UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 19, 2018

 

PTC Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-35969

 

04-3416587

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(I.R.S. Employer
Identification No.)

 

100 Corporate Court

 

 

South Plainfield, NJ

 

07080

(Address of Principal Executive Offices)

 

(Zip Code)

 

Company’s telephone number, including area code:
(908) 222-7000

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o          Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

 

 

 



 

Item 1.01. Entry into a Material Definitive Agreement.

 

Merger Agreement

 

On July 19, 2018, PTC Therapeutics, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Agility Merger Sub, Inc., a Delaware corporation and a wholly owned, indirect subsidiary of the Company (“Transitory Subsidiary”), Agilis Biotherapeutics, Inc., a Delaware corporation (“Agilis”), and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC, a Colorado limited liability company. The Merger Agreement provides for the acquisition of Agilis by the Company through the merger of Transitory Subsidiary into Agilis, with Agilis surviving as a wholly owned, indirect subsidiary of the Company (the “Merger”).   Agilis is a privately-held biotechnology company advancing an innovative gene therapy platform for rare monogenic diseases that affect the central nervous system.

 

At the effective time of the Merger, by virtue of the Merger and without any action on the part of the holders of capital stock of Agilis, all issued and outstanding shares of the capital stock and outstanding vested options and warrants of Agilis will be converted into the right to receive, subject to customary adjustments, an aggregate, of (i) $50.0 million and (ii) a number of shares of the Company’s common stock (the “Closing Stock Consideration”) equal to $150.0 million divided by the volume-weighted average price per share of the Company’s common stock on the Nasdaq Global Select Market for the ten consecutive trading day period ending on the second trading day immediately preceding the closing of the Merger (the “10-Day VWAP”), and will be subject to reduction such that the number of shares issuable will not equal or exceed 20% of the issued and outstanding shares of the Company’s common stock immediately prior to the closing date, which is expected to be a maximum of approximately 9.34 million.  Agilis equityholders would receive additional cash consideration in lieu of any such reduction in Closing Stock Consideration.

 

In addition, pursuant to the Merger Agreement, Agilis equityholders will be entitled to receive contingent payments from the Company based on (i) the achievement of certain development milestones up to an aggregate maximum amount of $60.0 million, (ii) the achievement of certain regulatory approval milestones together with a milestone payment following the receipt of a priority review voucher up to an aggregate maximum amount of $535.0 million, (iii) the achievement of certain net sales milestones up to an aggregate maximum amount of $150.0 million, and (iv) a percentage of annual net sales for Friedreich ataxia and Angelman Syndrome during specified terms, ranging from 2-6%. Under the Merger Agreement, the Company is required to pay $40.0 million of the development milestone payments no later than the second anniversary of the closing of the Merger, regardless of whether the applicable milestones have been achieved.

 

The Merger Agreement contains customary representations, warranties and covenants of Agilis and the Company, including covenants providing for each of the parties to use its reasonable best efforts to cause the Merger to be consummated, to obtain required third party consents, and covenants requiring Agilis, subject to certain exceptions, to carry on its business in all material respects in the ordinary course of business consistent with past practice during the period between the execution of the Merger Agreement and the closing of the Merger and prohibiting the Company from initiating or otherwise knowingly facilitating any inquiry, proposal, offer or discussion with any party other than the Company with respect to certain transactions involving Agilis or any of its subsidiaries.

 

The Merger Agreement also contains customary indemnification provisions whereby the equityholders of Agilis will indemnify the Company and certain affiliated parties for any losses arising out of breaches of

 

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the representations, warranties and covenants of Agilis under the Merger Agreement, appraisal claims of Agilis stockholders, fraud and knowing misrepresentation and certain other matters. As partial security for the indemnification and purchase price adjustment obligations of Agilis equityholders under the Merger Agreement, (i) $2.5 million in cash of the merger consideration otherwise payable in the Merger to Agilis equityholders will be placed in third party escrow until the final resolution of any adjustments to the purchase price based on Agilis’s closing net working capital and (ii) the first $25.0 million of any contingent consideration that becomes actually due and payable under the Merger Agreement, along with 12.5% of any contingent consideration in excess of such first $25.0 million that becomes actually due and payable under the Merger Agreement, will be withheld by the Company, for a period of 15 months following the closing.  The Merger Agreement contains customary termination rights for both the Company and Agilis, including, among others, for failure to consummate the Merger by the date that is five months after the date of the Merger Agreement.

 

The Merger Agreement includes customary closing conditions, including the requisite consent to the adoption of the Merger by Agilis’s stockholders receipt of certain third party consents and the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements of 1976, as amended.

 

Pursuant to the Merger Agreement, the Company has agreed (i) in the event that Agilis provides certain required information at least 10 business days prior to the Closing of the Merger, on the closing date of the Merger or, (ii) alternatively, following the closing of the Merger, to use commercially reasonable efforts to file a registration statement on Form S-3 with respect to the resale of the shares of the Closing Stock Consideration to be issued to Agilis equityholders as Merger consideration and to maintain the effectiveness of such registration statement until the six month anniversary date of the closing of the Merger or such earlier time as all shares of Company common stock covered by the registration statement have been sold, subject to certain exceptions and the provision of certain information by Agilis.

 

The above description of the Merger Agreement is a summary only and is qualified in its entirety by reference to the terms of the Merger Agreement, filed as Exhibit 2.1 hereto and incorporated herein by reference.

 

Bridge Loan and Security Agreement

 

In connection with the Merger Agreement, on July 19, 2018, the Company entered into a Bridge Loan and Security Agreement (the “Bridge Loan and Security Agreement”) by and among the Company, Agilis and certain of Agilis’s domestic subsidiaries, as guarantors.  Under the Bridge Loan Agreement, the Company agreed to make a term loan advance to Agilis in an original principal amount of up to $10.0 million and, in the event that the Merger does not close prior to September 2, 2018, an additional term loan advance of up to $10.0 million, in each case, subject to the satisfaction of certain conditions. Each domestic subsidiary of Agilis has agreed to jointly and severally guarantee Agilis’s payment obligations under the Bridge Loan Agreement.

 

The term loans will accrue interest at a fixed rate per annum equal to 3.0%, subject to increase to 8.0% in the event of a default. Upon closing of the Merger or an event of default, Agilis must repay all outstanding term loans plus accrued and unpaid interest thereon, plus any other sums that have then become due and payable under the Bridge Loan Agreement; provided, however, that only the second term loan advance (if any) would be accelerated for payment in an event of default arising due to failure to obtain stockholder approval for the Merger or a material breach of the Merger Agreement by Agilis. To the extent not previously repaid, all outstanding credit extensions plus accrued and unpaid interest thereon, plus any other sums that have then become due and payable under the Bridge Loan Agreement,

 

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must be repaid by July 19, 2020. Agilis may elect to prepay any or all of the term loan advances at any time without penalty or premium.

 

Under the Bridge Loan Agreement, Agilis granted the Company a continuing, first priority perfected security interest (subject to certain permitted liens) to all right, title and interest in, to and under all present and future real and personal property of Agilis and any guarantor, whether tangible or intangible, subject to certain exceptions in the Bridge Loan Agreement, but not including Agilis’s intellectual property.

 

The Bridge Loan Agreement contains certain customary representations and warranties, affirmative covenants and conditions. The Bridge Loan Agreement also contains a number of negative covenants that, among other things and subject to certain exceptions, restrict Agilis’s and its subsidiaries’ ability to engage in certain actions or undergo certain changes from and after the termination of the Merger Agreement. The Bridge Loan Agreement also contains customary events of default (subject to grace periods as appropriate). In an event of default occurring as a result of termination of the Merger Agreement by the Company for Agilis’s material breach or failure to perform or failure to timely obtain the required stockholder approval, the Company has a limited remedy to declare the second term loan advance (if any) immediately due and payable, but the first term loan advance would remain outstanding and accrue interest at 8.0% per annum.

 

The above description of the Bridge Loan Agreement is a summary only and is qualified in its entirety by reference to the terms of the Bridge Loan Agreement, filed as Exhibit 10.1 hereto and incorporated herein by reference.

 

Consent under Credit and Security Agreement

 

In connection with the execution of the Merger Agreement and Bridge Loan Agreement, on July 19, 2018, the Company entered into an amendment and consent agreement (the “Credit Agreement Amendment”) to its existing credit and security agreement with MidCap Financial Trust, a Delaware statutory trust (“MidCap”), as administrative agent, and the other lenders parties thereto, dated as of May 5, 2017 (the “Existing Credit Agreement”). Pursuant to the Credit Agreement Amendment, MidCap and the requisite lenders agreed to, among other things, amend and modify certain covenants and other provisions in the Existing Credit Agreement to permit the entering into of the Merger Agreement and the Bridge Loan Agreement, and the consummation and performance of the transactions contemplated thereby, in each case, subject to certain terms and conditions.

 

The above description of the Credit Agreement Amendment is a summary only and is qualified in its entirety by reference to the terms of the Credit Agreement Amendment, filed as Exhibit 10.2 hereto and incorporated herein by reference.

 

Item 3.02. Unregistered Sales of Equity Securities.

 

The description of the common stock consideration under the terms of the Merger Agreement set forth in Item 1.01 is incorporated herein by reference.  In connection with the closing of the Merger, the Company will issue to the Agilis equityholders the common stock consideration pursuant to an exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder.

 

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Item 7.01.    Regulation FD Disclosure.

 

On July 19, 2018, the Company issued a press release in which it announced that it entered into the Merger Agreement. A copy of the press release is attached to this Report as Exhibit 99.1 and is incorporated by reference into this Item 7.01.

 

The information set forth in or incorporated by reference into this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.    Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.

 

Description

 

 

 

2.1*

 

Agreement and Plan of Merger, dated July 19, 2018, by and among PTC Therapeutics, Inc., Agility Merger Sub, Inc., Agilis Biotherapeutics, Inc. and, solely in its capacity as equityholder representative, Shareholder Representative Services LLC

10.1

 

Bridge Loan and Security Agreement, dated as of July 19, 2018, by and among PTC Therapeutics, Inc., Agilis Biotherapeutics, Inc., and the Guarantors as defined therein

10.2

 

Amendment No. 1 and Limited Consent to Credit and Security Agreement, dated of as July 19, 2018, by and among PTC Therapeutics, Inc., MidCap Financial Trust, and the Lenders as defined therein

99.1

 

Press Release, dated July 19, 2018, issued by PTC Therapeutics, Inc.

 


* Confidential treatment has been requested for certain portions that are omitted from this exhibit. The omitted information has been filed separately with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the registrant’s application for confidential treatment. In addition, schedules have been omitted from this exhibit pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the registrant may request confidential treatment for any document so furnished.

 

Cautionary Statement Concerning Forward Looking Statements

 

This Report contains forward-looking statements addressing the Merger and the other transactions contemplated in the Merger Agreement and any other statements about future expectations, prospects, estimates and other matters that are dependent upon future events or developments. All statements, other than those of historical fact, contained in this Report are forward-looking statements, including statements related to the Company’s expectations with respect to the closing of the Merger; the potential financial impact and benefits to the Company of the Merger, including with respect to the business of Agilis to be acquired and the Company’s expectations with respect to contingent payments to the Agilis equityholders based on net sales and the potential achievement of development, regulatory and sales milestones and contingent payments to the Agilis equityholders with respect thereto; the future expectations, plans and prospects for the Company; the Company’s strategy, future operations, future financial position, future revenues or projected costs; the integration of Agilis’s operations and employees; and the objectives of management.  Other forward-looking statements may be identified by the words “look forward”, “plan,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions.  The Company’s actual results, performance or achievements could differ materially from those expressed or implied by forward-looking statements it

 

5



 

makes as a result of a variety of risks and uncertainties, including those related to: satisfaction of the conditions to closing the Merger (including the failure to obtain necessary Agilis stockholder and regulatory approvals) in the anticipated timeframe or at all; the Company’s ability to realize the anticipated benefits of the Merger, including the possibility that the expected benefits from the Merger will not be realized or will not be realized within the expected time period; negative effects of the announcement of the Merger Agreement on the market price of the Company’s common stock; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Merger; other business effects, including the effects of industry, market, economic, political or regulatory conditions; changes in tax and other laws, regulations, rates and policies; the eligible patient base and commercial potential of TranslarnaTM (ataluren) and Emflaza®; the sufficiency of the Company’s cash resources and its ability to obtain adequate financing in the future for its foreseeable and unforeseeable operating expenses and capital expenditures; the integration of Agilis’s operations and employees; and the factors discussed in the “Risk Factors” section of the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K as well as any updates to these risk factors filed from time to time in the Company’s other filings with the SEC.   As with any pharmaceutical under development, there are significant risks in the development, regulatory approval and commercialization of new products. There are no guarantees that any product candidate will receive or maintain regulatory approval in any territory, or prove to be commercially successful, including Translarna or Emflaza, or any product candidates acquired in the Merger.  The forward-looking statements contained herein represent the Company’s views only as of the date of this Report and the Company does not undertake or plan to update or revise any such forward-looking statements to reflect actual results or changes in plans, prospects, assumptions, estimates or projections, or other circumstances occurring after the date of this Report except as required by law. All website addresses given in this Report or incorporated herein by reference are for information only and are not intended to be an active link or to incorporate any website information into this Report.

 

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Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

PTC Therapeutics, Inc.

 

 

 

 

Date: July 19, 2018

By:

/s/ Christine Utter

 

Name:

Christine Utter

 

Title:

Principal Financial Officer

 

7


Exhibit 2.1

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

PTC THERAPEUTICS, INC.,

 

AGILITY MERGER SUB, INC.,

 

AGILIS BIOTHERAPEUTICS, INC.,

 

and,

 

SOLELY IN ITS CAPACITY AS COMPANY EQUITYHOLDER REPRESENTATIVE,

 

SHAREHOLDER REPRESENTATIVE SERVICES LLC

 

Dated as of July 19, 2018

 



 

TABLE OF CONTENTS

 

 

 

Page

Article I THE MERGER

2

1.1

Effective Time of the Merger

2

1.2

Closing; Actions at the Closing

2

1.3

Effects of the Merger

2

1.4

Directors and Officers of the Surviving Corporation

3

1.5

Additional Action

3

Article II CONVERSION OF SECURITIES

3

2.1

Conversion of Capital Stock

3

2.2

Payment Fund

7

2.3

Dissenting Shares

8

2.4

Company Equityholder Representative

9

2.5

Treatment of Company Equity Awards and Company Warrants

13

2.6

Adjustment Before and After the Closing

15

2.7

Allocation Schedules; Payments of Future Payments

18

2.8

Contingent Payments

18

2.9

Withholding Rights

27

Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

27

3.1

Organization, Standing and Corporate Power

27

3.2

Capitalization

27

3.3

Subsidiaries; Company Joint Venture

30

3.4

Authority; No Conflict; Required Filings and Consents

30

3.5

Financial Statements

32

3.6

Absence of Certain Changes

33

3.7

Undisclosed Liabilities

33

3.8

Books and Records

34

3.9

Tax Matters

34

3.10

Assets

37

3.11

Owned and Leased Real Property

37

3.12

Intellectual Property

38

3.13

Contracts

41

3.14

Litigation

44

3.15

Environmental Matters

44

3.16

Labor and Employment

45

3.17

Employee Benefit Plans

47

3.18

Compliance with Laws

49

3.19

Unlawful Payments

50

3.20

Permits and Regulatory Matters

50

3.21

Insurance

51

3.22

Customers and Suppliers

52

3.23

Certain Business Relationships With Affiliates

52

3.24

Investment Questionnaires

52

3.25

Brokers; Schedule of Fees and Expenses

53

3.26

Powers of Attorney

53

 

i



 

3.27

Disclosure

53

3.28

No Other Representations and Warranties

53

Article IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY

54

4.1

Organization, Standing and Power

54

4.2

Authority; No Conflict; Required Filings and Consents

54

4.3

Operations of Transitory Subsidiary

55

4.4

Capitalization

56

4.5

Buyer Stock

56

4.6

SEC Filings; Financial Statements

56

4.7

Sufficiency of Funds

56

4.8

Financial Advisor

57

4.9

Litigation

57

4.10

No Prior Activities

57

4.11

No Other Representations and Warranties

57

Article V CONDUCT OF BUSINESS

58

5.1

Operation of Business

58

5.2

Confidentiality

61

Article VI ADDITIONAL PRE-CLOSING AGREEMENTS

61

6.1

No Solicitation

61

6.2

Stockholder Consent or Approval

62

6.3

Access to Information

63

6.4

Closing Efforts; Legal Conditions to the Merger; Third-Party Consents

64

6.5

Public Disclosure

64

6.6

Notification of Certain Matters

65

6.7

280G Covenant

65

6.8

FIRPTA

65

6.9

Termination of 401(k) Plan

66

6.10

Required Financial Statements; Resale Registration

66

6.11

Product Regulatory Meetings

69

6.12

Employee Benefits Matters

69

Article VII CONDITIONS TO CONSUMMATION OF THE MERGER

70

7.1

Conditions to Obligations of the Buyer and the Transitory Subsidiary

70

7.2

Conditions to Obligations of the Company

73

Article VIII INDEMNIFICATION

74

8.1

Indemnification by the Company Equityholders

74

8.2

Indemnification by Buyer

75

8.3

Indemnification Claims

75

8.4

Survival of Representations and Warranties

78

8.5

Limitations and other Indemnification Matters

78

Article IX OTHER POST-CLOSING AGREEMENTS

82

9.1

No Claims

82

9.2

Indemnification

82

9.3

Tax Matters

83

Article X TERMINATION AND AMENDMENT

87

10.1

Termination

87

 

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10.2

Effect of Termination

88

10.3

Fees and Expenses

88

10.4

Amendment

88

10.5

Extension; Waiver

89

Article XI DEFINITIONS

89

Article XII MISCELLANEOUS

113

12.1

Notices

113

12.2

Entire Agreement

115

12.3

Third-Party Beneficiaries

115

12.4

Assignment

115

12.5

Severability

115

12.6

Counterparts and Signature

116

12.7

Interpretation

116

12.8

Governing Law

116

12.9

Remedies

117

12.10

Submission to Jurisdiction

117

12.11

Privilege Matters

117

 

Exhibits:

 

 

 

 

 

Exhibit A

Form of Certificate of Incorporation of the Surviving Corporation

 

Exhibit B

Form of Investor Representation Letter

 

Exhibit C

Form of Escrow Agreement

 

Exhibit D

Form of Letter of Transmittal

 

Exhibit E

Form of Selling Stockholder Questionnaire

 

Exhibit F

Stockholders Agreement

 

Exhibit G

Form of Surrender Agreement

 

Exhibit H

Form of Written Consent

 

Exhibit I

Form of Notice to Holders of Company Equity Awards

 

Exhibit J

Form of Notice to Holders of Company Warrants

 

Exhibit K

Form of Notice to Holders of Restricted Stock Awards

 

 

Schedules:

 

 

 

 

 

Schedule 2.6(a)

Closing Adjustment Items

 

Schedule 2.8(g)(i)

AADC Product Definition

 

Schedule 2.8(g)(ii)

AS Product Definition

 

Schedule 2.8(g)(iii)

FA Product Definition

 

Schedule 5.1(i)

Certain Employees

 

Schedule 6.10(a)

Required Company Information List

 

Schedule 7.1(h)

Required Consents

 

Schedule 7.1(j)

Affiliate Arrangements

 

Schedule 9.2

Director and Officer Indemnification Agreements

 

Schedule NC

Non-Competition Parties

 

Schedule NWC

Example Closing Net Working Capital Calculation

 

 

iii



 

Schedule AS

Preliminary Closing Date Allocation Schedule

 

 

 

Company Disclosure Schedule

 

 

iv



 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of July 19, 2018, by and among: PTC THERAPEUTICS, INC., a Delaware corporation (the “Buyer”); AGILITY MERGER SUB, INC., a Delaware corporation and a wholly owned, indirect subsidiary of the Buyer (the “Transitory Subsidiary”); AGILIS BIOTHERAPEUTICS, INC., a Delaware corporation (the “Company”); and, solely in such Person’s capacity as the representative, agent and attorney-in-fact of the Company Equityholders, Shareholder Representative Services LLC, a Colorado limited liability company (the “Company Equityholder Representative”).

 

RECITALS

 

WHEREAS, (i) the Boards of Directors of the Buyer and the Company deem it advisable and in the best interests of each such corporation and their respective stockholders that the Buyer acquire the Company in order to advance the long-term business interests of the Buyer and the Company and (ii) the Buyer, as sole stockholder of PTC Therapeutics Holdings, Inc., a Delaware corporation, will cause PTC Therapeutics Holdings, Inc., as sole stockholder of Transitory Subsidiary, to, immediately following the execution and delivery of this Agreement, adopt this Agreement and approve the Merger;

 

WHEREAS, the acquisition of the Company by the Buyer shall be effected through the merger of the Transitory Subsidiary with and into the Company in accordance with the terms of this Agreement and the DGCL, as a result of which the Company shall become a wholly owned indirect subsidiary of the Buyer;

 

WHEREAS, concurrently with the execution of this Agreement, and as a condition of the willingness of the Buyer to enter into this Agreement, the stockholders of the Company named on Schedule 1 hereto (the “Principal Stockholders”) are entering into the Stockholders Agreement, pursuant to which such Principal Stockholders are agreeing, among other things, (i) to vote all shares of Company Stock that are beneficially owned by them in favor of the adoption of this Agreement and the approval of the Merger, and (ii) not to vote any shares of Company Stock in favor of any other acquisition (whether by way of merger, consolidation, share exchange, stock purchase or asset purchase) of all or a majority of the outstanding capital stock or assets of the Company;

 

WHEREAS, concurrently with the execution of this Agreement, the Buyer and the Company shall have entered into that certain Bridge Loan and Security Agreement (the “Bridge Loan Agreement”), dated as of the date hereof, by and among Buyer, the Company and each of the Subsidiaries; and

 

WHEREAS, the parties intend that, as soon as practicable following the execution of this Agreement, and as a condition to the willingness of the Buyer and the Company to enter into this Agreement, the Principal Stockholders will cause Written Consents to approve the transactions contemplated by this Agreement to be executed by themselves or by their proxy holders.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below, and for other good and

 



 

valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Buyer, the Transitory Subsidiary, the Company and (solely in such Person’s capacity as the Company Equityholder Representative) the Company Equityholder Representative agree as follows:

 

ARTICLE I

 

THE MERGER

 

1.1                               Effective Time of the Merger.  Subject to the provisions of this Agreement, prior to the Closing, the Buyer shall prepare or cause to be prepared the Certificate of Merger, and, immediately following the Closing, the Buyer shall cause the Certificate of Merger to be filed with the Secretary of State of the State of Delaware and shall make all other filings or recordings required under the DGCL in order to give effect to the Merger.  The Merger shall become effective at the Effective Time.

 

1.2                               Closing; Actions at the Closing.

 

(a)                                 The Closing shall take place at 10:00 a.m., Eastern time, on the Closing Date at the offices of Wilmer Cutler Pickering Hale and Dorr LLP, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007 unless another date, place or time is agreed to in writing by the Buyer and the Company. Upon the agreement of the parties, the Closing may take place remotely, via electronic exchange of documents.

 

(b)                                 At the Closing:

 

(i)                                     the Company shall deliver to the Buyer and the Transitory Subsidiary the various certificates, instruments and documents referred to in Section 7.1;

 

(ii)                                  the Buyer and the Transitory Subsidiary shall deliver to the Company the various certificates, instruments and documents referred to in Section 7.2;

 

(iii)                               the Buyer shall file with the Secretary of State of the State of Delaware the Certificate of Merger; and

 

(iv)                              the Buyer shall make the payments contemplated by Section 2.1(d)(ii).

 

1.3                               Effects of the Merger.  At the Effective Time (a) the separate existence of the Transitory Subsidiary shall cease and the Transitory Subsidiary shall be merged with and into the Company and (b) the Company Certificate of Incorporation shall be amended and restated in its entirety to read as set forth on Exhibit A.  In addition, the Buyer shall cause the by-laws of the Surviving Corporation to be amended and restated in their entirety so that, immediately following the Effective Time, they are identical to the by-laws of the Transitory Subsidiary as in effect immediately prior to the Effective Time, except that all references to the name of the Transitory Subsidiary therein shall be changed to refer to the name of the Company.  The Merger shall have the effects set forth in Section 259 of the DGCL.

 

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1.4                               Directors and Officers of the Surviving Corporation.

 

(a)                                 The directors of the Transitory Subsidiary immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.

 

(b)                                 The officers of the Transitory Subsidiary immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation.

 

1.5                               Additional Action.  The Surviving Corporation may, at any time from and after the Effective Time, take any action, including executing and delivering any document, in the name and on behalf of either the Company or the Transitory Subsidiary in order to consummate and give effect to the transactions contemplated by this Agreement.

 

ARTICLE II

 

CONVERSION OF SECURITIES

 

2.1                               Conversion of Capital Stock.  At the Effective Time, by virtue of the Merger and without any action on the part of the Buyer, the Company, any holder of Company Stock or any other Person:

 

(a)                                 Capital Stock of the Transitory Subsidiary.  Each share of the common stock, $0.001 par value per share, of the Transitory Subsidiary that is issued and outstanding as of immediately prior to the Effective Time shall be converted into and become one (1) fully paid and nonassessable share of common stock, $0.001 par value per share, of the Surviving Corporation.

 

(b)                                 Cancellation of Treasury Stock and Buyer-Owned Stock.  Each share of Company Stock that is owned by the Company as treasury stock and each share of Company Stock that is owned by the Buyer, the Transitory Subsidiary or any other wholly-owned direct or indirect subsidiary of the Buyer as of immediately prior to the Effective Time shall be cancelled and shall cease to exist and no payment or consideration shall be delivered in exchange therefor.

 

(c)                                  Conversion of Company Stock.

 

(i)                                     Subject to Section 2.2(b), each share of Company Series A Preferred Stock that is issued and outstanding as of immediately prior to the Effective Time (other than (A) shares of Company Series A Preferred Stock referenced in Section 2.1(b) and (B) Dissenting Shares) shall be converted into the right of the holder thereof to receive (in cash and/or Buyer Common Stock, as applicable, as set forth in the Closing Date Allocation Schedule):  (1) the Series A Preference Amount, plus (2) such share’s applicable Closing Waterfall Per Share Amount, plus (3) such share’s Pro Rata Share of the portion of all Future Payments that become payable pursuant to the terms of this Agreement.

 

(ii)                                  Subject to Section 2.2(b), each share of Company Series B Preferred Stock that is issued and outstanding as of immediately prior to the Effective Time

 

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(other than (A) shares of Company Series B Preferred Stock referenced in Section 2.1(b) and (B) Dissenting Shares) shall be converted into the right of the holder thereof to receive (in cash and/or Buyer Common Stock, as applicable, as set forth in the Closing Date Allocation Schedule):  (1) the Series B Preference Amount, plus (2) such share’s applicable Closing Waterfall Per Share Amount, plus (3) such share’s Pro Rata Share of the portion of all Future Payments that become payable pursuant to the terms of this Agreement.

 

(iii)                               Subject to Section 2.2(b), each share of Company Common Stock that is issued and outstanding as of immediately prior to the Effective Time (other than (A) shares of Company Common Stock referenced in Section 2.1(b) and (B) Dissenting Shares) shall be converted into the right of the holder thereof to receive (in cash and/or Buyer Common Stock, as applicable, as set forth in the Closing Date Allocation Schedule):  (1) such share’s applicable Closing Waterfall Per Share Amount, plus (2) such share’s Pro Rata Share of the portion of all Future Payments that become payable pursuant to the terms of this Agreement.

 

(d)                                 Closing Payment Certificate; Closing Date Payments.

 

(i)                                     No later than three (3) Business Days prior to the Closing Date, the Company shall deliver to the Buyer: (A) the Closing Payment Certificate; (B) a pay-off letter in form and substance reasonably satisfactory to the Buyer duly executed by each Person to whom any Indebtedness will remain unpaid or otherwise be owed as of immediately prior to the Effective Time by the Company, the Surviving Corporation or any Subsidiary, which shall include a complete release of the Company, the Surviving Corporation and each Subsidiary from all Liens, liabilities and other obligations with respect to such Indebtedness, effective upon the discharge of such Indebtedness at the Closing; and (C) final invoices submitted by each Person to whom any Company Transaction Expenses will remain unpaid or otherwise be owed as of immediately prior to the Effective Time, which shall state that the amount invoiced thereby represents all Company Transaction Expenses payable to such Person with respect to the period through the Closing.

 

(ii)                                  On the Closing Date, the Buyer shall make the following payments, in each case in the respective amounts set forth in the Closing Payment Certificate:

 

(A)                               to the Surviving Corporation, by wire transfer of immediately available funds, the portion of the Closing Cash Consideration payable to the holders of Company Equity Awards pursuant to Section 2.5(a) and the procedures described in Section 9.3(f)(iii);

 

(B)                               to the Escrow Agent, the Escrow Amount by wire transfer of immediately available funds;

 

(C)                               to the Company Equityholder Representative, by wire transfer of immediately available funds, the Company Equityholder Representative Expense Amount;

 

(D)                               to each Person specified in the Closing Payment Certificate as a recipient of payments in respect of the Closing Indebtedness (other than unpaid Pre-Closing Taxes) that remains unpaid as of immediately prior to the Effective Time, by wire transfer of

 

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immediately available funds, the amount payable to such Person as specified in the Closing Payment Certificate;

 

(E)                                to each Person specified in the Closing Payment Certificate as a recipient of payments in respect of Company Transaction Expenses that remain unpaid as of immediately prior to the Effective Time, by wire transfer of immediately available funds, the amount payable to such Person as specified in the Closing Payment Certificate; and

 

(F)                                 to the Exchange and Paying Agent, the Closing Company Stockholder and Warrantholder Consideration by, as applicable, wire transfer of immediately available funds or shares of Buyer Common Stock issued in book entry.

 

All shares of Closing Stock Consideration issued pursuant to this Section 2.1(d)(ii) shall bear a legend (and Buyer will make a notation on its transfer books to such effect) prominently stamped or printed thereon or the substance of which will otherwise be reflected on the books and records of the transfer agent for Buyer Common Stock with respect to book-entry shares, in each case reading substantially as follows:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO RESALE IN CONNECTION WITH A DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.”

 

(e)                                  Escrow; Holdback.

 

(i)                                     At Closing, the Buyer will (in accordance with Section 2.1(d)(ii)(B)) deliver to the Escrow Agent the Escrow Amount to be held in escrow pursuant to the Escrow Agreement and to be disbursed in accordance with the terms of this Agreement and the Escrow Agreement.  The Escrow Amount, together with any interest and earnings thereon, shall be held by the Escrow Agent and released by the Escrow Agent to the Surviving Corporation, the Exchange and Paying Agent or the Buyer, as applicable, in accordance with the terms of the Escrow Agreement.

 

(ii)                                  Any portion of the Escrow Fund disbursed pursuant to the Escrow Agreement for the benefit of the Company Equityholders shall be disbursed in accordance with this Section 2.1(e)(ii).  A portion of such disbursed amount equal to the aggregate of the Pro Rata Shares of such disbursed amount represented by all shares of Company Stock converted pursuant to Section 2.1(c) or any Company Warrant shall be paid by the Escrow Agent to the Exchange and Paying Agent pursuant to the terms of the Escrow Agreement for payment to the holders thereof.  A portion of such disbursed amount equal to the aggregate of the Pro Rata Shares of such disbursed amount represented by all Vested Company Options shall be paid by the Escrow Agent to the Surviving Corporation pursuant to the terms of the Escrow Agreement for payment

 

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to the holders thereof (which amount shall be paid by the Surviving Corporation to such holders, subject to any applicable withholding as provided in Section 2.9). The Company Equityholder Representative shall, prior to any disbursement of funds for the benefit of Company Equityholders pursuant to this Section 2.1(e)(ii) and/or the Escrow Agreement, deliver to the Buyer a Post-Closing Disbursement Certificate in respect of such disbursement.

