EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 23, 2003
AMONG
XECHEM INTERNATIONAL, INC.
CEPTOR ACQUISITION, INC.
CEPTOR CORPORATION
AND
THE PARTIES LISTED ON THE SIGNATURE PAGE HERETO
6
TABLE OF CONTENTS
PAGE
----
Article I THE MERGER..........................................................6
1.1 Merger.........................................................6
1.2 Filing and Effective Time......................................6
1.3 Effects of the Merger..........................................7
1.4 Merger Consideration...........................................7
1.5 Conversion of Merger Sub Shares................................7
1.6 Exchange of Certificates; Payment of Merger Consideration......7
1.7 Contingent Consideration.......................................8
1.8 Dissenting Shareholders........................................8
1.9 The Closing....................................................9
Article II REPRESENTATIONS AND WARRANTIES OF PARENT...........................9
2.1 Corporate Status...............................................9
2.2 Corporate Power and Authority..................................9
2.3 Enforceability.................................................9
2.4 No Violation...................................................9
2.5 No Commissions................................................10
2.6 Issuance of Preferred Shares..................................10
2.7 SEC Documents.................................................10
Article III REPRESENTATIONS AND WARRANTIES OF MERGECO........................10
3.1 Corporate Status..............................................10
3.2 Corporate Power and Authority.................................10
3.3 Enforceability................................................11
i
3.4 No Violation..................................................11
3.5 No Commissions................................................11
3.6 Mergeco Capitalization........................................11
3.7 Business Activity.............................................11
Article IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
AND THE COMPANY....................................................12
4.1 Corporate Status..............................................12
4.2 Corporate Power and Authority.................................12
4.3 Enforceability................................................12
4.4 No Violation..................................................12
4.5 Capitalization................................................13
4.6 Subsidiaries..................................................13
4.7 Changes Since July 1, 2003....................................13
4.8 Liabilities...................................................14
4.9 Litigation....................................................14
4.10 Real Estate...................................................14
4.11 Good Title to and Condition of Assets.........................14
4.12 Environmental Matters.........................................14
4.13 Compliance with Laws..........................................14
4.14 Tax Matters...................................................15
4.15 ERISA.........................................................15
4.16 Licenses and Permits..........................................15
4.17 Intellectual Property.........................................16
4.18 Contracts.....................................................17
ii
4.19 Accuracy of Information Furnished by the Company..............17
4.20 Authority of Shareholder......................................17
4.21 No Commissions................................................18
Article V CONDUCT OF BUSINESS PENDING THE CLOSING............................18
5.1 Conduct of Business Pending the Closing.......................18
5.2 Investigation of the Company by Parent........................19
5.3 Audit of Financial Statements.................................19
5.4 Amendment of Convertible Notes................................20
5.5 Pre-Clear Merger..............................................20
5.6 Certificate of Designations...................................20
5.7 Notification of Certain Matters...............................20
5.8 Trading in Parent's Common Stock..............................20
Article VI ADDITIONAL AGREEMENTS.............................................20
6.1 Further Assurances............................................20
6.2 Confidentiality; Publicity....................................20
6.3 No Other Discussions..........................................20
6.4 Post Closing Funding..........................................21
6.5 Other Agreements..............................................21
6.6 Release.......................................................21
6.7 Tax Filings...................................................21
Article VII CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGECO..............22
7.1 Accuracy of Representations and Warranties and
Compliance with Obligations...................................22
7.2 Consents......................................................22
iii
7.3 Amount of Indebtedness........................................22
7.4 Secretary's Certificate.......................................22
7.5 No Adverse Litigation.........................................22
7.6 Other Closing Deliveries......................................22
7.7 Due Diligence.................................................23
7.8 Shareholder Approval..........................................23
Article VIII CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND
THE SHAREHOLDERS...................................................23
8.1 Accuracy of Representations and Warranties and
Compliance with Obligations...................................23
8.2 No Adverse Litigation.........................................23
8.3 Secretary's Certificate.......................................23
8.4 Other Closing Deliveries......................................24
Article IX INDEMNIFICATION...................................................24
9.1 Indemnification by the Shareholder............................24
9.2 Indemnification for Shareholder Matters.......................25
9.3 Indemnification by Parent.....................................25
9.4 Notice of Claims..............................................26
9.5 Third Person Claims...........................................27
9.6 Exclusivity of Indemnification................................27
Article X SECURITIES LAW MATTERS.............................................27
10.1 Disposition of Parent Securities..............................27
10.2 Legend........................................................28
iv
Article XI DEFINITIONS.......................................................28
11.1 Defined Terms.................................................28
11.2 Other Definitional Provisions.................................31
Article XII TERMINATION, AMENDMENT AND WAIVER................................31
12.1 Termination...................................................31
12.2 Effect of Termination.........................................32
Article XIII GENERAL PROVISIONS..............................................32
13.1 Notices.......................................................32
13.2 Entire Agreement..............................................33
13.3 Expenses......................................................33
13.4 Amendment; Waiver.............................................33
13.5 Binding Effect; Assignment....................................33
13.6 Counterparts..................................................34
13.7 Interpretation................................................34
13.8 Governing Law; Interpretation.................................34
13.9 Arm's Length Negotiations.....................................34
v
AGREEMENT AND PLAN OF MERGER
----------------------------
This Agreement and Plan of Merger is entered into the 23rd day of December,
2003, by and among Xechem International, Inc., a Delaware corporation
("PARENT"); Ceptor Acquisition, Inc., a Delaware corporation, and a wholly owned
subsidiary of Parent ("MERGECO"); Ceptor Corporation, a Delaware corporation
("TARGET" or "COMPANY"); and the shareholders of the Company, as set forth on
the signature page hereto (each a "SHAREHOLDER" and collectively, the
"SHAREHOLDERS"). Certain other capitalized terms used herein are defined in
Article XI or elsewhere throughout this Agreement.
RECITALS
--------
A. The Shareholders own, and until the Closing (as defined herein) will
own, in excess of 98% of the issued and outstanding shares of capital stock of
the Company;
B. Upon the terms and subject to the conditions set forth herein, Parent
desires to acquire all of the shares of capital stock of the Company (the
"TARGET SHARES") in exchange for shares of Class C Series 7 Preferred Stock,
$0.00001 par value per share, of Parent (the "PREFERRED STOCK"), having the
rights and preferences set forth on the Certificate of Designations, Preferences
and Rights attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATIONS");
C. Parent and the Company have agreed to accomplish this transaction
through a reverse triangular merger whereby Mergeco will merge with and into
Target, and Target will be the surviving corporation (the "MERGER");
D. The parties hereto intend that the merger qualify as a
"reorganization" within the meaning of Section 386(a)(1) of the Code; and
E. Each of the Boards of Directors of Target, Parent and Mergeco have
approved this Agreement, and prior to the Closing Date, the Shareholders of the
Company will have approved this Agreement.
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER. Upon and subject to the terms and conditions set forth in this
Agreement and in accordance with the Delaware General Business Corporation Law
(the "DGCL"), Mergeco shall be merged with and into Target. Following the
Merger, Target shall continue to exist as the surviving corporation (sometimes
referred to as the "SURVIVING CORPORATION") and the separate corporate existence
of Mergeco shall cease.
1.2 FILING AND EFFECTIVE TIME. At the Closing, Mergeco and Target shall
file with the Secretary of State of the State of Delaware a Certificate of
Merger, appropriately completed and executed in accordance with Section 251 of
the DGCL. The Merger shall become effective upon
filing of the Certificate of Merger, in accordance with Section 103 of the DGCL
(the "EFFECTIVE TIME," and the date thereof hereinafter referred to as the
"EFFECTIVE DATE").
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
Section 251 of the DGCL. In addition:
(a) The Certificate of Incorporation of Mergeco as in effect at the
Effective Time shall be the certificate of incorporation of the Surviving
Corporation, until duly amended as provided therein or by applicable law;
(b) The bylaws of Mergeco as in effect at the Effective Time shall be
the bylaws of the Surviving Corporation, until duly amended as provided therein
or by applicable law;
(c) The officers of Mergeco immediately prior to the Merger shall be
the officers of the Surviving Corporation until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be; and
(d) The directors of Mergeco shall be the directors of the Surviving
Corporation until the earlier of their earlier resignation or removal or until
their respective successors are duly elected and qualified, as the case may be.
