5), any hazardous substance as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33)
or any toxic substance, oil, or hazardous material or other chemical or
substance regulated by or forming the basis of liability under any Environmental
Laws (collectively, "Hazardous Substances") that the Company has generated,
transported, handled, used, or disposed of has been found at any site at which a
federal, state, foreign, or local agency or other third party has conducted or
has ordered that the Company conduct a remedial investigation, removal, or other
response action pursuant to any Environmental Law; or (iii) the Company is or
will be a named party to any claim, action, cause of action, complaint
(contingent or otherwise), or legal or administrative proceeding arising out of
any third party's
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incurrence of costs, expenses, losses, or damages of any kind whatsoever in
connection with the release of Hazardous Substances.
(D) (i) No portion of any real property presently or formerly owned,
leased, or operated by the Company has been used by the Company, or to the best
of the Company's knowledge, by any other person, to handle, use, manufacture,
transport, store, or dispose of Hazardous Substances except in accordance in all
material respects with applicable Environmental Laws; and no underground tank or
other underground storage receptacle for Hazardous Substances used by the
Company is located on any real property presently owned, leased, or operated by
the Company, or to the best of the Company's knowledge, any real property
formerly owned, leased, or operated by it; (ii) in the course of the activities
conducted by the Company and to the best of the Company's knowledge, without
investigation, those of any other operators of any real property presently or
formerly owned, leased, or operated by the Company, no Hazardous Substances have
been generated, stored, or used on such properties except in accordance with
applicable Environmental Laws; (iii) to the best of the Company's knowledge,
there have been no releases (i.e. any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing, or dumping) or threatened releases of Hazardous Substances by the
Company on, upon, into, or from any real property presently or formerly owned,
leased, or operated by the Company; (iv) to the best of the Company's knowledge,
there have been no releases on, upon, from, or into any real property in the
vicinity of any real property presently or formerly owned, leased, or operated
by the Company that, through soil or groundwater contamination, have come to be
located on, any of the real property presently or formerly owned, leased, or
operated by the Company; and (v) to the extent required by applicable
Environmental Laws, any Hazardous Substances that have been generated by the
Company, or to the Company's actual knowledge, by any other person, on any real
property presently or formerly owned, leased, or operated by the Company, have
been transported offsite only by carriers having an identification number issued
by the EPA and treated or disposed of only by treatment or disposal facilities
having, to the Company's actual knowledge, valid permits as required under
applicable Environmental Laws, which transporters and facilities, to the
Company's actual knowledge, have been and are operating substantially in
compliance with such permits and applicable Environmental Laws.
(E) No real property presently owned, leased, or operated by the
Company, and to the best of the Company's knowledge, no real property formerly
owned, leased, or operated by the Company, and as a result of the present or
past activities of the Company, is subject to any Environmental Law (including
the New Jersey Industrial Site Recovery Act, N.J.A.C. 7:268) requiring the
performance of any Hazardous Substances site assessment, the removal or
remediation of any Hazardous Substances, the giving of notice to any
governmental agency or other person, or the recording and/or delivery to any
governmental agency or other person of any environmental disclosure statement or
document, by reason of, or as a condition to the effectiveness of, the Merger
and/or any other transaction contemplated hereby.
(F) The Company has and maintains, in full force and effect, all
licenses, permits, registrations, consents, authorizations and other approvals
(the "Environmental Permits") from all governmental authorities as are required
under Environmental Laws or are otherwise necessary for the conduct of the
business or operation of the Company, and the Company is in material compliance
with all of the Environmental Permits.
6.16. LABOR RELATIONS. The Company is and has been in compliance in
all material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in any
unfair labor practice. There is no charge or proceeding pending, or to the best
of the Company's knowledge, threatened, against the Company alleging unlawful
discrimination in
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employment practices or unfair labor practice before any court or agency,
including without limitation the National Labor Relations Board. There is no
labor strike, dispute, work slow-down, or work stoppage pending, or to the best
of the Company's knowledge, threatened against or involving the Company. No one
has petitioned within the last five years or is now petitioning for union
representation of any of the employees of the Company. No grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending against the Company and no claim therefor has been
asserted. None of the employees of the Company is covered by any collective
bargaining agreement, and no collective bargaining agreement is currently being
negotiated by the Company. The Company has not experienced any work stoppage or
other material labor difficulty during the last five years.
6.17. LITIGATION. Except as set forth in Schedule 6.17 of the Company
Disclosure Schedule, no litigation, arbitration, action, suit, proceeding, or
investigation (whether conducted by any judicial or regulatory body, arbitrator,
or other person) is pending (as evidenced by the Company's receipt of service of
process or other written notice of such pendency), or to the best of the
Company's knowledge, threatened, against the Company, nor is there any basis
therefor known to the Company.
6.18. MATERIAL CONTRACTS. Schedule 6.18 of the Company Disclosure
Schedule sets forth a complete and accurate list of all Company Material
Contracts (as defined below). As used in this Agreement, the term "Company
Material Contract" means every agreement or understanding of any kind, written
or oral, that is legally enforceable by or against or otherwise binding on the
Company and which is material to the Company's business, and specifically
includes without limitation: (a) agreements with any current or former officer,
director, employee, consultant, or stockholder, or any partnership, corporation,
joint venture, or any other entity in which any such person has an interest
(other than agreements terminable by the Company upon 30 days notice and which
termination does not result in any obligations or liabilities to the Company);
(b) agreements with any labor union or association representing any employee;
(c) agreements for the provision of services by or to the Company pursuant to
which amounts are owed to or from the Company in excess of $100,000; (d) bonds
or other security agreements provided by any party in connection with the
business of the Company; (e) agreements for the purchase or other acquisition or
the sale or other disposition of assets or properties (other than in the
ordinary course of business), or for the grant to any person of any preferential
rights to purchase any such assets or properties; (f) joint venture agreements
relating to the assets, properties, or business of the Company or by or to which
it or any of its assets or properties is bound or subject; (g) agreements under
which the Company agrees to indemnify any party, to share tax liability of any
party, or to refrain from competing with any party; (h) agreements with regard
to Indebtedness, including, without limitation, any indenture or other
agreements in connection with issuances of bonds, debentures or other debt
securities by the Company and any agreements in connection with bank financings
by the Company; (i) any agreement, contract, commitment, transaction or series
of transaction for any purpose relating to capital expenditures or commitments
or long-term obligations; (j) any purchase order or contract for the purchase of
raw materials; (k) any distribution, joint marketing or development agreement;
(l) any assignment, license or other agreement with respect to any form of
intangible property; (m) any research collaboration agreement; (n) any
agreements relating to venture capital and other equity financings by the
Company; (o) any stockholder agreements or other agreements with any of the
Company's stockholders pertaining to the shares of Company Stock held by them or
their rights as stockholders of the Company; and (p) to the knowledge of the
Company, any voting trust or voting agreements among the stockholders of the
Company.
All of the Company Material Contracts are in full force and effect,
and neither the Company nor, to the best of the Company's knowledge, any other
party thereto is in default under or in material breach of any of the material
terms thereof, nor does any event or condition exist that after notice or lapse
of time or both could constitute a default thereunder or material breach thereof
on the part of the
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Company, or to the best of the Company's knowledge, any other party thereto. All
payments required under each contract, agreement or understanding of any kind,
written or oral, that is legally enforceable by or against or otherwise binding
on the Company have been accrued for in accordance with generally accepted
accounting principles, consistently applied, and are reflected in the Company's
financial statements. Except as set forth on Schedule 6.3 of the Company
Disclosure Schedule, no approval or consent of any person is needed in order
that the Company Material Contracts continue in full force and effect following
the consummation of the Merger and the other transactions contemplated hereby
(except for any consent or consents the failure of which to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company), and no Company Material Contract includes any provision, the effect of
which may be to terminate (or give rise to a right of termination under) such
Company Material Contract, to enlarge or accelerate any obligations of the
Company thereunder, or to give additional rights to any other person, as a
result of the consummation of the Merger or the other transactions contemplated
hereby. The Company has delivered or made available to ABI true, correct, and
complete copies of all Company Material Contracts, including all amendments,
modifications, and supplements thereto.
6.19. POTENTIAL CONFLICTS OF INTEREST. No officer, director, or, to
best of the Company's knowledge, stockholder of the Company (a) owns, directly
or indirectly, any interest (excepting not more than five percent (5%) stock
holdings for investment purposes in securities of publicly held and traded
companies) in, or is an officer, director, employee, or consultant of, any
person (i) that furnishes or sells services, drug candidates or products to the
Company or (ii) that is a lessor, lessee, customer, or supplier of the Company;
(b) owns, directly or indirectly, in whole or in part (other than solely as a
result of his or its ownership of Company Stock), any tangible or intangible
property that the Company is using or the use of which is necessary for the
business of the Company; or (c) to the best of the Company's knowledge, has any
cause of action or other claim whatsoever against, or owes any amount to, the
Company, except for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under Employee Benefit Plans, and similar
matters and agreements.
6.20. INSURANCE. Schedule 6.20 of the Company Disclosure Schedule
lists the policies of products liability, theft, fire, liability, worker's
compensation, life, property and casualty, and other insurance owned or held by
the Company. Such policies of insurance are of the kinds, cover such risks, and
are in such amounts and with such deductibles and exclusions, as are consistent
with prudent business practice for companies in the Company's line of business
and of a similar size and location. All such policies are in full force and
effect; are sufficient for compliance by the Company with all requirements of
law and of all agreements to which the Company is a party; are valid,
outstanding, and enforceable policies and provide that they will remain in full
force and effect through the respective dates set forth on Schedule 6.20 of the
Company Disclosure Schedule; and will not in any way be affected by, or
terminate or lapse as a result of the consummation of, the transactions
contemplated by this Agreement.
6.21. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY. Schedule
6.21 of the Company Disclosure Schedule sets forth a complete and accurate list
of all bank, brokerage, and other accounts, and all safe-deposit boxes, of the
Company and the persons with signing or other authority to act with respect
thereto. Except as so listed, the Company does not have any account or safe
deposit box in any bank, and no person has any power, whether singly or jointly,
to sign any checks on behalf of the Company, to withdraw any money or other
property from any bank, brokerage, or other account of the Company, or to act
under any agency or power of attorney granted by the Company at any time for any
purpose. Schedule 6.21 of the Company Disclosure Schedule also sets forth the
names of all persons authorized to borrow money or sign notes on behalf of the
Company.
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6.22. RELATIONSHIPS WITH SUPPLIERS AND LICENSORS. No current supplier
to the Company has notified the Company of an intention to terminate or
substantially alter its existing business relationship with the Company, nor has
any licensor under a license agreement with the Company notified the Company of
an intention to terminate or substantially alter the Company's rights under such
license, which termination or alteration would have a Material Adverse Effect on
the Company.
6.23. EMPLOYMENT OF OFFICERS, EMPLOYEES. The name and current annual
salary and other compensation payable by the Company to each of its employees
(including but not limited to wages, salary, commissions, normal bonus, profit
sharing, deferred compensation, and other extra compensation) are as set forth
on Schedule 6.23 of the Company Disclosure Schedule. Except to the extent
otherwise disclosed on Schedule 6.23 of the Company Disclosure Schedule, none of
the current or former officers, directors, employees or consultants of the
Company is a party to, or the beneficiary of, any agreement, plan or arrangement
that provides for any payment (whether of severance pay or otherwise) becoming
due to such current or former officer, director, employee or consultant upon
termination of his or her relationship with the Company or as a result of the
Merger, or that provides for the vesting, acceleration of payment, or increases
in the amount of any benefit payable to or in respect of such current or former
director, officer, consultant, or employee upon termination of his or her
relationship with the Company or as a result of the Merger.
6.24. MINUTE BOOKS. The minute books of the Company made available to
ABI for inspection accurately record therein all material actions taken by the
Company's Board of Directors, all committees thereof, and its stockholders.
6.25. BROKERS. No finder, broker, agent, or other intermediary has
acted for or on behalf of the Company in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
Merger or the other transactions contemplated hereby.
6.26. COMPLIANCE WITH OTHER AGREEMENTS, LAWS, ETC. The Company has
complied with, and is in compliance with, (a) all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to its business, (b)
all unwaived terms and provisions of all contracts, agreements and indentures to
which the Company is a party, or by which the Company or any of its properties
is subject, and (c) its Certificate of Incorporation and by-laws, respectively,
each as amended to date; in the case of the preceding clauses (a) and (b),
excepting only any such noncompliances that, both individually and in the
aggregate, have not resulted and will not result in any Material Adverse Effect
with respect to the Company. Except as set forth in Schedule 6.17 of the Company
Disclosure Schedule, the Company has not been charged with, or to the best of
its knowledge, been under investigation with respect to, any violation of any
provision of any federal, state, or local law or administrative regulation.
6.27. PERMITS, LICENSES, AND PROGRAMS; NO DEBARMENT.
(A) Schedule 6.27 of the Company Disclosure Schedule contains a
complete and correct copy of (i) each pending application or registration for
governmental approval and each governmental approval held by the Company to
develop, manufacture, test (including, without limitation, preclinical tests and
clinical trials), import, export, store, market and sell the Company's products
or drug candidates, (ii) the most recent report by or on behalf of the FDA or
any other governmental body involving or relating to any facility inspection of
the Company's facilities, and (iii) a description of all ongoing proprietary
internal research and development programs. Except as are set forth on Schedule
6.27 of the Company Disclosure Schedule, (i) the Company possesses such
governmental approvals from all governmental bodies including, without
limitation, all FDA approvals, necessary to permit the
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operation of its business in the manner as the same is currently conducted, and
to operate, own or occupy its properties, (ii) there have been no product
recalls, field corrective activity, medical device reports, warning letters or
administrative actions by the FDA or any other governmental body, and (iii) to
the Company's knowledge, (aa) there is no administrative action pending or
threatened for the revocation of any such governmental approval and (bb)
assuming the obtaining of the authorizations, consents, approvals and other
actions listed on Schedule 6.27 of the Company Disclosure Schedule, no
governmental approvals and other actions listed on Schedule 6.27 of the Company
Disclosure Schedule, no governmental approval by any governmental body having
jurisdiction over the operation of the Company's business, whether in whole or
in part, will be revoked, or become ineffective or subject to revocation, as a
consequence of the transactions contemplated by this Agreement.
(B) The Company (i) has not been debarred or received notice of action
or threat of action with respect to its debarment under the provisions of the
Generic Drug Enforcement Act of 1992, 31 U.S.C. Section 335(a) and (b), or (ii)
to the best of the Company's knowledge, has used in any capacity the services of
any person which has been debarred under the provisions of the Generic Drug
Enforcement Act of 1992, 21 U.S.C. Section 335(a) and (b).
6.28. DISTRIBUTION OF MERGER CONSIDERATION. The Merger Consideration,
when distributed in accordance with the terms of this Agreement, will have been
distributed to the holders of Company Stock in a manner that does not violate
the Company's Certificate of Incorporation in effect immediately prior to the
Effective Time and any other document or agreement among the Company and such
holders related to the distribution of the Merger Consideration.
6.29. COMPANY UNAUDITED NET CASH BALANCES. The amount set forth in the
certificate delivered at the Closing by, or on behalf of, the Company to ABI
pursuant to Section 3.7(a) hereof as the amount of the Company November 30
Unaudited Net Cash Balance shall be true and correct. The amount set forth in
the certificate delivered at the Closing by, or on behalf of, the Company to ABI
pursuant to Section 3.7(a) hereof as the amount of the Company Closing Unaudited
Net Cash Balance shall be true and correct.
6.30. DISCLOSURE. No representation or warranty of the Company in this
Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by the Company
in connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
7. REPRESENTATIONS AND WARRANTIES OF ABI TO THE COMPANY.
ABI hereby represents and warrants to the Company as follows, subject in
each case to such exceptions as are set forth in the attached ABI Disclosure
Schedule.
7.1. INCORPORATION; AUTHORITY. Each of ABI and its Subsidiaries is a
corporation or other entity duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its formation, and has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted. Each of ABI and its
Subsidiaries has delivered to the Company complete and correct copies of its
Certificate of Incorporation and by-laws, or other organizational documents, in
each case with all amendments thereto, which Certificate of Incorporation and
by-laws, or other organizational documents, are in full force and effect.