 

(iii)                               Notwithstanding anything else in this Agreement to the contrary, but subject to the conditions and limitations set forth in Section 8.5, the Buyer shall withhold, in order to satisfy indemnification obligations owed to Buyer Indemnified Parties pursuant to Article VIII hereto and any Final Closing Adjustment in excess of the Escrow Funds, (A) the first $25,000,000 of Contingent Consideration that becomes actually due and payable to Company Equityholders pursuant to this Agreement and (B) 12.5% of any Contingent Consideration, in excess of the first such $25,000,000, in each case, that becomes actually due and payable under this Agreement prior to the date that is fifteen (15) months after the Closing Date (collectively, the “Holdback Amount”).  Any remaining Holdback Funds shall be disbursed by the Buyer pursuant to this Agreement for the benefit of the Company Equityholders in accordance with, and on the date(s) specified by, this Section 2.1(e)(iii) and Section 8.5(d).  A portion of such disbursed amount equal to the aggregate of the Pro Rata Shares of such disbursed amount represented by all shares of Company Stock converted pursuant to Section 2.1(c) or any Company Warrant converted pursuant to Section 2.5 shall be paid by the Buyer to the Exchange and Paying Agent pursuant to the terms of this Agreement for payment to the holders thereof.  A portion of such disbursed amount equal to the aggregate of the Pro Rata Shares of such disbursed amount represented by all Vested Company Options shall be paid by the Buyer to the Surviving Corporation pursuant to the terms of this Agreement for payment to the holders thereof (which amount shall be paid by the Surviving Corporation to such holders, subject to any applicable withholding as provided in Section 2.9). The Company Equityholder Representative shall, prior to any disbursement of funds for the benefit of Company Equityholders pursuant to this Section 2.1(e)(iii), deliver to the Buyer a Post-Closing Disbursement Certificate in respect of such disbursement.

 

(f)                                   Certain Adjustments to Per Share Amounts.  All per share amounts payable to the Company Equityholders pursuant to this Article II shall be adjusted, as applicable and appropriate, to reflect fully the effect of any reclassification, stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Company Stock), reorganization, recapitalization or other like change with respect to Company Stock occurring (or for which a record date is established) after the date of this Agreement and prior to the Effective Time.

 

(g)                                  No Fractional Shares.  Notwithstanding any other provision of this Agreement, no fractional shares of Buyer Common Stock shall be issued in exchange for any Company Stock, Company Equity Awards or Company Warrants, and no holder of any of the foregoing shall be entitled to receive a fractional share of Buyer Common Stock; provided, that in lieu of such fraction of a share, the holder of such Company Stock, Company Options or Company Warrants for which a fraction of a share of Buyer Common Stock would otherwise be payable hereunder shall be entitled to an amount in cash (rounded to the nearest whole cent) determined by multiplying such fraction by the Buyer Closing Stock Price.

 

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2.2                               Payment Fund.  The procedures for exchanging outstanding shares of Company Stock for the consideration to be paid to the holders of such Company Stock in connection with the Merger are as follows:

 

(a)                                 Exchange and Paying Agent.  At or prior to the Effective Time, the Buyer shall (in accordance with Section 2.1(d)(ii)(F)) deposit the Payment Fund with the Exchange and Paying Agent for payment to the Company Equityholders in accordance with this Section 2.2 and the Closing Date Allocation Schedule.  The Exchange and Paying Agent shall, pursuant to instructions from the Buyer in accordance with the Exchange and Paying Agent Agreement and the Closing Date Allocation Schedule, deliver the applicable portion of the Aggregate Closing Consideration out of the Payment Fund for payment in respect of Company Stock and Company Warrants.  The Payment Fund shall not be used for any purpose other than as specified in this Section 2.2(a).

 

(b)                                 Exchange Procedures.  Promptly after the Effective Time, the Buyer shall cause the Exchange and Paying Agent to mail to each holder of record of Company Stock that was issued and outstanding as of immediately prior to the Effective Time (i) a Letter of Transmittal and (ii) instructions for effecting the surrender of such Certificate in exchange for the applicable Aggregate Consideration that is or may become payable with respect thereto pursuant to the terms of this Agreement.  Upon (A) proper surrender of a Certificate for cancellation to the Exchange and Paying Agent and (B) delivery of a duly completed and executed Letter of Transmittal, the holder of such Certificate shall be entitled to receive in exchange therefor cash and Buyer Common Stock in an amount equal to the Aggregate Closing Consideration payable in respect of the shares of Company Stock represented by such Certificate, as determined in accordance with Section 2.1 and reflected on the Closing Date Allocation Schedule attached to the Closing Payment Certificate.  If payment in respect of any Certificate is to be made to a Person other than the Person in whose name such Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be transferable and be properly endorsed or shall otherwise be in proper form for transfer, that the signatures on such Certificate or any related stock power shall be properly guaranteed and that the Person requesting such payment shall have established to the satisfaction of the Buyer and the Exchange and Paying Agent that any transfer and other Taxes required by reason of such payment to a Person other than the registered holder of such Certificate have been paid or are not applicable. Until surrendered as contemplated by this Section 2.2(b), each Certificate shall be deemed at all times after the Effective Time to represent only the right to receive upon such surrender the applicable portion of the Aggregate Closing Consideration and the applicable portion of any Future Payments that become payable pursuant to this Agreement in respect of such Certificate.  Holders of Certificates shall not be entitled to receive any portion of the Aggregate Consideration to which they would otherwise be entitled until such Certificates are properly surrendered.  Notwithstanding the foregoing, if a Certificate is held in electronic form, then surrender of such Certificate shall be effected upon delivery to Buyer of a confirmation of cancellation of such Certificate from the Company’s transfer agent, eShares, Inc. (DBA Carta, Inc.).

 

(c)                                  No Further Ownership Rights in Company Stock.  All consideration paid following the surrender for exchange of Certificates evidencing shares of Company Stock (including any Future Payments payable with respect thereto) in accordance with the terms hereof shall be deemed to have been paid in satisfaction of all rights pertaining to such shares of

 

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Company Stock, and from and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Stock which were outstanding as of immediately prior to the Effective Time.  If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange and Paying Agent for any reason, they shall be cancelled and exchanged as provided in this Article II, subject to Section 2.2(e).

 

(d)                                 Termination of Payment Fund.  Any amount deposited with the Exchange and Paying Agent that remains undistributed to the holders of Company Stock or Company Warrants until nine (9) months after the Effective Time shall be delivered to the Buyer (subject to abandoned property, escheat or similar Law), upon demand, and any holder of Company Stock or Company Warrants who is entitled to such amount under this Section 2.2 shall (subject to Section 2.2(e)) be entitled to seek payment of such amount from the Buyer only as a general creditor thereof.

 

(e)                                  No Liability.  To the extent permitted by applicable Law, none of the Buyer, the Transitory Subsidiary, the Company, the Surviving Corporation or the Exchange and Paying Agent shall be liable to any Company Equityholder for any amount delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.  If any Certificates shall not have been exchanged prior to the fourth (4th) anniversary of the Closing Date (or immediately prior to such earlier date on which the related consideration payable pursuant to this Article II would otherwise escheat to or become the property of any Governmental Entity), any such consideration in respect thereof shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto.

 

(f)                                   Lost Certificates.  If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact and a customary indemnification of the Company and the Buyer in a form reasonably satisfactory to the Buyer by the Person claiming such Certificate to be lost, stolen or destroyed, the Exchange and Paying Agent shall pay in exchange for such lost, stolen or destroyed Certificate the Aggregate Consideration payable in respect thereof pursuant to this Agreement.  The Exchange and Paying Agent or the Buyer may, in its discretion and as a condition precedent to the payment thereof, require the owner of such lost, stolen or destroyed Certificate to agree to an indemnity in favor of the Exchange and Paying Agent and/or the Buyer against any claim that may be made against the Exchange and Paying Agent or the Buyer with respect to the Certificate alleged to have been lost, stolen or destroyed; provided, that no such indemnity shall require the posting of a bond by the owner of such Certificate so long as the Aggregate Closing Consideration to be received by such owner (assuming, for this purpose, that the value of the Closing Stock Consideration included within such Aggregate Closing Consideration equals the applicable number of shares of Buyer Common Stock multiplied by the Buyer Closing Stock Price) does not exceed $50,000 in the aggregate.

 

2.3                               Dissenting Shares.

 

(a)                                 Notwithstanding anything to the contrary contained in this Agreement, Dissenting Shares shall not be converted into or represent the right to receive any portion of the

 

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Aggregate Consideration in accordance with Section 2.1, but shall be entitled only to such rights as are granted by the DGCL to a holder of Dissenting Shares.

 

(b)                                 If any Dissenting Shares shall lose their status as such (through failure to perfect or otherwise), then, as of the later of the Effective Time or the date of loss of such status, such shares shall automatically be converted into and shall represent only the right to receive any portion of the Aggregate Consideration otherwise payable in respect thereof pursuant to this Agreement, without interest thereon, upon surrender of the Certificate formerly representing such shares.

 

(c)                                  The Company shall give the Buyer (i) prompt notice of any written demand for appraisal received by the Company prior to the Effective Time pursuant to the DGCL, any withdrawal of any such demand and any other demand, notice or instrument delivered to the Company prior to the Effective Time pursuant to the DGCL that relates to such demand and (ii) the opportunity to participate in all negotiations and proceedings with respect to any such demand, notice or instrument.  The Company shall not settle or make any payment or settlement offer prior to the Effective Time with respect to any such demand, notice or instrument unless the Buyer shall have given its written consent to such settlement, payment or settlement offer (such consent not to be unreasonably withheld, conditioned or delayed).

 

2.4                               Company Equityholder Representative.

 

(a)                                 By their execution of this Agreement or the Letter of Transmittal, approval of the Merger and adoption of this Agreement and/or their acceptance of any consideration pursuant to this Agreement, each Company Equityholder shall be deemed to have approved, and shall have approved, the appointment of, and hereby irrevocably (subject only to Section 2.4(e)) appoints, the Company Equityholder Representative as the representative, attorney-in-fact and agent of the Company Equityholders for all purposes in connection with delivering Post-Closing Disbursement Certificates pursuant to Section 2.1(e), Section 2.4(c), Section 2.7(a), and Section 2.7(c), determining the Final Closing Adjustment pursuant to Section 2.6, amending or modifying the Closing Date Allocation Schedule pursuant to Section 2.7(a), matters relating to Contingent Payments pursuant to Section 2.8, receiving notices regarding Registration Statements pursuant to Section 6.10(d), addressing indemnification claims under Article VIII, handling tax matters under Section 9.3 and privilege matters pursuant to Section 12.11, in each case pursuant to this Agreement and any agreements ancillary hereto, including the Exchange and Paying Agent Agreement and the Escrow Agreement and in any related litigation or arbitration.  In connection therewith, the Company Equityholder Representative is authorized to do or refrain from doing all further acts and things, and to execute all such documents as the Company Equityholder Representative shall deem necessary or appropriate, and shall have the power and authority to:

 

(i)                                     act for some or all of the Company Equityholders with regard to all matters pertaining to this Agreement and any agreements ancillary hereto, including the Exchange and Paying Agent Agreement or the Escrow Agreement;

 

(ii)                                  act for the Company Equityholders to transact matters of litigation;

 

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(iii)                               execute and deliver all amendments, waivers, ancillary agreements, certificates and documents that the Company Equityholder Representative deems necessary or appropriate in connection therewith, including delivering any update to or correction, amendment or modification of the Closing Date Allocation Schedule permitted by Section 2.7(a);

 

(iv)                              receive the Company Equityholder Representative Expense Amount, make payments from such amount, and give receipts for such payments;

 

(v)                                 do or refrain from doing, on behalf of the Company Equityholders, any further act or deed that the Company Equityholder Representative deems necessary or appropriate in the Company Equityholder Representative’s discretion relating to such matters, in each case as fully and completely as the Company Equityholders could do if personally present;

 

(vi)                              give and receive all notices required to be given or received by the Company Equityholders under this Agreement and any agreements ancillary hereto, including the Exchange and Paying Agent Agreement or the Escrow Agreement;

 

(vii)                           give any written direction to the Exchange and Paying Agent or the Escrow Agent;

 

(viii)                        agree to, negotiate and/or comply with the determination of the Final Closing Adjustment Statement, the Final Closing Adjustment Items and the Final Closing Adjustment pursuant to Section 2.6, and to agree to, negotiate, comply with and/or enter into settlement and compromises regarding any Contingent Consideration pursuant to Section 2.8;

 

(ix)                              agree to, negotiate, enter into settlements and compromises and/or comply with arbitration awards and court orders with respect to claims for indemnification made by the Buyer under Article VIII; and

 

(x)                                 receive service of process in connection with any claims under this Agreement and any agreements ancillary hereto, including the Exchange and Paying Agent Agreement and/or the Escrow Agreement.

 

(b)                                 All decisions and actions of the Company Equityholder Representative on behalf of the Company Equityholders shall be deemed to be facts ascertainable outside of this Agreement and shall be binding upon all Company Equityholders, and no Company Equityholder shall have the right to object, dissent, protest or otherwise contest the same.

 

(c)                                  At the Effective Time, the Buyer shall pay the Company Equityholder Representative Expense Amount to the Company Equityholder Representative, which will be used for the purposes of paying directly, or reimbursing the Company Equityholder Representative for, any third party expenses pursuant to this Agreement and the agreements ancillary hereto.  In no event shall the Buyer or the Surviving Corporation (or any of their respective Affiliates) be obligated to reimburse the Company Equityholder Representative for any such expenses. The Company Equityholders will not receive any interest or earnings on the Company Equityholder Representative Expense Amount and irrevocably transfer and assign to the Company Equityholder Representative any ownership right that they may otherwise have had

 

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in any such interest or earnings. The Company Equityholder Representative will not be liable for any loss of principal of the Company Equityholder Representative Expense Amount other than as a result of its bad faith, gross negligence or willful misconduct.  The Company Equityholder Representative will hold these funds separate from its corporate funds in a segregated account, will not use these funds for its operating expenses or any other corporate purposes and will not voluntarily make these funds available to its creditors in the event of bankruptcy. As soon as practicable following the completion of the Company Equityholder Representative’s responsibilities, the Company Equityholder Representative shall deliver any then remaining portion of the Company Equityholder Representative Expense Amount (the “Company Equityholder Representative Account Payment”) to the Buyer, which will promptly pay (i) a portion thereof equal to the Pro Rata Share that is represented by each share of Company Stock converted pursuant to Section 2.1(c) to the Exchange and Paying Agent for payment to the holder thereof, (ii) a portion thereof equal to the Pro Rata Share that is represented by each Company Warrant converted pursuant to Section 2.5 to the Exchange and Paying Agent for payment to the holder thereof, and (iii) a portion thereof equal to the Pro Rata Share that is represented by each Company Equity Award to the Surviving Corporation for payment to the holder thereof (which amount shall be paid by the Surviving Corporation to such holder, in accordance with Section 2.5, subject to any applicable withholding as provided in Section 2.9).  The Company Equityholder Representative shall prior to any disbursement of funds for the benefit of Company Equityholders pursuant to this Section 2.4(c), deliver to the Buyer a Post-Closing Disbursement Certificate in respect of such disbursement.  The Company Equityholder Representative shall hold the Company Equityholder Representative Expense Amount for the benefit of all of the Company Equityholders, and the Company Equityholder Representative Expense Amount shall not be used for any other purpose not expressly set forth herein and shall not be available to the Buyer to satisfy any claims hereunder.

 

(d)                                 The Company Equityholder Representative shall act for the Company Equityholders on all of the matters set forth in this Agreement, the Exchange and Paying Agent Agreement and the Escrow Agreement in the manner the Company Equityholder Representative believes to be in the best interest of the Company Equityholders.  The Company Equityholder Representative is authorized to act on behalf of the Company Equityholders notwithstanding any dispute or disagreement among the Company Equityholders.  In taking any action as Company Equityholder Representative, the Company Equityholder Representative may rely conclusively, without any further inquiry or investigation, upon any certification or confirmation, oral or written, given by any Person whom the Company Equityholder Representative reasonably believes to be authorized thereunto.  The Company Equityholder Representative may, in all questions arising hereunder, rely on the advice of counsel, and the Company Equityholder Representative shall not be liable to any Company Equityholder for anything done, omitted or suffered in good faith by the Company Equityholder Representative based on such advice.  The Company Equityholder Representative undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Company Equityholder Representative.  The Company Equityholder Representative will incur no liability of any kind to Company Equityholders with respect to any action or omission by the Company Equityholder Representative in connection with the Company Equityholder Representative’s services pursuant to this Agreement and any agreements ancillary hereto, except in the event of liability directly resulting from the Company Equityholder Representative’s bad faith, gross negligence or willful misconduct. Each Company

 

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Equityholder, severally and not jointly in accordance with its Pro Rata Share, will indemnify, defend and hold harmless the Company Equityholder Representative from and against any and all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses (including the fees and expenses of counsel and experts and their staffs and all expense of document location, duplication and shipment) (collectively, “Representative Losses”) arising out of or in connection with the Company Equityholder Representative’s execution and performance of this Agreement and any agreements ancillary hereto, in each case as such Representative Loss is suffered or incurred; provided, that in the event that any such Representative Loss is finally adjudicated to have been directly caused by the bad faith, gross negligence or willful misconduct of the Company Equityholder Representative, the Company Equityholder Representative will reimburse the Company Equityholders the amount of such indemnified Representative Loss to the extent attributable to such bad faith, gross negligence or willful misconduct.  If not paid directly to the Company Equityholder Representative by the Company Equityholders, any such Representative Losses may be recovered by the Company Equityholder Representative from (i) the Company Equityholder Representative Expense Amount and (ii) any Future Payments at such time as remaining amounts would otherwise be distributable to the Company Equityholders; provided, that while this section allows the Company Equityholder Representative to be paid from the aforementioned sources of funds, this does not relieve the Company Equityholders from their obligation to promptly pay such Representative Losses as they are suffered or incurred, nor does it prevent the Company Equityholder Representative from seeking from the Company Equityholders any remedies available to it at law or otherwise.  In no event will the Company Equityholder Representative be required to advance its own funds on behalf of the Company Equityholders or otherwise.  Notwithstanding anything in this Agreement to the contrary, any restrictions or limitations on liability or indemnification obligations of, or provisions limiting the recourse against non-parties, otherwise applicable to the Company Equityholders set forth elsewhere in this Agreement are not intended to be applicable to the indemnities provided by the Company Equityholders to the Company Equityholder Representative under this section.  The foregoing indemnities will survive the Closing, the resignation or removal of the Company Equityholder Representative or the termination of this Agreement. In no event will the Buyer or Surviving Corporation be responsible for any fees, costs or expenses of the Company Equityholder Representative.

 

(e)                                  In the event the Company Equityholder Representative becomes unable to perform the Company Equityholder Representative’s responsibilities hereunder or resigns from such position, the Company Equityholders (acting by a written instrument signed by holders of Company Stock who held, as of immediately prior to the Effective Time, a majority (by voting power) of the then outstanding shares of Company Stock) shall select another representative to fill the vacancy of the Company Equityholder Representative, and such substituted representative shall be deemed to be the Company Equityholder Representative for all purposes of this Agreement.  The Company Equityholder Representative may be removed only upon delivery of written notice to the Buyer signed by Persons who, as of immediately prior to the Effective Time, held a majority (by voting power) of the then outstanding shares of Company Stock; provided that no such removal shall be effective until such time as a successor Company Equityholder Representative shall have been validly appointed hereunder.  The Company Equityholder Representative shall provide the Buyer prompt written notice of any replacement of the Company Equityholder Representative, including the identity and address of the new Company Equityholder Representative.  Upon any replacement of the Company Equityholder

 

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Representative, the Company Equityholder Representative being replaced shall transfer to the new Company Equityholder Representative the balance of any unexpended Company Equityholder Representative Expense Amount.

 

(f)                                   For all purposes of this Agreement:

 

(i)                                     the Buyer shall be entitled to rely conclusively on the instructions and decisions of the Company Equityholder Representative as to the settlement of any disputes or claims under this Agreement or any agreements ancillary hereto, including the Exchange and Paying Agent Agreement or the Escrow Agreement, or any other actions required or permitted to be taken by the Company Equityholder Representative hereunder, and no party hereunder or any Company Equityholder shall have any cause of action against the Buyer for any action taken by the Buyer in reliance upon the instructions or decisions of the Company Equityholder Representative;

 

(ii)                                  the provisions of this Section 2.4 are independent and severable, are irrevocable (subject only to Section 2.4(e)) and coupled with an interest and shall be enforceable notwithstanding any rights or remedies that any Company Equityholder may have in connection with the transactions contemplated by this Agreement; and

 

(iii)                               the provisions of this Section 2.4 shall be binding upon the executors, heirs, legal representatives, personal representatives, successor trustees and successors of each Company Equityholder, and any references in this Agreement to a Company Equityholder shall mean and include the successors to the rights of each applicable Company Equityholder hereunder, whether pursuant to testamentary disposition, the Laws of descent and distribution or otherwise.

 

2.5                               Treatment of Company Equity Awards and Company Warrants.

 

(a)                                 Company Equity Awards.

 

(i)                                     As of immediately prior to the Effective Time, each Company Option that is then outstanding (but not to the extent it has theretofore been exercised) shall be cancelled and each Company Option that is vested as of immediately prior to the Effective Time (including any such Company Option that shall become vested in connection therewith) (each, a “Vested Company Option”) shall be converted, in settlement and cancellation thereof, into the right to receive an amount equal to (A) such Vested Company Option’s Closing Waterfall Per Share Amount minus the per share exercise price of such Vested Company Option, plus (B) such Vested Company Option’s Pro Rata Share of the portion of all Future Payments that become payable pursuant to the terms of this Agreement, in each case subject to withholding as provided in Section 2.9; provided, however, that notwithstanding anything to the contrary herein, no portion of the Aggregate Consideration shall be payable to any holder of any such Vested Company Option unless and until such holder shall have executed and delivered to the Buyer a Surrender Agreement; provided, further, that all payments to holders of Vested Company Options pursuant to this Section 2.8(a)(i) shall be composed entirely of cash in lieu of any shares of Buyer Common Stock that would otherwise be issuable in respect of such Vested Company Options, and the Closing Cash Consideration and Closing Stock Consideration payable to

 

13



 

Company Stockholders and holders of Company Warrants shall be adjusted proportionately, in each case as reflected on the Closing Date Allocation Schedule.  Each Company Option other than a Vested Company Option (an “Unvested Company Option”) shall be cancelled without the payment of any consideration therefor.  For purposes of clarification, for any outstanding awards of Company Options that are partially vested (or that shall be partially vested as of immediately prior to the Effective Time), only the vested portion of such grants shall be considered Vested Company Options, and the unvested portions of such grants shall be considered Unvested Company Options.

 

(ii)                                  As of immediately prior to the Effective Time, each Company Restricted Stock Award that is unvested in whole or in part shall vest in full (and all outstanding shares of Company Common Stock issued in connection with such Company Restricted Stock Award shall be converted pursuant to Section 2.1(c)(iii)).

 

(iii)                               Upon the conversion and cancellation of any Company Equity Award pursuant to this Section 2.5(a), such Company Equity Award shall no longer represent the right to acquire any shares of Company Stock or other Equity Interests, but shall entitle the holder thereof to receive only the consideration payable in respect thereof pursuant to this Section 2.5(a).

 

(iv)                              Promptly after the date hereof, the Company shall provide to (i) each holder of Company Equity Awards a letter, in the form of Exhibit I hereto, describing the treatment of such Company Equity Awards pursuant to this Section 2.5(a) and (ii) each holder of Company Restricted Stock Awards a letter, in the form of Exhibit K hereto, describing the treatment of such Company Restricted Stock Awards pursuant to this Section 2.5.

 

(v)                                 Subject to the Buyer’s receipt from a holder of Company Options of a Surrender Agreement, the Buyer shall cause the Surviving Corporation to pay as promptly as practicable after the later of (1) the Effective Time and (2) the date on which the Buyer receives from the applicable holder of Company Options an executed Surrender Agreement, to each holder of such Company Options the portion of the Aggregate Closing Consideration payable to such holder pursuant to this Section 2.5(a), subject to any applicable withholding as provided in Section 2.9, in accordance with the Closing Date Allocation Schedule.  The Buyer shall cause the Surviving Corporation to pay to each holder of Company Equity Awards any amounts payable with respect to each Future Payment (subject to any applicable withholding as provided in Section 2.9) in accordance with Section 2.7 hereof.

 

(vi)                              The Company shall, prior to the Effective Time, take all actions reasonably necessary in connection with the treatment of Company Equity Awards contemplated by this Section 2.5(a), including obtaining the consent from each holder of any Company Equity Award (unless such consent is not required under the terms of the applicable agreement, instrument or plan).  The Company shall also use Reasonable Best Efforts prior to the Effective Time to obtain (A) an Investor Representation Letter from each holder of Company Equity Awards and (B) a Surrender Agreement, which shall be effective as of the Effective Time, duly executed by each holder of a Company Equity Award.

 

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(b)                                 Company Warrants.  At the Effective Time, each Company Warrant that is then outstanding (but not to the extent it has theretofore been exercised) shall be cancelled and shall be converted, in settlement and cancellation thereof, into the right to receive an amount equal to (A) such Company Warrant’s Closing Waterfall Per Share Amount minus the per share exercise price of such Company Warrant, plus (B) such Company Warrant’s Pro Rata Share of the portion of all Future Payments that become payable pursuant to the terms of this Agreement, in each case subject to withholding as provided in Section 2.9.  As soon as practicable following the execution of this Agreement, the Company shall provide to each holder of a Company Warrant a letter, in the form of Exhibit J hereto, describing the treatment of such Company Warrant pursuant to this Section 2.5(b).  (A) Prior to the date of this Agreement, the Board of Directors of the Company has adopted the necessary resolutions and taken such other actions, and (B) promptly following the date of this Agreement (but in any event prior to the Closing Date), the Company shall take all other actions as may be required, in each case to effect the treatment described in this Section 2.5(b) prior to the Effective Time.

 

2.6                               Adjustment Before and After the Closing.  The Estimated Closing Adjustment and the Final Closing Adjustment shall be determined as set forth below in this Section 2.6:

 

(a)                                 Not later than four (4) Business Days prior to the Closing Date, the Company shall prepare and deliver to the Buyer a statement (the “Estimated Closing Adjustment Statement”) setting forth the Estimated Closing Adjustment, including an estimated consolidated balance sheet of the Company and the Subsidiaries as of immediately prior to the Effective Time, together with all relevant backup materials, in detail reasonably acceptable to the Buyer.  The Estimated Closing Adjustment Statement and such consolidated balance sheet shall be prepared in accordance with GAAP applied on a basis consistent with the application thereof to the most recent audited financial statements included in the Company Financial Statements (to the extent consistent with GAAP).  Schedule 2.6(a) attached hereto reflects the Closing Adjustment Items to be included in the Estimated Closing Adjustment Statement, including estimated amounts in respect thereof as of the date of this Agreement.  From the delivery of the Estimated Closing Adjustment Statement until such time as the calculation of the Estimated Closing Adjustment has been finally determined pursuant to this Section 2.6(a), the Buyer and its accountants shall, upon reasonable notice and during normal business hours, be permitted to discuss with the Company and its accountants the Estimated Closing Adjustment Statement and shall be provided complete and accurate copies of, and have reasonable access, upon reasonable notice at reasonable times during normal business hours, to the work papers and supporting records of the Company and its accountants so as to allow the Buyer and its accountants to verify the accuracy of the Estimated Closing Adjustment Statement.  If the Buyer objects to the Estimated Closing Adjustment Statement, the Company and the Buyer will work together in good faith to resolve the issues in dispute.  If all disputed issues are resolved, the amounts as agreed upon by the Buyer and the Company shall be used to determine the Estimated Closing Adjustment.  If the Buyer and the Company are unable to resolve all such disputed issues within four (4) Business Days following the Buyer’s receipt of the Estimated Closing Adjustment Statement, the Estimated Closing Adjustment shall be as determined by the Company.

 

(b)                                 Not later than 60 calendar days after the Closing Date, the Buyer shall deliver to the Company Equityholder Representative the Closing Adjustment Statement, including a consolidated balance sheet of the Company and the Subsidiaries as of immediately

 

15



 

prior to the Effective Time.  The Closing Adjustment Statement and such consolidated balance sheet shall be prepared in accordance with GAAP applied on a basis consistent with the application thereof to the most recent audited financial statements included in the Company Financial Statements (to the extent consistent with GAAP).  The Closing Adjustment Statement delivered pursuant to this Section 2.6(b) shall be accompanied by a statement setting forth the amount, if any, by which the total of the Closing Adjustment Items is greater than, or less than, the Estimated Closing Adjustment.  The Closing Adjustment Statement, as proposed by Buyer pursuant to this Section 2.6(b), shall be deemed for purposes of this Section 2.6 to be the “Final Closing Adjustment Statement,” the Closing Adjustment Items reflected thereon shall be deemed for purposes of this Section 2.6 to be the “Final Closing Adjustment Items” and each shall be final and binding on all parties to this Agreement and on all Company Equityholders, unless the Company Equityholder Representative timely delivers to the Buyer an Objection Notice in accordance with Section 2.6(c).

 

(c)                                  In the event that the Company Equityholder Representative disputes the Closing Adjustment Statement or the amount of the Closing Adjustment Items, the Company Equityholder Representative shall notify the Buyer in writing (the “Objection Notice”) of the amount, nature and basis of such dispute, within 30 calendar days after delivery of the Closing Adjustment Statement pursuant to Section 2.6(b).  Any such Objection Notice shall specify those items or amounts as to which the Company Equityholder Representative disagrees, and the Company Equityholder Representative shall be deemed to have agreed with all other items and amounts contained in the Closing Adjustment Statement and the amount of the Closing Adjustment Items delivered pursuant to Section 2.6(b).  In the event of such a dispute, the Buyer and the Company Equityholder Representative shall first negotiate in good faith to reach agreement on the disputed items or amounts in order to determine the amount of the Closing Adjustment Items, which amount shall not be more than the Buyer’s calculation delivered pursuant to Section 2.6(b) nor less than the Company Equityholder Representative’s calculation delivered pursuant to this Section 2.6(c).  If the Buyer and the Company Equityholder Representative reach a final resolution on the Closing Adjustment Statement within 30 days after the Buyer’s receipt of the Objection Notice (or within any additional period as mutually agreed to between the Buyer and the Company Equityholder Representative), then the Closing Adjustment Statement agreed upon by the Buyer and the Company Equityholder Representative shall be deemed for purposes of this Section 2.6 to be the “Final Closing Adjustment Statement,” the Closing Adjustment Items reflected thereon shall be deemed for purposes of this Section 2.6 to be the “Final Closing Adjustment Items” and each shall be final and binding on all parties to this Agreement and on all Company Equityholders.