1.4 MERGER CONSIDERATION. At the Effective Time, the Target Shares, issued
and outstanding at and as of the Effective Time, other than shares held in the
Company's treasury, by virtue of the Merger and without any further action on
the part of the holder thereof, shall be converted into (i) an aggregate of
6,000 shares of Preferred Stock (the "CLOSING CONSIDERATION") and (ii) a right
to receive the Contingent Consideration (as defined below). At the Effective
Time, each Target Share shall be converted into the right to receive (i)
0.0018378 shares of Preferred Stock and (ii) a right to receive 0.000000306 of
the amount of the Contingent Consideration.
1.5 CONVERSION OF MERGER SUB SHARES. At and as of the Effective Time, by
virtue of the Merger and without any further action on the part of Parent, each
share of no par value common stock of Mergeco issued and outstanding to Parent
immediately prior to the Effective Time shall by virtue of the Merger by
converted into one share of common stock of the Surviving Corporation.
1.6 EXCHANGE OF CERTIFICATES; PAYMENT OF MERGER CONSIDERATION. At the
Closing, the Shareholders shall surrender to Parent their stock certificate(s)
representing their Target Shares. Upon receipt of the stock certificates, Parent
shall cancel such stock certificates and Parent shall thereupon issue a stock
certificate representing the Preferred Shares into which such Target Shares
previously represented by the surrendered certificate shall have been converted
at the Effective Time. From and after the Effective Time, until so surrendered,
the Company stock certificates shall be deemed for all purposes to represent and
evidence only the right to receive the per share consideration set forth in
SECTION 1.4, for each share represented by such certificates, and no interest
shall be paid or accrued on such amount and the holders of such Company stock
certificates shall cease to have any rights as common shareholders of the
Company.
7
1.7 CONTINGENT CONSIDERATION. In addition to the Closing Consideration,
Parent shall issue to the Shareholders a series of $1,000,000 awards (each, an
"AWARD"), payable in shares of common stock of Parent, upon the occurrence of
one of following with respect to a development drug that is substantially
derived from the Company's patents, technology and compounds (as listed and
described on SCHEDULE 4.17) (each, a "DEVELOPMENT DRUG"):
(a) A filing of a Phase II application within 36 months of the
Closing Date;
(b) A filing of a Phase III application within 60 months of the
Closing Date; or
(c) A NDA filing is made within 72 months of the Closing Date.
Only one Award is payable per Development Drug even if such Development Drug
satisfies more than one of the conditions in (a)-(c) above. Upon a Development
Drug satisfying one of the foregoing conditions for the first time (an "AWARD
EVENT"), the Company shall within 30 days of such Award Event issue to the
Shareholders an aggregate number of shares of common stock of Parent equal to
$1,000,000 divided by Current Share Value. The aggregate amount paid to the
Shareholders hereunder with respect to all of the Development Drugs, if any, is
referred to herein as the "CONTINGENT CONSIDERATION". Each Shareholder shall be
entitled to receive his, her, or its proportional amount of the Contingent
Consideration. As used herein, the term "CURRENT SHARE VALUE" shall mean the
lower of (i) $.20 and (ii) the average closing price per share of Parent Common
Stock as reported on the OTC Bulletin Board (or such other market on which such
share of common stock are then listed) for the twenty five (25) trading days
immediately preceding the date of such Award Event, subject to equitable
adjustment as the parties agree in the event of a stock split, recapitalization,
stock dividend, distribution or reclassification. An Award Event will be deemed
to have occurred pursuant to (a)-(c) if the research studies in support of a
Phase II, III or NDA filing have been completed satisfactorily and the results
support a reasonable conclusion that a Phase II, III or NDA filing should be
pursued, notwithstanding that the actual filing has not been submitted to the
FDA for consideration within the time applicable period specified in (a) - (c)
hereof.
1.8 DISSENTING SHAREHOLDERS.
(a) Notwithstanding anything herein to the contrary, any share of
capital stock of the Company owned by a Dissenting Shareholder shall not be
converted into the right to receive the consideration hereunder, but such
Dissenting Shareholder shall be entitled to only such payments as are provided
for by the DGCL, which shall be paid by the Surviving Corporation.
(b) Notwithstanding the provisions of SECTION 1.8(a), if any
Dissenting Shareholder shall effectively withdraw or lose (through failure to
perfect or otherwise) such shareholder's right to receive the payment provided
for by the DGCL for such shareholder's shares of capital stock of the Company,
then, as of the Effective Time, such Dissenting Shareholder's shares of capital
stock of the Company shall automatically be converted into the right to receive
only such consideration as is provided for in 262 of the DGCL, which shall be
paid by Parent without interest thereon.
8
(c) Prior to the Closing Date, the Company shall give Parent (i)
prompt notice of any written demands by Dissenting Shareholders, withdrawals of
such demands and any other similar instruments served pursuant to the DGCL and
received by the Company and (ii) the opportunity to discuss with the Company any
negotiations and proceedings with respect to such demands and to participate
with the Company in such negotiations and proceedings. Prior to the Closing
Date, the Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands by Dissenting
Shareholders or settle or offer to settle any such demands
1.9 THE CLOSING. The Closing of the Merger (the "CLOSING") shall take
place as soon as the conditions set forth in Articles VIII and IX are satisfied
or at such later date as the parties may agree (the "CLOSING DATE"), at such
place as the parties may agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT
As a material inducement to the Company and the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, Parent
makes the following representations and warranties to the Company and the
Shareholders:
2.1 CORPORATE STATUS. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted.
2.2 CORPORATE POWER AND AUTHORITY. Parent has the corporate power and
authority to execute and deliver this Agreement and the Parent Ancillary
Documents, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. Parent has taken all corporate
action necessary to authorize its execution and delivery of this Agreement and
the Parent Ancillary Documents, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby. No approval of the stockholders of Parent is required to authorize the
transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
Parent and constitutes a legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms and each of the Parent
Ancillary Documents, upon execution and delivery by Parent, will be a legal,
valid and binding obligation of Parent enforceable in accordance with its terms.
2.4 NO VIOLATION. The execution and delivery of this Agreement and the
Parent Ancillary Documents by Parent, the performance by it of its obligations
hereunder and thereunder and the consummation by it of the transactions
contemplated by this Agreement and the Parent Ancillary Documents will not (i)
contravene any provision of its Certificate of incorporation or bylaws, (ii)
violate or conflict with any law, statute, ordinance, rule, regulation, decree,
writ, injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against Parent, (iii) conflict
9
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right to terminate, amend, modify, abandon or
accelerate, any Contract which is applicable to, binding upon or enforceable
against Parent, (iv) result in or require the creation or imposition of any Lien
upon or with respect to any of the property or assets of Parent, or (v) require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person, except the Secretary of State of the State of Delaware, or the SEC or
other filings required to be made by Parent.
2.5 NO COMMISSIONS. Parent has incurred no obligation for any finder's or
broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby.
2.6 ISSUANCE OF PREFERRED SHARES. Upon the Closing and the issuance and
delivery of the certificates representing the shares of Preferred Stock to the
Shareholders, the Preferred Stock will be, and upon conversion of the Preferred
Stock into shares of Parent Common Stock in accordance with the Certificate of
Designations such Common Stock will be, validly issued, fully paid and
non-assessable, and will not be subject to any Liens. The Preferred Stock shall
have the terms as set forth in the form of Certificate of Designations attached
hereto as Exhibit A.
2.7 SEC DOCUMENTS. Parent has made available (including through the SEC's
▇▇▇▇▇ Database) to the Company and the Shareholders each statement, report,
registration statement, definitive proxy statement, and other filings (including
exhibits, supplements and schedules thereto) filed with the SEC by Parent since
January 1, 2002 (collectively, the "PARENT SEC DOCUMENTS"). As of their
respective filing dates, the Parent SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act, and
none of the Parent SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading, except to the extent corrected by a
subsequently filed Parent SEC Document.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MERGECO
As a material inducement to the Company and the Shareholder to enter into
this Agreement and to consummate the transactions contemplated hereby, Parent
and Mergeco jointly and severally make the following representations and
warranties to the Company and the Shareholders:
3.1 CORPORATE STATUS. Mergeco is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full corporate power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted.