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7.2. AUTHORIZATION AND ENFORCEABILITY. Each of ABI and Merger Sub has
all requisite corporate power to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of ABI and Merger Sub,
subject only to the approval of the Merger and the transactions contemplated by
this Agreement by ABI's stockholders and ABI as the sole stockholder of Merger
Sub. The Board of Directors of each of ABI and Merger Sub has (i) approved this
Agreement and the transactions contemplated hereby and (ii) determined that the
Merger is in the best interests of the stockholders of ABI or ABI as the sole
stockholder of Merger Sub, as the case may be, and is on terms that are fair to
such stockholders. This Agreement has been duly executed and delivered by ABI
and Merger Sub, and constitutes the valid and binding obligation of ABI and
Merger Sub, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The voting power of the shares of
ABI capital stock held of record by the Designated ABI Stockholders is such that
the affirmative vote (whether at a meeting of stockholders of ABI or by written
consent in lieu of a meeting) of all shares of ABI capital stock held of record
by the Designated ABI Stockholders in favor of the adoption of this Agreement
and the approval of the Merger would be sufficient to constitute the required
stockholder approval of this Agreement and the Merger pursuant to, and in
accordance with, the terms of ABI's Certificate of Incorporation, ABI's by-laws
and the DGCL, as applicable.
7.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION,
ETC. Except for the filing of the Merger Certificate and except as described on
Schedule 7.3 of the ABI Disclosure Schedule, no consent, approval, or
authorization of or registration, designation, declaration, or filing with any
governmental authority, federal or other, or any other person, is required on
the part of ABI or Merger Sub in connection with the execution, delivery, and
performance of this Agreement or the consummation of the Merger and the other
transactions contemplated hereby. Except as described in Schedule 7.3 of the ABI
Disclosure Schedule, the execution, delivery, and performance of this Agreement
and the consummation of such transactions will not violate (a) any provision of
the Certificate of Incorporation or by-laws, or other organizational documents,
in each case as amended and in effect, of ABI or Merger Sub, (b) any order,
judgment, injunction, award or decree of any court or state or federal
governmental or regulatory body applicable to ABI or Merger Sub, or (c) any
judgment, decree, order, statute, rule, regulation, agreement, instrument, or
other obligation to which ABI or Merger Sub is a party or by or to which it or
any of its assets is bound or subject, which violation will not have a Material
Adverse Effect on ABI or Merger Sub.
7.4. CAPITALIZATION. The authorized and outstanding capital stock and
other securities of ABI and its Subsidiaries as of the date hereof are as set
forth in Schedule 7.4 of the ABI Disclosure Schedule. All outstanding shares of
Series C Convertible Preferred Stock, par value $0.01 per share, of ABI are
owned of record as set forth Schedule 7.4 of the ABI Disclosure Schedule. All of
such outstanding shares of capital stock are duly authorized, validly issued,
fully paid and non-assessable, and all of such outstanding shares and other
securities were issued in compliance with all applicable laws, including
securities laws, and all applicable preemptive or similar rights of any person.
Neither ABI nor any of its Subsidiaries is aware of any person who has a valid
right to rescind any purchase of any shares of ABI's or any of its Subsidiaries'
capital stock or other securities. As of the date hereof, ABI is the sole
stockholder of Merger Sub. Subject to any of the adjustments provided for or
contemplated under this Agreement, the Aggregate Consideration Shares represent
as of the date hereof forty percent (40%) of the issued and outstanding capital
stock of ABI assuming, for purposes of this representation and warranty, that
all outstanding securities or other instruments convertible into capital stock
of ABI have been exercised in full and converted into shares of ABI Common
Stock.
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Other than as set forth on Schedule 7.4 of the ABI Disclosure Schedule,
there are no agreements or other obligations to which ABI or any of its
Subsidiaries is a party or by which it is bound to purchase or sell any shares
of its capital stock or other securities, and no outstanding convertible or
exchangeable securities, options, warrants or other rights to acquire from ABI
or any of its Subsidiaries any shares of its capital stock or other securities.
7.5. AUTHORIZATION OF SHARES OF ABI PREFERRED STOCK AND ABI CONVERSION
SHARES.
(A) The issuance, sale and delivery of the shares of ABI Preferred
Stock contemplated hereunder have been duly authorized by all requisite action
of ABI and, when issued and delivered in accordance with this Agreement, such
shares will be validly issued and outstanding, fully paid and nonassessable,
with no personal liability attaching to the ownership thereof, and, except as
may be set forth in the Series C Stockholders Agreement, not subject to
preemptive or any other similar rights of the stockholders of ABI or others.
(B) The reservation, issuance, sale and delivery by ABI of the ABI
Conversion Shares have been duly authorized by all requisite action of ABI, and
the ABI Conversion Shares have been duly reserved by ABI. Upon the issuance and
delivery of the ABI Conversion Shares in accordance with the terms of this
Agreement, the ABI Conversion Shares will be validly issued and outstanding,
fully paid and nonassessable, with no personal liability attaching to the
ownership thereof, and not subject to preemptive or any other similar rights of
the stockholders of ABI or others.
7.6. QUALIFICATION. Each of ABI and its Subsidiaries is duly qualified
and in good standing as a foreign corporation in all jurisdictions in which the
character of its owned or leased properties or the nature of its activities
makes such qualification necessary, except for such failures to be so qualified
or in good standing as would not, either individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on ABI or its Subsidiaries,
as the case may be.
7.7. SUBSIDIARIES. Except for Merger Sub and ActivBiotics (Canada),
Inc., a company formed under the laws of Canada ("ABI Canada"), ABI does not
have any Subsidiaries or own any legal and/or beneficial interests in or to any
other business enterprise or other person. Neither Merger Sub nor ABI Canada has
any Subsidiaries or own any legal and/or beneficial interests in or to any other
business enterprise or other person.
7.8. FINANCIAL STATEMENTS. Attached to Schedule 7.8 of the ABI
Disclosure Schedule are copies of (i) the audited balance sheets of ABI as of
December 31, 2002, 2003 and 2004, and the related audited statements of income
and retained earnings and cash flows, respectively, of ABI, for the fiscal years
ended on such dates, certified by KPMG LLP U.S., independent public accountants,
and (ii) the unaudited balance sheet of ABI as of October 31, 2005, and the
related unaudited statements of income and retained earnings and cash flows,
respectively, of ABI, for the 10-month period, respectively, ended on such date
(such balance sheet as of October 31, 2005, the "ABI Most Recent Balance
Sheet"). Each of such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods; each of such balance sheets presents fairly and accurately in all
material respects the financial condition of ABI as of its respective date; and
each of such statements of income and retained earnings and cash flows,
respectively, presents fairly and accurately in all material respects the
results of operations and retained earnings, or cash flows, as the case may be,
of ABI for the period covered thereby; in each case, subject, with respect to
the unaudited financial statements referred to in clause (ii) of this section,
to the absence of footnote
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disclosure and to normal, recurring end-of-period adjustments, the effect of
which, both individually and in the aggregate, is not and will not be material.
7.9. ABSENCE OF CERTAIN CHANGES. Since the date of the ABI Most Recent
Balance Sheet, except as disclosed on Schedule 7.9 of the ABI Disclosure
Schedule, there has not been any: (i) change in the assets, liabilities, sales,
income, or business of ABI or any of its Subsidiaries or in their respective
relationships with suppliers, customers, or lessors, other than changes that
were both in the ordinary course of business and have not caused, either in any
case or in the aggregate, a Material Adverse Effect on ABI or its Subsidiaries;
(ii) acquisition or disposition by ABI or any of its Subsidiaries of any
material asset or property; (iii) damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting, either in any case or
in the aggregate, the business or any material property of ABI or any of its
Subsidiaries; (iv) declaration, setting aside or payment of any dividend or any
other distributions in respect of any shares of capital stock of ABI or any of
its Subsidiaries; (v) issuance of any shares of the capital stock of ABI or any
of its Subsidiaries or any direct or indirect redemption, purchase, or other
acquisition by ABI or any of its Subsidiaries, as the case may be, of any such
capital stock; (vi) loss of the services of any officer or key employee or
consultant, or any increase in the compensation, pension, or other benefits
payable or to become payable by ABI or any of its Subsidiaries to any of its
respective officers or key employees or consultants, or any bonus payments or
arrangements made to or with any of them; (vii) forgiveness or cancellation of
any debts or claims by ABI or any of its Subsidiaries or any waivers of any
rights; (viii) entry by ABI or any of its Subsidiaries into any transaction with
any of its Affiliates; (ix) incurrence by ABI or any of its Subsidiaries of any
obligations or liabilities, whether absolute, accrued, contingent or otherwise
(including without limitation liabilities as guarantor or otherwise with respect
to obligations of others), other than obligations and liabilities incurred in
the ordinary course of business with persons other than Affiliates of ABI or any
of its Subsidiaries; (x) incurrence or imposition of any Lien on any of the
assets, tangible or intangible, of ABI or its Subsidiaries; or (xi) discharge or
satisfaction by ABI or any of its Subsidiaries of any Lien or payment by ABI or
any of its Subsidiaries of any obligation or liability (fixed or contingent)
other than (A) current liabilities included in the ABI Most Recent Balance
Sheet, (B) current liabilities to persons other than Affiliates of ABI incurred
since the date of the ABI Most Recent Balance Sheet in the ordinary course of
business, and (C) current liabilities incurred in connection with the
transactions contemplated hereby and as disclosed in Schedule 7.9 of the ABI
Disclosure Schedule.
7.10. PROPERTIES AND ASSETS. Each of ABI and its Subsidiaries has good
and marketable title or leasehold title, as the case may be, to all of its
respective assets and properties that it purports to own or lease, including
without limitation all those reflected in the ABI Most Recent Balance Sheet
(except for properties or assets sold, consumed, or otherwise disposed of in the
ordinary course of business since the date of the ABI Most Recent Balance
Sheet), all free and clear of Liens on ABI's or any of its Subsidiaries'
interest therein. All such properties and assets are in good condition and
repair, reasonable wear-and-tear excepted, and are, and as of the Closing Date
will be, adequate and sufficient to carry on the business of ABI and its
Subsidiaries as presently conducted. To ABI's knowledge, Schedule 7.10 of the
ABI Disclosure Schedule sets forth a complete and correct list of all capital
assets of ABI and its Subsidiaries.
Neither ABI nor any of its Subsidiaries owns any real property.
Neither ABI nor any of its Subsidiaries has received any notice that either the
whole or any portion of any real property leased by it is to be condemned,
requisitioned, or otherwise taken by any public authority or is to be the
subject of any public improvements that may result in special assessments
against or otherwise affect such real property. Schedule 7.10 of the ABI
Disclosure Schedule sets forth a complete and correct description of all leases
of real property to which ABI or its Subsidiaries is a party. Complete and
correct copies of all such leases have been delivered to the Company. Each such
lease is valid and subsisting and no event or
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condition exists that constitutes, or after notice or lapse of time or both
could constitute, a default thereunder by ABI or any of its Subsidiaries, or to
the best of ABI's knowledge, any other person. The leasehold interests of ABI
and each of its Subsidiaries are subject to no Lien, and ABI and its
Subsidiaries are in quiet possession of the properties covered by such leases.
7.11. INTELLECTUAL PROPERTY.
(A) Schedule 7.11(a) of the ABI Disclosure Schedule lists all inter
partes proceedings or actions known to ABI before any court or tribunal
(including the PTO or equivalent authority anywhere in the world) related to any
ABI Intellectual Property. To the best of ABI's knowledge, no ABI Intellectual
Property is the subject of any inter partes proceeding or outstanding decree,
order, judgment, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by ABI or any of its Subsidiaries, or which may
affect the validity, use or enforceability of such ABI Intellectual Property.
(B) Except as set forth on Schedule 7.11(b) of the ABI Disclosure
Schedule, with respect to each item of ABI Registered Intellectual Property,
necessary registration, maintenance and renewal fees in connection with such ABI
Registered Intellectual Property have been made and all necessary documents and
certificates in connection with such ABI Registered Intellectual Property have
been filed with the relevant patent authorities in the United States for the
purposes of maintaining such ABI Registered Intellectual Property and, to the
best of ABI's knowledge, no information material to patentability under
applicable law has been withheld from the examining office that would constitute
fraud or inequitable conduct.
(C) All ABI Registered Intellectual Property is listed on Schedule
7.11(c) of the ABI Disclosure Schedule. Each of ABI and its Subsidiaries owns
and has good and exclusive title, or has exclusively license rights, in each
case free and clear of any Lien, to all ABI Registered Intellectual Property
listed on Schedule 7.11(c) of the ABI Disclosure Schedule (for purposes of this
Section 7.11(c), joint ownership with third parties of such ABI Registered
Intellectual Property constitutes "good and exclusive title").
(D) To the extent that any work, invention, or material has been
developed or created by a third party for ABI or any of its Subsidiaries, each
of ABI and its Subsidiaries has a written agreement with such third party with
respect thereto and ABI has obtained ownership of, and is the exclusive owner
of, or has a valid license to use, all ABI Intellectual Property in such work,
material or invention by operation of law or by valid assignment or by
agreement, as the case may be.
(E) Except as set forth on Schedule 7.11(e) of the ABI Disclosure
Schedule, neither ABI or any of its Subsidiaries has transferred ownership of,
or granted any license with respect to, any ABI Intellectual Property to any
third party. Schedule 7.11(e) of the ABI Disclosure Schedule lists all
contracts, licenses and agreements to which ABI is a party that are currently in
effect (i) with respect to ABI Intellectual Property licensed or offered to any
third party; or (ii) pursuant to which a third party has licensed or transferred
any ABI Intellectual Property to ABI.
(F) To the best of ABI's knowledge, the contracts, licenses and
agreements listed on Schedule 7.11(e) of the ABI Disclosure Schedule are in full
force and effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach, modification,
cancellation, termination, or suspension of such contracts, licenses and
agreements listed on Schedule 7.11(e) of the ABI Disclosure Schedule. Each of
ABI and its Subsidiaries is in material compliance with, and has not materially
breached any term any of such contracts, licenses and agreements
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listed on Schedule 7.11(e) of the ABI Disclosure Schedule and, to the knowledge
of ABI, all other parties to such contracts, licenses and agreements listed on
Schedule 7.11(e) of the ABI Disclosure Schedule are in compliance with, and have
not breached any term of, such contracts, licenses and agreements. To the best
of ABI's knowledge, following the Closing Date, ABI will be permitted to
exercise all of its rights under the contracts, licenses and agreements listed
on Schedule 7.11(e) of the ABI Disclosure Schedule without the payment of any
additional funds other than ongoing fees, royalties or payments which ABI would
otherwise be required to pay.
(G) To the best of ABI's knowledge, Schedule 7.11(g) of the ABI
Disclosure Schedule lists all contracts, licenses and agreements between ABI or
any of its Subsidiaries and any third party wherein or whereby ABI or any of its
Subsidiaries has agreed to, or assumed, any obligation or duty to warrant,
indemnify, hold harmless or otherwise assume or incur any obligation or
liability with respect to the infringement or misappropriation by ABI of any
third party's Intellectual Property.
(H) Neither ABI nor any of its Subsidiaries (including its executive
officers, directors and, to the best of ABI's knowledge, employees) has received
notice from any third party that the operation of its business or any act,
product, drug candidate or service of ABI or any of its Subsidiaries infringes
or misappropriates the Intellectual Property of any third party or constitutes
unfair competition or trade practices under the laws of any jurisdiction.
(I) To the best of ABI's knowledge, (i) no person has nor is
infringing or misappropriating any ABI Intellectual Property and (ii) there have
been, and are, no claims asserted against ABI or any of its Subsidiaries or
against any of their licensees with respect to ABI Intellectual Property.
(J) Each of ABI and its Subsidiaries maintains reasonable security
measures for the preservation of the secrecy and proprietary nature of such of
ABI Intellectual Property as constitute trade secrets or other confidential
information. To the best of ABI's knowledge, no officer, director, employee, or
consultant of ABI is obligated under or bound by any agreement or instrument, or
any judgment, decree, or order of any court of administrative agency, that (i)
conflicts or may conflict with his agreements and obligations to use his best
efforts to promote the interest of ABI, (ii) conflicts or may conflict with the
business or operations of ABI, or (iii) restricts or may restrict the use or
disclosure of any information that may be useful to ABI.
(K) All of the representations and warranties of ABI with respect to
ABI's rights to ABI Intellectual Property are set forth in this Section 7.11
and, notwithstanding anything to the contrary contained herein, no other
representation or warranty in this Agreement shall be construed to relate to
ABI's rights to the ABI Intellectual Property.