 

(d)                                 If the Buyer and the Company Equityholder Representative are unable to resolve the dispute within 30 calendar days after delivery of the Objection Notice, then any remaining items in dispute shall be submitted to the Neutral Accountant.  All determinations and calculations pursuant to this Section 2.6(d) shall consider only those Closing Adjustment Items that are set forth in the Objection Notice and remain in dispute, shall be a value that is not more than the Buyer’s calculation delivered pursuant to Section 2.6(b) nor less than the Company Equityholder Representative’s calculation delivered pursuant to Section 2.6(c), shall be in writing and shall be delivered to the Buyer and the Company Equityholder Representative as promptly as practicable.  Absent fraud or manifest error, the Closing Adjustment Statement as finally determined by the Neutral Accountant shall be deemed for purposes of this Section 2.6 to

 

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be the “Final Closing Adjustment Statement,” the Closing Adjustment Items reflected thereon shall be deemed for purposes of this Section 2.6 to be the “Final Closing Adjustment Items” and each shall be final and binding on all parties to this Agreement and on all Company Equityholders.  In determining the Closing Adjustment Statement and the Closing Adjustment Items, the Neutral Accountant shall act as an expert and not as arbitrator.  A judgment on the determination made by the Neutral Accountant pursuant to this Section 2.6 may be entered in and enforced by any court having jurisdiction thereover.

 

(e)                                  Subject to Section 2.6(f), the fees and expenses of the Neutral Accountant in connection with the resolution of disputes pursuant to Section 2.6(d) shall be borne by the Company Equityholders (in each case, in accordance with their Pro Rata Share), on the one hand, and the Buyer, on the other hand, in proportion to the amounts by which the proposals of the Buyer and the Company Equityholder Representative differed from the Neutral Accountant’s final determination.

 

(f)                                   The “Final Closing Adjustment” shall be equal to (i) the amount of the Final Closing Adjustment Items, minus (ii) the Estimated Closing Adjustment.  For the avoidance of doubt, the Final Closing Adjustment may be a positive or negative number.  If the Final Closing Adjustment is greater than zero (0), then the Buyer shall be entitled to receive payment of the Final Closing Adjustment from the Company Equityholders, together with any fees and expenses of the Neutral Accountant to be borne by the Company Equityholders pursuant to Section 2.6(e) to the extent advanced by Buyer, promptly (and in no event later than two (2) Business Days) after the date of determination of the Final Closing Adjustment; provided that the Buyer’s recourse with respect to any such Final Closing Adjustment shall be limited to, without duplication, (a) the then-current balance of the Escrow Fund, (b) subject to Section 2.1(e)(iii) and Section 8.5(d), the Holdback Funds (if any) and (c) the Adjusted Guaranteed Amount; provided, further, that as among any then-current balance of the Escrow Fund, the Holdback Funds and the Adjusted Guaranteed Amount, the Buyer shall seek recourse first against the Escrow Fund.  For the avoidance of doubt, except in the case of fraud (but subject to the limitations set forth in Section 8.5(e)), the Buyer shall not be entitled to direct recourse against any Company Equityholder with respect to any Final Closing Adjustment.  If the Final Closing Adjustment is less than zero (0), then promptly (and in no event later than two (2) Business Days) after the date of determination of the Final Closing Adjustment: (1) a portion thereof equal to the aggregate of the Pro Rata Shares of such Final Closing Adjustment represented by all shares of Company Stock converted pursuant to Section 2.1(c) and all Company Warrants converted pursuant to Section 2.5 shall be paid by the Buyer to the Exchange and Paying Agent for payment to the holders thereof and (2) a portion thereof equal to the aggregate of the Pro Rata Shares of such Final Closing Adjustment represented by all Vested Company Options shall be paid by the Buyer to the Surviving Corporation for payment to the holders thereof (subject to any applicable withholding as provided in Section 2.9); provided, that all such payments by the Buyer under clauses (1) and (2) of this Section 2.6(f) shall be composed of one-hundred percent (100%) cash.  The percentage of the Final Closing Adjustment, if any, to be distributed to each Company Equityholder is set forth opposite such Company Equityholder’s name on the Closing Date Allocation Schedule. Notwithstanding the foregoing, if (A) the Final Closing Adjustment is a positive number and is less than $100,000, or (B) the Final Closing Adjustment is a negative number and is greater than ($100,000), then no Final Closing Adjustment payments shall be made pursuant to this Section 2.6(f).

 

17



 

(g)                                  From the delivery of the Closing Adjustment Statement until such time as the calculation of the Final Closing Adjustment has been finally determined pursuant to this Section 2.6, the Company Equityholder Representative and its accountants (at the Company Equityholder Representative’s expense on behalf of the Company Equityholders) shall, upon reasonable notice and during normal business hours, be permitted to discuss with the Buyer and its accountants the Closing Adjustment Statement and shall be provided complete and accurate copies of, and have reasonable access, upon reasonable notice at reasonable times during normal business hours, to the work papers and supporting records of the Buyer and its accountants so as to allow the Company Equityholder Representative and its accountants to verify the accuracy of the Closing Adjustment Statement.

 

(h)                                 The parties agree that the procedures set forth in this Section 2.6 shall be the sole and exclusive method for resolving any disputes with respect to the determination of the Final Closing Adjustment Statement, the Final Closing Adjustment Items and the Final Closing Adjustment; provided, that this provision shall not prohibit the Buyer or the Company Equityholder Representative from instituting litigation to enforce the determination of the Neutral Accountant and shall not limit any remedy of any party under Article VIII.

 

2.7                               Allocation Schedules; Payments of Future Payments.

 

(a)                                 The Preliminary Closing Date Allocation Schedule sets forth a true, correct and complete summary of the allocation (estimated as of the date hereof) of the amounts payable to the Company Equityholders pursuant to this Agreement.  The Company shall deliver to the Buyer and the Exchange and Paying Agent, at least three (3) Business Days prior to the Closing, the Closing Date Allocation Schedule (attached as an exhibit to the Closing Payment Certificate).  From time to time after the Effective Time, the Company Equityholder Representative (on behalf of the Company Equityholders) may, with the written agreement of the Buyer, update, correct or otherwise amend or modify the Closing Date Allocation Schedule in any manner that is consistent with the express provisions of this Article II, including by delivering a Post-Closing Disbursement Certificate that supersedes such Closing Date Allocation Schedule.  The Buyer shall be entitled to rely conclusively on the Closing Date Allocation Schedule as in effect from time to time and/or any Post-Closing Disbursement Certificate, as applicable, and, as between the Company Equityholders, on the one hand, and the Buyer and the Surviving Corporation, on the other hand, any amounts delivered by the Buyer to any Company Equityholder (or delivered by the Buyer to the Exchange and Paying Agent for delivery) in accordance with the Closing Date Allocation Schedule and/or Post-Closing Disbursement Certificate, as applicable, in effect from time to time shall be deemed for all purposes to have been delivered to the applicable Company Equityholder in full satisfaction of the obligations of the Buyer and the Surviving Corporation under this Article II.

 

(b)                                 The Exchange and Paying Agent shall make all payments constituting Aggregate Consideration to the applicable Company Equityholders in accordance with the Closing Date Allocation Schedule and the Letters of Transmittal, and the Buyer or the Surviving Corporation shall pay the portion of the Closing Cash Consideration payable to the holders of Company Equity Awards pursuant to Section 2.5(a) to the holders thereof in accordance with the Closing Date Allocation Schedule (subject to any applicable withholding as provided in Section 2.9).

 

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(c)                                  The portion of any Future Payment payable in respect of Company Stock and any Company Warrant shall be paid by the Buyer or the Surviving Corporation to the Exchange and Paying Agent for the benefit of the holders thereof, and the portion of any Future Payment payable in respect of Company Equity Awards shall be paid (subject to any applicable withholding as provided in Section 2.9) by the Surviving Corporation to the holders thereof, in each case in accordance with the Closing Date Allocation Schedule.   The Company Equityholder Representative shall, prior to any disbursement of funds for the benefit of Company Equityholders pursuant to this Section 2.7(c), deliver to the Buyer a Post-Closing Disbursement Certificate in respect to such disbursement.

 

(d)                                 The parties understand and agree that (i) the Company Equityholders have no rights as a security holder of the Surviving Corporation or the Buyer as a result of their right to receive the Future Payments, (ii) without limiting the generality of Section 12.4, no right to receive any Future Payment may be assigned or otherwise transferred without the prior written consent of the Buyer and any purported assignment or transfer in the absence of such consent shall be null and void ab initio, and (iii) no interest is payable as additional consideration with respect to any of the Future Payments.

 

2.8                               Contingent Payments. Subject to Section 2.1(e)(iii), Section 8.5(d) and Section 8.5(j), the Company Equityholders shall be entitled to certain contingent cash payments determined as set forth below (collectively, the “Contingent Consideration”):

 

(a)                                 Priority Review Voucher Payment.  If the Buyer or any of its Subsidiaries or any of their respective licensees or sublicensees obtains a Priority Review Voucher for an [**] from the FDA, then on the date that is the earlier to occur of: (i) [**] after the date of receipt by the Buyer or its Subsidiary of such Priority Review Voucher; or (ii) [**] after the date that the Buyer or its Subsidiary receives at least [**] percent ([**]%) of the proceeds of the sale of such Priority Review Voucher by the Buyer or such Subsidiary to a third party, the Buyer shall pay to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, a one-time cash payment of an amount equal to $[**].  The payment under this subsection (a) shall be made one time only even if multiple Priority Review Vouchers for an [**] are obtained by Buyer or any of its Subsidiaries.  The Buyer shall promptly file with the FDA for a Priority Review Voucher at the time of [**] for the first [**] and submit to the FDA any additional documents and responses to any inquiries with respect thereto, in each case, as necessary for the FDA to review and fully consider the application for a Priority Review Voucher.

 

(b)                                 Milestone Payments.  Buyer shall promptly notify the Company Equityholder Representative in writing of the first achievement of each milestone event set forth below (each, a “Milestone Event”) by or on behalf of the Buyer, any of its Subsidiaries or any their respective sublicensees with respect to the applicable Product, and the Buyer shall make a one-time, cash payment in the amount below corresponding to such Milestone Event (each, a “Milestone Payment”) to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, within [**] after provision of such notice.

 

(i)                                     Development and Regulatory Milestone Payments.

 

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Development or Regulatory Milestone Event

 

Milestone Payment (in
U.S. Dollars)

For the AADC Product:

 

 

(A) Acceptance for filing by FDA of a BLA for the first AADC Product for treatment of AADC

 

$20,000,000

[**]

 

[**]

[**]

 

[**]

 

 

 

For the FA Product:

 

 

[**] or (b) two (2) years after the Closing Date

 

$20,000,000

[**]

 

[**]

[**]

 

[**]

 

 

 

For the AS Product:

 

 

[**] or (b) two (2) years after the Closing Date

 

$20,000,000

[**]

 

[**]

[**]

 

[**]

 

(ii)                                  Sales Milestone Payments.

 

Sales Milestone Event (in U.S. Dollars)

 

Milestone Payment (in
U.S. Dollars)

For the AADC Product:

 

 

(A) First occurrence of a four (4) consecutive Calendar Quarter period in which aggregate Net Sales of the AADC Product [**]

 

[**]

(B) First occurrence of a four (4) consecutive Calendar Quarter period in which aggregate Net Sales of the AADC Product [**]

 

[**]

 

 

 

For the FA Product:

 

 

(C) First occurrence of a four (4) consecutive Calendar Quarter period in which aggregate Net Sales of the FA Product [**]

 

[**]

(D) First occurrence of a four (4) consecutive Calendar Quarter period in which aggregate Net Sales of the FA Product [**]

 

[**]

 

 

 

For the AS Product:

 

 

(E) First occurrence of a four (4) consecutive Calendar Quarter Period in which aggregate Net Sales of the AS Product [**]

 

[**]

(F) First occurrence of a four (4) consecutive Calendar Quarter Period in which aggregate Net Sales of the AS Product [**]

 

[**]

 

(iii)                               Certain Limitations.  Each of the Milestone Payments shall only be payable once with respect to each Product, upon the first occurrence of the corresponding Milestone Event for such Product, and no additional payment will be due in the event of any

 

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repeated occurrence of such Milestone Event with respect to such Product or to any product developed by the Buyer as a follow-on product to any Product.

 

(c)                                  Net Sales Payments.   Subject to the terms and conditions of this Agreement, during the Payment Term, the Buyer shall pay to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, cash payments in respect of Annual Net Sales of each of the FA Product and the AS Product in accordance with clauses (i) and (ii) below (the “Net Sales Payments”).  For purposes of clarity, no Net Sales Payments shall be owed with respect to sales of the AADC Product.

 

(i)                                     FA Product.

 

Annual Net Sales of the FA Product Worldwide

 

Applicable Percentage

 

(A) For that portion of Annual Net Sales of the FA Product less than or equal to $[**]

 

2

%

(B) For that portion of Annual Net Sales of the FA Product greater than $[**] but less than or equal to $[**]

 

4

%

(C) For that portion of Annual Net Sales of the FA Product greater than $[**]

 

6

%

 

(ii)                                  AS Product.

 

Annual Net Sales of the AS Product Worldwide

 

Applicable Percentage

 

(A) For that portion of Annual Net Sales of the AS Product less than or equal to $[**]

 

2

%

(B) For that portion of Annual Net Sales of the AS Product greater than $[**] but less than or equal to $[**]

 

4

%

(C) For that portion of Annual Net Sales of the AS Product greater than $[**]

 

6

%

 

(iii)                               Net Sales Payment Reports; Payments.  Payments of any Net Sales Payments shall be made (1) on a quarterly basis within [**] after the last day of each of the first three Calendar Quarters of each applicable Calendar Year and (2) within [**] after the last day of the fourth Calendar Quarter of the calendar year in which Net Sales Payments are due hereunder, and shall be accompanied by a written report with respect to the immediately preceding quarter (each, a “Net Sales Payment Report”) stating: (A) the total gross sales of the FA Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such Calendar Quarter; (B) the Net Sales of the FA Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such quarter, including a breakdown of the sum of each of the deductions made, if any, from gross sales to arrive at the calculation of Net Sales; (C) the total gross sales of the AS Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such Calendar Quarter; and (D) the Net Sales of the AS Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such quarter, including a breakdown of the sum of each

 

21



 

of the deductions made, if any, from gross sales to arrive at the calculation of Net Sales.  Concurrent with the submission of a Net Sales Payment Report for each such Calendar Quarter, the Buyer shall deliver to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, all Net Sales Payments due under Section 2.8(c)(i) and (ii) in respect of such Calendar Quarter.

 

(iv)                              Milestone Net Sales Reports.  Solely with respect to the United States and the European Union and commencing no earlier than nine (9) months after the date of the first commercial sale of the AADC Product in the applicable jurisdiction, the Buyer shall provide to the Company Equityholder Representative, within sixty (60) calendar days after (1) the second Calendar Quarter of each applicable Calendar Year and (2) within ninety (90) calendar days after the fourth Calendar Quarter of the calendar year, in each case a report with respect to the immediately preceding six (6) month period (including, in each case, breakdowns of the applicable amounts by Calendar Quarter) (each, a “Milestone Payment Report”) stating: (A) the total gross sales of the AADC Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such six (6) month period in the applicable jurisdiction(s); and (B) the Net Sales of the AADC Product sold by the Buyer, its Subsidiaries and their respective sublicensees during such six (6) month period in the jurisdiction(s), including a breakdown of the sum of each of the deductions made, if any, from gross sales to arrive at the calculation of Net Sales of the AADC Product for such jurisdiction during such period.  Upon (a) the achievement of the Milestone Event with respect to a jurisdiction pursuant to Section 2.8(b)(ii)(A) or Section 2.8(b)(ii)(B), as applicable, and the payment of the applicable Milestone Payment for the achievement of such Milestone Event pursuant to Section 2.8(b), or (b) the expiration of the Payment Term with respect to the AADC Product, the Buyer shall have no further obligation to submit any Milestone Payment Reports with respect to such jurisdiction(s) under this Section 2.8(c)(iv).

 

(v)                                 Until the third (3rd) anniversary of the expiration of the applicable Payment Term, the Buyer agrees to keep reasonably complete and accurate records of Net Sales, setting forth the gross invoiced amounts from sales of Products and amounts deducted by category from gross invoiced amounts in reasonable detail.  The Buyer further agrees, upon not less than thirty (30) calendar days prior written notice, to permit applicable books and records relating to such Net Sales to be examined by an independent accounting firm selected by the Company Equityholder Representative and reasonably acceptable to Buyer for the purpose of verifying reports provided by Buyer under Section 2.8(c).  Such examination shall not be performed more frequently than once in any twelve (12) month period and not more than once with respect to the books and records relating to Net Sales in any given period, and shall be conducted under appropriate confidentiality provisions, for the sole purpose of verifying the accuracy and completeness of such reports.  Such examination is to be made at the expense of the Company Equityholders, unless such audit discloses an underpayment by Buyer of more than seven percent (7%) of the amount of any Net Sales Payments and any other payments due under this Agreement for any applicable Calendar Quarter, in which case, the Buyer shall bear the cost of such audit and shall reasonably promptly remit to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, the amount of any such underpayment.  Any overpayment by Buyer revealed by an audit shall be credited against or set-off against Future Payments owed by the Buyer to the Company Equityholders

 

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(provided, that if no further payments are due, such overpayment shall not be refunded by the Company Equityholders).

 

(d)                                 Each of the Company Equityholders, by his, her or its execution of a Stockholders Agreement, a Written Consent, a Surrender Agreement, a Letter of Transmittal and/or receipt of Aggregate Consideration hereunder, acknowledges and agrees that (i) Buyer is entitled to conduct the business of the Surviving Corporation and with respect to any Products in a manner that is in the best interests of Buyer and its shareholders, and shall have the absolute right and sole and absolute discretion to operate and otherwise make decisions with respect to the conduct of the business of the Surviving Corporation and/or the Products and to take or refrain from taking any action with respect thereto; (ii) Buyer or an Affiliate of Buyer currently or may in the future offer products or services that compete, either directly or indirectly, with the Products and may make decisions with respect to such products and services that may adversely affect the Products and the products, services, sales, revenues, expenses, or other financial performance measures of the Surviving Corporation or the Products; and (iii) neither the Buyer nor any of its Affiliates shall have any liability to any Company Equityholder or any other Person for any claim, loss or damage of any nature, including claims, losses or damages that arise out of or relate in any way to any decisions or actions affecting whether or not or the extent to which the Contingent Consideration becomes payable in accordance with this Section 2.8, in each case in connection with the Contingent Consideration unless, and then only to the extent, that it takes any action intended for the purpose of frustrating the payment of Contingent Consideration hereunder.

 

(e)                                  The right of any Company Equityholder to receive any amounts with respect to Contingent Consideration (i) shall not be evidenced by a certificate or other instrument, (ii) shall not be assignable or otherwise transferable by such Company Equityholder, except by will, upon death or by operation of Law, and (iii) does not represent any right other than the right to receive the consideration set forth in this Section 2.8.  Any attempted transfer of the right to any amounts with respect to Contingent Consideration by any holder thereof (other than as specifically permitted by the immediately preceding sentence) shall be null and void.

 

(f)                                   Notwithstanding any other provision in this Agreement, the Buyer’s obligations to pay any Contingent Consideration hereunder is subject to (i) Section 8.5(d) and Section 8.5(j) and (ii) receipt by the Buyer of a Post-Closing Disbursement Certificate pursuant to, and in accordance with, Section 2.7(c).

 

(g)                                  Certain Definitions. As used in this Agreement, the following terms shall have the meanings ascribed to them below:

 

(i)                                     AADC” means Aromatic Amino Acid Decarboxylase Deficiency.

 

(ii)                                  AADC Product” means the product known internally by the Company as AGIL-AADC as more specifically described on Schedule 2.8(g)(i) attached hereto.

 

(iii)                               Annual Net Sales” means the Net Sales generated over any given Calendar Year.

 

(iv)                              AS” means Angelman Syndrome.

 

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(v)                                 AS Product” means the product known internally by the Company as AGIL-AS, as more specifically described on Schedule 2.8(g)(ii) attached hereto.

 

(vi)                              BLA” means a Biologics License Application submitted to the FDA pursuant to 21 C.F.R. § 601.2 (or any successor regulation thereto), for purposes of obtaining Regulatory Approval for a new biologic in the United States, or any equivalent filing in a country or regulatory jurisdiction other than the United States.

 

(vii)                           Calendar Quarter” means each period of three (3) consecutive months commencing on January 1, April 1, July 1 and October 1 of each calendar year.

 

(viii)                        Calendar Year” means the period of four consecutive Calendar Quarters beginning on January 1 and ending on December 31 of each calendar year.

 

(ix)                              Cover” means that, in the absence of ownership of or a license granted under a Valid Claim, the making, using, selling, offering for sale or importation of a Product would infringe such Valid Claim (or, in the case of a Valid Claim that has not yet issued, would infringe such Valid Claim if it were to issue).

 

(x)                                 European Union” or “EU” means (A) the economic, scientific and political organization of the European Union as it may be constituted from time to time, which as of the date of this Agreement consists of twenty-eight (28) European member states; and (B) the United Kingdom.

 

(xi)                              FA” means Friedrich’s Ataxia.

 

(xii)                           FA Product” means the product known internally by the Company as AGIL-FA as more specifically described on Schedule 2.8(g)(iii) attached hereto.

 

(xiii)                        FDA Act” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).

 

(xiv)                       Initiation” means, with respect to a clinical trial, the first dosing of the first subject enrolled in such Clinical Trial with a product.

 

(xv)                          Net Sales” means with respect to any Product, the gross amount invoiced Buyer, any of its Subsidiaries and or any sublicensee (each, a “Selling Party”) to a third party (including a customer, distributor, wholesaler or end user) for sales or distribution of such Product, less the following deductions as calculated in accordance with GAAP consistently applied:

 

(A)                               normal trade, cash, quantity and other customary discounts given to customers in the ordinary course of business;

 

(B)                               rebates, credits and allowances given by reason of rejections returns, damaged or defective product or recalls;

 

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(C)                               government-mandated rebates and any other compulsory payments, credits, adjustments and rebates paid or deducted;

 

(D)                               price adjustments, allowances, credits, chargeback payments, discounts, rebates, free of charge concessions, fees and reimbursements or similar payments granted or made to managed care organizations, group purchasing organizations or other buying groups, pharmacy benefit management companies, health maintenance organizations and any other providers of health insurance coverage, health care organizations or other health care institutions (including hospitals), health care administrators, patient assistance or other similar programs, or to federal state/provincial, local and other governments, including their agencies, or to wholesalers, distributors or other trade customers;

 

(E)                                reasonable and customary freight, shipping, insurance and other transportation expenses, if borne by the applicable Selling Party without reimbursement from any third party;

 

(F)                                 amounts written off as uncollectable debt; provided that the amount of any uncollectable debt deducted pursuant to this exception and actually collected in a subsequent Calendar Quarter shall be included in Net Sales for such subsequent Calendar Quarter; and

 

(G)                               sales, value-added, excise taxes, tariffs and duties, and other taxes and government charges directly related to the sale, delivery or use of such Product (but not including taxes assessed against the net income derived from such sale).

 

If non-monetary consideration is received for any Product, Net Sales will be calculated based on the average price charged for such Product during the preceding Calendar Quarter in the relevant country, or in the absence of such sales, the fair market value of the Product, as determined by the parties in good faith.

 

Furthermore, Net Sales shall not include use of or sale at or below the transfer price by Buyer, its Subsidiaries and/or its sublicensees of Product for non-clinical or clinical studies, patient-assistance programs, charitable donations or compassionate use.

 

Resales or sales of a Product made in good faith between or among Buyer, any of its Subsidiaries or any sublicensee shall not be included in the calculation of Net Sales as long as, with respect to such resales or sales, the first sale thereafter to a non-sublicensee third party is included in the calculation of Net Sales.

 

(xvi)                       Payment Term” means, on a country-by-country and Product-by-Product basis, the period commencing on the date of the first commercial sale of a Product in such country and terminating upon the later of: (A) the last to expire of any Valid Claims Covering the Product in such country; (B) ten (10) years after the first commercial sale of such Product in such country; and (C) the termination or expiration of Regulatory Exclusivity applicable to the Product in such country.

 

(xvii)                    Phase 1 Clinical Trial” means a human clinical trial (or a portion of a human clinical trial) of a product in any country, the principal purpose of which is a

 

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preliminary determination of safety in patients, that would satisfy the requirements of 21 C.F.R. §312.21(a), or a similar clinical study prescribed by the relevant Regulatory Authorities in a country other than the United States.

 

(xviii)                 Priority Review Voucher” means a priority review voucher issued by the FDA or otherwise under the authority of the United States Department of Health and Human Services to Buyer or any of its Subsidiaries as the sponsor of a rare pediatric disease or neglected tropical disease product application, that entitles the holder of such voucher to priority review of a single human drug application submitted under Section 505(b)(1) or 505(b)(2) of the FDA Act or Section 351(a) of the United States Public Health Service Act, as further defined in the FDA Act.

 

(xix)                       Product” means the AADC Product, the FA Product or the AS Product.

 

(xx)                          Regulatory Approval” means the approval of the applicable Regulatory Authority necessary for the marketing and sale of a product in a country (or countries), and including the expansion or modification of the label for additional indications or uses.

 

(xxi)                       Regulatory Approval Application” means (A) a BLA, or (B) any other corresponding foreign application to seek Regulatory Approval of a product in any country or multinational jurisdiction, as defined in applicable Laws and filed with the relevant Regulatory Authorities of such country or jurisdiction.

 

(xxii)                    Regulatory Exclusivity” means an additional market protection, other than patent protection, granted by the applicable Regulatory Authority which confers a time period during which the Buyer, its Subsidiaries and/or their respective sublicensees have the exclusive right to market and sell a Product in the United States through a regulatory exclusivity right (e.g., new chemical entity exclusivity, new use or indication exclusivity, new formulation exclusivity, orphan drug exclusivity, pediatric exclusivity, or any applicable data exclusivity).

 

(xxiii)                 United Kingdom” means Great Britain and Northern Ireland.

 

(xxiv)                United States” means the United States of America and its territories and possessions.

 

(xxv)                   Valid Claim”  means (A) a claim of any issued and unexpired patent whose validity, enforceability, or patentability has not been affected by any of the following: (1) irretrievable lapse, abandonment, revocation, dedication to the public, or disclaimer; or (2) a holding, finding, or decision of invalidity, unenforceability, or non-patentability by a court, national or regional patent office, or other applicable Governmental Entity that has competent jurisdiction, such holding, finding, or decision being final and nonappealable or unappealed within the time required for a timely appeal; or (B) a claim of a patent application that is filed in good faith and has not been (1) cancelled, withdrawn, abandoned or finally disallowed, without the possibility of appeal or refiling, or (2) pending for more than five (5) years from its earliest priority date, as of the relevant time.  For clarity, any claim in a patent application that has been pending for more than seven (7) years from its earliest

 

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priority date as of the relevant time shall not be considered a Valid Claim unless and until such claim is granted and meets the requirement of subsection (A) of this definition.

 

2.9                               Withholding Rights.  The Buyer, the Company, the Exchange and Paying Agent and the Escrow Agent will be entitled to deduct and withhold from the amounts otherwise payable by it pursuant to this Agreement to any Person, such amounts that it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law, and to collect any reasonably requested Tax forms, including IRS Forms W-9 or appropriate IRS Forms W-8, as applicable, or any similar information, from Company Stockholders and any other recipients of payments hereunder.  In the event that any amount is so deducted and withheld, and properly remitted to the applicable Governmental Entity, such amount will be treated for all purposes of this Agreement as having been paid to the Person to whom the payment from which such amount was withheld was made.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to the Buyer that, except as set forth in the Company Disclosure Schedule, the statements contained in this Article III are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).  The Company Disclosure Schedule shall be arranged in sections and paragraphs corresponding to the numbered and lettered sections and paragraphs contained in this Article III; provided, however, that the disclosures in any section or paragraph of the Company Disclosure Schedule shall qualify (a) the corresponding section or paragraph in this Article III and (b) such other sections or paragraphs in this Article III (whether or not there is a specific cross reference) to the extent that it is reasonably apparent on the face of the disclosure that such disclosure also qualifies or applies to such other section or paragraph.

 

3.1                               Organization, Standing and Corporate Power.  The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.  The Company is duly qualified to conduct business and is in good standing under the Laws of each jurisdiction listed in Section 3.1 of the Company Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Company’s businesses or the ownership or leasing of its properties requires such qualification, except where the failure of the Company to be so qualified in any such jurisdiction other than Delaware, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.  The Company has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Company has made available to the Buyer complete and accurate copies of its Organizational Documents.

 

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3.2                               Capitalization.

 

(a)                                 The authorized capital stock of the Company consists of 36,542,218 shares of Company Common Stock and 23,844,412 shares of Company Preferred Stock, of which 7,244,412 shares are designated as Company Series A Preferred Stock and 16,600,000 shares are designated as Company Series B Preferred Stock.  As of the date of this Agreement, there are (i) 2,661,803 shares of Company Common Stock, 7,244,412 shares of Company Series A Preferred Stock and 16,357,863 shares of Company Series B Preferred Stock outstanding and (ii) no shares of Company Stock held in treasury.

 

(b)                                 Section 3.2(b) of the Company Disclosure Schedule sets forth a complete and accurate list, as of the date of the Agreement, of the holders of capital stock of the Company, showing the number of shares of capital stock, and the class or series of such shares, held by each stockholder and (for shares other than shares of Company Common Stock) the number of shares of Company Common Stock (if any) into which such shares are convertible.  Section 3.2(b) of the Company Disclosure Schedule also indicates all outstanding shares of Company Stock that constitute restricted stock or that are otherwise subject to a repurchase or redemption right, indicating the name of the applicable stockholder, the vesting schedule (including any acceleration provisions with respect thereto), and the repurchase price payable by the Company.  All of the issued and outstanding shares of capital stock of the Company have been and on the Closing Date will be duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights.  All of the issued and outstanding shares of capital stock of the Company have been offered, issued and sold by the Company in compliance with all applicable federal and state securities Laws.

 

(c)                                  Section 3.2(c) of the Company Disclosure Schedule sets forth a complete and accurate list, as of the date of this Agreement, of: (i) all Company Stock Plans, indicating for each Company Stock Plan the number of shares of Company Stock issued to date under such Company Stock Plan, the number of shares of Company Stock subject to outstanding options under such Company Stock Plan and the number of shares of Company Stock reserved for future issuance under such Company Stock Plan, (ii) all holders of outstanding Company Options, indicating with respect to each Company Option the Company Stock Plan under which it was granted, the number of shares of Company Stock subject to such Company Option, the exercise price, the date of grant, and the vesting schedule (including any acceleration provisions with respect thereto), (iii) all other outstanding Company Equity Awards,  indicating with respect to each such award the name of the holder thereof, the Company Stock Plan under which it was granted, the number and class or series of shares of Company Stock subject to such award, the date of grant, and the vesting schedule, including whether (and to what extent) the vesting will be accelerated in any way in connection with the Merger or any of the other transactions contemplated by this Agreement or upon related, concurrent or subsequent employment termination, or in combination with any other event, and (iv) all holders of outstanding Company Warrants, indicating with respect to each Company Warrant the agreement or other document under which it was granted, the number of shares of capital stock, and the class or series of such shares, subject to such Company Warrant, the exercise price, the date of issuance and the expiration date thereof.  The Company has made available to the Buyer complete and accurate copies of all Company Stock Plans, forms of all stock option agreements evidencing Company Options and all agreements evidencing Company Warrants.  All of the shares of capital stock of the Company subject to Company Options and Company Warrants will be, upon issuance

 

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pursuant to the exercise of such instruments, duly authorized, validly issued, fully paid, nonassessable and free of all preemptive rights.

 

(d)                                 With respect to each Company Option (whether outstanding or previously exercised), (i) each such Company Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies, (ii) each grant of a Company Option was duly authorized no later than the date on which the grant of such Company Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including, as applicable, approval by the Company’s Board of Directors (or a duly constituted and authorized committee thereof), or a duly authorized delegate thereof, and any required stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, and (iii) each such grant was made in accordance with the terms of the applicable Company Stock Plan, the Exchange Act, to the extent applicable, and all other applicable Laws and are not and have not been the subject of any internal investigation, review or inquiry.