3.2 CORPORATE POWER AND AUTHORITY. Mergeco has the corporate power and
authority to execute and deliver this Agreement and the Mergeco Ancillary
Agreements, to perform its
10
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Mergeco has taken all action necessary to
authorize its execution and delivery of this Agreement, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
Mergeco and constitutes a legal, valid and binding obligation of Mergeco,
enforceable against Mergeco in accordance with its terms and each of the Mergeco
Ancillary Agreements, upon execution and delivery by Mergeco, will be a legal,
valid and binding obligation of Mergeco enforceable in accordance with its
terms.
3.4 NO VIOLATION. The execution and delivery of this Agreement and the
Mergeco Ancillary Agreements by Mergeco, the performance by it of its
obligations hereunder and thereunder and the consummation by it of the
transactions contemplated by this Agreement and the Mergeco Ancillary Agreements
will not (i) contravene any provision of the certificate of incorporation or
bylaws of Mergeco, (ii) violate or conflict with any law, statute, ordinance,
rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against Mergeco, (iii) conflict with, result in
any breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under, or
give rise to a right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against Mergeco,
(iv) result in or require the creation or imposition of any Lien upon or with
respect to any of the property or assets of Mergeco, or (v) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except the
Secretary of State of the State of Delaware, or the SEC or other filings
required to be made by Parent.
3.6 NO COMMISSIONS. Mergeco has incurred no obligation for any finder's or
broker's or agent's fees or commissions or similar compensation in connection
with the transactions contemplated hereby.
3.7 MERGECO CAPITALIZATION. Mergeco's authorized capital stock consists of
one thousand (1,000) shares of common stock, no par value, of which one hundred
(100) shares are issued and outstanding all of which are validly issued, fully
paid and non-assessable. There are no options, warrants, preemptive rights,
conversion privileges or other contracts which give any Person the right to
acquire any capital stock of Mergeco or any interest therein. Parent is the
beneficial and record owner of all of the outstanding shares of common stock of
Mergeco, free and clear of all Liens.
3.8 BUSINESS ACTIVITY. Mergeco has not engaged in any business activity of
any nature prior to the date of this Agreement.
11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDER AND THE COMPANY
As a material inducement to Parent and Mergeco to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company and the
Shareholders make the following representations and warranties to Parent and
Mergeco:
4.1 CORPORATE STATUS. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own or lease its property and
to carry on its business as now being conducted. The Company is legally
qualified to transact business and is in good standing as a foreign corporation
in the State of New York, which is the only foreign jurisdiction where the
nature of its property and the conduct of its business requires such
qualification, except for such jurisdictions where the failure to so qualify
would not have a material adverse effect on the financial condition or results
of operation of the Company (a "MATERIAL ADVERSE EFFECT"). There is no pending
or threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of the Company.
4.2 CORPORATE POWER AND AUTHORITY. The Company has full corporate power
and authority to execute and deliver this Agreement and the Company Ancillary
Documents, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The Company has taken all
corporate action necessary to authorize its execution and delivery of this
Agreement and the Company Ancillary Documents, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms and each of the
Company Ancillary Documents, upon execution and delivery by the Company, will be
a legal, valid and binding obligation of the Company enforceable in accordance
with its terms.
4.4 NO VIOLATION. Except as set forth on SCHEDULE 4.4, the execution and
delivery of this Agreement and the Company Ancillary Documents by the Company,
the performance by it of its obligations hereunder and thereunder and the
consummation by it of the transactions contemplated by this Agreement and the
Company Ancillary Documents will not (i) contravene any provision of the
certificate of incorporation or bylaws of the Company, (ii) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company;
(iii) conflict with, result in any breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against the Company, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
the Company, or (v) require the consent, approval, authorization
12
or permit of, or filing with or notification to, any Governmental Authority, any
court or tribunal or any other Person, except the Secretary of State of the
State of Delaware.
4.5 CAPITALIZATION. SCHEDULE 4.5 sets forth, with respect to the Company,
(i) the number of authorized shares of each class of its capital stock, (ii) the
number of issued and outstanding shares of each class of its capital stock, and
(iii) the number of shares of each class of its capital stock which are held in
treasury. All of the issued and outstanding shares of capital stock of the
Company (i) are legally and beneficially owned by the Person in such amounts as
set forth each Person's name on SCHEDULE 4.5, (ii) have been duly authorized and
validly issued and are fully paid and non-assessable, (iii) were issued in
compliance with all applicable state and federal securities laws, and (iv) were
not issued in violation of any preemptive rights or rights of first refusal. No
preemptive rights or rights of first refusal exist with respect to the
outstanding shares of capital stock of the Company, and no such rights arise by
virtue of or in connection with the transactions contemplated hereby. Except as
disclosed or specifically referred to on SCHEDULE 4.5 there are no outstanding
or authorized rights, options, warrants, convertible securities, subscription
rights, conversion rights, exchange rights or other agreements or commitments of
any kind that could require the Company to issue or sell any shares of its
capital stock (or securities convertible into or exchangeable for shares of its
capital stock). There are no outstanding stock appreciation, phantom stock,
profit participation or other similar rights with respect to the Company. There
are no proxies, voting rights or other agreements or understandings with respect
to the voting or transfer of the outstanding capital stock of the Company. The
Company is not obligated to redeem or otherwise acquire any of its outstanding
shares of capital stock.
4.6 SUBSIDIARIES. Except as set forth on SCHEDULE 4.6, the Company does
not own, directly or indirectly, any outstanding voting securities of or other
interests in, or control, any other corporation, partnership, joint venture or
other business entity.
4.7 CHANGES SINCE JULY 1, 2003. Except as disclosed in SCHEDULE 4.7 or as
contemplated herein, since July 1, 2003, the Company has not:
(i) issued any capital stock or other securities;
(ii) made any distribution of or with respect to its capital
stock or other securities or purchased or redeemed any of its securities;
(iii) sold, leased or transferred any of its properties or assets
including selling, licensing or transferring any rights in the Owned
Intellectual Property;
(iv) made or obligated itself to make capital expenditures;
(v) made any payment in respect of its liabilities other than in
the ordinary course of business consistent with past practice;
(vi) incurred any obligations or liabilities (including any
indebtedness) or entered into any transaction or series of transactions
involving in excess of $1,000 in the aggregate out of the ordinary course
of business, except for this Agreement and the transactions contemplated
hereby;
13
(vii) suffered any theft, damage, destruction or casualty loss;
(viii) made or adopted any change in its accounting practice or
policies;
(ix) terminated, amended or modified any contract;
(x) imposed any security interest or other Lien on any of its
assets including the Owned Intellectual Property;
(xi) delayed paying any accounts payable, not being contested in
good faith, otherwise than in the ordinary course of business consistent
with past practice; or
(xii) agreed to do or authorized any of the foregoing.
4.8 LIABILITIES. Except as set forth on SCHEDULE 4.8, the Company does not
have any liabilities or obligations, whether accrued, absolute, contingent or
otherwise, except (i) to the extent specifically set forth in or incorporated by
express reference in any of the Schedules attached hereto, and (ii) recurring
liabilities, payable in thirty days, incurred in the ordinary course of business
consistent with past practice, none of which are past due.
4.9 LITIGATION. There is no action, suit, or other legal or administrative
proceeding or governmental investigation, pending or, to the Company's
Knowledge, threatened, anticipated or contemplated against, by or affecting the
Company or any of its properties or assets, or which question the validity or
enforceability of this Agreement or the transactions contemplated hereby, and to
the Company's Knowledge, there is no basis for any of the foregoing. There are
no outstanding orders, decrees or stipulations issued by any Governmental
Authority in any proceeding to which the Company is or was a party which have
not been complied with in full or which continue to impose any material
obligations on the Company.
4.10 REAL ESTATE. The Company does not own or lease, and never has owned or
leased any real property.
4.11 GOOD TITLE TO AND CONDITION OF ASSETS. The Company has good and valid
title to all of its Assets (as hereinafter defined), free and clear of any Liens
or restrictions on use. For purposes of this Agreement, the term "ASSETS" means
all of the properties and assets of the Company, whether real, personal or
mixed, tangible or intangible, wherever located.
4.12 ENVIRONMENTAL MATTERS. The operations of the Company are and have at
all times been in compliance in all material respects with all applicable
Environmental Laws. Neither the Company nor any Shareholder has received written
notice of any violation of any Environmental Laws applicable to the Assets or
the Company's operations.