7.12. INDEBTEDNESS. At the date hereof, neither ABI nor any of its
Subsidiaries (a) has any Indebtedness outstanding except as set forth in
Schedule 7.12 of the ABI Disclosure Schedule or (b) is in default with respect
to any outstanding Indebtedness or any agreement, instrument, or other
obligation relating thereto and no such Indebtedness or any agreement,
instrument or other obligation relating thereto purports to limit the issuance
of any securities by it, or (except as set forth on Schedule 7.12 of the ABI
Disclosure Schedule) the operation of its business. Complete and correct copies
of all agreements, instruments, and other obligations (including all amendments,
supplements, waivers, and consents) relating to any Indebtedness of ABI or any
of its Subsidiaries have been furnished to the Company.
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7.13. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the ABI Most Recent Balance Sheet, or (b)
described on Schedule 7.13 of the ABI Disclosure Schedule, neither ABI nor any
of its Subsidiaries has any liabilities or obligations of any nature, whether
accrued, absolute, contingent, or otherwise (including, without limitation,
liabilities, as guarantor or otherwise, in respect of obligations of others)
that would be required to be reflected or reserved against in a balance sheet
prepared in accordance with generally accepted accounting principles or referred
to in the notes thereto.
7.14. TAXES.
(A) FILING OF TAX RETURNS AND PAYMENT OF TAXES. Each of ABI and its
Subsidiaries has timely filed (including applicable extensions granted without
penalty) all Tax Returns required to be filed by it at or prior to the Effective
Time, each such Tax Return has been prepared in compliance with all applicable
laws and regulations, and all such Tax Returns are true and accurate in all
respects. All Taxes due and payable by ABI and each of its Subsidiaries have
been paid, and neither ABI nor any of its Subsidiaries will be liable for any
additional Taxes in respect of any taxable period ending on or before the
Closing Date in an amount that exceeds the corresponding reserve for unpaid
Taxes, if any, reflected in the ABI Most Recent Balance Sheet. ABI has delivered
or made available to the Company true and complete copies of all Tax Returns
filed by or with respect to it and its Subsidiaries with respect to taxable
periods ended on or after December 31, 2001, and all examination reports and
statements of deficiencies assessed against or agreed to by ABI or its
Subsidiaries with respect thereto.
(B) AUDIT HISTORY. With respect to each taxable period of ABI and its
Subsidiaries ended before December 31, 2001, either such taxable period has been
audited by the relevant taxing authority or the time for assessing or collecting
Tax with respect to each such taxable period has closed and such taxable period
is not subject to review by any relevant taxing authority.
(C) DEFICIENCIES. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been proposed,
asserted or assessed in writing by any taxing authority against ABI or any of
its Subsidiaries.
(D) LIENS. There are no Liens for Taxes (other than current Taxes not
yet due and payable) on the assets of ABI or any of its Subsidiaries.
(E) EXTENSIONS TO STATUTE OF LIMITATIONS FOR ASSESSMENT OF TAXES.
Neither ABI nor any of its Subsidiaries currently has in effect any consent to
extend the time in which any Tax may be assessed or collected by any taxing
authority.
(F) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. Except as set forth
in Schedule 7.14(g) of the ABI Disclosure Schedule, neither ABI nor any of its
Subsidiaries has requested or been granted an extension of the time for filing
any Tax Return to a date on or after the Closing Date.
(G) PENDING PROCEEDINGS. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or to the
best of ABI's knowledge, threatened, against or with respect to (i) ABI or any
of its Subsidiaries, or (ii) any Affiliated Group with respect to a taxable
period during which ABI or any of its Subsidiaries was a member of such
Affiliated Group.
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(H) NO FAILURES TO FILE TAX RETURNS. No claim has ever been made by a
taxing authority in a jurisdiction where ABI or any of its Subsidiaries does not
pay Tax or file Tax Returns that ABI or any of its Subsidiaries is or may be
subject to Taxes assessed by such jurisdiction.
(I) MEMBERSHIP IN AFFILIATED GROUPS, ETC. Neither ABI nor any of its
Subsidiaries has ever been a member of any Affiliated Group, or filed or been
included in a combined, consolidated, or unitary Tax Return, other than with
respect to an Affiliated Group or other combined, consolidated or unitary group
of which ABI was the common parent or equivalent.
(J) ADJUSTMENTS UNDER SECTION 481. Neither ABI nor any of its
Subsidiaries will be required, as a result of a change in method of accounting
for any period ending on or before the Closing Date other than as a result of
the transactions contemplated by this Agreement, to include any adjustment under
Section 481(c) of the Code (or any similar or corresponding provision or
requirement under any Tax law) in taxable income for any period ending on or
after the Closing Date.
(K) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. Neither ABI nor
any of its Subsidiaries is a party to or bound by any Tax sharing or allocation
agreement or has any current or potential contractual obligation to indemnify
any person other than ABI or any of its Subsidiaries with respect to Taxes.
(L) WITHHOLDING TAXES. Each of ABI and its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid by them in connection
with amounts paid or owing to any employee, creditor, independent contractor, or
other person.
(M) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. Except as set forth
in Schedule 7.14(n) of the ABI Disclosure Schedule, neither ABI nor any of its
Subsidiaries has a permanent establishment in any foreign country, as defined in
the relevant tax treaty between the United States of America and such foreign
country, and does not otherwise operate or conduct business through any branch
in any foreign country.
(N) U.S. REAL PROPERTY HOLDING CORPORATION. Neither ABI nor any of its
Subsidiaries is, nor has been, a United States real property holding
corporation, within the meaning of Code Section 897(c)(2), within the five-year
period ending on the date of this Agreement.
(O) SAFE HARBOR LEASE PROPERTY. None of the property owned or used by
ABI or any of its Subsidiaries is subject to a tax benefit transfer lease
executed in accordance with Section 168(f)(8) of the Internal Revenue Code of
1954, as amended by the Economic Recovery Tax Act of 1981.
(P) TAX-EXEMPT USE PROPERTY. Except as set forth in Schedule 7.14(q)
of the ABI Disclosure Schedule, none of the property owned by ABI or any of its
Subsidiaries is "tax-exempt use property" within the meaning of Section 168(h)
of the Code.
(Q) SECURITY FOR TAX-EXEMPT OBLIGATIONS. None of the assets of ABI or
any of its Subsidiaries directly or indirectly secures any Indebtedness, the
interest on which is tax-exempt under Section 103(a) of the Code, and neither
ABI nor any of its Subsidiaries is directly or indirectly an obligor or a
guarantor with respect to any such Indebtedness.
(R) PARACHUTE PAYMENTS. Neither ABI nor any of its Subsidiaries has
made any payments, is obligated to make any payments, nor is a party to any
agreement that under certain
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circumstances could obligate it to make any payments, that will not be
deductible under Code Section 280G.
7.15. EMPLOYEE BENEFIT PLANS.
(A) Except as described on Schedule 7.15(a) of the ABI Disclosure
Schedule, neither ABI nor any of its Subsidiaries now maintains or contributes
to, or has any liability (contingent or otherwise) in respect of, any pension,
profit-sharing, deferred compensation, bonus, stock option, share appreciation
right, severance, group or individual health, dental, medical, life insurance,
survivor benefit, or similar plan, policy, or arrangement, whether formal or
informal, for the benefit of any director, officer, consultant or employee,
whether active or terminated, of ABI or any of its Subsidiaries. Each of the
arrangements set forth on Schedule 7.15(a) of the ABI Disclosure Schedule is
hereinafter referred to as a "ABI Employee Benefit Plan," except that any such
arrangement that is a multi-employer plan will be treated as an ABI Employee
Benefit Plan only for purposes of Sections 7.15(d)(iv), (vi), and (vii) and
7.15(g) hereof.
(B) ABI has delivered or made available to the Company true, correct,
and complete copies of each ABI Employee Benefit Plan, and with respect to each
such Plan (i) any associated trust, custodial, insurance, or service agreements,
(ii) any annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental agency
or distributed to participants or beneficiaries thereunder in the current
calendar year or any of the three preceding calendar years, and (iii) the most
recently received IRS determination letters and any governmental advisory
opinions or rulings.
(C) To the best of ABI's knowledge, each ABI Employee Benefit Plan is
and has heretofore been maintained and operated in all material respects with
the terms of such Plan and with the requirements prescribed (whether as a matter
of substantive law or as necessary to secure favorable tax treatment) by any and
all statutes, governmental or court orders, and governmental rules or
regulations in effect from time to time, including, but not limited to, ERISA,
and the Code, and applicable to such Plan. Each ABI Employee Benefit Plan that
is intended to qualify under Section 401(a) of the Code and each trust forming
part of an ABI Employee Benefit Plan which is intended to qualify under Section
501(c)(9) of the Code is specifically so identified in Schedule 7.15(a) of the
ABI Disclosure Schedule and has been determined by the IRS to be so qualified,
and to the best of ABI's knowledge, nothing has occurred since the date of the
last such determination as to each such Plan or trust that has resulted or is
likely to result in the revocation of such determination as to such Plan or
trust, other than such failures as may be corrected without expenditure of more
than $10,000.
(D) (I) There is no pending, or to the best of ABI's knowledge,
threatened, legal action, proceeding, or investigation, other than routine
claims for benefits, concerning any ABI Employee Benefit Plan, or to the best of
ABI's knowledge, any fiduciary or service provider thereof.
(II) No liability (contingent or otherwise) to the PBGC or any
multi-employer plan has been incurred by ABI or any of its Subsidiaries or any
of their ERISA affiliates (other than insurance premiums satisfied in due
course).
(III) No reportable event, or event or condition that presents a
material risk of termination by the PBGC, has occurred with respect to any ABI
Employee Benefit Plan, or any retirement plan of an ERISA affiliate of ABI or
any of its Subsidiaries, which is subject to Title IV of ERISA.
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(IV) To the best of ABI's knowledge, no ABI Employee Benefit Plan
nor any party in interest with respect thereto, has engaged in a prohibited
transaction that could subject ABI or any of its Subsidiaries directly or
indirectly to liability under Section 409 or 502(i) of ERISA or Section 4975 of
the Code.
(V) No communication, report, or disclosure has been made that,
at the time made, did not reflect accurately in all material respects the terms
and operations of any ABI Employee Benefit Plan.
(VI) No ABI Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries,
other than (A) coverage mandated by applicable law, (B) benefits the full cost
of which is borne by the current or former employees (or their beneficiaries),
and (C) benefits that have already been satisfied in full.
(VII) Neither ABI nor any of its Subsidiaries has undertaken to
maintain any ABI Employee Benefit Plan for any period of time and each such Plan
is terminable at the sole discretion of ABI or its Subsidiaries, subject only to
such constraints as may be imposed by applicable law.
(E) With respect to each ABI Employee Benefit Plan for which a
separate fund of assets is or is required to be maintained, full payment has
been made of all amounts that ABI or any of its Subsidiaries is required, under
the terms of each such Plan, to have paid as contributions to that Plan as of
the Closing Date, and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any such Plan. The current value of the assets of each such ABI
Employee Benefit Plan, as of the end of the most recently ended plan year of
that Plan, equaled or exceeded the current value of all accrued benefits under
that Plan.
(F) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any ABI Employee Benefit Plan to
any current or former director, officer, consultant, or employee of ABI or any
of its Subsidiaries or result in the vesting, acceleration of payment, or
increases in the amount of any benefit payable to or in respect of any such
current or former director, officer, consultant, or employee.
(G) No ABI Employee Benefit Plan is a multi-employer plan.
(H) For purposes of this Section 7.15, "multi-employer plan," "party
in interest," "current value," "accrued benefit," "reportable event," and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under
Section 414 of the Code is treated as a single employer with ABI or any of its
Subsidiaries.
7.16. SAFETY AND ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 7.16 of the ABI Disclosure Schedule:
(A) None of the activities carried on by ABI or any of its
Subsidiaries at any plants, offices, or properties in or on which ABI operates
are in violation of any zoning, health, or safety law or regulation, including
without limitation the Occupational Safety and Health Act of 1970, as amended,
excluding only such violations as will not, either individually or in the
aggregate, have a Material Adverse Effect on ABI or any of its Subsidiaries.
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(B) Neither ABI nor any of its Subsidiaries, nor to the best of ABI's
knowledge, any operator of any real property presently or formerly owned,
leased, or operated by ABI or any of its Subsidiaries is in violation or alleged
violation of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including without limitation Environmental
Laws, excluding only such violations as will not, either individually or in the
aggregate, have a Material Adverse Effect on ABI or any of its Subsidiaries.
(C) Neither ABI nor any of its Subsidiaries has received notice from
any third party, including without limitation any federal, state, foreign, or
local governmental authority, that (i) ABI or any of its Subsidiaries has been
identified by the EPA as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part ▇▇▇
▇▇▇▇▇▇▇▇ ▇ (1986); (ii) any Hazardous Substances that ABI or any of its
Subsidiaries has generated, transported, handled, used, or disposed of has been
found at any site at which a federal, state, foreign, or local agency or other
third party has conducted or has ordered that ABI or any of its Subsidiaries
conduct a remedial investigation, removal, or other response action pursuant to
any Environmental Law; or (iii) ABI or any of its Subsidiaries is or will be a
named party to any claim, action, cause of action, complaint (contingent or
otherwise), or legal or administrative proceeding arising out of any third
party's incurrence of costs, expenses, losses, or damages of any kind whatsoever
in connection with the release of Hazardous Substances.
(D) (i) No portion of any real property presently or formerly owned,
leased, or operated by ABI or any of its Subsidiaries has been used by ABI or
any of its Subsidiaries, or to the best of ABI's knowledge, by any other person,
to handle, use, manufacture, transport, store, or dispose of Hazardous
Substances except in accordance in all material respects with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances used by ABI or any of its Subsidiaries is
located on any real property presently owned, leased, or operated by ABI or any
of its Subsidiaries, or to the best of ABI's knowledge, any real property
formerly owned, leased, or operated by it; (ii) in the course of the activities
conducted by ABI and its Subsidiaries and to the best of ABI's knowledge,
without investigation, those of any other operators of any real property
presently or formerly owned, leased, or operated by ABI and its Subsidiaries, no
Hazardous Substances have been generated, stored, or used on such properties
except in accordance with applicable Environmental Laws; (iii) to the best of
ABI's knowledge, there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing, or dumping) or threatened releases of Hazardous
Substances by ABI or any of its Subsidiaries on, upon, into, or from any real
property presently or formerly owned, leased, or operated by ABI or any of its
Subsidiaries; (iv) to the best of ABI's knowledge, there have been no releases
on, upon, from, or into any real property in the vicinity of any real property
presently or formerly owned, leased, or operated by ABI or any of its
Subsidiaries that, through soil or groundwater contamination, have come to be
located on, any of the real property presently or formerly owned, leased, or
operated by ABI or any of its Subsidiaries; and (v) to the extent required by
applicable Environmental Laws, any Hazardous Substances that have been generated
by ABI or any of its Subsidiaries, or to ABI's actual knowledge, by any other
person, on any real property presently or formerly owned, leased, or operated by
ABI or any of its Subsidiaries, have been transported offsite only by carriers
having an identification number issued by the EPA and treated or disposed of
only by treatment or disposal facilities having, to ABI's actual knowledge,
valid permits as required under applicable Environmental Laws, which
transporters and facilities, to ABI's actual knowledge, have been and are
operating substantially in compliance with such permits and applicable
Environmental Laws.
(E) No real property presently owned, leased, or operated by ABI or
any of its Subsidiaries, and to the best of ABI's knowledge, no real property
formerly owned, leased, or operated
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by ABI or any of its Subsidiaries, and as a result of the present or past
activities of ABI or any of its Subsidiaries, is subject to any Environmental
Law requiring the performance of any Hazardous Substances site assessment, the
removal or remediation of any Hazardous Substances, the giving of notice to any
governmental agency or other person, or the recording and/or delivery to any
governmental agency or other person of any environmental disclosure statement or
document, by reason of, or as a condition to the effectiveness of, the Merger
and/or any other transaction contemplated hereby.
(F) ABI has and maintains, in full force and effect, all Environmental
Permits from all governmental authorities as are required under Environmental
Laws or are otherwise necessary for the conduct of the business or operation of
ABI, and the ABI is in material compliance with all of the Environmental
Permits.