 

(e)                                  Except as set forth in Section 3.2(c) or Section 3.2(e) of the Company Disclosure Schedule, as of the date of this Agreement (i) there are no Equity Interests of any class of the Company, or any security exchangeable into or exercisable for such Equity Interests, issued, reserved for issuance or outstanding, (ii) there are no options, warrants, equity securities, calls, rights, commitments or agreements to which the Company is a party or by which the Company is bound obligating the Company to issue, exchange, transfer, deliver or sell, or cause to be issued, exchanged, transferred, delivered or sold, additional shares of capital stock or other Equity Interests of the Company or any security or rights convertible into or exchangeable or exercisable for any such shares or other Equity Interests, or obligating the Company to grant, extend, otherwise modify or amend or enter into any such option, warrant, Equity Interest, call, right, commitment or agreement, (iii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right, or to issue or distribute to holders of any Equity Interests of the Company any evidences of Indebtedness or assets of the Company, and (iv) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any Equity Interests or to pay any dividend or to make any other distribution in respect thereof.  Except as set forth in this Section 3.2, as of the date of this Agreement, the Company does not have any outstanding equity compensation or equity-based compensation.

 

(f)                                   Except as set forth in Section 3.2(f) of the Company Disclosure Schedule, there is no agreement, written or oral, between the Company and any holder of its securities, or, to the Company’s Knowledge, among any holders of its securities, relating to the sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag along” rights), registration under the Securities Act or the securities Laws of any other jurisdiction, or voting, of the capital stock of the Company.

 

(g)                                  The allocation of payments set forth on the Preliminary Closing Date Allocation Schedule complies (and the allocation of such payments set forth on the Closing Date Allocation Schedule will comply) with the terms of the Company’s Organizational Documents, the Company Stock, the Company Warrants, the Company Equity Awards and the Company Stock Plans.

 

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3.3                               Subsidiaries; Company Joint Venture.

 

(a)                                 Section 3.3 of the Company Disclosure Schedule sets forth: (i) the name of each Subsidiary and the Company Joint Venture; (ii) the number and type of outstanding equity securities of each Subsidiary and the Company Joint Venture and a list of the holders thereof; (iii) the jurisdiction of organization of each Subsidiary and the Company Joint Venture; (iv) the names of the officers and directors of each Subsidiary and the Company Joint Venture; and (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to do business as a foreign corporation or other entity. Each Subsidiary and, to the Company’s Knowledge, the Company Joint Venture, is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation.

 

(b)                                 Each Subsidiary and, to the Company’s Knowledge, the Company Joint Venture, is duly qualified to conduct business and is in good standing under the Laws of each jurisdiction in which the nature of its businesses or the ownership or leasing of its properties requires such qualification.  Each Subsidiary and, to the Company’s Knowledge, the Company Joint Venture, has all requisite power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.  The Company has delivered to the Buyer complete and accurate copies of the charter, by-laws or other organizational documents of each Subsidiary and the Company Joint Venture.  No Subsidiary nor, to the Company’s Knowledge, the Company Joint Venture, is in default under or in violation of any provision of its charter, by-laws or other organizational documents.  All of the issued and outstanding shares of capital stock of each Subsidiary and, to the Company’s Knowledge, the Company Joint Venture, are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights.  All shares of each Subsidiary and the Company Joint Venture that are held of record or owned beneficially by either the Company or any Subsidiary are held or owned free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities Laws), claims, Liens, options, warrants, rights, contracts, calls, commitments, equities and demands.  There are no outstanding or authorized options, warrants, rights, agreements or commitments to which the Company or any Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary or the Company Joint Venture.  There are no forms of equity or equity-based compensation or similar rights with respect to any Subsidiary.  There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary.

 

(c)                                  Other than the Company Joint Venture, Company does not own or control directly or indirectly or have any direct or indirect equity participation or similar interest in, or any obligation to providing funding to, any corporation, partnership, limited liability company, joint venture, trust or other business association or entity that is not a Subsidiary.  The Company Joint Venture has no rights to commercialize, market or otherwise sell or distribute any products or product candidates in any jurisdiction or market outside of Japan.

 

3.4                               Authority; No Conflict; Required Filings and Consents.

 

(a)                                 The Company and the Subsidiaries have all requisite power and authority (corporate and other) to execute and deliver this Agreement and the other agreements contemplated hereby to which it is a party and to perform their respective obligations hereunder

 

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and thereunder.  The execution and delivery by the Company of this Agreement and the other agreements contemplated hereby to which it is a party and, subject to obtaining the Company Stockholder Approval, which is the only approval required from the Company Stockholders, the performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate and other action on the part of the Company.  Without limiting the generality of the foregoing, the Board of Directors of the Company, at a meeting duly called and held, by the unanimous vote of all directors (i) determined that the Merger is advisable, fair and in the best interests of the Company and its stockholders, (ii) approved this Agreement in accordance with the provisions of the DGCL, and (iii) directed that this Agreement and the Merger be submitted to the stockholders of the Company for their adoption and approval and resolved to recommend that the stockholders of the Company vote in favor of the adoption of this Agreement and the approval of the Merger.  This Agreement and all other agreements contemplated hereby to which the Company or any Subsidiary is or will be a party have been or will be as of the Closing Date duly and validly executed and delivered by the Company and constitutes or will constitute a valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity.

 

(b)                                 Subject to the filing of the Certificate of Merger as required by the DGCL and to the filing requirements of the HSR Act and applicable foreign Antitrust Laws, neither the execution and delivery by the Company of this Agreement or any other agreement contemplated hereby to which it is a party, nor the performance by the Company of its obligations hereunder or thereunder, nor the consummation by the Company of the transactions contemplated hereby or thereby, will (i) conflict with or violate any provision of the Organizational Documents of the Company, each as amended or restated to date, or the Organizational Documents of any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture, each as amended or restated to date, (ii) require on the part of the Company, any Subsidiary, any Company Stockholder, or to the Company’s Knowledge, the Company Joint Venture any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of Indebtedness, Lien or other arrangement to which the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture, is a party or by which the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture is bound or to which any of the assets of the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture are subject, (iv) result in the imposition of any Lien upon any assets of the Company or any Subsidiary or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture, or any of their respective properties or assets, except in the case of the foregoing clauses (iii), (iv) and (v) for such notices, consents and waivers that, if not obtained or made, and such conflicts, breaches, defaults, accelerations, terminations, modifications, cancellations, Liens and violations that, individually or in the aggregate, have not resulted in and would not reasonably be expected to

 

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result in any material Damages or the loss of any material rights or benefits.  The Company is not in default under or in violation of any of its Organizational Documents.

 

(c)                                  No consent, approval, license, permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated by this Agreement, except for (i) the pre-merger notification requirements under the HSR Act and any applicable foreign Antitrust Laws and (ii) the filing of the Certificate of Merger with the Delaware Secretary of State and appropriate corresponding documents with the appropriate authorities of other states in which the Company is qualified as a foreign corporation to transact business.

 

(d)                                 The Principal Stockholders have as of the date hereof entered into the Stockholders Agreement, pursuant to which such Principal Stockholders have agreed, subject to the terms thereof (i) to vote all shares of Company Stock that are beneficially owned by them in favor of the adoption of this Agreement and the approval of the Merger, and (ii) not to vote any shares of Company Stock in favor of any other acquisition (whether by way of merger, consolidation, share exchange, stock purchase or asset purchase) of all or a majority of the outstanding capital stock or assets of the Company.

 

3.5                               Financial Statements.

 

(a)                                 The Company has made available to the Buyer the Company Financial Statements.  The Company Financial Statements (i) comply as to form with all applicable accounting requirements under Section 3-05 of Regulation S-X under the Securities Act and (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby; provided, however, that the Company Financial Statements referred to in clause (b) of the definition of such term are subject to normal recurring year-end adjustments (which, individually and in the aggregate, will not be material) and do not include footnotes.

 

(b)                                 Each of the Company Financial Statements fairly presents the consolidated assets, liabilities, business, financial condition, results of operations and cash flows of the Company and the Subsidiaries as of the date thereof and for the period referred to therein, and is consistent with the books and records of the Company and the Subsidiaries.   The accruals for vacation expenses, severance payments and Taxes are accounted for on the Most Recent Balance Sheet and are adequate and properly reflect the expenses associated therewith in accordance with GAAP.

 

(c)                                  The Company maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls which provide assurance that (i) transactions are executed with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of the financial statements of the Company and to maintain accountability for the Company’s assets, (iii) access to assets of the Company is permitted only in accordance with management’s authorization, (iv) the reporting of assets of the Company is compared with existing assets at regular intervals, and (v) accounts, notes and other

 

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receivables and inventory were recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

 

(d)                                 The Company maintains disclosure controls and procedures that are effective to ensure that all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company’s financial statements.  Section 3.5(d) of the Company Disclosure Schedule lists, and the Company has delivered to the Buyer copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.

 

(e)                                  Section 3.5(e) of the Company Disclosure Schedule lists, and the Company has delivered to the Buyer copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(a)(4) of Regulation S-K of the SEC) effected by the Company or any Subsidiary.  Section 3.5(e) of the Company Disclosure Schedule lists all non-audit services performed by the Company’s auditors for the Company or any Subsidiary.

 

(f)                                   Neither the Company nor any Subsidiary has extended or maintained credit, arranged for the extension of credit, modified or renewed an extension of credit, in the form of a personal loan or otherwise, to or for any director or executive officer of the Company or any Subsidiary other than reimbursement for business expenses in the Ordinary Course of Business.  Section 3.5(f) of the Company Disclosure Schedule identifies any loan or extension of credit maintained by the Company or any Subsidiary to which the second sentence of Section 13(k)(1) of the Exchange Act would apply.

 

(g)                                  BDO USA, LLP, the Company’s current auditors, is and has been at all times since its engagement by the Company (x) “independent” with respect to the Company and the Subsidiaries within the meaning of Regulation S-X and (y) in compliance with subsections (g) through (l) of Section 10A of the Exchange Act (to the extent applicable) and the related rules of the SEC and the American Institute of Certified Public Accountants.

 

(h)                                 With respect to each Company Option (whether outstanding or previously exercised), each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of the Company.

 

3.6                               Absence of Certain Changes.  Since December 31, 2017, (a) there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Company Material Adverse Effect, (b) the Company and the Subsidiaries have conducted their businesses in the Ordinary Course of Business and (c) neither the Company nor any Subsidiary has taken any of the actions set forth in clauses (a) through (s) of Section 5.1.

 

3.7                               Undisclosed Liabilities.  Neither the Company nor any Subsidiary has any material liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on or expressly reserved for in the Most Recent Balance Sheet, a copy of which is attached to Section 3.7 of the Company Disclosure Schedule, (b) liabilities that have arisen since the Most

 

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Recent Balance Sheet Date in the Ordinary Course of Business and which are similar in nature and amount to the liabilities that arose during the comparable period of time in the immediately preceding fiscal period, (c) contractual and other liabilities incurred in the Ordinary Course of Business that are not required by GAAP to be reflected on a balance sheet and that are not in the aggregate material to the Company and the Subsidiaries, taken as a whole, (in each case, none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement or violation of Law) and (d) liabilities that are both (i) within the subject matter of another representation or warranty in this Article III and (ii) not required to be disclosed on the corresponding section of the Company Disclosure Schedule applicable to such representation or warranty solely as a result of a materiality qualifier or monetary threshold in such other representation or warranty.

 

3.8                               Books and Records.  The minute books and other similar records of the Company and each Subsidiary and, to the Company’s Knowledge, the Company Joint Venture, contain complete and accurate records of all actions taken at any meetings of the Company’s or such Subsidiary’s stockholders, Board of Directors or any committee thereof and of all written consents executed in lieu of the holding of any such meeting.  The books and records of the Company and each Subsidiary accurately reflect the assets, liabilities and business of the Company and the Subsidiaries and have been maintained in accordance with good business and bookkeeping practices.  Section 3.8 of the Company Disclosure Schedule contains a list of all bank accounts and safe deposit boxes of the Company and the Subsidiaries and the names of persons having signature authority with respect thereto or access thereto.

 

3.9                               Tax Matters.

 

(a)                                 Each of the Company and the Subsidiaries and, to the Company’s Knowledge, the Company Joint Venture, has properly filed on a timely basis (taking into account any extensions of the applicable due date) all income and other material Tax Returns that it was required to file, and all such Tax Returns are true, correct and complete in all material respects and were prepared in material compliance with all applicable Laws.  Each of the Company and the Subsidiaries and, to the Company’s Knowledge, the Company Joint Venture, has paid on a timely basis all Taxes, whether or not shown on any Tax Return, that were due and payable.  The unpaid Taxes of the Company and each Subsidiary (i) for taxable periods through the Most Recent Balance Sheet Date do not exceed the reserves for Taxes (excluding reserves for any deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Most Recent Balance Sheet and (ii) for taxable periods (or portions thereof) through the Closing Date, do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with GAAP.  Neither the Company nor any of its Subsidiaries has incurred any liability for Taxes since the Most Recent Balance Sheet Date outside of the Ordinary Course of Business.

 

(b)                                 All Taxes that the Company or any Subsidiary or, to the Company’s Knowledge, the Company Joint Venture, is or was required by Law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Entity, and each of the Company and any Subsidiary has complied with all information reporting and backup withholding requirements in connection with amounts paid to any Company Employee, independent contractor, creditor, or other third party.

 

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(c)                                  Neither the Company nor any Subsidiary is or has ever been a member of an affiliated group with which it has filed (or been required to file) consolidated, combined, unitary or similar Tax Returns, other than a group of which the common parent is the Company.  Neither the Company nor any Subsidiary (i) has any liability under Treasury Regulation Section 1.1502-6 (or any comparable or similar provision of federal, state, local or foreign Law), as a transferee or successor or pursuant to any contractual obligation (excluding any customary commercial contracts entered into in the Ordinary Course of Business and not primarily related to Taxes) for any Taxes of any Person other than the Company or any Subsidiary, or (ii) is a party to or bound by any Tax indemnity, Tax sharing, Tax allocation or similar agreement (excluding any customary commercial agreements entered into in the Ordinary Course of Business and not primarily related to Taxes).

 

(d)                                 The Company made available to the Buyer (i) complete and correct copies of all Tax Returns of the Company and any Subsidiary relating to Taxes for all taxable periods ending on or after December 31, 2014, (ii) complete and correct copies of all private letter rulings, revenue agent reports, information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests and any similar documents submitted by, received by, or agreed to by or on behalf of the Company or any Subsidiary relating to Taxes for all taxable periods ending on or after December 31, 2014, and (iii) complete and correct copies of all material agreements, rulings or settlements relating to Tax incentives of the Company or any Subsidiary.

 

(e)                                  No examination or audit or other action of or relating to any Tax Return of the Company or any Subsidiary by any Governmental Entity is currently in progress or has been threatened in writing or to the Knowledge of the Company, otherwise.  No deficiencies for Taxes of the Company or any Subsidiary have been claimed, proposed or assessed by any Governmental Entity.  Neither the Company nor any Subsidiary has received any written notice from, or to the Knowledge of the Company, otherwise been notified by, any jurisdiction in which the Company or any Subsidiary does not file a Tax Return that the jurisdiction believes that the Company or any Subsidiary was required to file any Tax Return that was not filed or is subject to Tax in such jurisdiction. Neither the Company nor any Subsidiary has (i) waived any statute of limitations with respect to Taxes or agreed to extend the period for assessment or collection of any Taxes, which waiver or extension is still in effect, (ii) requested any extension of time within which to file any Tax Return, which Tax Return has not yet been filed, or (iii) executed or filed any power of attorney with any taxing authority, which is still in effect.

 

(f)                                   Neither the Company nor any Subsidiary has made any payment, is obligated to make any payment, or is a party to any agreement, contract, arrangement or plan that would reasonably be expected to obligate it to make any payment that would be treated as an “excess parachute payment” under Section 280G of the Code (without regard to Sections 280G(b)(4) and 280G(b)(5) of the Code).

 

(g)                                  Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or portion thereof) ending after the Closing Date as a result of (i) any change in method of, or use of an improper method of, accounting for a taxable period ending on or prior to the Closing Date, (ii) deferred intercompany gain or any excess loss account described in Treasury Regulations

 

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under Section 1502 of the Code (or any corresponding provision of state, local or foreign Tax Law) existing, in each case, on or prior to the Closing Date, (iii) closing agreement as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law) executed on or prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date, (v) prepaid amount received on or prior to the Closing Date, or (vi) any election made pursuant to Section 108(i) of the Code on or prior to the Closing Date.

 

(h)                                 Neither the Company nor any Subsidiary has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(l)(A)(ii) of the Code.

 

(i)                                     Neither the Company nor any Subsidiary has distributed to its shareholders or security holders stock or securities of a controlled corporation, nor has stock or securities of the Company or any Subsidiary been distributed, in a transaction to which Section 355 of the Code applies (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the transactions contemplated by this Agreement.

 

(j)                                    There are no Liens with respect to Taxes upon any of the assets of the Company or any Subsidiary, other than with respect to Taxes not yet due and payable.

 

(k)                                 Section 3.9(k) of the Company Disclosure Schedule sets forth each jurisdiction (other than United States federal) in which the Company or any Subsidiary files, is required to file or has been required to file a Tax Return.

 

(l)                                     Neither the Company nor any Subsidiary (i) is a party to any joint venture, partnership, or other arrangement that is treated as a partnership for federal income Tax purposes or (ii) has made an entity classification (“check-the-box”) election under Section 7701.

 

(m)                             Neither the Company nor any of its Subsidiaries is subject to tax in any country other than its country of incorporation, organization or formation by virtue of having employees, a permanent establishment or other place of business in that country.

 

(n)                                 Neither the Company nor any Subsidiary (i) is a stockholder of a “specified foreign corporation” as defined in Section 965(e) of the Code (or any similar provision of state, local or foreign Law), or (ii) is a stockholder in a “passive foreign investment company” as defined in Section 1297 of the Code.

 

(o)                                 All related party transactions involving the Company or any Subsidiary have been conducted at arm’s length in compliance with Section 482 of the Code and the Treasury Regulations promulgated thereunder and any comparable provisions of any other Tax Law.

 

(p)                                 Neither the Company nor any Subsidiary has engaged in a “reportable transaction” as set forth in Treasury Regulation section 1.6011-4(b) or a “listed transaction” as set forth in Treasury Regulation section 301.6111-2(b)(2) or any analogous provision of state or

 

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local Law.  Each of the Company and the Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Section 6662 of the Code.

 

(q)                                 This Section 3.9 and Section 3.17 (to the extent such section relates to Taxes) constitute the exclusive representations and warranties of the Company with respect to Taxes and any claim for breach of representation with respect to Taxes shall be based solely on the representations made in such sections and shall not be based on the representations set forth in any other provision of this Agreement.  Nothing in this Section 3.9 or otherwise in this Agreement shall be construed as a representation or warranty with respect to the amount or availability of any net operating loss, capital loss, Tax credits, Tax basis or other Tax asset or attribute of the Company or any of its Subsidiaries in any taxable period (or portion thereof) beginning after the Closing Date.  With the exception of Sections 3.9(c), 3.9(f), 3.9(g), 3.9(l), and 3.9(n), no representation or warranty contained in this Section 3.9 shall apply to Taxes with respect to any taxable period (or portion thereof) beginning after the Closing Date.

 

3.10                        Assets.

 

(a)                                 The Company or the applicable Subsidiary or, to the Company’s Knowledge, the Company Joint Venture, is the true and lawful owner of, and has good title to, all of the assets (tangible or intangible) purported to be owned by the Company or such Subsidiary or, to the Knowledge of the Company, the Company Joint Venture, free and clear of all Liens.  The Company and each Subsidiary owns or leases all tangible assets sufficient for the conduct of its businesses as presently conducted, which tangible assets are reflected in the Company Financial Statements (other than to the extent disposed of in the Ordinary Course of Business).  Each such tangible asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used.

 

(b)                                 Section 3.10(b) of the Company Disclosure Schedule lists individually all fixed assets (within the meaning of GAAP) of the Company or the Subsidiaries, indicating the cost, accumulated book depreciation (if any) and the net book value of each such fixed asset as of the Most Recent Balance Sheet Date.

 

3.11                        Owned and Leased Real Property.

 

(a)                                 Neither the Company nor any Subsidiary owns, or has ever owned, any real property.

 

(b)                                 Section 3.11(b) of the Company Disclosure Schedule lists all Leases and lists the term of such Lease, any extension and expansion options, and the rent payable, security deposit, maintenance and like charges thereunder, and any advance rent thereunder.  The Company has made available to the Buyer complete and accurate copies of the Leases.  Neither the Company nor any Subsidiary occupies any space other than pursuant to a Lease. With respect to each Lease:

 

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(i)                                     such Lease is legal, valid, binding, enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto;

 

(ii)                                  such Lease will continue to be legal, valid, binding, enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;

 

(iii)                               none of the Company, any Subsidiary or, to the Knowledge of the Company, any other party, is in breach or violation of, or default under, any such Lease, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute any such breach or default by the Company or any Subsidiary or, to the Knowledge of the Company, any other party under such Lease; and to the Knowledge of the Company, no event has occurred that would give rise to a termination right under such Lease;

 

(iv)                              there are no (A) unresolved disputes with respect to the terms of the Lease initiated by the Company against any other party thereto or asserted in writing, or to the Company’s Knowledge, via any other means (including orally) by any other party thereto against the Company or any Subsidiary, (B) oral agreements which modify or supersede any terms of the written Lease, or (C) or forbearance programs in effect as to such Lease;

 

(v)                                 neither the Company nor any Subsidiary has assigned, transferred, conveyed, mortgaged, subleased, licensed, deeded in trust or encumbered any interest in the leasehold or subleasehold;

 

(vi)                              all facilities leased or subleased thereunder are supplied with utilities and other services adequate for the operation of said facilities;

 

(vii)                           to the Knowledge of the Company, there are no Liens, easements, covenants or other restrictions applicable to the real property subject to such Lease which would reasonably be expected to impair the current uses or the occupancy by the Company or any Subsidiary of the property subject thereto; and

 

(viii)                        no construction, alteration or other leasehold improvement work with respect to the Lease remains to be paid for or performed by the Company or any Subsidiary.

 

3.12                        Intellectual Property.

 

(a)                                 Section 3.12(a) of the Company Disclosure Schedule lists all Company Registrations, in each case enumerating specifically the applicable filing or registration number, title, jurisdiction in which filing was made or from which registration issued, date of filing and issuance, names of all current applicant(s) and registered owners(s), as applicable.  All assignments of Company Registrations to the Company or any Subsidiary have been properly executed and recorded.  All issuance, renewal, maintenance and other payments that are or have become due with respect to any Company Registrations have been timely paid by or on behalf of

 

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the Company, and there are no Liens on any of the Company Registrations other than non-exclusive licenses to end users entered into in the Ordinary Course of Business.

 

(b)                                 There are no inventorship challenges, opposition or nullity proceedings or interferences declared, commenced or provoked, or to the Knowledge of the Company, threatened, with respect to any Patent Rights included in the Company Registrations. The Company and the Subsidiaries have complied with their duty of candor and disclosure to the United States Patent and Trademark Office and any relevant foreign patent office with respect to all patent and trademark applications filed by or on behalf of the Company or any Subsidiary and have made no misrepresentation in such applications.  The Company has no Knowledge of any information that would preclude the Company or any Subsidiary from having clear title to the Company Registrations or affecting the patentability, validity or enforceability of any Company Registrations.  There has been no public disclosure of any Company Intellectual Property, including in trade publications or at trade shows, prior to filing of any Company Registrations with respect thereto.

 

(c)                                  Each item of Company Intellectual Property will be owned or available for use by the Buyer or a subsidiary of the Buyer following the Closing on the same terms and conditions as it was immediately prior to the Closing.  The Company or a Subsidiary is the sole and exclusive owner of all Company Owned Intellectual Property, free and clear of any Liens other than non-exclusive licenses to end users entered into in the Ordinary Course of Business.  The Company Intellectual Property constitutes all Intellectual Property necessary (i) to Exploit the Customer Offerings in the manner so done currently and contemplated to be done in the future by the Company and the Subsidiaries, and (ii) otherwise to conduct the business of the Company and the Subsidiaries in the manner currently conducted and contemplated to be conducted in the future by the Company and the Subsidiaries.  A true and complete list of all Customer Offerings is set forth in Section 3.12(c)(i) of the Company Disclosure Schedule, and all Internal Systems to the extent material to the business of the Company and any of the Subsidiaries, taken as a whole, are listed and described in Section 3.12(c)(ii) of the Company Disclosure Schedule.

 

(d)                                 The Company or the appropriate Subsidiary, as applicable, has taken all reasonably necessary measures to protect the proprietary nature of each item of Company Owned Intellectual Property, and to maintain in confidence all trade secrets and confidential information comprising a part thereof.   The Company and each Subsidiary has, in all material respects, complied with all applicable contractual and legal requirements pertaining to information privacy and security.  No written, or to the Knowledge of the Company, oral or other form of complaint relating to an improper use or disclosure of, or a breach in the security of, any such information has been made or, to the Knowledge of the Company, threatened against the Company or any Subsidiary.  To the Knowledge of the Company, there has been no: (i) unauthorized disclosure of any third party proprietary or confidential information in the possession, custody or control of the Company or any Subsidiary, or (ii) breach of the Company’s or any Subsidiary’s security procedures wherein confidential information has been disclosed to a third Person, in each case where such disclosure has resulted in material Damages or the loss of a material right or benefit.

 

(e)                                  None of the Customer Offerings, or the Exploitation thereof by the Company or the Subsidiaries or by any reseller, distributor, customer or user thereof, or any

 

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other activity of the Company or the Subsidiaries, infringes or violates, or constitutes a misappropriation of, or in the past has infringed or violated, or constituted a misappropriation of, any Intellectual Property rights of any third party.    Section 3.12(e) of the Company Disclosure Schedule lists any written, or to the Knowledge of the Company, oral or other form of complaint, claim or notice, or threat of any of the foregoing (including any notification that a license under any patent is or may be required by, or is available for license to, the Company), received by the Company or any Subsidiary alleging any such infringement, violation or misappropriation and any request or demand for indemnification or defense received by the Company or any Subsidiary from any reseller, distributor, customer, user or any other third party; and the Company has provided to the Buyer copies of all such complaints, claims, notices, requests, demands or threats, as well as any legal opinions, studies, market surveys and analyses relating to any alleged or potential infringement, violation or misappropriation.

 

(f)                                   To the Knowledge of the Company, no Person (including any Company Employee or current or former consultant of the Company or the Subsidiaries) is infringing, violating or misappropriating any of the Company Owned Intellectual Property or any of the Company Licensed Intellectual Property that is exclusively licensed to the Company or any Subsidiary.  The Company has provided to the Buyer copies of all correspondence, analyses, legal opinions, complaints, claims, notices or threats concerning the infringement, violation or misappropriation of any Company Owned Intellectual Property.

 

(g)                                  Section 3.12(g) of the Company Disclosure Schedule identifies each license, covenant or other agreement pursuant to which the Company or any Subsidiary has assigned, transferred, licensed, distributed or otherwise granted any right or access to any Person, or covenanted not to assert any right, with respect to any past, existing or future Company Intellectual Property.  Except as described in Section 3.12(g) of the Company Disclosure Schedule, neither the Company nor any Subsidiary has agreed to indemnify any Person against any infringement, violation or misappropriation of any Intellectual Property rights with respect to any Customer Offerings or any third party Intellectual Property rights.  Neither the Company nor any Subsidiary is a member of or party to any patent pool, industry standards body, trade association or other organization pursuant to the rules of which it is obligated to license any existing or future Intellectual Property to any Person.

 

(h)                                 Section 3.12(h) of the Company Disclosure Schedule identifies (i) each item of Company Licensed Intellectual Property and the license or agreement pursuant to which the Company or any Subsidiary Exploits or obtains rights to Exploit it (excluding currently-available, off-the-shelf software programs that are part of the Internal Systems and are licensed by the Company or any Subsidiary pursuant to “shrink wrap” licenses, the total fees associated with which are less than $25,000 per year) and (ii) each agreement, contract, assignment or other instrument pursuant to which the Company or any Subsidiary has obtained any joint or sole ownership interest in or to each item of Company Owned Intellectual Property.  No third party inventions, methods, services, materials, processes or Software are included in or required to Exploit the Customer Offerings or Internal Systems.

 

(i)                                     Neither the Company nor any Subsidiary has licensed, distributed or disclosed, and to the Knowledge of the Company, there has been no distribution or disclosure by others (including any Company Employee or any current or former contractor of the Company or

 

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any Subsidiary) of, the Company Source Code to any Person, except pursuant to the agreements listed in Section 3.12(i) of the Company Disclosure Schedule, and the Company and the Subsidiaries have taken all reasonable physical and electronic security measures to prevent disclosure of such Company Source Code.  No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, nor will the consummation of the transactions contemplated hereby, result in the disclosure or release of such Company Source Code by the Company, the Subsidiaries, their escrow agent(s) or any other Person to any third party.

 

(j)                                    Each Company Employee and each current or former independent contractor of the Company or any Subsidiary has executed a valid, binding and enforceable written agreement expressly assigning to the Company or such Subsidiary all right, title and interest in any inventions and works of authorship, whether or not patentable, invented, created, developed, conceived and/or reduced to practice during the term of such Company Employee’s employment or such independent contractor’s work for the Company or the relevant Subsidiary, and all Intellectual Property rights therein, and has waived all moral rights therein to the extent legally permissible.

 

(k)                                 The Company and the Subsidiaries have neither sought, applied for nor received any support, funding, resources or assistance from any federal, state, local or foreign governmental or quasi-governmental agency or funding source in connection with the Exploitation of the Customer Offerings or any facilities or equipment used in connection therewith.  No university or Governmental Entity has sponsored any research or development conducted by the Company or any Subsidiary, or has any claim of right or ownership of or Lien on any Company Owned Intellectual Property or any Company Licensed Intellectual Property that is, or is purported to be, exclusively licensed to Company or any Subsidiary.

 

(l)                                     Neither the negotiation, execution, delivery or performance of this Agreement, nor the consummation of the transactions contemplated hereby, will result in (i) a material breach of or material default under any agreement governing any Company Intellectual Property, (ii) a material impairment of the rights of the Company or any Subsidiary in or to any Company Intellectual Property or portion thereof, (iii) the grant or transfer to any third party of any new license or other interest under, the abandonment, assignment to any third party, or modification or loss of any right with respect to, or the creation of any Lien on, any Company Intellectual Property, (iv) the Company, any Subsidiary, the Buyer or any of their respective Affiliates being obligated to pay any penalty or new or increased royalty or fee to any Person under any agreement governing any Company Intellectual Property, or (v) the Buyer or any of the Buyer’s Affiliates being (A) bound by or subject to any noncompete or licensing obligation or covenant not to sue or (B) obligated to license any of its Intellectual Property to (or obligated not to assert its Intellectual Property against) any Person.