4.13 COMPLIANCE WITH LAWS.
(a) The Company has complied in all material respects with all laws,
regulations and orders applicable to it, its business, operations and Assets.
The Company has not been cited, fined or otherwise notified of any asserted past
or present material failure to comply
14
with any laws, regulations or orders and no proceeding with respect to any such
material violation is pending or threatened.
(b) The Company has not made any payment of funds in connection with
its business which is prohibited by law, and no funds have been set aside to be
used in connection with its business for any payment prohibited by law.
4.14 TAX MATTERS. Except as set forth in SCHEDULE 4.14 hereto, all Tax
Returns required to be filed prior to the date hereof with respect to the
Company, or any of its income, properties, franchises or operations have been
filed, each such Tax Return has been prepared in compliance with all applicable
laws and regulations, and all such Tax Returns are true, complete and accurate
in all respects. All Taxes due and payable by or with respect to the Company
have been paid or accrued on or will be accrued on its books and records as of
the Closing. Except as set forth in SCHEDULE 4.14 hereto: (i) with respect to
each taxable period of the Company, no taxable period has been audited by the
relevant taxing authority; (ii) no deficiency or proposed adjustment which has
not been settled or otherwise resolved for any amount of Taxes has been asserted
or assessed by any taxing authority; (iii) the Company has not consented to
extend the time in which any Taxes may be assessed or collected by any taxing
authority; (iv) the Company has not requested or been granted an extension of
the time for filing any Tax Return to a date later than the Closing Date; (v)
there is no action, suit, taxing authority proceeding, or audit or claim for
refund now in progress, pending or threatened against or with respect to the
Company regarding Taxes; (vi) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of the Company; (vii) the
Company has not made any payments, and is or will not become obligated (under
any contract entered into on or before the Closing Date) to make any payments,
that will be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign law); (viii) no claim has ever been made by
a taxing authority in a jurisdiction where the Company does not file Tax Returns
that is or may be subject to Taxes assessed by such jurisdiction; (ix) true,
correct and complete copies of all income Tax Returns filed by or with respect
to the Company for the past two years has been furnished or made available to
Parent; and (xi) no sales or use tax or property transfer tax (other than sales
tax on aircraft, boats, mobile homes and motor vehicles), non-recurring
intangibles tax, documentary stamp tax or other excise tax (or comparable tax
imposed by any Governmental Authority) will be payable by the Company or Parent
by virtue of the transactions completed in this Agreement.
4.15 ERISA. Except as set forth on SCHEDULE 4.15, the Company does not have
and never has had any employment benefit plans, as defined in Section 3(2) of
ERISA, multiemployer plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, hospitalization, disability
and other insurance plans, severance or termination pay plans and policies,
whether or not described in Section 3(3) of ERISA, in which employees, their
spouses or dependents, or the Company participate.
4.16 LICENSES AND PERMITS. The Company possesses all licenses and required
governmental or official approvals, permits or authorizations (collectively, the
"PERMITS") necessary to lawfully conduct its business and operations which
Permits are listed on SCHEDULE 4.17. All such Permits are valid and in full
force and effect, the Company is in material
15
compliance with the requirements thereof, and no proceeding is pending or
threatened to revoke or amend any of them.
4.17 INTELLECTUAL PROPERTY.
(a) The Company owns all right, title, and interest in (free and
clear of all Liens) ("OWNED INTELLECTUAL PROPERTY") all of the Intellectual
Property described on SCHEDULE 4.17.
(b) SCHEDULE 4.17 lists (i) all patents and patent applications and
all registered and material unregistered trademarks, trade names and service
marks, registered and material unregistered copyrights, and mask works included
in the Owned Intellectual Property, including the jurisdictions in which each
such Owned Intellectual Property right has been issued or registered or in which
any application for such issuance and registration has been filed; (ii) all
licenses, sublicenses and other agreements to which the Company is a party
pursuant to which any Person is authorized to use any Owned Intellectual
Property; and (iii) all licenses, sublicenses and other agreements to which the
Company is a party pursuant to which the Company is authorized to use any
third-party (including without limitation for the purposes of this SECTION 4.17
any employees of the Company) Intellectual Property which is not Owned
Intellectual Property, or which is incorporated in, is, or forms a part of, any
Owned Intellectual Property. Except as set forth in SCHEDULE 4.17, no royalties
or other continuing payment obligations are due in respect of the Owned
Intellectual Property. Except as set forth in SCHEDULE 4.17, all patents and
registrations or applications therefor included in Owned Intellectual Property
are valid and subsisting and in full force and effect and are applied for and
owned in the name of the Company.
(c) The Company is not, nor will it be, as a result of the execution
and delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
Owned Intellectual Property Rights.
(d) The Owned Intellectual Property does not dilute, misuse,
infringe, misappropriate or otherwise come into conflict with any Intellectual
Property of any other Person (including without limitation any Employee), except
for such dilutions, misuses, infringements, misappropriations or other conflicts
which, individually or in the aggregate, would not have or be reasonably
expected to have a Material Adverse Effect. No charge, complaint, demand, notice
or claim is pending or has been made to such effect and the Company has not
received written notice so alleging (including any claim that the Company must
license or refrain from using any Intellectual Property of any other such
Person). No action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or, to the Company's Knowledge, threatened, that
challenges the legality, validity, enforceability, use or ownership of any item
of Owned Intellectual Property, nor is any Owned Intellectual Property subject
to any outstanding injunction, judgment, order, decree, ruling or charge.
(e) To the Company's knowledge, no third party has interfered with,
infringed upon, misappropriated, misused, diluted or otherwise come into
conflict with any Owned Intellectual Property.
16
4.18 CONTRACTS. SCHEDULE 4.18 sets forth a list of each Contract to which
the Company is a party or by which its properties and assets are bound, except
for Contracts cancelable within 30 days without payment or penalty, true and
correct copies of which have been provided to Parent (a "DESIGNATED CONTRACT").
The Company has not violated any of the terms or conditions of any Designated
Contract or any term or condition which would permit termination or material
modification of any Designated Contract, and the Company has not received any
claim for breach or indemnification or notice of default or termination under
any Designated Contract. No event has occurred which constitutes, or after
notice or the passage of time, or both, would constitute, a default by the
Company under any Designated Contract, and to the Company's Knowledge, no such
event has occurred which constitutes or would constitute a material default by
any other party.
4.19 ACCURACY OF INFORMATION FURNISHED BY THE COMPANY. No representation
contained in this Article IV contains, and the certificate referred to in
SECTION 7.1 when delivered will not contain, any untrue statement of a material
fact or omits (or in the case of such certificate, will omit) to state a
material fact necessary to make the statements contained therein not misleading.
4.20 AUTHORITY OF SHAREHOLDER. Notwithstanding the first paragraph of this
ARTICLE IV, each Shareholder severally and not jointly, with respect to himself,
herself, or itself only, represents and warrants as follows:
(a) Authority. Shareholder has full legal right, power and capacity
and authority to enter into this Agreement and the Shareholder Ancillary
Agreements and perform his obligations hereunder and thereunder.
(b) Enforceability. The Agreement and each of the Shareholder
Ancillary Agreements has been, or at Closing will be, duly executed and
delivered by Shareholder and does constitute, or at Closing will constitute, a
valid and binding obligation of Shareholder, enforceable against Shareholder in
accordance with its terms.
(c) No Violation. Except as set forth on SCHEDULE 4.20, the execution
and delivery of this Agreement and the Shareholder Ancillary Agreements to which
Shareholder is a party will not (i) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is applicable to,
binding upon or enforceable against Shareholder of which Shareholder is aware;
(ii) conflict with, result in any breach of, or constitute a default (or an
event which would, with the passage of time or the giving of notice or both,
constitute a default) under, or give rise to a right to terminate, amend,
modify, abandon or accelerate, any Contract which is applicable to, binding upon
or enforceable against Shareholder, (iii) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
the Shareholder, or (iv) require the consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except the Secretary of State of the State of
Delaware.
(d) Target Shares. Shareholder own his, her or its Target Shares as
set forth on SCHEDULE 4..5, free and clear of all Liens, restrictions and claims
of any kind. The
17
Shareholders have not granted to any Person any rights (including proxy rights
or options) with respect to his, her or its Target Shares, and Shareholder has
no claim against the Company or any of its directors, officers or other
Shareholders with respect to the issuance of any shares of capital stock of the
Company.