7.17. LABOR RELATIONS. Each of ABI and its Subsidiaries is and has
been in compliance in all material respects with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and nondiscrimination in employment, and is not and
has not been engaged in any unfair labor practice. There is no charge or
proceeding pending, or to the best of ABI's knowledge, threatened, against ABI
or any of its Subsidiaries alleging unlawful discrimination in employment
practices or unfair labor practice before any court or agency, including without
limitation the National Labor Relations Board. There is no labor strike,
dispute, work slow-down, or work stoppage pending, or to the best of ABI's
knowledge, threatened against or involving ABI or any of its Subsidiaries. No
one has petitioned within the last five years or is now petitioning for union
representation of any of the employees of ABI or any of its Subsidiaries. No
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is pending against ABI or any of its Subsidiaries and no
claim therefor has been asserted. None of the employees of ABI or any of its
Subsidiaries is covered by any collective bargaining agreement, and no
collective bargaining agreement is currently being negotiated by ABI or any of
its Subsidiaries. Neither ABI nor any of its Subsidiaries has experienced any
work stoppage or other material labor difficulty during the last five years.
7.18. LITIGATION. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending (as evidenced by ABI's or its
Subsidiaries' receipt of service of process or other written notice of such
pendency), or to the best of ABI's knowledge, threatened, against ABI or any of
its Subsidiaries, nor is there any basis therefor known to ABI.
7.19. MATERIAL CONTRACTS. Schedule 7.19 of the ABI Disclosure Schedule
sets forth a complete and accurate list of all ABI Material Contracts (as
defined below). As used in this Agreement, the term "ABI Material Contract"
means every agreement or understanding of any kind, written or oral, that is
legally enforceable by or against or otherwise binding on ABI and which is
material to ABI's business, and specifically includes without limitation: (a)
agreements with any current or former officer, director, employee, consultant,
or stockholder, or any partnership, corporation, joint venture, or any other
entity in which any such person has an interest (other than agreements
terminable by ABI upon 30 days notice and which termination does not result in
any obligations or liabilities to ABI); (b) agreements with any labor union or
association representing any employee; (c) agreements for the provision of
services by or to ABI pursuant to which amounts are owed to or from ABI in
excess of $100,000; (d) bonds or other security agreements provided by any party
in connection with the business of ABI; (e) agreements for the purchase or other
acquisition or the sale or other disposition of assets or properties (other than
in the ordinary course of business), or for the grant to any person of any
preferential rights to purchase any such assets or properties; (f) joint venture
agreements relating to the assets, properties, or business of ABI or by or to
which it or any of its assets or properties is bound or subject; (g) agreements
under which ABI
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agrees to indemnify any party, to share tax liability of any party, or to
refrain from competing with any party; (h) agreements with regard to
Indebtedness, including, without limitation, any indenture or other agreements
in connection with issuances of bonds, debentures or other debt securities by
ABI and any agreements in connection with bank financings by ABI; (i) any
agreement, contract, commitment, transaction or series of transaction for any
purpose relating to capital expenditures or commitments or long-term
obligations; (j) any purchase order or contract for the purchase of raw
materials; (k) any distribution, joint marketing or development agreement; (l)
any assignment, license or other agreement with respect to any form of
intangible property; (m) any research collaboration agreement; (n) any
agreements relating to venture capital and other equity financings by ABI; (o)
any stockholder agreements or other agreements with any of ABI's stockholders
pertaining to the shares of capital stock of ABI held by them or their rights as
stockholders of ABI; and (p) to the knowledge of ABI, any voting trust or voting
agreements among the stockholders of ABI.
All of the ABI Material Contracts are in full force and effect, and neither
ABI nor, to the best of ABI's knowledge, any other party thereto is in default
under or in material breach of any of the material terms thereof, nor does any
event or condition exist that after notice or lapse of time or both could
constitute a default thereunder or material breach thereof on the part of ABI,
or to the best of ABI's knowledge, any other party thereto. All payments
required under each contract, agreement or understanding of any kind, written or
oral, that is legally enforceable by or against or otherwise binding on ABI have
been accrued for in accordance with generally accepted accounting principles,
consistently applied, and are reflected in ABI's financial statements. Except as
set forth on Schedule 7.19 of the ABI Disclosure Schedule, no approval or
consent of any person is needed in order that the ABI Material Contracts
continue in full force and effect following the consummation of the Merger and
the other transactions contemplated hereby, and no ABI Material Contract
includes any provision, the effect of which may be to terminate (or give rise to
a right of termination under) such ABI Material Contract, to enlarge or
accelerate any obligations of ABI thereunder, or to give additional rights to
any other person, as a result of the consummation of the Merger or the other
transactions contemplated hereby. ABI has delivered or made available to the
Company true, correct, and complete copies of all ABI Material Contracts,
including all amendments, modifications, and supplements thereto.
7.20. POTENTIAL CONFLICTS OF INTEREST. No officer, director, or, to
best of ABI's knowledge, stockholder of ABI or any of its Subsidiaries (a) owns,
directly or indirectly, any interest (excepting not more than five percent (5%)
stock holdings for investment purposes in securities of publicly held and traded
companies) in, or is an officer, director, employee, or consultant of, any
person that furnishes or sells services, drug candidates or products that ABI or
any of its Subsidiaries furnishes or sells or proposes to furnish or sell or is
a lessor, lessee, customer, or supplier of ABI or any of its Subsidiaries; (b)
owns, directly or indirectly, in whole or in part (other than solely as a result
of his or its ownership of capital stock of ABI), any tangible or intangible
property that ABI or any of its Subsidiaries is using or the use of which is
necessary for the business of ABI or any of its Subsidiaries; or (c) to the best
of the ABI's knowledge, has any cause of action or other claim whatsoever
against, or owes any amount to, ABI or any of its Subsidiaries, except for
claims in the ordinary course of business, such as for accrued vacation pay,
accrued benefits under the ABI Employee Benefit Plans, and similar matters and
agreements.
7.21. INSURANCE. Schedule 7.21 of the ABI Disclosure Schedule lists
the policies of products liability, theft, fire, liability, worker's
compensation, life, property and casualty, and other insurance owned or held by
ABI and its Subsidiaries. Such policies of insurance are of the kinds, cover
such risks, and are in such amounts and with such deductibles and exclusions, as
are consistent with prudent business practice for companies in ABI's and its
Subsidiaries' lines of business and of a similar size and location. All such
policies are in full force and effect; are sufficient for compliance by ABI and
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its Subsidiaries with all requirements of law and of all agreements to which ABI
or any of its Subsidiaries is a party; are valid, outstanding, and enforceable
policies and provide that they will remain in full force and effect through the
respective dates set forth on Schedule 7.21 of the ABI Disclosure Schedule; and
will not in any way be affected by, or terminate or lapse as a result of the
consummation of, the transactions contemplated by this Agreement.
7.22. RELATIONSHIPS WITH SUPPLIERS AND LICENSORS. No current supplier
to ABI or any of its Subsidiaries has notified ABI or any of its Subsidiaries of
an intention to terminate or substantially alter its existing business
relationship with ABI or any of its Subsidiaries, nor has any licensor under a
license agreement with ABI or any of its Subsidiaries notified ABI or any of its
Subsidiaries of an intention to terminate or substantially alter ABI's or its
Subsidiaries' rights under such license, which termination or alteration would
have a Material Adverse Effect on ABI or any of its Subsidiaries.
7.23. EMPLOYMENT OF OFFICERS, EMPLOYEES. The aggregate annual
compensation payable by ABI to its five most highly compensated employees
(including but not limited to wages, salary, commissions, normal bonus, profit
sharing, deferred compensation, and other extra compensation) is as set forth on
Schedule 7.23 of the ABI Disclosure Schedule. Except to the extent otherwise
disclosed on Schedule 7.23 of the ABI Disclosure Schedule, none of the current
or former officers, directors, employees or consultants of ABI is a party to, or
the beneficiary of, any agreement, plan or arrangement that provides for any
payment (whether of severance pay or otherwise) becoming due to such current or
former officer, director, employee or consultant as a result of the Merger, or
that provides for the vesting, acceleration of payment, or increases in the
amount of any benefit payable to or in respect of such current or former
director, officer, consultant, or employee as a result of the Merger.
7.24. BROKERS. No finder, broker, agent, or other intermediary has
acted for or on behalf of ABI or any of its Subsidiaries in connection with the
negotiation, preparation, execution, or delivery of this Agreement or the
consummation of the Merger or the other transactions contemplated hereby.
7.25. COMPLIANCE WITH OTHER AGREEMENTS, LAWS, ETC. Each of ABI and its
Subsidiaries has complied with, and is in compliance with, (a) all laws,
statutes, governmental regulations and all judicial or administrative tribunal
orders, judgments, writs, injunctions, decrees or similar commands applicable to
its business, (b) all unwaived terms and provisions of all contracts, agreements
and indentures to which ABI or any of its Subsidiaries is a party, or by which
ABI or any of its Subsidiaries or any of its properties is subject, and (c) its
Certificate of Incorporation and by-laws, respectively, each as amended to date;
in the case of the preceding clauses (a) and (b), excepting only any such
noncompliances that, both individually and in the aggregate, have not resulted
and will not result in any Material Adverse Effect on ABI or any of its
Subsidiaries. Neither ABI nor any of its Subsidiaries has not been charged with,
or to the best of ABI's knowledge, been under investigation with respect to, any
violation of any provision of any federal, state, or local law or administrative
regulation.
7.26. PERMITS, LICENSES, AND PROGRAMS; NO DEBARMENT.
(A) Schedule 7.26 of the ABI Disclosure Schedule contains a complete
and correct copy of (i) each pending application or registration for
governmental approval and each governmental approval held by ABI or any of its
Subsidiaries to develop, manufacture, test (including, without limitation,
preclinical tests and clinical trials), import, export, store, market and sell
its products or drug candidates, (ii) the most recent report by or on behalf of
the FDA or any other governmental body involving or relating to any facility
inspection of ABI's or any of its Subsidiaries' facilities, and (iii) a
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description of all ongoing proprietary internal research and development
programs. Except as are set forth on Schedule 7.26 of the ABI Disclosure
Schedule, (i) each of ABI and its Subsidiaries possesses such governmental
approvals from all governmental bodies including, without limitation, all FDA
approvals, necessary to permit the operation of its respective business in the
manner as the same is currently conducted, and to operate, own or occupy its
properties, (ii) there have been no product recalls, field corrective activity,
medical device reports, warning letters or administrative actions by the FDA or
any other governmental body, and (iii) to ABI's knowledge, (aa) there is no
administrative action pending or threatened for the revocation of any such
governmental approval and (bb) assuming the obtaining of the authorizations,
consents, approvals and other actions listed on Schedule 7.26 of the ABI
Disclosure Schedule, no governmental approvals and other actions listed on
Schedule 7.26 of the ABI Disclosure Schedule, no governmental approval by any
governmental body having jurisdiction over the operation of ABI's or any of its
Subsidiaries' business, whether in whole or in part, will be revoked, or become
ineffective or subject to revocation, as a consequence of the transactions
contemplated by this Agreement.
(B) Neither ABI nor or any of its Subsidiaries (i) has been debarred
or received notice of action or threat of action with respect to its debarment
under the provisions of the Generic Drug Enforcement Act of 1992, 31 U.S.C.
Section 335(a) and (b), or (ii) to the best of ABI's knowledge, has used in any
capacity the services of any person which has been debarred under the provisions
of the Generic Drug Enforcement Act of 1992, 21 U.S.C. Section 335(a) and (b).
7.27. ABI UNAUDITED NET CASH BALANCE. The amount set forth in the
certificate delivered at the Closing by, or on behalf of, ABI to the Company
pursuant to Section 3.7(b) hereof as the amount of the ABI Unaudited Net Cash
Balance shall be true and correct.
7.28. MERGER SUB. Merger Sub was incorporated solely for the purpose
of entering into this Agreement and consummating the Merger and the transactions
contemplated hereby, has engaged in no other business activities since its
incorporation and has conducted its operations only as contemplated in this
Agreement.
7.29. DISCLOSURE. No representation or warranty of ABI in this
Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by ABI in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
8. MUTUAL COVENANTS.
8.1. SATISFACTION OF CONDITIONS. Each of the parties will use
reasonable best efforts to cause the satisfaction as promptly as possible, but
in any event by January 13, 2006, of the conditions contained in Sections 10
through 12 hereof that impose obligations on it or require action on its part or
the part of any of its stockholders or Affiliates.
8.2. BLUE SKY APPROVALS. ABI will file all documents required to
obtain the Blue Sky permits and approvals, if any, required to carry out the
transactions contemplated by this Agreement (to the extent required prior to the
Effective Time), will pay all expenses incident thereto and will use its best
efforts to obtain such permits and approvals; provided, however, that ABI shall
not be required in connection with this Section 8.2 to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
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8.3. TAX MATTERS. None of the parties shall knowingly take, or
knowingly cause or permit any of its Subsidiaries to take, any action (other
than actions explicitly contemplated by this Agreement) that would reasonably be
expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
8.4. FURTHER ASSURANCES. Subject to the terms and conditions set forth
in this Agreement, from time to time both before and after the Effective Time,
the Company, ABI, Merger Sub and the Stockholder Representatives, and their
respective proper officers and directors, will use their respective reasonable
best efforts, as promptly as is practicable, to take or cause to be taken all
actions, and to do or cause to be done all other things, as are necessary,
proper, or advisable to consummate and make effective the Merger and the other
transactions contemplated hereby.
8.5. STOCKHOLDER APPROVAL. Each of the Company and ABI will take all
steps necessary or appropriate to duly call, give notice of, convene and hold a
stockholders meeting, and/or obtain the necessary written consents of its
stockholders in accordance with the DGCL, as the case may be, as soon as
reasonably practicable for the purpose of adopting and approving this Agreement
and the transactions contemplated hereunder, and for such other purposes as may
be necessary or desirable. The Board of Directors of the Company will recommend
to its stockholders the adoption and approval of this Agreement and the
transactions contemplated hereby and the other matters to be submitted to its
stockholders in connection therewith, except to the extent that legal counsel to
the Company provides legal advice to such Board of Directors that such
recommendation would cause such Board of Directors to breach its fiduciary
duties, in which case the Company shall not be required to make such
recommendation. The Board of Directors of ABI will recommend to its stockholders
the adoption and approval of this Agreement and the transactions contemplated
hereby and the other matters to be submitted to its stockholders in connection
therewith, except to the extent that legal counsel to ABI provides legal advice
to such Board of Directors that such recommendation would cause such Board of
Directors to breach its fiduciary duties, in which case ABI shall not be
required to make such recommendation. Each of the Company and ABI shall use all
reasonable best efforts to obtain the necessary approvals by its stockholders of
this Agreement and the transactions contemplated hereby, including the approval,
execution and delivery of the Series C Investment Documents.
8.6. INFORMATION STATEMENT. As soon as practicable after the date of
this Agreement, ABI and the Company shall use reasonable best efforts to
prepare, and the Company shall furnish to its stockholders, an information
statement (the "Information Statement") soliciting a vote, whether at a meeting
of stockholders of the Company or by written consent, to ratify, approve and
adopt the Merger Agreement and the Merger and the other transactions
contemplated by this Agreement. The Information Statement shall include a Notice
of Merger and Appraisal Rights (the "Appraisal Rights Notice") for the
stockholders of the Company, which Appraisal Rights Notice shall comply in all
respects with the requirements of the DGCL. In addition, the Information
Statement shall constitute a disclosure document for the offer and issuance of
the shares of ABI Preferred Stock that may be received by the Stockholders in
the Merger. ABI and the Company shall each use reasonable best efforts to cause
the Information Statement to comply with applicable federal and state securities
laws requirements. Each of ABI and the Company hereby (i) consents to the use of
its name and, on behalf of its Subsidiaries and Affiliates, the names of such
Subsidiaries and Affiliates and to the inclusion of financial statements and
business information relating to such party and its Subsidiaries and Affiliates
(in each case, to the extent required by applicable securities laws) in the
Information Statement, or in any amendments or supplements thereto, (ii) agrees
to provide promptly to the other party such information concerning it and its
respective Affiliates, directors, officers and security holders as, in the
reasonable judgment of the other party or its counsel, may be required or
appropriate for inclusion in the Information Statement, or in any amendments or
supplements thereto, and (iii) agrees to cause its counsel and auditors to
cooperate with the other
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party's counsel and auditors in the preparation of the Information Statement and
any amendments or supplements thereto. If any event relating to the Company or
ABI occurs, or if the Company or ABI becomes aware of any information, in either
case that should be disclosed in an amendment or supplement to the Information
Statement, then ABI and the Company shall promptly prepare such amendment or
supplement and the Company shall promptly distribute the same to its
stockholders. Subject to Section 8.5 hereof, the Information Statement shall
contain the recommendation of the Board of Directors of Company that the
stockholders of the Company approve and adopt this Agreement, the Merger and the
other transactions contemplated by this Agreement, and the conclusion of the
Board of Directors of the Company that the terms and conditions of this
Agreement and the Merger are fair and reasonable and in the best interests of
Company and its stockholders. The Company shall assist ABI in obtaining such
information as ABI reasonably requires to allow ABI to determine the number and
nature of the stockholders of the Company in their capacity as purchasers (as
such term is used under Rule 506 of Regulation D promulgated under the
Securities Act ("Regulation D")). In connection with the distribution of the
Information Statement to the stockholders of the Company, the Company shall use
reasonable best efforts to cause each of its stockholders to complete and return
an accredited investor questionnaire. To the extent that ABI reasonably
determines that a stockholder of the Company is not an "accredited investor" (as
defined in Rule 501(a) of Regulation D) and does not meet the financial
knowledge and experience requirements of Rule 506 of Regulation D, the Company
agrees that it shall use its reasonable best efforts to cause such stockholder
to use a "purchaser representative" (as defined in Rule 501(h) of Regulation D)
to assist such stockholder in evaluating the Information Statement and the
investment decisions represented by this Agreement, the Series C Investment
Documents, the Merger and the transactions contemplated hereby and thereby.