 

3.13                        Contracts.

 

(a)                                 Section 3.13(a) of the Company Disclosure Schedule lists the following agreements (each a “Contract”) to which the Company or any Subsidiary is, as of the date of this Agreement, a party and under which the Company or any Subsidiary has any remaining rights or obligations:

 

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(i)                                     any agreement (or group of related agreements) for the lease of personal property from or to third parties;

 

(ii)                                  any agreement (or group of related agreements) for the purchase or sale of products or for the furnishing or receipt of services (A) which calls for performance over a period of more than one year, (B) which involves more than the sum of $75,000, or (C) in which the Company or any Subsidiary has granted manufacturing rights, “most favored nation” pricing provisions or marketing or distribution rights relating to any services, products or territory or has agreed to purchase a minimum quantity of goods or services or has agreed to purchase goods or services exclusively from a certain party;

 

(iii)                               any agreement providing for any royalty, milestone or similar payments by the Company;

 

(iv)                              any agreement concerning the establishment or operation of a partnership, joint venture or limited liability company;

 

(v)                                 any agreement (or group of related agreements) under which the Company or any Subsidiary has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) Indebtedness (including capitalized lease obligations) or under which it has imposed (or may impose) a Lien on any of its assets, tangible or intangible;

 

(vi)                              any agreement for the disposition of any significant portion of the assets or business of the Company or any Subsidiary (other than sales of products in the Ordinary Course of Business) or any agreement for the acquisition of the assets or business of any other Person (other than purchases of inventory or components in the Ordinary Course of Business);

 

(vii)                           any agreement concerning noncompetition or non-solicitation (other than nonsolicitation agreements with end customers of the Company or any Subsidiary or Company Employees or contractors set forth in the Company’s or the applicable Subsidiary’s standard terms and conditions of sale or standard form of employment or consulting agreement, copies of which have previously been made available the Buyer);

 

(viii)                        any employment agreement or consulting agreement other than offer letters for at will employees without severance or proprietary information agreements materially similar to the Company’s existing form, a copy of which has been made available to Buyer;

 

(ix)                              any agreement providing for severance, retention, change in control payments, or transaction-based bonuses or incentives;

 

(x)                                 any settlement agreement or settlement-related agreement (including any agreement in connection with which any employment-related claim is settled);

 

(xi)                              any agreement involving any current or former officer, director or stockholder of the Company or any Affiliate thereof;

 

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(xii)                           any agreement under which the consequences of a default or termination would reasonably be expected to have a Company Material Adverse Effect;

 

(xiii)                        any agency, distributor, sales representative, franchise or similar agreements to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound;

 

(xiv)                       any agreement which contains any provisions requiring the Company or any Subsidiary to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products or services entered into in the Ordinary Course of Business);

 

(xv)                          any agreement that would reasonably be expected to have the effect of prohibiting or impairing the conduct of the business of the Company or any of the Subsidiaries as currently conducted;

 

(xvi)                       any agreement that would entitle any third party to receive a license or any other right to Intellectual Property of the Buyer or any of the Buyer’s Affiliates (excluding the Company and the Subsidiaries) following the Closing;

 

(xvii)                    any agreement relating to the research, development, clinical trial, manufacturing, distribution, supply, marketing or co-promotion of any products, product candidates or devices in development by or which has been or which is being researched, developed, marketed, distributed, supported, sold or licensed out, in each case by or on behalf of the Company or any Subsidiary;

 

(xviii)                 any agreement between or among (A) the Company and/or any Subsidiary and (B) the Company Joint Venture and/or any other equityholder of the Company Joint Venture;

 

(xix)                       any agreement that, following the Closing, would bind or purport to bind the Buyer or any of its Affiliates (excluding the Company and the Subsidiaries); and

 

(xx)                          any other agreement (or group of related agreements) involving, pursuant to the terms thereof, payments to or by the Company in amounts of more than $25,000 in any 12-month period and not entered into in the Ordinary Course of Business.

 

(b)                                 The Company has made available to the Buyer a complete and accurate copy of each Contract (as amended to date).  With respect to each Contract: (i) the Contract is legal, valid, binding and enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto; (ii) the Contract will continue to be legal, valid, binding and enforceable and in full force and effect against the Company or the Subsidiary that is the party thereto, as applicable, and, to the Company’s Knowledge, against each other party thereto immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) neither the Company, any Subsidiary nor, to the Knowledge of the Company, any other party, is in breach or violation of, or default under, any such Contract, and no event has occurred, is pending or, to the Knowledge of the Company, is threatened, which, after the giving

 

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of notice, with lapse of time, or otherwise, would constitute any such breach or default by the Company, any Subsidiary or, to the Knowledge of the Company, any other party under such Contract.

 

(c)                                  Neither the Company nor any Subsidiary is a party to any oral contract, agreement or other arrangement which, if reduced to written form, would be required to be listed in Section 3.13(a) of the Company Disclosure Schedule under the terms of Section 3.13(a).  Neither the Company nor any Subsidiary is a party to any written or oral arrangement (i) to perform services or sell products which is expected to be performed at, or to result in, a loss or (ii) for which the customer has already been billed or paid that have not been fully accounted for on the Most Recent Balance Sheet.

 

3.14                        Litigation.  There is no Legal Proceeding pending or, to the Knowledge of the Company, threatened with respect to or against the Company or any Subsidiary or, to the Knowledge of the Company, any current or former officer, director, employee, consultant, agent or stockholder of the Company or any Subsidiary in its, his or her capacity as such or with respect to the Company or any Subsidiary, or seeking to prevent or delay the transactions contemplated hereby, and no written or, to the Knowledge of the Company, other notice of any Legal Proceeding involving or relating to the Company or any Subsidiary, whether pending or threatened, has been received by the Company or any Subsidiary.  There are no judgments, orders, injunctions, decrees, stipulations or awards (whether rendered by a court, administrative agency or other Governmental Entity, by arbitration or otherwise) against or involving the Company or any Subsidiary.  There is no Legal Proceeding by the Company or any Subsidiary pending, or which the Company or any Subsidiary has commenced preparations to initiate, against any other Person.

 

3.15                        Environmental Matters.

 

(a)                                 The Company and the Subsidiaries have complied with all applicable Environmental Laws.  There is no pending or, to the Knowledge of the Company, threatened Legal Proceeding relating to any Environmental Law involving the Company or any Subsidiary.

 

(b)                                 Neither the Company nor any Subsidiary has any liabilities or obligations arising from the release or threatened release of any Materials of Environmental Concern into the environment.

 

(c)                                  Neither the Company nor any Subsidiary is a party to or bound by any court order, administrative order, consent order or other agreement between the Company or any Subsidiary and any Governmental Entity entered into in connection with any legal obligation or liability arising under any Environmental Law.

 

(d)                                 Set forth in Section 3.15(d) of the Company Disclosure Schedule is a list of all documents (whether in hard copy or electronic form) that contain any environmental reports, investigations and audits relating to premises currently or previously owned or operated by the Company or any Subsidiary (whether conducted by or on behalf of the Company, any Subsidiary or a third party, and whether done at the initiative of the Company or a Subsidiary or

 

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directed by a Governmental Entity or other third party) which the Company has possession of or access to.  A complete and accurate copy of each such document has been provided to the Buyer.

 

3.16                        Labor and Employment.

 

(a)                                 Section 3.16(a) of the Company Disclosure Schedule contains a list of all individual Company Employees as of the date of this Agreement, along with the position, date of hire, annual rate of compensation (or with respect to Company Employees compensated on an hourly or per diem basis, the hourly or per diem rate of compensation), estimated or target annual incentive compensation of each such person and employment status of each such person (including whether the person is on leave of absence and the dates of such leave).  Section 3.16(a) of the Company Disclosure Schedule sets forth all bonuses earned by any Company Employee through the date of this Agreement that are expected to be accrued but unpaid as of the Closing Date and the amounts of accrued vacation or paid time off, accrued sick time, and the amount of such liabilities as of the date that is one Business Day prior to the date hereof.  Each Company Employee has entered into the Company’s or such Subsidiary’s standard form of confidentiality, non-competition and assignment of inventions agreement, a copy of which has previously been made available to the Buyer.  To the Knowledge of the Company, all of the agreements referenced in the preceding sentence will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing.  To the Knowledge of the Company, no key Company Employee or group of Company Employees has any plans to terminate employment with the Company or any Subsidiary.  Since inception, neither the Company nor any Subsidiary has directly incurred or paid any liabilities, obligations, costs, expenses or damages with respect to any employees of the Company Joint Venture.

 

(b)                                 Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, the Company Joint Venture, has materially breached or violated any (i) applicable Law respecting employment and employment practices, terms and conditions of employment and wages and hours, including any such Law respecting employment discrimination, employee classification (for overtime purposes or as employee versus independent contractor), workers’ compensation, family and medical leave, the Immigration Reform and Control Act and occupational safety and health requirements, or (ii) the terms of employment and other individual service provider agreements.  No material claims, controversies, investigations, audits or other Legal Proceedings are pending or, to the Knowledge of the Company, threatened, with respect to such Laws or agreements, either by private Persons or by Governmental Entities. No persons provide services to the Company and its Subsidiaries through a professional employer organization or other similar service.

 

(c)                                  Neither the Company nor any Subsidiary is a party to or bound by any collective bargaining agreement, nor has either of them experienced any actual or threatened strikes, grievances, claims of unfair labor practices or other collective bargaining disputes.  The Company has no Knowledge of any organizational effort made or threatened (including the filing of a petition for certification) either currently or within the past two (2) years, by or on behalf of any labor union or works council with respect to Company Employees.

 

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(d)                                 Section 3.16(d) of the Company Disclosure Schedule contains a list of all consultants and independent contractors as of the date of this Agreement currently engaged by either the Company or any Subsidiary, along with the position, date of retention and rate of remuneration for each such Person.  Each such consultant or independent contractor is a party to a written agreement or contract with the Company or any Subsidiary containing confidentiality and assignment of inventions provisions, a copy of which has previously been made available to the Buyer.  No independent contractor has provided services to the Company or any Subsidiary for a period of six (6) consecutive months or longer.  Neither the Company nor any Subsidiary has or has had any temporary or leased employees.

 

(e)                                  The Company has made available to the Buyer a true, correct and complete list as of the date of this Agreement of all current Company Employees working in the United States who are not citizens or permanent residents of the United States, that indicates visa, work authorization, and green card status and the date their work authorization is scheduled to expire.  All other Company Employees employed in the United States are citizens or permanent residents.  The Company has never engaged anyone as an employee outside the United States.  Each Company Employee working in a country other than one of which such Company Employee is a national has a valid work permit, certificate of sponsorship, visa, or other right under applicable Law that permits him or her to be employed lawfully by the Company or the applicable Subsidiary in the country in which he or she is so employed.

 

(f)                                   Neither the Company nor any of its Subsidiaries is liable for any arrears of wages.

 

(g)                                  No charges or complaints are open and pending (or since December 31, 2014 have been settled or otherwise closed) against the Company or any Subsidiary with the Equal Employment Opportunity Commission, Office of Federal Contract Compliance or other Governmental Entity regulating the employment or compensation of individuals or pursuant to internal complaint procedures, and, to the Knowledge of the Company, no current or former employee of the Company or any Subsidiary has made, during the last 12 months, an oral or, during the last three (3) years, a written complaint of discrimination, retaliation or other similar wrongdoing.  True, correct and complete information regarding any closed charges or complaints filed since December 31, 2014 with any Governmental Entity for reasons set forth in the preceding sentence (or, with respect to discrimination, retaliation, or similar wrongdoing, pursuant to internal complaint procedures) has been made available to the Buyer.

 

(h)                                 Section 3.16(h) of the Company Disclosure Schedule contains a complete and accurate list as of the date of this Agreement of (i) all of the Company’s and each Subsidiary’s current written employee handbooks, employment manuals, employment policies, or affirmative action plans, and (ii) written summaries of all unwritten employment policies. Section 3.16(h) of the Company Disclosure Schedule sets forth the policy of the Company and each Subsidiary with respect to accrued vacation, paid time off, accrued sick time and earned time off.

 

(i)                                     Neither the Company nor any Subsidiary has incurred, and no circumstances exist under which the Company or any Subsidiary could incur, any liability arising

 

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from the misclassification of employees as consultants or independent contractors, or from the misclassification of consultants or independent contractors as employees.

 

3.17                        Employee Benefit Plans.

 

(a)                                 Section 3.17(a) of the Company Disclosure Schedule contains a complete and accurate list of all Company Plans.  Complete and accurate copies of (i) all Company Plans that have been reduced to writing, together with all amendments thereto, (ii) written summaries of all unwritten Company Plans, (iii) all related trust agreements, insurance contracts and summary plan descriptions, (iv) all annual reports filed on IRS Form 5500 and (for all funded plans) all plan financial statements for the last three (3) plan years for each Company Plan, (v) all reports regarding the satisfaction of the nondiscrimination requirements of Sections 410(b), 401(k), and 401(m) of the Code for the past year, (vi) all disclosures received by the Company with respect to ERISA Section 408(b)(2) or provided by a Company Plan pursuant to ERISA Section 404(a) and (vii) any written or electronic communications from or to the Internal Revenue Service, the DOL or any other Governmental Entity with respect to a Company Plan (including any voluntary correction submissions), have been made available to the Buyer.  No current or former Company Plan is or has been subject to non-U.S. Law.

 

(b)                                 Each Company Plan has been administered, in all material respects, in accordance with its terms.  The Company and the Subsidiaries, are, and have been, with respect to each Company Plan, in compliance with the applicable provisions of ERISA and the Code and the regulations thereunder and other applicable Law, in each case, in all material respects and have made all required contributions thereto in all material respects. There is no plan or commitment, whether legally binding or not, to create any additional Company Plans or to modify any existing Company Plans.

 

(c)                                  There are no Legal Proceedings (except claims for benefits payable in the normal operation of the Company Plans and proceedings with respect to qualified domestic relations orders) pending against any Company Plan or asserting any rights or claims to benefits under any Company Plan that could reasonably be expected to give rise to any liability.  No Company Plan is or within the last three (3) calendar years has been the subject of, or has received or provided written (or, to the Company’s Knowledge, other form of) notice that it is the subject of, examination by a Governmental Entity or a participant in a government sponsored amnesty, voluntary compliance or similar program.

 

(d)                                 All the Company Plans that are intended to be qualified under Section 401(a) of the Code have received determination, opinion, or advisory letters from the Internal Revenue Service to the effect that such Company Plans are qualified and the plans and the trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code or are based on prototype or volume submitter documents that have received such letter, no such determination, advisory, or opinion letter has been revoked and revocation has not been threatened, and no such Company Plan has been amended since the date of its most recent determination, advisory, or opinion letter or application therefor in any respect, and no act or omission has occurred, that would adversely affect its qualification or increase its cost.  There has been no termination or partial termination of such a Company Plan.  Each Company Plan that provides for compliance with Section 404(c) of ERISA, or is intended to

 

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comply with such provision, has so complied in all material respects.  Each Company Plan has complied in all material respects, where applicable, with ERISA Section 408(b)(2) (or other applicable exemption) and with ERISA Section 404(a).

 

(e)                                  Neither the Company, any Subsidiary nor any ERISA Affiliate has ever maintained or contributed to or had any actual or potential contingent liability with respect to an Employee Benefit Plan that was ever subject to Section 412 of the Code or Title IV of ERISA.  At no time has the Company, any Subsidiary or any ERISA Affiliate been obligated to contribute to or has ever had any actual or potential liability with respect to any “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).

 

(f)                                   With respect to the Company Plans, there are no benefit obligations for which contributions have not been made or properly accrued, accounted for by reserves, or otherwise properly footnoted in accordance with GAAP, on the Company Financial Statements.  The assets of each Company Plan that is funded are reported at their fair market value on the books and records of such Company Plan.

 

(g)                                  All group health plans of the Company, any Subsidiary and any ERISA Affiliate comply and have complied, in each case, in all material respects, with the requirements of COBRA, Code Section 5000, the Health Insurance Portability and Accountability Act, the Patient Protection and Affordable Care Act (“PPACA”), and any other comparable domestic or foreign Laws.  The Company does not have any arrangement for paying or reimbursing medical premiums that would constitute an employer payment plan as described in IRS Notice 2015-17.  No employee, officer, director or manager, or former employee, officer, director, or manager (or beneficiary of any of the foregoing) of the Company or any Subsidiary is entitled to receive any welfare benefits, including death or medical benefits (whether or not insured) beyond retirement or other termination of employment, other than cash severance (to the extent disclosed) or as required by applicable Law, and there are and have been no written or oral commitments to provide any of the foregoing.

 

(h)                                 No act or omission has occurred and no condition exists with respect to any Company Plan that would subject the Buyer, the Company, any Subsidiary, any Subsidiary, or any plan participant to (i) any material fine, penalty, Tax or liability of any kind imposed under ERISA, the Code or any other applicable Law or (ii) any contractual indemnification or contribution obligation protecting any fiduciary, insurer or service provider with respect to any Company Plan, nor will the transactions contemplated by this Agreement give rise to any such liability.

 

(i)                                     Each Company Plan (other than bilateral agreements with individuals) is amendable and terminable unilaterally by the Company and any Subsidiary at any time without liability or expense to the Company, any Subsidiary or such Company Plan as a result thereof (other than for benefits accrued through the date of termination or amendment and reasonable administrative expenses related thereto).  The investment vehicles used to fund any Company Plan may be changed at any time without incurring a sales charge, surrender fee or other similar expense.

 

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(j)                                    No Company Plan or other contract, agreement, plan or arrangement covering any one or more individuals contains any provision or is subject to any applicable Law that, in connection with the Merger or any of the other transactions contemplated by this Agreement or upon related, concurrent or subsequent employment termination, or in combination with any other event, would (i) increase, accelerate or vest any compensation or benefit, except as required by Law with respect to the termination of any Company Plan pursuant to Section 6.9, (ii) require severance, termination or retention payments, (iii) provide any term of employment or compensation guaranty, (iv) forgive any Indebtedness, (v) require or provide any payment or compensation subject to Section 280G of the Code (and no such payment or compensation has previously been made), (vi) promise or provide any Tax gross ups or indemnification, whether under Sections 409A or 4999 of the Code or otherwise or (vii) measure any values of benefits on the basis of any of the transactions contemplated hereby.  No stockholder, employee, officer or director of the Company has been promised or paid any bonus or incentive compensation related to the transactions contemplated hereby.

 

(k)                                 There are no loans or extensions of credit from the Company or any Subsidiary to any Company Employee or any independent contractor to the Company or any Subsidiary (other than advances of business expenses in the Ordinary Course of Business).  There is no corporate-owned life insurance (COLI), split-dollar life insurance policy or any other life insurance policy on the life of any Company Employee or on any Company Equityholder.

 

(l)                                     Each Company Plan that is a “nonqualified deferred compensation plan” (as defined in Code Section 409A(d)(1)) has been since the later of January 1, 2005 or its inception in compliance with Code Section 409A and IRS Notice 2005-1 and has been in documentary compliance since January 1, 2009, in each case, in all material respects.  No corrections of violations of Code Section 409A have occurred.  No stock option or equity unit option granted under any Company Plan has an exercise price that has been less than the fair market value of the underlying stock or equity units (as the case may be) as of the date such option was granted or has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such option.  The Company has made available to the Buyer all valuation or similar reports pertaining to the valuation of the Company Stock.

 

3.18                        Compliance with Laws.  Each of the Company and the Subsidiaries and, to the Company’s Knowledge, the Company Joint Venture, has conducted since inception, and is conducting, its business and operations in compliance in all material respects with all applicable Laws.  Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, the Company Joint Venture, has received any written notice or, to its Knowledge, any other communication from any Governmental Entity or other Person alleging any such noncompliance with any applicable Law.  Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, the Company Joint Venture, has any material liability for failure to comply with any Law and, to the Knowledge of the Company, there is no act, omission, event or circumstance that would reasonably be expected to give rise to any such liability.  Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, the Company Joint Venture, has conducted any internal investigation with respect to any actual, potential or alleged violation of any Law by any manager, member or other equity holder, officer or Company Employee or concerning any actual or alleged fraud.

 

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3.19                        Unlawful Payments.  The Company and the Subsidiaries are and have been in compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., the Organization for Economic Cooperation and Development Convention Against Bribery of Foreign Public Officials in International Business Transactions and legislation implementing such convention, all other international anti-bribery conventions and all applicable anti-corruption or bribery Laws in any jurisdiction in which the Company or any Subsidiary has conducted its business (collectively, “Anti-Bribery Laws”).  Neither the Company nor any Subsidiary has received any written communication from any Governmental Entity that alleges that the Company or any Subsidiary, or any current or former Representatives thereof, is or may be in violation of, or has, or may have, any liability under, any Anti-Bribery Laws, and no such potential violation of Anti-Bribery Laws has been discovered by or brought to the attention of the Company or any Subsidiary since December 31, 2013.  Neither the Company nor any Subsidiary has made or anticipates making any disclosures to any Governmental Entity for potential violations of Anti-Bribery Laws.  None of the Company and the Subsidiaries’ current or former directors, officers, or employees, or, to the Knowledge of the Company, other Representatives is currently an officer, agent or employee of a Governmental Entity. Neither the Company nor any Subsidiary nor any of their respective current or former Representatives has directly or indirectly offered, given, reimbursed, paid or promised to pay, or authorized the unlawful payment of, any money or other thing of value (including any fee, gift, sample, travel expense or entertainment) or any commission payment payable to (a) any Person who is an official, officer, agent, employee or representative of any Governmental Entity or of any existing or prospective customer (whether or not owned by a Governmental Entity), (b) any political party or official thereof, (c) any candidate for political or political party office or (d) any other Person affiliated with any such customer, political party or official or political office, in each case, while knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, reimbursed, paid or promised, directly or indirectly, for purposes not allowable under the Anti-Bribery Laws, to any such official, officer, agent, employee, representative, political party, political party official, candidate, individual, or other Person affiliated with any such customer, political party or official or political office.

 

3.20                        Permits and Regulatory Matters.

 

(a)                                 Section 3.20 of the Company Disclosure Schedule sets forth a list of all Permits issued to or held by the Company or any Subsidiary, including all governmental authorizations from the United States Food and Drug Administration (the “FDA”), the European Medicines Agency (the “EMA”) or any other Regulatory Authority.  Such listed Permits are the only Permits that are required for the Company and the Subsidiaries to conduct their business as presently conducted.  Each such Permit is in full force and effect; the Company or the applicable Subsidiary, as the case may be, is in material compliance with the terms of each such Permit; and, to the Knowledge of the Company, no suspension or cancellation of such Permit is threatened and there is no basis for believing that such Permit will not be renewable upon expiration.  To the Knowledge of the Company, each such Permit will continue in full force and effect immediately following the Closing. The Company has made available to the Buyer all such Permits. To the Knowledge of the Company: the Company Joint Venture holds all Permits required for the Company Joint Venture to conduct its business as presently conducted; each such Permit is in full force and effect; the Company Joint Venture is in material compliance with

 

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the terms of each such Permit; and each such Permit will continue in full force and effect immediately following the Closing.

 

(b)                                 All manufacturing, processing, distribution, labeling, storage, testing, specifications or sampling of products performed by or on behalf of the Company or any Subsidiary are in material compliance with all applicable Laws administered or issued by the FDA, the EMA or any other Governmental Entity exercising comparable authority.  Neither the Company nor any Subsidiary has received any written notices or correspondence from the FDA, the EMA or any other Governmental Entity exercising comparable authority, and there is no action or proceeding pending, or, to the Knowledge of the Company, threatened (including any prosecution, injunction, seizure, civil fine, suspension or recall), in each case alleging that the Company or any Subsidiary is not currently in compliance with any and all applicable Laws implemented by the FDA, the EMA or any other Governmental Entity exercising comparable authority.

 

(c)                                  The nonclinical studies and tests and clinical trials conducted by or on behalf of the Company and the Subsidiaries were and, if still pending, are being conducted in accordance with experimental protocols, procedures and controls pursuant to, where applicable, accepted professional and scientific standards; neither the Company nor any Subsidiary has received any written notices or correspondence from the Regulatory Authorities requiring the termination, suspension or modification of any studies, tests or preclinical or clinical trials conducted by or on behalf of the Company and/or any of the Subsidiaries. Each submission to the Investigational New Drug applications submitted by or on behalf of the Company or any of its Subsidiaries to the FDA, including all supplements and amendments thereto was true, complete and correct as of the applicable date of submission.

 

(d)                                 The Company and its Subsidiaries have complied with all applicable security and privacy standards regarding protected health information under (i) the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, including the regulations promulgated thereunder and (ii) any applicable state privacy Laws.

 

(e)                                  Section 3.20(e) of the Company Disclosure Schedule sets forth a list of (i) all recalls, field notifications, investigator notices, safety alerts, “serious adverse event” reports or other notices of action relating to an alleged lack of safety or regulatory compliance issued by the Company or any Subsidiary (“Safety Notices”), (ii) the dates such Safety Notices, if any, were resolved or closed, and (iii) to the Company’s Knowledge, any complaints that are currently unresolved.

 

(f)                                   The Company has made available to the Buyer all material written formal communications submitted by or on behalf of the Company or any of its Subsidiaries to any Regulatory Authority.

 

3.21                        Insurance.  Section 3.21 of the Company Disclosure Schedule lists each insurance policy (including fire, theft, casualty, comprehensive general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which the Company or any Subsidiary is a party, a named

 

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insured or otherwise the beneficiary of coverage, all of which are in full force and effect.  There is no claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy.  All premiums due and payable under all such policies have been paid, neither the Company nor any Subsidiary may be liable for retroactive premiums or similar payments, and the Company and the Subsidiaries are otherwise in compliance with the terms of such policies in all material respects.  The Company has no Knowledge of any threatened termination of, or premium increase with respect to, any such policy.  To the Knowledge of the Company, each such policy will continue to be enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing.  Section 3.21 of the Company Disclosure Schedule identifies all material claims asserted by the Company pursuant to any insurance policy since January 1, 2017 and describes the nature and status of each such claim.

 

3.22                        Customers and Suppliers.  Section 3.22 of the Company Disclosure Schedule sets forth a list of (a) each customer of the Company or any Subsidiary during the last full fiscal year and the interim period through the Most Recent Balance Sheet Date and the amount of revenues accounted for by such customer during each such period and (b) each supplier that is the sole supplier of any significant product or service to the Company or any Subsidiary.  No such customer or supplier has indicated within the past year that it will stop, or decrease the rate of, buying materials, products or services or supplying materials, products or services, as applicable, to the Company or any Subsidiary.  The Company and the Subsidiaries each have good relations with their customers.  No unfilled customer order or commitment obligating the Company or any Subsidiary to process, manufacture, provide or deliver products or perform services will result in a loss to the Company or any Subsidiary upon completion of performance.  No purchase order or commitment of the Company or any Subsidiary is in excess of normal requirements, nor are prices provided therein in excess of current market prices for the products or services to be provided thereunder.

 

3.23                        Certain Business Relationships With Affiliates.  No Affiliate of the Company or any Subsidiary, directly or indirectly, (a) owns any property or right, tangible or intangible, which is used in the business of the Company or any Subsidiary, (b) has any claim or cause of action against the Company or any Subsidiary, (c) owes any money to, or is owed any money by, the Company or any Subsidiary, except for reimbursements for business expenses in the Ordinary Course of Business, or (d) is a party to any written, or, to the Knowledge of the Company, other arrangement with the Company or any Subsidiary other than in such Affiliate’s capacity as an employee, director or officer of the Company.  Section 3.23 of the Company Disclosure Schedule describes any transactions or relationships between the Company or any Subsidiary and any Affiliate thereof that occurred or have existed since the beginning of the time period covered by the Company Financial Statements other than any such transaction or relationships solely to the extent related to (i) such Affiliate’s capacity as an employee, director or officer  and (ii) the compensation by the Company of such person.

 

3.24                        Investment Questionnaires.  Each Company Equityholder listed on Section 3.24 of the Company Disclosure Schedule has completed, executed and delivered to the Company an Investor Representation Letter, dated as of a recent date, and copies of all such executed Investor Representation Letters have been made available to the Buyer.  The Company has no reason to believe that the statements set forth therein are not true.

 

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3.25                        Brokers; Schedule of Fees and Expenses.  Neither the Company nor any Subsidiary has any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

 

3.26                        Powers of Attorney.  There are no outstanding powers of attorney executed on behalf of the Company or any Subsidiary.

 

3.27                        Disclosure.  To the Knowledge of the Company, no representation or warranty by the Company contained in this Agreement, and to the Knowledge of the Company, no statement contained in the Company Disclosure Schedule or any other document, certificate or other instrument delivered or to be delivered by or on behalf of the Company pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading.

 

3.28                        No Other Representations and Warranties.

 

(a)                                 Except (i) for the representations and warranties of the Company expressly contained in this Article III or in any certificate, document or instrument delivered at the Closing pursuant to the terms of this Agreement (in each case as qualified and limited by the Disclosure Schedule), or (ii) in the case of fraud or knowing misrepresentation (which, unless an action in another form is required as a matter of Law, may be recovered solely by way of a claim for indemnity pursuant to Section 8.1(g)), the Company has not made or makes any other express or implied representation or warranty, either written or oral, including any representation or warranty as to the accuracy or completeness of any information regarding the Company furnished or made available to Buyer.

 

(b)                                 The Company agrees that it (i) has had an opportunity to discuss the business and affairs of the Buyer with the management of the Buyer, (ii) has had access to due diligence materials of the Buyer for purposes of the transactions contemplated hereby, as well as access to publicly filed documents of the Buyer, (iii) has been afforded the opportunity to ask questions of and receive answers from officers of the Buyer and (iv) has conducted its own independent investigation of the Buyer, its business and the transactions, and has not relied on any representation, warranty or other statement by any person on behalf of the Buyer, other than the representations and warranties of the Buyer expressly contained in Article IV or in any certificate, document or instrument delivered at the Closing pursuant to the terms of this Agreement.  Without limiting the foregoing, (A) other than the representations and warranties of the Buyer expressly contained in Article IV or in any certificate, document or instrument delivered at the Closing pursuant to the terms of this Agreement, none of the Buyer or any of its Affiliates or any other Person, has made or is making any express or implied representation or warranty with respect to the Buyer, including with respect to any information provided or made available to the Company or any Company Equityholder or any of their respective Affiliates or Representatives or any other Person, or, except as otherwise expressly set forth in this Agreement, had or has any duty or obligation to provide any information to the Company or any Company Equityholder or any of their respective Affiliates or Representatives or any other Person in connection with this Agreement or otherwise, and (B) except as otherwise provided therein, none of the Buyer or any of its Affiliates or Representatives or any other Person, will

 

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have or be subject to any liability of any kind or nature to the Company, any Company Equityholder or any of their respective Affiliates, Representatives or any other Person, resulting from the delivery, dissemination or any other distribution to the Company, any Company Equityholder or any of their respective Affiliates or Representatives or any other Person, or the use by the Company, any Company Equityholder or any of their respective Affiliates or Representatives or any other Person, of any such information provided or made available to any of them by the Buyer or any of its Affiliates or Representatives or any other Person, and except as set forth herein, the Company and the Company Equityholders will have no claim against the Buyer or any of its stockholders, directors, officers, employees, Affiliates, advisors, agents or other representatives with respect thereto.

 

(c)                                  Subject to the limitations set forth in Section 8.5 applicable to claims based on fraud and knowing misrepresentations, nothing in this Agreement (including this Section 3.28) shall, or shall be deemed or construed to, preclude, limit or impair any claim in respect of, relieve any Person of any liability or obligation for, or limit or impair any recourse or remedy of any Person available in respect of, fraud or knowing misrepresentation, whether based on representations or statements set forth in or outside of this Agreement (which all parties hereto agree, in the case of claims by any Buyer Indemnified Party, shall be recovered by way of a claim for indemnity pursuant to Section 8.1(g) unless an action in another form is required as a matter of Law).