(e) Investment Intent; Sophistication. The Shareholder is acquiring
his interest in Preferred Shares for his own account for investment and not with
a view to, or for the sale in connection with, any distribution of his interest,
except in compliance with applicable state and federal securities laws. The
Shareholder has been provided, to his satisfaction, the opportunity to discuss
the transactions contemplated hereby with Parent and has had the opportunity to
obtain such information pertaining to Parent as has been requested, including
but not limited to filings made by Parent with the SEC under the Exchange Act.
The Shareholder has such knowledge and experience in business and financial
matters that he is capable of evaluating the merits and risks of an investment
in Preferred Shares, and is capable of bearing the economic risks of such
investment and is able to bear a complete loss of his investment in Preferred
Shares. The Shareholder acknowledges that Preferred Shares to be issued pursuant
to this Agreement have not been registered under the Securities Act and that
such shares may not be sold, transferred or otherwise disposed of by the holder
thereof except in compliance with the legend set forth in SECTION 10.2.
4.21 NO COMMISSIONS. Neither the Company nor the Shareholder has incurred
any obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS PENDING THE CLOSING. Except pursuant to
commitments disclosed in, or permitted or contemplated by this Agreement, the
Company covenants and agrees that, between the date of this Agreement and the
Closing Date, the business of the Company shall be conducted only in, and the
Company shall not take any action except in, the ordinary course of business,
consistent with past practice and in compliance with all rules, regulations and
laws. By way of amplification and not limitation, except pursuant to commitments
disclosed in, or permitted or contemplated by, this Agreement, the Company shall
not, between the date of this Agreement and the Closing Date, directly or
indirectly, do or propose or agree to do any of the following without the prior
written consent of Parent:
(a) amend or otherwise change its certificate of incorporation or
bylaws;
(b) issue, sell, pledge, dispose of, encumber, or, authorize the
issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of
its capital stock of any class, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest, thereof, or (ii) any of its assets, tangible or
intangible, except in the ordinary course of business consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
18
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or shares of
stock, by merger, consolidation, or acquisition of stock or assets) any interest
in any corporation, partnership or other business organization or division
thereof or any assets, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except in the
ordinary course of business, consistent with past practice, purchase any
property or assets of any other Person, (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any Person, or
make any loans or advances, or (iii) enter into any Contract other than in the
ordinary course of business, consistent with past practice;
(f) make any capital expenditure or enter into any contract or
commitment therefore;
(g) amend, terminate or extend any Contract;
(h) delay or accelerate payment of any account payable or other
liability of the Company beyond or in advance of its due date or the date when
such liability would have been paid in the ordinary course of business
consistent with past practice; or
(i) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or warranty
contained in Article IV untrue or incorrect.
5.2 INVESTIGATION OF THE COMPANY BY PARENT. The Company and Shareholders
shall afford to the officers, employees and authorized representatives of Parent
(including, without limitation, independent public accountants and attorneys)
complete access during normal business hours to the offices, properties,
employees and business and financial records (including computer files,
retrieval programs and similar documentation) of the Company to the extent
Parent shall deem necessary or desirable and shall furnish to Parent or its
authorized representatives such additional information concerning the Company as
shall be reasonably requested. Parent agrees that such investigation shall be
conducted in such a manner as not to interfere unreasonably with the operations
of the Company. No investigation made by Parent or its representatives hereunder
shall affect the representations and warranties of the Company or Shareholder
hereunder.
5.3 AUDIT OF FINANCIAL STATEMENTS. The Parent, at its expense, shall
engage an accounting firm (the "AUDITORS") to prepare financial statements of
the Company, if necessary pursuant to the Exchange Act, for the years ended
November 30, 2002 and 2003. Parent shall cause such financial statements to be
completed within 60 days of the Closing Date, and shall obtain the consent of
the Auditors for the filing of such audited financial statements in connection
with the Company's filing on Form 8-K with the SEC (reporting the consummation
of the transactions contemplated by this Agreement) and to the incorporation by
reference of such audited financial statements in any registrations statements
wherein the Company incorporates such financial statements by reference.
19
5.4 AMENDMENT OF CONVERTIBLE NOTES. Prior to the Closing Date, the Company
shall cause those certain promissory notes listed on SCHEDULE 4.18 (the
"CONVERTIBLE NOTES") to be amended to delete any obligations thereunder to (i)
prepay or redeem such note prior to its schedule maturity date and (ii) issue
any shares of capital stock or any other equity interest of the Parent upon
conversion of such note or otherwise.
5.5 PRE-CLEAR MERGER. Parent, Mergeco and the Company shall take all
necessary steps to pre-clear the Merger with the Secretary of State of the State
of Delaware, in order that on the Closing Date, the Certificate of Merger may be
filed with the Secretary of State of the State of Delaware and become effective
upon filing.
5.6 CERTIFICATE OF DESIGNATIONS. Prior to the Closing Date, the Parent
shall file the Certificate of Designations, substantially in the form attached
hereto as EXHIBIT A, with the Secretary of State of the State of Delaware.
5.7 NOTIFICATION OF CERTAIN MATTERS. The Company and Parent shall give
prompt notice to the other of the occurrence or non-occurrence of any event
which would likely cause any representation or warranty contained herein to be
untrue or inaccurate, or any covenant, condition, or agreement contained herein
not to be complied with or satisfied.
5.8 TRADING IN PARENT'S COMMON STOCK. Except as otherwise expressly
consented to by Parent, from the date of this Agreement until the Closing Date,
neither the Company, nor any Shareholder (nor any Affiliates thereof) will
directly or indirectly purchase or sell (including short sales) any shares of
common stock of the Parent in any transactions effected on the OTC Bulletin
Board.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
6.2 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, prior to the Closing, no
party hereto or their respective Affiliates, employees, agents and
representatives shall disclose to any third party this Agreement or the subject
matter or terms hereof without the prior consent of the other parties hereto. No
press release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by any party hereto without the
prior approval of the other parties, except that Parent may make such public
disclosure which Parent believes in good faith is required by law or by the
terms of any listing agreement with or requirements of a securities exchange.
6.3 NO OTHER DISCUSSIONS. Neither the Company, nor any Shareholder, and
their respective Affiliates, employees, agents or representatives shall (i)
initiate or encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
20
business or properties of the Company (whether by merger, consolidation, sale of
stock or otherwise) or (ii) enter into any agreement or commitment (whether or
not binding) with respect to any of the foregoing transactions. The Shareholders
will immediately notify Parent if any third party attempts to initiate any
solicitation, discussion or negotiation with respect to any of the foregoing
transactions.
6.4 POST CLOSING FUNDING. From time to time following the Closing Date,
but prior to May 31, 2004, the Parent shall, upon at least 30 day written notice
from either ▇▇. ▇▇▇▇▇▇▇▇ or ▇▇. ▇▇▇▇▇▇, advance to the Surviving Corporation, in
the form of debt or equity, an additional amount of at least $250,000 (in
addition to the $50,000 already advanced to the Company). ▇▇. ▇▇▇▇▇▇ and ▇▇.
▇▇▇▇▇▇▇▇, on behalf of the Shareholders, shall have the right to specifically
enforce this provision against the Parent, it being intended that the
Shareholders are intended beneficiaries of this SECTION 6.4. Payment to ▇▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ of their consulting fees shall not constitute payments
towards Parent's post-closing funding obligation, as set forth in this SECTION
6.4. In addition to their right to specifically enforce this provision, in the
event that Parent has not funded at least $300,000 for Ceptor technology
research activities by May 31, 2004 Parent shall issue to each of ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ an additional $150,000 of Parent Preferred Stock ($300,000 in total).
6.5 OTHER AGREEMENTS. At the Closing, Parent shall execute and deliver the
following agreements (collectively, the "COLLATERAL AGREEMENTS"):
(a) a consulting agreement between the Parent and ▇▇. ▇▇▇▇▇▇▇▇ in the
form of EXHIBIT B (the "▇▇▇▇▇▇▇▇ CONSULTING AGREEMENT");
(b) a consulting agreement between the Parent and ▇▇. ▇▇▇▇▇▇ in the
form of EXHIBIT C (the "▇▇▇▇▇▇ CONSULTING AGREEMENT"); and
(c) a registration rights agreement between Parent and the
Shareholders in the form of EXHIBIT D (the "REGISTRATION RIGHTS AGREEMENT").