8.7. DISSENTING SHARES. As promptly as practicable after any such
meeting of the stockholders of the Company at which this Agreement and the
transactions contemplated hereunder are submitted to such stockholders for
adoption and approval, or after sending any notices required under the DGCL
after this Agreement and the transactions contemplated hereunder have been
adopted and approved by the stockholders of the Company by written consent in
accordance with the DGCL, the Company shall furnish to ABI the names and
addresses of any dissenting stockholder and the number of Dissenting Shares
owned beneficially and of record by such dissenting stockholder.
8.8. INTELLECTUAL PROPERTY. ABI and the Company each agree that, prior
to the Effective Time, any and all Intellectual Property, including trade
secrets, created or developed by either party shall remain the exclusive
property of the party who created or developed such property, notwithstanding
the sharing of information prior to the Merger.
8.9. PUBLIC DISCLOSURE. Between the date hereof and the Effective Time
of the Merger, neither the Company nor ABI will furnish any communications to
the public generally if the subject matter thereof relates to the other party or
to the transactions contemplated under this Agreement, without the prior
approval of the other party as to the contents thereof, which approval shall not
be unreasonably withheld or delayed.
8.10. CONSENTS. The Company shall use reasonable best efforts to
obtain the consents, waivers and approvals necessary for the consummation of the
Merger and the transactions contemplated under this Agreement (all of such
consents, waivers and approvals having been set forth in Schedules 6.3 and 6.18
of the Company Disclosure Schedule), including, but not limited, all consents,
waivers and approvals that are necessary or required in connection with, or as a
result of, the Merger to preserve all of the Company's rights and benefits in
its business, assets, properties, leases and contracts following the Merger and
without incurring any additional or special liability, or accelerating any
existing liability or obligation, in connection with or under its business,
assets, properties, leases and contracts following the
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Merger. ABI shall use reasonable best efforts to obtain the consents, waivers
and approvals necessary for the consummation of the Merger and the transactions
contemplated under this Agreement (all of such consents, waivers and approvals
having been set forth in Schedules 7.3 and 7.18 of the ABI Disclosure Schedule),
including, but not limited, all consents, waivers and approvals that are
necessary or required in connection with, or as a result of, the Merger to
preserve all of ABI's rights and benefits in its business, assets, properties,
leases and contracts following the Merger and without incurring any additional
or special liability, or accelerating any existing liability or obligation, in
connection with or under its business, assets, properties, leases and contracts
following the Merger.
8.11. NOTIFICATION OF CERTAIN MATTERS.
(A) Between the date hereof and the Effective Time, each of ABI and
the Company shall, upon obtaining knowledge of any of the following, promptly
notify 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;
(II) any actions, suits, claims, investigations or other judicial
proceedings known to its executive officers commenced or threatened against such
party or any of its Subsidiaries which, if pending on the date of this
Agreement, would have been required to have been disclosed pursuant to Sections
6.17 or 7.18 hereof or which relate to the consummation of the Merger;
(III) occurrence or non-occurrence of any other event known to
its executive officers which is likely to cause any representation or warranty
of such party contained in this Agreement to be materially untrue or inaccurate
at or prior to the Effective Time;
(IV) any failure of such party known to its executive officers to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; and
(V) any adverse determination or recommendation in connection
with any governmental proceeding to license any of the Products and any report
filed with the FDA regarding an unexpected fatal or life-threatening experience
with respect to any such Product.
(B) The delivery of any notice pursuant to this Section 8.11 shall not
limit or otherwise affect any remedies available to a party.
8.12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(A) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative, asserted
or arising after the Effective Time and relating to actions, events or
occurrences (or the absence thereof) on or prior to the Effective Time (each a
"D&O Claim"), in which any person who is or was a director, officer or key
employee of the Company covered by the Company's existing D&O policy (the "D&O
Indemnified Parties") is, or is threatened to be, made a defendant arising out
of or as a result of the fact that such D&O Indemnified Party is or was a
director or officer of the Company, ABI and the Surviving Corporation shall,
after the Effective Time, indemnify and hold harmless, to the fullest extent
permitted by law as in effect at the Effective Time, each such D&O Indemnified
Party against any Damages suffered or incurred by such D&O Indemnified Party in
connection with any such D&O Claim.
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(B) Promptly after a D&O Indemnified Party has received notice of
or has knowledge of any D&O Claim or the commencement of any D&O Claim (a "D&O
Proceeding") for which a D&O Indemnified Party is entitled or may become
entitled to make a claim pursuant to this Section 8.12, such D&O Indemnified
Party shall give ABI written notice of such D&O Claim or the commencement of
such D&O Proceeding. Any failure to so notify ABI shall not limit the right to
indemnification hereunder unless (and then only to the extent) the failure to
give such notice actually prejudices ABI or the Surviving Corporation. ABI (i)
shall have the right to assume control of the defense of the D&O Claim and/or
D&O Proceeding by appropriate proceedings with its counsel and (ii) shall have
the authority to negotiate, compromise and settle such D&O Claim and/or D&O
Proceeding with the consent of the applicable D&O Indemnified Party, which
consent shall not be unreasonably withheld or delayed. Each D&O Indemnified
Party may participate in the defense, at its sole expense, provided that counsel
for ABI shall act as lead counsel in all matters pertaining to the defense or
settlement of such D&O Claims and/or D&O Proceedings. ABI shall not be entitled
to control (but shall be entitled to participate at its own expense in the
defense of), and the D&O Indemnified Parties shall be entitled to have control
over, the defense or settlement, compromise, admission, or acknowledgment of any
D&O Proceeding as to which ABI fails to assume the defense within a reasonable
length of time; provided that the D&O Indemnified Party shall not, without the
prior written consent of ABI (such consent not to be unreasonably withheld or
delayed), consent to the settlement, compromise, admission or acknowledgment of
such D&O Proceeding. The D&O Indemnified Parties as a group may retain only one
law firm to represent them with respect to each D&O Claim or D&O Proceeding
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the positions of any two or more D&O
Indemnified Parties. To the maximum extent permitted under, and in accordance
with all of the applicable provisions of, the DGCL, ABI shall be obligated to
advance expenses incurred by the D&O Indemnified Parties in connection with any
D&O Claim or D&O Proceeding controlled by the D&O Indemnified Parties pursuant
to the foregoing provisions of this Section 8.12.
(C) Without limiting the generality of the foregoing provisions
of this Section 8.12, from and after the Effective Time ABI shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations, to
the extent legally permissible, of the Company to its directors and officers
pursuant to the indemnification provisions under the Company's certificate of
incorporation or by-laws as in effect on the date hereof.
(D) Notwithstanding the foregoing provisions of this Section
8.12, the indemnification obligations of ABI pursuant to this Section 8.12 are
subject to the condition precedent that, prior to the Closing, the Company shall
have obtained a one-year "tail" insurance policy that provides coverages
substantially similar to the coverages provided under the Company's directors
and officers insurance policy in effect on the date of this Agreement, which
one-year "tail" insurance policy shall cover the D&O Indemnified Parties for
events occurring on or prior to the Effective Time. Any premium or other amount
spent by the Company in obtaining such one-year "tail" insurance policy shall be
taken into account in calculating, and shall reduce, the Company Net Cash
Balance.
(E) The provisions of this 8.12 are intended to be for the
benefit of, and enforceable by, each D&O Indemnified Party and his or her heirs
and assigns.
(F) If at any time the Surviving Corporation or ABI is required
to provide indemnification pursuant to this Section 8.12, then ABI shall have
the right to make a claim for indemnification therefor pursuant to Section 13.3
hereof.
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8.13. TREATMENT OF EMPLOYEES. At the Effective Time, ABI or the
Surviving Corporation shall offer employment to those employees of the Company
listed on Schedule 8.13 of the ABI Disclosure Schedule (the "Continuing Company
Employees"). Prior to the Effective Time, the Company shall terminate the
employment of all employees of the Company other than the Continuing Company
Employees. As of the Effective Time (or as soon as practicable thereafter),
unless ABI or the Surviving Corporation continue the Company's employee benefit
plans and except as provided below with respect to the Company Group Medical
Plan (as defined below), ABI shall permit the Continuing Company Employees to
participate in ABI's employee benefit plans, including its medical plan, dental
plan, life insurance plan and disability plan, under the same coverage
applicable to similarly situated employees of ABI, giving such Continuing
Company Employees service credit for their prior employment with the Company
eligibility, vesting and benefit accrual (but only, in the case of benefit
accrual, in determining vacation or paid time off) purposes for all ABI's
employee benefit plans as if such service had been performed with ABI (but only
to the extent such credit was given under a comparable Company employee benefit
plan immediately prior to the Closing, and in no event where such credit would
result in an unintended duplication of benefits and benefit accruals in the case
of paid time off and vacation). Except to the extent otherwise provided above,
nothing in this Section 8.13 or elsewhere in this Agreement will require ABI to
provide or cause to provide any particular form of employee benefit or establish
or maintain any particular type or form of employee benefit arrangement. Except
to the extent otherwise set forth below in this Section 8.13, nothing in this
Section 8.13 or elsewhere in this Agreement will preclude ABI from (i) amending
or terminating in its discretion any employee benefit plan, program or policy
sponsored or maintained by Company, ABI or any of their respective Subsidiaries
or (ii) following the Effective Time, terminating the employment of any
Continuing Company Employee. Notwithstanding any other provision of this
Agreement to the contrary, ABI shall maintain or cause the Surviving Corporation
to maintain the Company Group Medical Plan for a period of no less than 18
months following the Closing for the benefit of the Continuing Company Employees
and for purposes of allowing any former employees of the Company that are not
employed by ABI or any of its Subsidiaries (including, without limitation, the
Surviving Corporation) and existing COBRA beneficiaries at the time of Closing
to enjoy COBRA continuation coverage benefits under the Company Group Medical
Plan in accordance with applicable law; provided, however, that in no event
shall ABI, the Surviving Corporation or any other Subsidiary of ABI be
responsible or obligated for (1) with respect to the Continuing Company
Employees, any cost or contribution in excess of the cost-sharing, as between
employee and employer, in effect under the group medical plan maintained by the
Company immediately prior to the Closing and (2) with respect to former
employees of the Company or other COBRA beneficiaries of the Company, payment of
all or any portion of the premium or other benefit cost in connection with such
former employee's or COBRA beneficiary's heath insurance coverage or benefits
under the Company Group Medical Plan or in connection with such COBRA benefits.
For purposes of this Section 8.13, the term "Company Group Medical Plan" shall
mean the group medical plan maintained by the Company immediately prior to the
Closing or, to the extent such plan's insurance carrier or the terms of such
plan do not permit ABI to so maintain such plan, a group medical plan providing
substantially identical benefits to the group medical plan maintained by the
Company immediately prior to the Closing, or if no such plan can be obtained by
the Surviving Corporation or ABI, the group medical plan maintained by ABI for
the benefit of its employees generally.
8.14. COMPANY 401(K) PLAN. Except with the prior written consent of
ABI, during the period from the date hereof to the Effective Time, the Company
shall not (i) make any discretionary contribution to the Company's 401(k) plan
(the "Company 401(k) Plan") or (ii) make any required contribution to the
Company 401(k) Plan in Company Common Stock. The Company has not made any
required contribution to the Company 401(k) Plan in Company Common Stock. The
Company shall, contingent upon the Closing, terminate the Company 401(k) Plan as
of the day immediately preceding the Closing Date. Notwithstanding the
termination of the Company 401(k) Plan prior to the Closing Date,
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the Surviving Corporation shall make all matching and other contributions to the
Company 401(k) Plan for the portion of the 2005 Company 401(k) Plan year ending
on the date of the termination of the Company 401(k) Plan in accordance with its
terms and the requirements of the Code. ABI shall cause all Continuing Company
Employees to be eligible for a Code Section 401(k) Plan immediately upon the
Closing Date which is similar in all respects to that maintained for the benefit
of ABI employees. Continuing Company Employees may, as soon as practicable
following ABI's receipt of a favorable IRS determination letter on termination
of the Company 401(k) Plan, elect a direct rollover of their Company 401(k) Plan
benefits, including any Company 401(k) Plan loan outstanding as of the Closing
Date, to ABI's 401(k) plan, provided any such loan has not been accelerated at
the time of rollover. As soon as practicable following ABI's receipt of a
favorable IRS determination letter on termination of the Company 401(k) Plan,
ABI's 401(k) plan shall accept the direct rollover of electing Continuing
Company Employees' benefits under the Company 401(k) Plan in cash and, if
applicable, promissory notes that are not accelerated from Company's 401(k) Plan
as provided under Section 401(a)(31) of the Code. The foregoing shall not
preclude payment by the Company 401(k) Plan of any distribution to which a
participant (or his or her beneficiary) may become entitled under the terms of
the Company 401(k) Plan (e.g., on account of his or her termination of
employment or death) in the period preceding ABI's receipt of the requested
favorable IRS determination letter, but ABI's 401(k) Plan shall not then be
obligated to accept a rollover of such a distribution.
8.15. CONFIDENTIALITY. Any and all non-public information disclosed or
made available by ABI to the Company or by the Company to ABI as a result of the
negotiations or due diligence investigations leading to the execution of this
Agreement, or in furtherance thereof, including, without limitation, any
information disclosed or made available pursuant to Section 9.1 hereof, shall
remain subject to the terms and conditions of that certain Confidential
Disclosure Agreement, by and between the Company and ABI, dated September 26,
2005 (the "Confidentiality Agreement").
8.16. BUDGET. ABI management shall present the budget attached hereto
as Exhibit I to the Board of Directors of ABI for its review, consideration and,
at the sole discretion of the Board of Directors of ABI, approval at its first
meeting following the consummation of the Merger and the transactions
contemplated hereby.
9. CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the date of this
Agreement and until the Closing:
9.1. FULL ACCESS. The Company will afford to ABI and its authorized
representatives full access, upon request and reasonable notice and during
normal business hours, to all of the properties, books, records, contracts, and
documents of the Company, and a reasonable opportunity to make such
investigations as ABI desires to make, and will furnish or cause to be furnished
to ABI and its authorized representatives all such information with respect to
the Company's affairs and businesses as ABI reasonably requests. ABI will afford
to the Company and its authorized representatives full access, upon request and
reasonable notice and during normal business hours, to all of the properties,
books, records, contracts, and documents of ABI, and a reasonable opportunity to
make such investigations as the Company desires to make, and will furnish or
cause to be furnished to the Company and its authorized representatives all such
information with respect to ABI's affairs and businesses as the Company
reasonably requests. No information or knowledge obtained by either ABI or the
Company in any investigation pursuant to this Section 9.1 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions of the parties to consummate the Merger.
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9.2. COURSE OF BUSINESS PENDING THE CLOSING. Subject to the provisions
of this Section 9, each of the Company and ABI shall operate its business solely
in the ordinary course consistent with past practice.