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE TRANSITORY SUBSIDIARY

 

Each of the Buyer and the Transitory Subsidiary represents and warrants to the Company that the statements contained in this Article IV are true and correct as of the date of this Agreement and will be true and correct as of the Closing as though made as of the Closing, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date):

 

4.1                               Organization, Standing and Power.  Each of the Buyer and the Transitory Subsidiary is a corporation duly organized, validly existing and in good standing under the Laws of the state of its incorporation.  The Buyer has all requisite power and authority (corporate and other) to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

 

4.2                               Authority; No Conflict; Required Filings and Consents.

 

(a)                                 Each of the Buyer and the Transitory Subsidiary has all requisite power and authority to execute and deliver this Agreement and the other agreements contemplated hereby to which it is party and to perform their respective obligations hereunder and thereunder.  The execution and delivery by each of the Buyer and the Transitory Subsidiary of this Agreement and the other agreements contemplated hereby to which it is a party and the consummation by the Buyer and the Transitory Subsidiary of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on

 

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the part of the Buyer and the Transitory Subsidiary, respectively.  This Agreement and the other agreements contemplated hereby to which the Buyer or Transitory Subsidiary is a party has been duly and validly executed and delivered by the Buyer and the Transitory Subsidiary and constitute a valid and binding obligation of the Buyer and the Transitory Subsidiary, enforceable against them in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity.

 

(b)                                 Subject to the filing of the Certificate of Merger as required by the DGCL and to the filing requirements of the HSR Act and applicable foreign Antitrust Laws, neither the execution and delivery by the Buyer or the Transitory Subsidiary of this Agreement the other agreements contemplated hereby to which they are a party, nor the performance by the Buyer or the Transitory Subsidiary of their respective obligations hereunder or thereunder, nor the consummation by the Buyer or the Transitory Subsidiary of the transactions contemplated hereby or thereby, will (i) conflict with or violate any provision of the charter or By-laws of the Buyer or the Transitory Subsidiary, (ii) require on the part of the Buyer or the Transitory Subsidiary any filing with, or permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to accelerate, terminate, modify or cancel, or require any notice, consent or waiver under, any contract, lease, sublease, license, sublicense, franchise, permit, indenture, agreement or mortgage for borrowed money, instrument of Indebtedness, Lien or other agreement to which the Buyer or the Transitory Subsidiary is a party or by which either is bound or to which any of their assets are subject, or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer or the Transitory Subsidiary or any of their properties or assets, except in the case of the foregoing clauses (iii) and (iv) for such notices, consents and waivers that, if not obtained or made, and such conflicts, breaches, defaults, accelerations, terminations, modifications, cancellations, Liens and violations that, individually or in the aggregate, have not had and would not reasonably be expected to have a Buyer Material Adverse Effect.

 

(c)                                  No consent, approval, license, permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to the Buyer or the Transitory Subsidiary in connection with the execution and delivery of this Agreement by the Buyer or the Transitory Subsidiary or the consummation by the Buyer or the Transitory Subsidiary of the transactions contemplated by this Agreement, except for (i) the pre-merger notification requirements under the HSR Act and any applicable foreign Antitrust Laws and (ii) the filing of the Certificate of Merger with the Delaware Secretary of State and appropriate corresponding documents with the appropriate authorities of other states in which the Company is qualified as a foreign corporation to transact business.

 

4.3                               Operations of Transitory Subsidiary.  Transitory Subsidiary is a wholly owned, indirect subsidiary of Buyer and has not engaged in any business activities or conducted any operations of any kind, entered into any agreement or arrangement with any person, or incurred, directly or indirectly, any liabilities, in each case except in connection with its incorporation and the negotiation of this Agreement.

 

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4.4                               Capitalization.  The authorized capital stock of the Buyer consists of 125,000,000 shares of Buyer Common Stock and 5,000,000 shares of Buyer Preferred Stock, $0.001 par value per share (“Buyer Preferred Stock”). As of the close of business on the Business Day prior to the date of this Agreement, there were (i) 46,697,006 shares of Buyer Common Stock and no shares of Buyer Preferred Stock outstanding and (ii) no shares of Buyer Common Stock held in treasury.

 

4.5                               Buyer Stock.  The shares of Closing Stock Consideration subject to issuance pursuant to Article II of this Agreement, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable, free and clear of all Liens (other than restrictions on transfer imposed under applicable securities Laws and restrictions on transfer thereof as provided for herein or Liens imposed as a result of any action or inaction of the Company or any Company Equityholder), and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the DGCL, the organizational documents of the Buyer or any agreement to which Buyer is a party or is otherwise bound.

 

4.6                               SEC Filings; Financial Statements. The Buyer has filed all forms, reports, certifications and other documents required to be filed by Buyer with the SEC since January 1, 2016. All such registration statements, forms, reports and other documents are referred to herein as the “Buyer SEC Reports.” All of the Buyer SEC Reports (i) were filed on a timely basis, (ii) at the time filed, complied as to form in all material respects with the requirements of the Securities Act and the Exchange Act applicable to such Buyer SEC Reports and (iii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Buyer SEC Reports or necessary in order to make the statements in such Buyer SEC Reports, in the light of the circumstances under which they were made, not misleading, in any material respect.  Each of the consolidated financial statements (including, in each case, any related notes and schedules) contained in the Buyer SEC Reports at the time filed (i) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods involved and at the dates involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly presented in accordance with GAAP the consolidated financial position of Buyer and its Subsidiaries as of the dates indicated and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal and recurring year-end adjustments.

 

4.7                               Sufficiency of Funds.  The Buyer will have at the Closing sufficient cash on hand to enable it to perform its obligations to be performed as of the Effective Time.  Each of Buyer and Transitory Subsidiary affirms that it is not a condition to the Closing or to any of its other obligations under this Agreement that Buyer or Transitory Subsidiary obtain financing for or related to any of the transactions contemplated hereby.

 

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4.8                               Financial Advisor.  No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission based upon arrangements made by or on behalf of Buyer or Transitory Subsidiary in respect of any of the transactions contemplated hereby.

 

4.9                               Litigation.  There is no Legal Proceeding pending or, to the knowledge of the Buyer, threatened against the Buyer or Transitory Subsidiary seeking to prevent or delay the transactions contemplated hereby or that would reasonably be expected to result in a Buyer Material Adverse Effect.

 

4.10                        No Prior Activities.  The Transitory Subsidiary has not incurred nor will it incur any liabilities or obligations, except those incurred in connection with its organization and with the negotiation of this Agreement and the performance of its obligations hereunder and the consummation of the transactions contemplated by this Agreement, including the Merger.  As of the date of this Agreement, all of the issued and outstanding capital stock of the Transitory Subsidiary is owned beneficially and of record by Buyer.

 

4.11                        No Other Representations and Warranties.

 

(a)                                 The Buyer agrees that it (i) has had an opportunity to discuss the business and affairs of the Company with the management of the Company, (ii) has had access to the electronic dataroom maintained by the Company for purposes of the transactions contemplated hereby, (iii) has been afforded the opportunity to ask questions of and receive answers from officers of the Company and (iv) has conducted its own independent investigation of the Company, its business and the transactions, and has not relied on any representation, warranty or other statement by any person on behalf of the Company, other than the representations and warranties of the Company expressly contained in Article III or in any certificate, document or instrument delivered at the Closing pursuant to the terms of this Agreement (in each case as qualified and limited by the Company Disclosure Schedule).  Without limiting the foregoing, (A) other than the representations and warranties of the Company expressly contained in Article III or in any certificate, document or instrument delivered at the Closing pursuant to the terms of this Agreement (in each case as qualified and limited by the Company Disclosure Schedule), none of the Company or any of its Affiliates or any other Person, has made or is making any express or implied representation or warranty with respect to the Company, including with respect to any information provided or made available to Buyer or any of its Affiliates or Representatives or any other Person, or, except as otherwise expressly set forth in this Agreement, had or has any duty or obligation to provide any information to the Buyer or any of its Affiliates or Representatives or any other Person in connection with this Agreement or otherwise, and (B) except as otherwise expressly provided herein, none of the Company or any of its Affiliates or Representatives or any other Person, will have or be subject to any liability of any kind or nature to Buyer, Transitory Subsidiary or any of their respective Affiliates, Representatives or any other Person, resulting from the delivery, dissemination or any other distribution to Buyer, Transitory Subsidiary or any of their respective Affiliates or Representatives or any other Person, or the use by Buyer, Transitory Subsidiary or any of their respective Affiliates or Representatives or any other Person, of any such information provided or made available to any of them by the Company or any of its Affiliates or Representatives or any other Person, and except as set forth herein, Buyer and Transitory Subsidiary will have no claim

 

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against the Company or any of its stockholders, directors, officers, employees, Affiliates, advisors, agents or other representatives with respect thereto.

 

(b)                                 Subject to the limitations set forth in Section 8.5 applicable to claims based on fraud and knowing misrepresentations, nothing in this Agreement (including this Section 4.11) shall, or shall be deemed or construed to, preclude, limit or impair any claim in respect of, relieve any Person of any liability or obligation for, or limit or impair any recourse or remedy of any Person available in respect of, fraud or knowing misrepresentation, whether based on representations or statements set forth in or outside of this Agreement (which all parties hereto agree, in the case of claims by any Company Indemnified Party, shall be recovered by way of a claim for indemnity pursuant to Section 8.2(c) unless an action in another form is required as a matter of Law)

 

ARTICLE V

 

CONDUCT OF BUSINESS

 

5.1                               Operation of Business.  Except as expressly contemplated by this Agreement, as set forth on Section 5.1 of the Company Disclosure Schedule or as required by applicable Law, during the Pre-Closing Period, without the written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall, and shall cause each Subsidiary and (to the extent within its control) the Company Joint Venture to, conduct its operations only in the Ordinary Course of Business and in compliance with all applicable Laws in all material respects and, to the extent consistent therewith, use its  Reasonable Best Efforts to preserve intact its current business organization, keep its physical assets in good working condition, keep available the services of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it and continue the timely payment of its accounts payable that are not subject to good faith dispute.  Without limiting the generality of the foregoing, during the Pre-Closing Period and except as set forth on Section 5.1 of the Company Disclosure Schedule, the Company shall not, and shall cause each Subsidiary and (to the extent within its control) the Company Joint Venture not to, without the written consent of the Buyer (provided, that with respect to clauses (c)(i), (f), (h), (p) and (q), and to the extent relating to the foregoing clauses, (t), such consent shall not be unreasonably withheld, conditioned or delayed):

 

(a)                                 issue or sell any stock or other securities of the Company or any Subsidiary or any options, warrants or rights to acquire any such stock or other securities (except pursuant to the exercise or conversion of shares of Company Preferred Stock, Company Options or Company Warrants outstanding on the date hereof, in each case solely to the extent reflected on the Preliminary Closing Date Allocation Schedule), or amend any of the terms of any Company Options, Company Warrants or restricted stock agreements, or repurchase or redeem any stock or other securities of the Company (except from former employees, directors or consultants in accordance with agreements in place on the date of this Agreement and providing for the repurchase of shares at their original issuance price in connection with any termination of employment with or services to the Company or any Subsidiary); provided, that, the foregoing shall not prohibit the acceleration of the vesting of any Company Equity Awards as determined

 

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by the Company in its reasonable discretion and solely to the extent such acceleration would not result in any violation of Law;

 

(b)                                 split, combine or reclassify any shares of its capital stock; or declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock;

 

(c)                                  (i) other than pursuant to the Bridge Loan Agreement, create, incur or assume any Indebtedness (other than interest incurred with respect to Indebtedness outstanding as of the date hereof in accordance with its terms); (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; or (iii) make any loans, advances or capital contributions to, or investments in, any other Person;

 

(d)                                 hire any new officers or, except in the Ordinary Course of Business, any new employees or consultants;

 

(e)                                  except as required to comply with applicable Law or pursuant to agreements, plans or arrangements existing on the date hereof and disclosed in Section 5.1(e) of the Company Disclosure Schedule, (i) adopt, enter into, terminate or amend any employment or severance plan, agreement or arrangement, any Company Plan or any collective bargaining agreement, (ii) increase the compensation or fringe benefits of, or pay any bonus to, any director, officer, employee or consultant, (iii) amend or accelerate the payment, right to payment or vesting of any compensation or benefits, including any outstanding Company Equity Awards, (iv) pay any material benefit not provided for as of the date of this Agreement under any Company Plan, grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or benefit plan, including the grant of equity or equity-based compensation, or the removal of existing restrictions in any benefit plans or agreements or awards made thereunder, or (v) take any action to fund or in any other way secure the payment of compensation or benefits under any Company Plan other than the payment of premiums due or contributions owed in the Ordinary Course of Business; provided, that, nothing herein shall prohibit the acceleration of the vesting of any Company Equity Awards as determined by the Company in its reasonable discretion and solely to the extent such acceleration would not result in any violation of Law;

 

(f)                                   acquire, sell, lease, license or dispose of any assets or property (including any shares or other equity interests in or securities of any Subsidiary or any other corporation, partnership, association or other business organization or division thereof), other than sales of assets to customers in the Ordinary Course of Business;

 

(g)                                  other than pursuant to the Bridge Loan Agreement, mortgage or pledge any of its property or assets or subject any such property or assets to any Lien;

 

(h)                                 discharge or satisfy any Lien or pay any obligation or liability other than in the Ordinary Course of Business;

 

(i)                                     amend its Organizational Documents;

 

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(j)                                    sell, assign, transfer, license or sublicense any Company Intellectual Property;

 

(k)                                 change the nature or scope of its business being carried on as of the date of this Agreement or commence any new business not being ancillary or incidental to such business or take any action to alter its organizational or management structure;

 

(l)                                     change its accounting methods, principles or practices, except insofar as may be required by a generally applicable change in GAAP or applicable Law;

 

(m)                             except as required by applicable Law, make, or amend, any filings with the FDA, EMA or any other Regulatory Authority;

 

(n)                                 except as required by applicable Law, make or change any Tax election, change an annual accounting period, file any amended Tax Return, enter into any closing agreement, waive or extend any statute of limitations with respect to Taxes, settle or compromise any Tax liability, claim or assessment, surrender any right to claim a material refund of Taxes;

 

(o)                                 enter into, amend, terminate, take or omit to take any action that would constitute a material violation of or default under, or waive any rights under, applicable Law or any contract or agreement of a nature required to be listed in Section 3.11(b), Section 3.12 or Section 3.13 of the Company Disclosure Schedule;

 

(p)                                 make or commit to make any capital expenditure in excess of $10,000 per item or $20,000 in the aggregate;

 

(q)                                 institute or settle any Legal Proceeding;

 

(r)                                    take any action or fail to take any action permitted by this Agreement with the knowledge that such action or failure to take action would have the result of causing (i) any of the representations and warranties of the Company set forth in this Agreement to become untrue in any manner which would cause the condition in Section 7.1(c) not to be satisfied or (ii) any of the conditions to the Merger set forth in Section 7.1 to not be satisfied;

 

(s)                                   take any action to adversely effect, or fail to take any action, in each case, reasonably necessary to preserve the validity, in each case as existing as of the date of this Agreement, of, any Company Intellectual Property or Permit; or

 

(t)                                    agree in writing or otherwise to take any of the foregoing actions.

 

In addition, during the Pre-Closing Period, (1) the Company shall and shall cause each Subsidiary to (A) accept customer orders in the Ordinary Course of Business, and (B) continue to make regularly scheduled payments pursuant to the terms of any Contract with respect to any Indebtedness, if any, in existence as of the date of this Agreement, and (2) the Company shall take all actions necessary to terminate the employment, in accordance with applicable Law and existing contractual obligations and effective prior to the Closing, of each of the Company Employees listed on Schedule 5.1(i).

 

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5.2                               Confidentiality.

 

(a)                                 The parties acknowledge that the Buyer and the Company have previously executed the Confidentiality Agreement, which Confidentiality Agreement shall continue in full force and effect in accordance with its terms, except as expressly modified herein.

 

(b)                                 The Company (prior to the Closing) and each of the Company Equityholders (both prior to and after the Closing) who are or become bound hereby, including by execution and delivery of a Stockholders Agreement, Letter of Transmittal and/or Written Consent, agree not to, directly or indirectly, disclose the existence or terms of this Agreement or any other agreement contemplated hereby or any other information regarding this Agreement, the Merger or any of the other matters contemplated hereby, including any terms of this Agreement with respect to which the Buyer has sought confidential treatment under applicable SEC rules, except, in each case to the extent such information is or becomes generally known to the public (other than as a result of a disclosure by the Company or any Company Equityholders).

 

(c)                                  The Company Equityholder Representative agrees not to, directly or indirectly, disclose the existence or terms of this Agreement or any other agreement contemplated hereby or any other information regarding this Agreement, the Merger or any of the other matters contemplated hereby, including information provided to the Company Equityholder Representative pursuant to the terms of this Agreement (including without limitation Section 2.8 and Section 6.10 hereof), except, in each case (i) to the extent such information is or becomes generally known to the public (other than as a result of a disclosure by the Company Equityholder Representative without a breach of its obligations under this Section 5.2(c)), (ii) as required by applicable Law,(iii) to employees, advisors, agents or consultants of the Company Equityholder Representative and to the Company Equityholders, in each case who have a need to know such information, and further provided that such persons are subject to confidentiality obligations with respect thereto, or (iv) is in connection with, and only to the extent required for, enforcement of rights or defense of claims (including, in each case, on behalf of the Company Equityholders) under this Agreement, the Escrow Agreement and the transactions contemplated hereby and thereby.

 

ARTICLE VI

 

ADDITIONAL PRE-CLOSING AGREEMENTS

 

6.1                               No Solicitation.

 

(a)                                 During the Pre-Closing Period, the Company shall not, and the Company shall require each of its officers, directors, employees, representatives (acting in their capacities as such) and agents (acting in their capacities as such) not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or otherwise knowingly facilitate any inquiry, proposal, offer or discussion with any party (other than the Buyer or its representatives) concerning any acquisition, equity or debt financing, joint venture, merger, reorganization, consolidation, recapitalization, business combination, liquidation, dissolution, share exchange, sale of stock, sale of material assets or similar business transaction involving the Company or any Subsidiary,

 

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(ii) furnish any information concerning the business, properties or assets of the Company or any Subsidiary or the shares of Company Stock to any party (other than the Buyer or its representatives) concerning any such transaction or (iii) engage in negotiations or enter into any agreement with any party (other than the Buyer or its representatives) concerning any such transaction.

 

(b)                                 The Company shall immediately notify any party with which discussions or negotiations of the nature described in Section 6.1(a) were pending on the date hereof that the Company is terminating such discussions or negotiations.  If the Company receives any inquiry, proposal or offer of the nature described in Section 6.1(a), the Company shall, within one (1) Business Day after such receipt, notify the Buyer of such inquiry, proposal or offer.

 

6.2                               Stockholder Consent or Approval.

 

(a)                                 As expeditiously as possible (and in any event within four (4) Business Days) following the execution of this Agreement, the Company shall mail or otherwise distribute the Disclosure Statement, in a form reasonably acceptable to the Buyer, to the Company Stockholders, and shall promptly inform the Buyer of the date on which such Disclosure Statement (including the notices contained therein) was sent to the Company Stockholders.  The Disclosure Statement shall include, among other things, (i) a summary of the Merger and this Agreement (which summary shall include a summary of the terms relating to the indemnification obligations of the Company Equityholders, the escrow arrangements and the authority of the Company Equityholder Representative, and a statement that the adoption of this Agreement by the stockholders of the Company shall constitute approval of such terms), (ii) a copy of this Agreement, (iii) the Company Financial Statements, (iv) a description of any interested persons or interested transactions with respect to the Merger and this Agreement, (v) a statement that appraisal rights are available for the shares of Company Stock pursuant to Section 262 of the DGCL and a copy of such Section 262, (vi) such other information as may be required by Rules 502 or 506 of Regulation D promulgated under the Securities Act, and (vii) pursuant to Section 228 of the DGCL, a written notice to all stockholders of the Company that did not execute such Written Consent informing them that this Agreement and the Merger were adopted and approved by the stockholders of the Company.  The Buyer and its counsel shall be given an adequate opportunity to review and comment on the Disclosure Statement, and the Company shall reflect all reasonable comments of the Buyer or its counsel thereon.  As expeditiously as possible following the execution of this Agreement, and in any event by 5:00 p.m., New York City time, on the Business Day immediately following the date of this Agreement, the Company shall use Reasonable Best Efforts to secure and cause to be filed with the Written Consents from Company Stockholders necessary to secure the Company Stockholder Approval, which consents shall be in a form that is reasonably acceptable to the Buyer.  As expeditiously as possible following the receipt of the Company Stockholder Approval, the Company shall deliver to the Buyer a certificate executed on behalf of the Company by its Secretary and certifying that the Company Stockholder Approval has been obtained.

 

(b)                                 The Company shall ensure that the Disclosure Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading (provided that the Company shall not be responsible for the accuracy or completeness

 

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of any information concerning the Buyer or the Transitory Subsidiary furnished by the Buyer in writing for inclusion in the Disclosure Statement).

 

(c)                                  The Buyer shall ensure that any information furnished by the Buyer to the Company in writing for inclusion in the Disclosure Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

 

6.3                               Access to Information.

 

(a)                                 During the Pre-Closing Period, the Company shall (and shall cause each Subsidiary to) afford the officers, attorneys, accountants, tax advisors, lenders and other authorized representatives of the Buyer reasonable access upon reasonable notice and during normal business hours and without unreasonable interference with the operation of the business of the Company to all personnel, offices, properties, books and records of the Company and the Subsidiaries, so that the Buyer may have full opportunity to make such investigation as it shall desire to make of the management, business, properties and affairs of the Company and the Subsidiaries.  The Company shall (and shall cause each Subsidiary to) furnish to the Buyer such financial and operating data and other information as to the business of the Company and the Subsidiaries as the Buyer shall reasonably request.  Notwithstanding the foregoing, nothing herein will require the Company or its Subsidiaries to (i) provide Buyer with access or information that the Company is expressly prohibited by applicable Law from granting or disclosing, or (ii) take any action that would, in the advice of counsel, constitute a waiver of the attorney-client privilege or the attorney work product privilege in the event of a legal proceeding with the Buyer; provided, that in the event that the Company or any Subsidiary relies on this sentence to withhold access or disclosure, the Company shall, to the extent permitted by Law and the protection of such attorney-client privilege, promptly notify Buyer of the nature of the withheld information and provide the Buyer of a reasonable opportunity to seek an appropriate remedy or waive compliance with the terms of this Agreement.

 

(b)                                 During the Pre-Closing Period, within twenty (20) days after the end of each calendar month beginning with June 30, 2018, the Company shall furnish to the Buyer an unaudited income statement for such month and a balance sheet as of the end of such month, prepared in accordance with GAAP applied on a basis consistent with the application thereof to the most recent audited financial statements included in Company Financial Statements (to the extent consistent with GAAP).  Such financial statements shall present fairly the consolidated financial condition and results of operations of the Company and the Subsidiaries as of the dates thereof and for the periods covered thereby, and shall be consistent with the books and records of the Company and the Subsidiaries.

 

(c)                                  During the Pre-Closing Period, the Company shall, if reasonably requested by the Buyer, use its Reasonable Best Efforts to introduce the Buyer to customers and suppliers of the Company and the Subsidiaries for the purpose of facilitating the post-Closing integration of the Company and the Subsidiaries and their businesses into that of the Buyer.

 

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6.4                               Closing Efforts; Legal Conditions to the Merger; Third-Party Consents.

 

(a)                                 Upon the terms and subject to the conditions of this Agreement, each of the parties (other than the Company Equityholder Representative) shall use its Reasonable Best Efforts to take all actions and to do all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement to be completed at Closing, including using its Reasonable Best Efforts to ensure that the conditions to the obligations of the other parties to consummate the Merger are satisfied.

 

(b)                                 Each party (other than the Company Equityholder Representative) shall use its Reasonable Best Efforts to obtain, at its expense, all waivers, permits, consents, approvals or other authorizations from Governmental Entities, and to effect all registrations, filings and notices with or to Governmental Entities, as may be required for such party to consummate the transactions contemplated by this Agreement and to otherwise comply with all applicable Laws in connection with the consummation of the transactions contemplated by this Agreement.  Without limiting the generality of the foregoing, each of the parties shall promptly (and in any event within five (5) Business Days) after the date of this Agreement file any Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act or other applicable U.S. or foreign antitrust Laws, shall use its Reasonable Best Efforts to obtain an early termination of the applicable waiting period, and shall make any further filings or information submissions pursuant thereto that may be necessary, proper or advisable; provided, however, that notwithstanding anything to the contrary in this Agreement, the Buyer shall not be obligated (i) to commence or defend any Legal Proceeding required to obtain any such waiver, permit, consent, approval or other authorization or (ii) to sell or dispose of or hold separately (through a trust or otherwise) any assets or businesses of the Buyer or its Affiliates.

 

(c)                                  During the Pre-Closing Period, the Company shall use its Reasonable Best Efforts to obtain, at its expense, all such waivers, consents or approvals from third parties, and to give all such notices to third parties, in each case as are required to be listed in Section 3.4(b) or (c) of the Company Disclosure Schedule.

 

6.5                               Public Disclosure.  No party shall issue any press release or public announcement relating to the subject matter of this Agreement without the prior written approval of the other parties; provided, however, that (a) the Company and each of the Company Equityholders acknowledge and agree that the Buyer (i) may issue, without the approval of any other party, a press release with respect to this Agreement and the matters contemplated hereby, (ii) intends to publicly file this Agreement with the SEC, and (iii) intends to seek confidential treatment under applicable SEC rules with respect to certain matters and terms contained in this Agreement; (b) the Buyer or the Company may make any public disclosure it believes in good faith is required by applicable Law or stock market rule (in which case the disclosing party shall use Reasonable Best Efforts to advise the other party and provide them with a copy of the proposed disclosure prior to making the disclosure); (c) the Buyer and its Affiliates shall not be bound by the provisions of this Section 6.5 following the Closing Date; and (d) following Closing and the public announcement of the Merger, the Company Equityholder Representative shall be permitted to publicly announce that it has been engaged to serve as the Company Equityholder Representative in connection with the Merger as long as such announcement does not disclose

 

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any of the other terms of the Merger or the other transactions contemplated herein; provided, further, that except as specifically set forth in this Section 6.5 the provisions of Section 5.2 shall remain in full force and effect.

 

6.6                               Notification of Certain Matters.  During the Pre-Closing Period, the Company shall promptly deliver to the Buyer notice (including a reasonably detailed description) of any fact, circumstance or development that constitutes (or would reasonably be expected to constitute or result in) any material breach of any representation, warranty or covenant set forth herein, any material misstatement in or omission from the Disclosure Statement or the Company Disclosure Schedule or the non-satisfaction of any condition set forth in Article VII.  No such notice shall be deemed to avoid or cure any misrepresentation or breach of warranty or constitute an amendment of any representation, warranty, covenant or condition in this Agreement, the Disclosure Statement or the Company Disclosure Schedule.

 

6.7                               280G Covenant.  The Company shall use commercially reasonable efforts to obtain a waiver from each “disqualified individual” (as defined in Section 280G(c) of the Code) with respect to the Company who would reasonably be expected to receive or have received any payment or benefits that would constitute a “parachute payment” (within the meaning of Section 280G(b)(2)(A) of the Code) of such disqualified individual’s rights to some or all of such payments or benefits (the “Waived 280G Benefits” and, each such waiver, a “280G Waiver”) so that all remaining payments and/or benefits, if any, shall not be “excess parachute payments” (within the meaning of Section 280G of the Code), and, not less than five (5) Business Days prior to the Closing Date, the Company shall submit to a stockholder vote, in a manner that is intended to satisfy the stockholder approval requirements under Section 280G(b)(5)(B) of the Code and the Treasury Regulations promulgated thereunder, the right of any such “disqualified individual” (as defined in Section 280G(c) of the Code) that has entered into a 280G Waiver to receive or retain such Waived 280G Benefits.  Such vote shall establish such disqualified individuals’ right to the payment or other compensation if approved by the Company Stockholders.  In addition, the Company shall provide adequate disclosure to Company Stockholders that hold voting Company Stock of all material facts concerning all payments to any such disqualified individual that, but for such vote, could be deemed “parachute payments” under Section 280G of the Code in a manner that satisfies Section 280G(b)(5)(B)(ii) of the Code and regulations promulgated thereunder.  At least four (4) Business Days prior to the vote, the Buyer and its counsel shall be given the right to review and comment on all documents required to be delivered to the Company Stockholders in connection with such vote and any required disqualified individual waivers or consents, and the Company shall reasonably consider all comments of the Buyer or its counsel thereon.  Buyer and its counsel shall be provided copies of all documents executed by the stockholders and disqualified individuals in connection with the vote.

 

6.8                               FIRPTA.  Prior to the Closing, (a) the Company shall deliver to the Buyer a statement, made under penalty of perjury, that the Company is not and has not been a United States real property holding corporation at any time during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, and a notice to the Internal Revenue Service, in accordance with Treasury Regulations promulgated under Sections 897 and 1445 of the Code, together with written authorization for Buyer to deliver such statement and notice to the IRS on behalf of the Company after the Closing, or (b) each of the Company Stockholders shall deliver to the Buyer

 

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certifications that they are not foreign persons in accordance with the Treasury Regulations under Section 1445 of the Code.  If the Buyer does not receive the statement, certifications and/or notice described above on or before the Closing Date, the Buyer, the Transitory Subsidiary, the Escrow Agent and the Exchange and Paying Agent shall be permitted to withhold from the payments to be made pursuant to this Agreement any required withholding Tax under Section 1445 of the Code.

 

6.9                               Termination of 401(k) Plan.  Upon the Buyer’s written request, which request shall be made at least three (3) Business Days prior to the Closing Date, the Board of Directors of the Company shall adopt resolutions, no later than the day immediately preceding the Closing Date, to terminate any and all Company Plans intended to comply with Section 401(k) of the Code, or any successor statute, as of the day immediately preceding the Closing Date, such resolutions having been approved as to form by the Buyer at least two (2) Business Days before such action is taken.

 

6.10                        Required Financial Statements; Resale Registration.

 

(a)                                 Prior to Closing, the Company shall deliver to the Buyer (i) historical consolidated financial statements for the Company and the Subsidiaries for the fiscal years ended 2016 and 2017, and for the relevant quarterly periods of 2017 and 2018 (reviewed by an independent registered accounting firm in accordance with applicable review standards), in a form that complies with the requirements of Item 9.01 of Form 8-K and Rule 3-05 of Regulation S-X of the SEC for a business acquisition required to be described in answer to Item 2.01 of Form 8-K, including information required for the Buyer to prepare the pro forma financial information required by Item 9.01 of Form 8-K and opening balance sheet balances and detailed support thereof, (ii) an unqualified report from the Company’s independent accounting firm stating that such fiscal year 2016 and 2017 financial statements present fairly, in all material respects, the consolidated financial position, as well as the consolidated results of operations and cash flows, comprehensive income (loss) and shareholder’s equity of the Company and the Subsidiaries for the periods covered by the such financial statements, in conformity with GAAP (provided, that the Buyer acknowledges that such unqualified report may contain a statement that the opinion of the Company’s independent accounting firm and the accompanying financial statements were prepared and delivered subject to an assumption that the Company will continue as a going concern) and (iii) such other audited historical and/or pro forma financial statements or other information of the Company that the Buyer may reasonably request in connection with the Buyer’s reporting and accounting obligations related to this Agreement or the Merger to the extent required by Article 3 or 11 of Regulation S-X of the SEC or pursuant to the Company’s reporting requirements under the Securities Act and/or the Exchange Act, including consent(s) from the Company’s independent accounting firm regarding the inclusion of the financial statements and the reports described in clauses (i) and (ii) in the Registration Statement (collectively, the “Required Company Information”). Notwithstanding the foregoing, the Company shall deliver to the Buyer the Final Company Financial Statements at least ten (10) Business Days prior to the Closing. Attached as Schedule 6.10(a) hereto is a list of the Required Company Information (other than the financial statements and related financial information, reports and certifications included or required to be included therein) as of the date of this Agreement to the extent Buyer’s need for such information is known to it based on the information shared by the Company with the Buyer prior to the date of this Agreement.