6.6 RELEASE. Each Shareholder, on behalf of himself, his executors, heirs,
beneficiaries, administrators, Affiliates, successors and assigns (collectively,
the "RELEASING PARTIES"), does hereby release and discharge the Company and each
of the Company's officers, directors, and other Shareholders (collectively, the
"RELEASED PARTIES") from and against any and all actions, causes of action,
claims, charges, liabilities, accounts, demands, obligations, contracts,
agreements, costs, grievances, promises, covenants, and complaints, known or
unknown, suspected or unsuspected, direct or indirect, in law or in equity, of
any kind or character, that he or any of the Releasing Parties have ever had or
may have at any time through the date of this Agreement against any of the
Released Parties.
6.7 TAX FILINGS. Parent, the Company, Mergeco and the Shareholders shall
file all Tax Returns consistent with the treatment of the Merger as a tax free
"reorganization" within the meaning of Section 368(a)(1) of the Code. Parent
shall cause to be filed at Parent's cost and expense, tax returns for Company
for the Company's fiscal year ended November 30, 2003 and thereafter; PROVIDED,
HOWEVER, that Shareholders shall be responsible for the payment of all Taxes for
the fiscal year ended 2003 and prior taxable periods. ▇▇. ▇▇▇▇▇▇▇▇ and ▇▇.
▇▇▇▇▇▇ shall
21
have the right to approve, not to be unreasonably withheld, all tax elections
that could be made for fiscal year 2003 and prior periods that would increase
such year's taxes attributable to the Shareholders
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGECO
The obligations of Parent and Mergeco hereunder shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions, any or
all of which may be waived in whole or in part by Parent:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in ARTICLE IV of this Agreement shall be true and correct
at and as of the Closing Date with the same force and effect as though made at
and as of that time except (i) for changes specifically permitted by or
disclosed in this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date. The Company and the Shareholders shall have performed and
complied with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. The Company and
the Shareholders shall have delivered to Parent a certificate, dated as of the
Closing Date, duly signed (in the case of the Company by its chief executive
officer), stating that such representations and warranties are true and correct
and that all such obligations have been performed and complied with.
7.2 CONSENTS. The Company shall have received the consents and approvals,
in form and substance reasonably satisfactory to Parent, to the transactions
contemplated hereby from the Persons specified in Schedule 4.4.
7.3 AMOUNT OF INDEBTEDNESS. The Company shall not have liabilities in
excess of $300,000 as of the Closing Date, exclusive of liabilities for rent,
materials, insurance and similar expenses which shall not exceed $25,000 in the
aggregate.
7.4 SECRETARY'S CERTIFICATE. The Company shall have delivered to Parent
(i) copies of the certificate of incorporation and bylaws of the Company since a
specified date; (ii) copies of resolutions adopted by the Board of Directors of
the Company and the Shareholder authorizing the transactions contemplated by
this Agreement, and (iii) certificates of good standing of the Company issued by
the State of Delaware, certified in each case as of the Closing Date by the
Secretary as being true, correct and complete.
7.5 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other Governmental Authority
which shall seek to restrain, prohibit, invalidate or collect damages arising
out of the Agreement or any other transaction contemplated hereby, and which, in
the judgment of Parent, makes it inadvisable to proceed with the Agreement and
other transactions contemplated hereby.
7.6 OTHER CLOSING DELIVERIES. At Closing, Parent shall have received:
(a) each Shareholder Ancillary Agreement duly executed by the
Shareholder;
22
(b) each Company Ancillary Agreement duly executed by the Company;
(c) resignations effective as of the Closing Date from such officers
and directors of the Company as Parent shall have requested in writing; and
(d) the stock books, stock ledgers, minute books, corporate seal and
other books and records of the Company.
7.7 DUE DILIGENCE. Parent shall have completed its due diligence
investigation and the results of such investigation shall be satisfactory to
Parent, in its sole discretion.
7.8 SHAREHOLDER APPROVAL. This Agreement shall have been adopted by
holders of at least 98% of the outstanding Target Shares prior to the Effective
Time.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholder to effect the
Transaction shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions, any or all of which may be waived in whole or in
part by the Company and the Shareholder:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Parent and Mergeco contained
in this Agreement shall be true and correct at and as of the Closing Date with
the same force and effect as though made at and as of that time except (i) for
changes specifically permitted by or disclosed pursuant to this Agreement, and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date. Parent and
Mergeco shall have performed and complied with all of their respective
obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date. Parent and Mergeco shall have delivered to the
Shareholder a certificate, dated as of the Closing Date, and signed by an
executive officer, certifying that such representations and warranties are true
and correct and that all such obligations have been performed and complied with.
8.2 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the Agreement or any of the transactions contemplated hereby, and which in the
judgment of the Shareholder makes it inadvisable to proceed with the Agreement
or any other transaction contemplated hereby.
8.3 SECRETARY'S CERTIFICATE. The Parent shall have delivered to the
Shareholders (i) copies of the certificate of incorporation and bylaws of Parent
since a specified date, (ii) copies of resolutions adopted by the Board of
Directors of the Parent authorizing the transactions contemplated by this
Agreement, (iii) the Certificate of Designations as certified as filed by the
Secretary of State of the State of Delaware; and (iv) certificate of good
standing of the Parent Company issued by the State of Delaware certified in each
case as of the Closing Date by the Secretary as being true, correct and
complete.
23
8.4 OTHER CLOSING DELIVERIES. At Closing, the Company and the Shareholder
shall have received each Parent Ancillary Document and Mergeco Ancillary
Agreement, duly executed by Parent, Mergeco and/or its Affiliates, as the case
may be.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY THE SHAREHOLDER. The Shareholders agree to
indemnify and hold harmless Parent, the Surviving Corporation and their
respective successors and assigns (the "PARENT INDEMNITEES") from and against
any and all Losses and Expenses incurred by such Parent Indemnitees in
connection with or arising from:
(a) Any breach by the Company of any of its covenants in this
Agreement or in any Company Ancillary Document, or any failure of the Company to
perform any of its obligations in this Agreement or in any Company Ancillary
Document; PROVIDED, HOWEVER, with respect to the Company, this indemnification
is limited to breaches of agreements and covenants to be performed by the
Company on or prior to the Closing Date;
(b) Any breach of any warranty or the inaccuracy of any
representation regarding the Company contained in ARTICLE IV or referred to in
the Agreement or any certificate delivered by or on behalf of the Company
pursuant hereto, except for the representations and warranties contained in
Section 4.20; and
(c) the exercise of dissenters' rights by any shareholder of the
Company;
PROVIDED, HOWEVER, that the Shareholders shall be required to indemnify and hold
harmless under clauses (a) and (b) of this Section with respect to Losses and
Expenses incurred by the Parent Indemnitees, only if the aggregate amount of
such Losses and Expenses exceeds $25,000 (the "THRESHOLD AMOUNT"), in which case
the Shareholders shall be obligated to indemnify Parent Indemnitees for the
entire amount of the Losses and Expenses from the first dollar; PROVIDED,
FURTHER, that the aggregate maximum amount required to be paid by the
Shareholders pursuant to this SECTION 9.1 hereunder shall not exceed the value
of the shares of Preferred Stock and the shares of Common Stock in payment of
the Awards, determined in accordance with SECTION 9.4(c) (the "INDEMNIFICATION
LIMIT").
The indemnification provided for in this SECTION 9.1 shall terminate
fifteen (15) months after the Closing Date (and no claims shall be made by the
Parent Indemnitees under this SECTION 9.1(b) thereafter), except that the
indemnification by Shareholders shall continue as to:
(a) The representations and warranties set forth in SECTIONS 4.11
(title to assets), as to all of which no time limitation shall apply;
(b) The representations and warranties set forth in SECTIONS 4.15
(ERISA), and 4.14 (Taxes), which shall survive for the applicable statute of
limitations period under which a claim can be brought against Parent or the
Company; and
(c) Any Loss or Expense of which any Parent Indemnitee has notified
the Shareholder in accordance with the requirements of SECTION 9.4 on or prior
to the date such
24
indemnification would otherwise terminate in accordance with this SECTION 9.1,
as to which the obligation of Shareholder shall continue until the liability of
Shareholder shall have been determined pursuant to this ARTICLE IX, and
Shareholder shall have reimbursed all Parent Indemnitees for the full amount of
such Loss and Expense in accordance with this ARTICLE IX.