9.3. NO DIVIDENDS, ISSUANCES, REPURCHASES, ETC. Neither the Company
nor ABI will declare, set aside, or pay any dividends (whether in cash, shares
of stock, other property, or otherwise) on, or make any other distribution in
respect of, any shares of its capital stock or other securities, or issue,
purchase, redeem, or otherwise acquire for value any shares of its capital stock
or other securities. ABI will not issue any shares of its capital stock or other
securities (including without limitation any options, warrants, or other rights
to acquire ABI Stock), other than shares of ABI capital stock issued upon the
due exercise of options or warrants to purchase ABI capital stock that are
outstanding on the date of this Agreement. The foregoing provisions of this
Section 9.3 shall not be construed to limit, affect or apply to the payment of
Merger Consideration pursuant to, and in accordance with, the provisions of this
Agreement. The Company will not issue any shares of its capital stock or other
securities (including without limitation any options, warrants, or other rights
to acquire Company Stock), including, without limitation, any shares of Company
Stock upon exercise of any Company Options or Company Warrants. In the event
that any Optionholder purports to exercise any Assumed Option held by such
Optionholder or in the event that any Warrantholder purports to exercise any
Assumed Warrant held by such Warrantholder, the Company shall delay or postpone
the exercise of such Assumed Option or Assumed Warrant, as the case may be,
until after the Effective Time, and shall notify ABI promptly of such
Optionholder's or Warrantholder's, as the case may be, purported exercise of
such Assumed Option or Assumed Warrant, as the case may be, and shall notify
such Optionholder or such Warrantholder, as the case may be, that any exercise
of such Assumed Option or such Assumed Warrant, as the case may be, shall be
delayed or postponed until after the Effective Time at which time such exercise
shall be given effect and implemented in accordance with the provisions of
Section 5.1 hereof.
9.4. NO COMPENSATION CHANGES. The Company will not increase the base
salary payable or to become payable to any of its officers, directors,
employees, consultants or agents, or pay or increase any severance, bonus,
insurance, pension, or other benefit plan, payment, or arrangement made to, for,
or with any such officers, directors, employees, consultants or agents, except
as described in Schedule 9.4 of the Company Disclosure Schedule. The Company
shall not pay any severance benefits to, enter into any contract, agreement or
arrangement to provide severance benefits to, or implement any severance plan
for the benefit of, any of its officers, directors, employees or consultants,
except pursuant to any severance plan, contract or arrangement described in
Schedule 6.14 of the Company Disclosure Schedule. ABI will not increase the base
salary payable or to become payable to any of its officers, directors,
employees, consultants or agents, or pay or increase any bonus, insurance,
pension, or other benefit plan, payment, or arrangement made to, for, or with
any such officers, directors, employees, consultants or agents, except for any
such increases or payments that are in accordance with existing plans or
arrangements in effect as of the date of this Agreement and except for any such
increases or payments that are made or implemented pursuant to ABI's annual
performance review process conducted consistent with past practices.
9.5. CONTRACTS AND COMMITMENTS. The Company will not enter into any
contract or commitment, or engage in any other transaction, other than as
specifically contemplated by this Agreement or, subject to the other provisions
of this Section 9, in the ordinary course of business.
9.6. PURCHASE AND SALE OF ASSETS. The Company will not purchase, lease
as lessee, license as licensee, or otherwise acquire any interest in, or sell,
lease as lessor, license as licensor, or otherwise dispose of any interest in,
any assets (including, without limitation, any Company Intellectual Property),
other than sales of assets in the ordinary course of business (including the
wind-down of the
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Company's St. Louis facility) or in amounts not exceeding, in the aggregate,
$25,000. Notwithstanding the foregoing, in no event shall the Company sell,
lease, license or otherwise dispose of any Company Intellectual Property,
computer hard drives, computer servers, computer network hardware, physical or
electronic offsite storage materials, electronic tapes and/or other backup media
materials or written documentation of the Company.
9.7. LIABILITIES. The Company shall not incur any Indebtedness or
enter into any contracts or commitments involving potential payments to or by
the Company in any single instance of $25,000 or more or in the aggregate
$100,000 or more; provided, however, that nothing in this Section 9.7 shall
limit or prohibit the Company from (i) making payment of the fees and expenses
incurred by the Company in connection with the negotiation, execution and
delivery of this Agreement and the consummation of the transactions contemplated
under this Agreement (including, without limitation, the fees and expenses of
the Company's auditors and outside counsel) or (ii) incurring any Indebtedness
referred to in clause (e) of the definition of Indebtedness in the ordinary
course of the Company's business consistent with past practices.
9.8. ACQUISITIONS. Neither the Company nor ABI shall make, or permit
to be made, any material acquisition of property, assets or businesses.
9.9. CAPITAL EXPENDITURES. The Company shall not authorize or incur
any single capital expenditure in excess of $25,000 or capital expenditures
which in the aggregate exceed $100,000.
9.10. ACCOUNTING POLICIES. Except as may be required as a result of a
change in law or in generally accepted accounting principles, neither the
Company nor ABI shall change any of the accounting practices or principles used
by it.
9.11. TAXES. The Company shall not make any Tax election or settle or
compromise any material federal, state, local or foreign Tax liability (other
than settlements or compromises not involving any payments of Taxes), change its
annual tax accounting period, change any method of Tax accounting, enter into
any closing agreement relating to any Tax, surrender any right to claim a Tax
refund, or consent to any extension or waiver of the limitations period
applicable to any Tax claim or assessment.
9.12. LEGAL. The Company shall not settle or compromise any pending or
threatened suit, action or claim, other than settlements or compromises in which
the sole liability or obligation of the Company in connection with such
settlement or compromise is to make cash payment of amounts not exceeding, in
the aggregate for all of such settlements and compromises, $200,000.
9.13. EXTRAORDINARY TRANSACTIONS. Neither the Company nor ABI shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization (other
than the Merger).
9.14. PAYMENT OF INDEBTEDNESS. The Company shall not pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the Company Most
Recent Balance Sheet and authorized pursuant to Sections 9.2, 9.4 and 9.7
hereof.
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9.15. NEW AGREEMENTS; AMENDMENTS. The Company shall not enter into or
modify in any material respect any material supply, license, development,
research or collaboration agreement with any other person or entity.
9.16. OBLIGATIONS. The Company shall not obligate itself to do any of
the things that the Company is prohibited from doing pursuant to any of the
provisions of this Section 9. ABI shall not obligate itself to do any of the
things that ABI is prohibited from doing pursuant to any of the provisions of
this Section 9.
9.17. PRESERVATION OF ORGANIZATION. The Company will use commercially
reasonable efforts to preserve for the benefit of the Surviving Corporation its
present business relationships with its suppliers and customers and others
having business relationships with it.
9.18. INTELLECTUAL PROPERTY RIGHTS. The Company will maintain,
preserve and protect the Company Intellectual Property. ABI will maintain,
preserve and protect the ABI Intellectual Property.
9.19. NO DEFAULT. Neither the Company nor ABI will knowingly take or
omit to take any action, or permit any action or omission to act, that would
cause a default under or a breach of any of its contracts, commitments, or
obligations.
9.20. COMPLIANCE WITH LAWS. Each of the Company and ABI will duly
comply in all material respects with all applicable laws, regulations, and
orders.
9.21. ADVICE OF CHANGE. Each of the Company and ABI will promptly
advise the other party in writing of any event or occurrence which results in or
is reasonably likely to result in a Material Adverse Effect on it.
9.22. NO SHOPPING.
(A) The Company shall not, and shall cause each of its Subsidiaries
and each director, officer, employee, agent or other representative (including
each financial advisor and attorney) of the Company and each of its Subsidiaries
not to, (i) solicit, initiate, facilitate, assist or encourage action by, or
discussions with, any person, other than ABI, relating to the possible
acquisition of the Company or any Subsidiary of the Company or of all or a
material portion of the assets or capital stock of the Company or any Subsidiary
of the Company or any merger, reorganization, consolidation, business
combination, share exchange, tender offer, recapitalization, dissolution,
liquidation or similar transaction involving the Company or any Subsidiary of
the Company (an "Alternative Company Transaction"), (ii) participate in any
negotiations regarding, or furnish information with respect to, any effort or
attempt by any person to do or to seek any Alternative Company Transaction or
(iii) grant any waiver or release under any standstill or similar agreement. The
Company shall notify ABI promptly in writing (and, in any case, within one
business day) of any inquiries, proposals or offers received by, any information
requested from, or any discussions or negotiations sought to be initiated or
continued with, the Company, any Subsidiary of the Company or any of their
directors, officers, employees, agents or other representatives concerning an
Alternative Company Transaction indicating, in connection with such notice, the
names of the parties and the material terms and conditions of any proposal or
offer and, in the case of written materials, providing copies of such materials.
The Company agrees that it will keep ABI informed, on a prompt basis (and, in
any case, within one day of any significant development), of the status and
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company agrees that it will immediately cease and cause to be
terminated any existing activities,
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discussions or negotiations with respect to any potential Alternative Company
Transaction or similar transaction or arrangement. The Company agrees that it
will take the necessary steps to promptly inform the individuals or entities
referred to in the first sentence of this Section 9.22(a) of the obligations
undertaken in this Section 9.22(a).
(B) ABI shall not, and shall cause each of its Subsidiaries and each
director, officer, employee, agent or other representative (including each
financial advisor and attorney) of the Company and each of its Subsidiaries not
to, (i) solicit, initiate, facilitate, assist or encourage action by, or
discussions with, any person, other than the Company, relating to the possible
acquisition of ABI or any Subsidiary of ABI or of all or a material portion of
the assets of ABI or any Subsidiary of ABI or any merger, reorganization,
consolidation, business combination, share exchange, tender offer,
recapitalization, dissolution, liquidation or similar transaction involving ABI
or any Subsidiary of ABI (an "Alternative ABI Transaction"), (ii) participate in
any negotiations regarding, or furnish information with respect to, any effort
or attempt by any person to do or to seek any Alternative ABI Transaction or
(iii) grant any waiver or release under any standstill or similar agreement. ABI
shall notify the Company promptly in writing (and, in any case, within one
business day) of any inquiries, proposals or offers received by, any information
requested from, or any discussions or negotiations sought to be initiated or
continued with, ABI, any Subsidiary of ABI or any of their directors, officers,
employees, agents or other representatives concerning an Alternative ABI
Transaction indicating, in connection with such notice, the names of the parties
and the material terms and conditions of any proposal or offer and, in the case
of written materials, providing copies of such materials. ABI agrees that it
will keep the Company informed, on a prompt basis (and, in any case, within one
day of any significant development), of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations. ABI
agrees that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with respect to any potential
Alternative ABI Transaction or similar transaction or arrangement. ABI agrees
that it will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence of this Section 9.22(b) of the
obligations undertaken in this Section 9.22(b).
9.23. DISCLOSURE SUPPLEMENTS. From time to time before the Closing,
and in any event immediately before the Closing, each of ABI and the Company
will promptly advise the other in writing of any matter hereafter arising or
becoming known to the disclosing party that, if existing, occurring, or known at
or before the date of this Agreement, would have been required to be set forth
or described in the Company Disclosure Schedule or the ABI Disclosure Schedule,
as the case may be, or that is necessary to correct any information in such
Disclosure Schedule that is or has become inaccurate. No such disclosure will be
taken into account in determining whether the conditions to (i) in the case of
any such supplemental disclosure by ABI, the obligations of the Company, and
(ii) in the case of any such supplemental disclosure by the Company, the
respective obligations of ABI and Merger Sub, to consummate the transactions
contemplated by this Agreement have been satisfied. If the Merger is
consummated, then for purposes of the indemnification provisions of this
Agreement, such supplemental disclosures pursuant to this Section 9.13 will be
deemed to have been made as of the date hereof, and no indemnification will be
payable in respect thereof by reason of the fact that such disclosure was not
made on the date hereof.
10. MUTUAL CONDITIONS TO THE PARTIES' OBLIGATIONS. The parties' obligations
to consummate the Merger are subject to the satisfaction (or waiver by each such
party, in its sole discretion) of each of the conditions set forth in this
Section 10 on or before the Closing Date. If the Merger is consummated, such
conditions will conclusively be deemed to have been satisfied or waived.
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10.1. STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the stockholders of the Company by the requisite
vote under applicable law, the Company's certificate of incorporation and any
other applicable agreement involving the Company or its stockholders. This
Agreement and the Merger shall have been approved and adopted by the
stockholders of ABI by the requisite vote under applicable law, ABI's
certificate of incorporation and any other applicable agreement involving ABI or
its stockholders.
10.2. NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction, or other legal restraint or prohibition preventing the
consummation of the Merger, shall be in effect, and no petition or request for
any such injunction or other order shall be pending.
10.3. SECURITIES LAW COMPLIANCE. Any authorizations from all
applicable securities regulatory authorities that are required in connection
with the issuance and delivery to the Stockholders of ABI Preferred Stock
pursuant to the Merger shall have been obtained.
10.4. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and its counsel.
11. CONDITIONS TO THE COMPANY'S OBLIGATIONS. The obligations of the Company
to consummate the Merger are subject to the satisfaction (or waiver by the
Company, in its sole discretion) of each of the conditions set forth in this
Section 11 on or before the Closing Date. If the Merger is consummated, such
conditions will conclusively be deemed to have been satisfied or waived.
11.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by ABI and/or Merger Sub in or pursuant to this Agreement or in
any statement, certificate, or other document delivered to the Company in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby (a) that is qualified as to materiality or Material Adverse
Effect shall be true and correct in all respects as of the Closing Date as
though each such representation and warranty had been made on and as of the
Closing Date, except to the extent any such representation and warranty
expressly speaks only as of an earlier date (in which case as of such earlier
date), and (b) that is not so qualified shall be true and correct in all
material respects as of the Closing Date as though each such representation and
warranty had been made on and as of the Closing Date, except to the extent any
such representation and warranty expressly speaks only as of an earlier date (in
which case as of such earlier date).
11.2. COMPLIANCE WITH AGREEMENT. ABI and Merger Sub shall have
performed and complied in all material respects with all of their respective
obligations under this Agreement to be performed or complied with by them before
or at the Closing.
11.3. CLOSING CERTIFICATE. ABI and Merger Sub shall have executed and
delivered to the Company, at and as of the Closing, a certificate certifying
that the conditions referred to in Sections 11.1 and 11.2 hereof have been
satisfied.
11.4. OPINION OF COUNSEL. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel to ABI and
Merger Sub, shall have delivered to the Company a written legal opinion
addressed to the Company, dated on and as of the Closing Date, and in form
reasonably satisfactory to the Company.
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11.5. NO PENDING LITIGATION. No action, suit or proceeding shall be
pending against ABI or any of its Subsidiaries wherein any unfavorable
injunction, judgment, order, decree ruling or charge would have a Material
Adverse Effect on ABI.
11.6. THIRD PARTY CONSENTS. The Company shall have been furnished with
evidence reasonably satisfactory to it that ABI has obtained the consents,
approvals and waivers set forth in Schedules 6.3 and 6.18 of the ABI Disclosure
Schedule and any other consents, approvals and waivers that are necessary or
required in connection with, or as a result of, the Merger to preserve all of
the Company's rights and benefits in its business, assets, properties, leases
and contracts following the Merger and without incurring any additional or
special liability, or accelerating any existing liability or obligation, in
connection with or under its business, assets, properties, leases and contracts
following the Merger.
11.7. DESIGNATED ABI STOCKHOLDERS AGREEMENT. The Designated ABI
Stockholders Agreement shall remain full force and effect, and no Designated ABI
Stockholder shall have taken any action to terminate or rescind the Designated
ABI Stockholder Agreement.
11.8. ABI UNAUDITED NET CASH BALANCE. The ABI Unaudited Net Cash
Balance calculated pursuant to, and in accordance with, the provisions of
Section 3.7(b) hereof shall have been targeted to be $6,000,000, and in no event
shall be less than $5,000,000.
11.9. BOARD OF DIRECTORS OF ABI. Immediately after the Closing, the
Board of Directors of ABI shall be comprised as set forth in Section 6.2 of the
Series C Stockholders Agreement.
12. CONDITIONS TO ABI'S AND MERGER SUB'S OBLIGATIONS. The obligations of
each of ABI and Merger Sub, respectively, to consummate the Merger are subject
to the satisfaction (or waiver by ABI, in its sole discretion) of each of the
conditions set forth in this section on or before the Closing Date. If the
Merger is consummated, such conditions will conclusively be deemed to have been
satisfied or waived.