 

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(b)                                 Prior to the Closing, the Company shall provide the Buyer with such additional information, including reliance letters from the Company’s independent accounting firm, as the Buyer may reasonably request in order to comply with the requirements for financial statements included in Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and/or Current Reports on Form 8-K filed under the Exchange Act, as applicable, including with respect to the Company and its Subsidiaries as well as Buyer’s preparation of pro forma financial statements in respect of the acquisition of the Company and its Subsidiaries by Buyer, in each case in compliance with Buyer’s reporting obligations under the Securities Act and the Exchange Act.

 

(c)                                  Following (i) the Closing and (ii) receipt of the Required Company Information, the Buyer shall use commercially reasonable efforts to file with the SEC a registration statement with respect to the public resale by the Company Equityholders of the Closing Stock Consideration on a continuous or delayed basis pursuant to Rule 415 under the Securities Act, in respect of which the Buyer may use a registration statement on Form S-3 (or any successor form registration statement available for such resale which permits incorporation by reference of the Buyer’s filings with the SEC to at least the same extent as such form) to the extent the Buyer is then eligible for its use (the “Registration Statement”), and cause the Registration Statement to become automatically effective upon filing if eligible to do so or if not eligible to do so, then use commercially reasonable efforts to take such actions as are necessary to cause such Registration Statement to become effective.  Notwithstanding the foregoing, in the event that the Company delivers the Required Company Information on or prior to the date that is ten (10) Business Days prior to the Closing Date, the Buyer shall use commercially reasonable efforts to file the Registration Statement on the Closing Date and cause the Registration Statement to become effective.

 

(d)                                 The Buyer shall keep the Registration Statement effective under the Securities Act (and maintain the current status of the prospectus or prospectuses contained therein) until the date that is the six month anniversary of the Closing Date or such earlier time as all of the shares of Buyer Common Stock covered by the Registration Statement have been sold pursuant thereto; provided, that the obligation to keep such Registration Statement effective under this Section 6.10(d) shall not apply during the pendency of any Force Majeure Event to the extent such Force Majeure Event is the reason for or cause of an inability to keep such Registration Statement effective.  Buyer will promptly notify the Company Equityholder Representative of the time the Registration Statement became effective or a supplement to any prospectus forming a part of the Registration Statement has been filed.

 

(e)                                  The Buyer may, by written notice to the Company Equityholders, suspend the use of the Registration Statement after effectiveness and require that the Company Equityholders immediately cease sales of shares pursuant to the Registration Statement, in the event that (A) the Buyer engages in a public offering of its securities (an “Offering Suspension”) or (B) the Buyer is engaged in any activity, matter or transaction or preparations or negotiations for any activity, matter or transaction that the Buyer desires to keep confidential for business reasons, if the Buyer determines in good faith, upon advice of counsel, that the public disclosure requirements imposed on the Buyer under the Securities Act in connection with the Registration Statement would require disclosure of such activity, transaction, preparations or negotiations (a “Confidentiality Suspension”).  Each Company Equityholder agrees to keep and hold

 

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confidential the fact of, and any information contained or referenced in, any such notice described in this Section 6.10(e).  Notwithstanding the foregoing, the Buyer may not suspend the use of the Registration Statement by requiring Company Equityholders to cease sales of shares of Buyer Common Stock pursuant to the Registration Statement on or prior to September 30, 2018, except to the extent that the Buyer’s engagement in such activity, matter or transaction is related to a development with respect to regulatory, product or research and development matters with respect to any product or product candidate of the Buyer and is not within the Buyer’s control and discretion, in which case any suspension under this paragraph of Section 6.10(e) shall not exceed more than three (3) consecutive trading days. After September 30, 2018 the Buyer may suspend the use of the Registration Statement by requiring Company Equityholders to cease sales of shares of Buyer Common Stock upon notice to such Company Equityholders of an Offering Suspension or a Confidentiality Suspension, provided that such suspensions, taken together, are not used more than three times in the aggregate or for more than thirty (30) Business Days in the aggregate.

 

(f)                                   If the Buyer suspends the use of the Registration Statement by notice to the Company Equityholders and requires the Company Equityholders to cease sales of shares pursuant to this Section 6.10, the Buyer shall, as promptly as practicable following the termination of the circumstance which entitled the Buyer to do so, take such actions as may be necessary to reinstate the effectiveness of the Registration Statement and/or give written notice to all Company Equityholders authorizing them to resume sales pursuant to the Registration Statement.  If as a result thereof the prospectus included in the Registration Statement has been amended to comply with the requirements of the Securities Act, the Buyer shall enclose such revised prospectus with the notice to Company Equityholders given pursuant to this Section 6.10(f), and the Company Equityholders shall make no offers or sales of shares pursuant to the Registration Statement other than by means of such revised prospectus.

 

(g)                                  Promptly following the filing by the Buyer of the Registration Statement, the Buyer shall furnish to each Company Equityholder a copy of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act. The Buyer shall promptly provide (and in any event within the time periods specified in Section 6.10 (e)) the Company Equityholders with revised or supplemented prospectuses and, following receipt of the revised or supplemented prospectuses, the Company Equityholders shall be free to resume making offers and sales under the Registration Statement. The Buyer shall pay the expenses incurred by it in complying with its obligations under this Section 6.10, including all registration and filing fees, exchange listing fees, fees and expenses of counsel for the Buyer, and fees and expenses of accountants for the Buyer, but excluding (i) any brokerage fees, selling commissions or underwriting spread or discounts incurred by the Company Equityholders in connection with sales under the Registration Statement and (ii) the fees and expenses of any counsel retained by or on behalf of the Company Equityholders.

 

(h)                                 The Buyer shall not be required to include any shares of Closing Stock Consideration in the Registration Statement unless:

 

(i)                                     the Company Equityholder owning such shares furnishes to the Buyer in writing such information regarding such Company Equityholder and the proposed sale of Buyer Common Stock by such Company Equityholder as the Buyer may reasonably request in

 

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writing in connection with the Registration Statement or as shall be required in connection therewith by the SEC or any state securities law authorities;

 

(ii)                                  such Company Equityholder shall have provided to the Buyer its written agreement in substantially the form attached as Exhibit E hereto:

 

(A)                               to indemnify the Buyer and each of its directors and officers against, and hold the Buyer and each of its directors and officers harmless from, any losses, claims, damages, expenses or liabilities (including reasonable attorney’s fees) to which the Buyer or such directors and officers may become subject by reason of any statement or omission in the Registration Statement made in reliance upon, or in conformity with, a written statement by such Company Equityholder furnished pursuant to this Section 6.10; and

 

(B)                               to report to the Buyer sales made pursuant to the Registration Statement.

 

(i)                                     Solely for purposes of Section 6.10, if any Buyer Common Stock is included in the Registration Statement under this Section 6.10, the Buyer agrees to indemnify and hold harmless each Company Equityholder whose shares are included in the Registration Statement against any Damages, to which such Company Equityholder may become subject by reason of any untrue statement of a material fact contained in the Registration Statement or any omission to state therein a fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, expenses or liabilities arise out of or are based upon information furnished to the Buyer by or on behalf of the Company or a Company Equityholder for use in the Registration Statement.  The Buyer shall have the right to assume the defense and settlement of any claim or suit for which the Buyer may be responsible for indemnification under this Section 6.10.

 

6.11                        Product Regulatory Meetings.  During the Pre-Closing Period, the Company shall provide the Buyer with advance notice of all meetings, conferences, and discussions scheduled with Regulatory Authorities concerning any regulatory matters relating to any Product not later than five (5) days after the Company receives notice of the scheduling of such meeting, conference, or discussion.  The Buyer shall be entitled to have reasonable representation present at all such meetings; provided, however, that except with the prior written consent of the Buyer, the Company shall not, at any time following the date of this Agreement, (a) request any meeting regarding any Product with any Regulatory Authority; (b) accept any such meetings; and (c) attend any such meetings with Regulatory Authorities.

 

6.12                        Employee Benefits Matters.  The Buyer, the Surviving Corporation and their respective Subsidiaries and Affiliates shall treat, and shall cause each employee benefit plan, program, arrangement, agreement, policy or commitment sponsored or maintained by Buyer, the Surviving Corporation or any of their respective Subsidiaries or Affiliates following the Closing Date and in which any Person who is, as of immediately prior to the Effective Time, an employee of the Company or the Subsidiaries (regardless of whether any such employee is actively at work as of the Closing Date or is not actively at work as of the Closing Date as a result of disability or illness, an approved leave of absence (including military leave with reemployment rights under federal law and leave under the Family and Medical Leave Act of

 

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1993), vacation, personal day or similar short- or long-term absence) and who remains or becomes an employee of the Surviving Corporation or any Affiliate of Buyer as of immediately following the Effective Time (an “Employee”) (or the spouse, domestic partner or any dependent of any Employee) participates or is eligible to participate (each, a “Buyer Benefit Plan”) to treat, for all purposes (including eligibility to participate, vesting and level and accrual of benefits, other than accrual of benefits under any “defined benefit plan,” as defined in Section 3(35) of ERISA, or as would result in a duplication of benefits), all service with the Company (and predecessor employers to the extent that the Company or any Company Plan provides past service credit) as service with Buyer, the Surviving Corporation and their respective Subsidiaries and Affiliates.  The Buyer, the Surviving Corporation and their respective Subsidiaries and Affiliates shall use commercially reasonable efforts to cause each Buyer Benefit Plan that is a medical benefit plan, within the meaning of Section 3(1) of ERISA, (i) to waive any and all eligibility waiting periods, actively-at-work requirements, evidence of insurability requirements, pre-existing condition limitations and other exclusions and limitations with respect to the Employees and their spouses, domestic partners and dependents to the extent waived, satisfied or not included under the corresponding Company Plan, and (ii) to recognize for each Employee for purposes of applying annual deductible, co-payment and out-of-pocket maximums under such Buyer Benefit Plan any deductible, co-payment and out-of-pocket expenses paid by Employee and his or her spouse, domestic partner and dependents under the corresponding Company Plan during the plan year of such Company Plan in which occurs the Closing Date.  This Section 6.12 shall be binding upon and inure solely to the benefit of each of the parties to this Agreement, and nothing in this Section 6.12, express or implied, shall confer upon any other Person, including any Employee, any rights or remedies of any nature whatsoever under or by reason of this Section 6.12.  Nothing contained herein, express or implied, shall be construed to establish, amend or modify any Company Plan or any other plan, program, arrangement, agreement, policy or commitment.  The parties hereto acknowledge and agree that the terms set forth in this Section 6.12 shall not create any right in any Employee or any other Person to continued employment with the Company, Buyer, the Surviving Corporation or any of their respective Subsidiaries or Affiliates.

 

ARTICLE VII

 

CONDITIONS TO CONSUMMATION OF THE MERGER

 

7.1                               Conditions to Obligations of the Buyer and the Transitory Subsidiary.  The obligation of each of the Buyer and the Transitory Subsidiary to consummate the Merger is subject to the satisfaction of the following conditions precedent, each of which may be waived in writing in the sole discretion of the Buyer:

 

(a)                                 all applicable waiting periods (and any extensions thereof) under the HSR Act and under any other applicable Antitrust Laws shall have expired or otherwise been terminated;

 

(b)                                 no judgment, order, decree, stipulation or injunction shall be in effect, and no Legal Proceeding shall be pending or shall have been threatened in writing by a Governmental Entity, that would reasonably be expected to (i) prevent consummation of the

 

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transactions contemplated by this Agreement, or (ii) cause the transactions contemplated by this Agreement to be rescinded following consummation of such transaction;

 

(c)                                  (i) each of the representations and warranties of the Company in this Agreement that are set forth in any of Section 3.1 and Section 3.3(a) or that are qualified by reference to materiality, Company Material Adverse Effect or any similar qualification shall be true and correct in all respects as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all respects as of such date), (ii) each of the representations and warranties of the Company in this Agreement that are set forth in Section 3.2 shall be true and correct in all respects (other than de minimis inaccuracies) as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all respects (other than de minimis inaccuracies) as of such date) and (iii) all other representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all material respects as of such date);

 

(d)                                 the Company shall have performed or complied with (disregarding all qualifiers with respect to materiality contained within such agreements or covenants), in all material respects, its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing;

 

(e)                                  there shall have occurred no Change since the date of this Agreement that, individually or taken together with all other Changes, has had, or would reasonably be expected to have, a Company Material Adverse Effect;

 

(f)                                   the Buyer shall have received copies of Written Consents evidencing that this Agreement and the Merger have received the Company Stockholder Approval;

 

(g)                                  the number of Dissenting Shares, together with the number of shares of Company Stock eligible to become Dissenting Shares, shall not exceed three percent (3%) of the number of outstanding shares of Company Stock as of the Effective Time (calculated after giving effect to the conversion into shares of Company Common Stock of all outstanding shares of Company Preferred Stock, Company Equity Awards and Company Warrants);

 

(h)                                 the Buyer shall have received evidence, in form and substance reasonably satisfactory to the Buyer, that the Company has, at its own expense, obtained all of the waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices, set forth on Schedule 7.1(h);

 

(i)                                     the sum of the following shall equal fewer than fifteen (15) Company Stockholders: (i) the number of Company Stockholders and holders of Company Warrants who have returned Investor Representation Letters as of the Closing indicating that such Company Stockholder is not an “accredited investor” pursuant to Regulation D under the Securities Act,

 

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plus (ii) the number of Company Stockholders and holders of Company Warrants who have not returned an Investor Representation letter as of Closing;

 

(j)                                    the Buyer shall have received evidence, in form and substance reasonably satisfactory to the Buyer, that the agreements and other arrangements between Affiliates of the Company (other than Subsidiaries), on the one hand, and the Company or any Subsidiary, on the other hand, listed on Schedule 7.1(j) shall have been satisfied and discharged in full and otherwise terminated, in each case without any liability to the Company or any Subsidiary;

 

(k)                                 the Buyer shall have received copies of the resignations, effective as of the Closing and in form and substance reasonably satisfactory to the Buyer, of each director and officer of the Company and the Subsidiaries (other than any such resignations which the Buyer designates, by written notice to the Company, as unnecessary) from their officer and director positions (but not employment, as applicable);

 

(l)                                     the Buyer shall have received fully executed Surrender Agreements from holders of Company Equity Awards representing at least 90% (measured based upon the number of shares of Company Stock underling such Company Equity Awards) of the total Company Equity Awards outstanding as of immediately prior to the Effective Time and 100% of the Company Warrants outstanding as of immediately prior to the Effective Time;

 

(m)                             the Buyer shall have received a release, in form and substance reasonably satisfactory to the Buyer, executed by each Person to whom any portion of the Employee Amount is paid at Closing;

 

(n)                                 the Buyer shall have received a counterpart signature to the Stockholders Agreement executed by Company Stockholders who, together with the Principal Stockholders, collectively hold, as of immediately prior to the Effective Time, at least 95% of the outstanding shares of Company Stock (on a converted to Company Common Stock basis);

 

(o)                                 the Buyer shall have received the items contemplated to be delivered by the Company in accordance with Section 2.1(d)(i);

 

(p)                                 other than with respect to the Bridge Loan Agreement, (i) the Company shall have delivered to the Buyer payoff letters, in form and substance reasonably satisfactory to the Buyer, specifying the amounts required to repay all Closing Indebtedness as of the Closing and duly executed by each Person to whom any Closing Indebtedness is (or at the Closing will be) owed by the Company or any Subsidiary, and (ii) the Company and the Subsidiaries shall have made reasonable and customary arrangements to enable the Buyer to obtain the release of all Liens securing the Closing Indebtedness upon payment of the Closing Indebtedness;

 

(q)                                 the Buyer shall have received such other certificates and instruments (including certificates of good standing of the Company and the Subsidiaries in their jurisdictions of organization and the various foreign jurisdictions in which they are qualified, certified charter documents and certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in writing in connection with the Closing; and

 

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(r)                                    the Buyer shall have received the Company Certificate.

 

7.2                               Conditions to Obligations of the Company.  The obligation of the Company to consummate the Merger is subject to the satisfaction of the following conditions precedent, each of which may be waived in writing in the sole discretion of the Company:

 

(a)                                 (i) each of the representations and warranties of the Buyer and Transitory Subsidiary in this Agreement that are set forth in Section 4.1 or Section 4.2(a) or that are qualified by reference to materiality, Buyer Material Adverse Effect or any similar qualification shall be true and correct in all respects as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all respects as of such date), (ii) each of the representations and warranties of the Buyer and Transitory Subsidiary in this Agreement that are set forth in Section 4.4 shall be true and correct in all respects (other than de minimis inaccuracies) as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all respects (other than de minimis inaccuracies) as of such date) and (iii) all other representations and warranties of the Buyer and Transitory Subsidiary set forth in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing as though made as of the Closing (except to the extent any such representation and warranty speaks of an earlier date, in which case such representation and warranty will have been true and correct in all material respects as of such date);

 

(b)                                 each of the Buyer and the Transitory Subsidiary shall have performed or complied (disregarding all qualifiers with respect to materiality contained within such agreements or covenants), in all material respects, with its agreements and covenants required to be performed or complied with under this Agreement as of or prior to the Closing;

 

(c)                                  no judgment, order, decree, stipulation or injunction shall be in effect that would reasonably be expected to (i) prevent consummation of the transactions contemplated by this Agreement, or (ii) cause the transactions contemplated by this Agreement to be rescinded following consummation of such transaction

 

(d)                                 the Company shall have received the Buyer Certificate;

 

(e)                                  there shall have occurred no Change since the date of this Agreement that, individually or taken together with all other Changes, has had, or would reasonably be expected to have, a Buyer Material Adverse Effect;

 

(f)                                   the Buyer shall have made the payments contemplated to be delivered by the Buyer in accordance with Section 2.1(d)(ii); and

 

(g)                                  the Company shall have received a counterpart of the Escrow Agreement executed by the Buyer and the Escrow Agent.

 

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ARTICLE VIII

 

INDEMNIFICATION

 

8.1                               Indemnification by the Company Equityholders.  Subject to the terms and limitations set forth in this Article VIII, from and after the Effective Time, the Company Equityholders shall, on a several and not joint basis (except as otherwise provided in Section 8.5), defend and indemnify the Buyer in respect of, and hold it harmless against and will compensate and reimburse the Buyer for, its Pro Rata Share of any and all Damages incurred or suffered by any Buyer Indemnified Party (regardless of whether such Damages relate to any Third Party Action) resulting from, relating to or constituting:

 

(a)                                 any breach, as of the date of this Agreement or as of the Closing Date, of any representation or warranty of the Company contained in this Agreement, the Company Certificate or the Closing Payment Certificate;

 

(b)                                 any failure to perform any covenant or agreement of the Company contained in this Agreement, the Company Certificate or the Closing Payment Certificate;

 

(c)                                  the Employee Amount, any Closing Indebtedness (including any Pre-Closing Taxes), any Company Warrant Obligations, and any Company Transaction Expenses, in each case to the extent in excess of the amounts, if any, included in the calculation of the Aggregate Closing Consideration or the Final Closing Adjustment;

 

(d)                                 any failure of any Company Stockholder to have good, valid and marketable title to the issued and outstanding shares of Company Stock issued in the name of such Company Stockholder, free and clear of all Liens;

 

(e)                                  any claim by a stockholder or former stockholder of the Company or current or former holder of Company Equity Awards or Company Warrants, or any other Person, to the extent, seeking to assert, or based upon (but for the avoidance of doubt, excluding any disputes with respect to exchange procedures described in Section 2.2(b)):  (i) the ownership or rights to ownership of any shares of stock of the Company; (ii) any rights of a stockholder or holder of Company Equity Award or Company Warrants (other than the right to receive the consideration pursuant to Article II), including any option, preemptive rights or rights to notice or to vote; (iii) any rights under the Organizational Documents of the Company; (iv) any claim that his, her or its shares were wrongfully repurchased by the Company; or (v) any claim for appraisal or dissenters rights, including any payment in respect of Dissenting Shares in excess of the amount of payments otherwise payable to the stockholder seeking such rights under this Agreement;

 

(f)                                   any inaccuracy in the Closing Date Allocation Schedule, as in effect from time to time; and

 

(g)                                  any fraud or knowing misrepresentation in connection with the transactions contemplated by this Agreement.

 

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8.2                               Indemnification by Buyer.  Subject to the terms and limitations set forth in this Article VIII, from and after the Effective Time, the Buyer shall, indemnify the Company Equityholders in respect of any and all Damages incurred or suffered by any Equityholder Indemnified Party (regardless of whether such Damages relate to any Third Party Action) resulting from, relating to or constituting:

 

(a)                                 any breach of any representation or warranty of the Buyer or Transitory Subsidiary contained in this Agreement or the Buyer Certificate;

 

(b)                                 any failure to perform any covenant or agreement of Buyer or Transitory Subsidiary contained in this Agreement or the Buyer Certificate; or

 

(c)                                  any fraud or knowing misrepresentation on the part of the Buyer or Transitory Subsidiary, in each case, in connection with the transactions contemplated by this Agreement.

 

8.3                               Indemnification Claims.

 

(a)                                 An Indemnified Party shall give written notification to the Indemnifying Party of the commencement of any Third Party Action.  Such notification shall be given within 20 days after receipt by the Indemnified Party of the notice of such Third Party Action, and shall describe in reasonable detail (to the extent then known by the Indemnified Party) the facts constituting the basis for such Third Party Action and the amount of the claimed damages.  No delay or failure on the part of an Indemnified Party in so notifying the Indemnifying Party shall relieve the Indemnifying Party of any liability or obligation hereunder except to the extent of any damage, prejudice or liability caused by or arising out of such delay or failure.  Within 30 days after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such Third Party Action with counsel reasonably satisfactory to the Indemnified Party; provided that (i) the Indemnifying Party may only assume control of such defense if (A) it acknowledges in writing to the Indemnified Party that any damages, fines, costs or other liabilities that may be assessed against the Indemnified Party in connection with such Third Party Action constitute Damages for which the Indemnified Party shall be indemnified pursuant to this Article VIII, (B) in the case where the Indemnified Party is the Buyer, the ad damnum in such Third Party Action, taken together with the estimated costs of defense thereof and the Claimed Amount with respect to any unresolved claims for indemnification then pending, is less than or equal to the current balance, without duplication, of the Escrow Fund, the Holdback Funds (if any) and the Adjusted Guaranteed Amount, taken together, and (C) in the case where the Indemnified Party is the Buyer, an adverse resolution of the Third Party Action would not have a material adverse effect on the goodwill or reputation of the Buyer and its Subsidiaries, taken as a whole, or the business, operations or future conduct of the Buyer and its Subsidiaries, taken as a whole, and (ii) the Indemnifying Party may not assume control of the defense of any Third Party Action involving any Governmental Entity (other than any such Third Party Action involving Taxes) or criminal liability or in which equitable relief is sought.  If the Indemnifying Party does not, or is not permitted under the terms hereof to, so assume control of the defense of a Third Party Action, the Indemnified Party shall control such defense.  The Non-controlling Party may participate in such defense at its own expense.  The Controlling Party shall keep the Non-controlling Party advised of the status of such Third Party

 

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Action and the defense thereof and shall consider in good faith recommendations made by the Non-controlling Party with respect thereto.  The Non-controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third Party Action (including copies of any summons, complaint or other pleading which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise cooperate with and assist the Controlling Party in the defense of such Third Party Action.  The fees and expenses of counsel to the Indemnified Party with respect to a Third Party Action that is ultimately determined to be indemnifiable pursuant to this Article VIII shall be considered Damages for purposes of this Agreement if (x) the Indemnified Party controls the defense of such Third Party Action pursuant to the terms of this Section 8.3(a) or (y) the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes that the Indemnifying Party and the Indemnified Party have conflicting interests or different defenses available with respect to such Third Party Action.  The Indemnifying Party shall not agree to any settlement of, or the entry of any judgment arising from, any Third Party Action without the prior written consent of the Indemnified Party, which shall not be unreasonably withheld, conditioned or delayed; provided that the consent of the Indemnified Party shall not be required if the Indemnifying Party agrees in writing to pay, and does in fact pay (or, if applicable, permit the Buyer to offset from any amounts then due and payable under this Agreement) any amounts payable pursuant to such settlement or judgment and such settlement or judgment includes a complete release of the Indemnified Party from further liability and would not have any other adverse effect on the Indemnified Party and/or result in any injunctive relief against the Indemnified Party. Except as provided in Section 8.3(e), the Indemnified Party shall not agree to any settlement of, or the entry of any judgment arising from, any such Third Party Action without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld, conditioned or delayed.   Notwithstanding anything else herein to the contrary, to the extent there is any conflict between the provisions of this Section 8.3(a) and Section 9.3(c) with regard to any Third Party Action involving Taxes, Section 9.3(c) shall govern.

 

(b)                                 In order to seek indemnification under this Article VIII, the Indemnified Party shall deliver a Claim Notice to the Company Equityholder Representative (acting on behalf of the Company Equityholders) and Buyer (in the case of indemnification sought against the Buyer).

 

(c)                                  Within 30 days after delivery of a Claim Notice, the Indemnifying Party shall deliver to the Indemnified Party a Response, in which the Indemnifying Party, shall:  (i) agree that the Indemnified Party is entitled to receive all of the Claimed Amount (in the case where the Company Equityholders are the Indemnifying Party, the Response shall be accompanied by a letter from the Company Equityholder Representative instructing the Escrow Agent to disburse to the Buyer from the Escrow Fund an amount in cash equal to the Claimed Amount) and the Buyer to offset or setoff against any Holdback Funds (if any) or Adjusted Guaranteed Amount (in all cases subject to the limitations set forth in Section 8.5), (ii) agree that the Indemnified Party is entitled to receive a specified amount of the Claimed Amount, which may be all or a portion of the Claimed Amount (such specified amount, an “Agreed Amount”) in the case where the Company Equityholders are the Indemnifying Party, the Response shall be accompanied by a letter from the Company Equityholder Representative instructing the Escrow Agent to disburse to the Buyer from the Escrow Fund an amount in cash equal to the Claimed

 

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Amount and the Buyer to offset or set-off against any Holdback Funds (if any) or Adjusted Guaranteed Amount (in each case subject to the limitations set forth in Section 8.5) or (iii) dispute that the Indemnified Party is entitled to receive any of the Claimed Amount.  If no Response is delivered within such 30-day period, the Indemnifying Party shall be deemed to have agreed that, subject to the limitations on liability set forth herein, all of the Claimed Amount is owed to the Indemnified Party.  The Indemnifying Party may contest the payment of all or a portion of the Claimed Amount to the extent it believes in good faith that the Claimed Amount does not constitute Damages for which the Indemnified Party is entitled to indemnification under this Article VIII.  Acceptance by the Indemnified Party of partial payment of any Claimed Amount shall be without prejudice to the Indemnified Party’s right to claim the balance of any such Claimed Amount.

 

(d)                                 Subject to Section 2.6(h), any Dispute shall be resolved in accordance with Section 12.10.  If the Buyer seeks to enforce the claim that is the subject of the Dispute pursuant to the Escrow Agreement, the Company Equityholder Representative and the Buyer shall deliver to the Escrow Agent, promptly following the resolution of the Dispute (whether by mutual agreement, judicial decision or otherwise), a written notice executed by both parties instructing the Escrow Agent as to what (if any) portion of the Escrow Fund shall be distributed to the Buyer (which notice shall be consistent with the terms of the resolution of the Dispute).

 

(e)                                  Notwithstanding the other provisions of this Section 8.3, if a third party asserts (other than by means of a lawsuit) that any Buyer Indemnified Party is liable to such third party for a monetary or other obligation which may constitute or result in Damages for which a Buyer Indemnified Party may be entitled to indemnification pursuant to this Article VIII, and the Buyer reasonably determines that it has a valid business reason to fulfill such obligation, then (i) the Buyer shall be entitled to satisfy such obligation, without prior notice to or consent from the Company Equityholder Representative or the Company Equityholders, (ii) the Buyer may subsequently make a claim for indemnification in accordance with the provisions of this Article VIII, and (iii) the Buyer shall be reimbursed, in accordance with the provisions of this Article VIII, for any such Damages for which it is entitled to indemnification pursuant to this Article VIII (subject to the right of the Company Equityholder Representative, on behalf of the Company Equityholders, to dispute the applicable Buyer Indemnified Party’s entitlement to indemnification, or the amount for which it is entitled to indemnification, under the terms of this Article VIII).

 

(f)                                   Without limitation of Section 2.4, the Company Equityholder Representative shall have full power and authority on behalf of each Company Equityholder (as an Indemnifying Party and an Indemnified Party) to take any and all actions on behalf of, execute any and all instruments on behalf of, and execute or waive any and all rights of, the Company Equityholders under this Article VIII.  The Company Equityholder Representative shall have no liability to any Company Equityholders for any action taken or omitted on behalf of the Company Equityholders pursuant to this Article VIII.

 

(g)                                  The Indemnified Party shall make available to the Indemnifying Party that assumes control of the defense of a claim under this Article VIII and its Representatives (including, in the case of the Company Equityholders as the Indemnifying Party, to the Company Equityholder Representative) such books, records and other documents and materials as are

 

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under such Indemnified Party’s control and that are reasonably necessary in connection with the defense of any Third Party Action, in each case, solely to the extent such books, records and other documents are not subject to attorney-client privilege, the work produce doctrine or any other available privilege.

 

8.4                               Survival of Representations and Warranties.

 

(a)                                 Unless otherwise specified in this Section 8.4 or elsewhere in this Agreement, all provisions of this Agreement shall survive the Closing and the consummation of the transactions contemplated hereby and shall continue in full force and effect in accordance with their terms until the expiration of the applicable statute of limitations; provided, however, that, except with respect to claims based on fraud or knowing misrepresentation, all representations and warranties that are covered by the indemnification obligations in Section 8.1(a) shall expire, and no claims may be made with respect thereto by any Indemnified Party thereafter, on the date 15 months following the Closing Date (the “Non-Fundamental Expiration Date”), after which time such representations and warranties will terminate; provided further, however, that (i) the representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4(a),3.9, 3.17 (to the extent related to Tax), 3.25, 4.1, 4.2(a) and 4.4 shall survive until the date that is 60 days after the expiration of the longest statute of limitations applicable to the subject matter of the applicable representation or warranty (collectively, the “Fundamental Representations”) and (ii) the representations and warranties set forth in Sections 3.12 shall survive until the date that is 30 months following the Closing Date, after which time such representations and warranties will terminate.  The parties further acknowledge that the time periods set forth in this Article VIII for the assertion of claims under this Agreement are the result of arms’ length negotiation among the parties and that they intend for the time periods to be enforced as agreed by the parties. As such, it is the express intent of the parties hereto that, if an applicable survival period as contemplated by this Section 8.4(a) is shorter than the statute of limitations that would otherwise apply, then, by contract, the applicable statute of limitations shall be reduced to the survival period contemplated hereby.

 

(b)                                 If the Buyer delivers to the Company Equityholder Representative or the Company Equityholder Representative delivers to the Buyer, as applicable, before expiration of a representation, warranty, covenant or agreement, either a Claim Notice based upon a breach of such representation, warranty, covenant or agreement or an Expected Claim Notice based upon a breach of such representation, warranty, covenant or agreement then the applicable representation, warranty, covenant or agreement shall survive until, but only for purposes of, the resolution of the matter covered by such notice.  If the legal proceeding or written claim with respect to which an Expected Claim Notice has been given is definitively withdrawn or resolved in favor of the Buyer or the Company Equityholder Representative, the Buyer or the Company Equityholder Representative, as applicable, shall promptly so notify the Company Equityholder Representative or the Buyer, as applicable.