To the extent any Parent Indemnitee is entitled to indemnification pursuant to
this SECTION 9.1, Shareholder, their successors and assigns hereby forever
waive, release and agree not to make any claim or bring any cost recovery action
against the Parent Indemnitees, successors and assigns under any director or
officer indemnity agreement, or provision in law or under the Company's
Certificate of incorporation or by-laws or under CERCLA or any other
Environmental Law to the extent that such claim or cost recovery action relates
to the same matter as constitutes the basis for such Parent Indemnitees' claim
for indemnification.
9.2 INDEMNIFICATION FOR SHAREHOLDER MATTERS. Each Shareholder severally,
and not jointly, agrees to indemnify and hold harmless the Parent Indemnitees
from and against any and all Losses and Expenses incurred by such Parent
Indemnitees in connection with or arising from:
(a) Any breach by such Shareholder of any of the covenants of such
Shareholder in this Agreement or in any Shareholder Ancillary Agreement to which
such Shareholder is a party, or any failure of such Shareholder to perform any
of his, her or its obligations in this Agreement or in any Shareholder Ancillary
Agreement; and
(b) Any breach of any warranty or the inaccuracy of any
representation or warranty of such Shareholder contained in SECTION 4.20 of this
Agreement, any certificate or schedule delivered by or on behalf of such
Shareholder pursuant hereto, or any other Shareholder Ancillary Agreement to
which such Member is a party;
PROVIDED; HOWEVER; each Member's liability under this SECTION 9.2 (and together
with any of Shareholder's liability under SECTION 9.1) shall not exceed such
Shareholder's pro-rata percentage of Indemnification Limit. The indemnification
provided for in this SECTION 9.2 shall survive indefinitely.
9.3 INDEMNIFICATION BY PARENT. Parent agrees to indemnify and hold
harmless the Shareholder and their successors and assigns (the "SHAREHOLDER
INDEMNITEES") from and against any and all Losses and Expenses incurred by such
Shareholder Indemnitees in connection with or arising from:
(a) Any breach by Parent of any of its covenants or agreements in
this Agreement or any failure by Parent to perform any of its obligations in
this Agreement;
(b) Any breach of any warranty or the inaccuracy of any
representation of Parent contained or referred to in this Agreement or in any
certificate delivered by or on behalf of Parent pursuant hereto; and
(c) Any claim or liability arising out of the conduct by the
Surviving Corporation or Parent of the business from and after the Closing Date.
25
The indemnification provided for in this SECTION 9.3(b) shall terminate
fifteen (15) months after the Closing Date (and no claims shall be made by the
Shareholder under this SECTION 9.3 thereafter), except that the indemnification
by Parent shall continue as to:
(a) Any Loss or Expense of which Shareholder Indemnitees have
notified Parent in accordance with the requirements of SECTION 9.4 on or prior
to the date such indemnification would otherwise terminate in accordance with
this SECTION 9.3, as to which the obligation of Parent shall continue until the
liability of Parent shall have been determined pursuant to this ARTICLE IX, and
Parent shall have reimbursed all the Shareholder Indemnitees for the full amount
of such Loss and Expense in accordance with this ARTICLE IX.
9.4 NOTICE OF CLAIMS.
(a) Any Parent Indemnitee or Shareholder Indemnitee (the "INDEMNIFIED
PARTY") seeking indemnification hereunder shall give the party obligated to
provide indemnification to such Indemnified Party (the "INDEMNITOR") a notice (a
"CLAIM NOTICE") describing in reasonable detail the facts giving rise to any
claim for indemnification hereunder and shall include in such Claim Notice (if
then known) the amount or the method of computation of the amount of such claim,
and a reference to the provision of this Agreement or any agreement, document or
instrument executed pursuant hereto or in connection herewith upon which such
claim is based; PROVIDED, that a Claim Notice in respect of any action at law or
suit in equity by or against a third Person as to which indemnification will be
sought shall be given promptly after the action or suit is commenced; PROVIDED
FURTHER that failure to give such notice shall not relieve the Indemnitor of its
obligations hereunder except to the extent it shall have been prejudiced by such
failure.
(b) After the giving of any Claim Notice pursuant hereto, the amount
of indemnification to which an Indemnified Party shall be entitled under this
ARTICLE IX shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; or (ii) by a final judgment or decree of
any court of competent jurisdiction. The judgment or decree of a court shall be
deemed final when the time for appeal, if any, shall have expired and no appeal
shall have been taken or when all appeals taken shall have been finally
determined. The Indemnified Party shall have the burden of proof in establishing
the amount of Loss and Expense suffered by it.
(c) If a Parent Indemnity is entitled to indemnification hereunder,
and the amount of indemnification to which Parent Indemnitee is entitled has
been determined as provided for in SECTION 9.4(b), the Shareholders may satisfy
such claim, at the option of the Shareholders, by promptly tendering (i) cash or
(ii) shares of Preferred Stock (or that number of shares of common stock into
which the Preferred Stock was converted) or shares common stock of Parent issued
to Shareholders hereunder Parent Indemnitee. For purposes of this ARTICLE IX, a
share of Preferred Stock shall have a value of $1,000, and a share of common
stock issued in satisfaction of an Award shall have the Current Share Value
assigned to it hereunder. If a Shareholder Indemnitee is entitled to
indemnification hereunder, Parent shall pay to Shareholder Indemnitee the amount
of indemnification to which Shareholder Indemnitee is entitled promptly after it
has been determined as provided for in SECTION 9.4(b).
26
9.5 THIRD PERSON CLAIMS. The Indemnitor shall have the right to conduct
and control, through counsel of its choosing reasonably acceptable to the
Indemnitee, the defense, compromise or settlement of any third Person claim,
action or suit against the Indemnified Party as to which indemnification will be
sought by any Indemnified Party from any Indemnitor hereunder if the Indemnitor
has acknowledged and agreed in writing that if the same is adversely determined,
the Indemnitor has an obligation to provide indemnification to the Indemnified
Party in respect thereof. In any such case, the Indemnified Party shall
cooperate in connection therewith and shall furnish such records, information
and testimony and attend such conferences, discovery proceedings, hearings,
trials and appeals as may be reasonably requested by the Indemnitor in
connection therewith. The Indemnified Party may participate, through counsel
chosen by it and at its own expense, in the defense of any such claim, action or
suit as to which the Indemnitor has so elected to conduct and control the
defense thereof. Notwithstanding the foregoing, the Indemnified Party shall have
the right subject to obtaining Indemnitor's prior written consent to pay, settle
or compromise any such claim, action or suit, PROVIDED that if no consent is
obtained, the Indemnified Party shall waive any right to indemnity therefore
hereunder unless such consent is unreasonably withheld in which event no claim
for indemnity therefore hereunder shall be waived.
9.6 EXCLUSIVITY OF INDEMNIFICATION. If the Closing shall be completed,
indemnification under SECTIONS 9.1, 9.2 and 9.3 of this Agreement shall be the
sole and exclusive remedy available to Parent, Mergeco, the Company and the
Shareholder for the recovery of damages in respect of any Losses and Expenses
incurred by Parent, Mergeco, the Company or the Shareholder referred to in
SECTION 9.1, 9.2 or 9.3. Without limiting the generality of the preceding
sentence, subject to the completion of the Closing, each of Parent, Mergeco, the
Company and the Shareholder hereby waives any claim or cause of action which
such party might be entitled to assert in respect of any such Losses or Expenses
(including any claim or cause of action for fraud, misrepresentation or other
cause under the common law or any securities, trade regulation or other law)
other than claims and causes of action for indemnification under SECTION 9.1,
9.2 or 9.3 or for specific performance of the covenants of a party set forth in
this Agreement.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other disposition
after the Closing Date of Preferred Shares:
10.1 DISPOSITION OF PARENT SECURITIES. The Shareholder represents and
warrants that each of the Preferred Shares being acquired by him hereunder is
being acquired and will be acquired for his own account and will not be sold or
otherwise disposed of, except pursuant to (i) an exemption from the registration
requirements under the Securities Act, which does not require the filing by
Parent with the SEC of any registration statement, offering circular or other
disclosure statement, in which case the Shareholder shall first supply to Parent
an opinion of counsel (which counsel and opinions shall be satisfactory to
Parent) that such exception is available, or (ii) an effective registration
statement filed by Parent with the SEC under the Securities Act.