12.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Company in or pursuant to this Agreement or in any
statement, certificate, or other document delivered to ABI or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby (a) that is qualified as to materiality or Material Adverse
Effect shall be true and correct in all respects as of the Closing Date as
though each such representation and warranty had been made on and as of the
Closing Date, except to the extent any such representation and warranty
expressly speaks only as of an earlier date (in which case as of such earlier
date), and (b) that is not so qualified shall be true and correct in all
material respects as of the Closing Date as though each such representation and
warranty had been made on and as of he Closing Date, except to the extent any
such representation and warranty expressly speaks only as of an earlier date (in
which case as of such earlier date).
12.2. COMPLIANCE WITH AGREEMENT. The Company shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it before or at the Closing.
12.3. CLOSING CERTIFICATE. The Company will have executed and
delivered to ABI, at and as of the Closing, a certificate certifying that the
conditions referred to in Sections 12.1, 12.2 and 12.7 hereof have been
satisfied.
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12.4. OPINION OF COUNSEL. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇,
P.C., counsel to the Company, will have delivered to ABI a written legal opinion
addressed to ABI, dated on and as of the Closing Date, and in form reasonably
satisfactory to ABI.
12.5. NO PENDING LITIGATION. Except as set forth on Schedule 6.17, no
action, suit or proceeding shall be pending against the Company wherein any
unfavorable injunction, judgment, order, decree ruling or charge would have a
Material Adverse Effect on the Company.
12.6. THIRD PARTY CONSENTS. ABI shall have been furnished with
evidence reasonably satisfactory to it that the Company has obtained the
consents, approvals and waivers set forth in Schedules 7.3 and 7.18 of the
Company Disclosure Schedule and any other consents, approvals and waivers that
are necessary or required in connection with, or as a result of, the Merger to
preserve all of the Company's rights and benefits in its business, assets,
properties, leases and contracts following the Merger and without incurring any
additional or special liability, or accelerating any existing liability or
obligation, in connection with or under its business, assets, properties, leases
and contracts following the Merger.
12.7. RESIGNATION OF DIRECTORS AND OFFICERS. The directors and
officers of the Company in office immediately prior to the Effective Time shall
have resigned as directors and officers of the Surviving Corporation effective
as of the Effective Time.
12.8. DISSENTERS' RIGHTS. Any applicable period during which
Stockholders have the right to exercise appraisal, dissenters' or other similar
rights under Section 262 of the DGCL or other applicable law shall have expired
and Stockholders holding in the aggregate more than five percent (5%) of the
outstanding shares of the Company Stock shall not have exercised appraisal,
dissenters' or similar rights under applicable law with respect to its shares of
the Company Stock by virtue of the Merger.
12.9. DESIGNATED COMPANY STOCKHOLDERS AGREEMENT. The Designated
Company Stockholders Agreement shall remain in full force and effect, and no
Designated Company Stockholder shall have taken any action to terminate or
rescind the Designated Company Stockholders Agreement.
12.10. CERTAIN SERIES C INVESTMENT DOCUMENTS. Each of the Series C
Stock Restriction Agreement and the Series C Stockholders Agreement shall have
been executed and delivered by those stockholders of ABI that are required to
execute and deliver such agreement in order to make the amendments purported to
be implemented by such agreement valid and effective.
12.11. COMPANY UNAUDITED NET CASH BALANCES. The Company November 30
Unaudited Net Cash Balance calculated pursuant to, and in accordance with, the
provisions of Section 3.7(a) hereof shall have been targeted to be $20,000,000,
and in no event shall be less than $19,000,000. The Company Closing Unaudited
Net Cash Balance calculated pursuant to, and in accordance with, the provisions
of Section 3.7(a) hereof shall be the amount set forth in the certificate
delivered by the Company at Closing pursuant to Section 3.7(a) hereof.
12.12. NUMBER OF ACCREDITED INVESTORS; PURCHASER REPRESENTATIVE. Each
Stockholder (or a sufficient number of Stockholders so that ABI can make the
determination described in this Section 12.12) shall have delivered to ABI an
executed accredited investor questionnaire such that there shall be no more than
thirty five (35) Stockholders who are not "accredited investors" as defined in
Rule 501 under the Securities Act, or who are not otherwise excluded from the
calculation of the number of Purchasers under Rule 501(e) under the Securities
Act. Each Stockholder who is not an "accredited investor" as defined in Rule 501
under the Securities Act and who does not meet the sophistication
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requirements set forth in Rule 501 under the Securities Act, shall be
represented by a Purchaser Representative, as defined in Regulation D under the
Securities Act, reasonably satisfactory to ABI, and such Purchaser
Representative shall have executed and delivered documentation reasonably
satisfactory to ABI with respect to the issuance and delivery by ABI of ABI
Preferred Stock to such Stockholder pursuant to the Merger.
12.13. MATTERS RELATING TO COMPANY OPTIONS AND COMPANY WARRANTS. The
Company shall have taken all actions that the Company is required to take
pursuant to Section 5.1(h) hereof, and all of such actions shall be reasonably
satisfactory to ABI and its legal counsel.
13. INDEMNIFICATION.
13.1. EFFECTIVENESS. The provisions of this Section 13 shall apply and
become effective only if the Merger is consummated.
13.2. INDEMNIFICATION BY ABI AND SURVIVING CORPORATION. Subject to the
limitations set forth in Section 13.6 hereof, ABI and the Surviving Corporation,
severally, shall indemnify, defend, and hold harmless each Stockholder from and
against any and all Damages related to or arising, directly or indirectly, out
of or in connection with any breach by ABI and/or Merger Sub of any
representation, warranty, covenant, agreement, obligation, or undertaking made
by ABI and/or Merger Sub in this Agreement (including any schedule or exhibit
hereto), or any other agreement, instrument, certificate, or other document
delivered by or on behalf of ABI and/or Merger Sub in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby.
Notwithstanding anything in this Section 13.2 or elsewhere in this Agreement to
the contrary, only the Stockholder Representatives shall have the right, power
and authority to make or bring indemnification claims (or commence any action,
suit or proceeding on account of or with respect to any indemnification claims)
by and on behalf of any or all Stockholders against ABI or the Surviving
Corporation, and in no event shall any Stockholder himself, herself or itself
have the right to make or bring indemnification claims (or commence any action,
suit or proceeding on account of or with respect to any indemnification claims)
against ABI or the Surviving Corporation.
13.3. INDEMNIFICATION BY THE STOCKHOLDERS. Subject to the limitations
set forth in Section 13.6 hereof, the Stockholders, severally, shall indemnify,
defend, and hold harmless ABI, the Surviving Corporation and each of the
directors, officers, employees, agents, representatives and other Affiliates of
ABI and/or Merger Sub (all persons entitled to indemnification under this
Section 13.3 being hereinafter referred to as the "ABI Indemnified Parties",
and, together with the Stockholder Representatives, acting for and on behalf of
any or all of the Stockholders in their capacities as indemnified parties under
Section 13.2 hereof, the "Section 13 Indemnified Parties") from and against any
and all Damages related to or arising, directly or indirectly, out of or in
connection with (i) any breach by the Company of any representation, warranty,
covenant, agreement, obligation, or undertaking made by the Company in this
Agreement (including any schedule or exhibit hereto), or any other agreement,
instrument, certificate, or other document delivered by or on behalf of the
Company in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby, (ii) any claim made by holders of Dissenting
Shares for an appraisal of the value of such Dissenting Shares pursuant to, and
in accordance with, the provisions of such Section 262 of the DGCL, (iii) any
claim made against ABI or the Surviving Corporation by any officer, director or
employee of the Company seeking indemnification from ABI or the Surviving
Corporation under the circumstances contemplated under Section 8.12 hereof, (iv)
any exercise of any Company Options or Company Warrants other than the exercise
of the Assumed Options and the Assumed Warrants in accordance with the
provisions of Section 5.1 hereof (it being agreed to by the parties hereto that
any exercise of any such Company Options or Company Warrants not
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assumed by ABI shall be deemed to have caused Damages to the ABI Indemnified
Parties in an amount no less than the product obtained by multiplying the Series
C-2 Price Per Share by the number of shares of Company Common Stock underlying
any such exercised Company Option or Company Warrant) and (v) any failure of the
Company to obtain a consent needed in order that the Company Material Contracts
continue in full force and effect following the consummation of the Merger and
the other transactions contemplated hereby, other than any consent required
under those real estate leases specifically set forth on Schedule 6.3 of the
Company Disclosure Schedule.
13.4. CLAIMS.
(A) All claims for indemnification by a Section 13 Indemnified Party
pursuant to this Section 13 shall be made in accordance with the provisions of
this Section 13.
(B) If a Section 13 Indemnified Party has incurred or suffered Damages
for which it is entitled to indemnification under this Section 13, such Section
13 Indemnified Party shall give prompt written notice of such claim (a "Claim
Notice") to the Stockholder Representatives, in the case of a claim by an ABI
Indemnified Party, or to ABI, in the case of a claim by a Stockholder. Each
Claim Notice shall state the amount of claimed Damages (the "Claimed Amount"),
if known, and the basis for such claim. For purposes of this Agreement, the term
"Section 13 Indemnifying Party" shall mean any or all, as the context may
require, of (i) the Stockholders in their capacities as indemnifying parties
under Section 13.3 hereof, and (ii) ABI in its capacity as an indemnifying party
under Section 13.2 hereof.
(C) Within 20 days after delivery of a Claim Notice by a Section 13
Indemnified Party, the applicable Section 13 Indemnifying Party (who for
purposes of this Section 13 shall be represented by the Stockholder
Representatives in the case of a claim by an ABI Indemnified Party) shall
provide to such Section 13 Indemnified Party a written response (the "Response
Notice") in which such Section 13 Indemnifying Party shall: (i) agree that all
of the Claimed Amount is owed to such Section 13 Indemnified Party, (ii) agree
that part, but not all, of the Claimed Amount (the "Agreed Amount") is owed to
such Section 13 Indemnified Party, or (iii) contest that any of the Claimed
Amount is owed to such Section 13 Indemnified Party. Such Section 13
Indemnifying Party may contest the payment of all or a portion of the Claimed
Amount only based upon a good faith belief that all or such portion of the
Claimed Amount does not constitute Damages for which such Section 13 Indemnified
Party is entitled to indemnification under this Section 13. If no Response
Notice is delivered by such Section 13 Indemnifying Party within such 20-day
period, such Section 13 Indemnifying Party shall be deemed to have agreed that
all of the Claimed Amount is owed to the Section 13 Indemnified Party.
(D) If a Section 13 Indemnifying Party in any Response Notice agrees
(or is deemed to have agreed) that all of the Claimed Amount is owed to the
applicable Section 13 Indemnified Party, such Section 13 Indemnifying Party
shall owe to such Section 13 Indemnified Party an amount equal to the Claimed
Amount and such amount shall be paid in the manner set forth further below in
this Section 13. If such Section 13 Indemnifying Party in such Response Notice
agrees that part, but not all, of the Claimed Amount is owed to such Section 13
Indemnified Party, such Section 13 Indemnifying Party shall owe to such Section
13 Indemnified Party an amount equal to the Agreed Amount set forth in such
Response Notice and such amount shall be paid in the manner set forth further
below in this Section 13. If such Section 13 Indemnifying Party in such Response
Notice contests the payment of all or a portion of the Claimed Amount, such
Section 13 Indemnifying Party shall owe to such Section 13 Indemnified Party
only such amount, if any, as a court of competent jurisdiction determines to be
so owed.
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(E) Each Section 13 Indemnified Party shall give prompt written
notification to the applicable Section 13 Indemnifying Party of the commencement
of any action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section 13 may be sought; provided, however,
that no delay on the part of such Section 13 Indemnified Party in notifying such
Section 13 Indemnifying Party shall relieve such Section 13 Indemnifying Party
of any liability or obligation hereunder except to the extent of any damage or
liability caused by or arising out of such delay. Within 20 days after delivery
of such notification, such Section 13 Indemnifying Party may (except to the
extent otherwise provided below in this Section 13.3(e)), upon written notice to
such Section 13 Indemnified Party, assume control of the defense of such action,
suit or proceeding with counsel reasonably satisfactory to such Section 13
Indemnified Party, provided that (i) such Section 13 Indemnifying Party
acknowledges in writing to such Section 13 Indemnified Party, on behalf of the
Section 13 Indemnifying Party, that any damages, fines, costs or other
liabilities that may be assessed against such Section 13 Indemnified Party in
connection with such action, suit or proceeding constitute Damages for which
such Section 13 Indemnified Party shall be entitled to indemnification pursuant
to this Section 13, and (ii) the third party seeks monetary damages only. If
such Section 13 Indemnifying Party does not so assume control of such defense,
such Section 13 Indemnified Party shall control such defense. The party not
controlling such defense may participate therein at its own expense; provided
that if such Section 13 Indemnifying Party assumes control of such defense and
such Section 13 Indemnified Party reasonably concludes that such Section 13
Indemnifying Party and such Section 13 Indemnified Party have conflicting
interests or different defenses available with respect to such action, suit or
proceeding, the reasonable fees and expenses of counsel to such Section 13
Indemnified Party shall be considered "Damages" for purposes of this Agreement.
The party controlling such defense shall keep the other party advised of the
status of such action, suit or proceeding and the defense thereof and shall
consider in good faith recommendations made by the other party with respect
thereto. Such Section 13 Indemnified Party shall not agree to any settlement of
such action, suit or proceeding without the prior written consent of such
Section 13 Indemnifying Party, which shall not be unreasonably withheld or
delayed. A Section 13 Indemnifying Party shall not agree to any settlement of or
the entry of a judgment in any action, suit or proceeding without the prior
written consent of the applicable Section 13 Indemnified Party, which shall not
be unreasonably withheld (it being understood that it is reasonable to withhold
such consent if, among other things, the settlement or the entry of a judgment
(A) lacks a complete release of such Section 13 Indemnified Party for all
liability with respect thereto or (B) imposes any liability or obligation on
such Section 13 Indemnified Party).
13.5. SATISFACTION OF CLAIMS.
(A) A Section 13 Indemnifying Party shall be obligated to satisfy any
portion of any Claimed Amount that such Section 13 Indemnifying Party has agreed
in a Response Notice that it owes to a Section 13 Indemnified Party or that such
Section 13 Indemnifying Party is deemed to have agreed it owes to such Section
13 Indemnifying Party pursuant to the provisions of Section 13.4(c) hereof, said
satisfaction to be made and effected in accordance with the provisions set forth
in Section 13.5(b) hereof no later than the thirtieth (30th) day after such
Response Notice is delivered by such Section 13 Indemnifying Party or should
have been delivered by such Section 13 Indemnifying Party, as the case may be. A
Section 13 Indemnifying Party shall be obligated to satisfy any portion of any
Claimed Amount that is being disputed and contested by such Section 13
Indemnifying Party only if and when the dispute or contest is settled by such
Section 13 Indemnifying Party and the applicable Section 13 Indemnified Party,
or if and when a court of competent jurisdiction determines the portion, if any,
of such Claimed Amount that is owed by such Section 13 Indemnifying Party,
whereupon the portion of any such Claimed Amount that such Section 13
Indemnifying Party is obligated to satisfy shall be satisfied in accordance with
the provisions set forth in Section 13.5(b) hereof no later than the thirtieth
(30th) day after such settlement or court determination has been made.
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(B) The sole recourse and exclusive remedy that the ABI Indemnified
Parties or any of them have or has for the satisfaction of any portion of any
Claimed Amount in respect of which the Stockholders have an obligation under
Section 13.5(a) hereof to satisfy such portion of such Claimed Amount is (i) the
automatic increase in the Series C-2 Conversion Price (as defined in the ABI
Charter) and (ii) the automatic reduction in the Series C-2 Liquidation Per
Share Amount (as defined in the ABI Charter), in each case subject to, and in
accordance with, all of the terms and provisions set forth in the ABI Charter.
The sole recourse and exclusive remedy that the Stockholders or any of them have
for the satisfaction of any portion of any Claimed Amount in respect of which
ABI and the Surviving Corporation have an obligation under Section 13.5(a)
hereof to satisfy such portion of such Claimed Amount is the automatic decrease
in the Series C-2 Conversion Price (as defined in the ABI Charter) subject to,
and in accordance with, all of the terms and provisions set forth in the ABI
Charter. In no event shall any Section 13 Indemnified Party be entitled to
satisfy any Claimed Amount by seeking or obtaining a cash payment from any
Section 13 Indemnifying Party or in any other manner other than as referred to
in this Section 13.5(b).