27
10.2 LEGEND. Each of the Preferred Shares shall bear the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE PROVISIONS OF RULE 145(D) PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT WITH RESPECT THERETO OR IN
ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
ARTICLE XI
DEFINITIONS
11.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under control
with such Person.
"Company Ancillary Documents" all agreements, instruments and
documents, being or to be executed and delivered by the Company under
this Agreement or in connection herewith.
"Company's Knowledge," or words to that effect as used herein refer to
the personal actual knowledge of the Shareholder, and to the knowledge
which he should have reasonably had as the chief executive officer of
the Company who was involved in the day to day operations of the
Company.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Dissenting Shareholder" means any holder of capital stock of the
Company who, as a result of the transaction contemplated hereby,
perfects his, her or its rights in accordance with Sections 262 of the
DGCL and ceases to have any of the rights of a shareholder of the
Company other than the right to be paid the payments provided for by
the DGCL for his, her or its shares of capital stock of the Company
and any other rights under the DGCL.
"Environmental Law" means all laws, statutes, regulations, rules,
codes or ordinances derived from or relating to all federal, state and
local laws or regulations relating to or addressing the environmental,
health or safety, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund
28
Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.9601, et seq.
(hereinafter collectively "CERCLA"); the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and
subsequent Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
ss.6901 et seq. ("▇▇▇▇") (hereinafter, collectively "RCRA"), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.1801,
et seq.; the Clean Water Act, as amended, 33 U.S. C. ss.1311, et seq.;
the Clean Air Act, as amended (42 U.S.C. ss.7401-7642); Toxic
Substances Control Act, as amended, 15 U.S. C. ss.2601 et seq.; the
Federal Insecticide, Fungicide, and Rodenticide Act, as amended, 7
U.S.C. ss.136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986, as amended, 42 U.S.C. ss.11001, et seq.
(Title III of ▇▇▇▇) ("EPCRA"); the Occupational Safety and Health Act
of 1970, as amended, 29 U.S.C. ss.651, et seq. ("OSHA").
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Authority
in response to, a Release or threatened Release of a Hazardous
Substance into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" means any and all expenses incurred in connection with
investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder
(including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees, and reasonable fees and
disbursements of legal counsel, investigators, expert witnesses,
consultants, accountants and other professionals).
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity
or official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substances" means any substance, chemical or waste that is
listed, or contains material amounts of one or more components that
are defined, designated, classified, considered or listed, as
hazardous, toxic or radioactive under any Environmental Law; as well
as any asbestos or asbestos-containing material, petroleum, petroleum
product or by-product, crude oil or any fraction thereof, natural gas,
natural gas liquids, liquefied natural gas, synthetic gas usable as
fuel, or polychlorinated biphenyls ("PCBS").
29
"Intellectual Property" means (i) all names, brands, logos and slogans
embodying business or product goodwill or indications of origin, and
all trademarks, corporate names, trade names, service marks, trade
dress, domain names and universal resource locators, together with all
translations, adaptations, derivations and combinations thereof and
all applications, registrations and renewals in connection therewith,
and all of the goodwill associated therewith; (ii) all patents, patent
applications, patent disclosures, inventions (whether patentable or
unpatentable and whether or not reduced to practice) and all
improvements thereof, including, but not limited to, any provisional,
utility, continuation, continuation-in-part or divisional applications
filed in the U.S. or other jurisdictions and all reissues, revisions
and extensions thereof and all reexamination certificates issuing
therefrom; (iii) all websites, copyrights, and copyrightable works
both published and unpublished, including all registrations,
applications and renewals in connection therewith; (iv) all computer
and electronic data processing programs and software programs (in both
source code and object code form), data, databases and related
documentation; (v) all inventions, improvements, developments,
modifications, derivative works, know-how, trade secrets, and
confidential information (including research and development, know-how
formulas, compositions, manufacturing and production processes and
techniques, methods, schematics, technology, technical data, designs,
drawings, flowcharts, block diagrams, specifications, customer and
supplier lists, pricing and cost information and business and
marketing plans and proposals); (vi) all licenses, sublicenses,
permissions and other agreements relating to any of the foregoing; and
(vii) all other intellectual property rights (in whatever form or
medium) relating to any of the foregoing (including remedies and
recoveries against infringement hereof and rights of protection of
interest therein under the laws of all jurisdictions).
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, but not limited to, any
conditional sale or other title retention agreement, any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or comparable law or any
jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Losses" means any loss, cost, obligation, liability, settlement
payment, award, judgment, fine, penalty, damage, expense, deficiency
or other charge, but not including Expenses.
"Mergeco Ancillary Agreements" means all agreements, instruments and
documents being or to be executed and delivered by Mergeco under this
Agreement or in connection herewith.
"Parent Ancillary Documents" means all agreements, instruments and
documents being or to be executed and delivered by Parent under this
Agreement or in connection herewith.
30
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever
nature.
"Property" means any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or
other asset owned, leased or operated by the Company prior to the
Closing Date (including any surface water thereon or adjacent thereto,
and soil or groundwater thereunder).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Ancillary Agreements" means all agreements, instruments
and documents being or to be executed and delivered by Shareholder
under this Agreement or in connection herewith.
"Tax Return" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Taxes;
and
"Taxes" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
withholding, social security and unemployment taxes imposed by any
federal, state, local or foreign governmental agency, and any interest
or penalties related thereto.
11.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time prior to the
Closing Date:
31
(a) at any time prior to the Closing Date, by mutual written consent
of Parent and the Company at any time prior to the Closing;
(b) at any time prior to the Closing Date, by Parent in the event of
a material breach by the Company or the Shareholder of any provision of this
Agreement, by Parent giving notice thereof to the Company specifying in
reasonable detail the material breach;
(c) at any time prior to the Closing Date, by the Company in the
event of a material breach by Parent or Mergeco of any provision of this
Agreement, by the Company giving notice thereof to Parent specifying in
reasonable detail the material breach; or
(d) at any time prior to the Closing Date, by any of Parent or the
Shareholder if the Closing shall not have occurred by January 31, 2004;
PROVIDED, HOWEVER, that neither Parent, nor the Shareholder shall be entitled to
terminate this Agreement pursuant to this SECTION 12.1(d), if such party's
knowing or willful breach of this Agreement has prevented the consummation of
the transactions contemplated hereby.
12.2 EFFECT OF TERMINATION. Except as a party may otherwise agree in
writing, the termination of this Agreement by a party pursuant to this Section
will not be deemed to be a waiver of any rights of such party or its Affiliates
who are parties to this Agreement arising from any default thereunder by another
party.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (which
delivery may be by contract carrier, receipt acknowledged, or by telecopy or
other electronic transmission) to a party at the following address or telecopy
number for such party (or to such other address or telecopy number which such
party shall designate in writing to the other party):
(a) if to Parent to:
Xechem International, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
32
Attn: ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company or the Shareholder to:
▇▇. ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
And
▇▇. ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
With a copy to:
Lampf, Lipkind, Prupis & Petigrow
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules) contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part hereof as though set forth in full
above.
13.3 EXPENSES. Except as otherwise provided herein, the parties shall pay
their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors, heirs and assigns.
33
Nothing expressed or implied herein shall be construed to give any other person
any legal or equitable rights hereunder.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Time shall be of the
essence in this Agreement.
13.8 GOVERNING LAW; INTERPRETATION. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Delaware applicable to contracts executed and to be wholly performed within such
State.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents and
warrants to all other parties hereto that (a) before executing this Agreement,
said party has fully informed itself of the terms, contents, conditions and
effects of this Agreement; (b) said party has relied solely and completely upon
its own judgment in executing this Agreement; (c) said party has had the
opportunity to seek and has obtained the advice of counsel before executing this
Agreement; (d) said party has acted voluntarily and of its own free will in
executing this Agreement; (e) said party is not acting under duress, whether
economic or physical, in executing this Agreement; and (f) this Agreement is the
result of arm's length negotiations conducted by and among the parties and their
respective counsel.
(SIGNATURES PAGE FOLLOWS)
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
XECHEM INTERNATIONAL, INC
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
CEPTOR ACQUISITION, INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
CEPTOR CORPORATION
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
------------------------------
SHAREHOLDER