13.6. LIMITATIONS OF LIABILITY.
(A) DEDUCTIBLE. Subject to the exceptions set forth below in this
Section 13.6(a), no Section 13 Indemnifying Party shall be required to indemnify
a Section 13 Indemnified Party hereunder for any claim for indemnification under
this Section 13 except to the extent that the aggregate amount of Damages in
connection with all claims for indemnification under this Section 13 by such
Section 13 Indemnified Party and all other Section 13 Indemnified Parties
(including, without limitation, prior claims for indemnification regardless of
whether or not they are still pending) exceeds $100,000, whereupon such Section
13 Indemnified Party shall be entitled to be paid the excess of (A) the
aggregate amount of all such Damages over (B) $100,000, subject to the
limitations on the maximum amount of recovery set forth in Section 13.6(c)
hereof. The provisions of this Section 13.6(a) shall not apply to any claim for
indemnification made by (1) any ABI Indemnified Party pursuant to (A) clause
(ii), (iii) or (iv) of Section 13.3 hereof or (B) clause (i) of Section 13.3
hereof with respect to a breach by the Company of the representation and
warranty set forth in Sections 6.29(a) or 6.29(b) hereof, or (2) by the
Stockholders or any of them pursuant to Section 13.2 with respect to a breach by
ABI of the representation and warranty set forth in Section 7.27 hereof.
(B) MINIMUM CLAIM AMOUNT. No Section 13 Indemnified Party shall submit
one or more claims for indemnification under this Section 13 unless the
aggregate amount of Damages in connection with all of such claims for which such
Section 13 Indemnified Party seeks indemnification under this Section 13 is
equal to or greater than $25,000.
(C) LIMITED RECOURSE. Notwithstanding anything expressed or implied in
this Agreement to the contrary, the sole recourse available to any Section 13
Indemnified Party in connection with any claim for indemnification under this
Section 13 is to satisfy such claim for indemnification in the manner referred
to in Section 13.5(b) hereof. No Section 13 Indemnifying Party shall have any
personal liability to any Section 13 Indemnified Party with respect to or in
connection with any claim for indemnification pursuant to this Section 13.
(D) TIME LIMIT. No Section 13 Indemnifying Party will be liable for
any Damages hereunder in connection with any claim for indemnification under
this Section 13 by any applicable Section 13 Indemnified Party unless such claim
for indemnification is made in writing by such Section 13 Indemnified Party on
or prior to the earlier to occur of (i) the first anniversary of the Effective
Time, (ii) the consummation of a Qualified Public Offering (as defined in the
Series C Stockholders Agreement) or (iii) the consummation of a sale of all or
substantially all of the assets of ABI or the
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consummation of a merger, consolidation or sale of outstanding capital stock of
ABI that results in a change of control of ABI; provided, however, that, with
respect to any claim for indemnification by any ABI Indemnified Party pursuant
to clause (iv) of Section 13.3, such claim for indemnification may be made in
writing by such ABI Indemnified Party at any time after the first anniversary of
the Effective Time so long as such claim in any case is made on or prior to the
earlier to occur of the events set forth in the foregoing clauses (ii) and (iii)
of this Section 13.6(d).
(E) TAX AND INSURANCE BENEFITS. The amount of any Damages otherwise
payable to any Section 13 Indemnified Party hereunder will be reduced (i) to the
extent that such Section 13 Indemnified Party actually realizes, by reason of
such Damages, any tax benefit that is not offset by any corresponding adjustment
of the tax attributes of such Section 13 Indemnified Party or any of his or its
assets (e.g., any tax deduction available to such Section 13 Indemnified Party
in respect of such Damages will not be deemed to result in a tax benefit to such
Section 13 Indemnified Party to the extent that such deduction results in a
decrease in such Section 13 Indemnified Party's tax basis in any securities or
other assets), and (ii) by any insurance proceeds actually received by such
Section 13 Indemnified Party in respect thereof, to the extent that such
reduction is permitted without reduction of the amount of such proceeds payable
under the applicable insurance policy.
(F) INSURANCE COLLECTION. Each Section 13 Indemnified Party will use
reasonable efforts to collect any Damages from any available insurer before
attempting to collect from the applicable Section 13 Indemnifying Party at any
time. If any Section 13 Indemnified Party recovers any amount from any insurer
after payment to such Section 13 Indemnified Party by one or more Section 13
Indemnifying Parties of all Damages suffered or incurred by such Section 13
Indemnified Party in respect of the matters to which such insurance payment
relates, then such Section 13 Indemnified Party will promptly pay over to such
Section 13 Indemnifying Parties the amount so recovered, to the extent not in
excess of the amount previously paid by such Section 13 Indemnifying Party to
such Section 13 Indemnified Party in respect of such matter.
13.7. SUBROGATION. A Section 13 Indemnifying Party who indemnifies a
Section 13 Indemnified Party pursuant to this Section 13 will, upon indefeasible
payment in full of the amount owed with respect to such matter pursuant to this
Section 13, be subrogated to the extent of such payment to the rights of such
Section 13 Indemnified Party against all other persons in respect of the matter
for which such indemnification payment was made, to the extent permitted by
applicable insurance policies of such Section 13 Indemnified Party, and upon
such subrogation may assert such rights against such other persons.
13.8. EXCLUSIVE REMEDIES. The parties hereby acknowledge and agree
that, if the Merger is consummated, the sole and exclusive remedies of any and
all ABI Indemnified Parties, the Surviving Corporation and any and all
Stockholders in respect of any and all claims (other than actions for fraud or
willful misconduct or causes of action seeking specific performance) relating to
any breach or purported breach of any representation, warranty, covenant,
agreement, obligation, or undertaking that is contained in this Agreement will
be pursuant to the indemnification provisions of this Section 13. Without
limiting the generality of the foregoing, if the Merger is consummated, no
breach of any such representation, warranty, covenant, agreement, obligation, or
undertaking will give rise to any right of any ABI Indemnified Party or any
Stockholder to rescind this Agreement or any of the transactions contemplated
hereby.
14. RELEASES. If the Merger is consummated, then, effective as of the
Effective Time, each of the Stockholders, the Optionholders, the Warrantholders
and, if any, the Assumed Option Exercising Holders and the Assumed Warrant
Exercising Holders, for himself or itself and his or its heirs, legatees,
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successors, and assigns, hereby fully and irrevocably releases, remises, and
discharges the Surviving Corporation and its officers, directors, employees,
agents, representatives, successors, and assigns and the officers, directors,
employees, agents and representatives of the Company from any and all Damages,
regardless of whether known, unknown, or unknowable, and regardless of whether
absolute, contingent, or otherwise, and regardless of whether at law, in equity,
or otherwise, without limitation, whether now existing or arising in the future,
in each case to the extent based on actions, omissions, and/or events occurring
at or before the Effective Time, including without limitation all rights to
indemnification and/or contribution, but excluding Damages and rights of
indemnification arising expressly under this Agreement. Furthermore, each of
such releasing persons hereby irrevocably agrees not to ▇▇▇, or to commence,
maintain, or aid in the prosecution of any litigation, arbitration, or other
action or proceeding against or adverse to any of such released persons, or
otherwise to seek any recourse against any of such released persons, in respect
of any matter hereby released or purported or attempted to be released.
15. TERMINATION.
15.1. TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time (whether before or after
approval of the Merger by the stockholders of the Company or by ABI as sole
stockholder of Merger Sub) only as follows:
(A) at any time by mutual written agreement of ABI, Merger Sub and the
Company;
(B) by the Company, upon written notice to ABI and Merger Sub if there
has been a material breach by ABI or Merger Sub of any representation, warranty,
covenant or agreement set forth in this Agreement and such material breach is
not curable, or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Company to ABI and Merger Sub (it being
understood and agreed by the Company and ABI that, solely for purposes of this
Section 15.1(b), any representation or warranty made by ABI or Merger Sub in
this Agreement that by its own terms is qualified as to materiality shall be
read, and deemed to have been made by ABI or Merger Sub, without such
materiality qualification);
(C) by ABI, upon written notice to the Company and the Stockholder
Representatives if there has been a material breach by the Company of any
representation, warranty, covenant or agreement set forth in this Agreement and
such material breach is not curable, or, if curable, is not cured within thirty
(30) days after written notice of such breach is given by ABI to the Company and
the Stockholder Representatives (it being understood and agreed by the Company
and ABI that, solely for purposes of this Section 15.1(c), any representation or
warranty made by the Company in this Agreement that by its own terms is
qualified as to materiality shall be read, and deemed to have been made by the
Company, without such materiality qualification);
(D) by the Company or ABI, upon written notice to the other parties to
this Agreement if any temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction, or
other binding legal restraint or prohibition preventing the consummation of the
Merger or the other transactions contemplated hereby is at any time in effect
for a period of more than 20 consecutive days; or
(E) by the Company or ABI, upon written notice to the other parties to
this Agreement if the Merger has not been consummated on or before January 13,
2006, provided, however, that the right to terminate this Agreement pursuant to
this Section 15.1(e) shall not be available to any party whose breach of a
representation or warranty or failure to fulfill any covenant or other agreement
under this Agreement has caused the Merger not to occur on or before January 13,
2006.
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15.2. EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 15.1 hereof, then (a) this Agreement shall become void and have no
effect whatsoever, except that the provisions of Section 1 ("Definitions"),
Section 13 ("Indemnification"), this Section 15 ("Termination") and Section 16
("General") shall survive any such termination, (b) such termination shall not
relieve any party hereto from liability arising from any breach by such party of
any provision of this Agreement if such breach occurred prior to such
termination, (c) each party will redeliver all documents, work papers and other
material of the other party or parties relating to the transactions contemplated
hereby including such memoranda, notes, lists, records or other documents
compiled or derived from such material, whether so obtained before or after the
execution hereof, to the party furnishing the same and (d) all information
received by any party hereto with respect to the business of the other parties
or their affiliated companies shall remain subject to the terms of the
Confidentiality Agreement.
16. GENERAL.
16.1. COOPERATION. Each of the parties will cooperate with the others
and use reasonable best efforts to prepare all necessary documentation, to
effect all necessary filings, and to obtain all necessary permits, consents,
approvals, and authorizations of all governmental bodies and other third parties
necessary to consummate the transactions contemplated by this Agreement.
16.2. SURVIVAL OF PROVISIONS. The provisions of this Agreement,
including without limitation the representations and warranties of the parties,
and the provisions of the other documents executed and delivered in connection
with this Agreement, the Merger, and the other transactions contemplated hereby
will be deemed material, and, notwithstanding any investigation by or on behalf
of any other party, will be deemed to have been relied on by each other party,
and will survive the Closing and the consummation of the Merger and the other
transactions contemplated hereby until terminated or no longer in effect in
accordance with their respective terms, except that the representations and
warranties made by the parties pursuant to this Agreement shall survive the
Closing and the consummation of the Merger and the other transactions
contemplated hereby until the earlier to occur of (i) the first anniversary of
the Effective Time, (ii) the consummation of a Qualified Public Offering (as
defined in the Series C Stockholders Agreement) or (iii) the consummation of a
sale of all or substantially all of the assets of ABI or the consummation of a
merger, consolidation or sale of outstanding capital stock of ABI that results
in a change of control of ABI.
16.3. EXPENSES. ABI, on the one hand, and the Company, on the other
hand, will be responsible for and will pay all of their own respective expenses
in connection with the negotiation and preparation of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby.
16.4. BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY
BENEFICIARIES.
(A) This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(B) Except to the extent otherwise provided in Section 4.3(b) hereof,
no party will assign any rights or delegate any obligations hereunder without
the consent of the other parties, other than in the case of ABI, in connection
with (i) a merger or consolidation of ABI or (ii) a sale of the assets to which
this transaction relates (provided that, in the event of such sale of assets,
the buyer agrees in writing with the Stockholder Representatives to be bound by
the obligations of ABI under this Agreement), and any attempt to do so will be
void.
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(C) Nothing in this Agreement is intended to or will confer any rights
or remedies on any person other than the parties hereto and their respective
heirs, successors, and permitted assigns; provided however, that, if, but only
if, the Merger is consummated, (i) the provisions in Section 3 hereof concerning
the payment of the Merger Consideration for the Company Stock, the
representations of ABI and the Merger Sub set forth in Section 7 hereof, and the
indemnification provisions in Section 13 hereof are intended, and shall be, for
the benefit of the Stockholders as third party beneficiaries, (ii) the
provisions of Sections 3 and 5.1 hereof concerning the assumption of the Assumed
Options and the Assumed Warrants and the payment of the Merger Consideration to
the Assumed Option Exercising Holders and the Assumed Warrant Exercising Holders
is for the benefit of the Optionholders, Warrantholders, the Assumed Option
Exercising Holders and the Assumed Warrant Exercising Holders, as applicable, as
third party beneficiaries and (iii) the provisions of Section 8.12 hereof
concerning indemnification obligations of ABI and the Surviving Corporation in
connection with any D&O Claim or D&O Proceeding are intended, and shall be, for
the benefit of the D&O Indemnified Parties.
16.5. NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) sent by a reputable, established
courier service that guarantees next business day delivery (effective the next
business day), or (iii) sent by telecopier followed within 24 hours by
confirmation by one of the foregoing methods (effective upon receipt of the
telecopy in complete, readable form), addressed as follows (or to such other
address as the recipient party may have furnished to the sending party for the
purpose pursuant to this section):
(A) If to ABI, Merger Sub, and/or (after the Effective Time), the
Surviving Corporation to:
ActivBiotics, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Meerie Joung, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to the Company (before the Effective Time) to:
Metaphore Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company (after the Effective Time) or to the
Stockholder Representatives to:
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J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. Inc.
One Financial Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇-▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.▇.
▇▇▇▇▇▇▇▇▇▇ University School of Medicine
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C.
Chrysler Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
16.6. DISCLOSURE IN SCHEDULES. For purposes of this Agreement, with
respect to any matter that is clearly disclosed on any Section of the ABI
Disclosure Schedule or the Company Disclosure Schedule, as the case may be, in
such a way as to make its relevance to the information called for by another
Section of this Agreement or another Section of the ABI Disclosure Schedule or
the Company Disclosure Schedule, as the case may be, readily apparent, such
matter shall be deemed to have been disclosed in response to such other Section,
notwithstanding the omission of any appropriate cross-reference thereto;
provided, however, that each of ABI and the Company hereby covenants to make a
good faith diligent effort to make all appropriate cross-references within and
to any and all Sections of the ABI Disclosure Schedule and the Company
Disclosure Schedule, respectively.
16.7. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
16.8. CAPTIONS. The captions of sections or subsections of this
Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.
16.9. EQUITABLE RELIEF. Each of the parties hereby acknowledges that
any breach by him or it of his or its obligations under this Agreement would
cause substantial and irreparable damage to
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the parties, and that money damages would be an inadequate remedy therefor, and
accordingly, acknowledges and agrees that each other party will be entitled to
an injunction, specific performance, and/or other equitable relief to prevent
the breach of such obligations.
16.10. CONSTRUCTION. The language used in this Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party.
16.11. WAIVERS. No waiver of any breach or default hereunder will be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
16.12. ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules hereto and the other agreements, instruments, certificates, and
other documents referred to herein as having been or to be executed and
delivered in connection with the transactions contemplated hereby (including,
without limitation, the Confidentiality Agreement), contains the entire
understanding and agreement among the parties, and supersedes any prior
understandings or agreements among them, or between or among any of them, with
respect to the subject matter hereof, including, without limitation, that
certain letter agreement, dated on or about November 7, 2005, by and between ABI
and the Company.
16.13. GOVERNING LAW. This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of Commonwealth
of Massachusetts, as applied to contracts under seal made, and entirely to be
performed, within Massachusetts, and without reference to principles of
conflicts or choice of laws.
16.14. AMENDMENT. This Agreement may not be amended, modified,
changed, waived or supplemented except by a writing duly executed by ABI, Merger
Sub and the Company; provided however, that any amendment, modification, change,
waiver or supplement to any provision or provisions of this Agreement at any
time subsequent to the time the stockholders of the Company approve this
Agreement may be effected and implemented if, but only if, such amendment,
modification, change, waiver or supplement is set forth in a written instrument
or agreement duly executed by ABI and a majority of the Stockholder
Representatives.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement and Plan of Merger and Reorganization under seal as of the date first
above written.
ABI: ACTIVBIOTICS, INC.
By:
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Title: President and Chief
Executive Officer
MERGER SUB: METAPHORE ACQUISITION CO.
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Title: President and Chief
Executive Officer
COMPANY: METAPHORE PHARMACEUTICALS, INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
Title: President and Chief
Executive Officer
STOCKHOLDER REPRESENTATIVES:
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J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Ph.D.