 

8.5                               Limitations and other Indemnification Matters.

 

(a)                                 With respect to claims for Damages arising under Section 8.1(a), (A) the Company Equityholders shall not be liable for any such Damages unless and until the aggregate amount of Damages with respect to the particular event or occurrence giving rise to such claim

 

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(and all other events or occurrences arising from the same or similar circumstances) exceed $10,000 (at which point the Company Equityholders shall become liable for all such Damages, subject to clause (B) below and the other limitations set forth herein) and (B) the Company Equityholders shall not be liable for any such Damages until the aggregate amount of all such Damages exceeds $1,000,000 the (“Deductible Amount”) (at which point the Company Equityholders shall become liable for all Damages under Section 8.1(a) in excess of the Deductible Amount subject to the other limitations set forth herein); provided that the limitation set forth in this sentence shall not apply to (i) claims based on fraud or knowing misrepresentation or (ii) any claim pursuant to Section 8.1(a) relating to a breach of any of the Fundamental Representations.

 

(b)                                 With respect to claims for Damages arising under Section 8.2(a), (A) the Buyer shall not be liable for any such Damages unless and until the aggregate amount of Damages with respect to the particular event or occurrence giving rise to such claim (and all other events or occurrences arising from the same or similar circumstances) exceed $10,000 (at which point the Buyer shall become liable for all such Damages, subject to clause (B) below and the other limitations set forth herein) and (B) the Buyer shall not be liable for any such Damages until the aggregate amount of all such Damages exceeds $1,000,000 (the “Buyer Deductible Amount”) (at which point the Buyer shall become liable for all Damages under Section 8.2(a) in excess of the Buyer Deductible Amount subject to the other limitations set forth herein); provided that the limitation set forth in this sentence shall not apply to (1) claims based on fraud or knowing misrepresentation or (2) any claim pursuant to Section 8.2(a) relating to a breach by Buyer or Transitory Subsidiary of any of the Fundamental Representations.

 

(c)                                  Except in the case of claims (i) with respect to breaches of any Fundamental Representations or (ii) based on fraud or knowing misrepresentation, (A) the aggregate liability of the Company Equityholders for Damages under Section 8.1(a) shall not exceed the Non-Fundamental Cap, (B) without limiting the preceding clause (A), and without duplication, the Escrow Funds, the Holdback Funds (if any) and the Adjusted Guaranteed Amount shall be the exclusive source and means for the Buyer to collect any Damages for which it is entitled to indemnification under Section 8.1(a) from any Company Equityholder and (C) solely in the case of a claim for indemnification pursuant to Section 8.1(d), the Buyer may only seek recovery from the Escrow Funds,  the Holdback Funds and/or the Adjusted Guaranteed Amount, without duplication, to the extent of the applicable breaching Company Stockholder’s Pro Rata Share of the Escrow Funds, the Holdback Funds and/or the Adjusted Guaranteed Amount, without duplication, as applicable (but without limitation of the aggregate amount that may be recovered from such Company Stockholder).  In addition, in all cases, the Buyer shall not attempt to collect any Damages directly from any Company Equityholder unless there are insufficient (1) unclaimed Escrow Funds, Holdback Funds (if any) and Adjusted Guaranteed Amount, without duplication, and (2) other available Contingent Consideration that is then due and payable and remains available to satisfy Damages hereunder.

 

(d)                                 Promptly following the Non-Fundamental Expiration Date (and in any event within five (5) Business Days), the Buyer shall, in accordance with Section 2.1(e)(iii) and Section 2.7(c), distribute to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of the Company Equityholders, any then remaining Holdback Funds.  Any portion of the Holdback Funds that are not disbursed pursuant to the preceding sentence that

 

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are finally determined pursuant to this Article VIII not to constitute Agreed Amounts or otherwise upon resolution of such claim hereunder shall be distributed by the Buyer to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of Company Equityholders, pursuant to Section 2.1(e)(iii) and Section 2.7(c).

 

(e)                                  Subject to this Section 8.5, the aggregate liability of each Company Equityholder for Damages under this Article VIII shall not exceed the aggregate amount of Aggregate Consideration such Company Equityholder has received (or would have received but for the indemnification or holdback obligations set forth in this Article VIII) pursuant to this Agreement.  The foregoing limitation on liability set forth in this Section 8.5(e) shall not apply to a Company Equityholder with respect to fraud or a knowing misrepresentation committed by such Company Equityholder in connection with the transactions contemplated by this Agreement.

 

(f)                                   The aggregate liability of the Buyer for Damages under this Article VIII shall not exceed $150,000,000 in the aggregate; provided, that any indemnification obligations under Section 8.2(a) with respect to representations that are not Fundamental Representations of the Buyer or the Transitory Subsidiary shall be limited to $26,000,000 in the aggregate.  Notwithstanding anything herein to the contrary, the foregoing limitation on liability set forth in this Section 8.5(f) shall not apply with respect to Damages under (A) Section 8.2(c) or (B) a breach of Section 2.8.

 

(g)                                  No Company Equityholder shall have any right of contribution against the Company or the Surviving Corporation with respect to any breach by the Company of any of its representations, warranties, covenants or agreements.

 

(h)                                 The rights to indemnification set forth in this Article VIII shall not be affected by (i) any investigation conducted by or on behalf of any Buyer Indemnified Party or any knowledge acquired (or capable of being acquired) by any Buyer Indemnified Party, whether before or after the date of this Agreement or the Closing Date, with respect to the inaccuracy or noncompliance with any representation, warranty, covenant or obligation which is the subject of indemnification hereunder, or (ii) any waiver by the Buyer of any closing condition relating to the accuracy of representations and warranties or the performance of or compliance with agreements and covenants.

 

(i)                                     Notwithstanding anything to the contrary in this Agreement, for purposes of determining (i) whether there has been a breach of any representation or warranty set forth in Article III or the Company Certificate and (ii) the amount of Damages for which any Buyer Indemnified Party may be entitled to indemnification under this Article VIII, each such representation or warranty (other than the representations and warranties set forth in clause (a) of Section 3.6, Section 3.13(a)(xii) and in Section 3.27) shall be deemed to have been made without any qualifications or limitations as to materiality (including any qualifications or limitations made by reference to a Company Material Adverse Effect or Buyer Material Adverse Effect, as applicable).  For the avoidance of doubt, all qualifications and limitations as to materiality (including any qualifications or limitations made by reference to a Company Material Adverse Effect or Buyer Material Adverse Effect, as applicable) shall be given full effect for the purposes of determining whether there has been any fraud or knowing misrepresentation (but not, for the

 

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avoidance of doubt, the amount of Damages which any Buyer Indemnified Party may be entitled to recovery under this Article VIII).

 

(j)                                    Subject to the limitations set forth in this Agreement (including Sections 8.4, 8.5(b) and 8.5(c)), the Buyer shall have the right, but not the obligation, to set off, in whole or in part, against any obligation or payment it owes to any Company Equityholder under this Agreement (including by deducting from or withholding any Contingent Consideration that is or may become payable pursuant to this Agreement), amounts owed or described in a Claim Notice or Expected Claim Notice as owed by such Company Equityholder to any Buyer Indemnified Party pursuant to this Agreement; provided, that such right of set off shall only apply for so long as and to the extent that the claims asserted in such Claim Notice or Expected Claim Notice remain unresolved hereunder (or are determined to be Damages owed to Buyer hereunder), and all other amounts determined not to be Damages owed to Buyer hereunder shall (subject to Section 2.1(e)(iii) and Section 8.5(d)), promptly after such determination, be distributed by the Buyer to the Exchange and Paying Agent or the Surviving Corporation, as applicable, for the benefit of Company Equityholders, pursuant to Section 2.1(e)(iii) and Section 2.7(c).

 

(k)                                 Except (i) for specific performance, (ii) as set forth in Section 2.6 and (iii) to the extent any claim based on fraud may as a matter of Law only be recovered in an alternative form of action, after the Closing, the rights of the parties under this Article VIII shall be the exclusive remedy of the parties with respect to claims resulting from or relating to any misrepresentation, breach of warranty or failure to perform any covenant or agreement (including the indemnities in Section 8.1 and Section 8.2) of the other parties contained in this Agreement and claims based on fraud or knowing misrepresentation.

 

(l)                                     Any payments made to a party pursuant to this Article VIII or pursuant to the Escrow Agreement shall be treated as an adjustment to the Aggregate Consideration for Tax purposes to the extent permitted by Law.

 

(m)                             The amount of Damages that the Indemnified Parties (or any of them) may recover pursuant to this Article VIII shall be reduced, on a dollar-for-dollar basis, by (i) amounts actually received by such Indemnified Parties (or any of them) in respect of the Damages forming the basis of such claim for recovery from a third party pursuant to any indemnification or other similar right (net of costs of recovery), and (ii)  any amounts actually received by such Indemnified Parties (or any of them) in respect of the Damages forming the basis of such claim for recovery from a third party under any insurance policy or other similar arrangement (net of expenses (including costs of collection) and increased premiums), it being understood and hereby agreed that such Indemnified Parties shall have no obligation to recover any amounts available from third parties (whether under insurance policies or similar arrangements or otherwise) prior to or as a condition to recovering any amounts pursuant to this Article VIII.

 

(n)                                 For the avoidance of doubt, no Damages may be claimed by any Buyer Indemnified Party under this Article VIII to the extent that such Damages are expressly accounted for in the calculation of Aggregate Closing Consideration or Contingent Consideration.

 

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ARTICLE IX

 

OTHER POST-CLOSING AGREEMENTS

 

9.1                               No Claims.  Effective as of the Closing, each Company Stockholder, by its execution and delivery of this Agreement and/or the Written Consent, hereby (a) waives any and all rights of indemnification, contribution and other similar rights against the Company, the Surviving Corporation or any Subsidiary (whether arising pursuant to any charter document of the Company, the Surviving Corporation or any Subsidiary, any contract, applicable Law or otherwise) arising out of the representations, warranties, covenants and agreements contained in this Agreement and/or out of the negotiation, execution or performance of this Agreement, and agrees that any claim of the Buyer, whether for indemnity or otherwise, may be asserted directly against the Company Stockholders or any Company Stockholder (solely to the extent, and subject to the limitations, provided in this Agreement), without any need for any claim against, or joinder of, the Company, the Surviving Corporation or any Subsidiary and (b) forever waives, releases and discharges (and hereby agrees to cause each of its representatives to forever waive, release and discharge) with prejudice the Company, the Surviving Corporation and each Subsidiary from any and all claims, rights (including rights of indemnification, contribution and other similar rights, from whatever source, whether under contract, applicable Law or otherwise), causes of action, protests, suits, disputes, orders, obligations, debts, demands, proceedings, contracts, agreements, promises, liabilities, controversies, costs, expenses, fees (including attorneys’ fees), or damages of any kind, arising by any means (including subrogation, assignment, reimbursement, operation of law or otherwise), whether known or unknown, suspected or unsuspected, accrued or not accrued, foreseen or unforeseen, or mature or unmature related or with respect to, in connection with, or arising out of, directly or indirectly, any event, fact, condition, circumstance, occurrence, act or omission that was in existence (or that occurred or failed to occur) at or prior to the Closing; provided, however, this clause (b) shall not be construed as releasing (a) any party hereto from its obligations otherwise expressly set forth in this Agreement or any agreement delivered pursuant hereto or (b) the Company, the Surviving Corporation or any Subsidiary from (i) their respective obligations (subject to Section 9.2) under the director and officer indemnification provisions expressly set forth in their respective Organizational Documents as in effect on the date hereof or included in the agreements listed on Schedule 9.2 as in effect on the date hereof or (ii) any obligation to pay to any Person any wages or benefits arising in the Ordinary Course of Business solely from such Person’s employment with the Company, the Surviving Corporation or a Subsidiary.  Each Company Stockholder hereby expressly waives any and all provisions, rights and benefits conferred by §1542 of the California Civil Code (or any similar, comparable or equivalent provision or law of any applicable jurisdiction) which section provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

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9.2                               Indemnification.

 

(a)                                 From the Effective Time until the sixth (6th) anniversary of the Closing Date, all rights to indemnification, exculpation and the advancement of expenses by the Company existing in favor of those Persons who were prior to, or who are as of, the Closing Date, directors or officers of the Company (the “D&O Indemnified Persons”) for their acts and omissions occurring prior to the Effective Time (the “D&O Provisions”) shall survive the Merger and shall be observed by the Surviving Corporation (and its successors, if any, during such period) to the fullest extent available under the DGCL.

 

(b)                                 Notwithstanding anything else contained herein, the Company may, at its own expense, purchase, prior to the Effective Time, a six-year prepaid “tail policy” covering claims asserted within six years after the Closing arising from facts or events that occurred at or prior to the Effective Time (including consummation of the transactions contemplated by this Agreement), which names as insureds all D&O Indemnified Persons.  Following the Closing, the Buyer shall cause the Surviving Corporation to abide by and honor the Surviving Corporation’s contractual obligations, if any, under such “tail policy.” For the avoidance of doubt, any costs, expenses, liabilities or other amounts owed or payable with respect to such “tail policy” that remain unpaid as of the Closing shall be deemed to be “Company Transaction Expenses” for all purposes hereunder.

 

(c)                                  The provisions of this Section 9.2 shall survive the consummation of the Merger and are intended to be for the benefit of, and will be enforceable by, each of the D&O Indemnified Persons and their successors, assigns and heirs.  In addition, any successor-in-interest to or assignee of the Buyer or the Surviving Corporation shall be bound by this Section 9.2.  This Section 9.2 provides rights that are in addition to, and not in substitution of, any other rights to indemnification or contribution that any D&O Indemnified Person, or any successor, assign, heir or representative of any D&O Indemnified Person, may have by contract or otherwise.

 

9.3                               Tax Matters.

 

(a)                                 Preparation and Filing of Tax Returns; Payment of Taxes.

 

(i)                                     The Company, at its expense, shall prepare and timely file or shall cause to be prepared and timely filed all Tax Returns of the Company and the Subsidiaries required to be filed (taking into account extensions) prior to the Closing Date.  Such Tax Returns shall be prepared in a manner consistent with the Company’s or such Subsidiary’s past practice.

 

(ii)                                  The Buyer shall prepare and timely file or shall cause to be prepared and timely filed all other Tax Returns for the Company and the Subsidiaries that are required to be filed after the Closing Date (“Buyer Prepared Returns”).

 

(iii)                               All Buyer Prepared Returns that relate to Pre-Closing Tax Periods (including Straddle Periods), in each case, shall (1) be prepared and filed in a manner consistent with past practice of the Company or its applicable Subsidiary unless otherwise required by applicable Law and (2) to the extent such Tax Return is an income Tax Return for a Pre-Closing Tax Period, include all Transaction Deductions to the maximum extent permitted by applicable Law.  Buyer shall provide drafts of any such Tax Returns described in the preceding sentence to

 

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the Company Equityholder Representative at least 30 days prior to the applicable due date for filing thereof (or, if such due date is within 30 days of the Closing Date, as promptly as practicable following the Closing Date) and shall permit the Company Equityholder Representative to review and comment on any such Tax Return prior to filing.  Buyer shall consider in good faith all comments reasonably requested by the Company Equityholder Representative. To the extent Taxes are due with respect to any Buyer Prepared Returns that relate to any Pre-Closing Tax Periods (including Straddle Periods) and such Taxes were not taken into account in Closing Indebtedness to reduce the Aggregate Consideration, Buyer may recover such Taxes pursuant to Article VIII.

 

(iv)                              All transfer, sales, use, stamp, conveyance, real property transfer, recording, registration, documentary, filing and other non-income Taxes and administrative fees (including, without limitation, notary fees) arising in connection with the consummation of the transactions contemplated by this Agreement (“Transfer Taxes”) shall be borne fifty percent by the Company Equityholders and fifty percent by Buyer. The party responsible by applicable law for filing any Tax Return relating to Transfer Taxes shall be responsible for filing such Tax Return and the other party shall cooperate with the filing party in the filing of any such Tax Returns with respect to Transfer Taxes, including promptly supplying any information in its possession that is reasonably necessary to complete such Tax Returns.

 

(b)                                 Allocation of Certain Taxes.

 

(i)                                     The Buyer and the Company Equityholders agree that if the Company or any Subsidiary is permitted but not required under applicable foreign, state or local Tax Laws to treat the Closing Date as the last day of a taxable period, the Buyer and the Company Equityholders shall treat such day as the last day of a taxable period.

 

(ii)                                  Subject to Section 9.3(b)(iii) below, the amount of any Taxes for a Straddle Period allocable to a Pre-Closing Tax Period shall be deemed to equal (i) in the case of Taxes that (x) are based upon or related to income, receipts or payroll or (y) imposed in connection with any sale or other transfer or assignment of property (other than Transfer Taxes described in Section 9.3(a)), the amount which would be payable if the taxable year ended with the Closing Date, and (ii) in the case of other Taxes imposed on a periodic basis (including property Taxes), the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of calendar days in the period ending with the Closing Date and the denominator of which is the number of calendar days in the entire period.  For purposes of computing the Taxes attributable to the two portions of a taxable period pursuant to this Section 9.3(b), any exemptions, allowances, deductions (including depreciation or amortization) and credits that are calculated on an annual basis shall be allocated between the portion of the Straddle Period ending on the Closing Date and the portion beginning after the Closing Date in proportion to the number of days in each such portion of the taxable period.

 

(iii)                               Transactions that occur on the Closing Date but after the Closing and that are not incurred in the Ordinary Course of Business of the Company or its Subsidiaries (other than as specifically contemplated by this Agreement) shall be considered to be attributable to the period that commences on the day following the Closing Date.

 

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(c)                                  Cooperation on Tax Matters; Tax Audits.

 

(i)                                     The Buyer, the Surviving Corporation and the Company Equityholder Representative and their respective Affiliates shall (i) cooperate in the preparation of all Tax Returns and the conduct of all Tax Contests relating to the determination of any Tax for any Tax periods for which one party could reasonably require the assistance of the other party in obtaining any necessary information, (ii) furnish or cause to be furnished, upon reasonable request, as promptly as practicable, such information and assistance relating to Taxes in such party’s possession (including access to applicable books and records) as is reasonably necessary for the filing of all Tax Returns by Buyer, the Surviving Corporation, and their respective Affiliates, the making of any election relating to Taxes, the preparation for any Tax Contest and the prosecution or defense of any Tax Contest, and (iii) use commercially reasonable efforts to obtain any certificate or other document from any Governmental Entity as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the Company or any of its Subsidiaries or with respect to the transactions contemplated hereby.

 

(ii)                                  If, subsequent to the Closing, Buyer, the Surviving Corporation or any of their Affiliates (including the Company’s Subsidiaries) receives notice of a Tax Contest with respect to any Pre-Closing Tax Period with respect to which Company Equityholders may be required to provide indemnification under this Agreement, then within ten (10) Business Days after receipt of such notice, the Buyer shall notify the Company Equityholder Representative of such notice. No delay or failure in so notifying the Company Equityholder Representative shall relieve the Company Equityholders of any liability or obligation hereunder except to the extent of any damage, prejudice or liability caused by or arising out of such delay or failure.

 

(A)                               The Company Equityholder Representative may elect to control the conduct and resolution of such Tax Contest to the extent that such Tax Contest relates solely to a Pre-Closing Tax Period of the Company or any of its Subsidiaries (a “Pre-Closing Tax Contest”), provided that (i) the Company Equityholder Representative shall permit Buyer to participate in such Pre-Closing Tax Contest (using counsel of its own choosing), (ii) the Company Equityholder Representative shall keep Buyer reasonably informed of all material developments on a timely basis with respect to any such Pre-Closing Tax Contest, and (iii) the Company Equityholder Representative shall not enter into any settlement of, otherwise compromise or abandon any Pre-Closing Tax Contest without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed.

 

(B)                               With respect to any Tax Contest (i) involving Tax matters or items that could reasonably be expected to form the basis for a claim of indemnification against the Company Equityholders pursuant to this Agreement and (ii) that the Company Equityholder Representative does not or cannot elect to control pursuant to the preceding Section 9.3(c)(ii)(A), Buyer will control such Tax Contest, including the defense and settlement thereof; provided that, (i) the Buyer shall permit the Company Equityholder Representative to participate in such Tax Contest (using counsel of its own choosing), (ii) Buyer shall keep the Company Equityholder Representative reasonably informed of all material developments on a timely basis with respect to any such Tax Contest, and (iii) Buyer shall not enter into any settlement of, otherwise compromise or abandon any such Tax Contest without the prior written consent of the Company Equityholder Representative, which consent shall not be unreasonably withheld,

 

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conditioned or delayed.

 

(d)                                 Termination of Tax Sharing Agreements.  All Tax sharing agreements or similar arrangements with respect to or involving the Company or any Subsidiary shall be terminated prior to the Closing Date.

 

(e)                                  Post-Closing Restrictions. Buyer and the Company will not (and will not permit their respective Affiliates, including the Company’s Subsidiaries, to) (i) except for Tax Returns prepared and filed in accordance with Section 9.3(a), file or amend any Tax Returns of the Company or its Subsidiaries with respect to any Pre-Closing Tax Period, (ii) with respect to Tax Returns prepared and filed in accordance with Section 9.3(a) after the date such Tax Returns are filed, amend any such Tax Returns, (iii) make or change any Tax election or change any method of accounting that has retroactive effect to any Tax Return of the Company or any of its Subsidiaries for a Pre-Closing Tax Period (including any election pursuant to Section 338 or 336 of the Code), (iv) voluntarily approach any Tax authority regarding any Tax or Tax Return of the Company or any of its Subsidiaries for a Pre-Closing Tax Period or (v) agree to extend or waive the statute of limitations with respect to Taxes of the Company or any of its Subsidiaries for a Pre-Closing Tax Period, in each such case, if such action could reasonably be expected to form the basis for a claim of indemnification against the Company Equityholders pursuant to this Agreement, except with the prior written consent of the Company Equityholder Representative (which will not be unreasonably withheld, delayed or conditioned).

 

(f)                                   Tax Treatment. Except as may be required pursuant to a “determination” (as defined in Section 1313 of the Code or any similar provision of state, local, or foreign Tax law), for all applicable Tax purposes, the parties to this Agreement agree to, and no party shall take any action or filing position inconsistent with, the following Tax treatment of the items specified below:

 

(i)                                     The Company Equityholder Representative Expense Amount shall be treated as having been received and voluntarily set aside by the Company Equityholders on the Closing Date.  For the avoidance of doubt, any applicable withholding Taxes in respect of the portion of the Company Equityholder Representative Expense Amount borne by a Company Equityholder shall be withheld from such Company Equityholder’s share of the consideration paid in connection with the Closing, and any portion of the Company Equityholder Representative Expense Amount remaining that is returned to Company Equityholders shall not be subject to information reporting or Tax withholding a second time.

 

(ii)                                  The contingent rights of the Company Equityholders to their Pro Rata Share of the Future Payments (excluding any Company Equityholder Representative Account Payments), in each case, in respect of their Company Stock and Company Warrants (i) shall be treated as deferred contingent purchase price potentially eligible for installment sale treatment under Section 453 of the Code and any corresponding provision of state, local or non-U.S. Law as appropriate, and (ii) if and to the extent any such amount is released or paid in respect of Company Stock or Company Warrants, as applicable, interest may be imputed on such amount if required by Section 483 or 1274 of the Code.

 

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(iii)                               Any payments made in respect of Company Options shall be treated for Tax purposes as compensation paid and deducted by the Company, as and when received by the recipient thereof (which, for the avoidance of doubt, shall be the Closing Date with respect to the Company Equityholder Representative Expense Amount, and when released to the holder in the case of any other Future Payments).  The payment of such amounts shall (A) in case of payments made in respect of Employee Options, be paid through the Company’s standard payroll procedures and reported on IRS Form W-2, and (B) in the case of payments made in respect of Non-Employee Options, be paid through the Company’s standard accounts payable procedures and reported on IRS Form 1099-MISC.

 

(iv)                              Except for amounts described in Section 9.3(f)(iii) above, the entirety of the Aggregate Consideration payable by Buyer to the Company Equityholders pursuant to this Agreement (including the any Future Payments) shall be allocated to Company Stock or Company Warrants, as applicable, and none shall be treated as compensation.

 

(g)                                  The Merger shall be treated for federal and applicable state and local income Tax purposes as a sale or exchange of the Company Stock subject to Section 1001 of the Code and any corresponding provision under applicable state or local Tax Law.

 

ARTICLE X

 

TERMINATION AND AMENDMENT

 

10.1                        Termination.  This Agreement may be terminated at any time prior to the Effective Time (with respect to Sections 10.1(b) through 10.1(f), by written notice by the terminating party to the other party), whether before or, subject to the terms hereof, after receipt of the Company Stockholder Approval:

 

(a)                                 by mutual written consent of the Buyer, the Transitory Subsidiary and the Company; or

 

(b)                                 by either the Buyer or the Company if the Merger shall not have been consummated by the Outside Date; provided, however, that the right to terminate this Agreement under this Section 10.1(b) shall not be available to a party if the failure of the Merger to have been consummated on or before the Outside Date was primarily due to the failure of such party to perform any of its material obligations under this Agreement; or

 

(c)                                  by either the Buyer or the Company if a Governmental Entity of competent jurisdiction shall have issued a nonappealable final order, decree or ruling or taken any other nonappealable final action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger; provided, however, that the right to terminate this Agreement under this Section 10.1(c) shall not be available to a party if the issuance of such order, decree, ruling or the taking of such action was primarily due to the failure of such party to perform any of its material obligations under this Agreement; or

 

(d)                                 by the Buyer, if there has been a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, which breach or failure to perform (i) would cause the conditions set forth in

 

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Section 7.1(c) or 7.1(d) not to be satisfied and (ii) shall not have been cured or waived within 20 days following receipt by the Company of written notice of such breach or failure to perform from the Buyer; provided, however, that the right to terminate this Agreement under this Section 10.1(d) shall not be available to the Buyer if the Buyer or the Transitory Subsidiary is then in material breach of any representation, warranty or covenant set forth in this Agreement; or

 

(e)                                  by the Company, if there has been a breach of or failure to perform any representation, warranty, covenant or agreement on the part of the Buyer or the Transitory Subsidiary set forth in this Agreement, which breach or failure to perform (i) would cause the conditions set forth in Section 7.2(a) or 7.2(b) not to be satisfied and (ii) shall not have been cured or waived within 20 days following receipt by the Buyer of written notice of such breach or failure to perform from the Company; provided, however, that the right to terminate this Agreement under this Section 10.1(e) shall not be available to the Company if the Company is then in material breach of any representation, warranty or covenant set forth in this Agreement; or

 

(f)                                   by the Buyer, if the Company Stockholder Approval shall not have been obtained prior to 5:00 p.m., New York time, on the second (2nd) Business Day immediately following the date of this Agreement.

 

10.2                        Effect of Termination.  In the event of the termination of this Agreement as provided in Section 10.1, this Agreement shall immediately become void and there shall be no liability or obligation on the part of the Buyer, the Company, the Transitory Subsidiary or their respective officers, directors, stockholders or Affiliates; provided, that (a) any such termination shall not relieve any party from liability for damages for any willful breach on the part of the Buyer, the Company or Transitory Subsidiary, as the case may be, including such party’s obligation to close if it was otherwise obligated to do so under the terms of this Agreement and (b) each of Section 2.4(d)  (Exculpation and Indemnification of the Company Equityholder Representative), Section 5.2 (Confidentiality), this Section 10.2 (Effect of Termination), Section 10.3 (Fees and Expenses), Article XII (Miscellaneous) (in each case including the respective meanings ascribed to the related capitalized terms in Article XI (Definitions)) and the Confidentiality Agreement shall remain in full force and effect and survive any termination of this Agreement.  Nothing shall limit or prevent any party from exercising any rights or remedies it may have under Section 12.9 hereof in lieu of terminating this Agreement pursuant to Section 10.1.

 

10.3                        Fees and Expenses.  Except as otherwise expressly provided herein, the Buyer will pay all fees and expenses (including legal and accounting fees and expenses) incurred by it in connection with the transactions contemplated hereby and the Company Transaction Expenses shall be paid by the Company Equityholders.

 

10.4                        Amendment.  Prior to the Effective Time, this Agreement may be amended by the Buyer and the Company, by action taken or authorized by their respective Boards of Directors, at any time before or after receipt of the Company Stockholder Approval, but, after receipt of the Company Stockholder Approval no amendment shall be made which by Law requires further approval by such stockholders without such further approval.  This Agreement may not be amended except by an instrument in writing signed (a) in the case of an amendment of any of

 

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Section 2.4, Section 2.6, Article VIII, Article IX, this Article X, Article XI and Article XII, on behalf of each of the parties hereto, and (b) in the case of an amendment of any other provision of this Agreement, on behalf of the Buyer and the Company.

 

10.5                        Extension; Waiver.  (a) At any time prior to the Effective Time, the Buyer and the Company, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained herein; (b) any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party; (c) such extension or waiver shall not be deemed to apply to any time for performance, inaccuracy in any representation or warranty, or noncompliance with any agreement or condition, as the case may be, other than that which is specified in the extension or waiver; and (d) the failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.

 

ARTICLE XI

 

DEFINITIONS

 

For purposes of this Agreement, each of the following terms has the meaning set forth below.

 

Adjusted Guaranteed Amount” means, as of a time of determination, the amount that the Buyer Indemnified Parties are entitled to offset, in accordance with Section 8.5(j), against (a) the aggregate amount of $40,000,000 referred to in Section 2.8(b)(i)(D) and Section 2.8(b)(i)(G), counting all such amounts for purposes of this clause (a) regardless of whether such amounts have actually been earned and become payable pursuant to Section 2.8 hereof as of such time, minus (b) amounts which are determined to be Damages for which Buyer Indemnified Parties have previously set off against or (to the extent not yet due and payable hereunder) have the right to set off against, the Contingent Consideration referred to in the preceding clause (a) in accordance with Section 8.5(j), and minus (c) any Claimed Amounts made against the Contingent Consideration referred to in clause (a) prior to such measurement time.

 

Affiliate” means, with respect to a Person, any other Person who is an “affiliate” of that Person within the meaning of Rule 405 promulgated under the Securities Act of 1933, as amended.

 

Aggregate Closing Consideration” means (a) the Closing Cash Consideration plus (b) the Closing Stock Consideration.

 

Aggregate Consideration” means the sum of (a) the Aggregate Closing Consideration, plus (b) any Future Payments that become payable in accordance with the terms of this Agreement or the Escrow Agreement.

 

Aggregate Preferred Stock Preference Amount” means the Aggregate Series A Preference Amount plus the Aggregate Series B Preference Amount.

 

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Aggregate Series A Preference Amount” means the Series A Preference Amount, multiplied by the number of shares of Company Series A Preferred Stock outstanding as of immediately prior to the Effective Time.

 

Aggregate Series B Preference Amount” means the Series B Preference Amount, multiplied by the number of shares of Company Series B Preferred Stock outstanding as of immediately prior to the Effective Time.

 

Agreed Amount” has the meaning set forth in Section 8.3(c).

 

Agreement” has the meaning set forth in the first paragraph of this Agreement.

 

Anti-Bribery Laws” has the meaning set forth in Section 3.19.

 

Antitrust Laws” means the HSR Act, as amended, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act and any other applicable federal, state or foreign Law designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade.

 

Base Cash Purchase Price” means $50,000,000.

 

Bridge Loan Agreement” has the meaning set forth in the recitals to this Agreement.

 

Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in Wilmington, Delaware or New York, New York are permitted or required by Law, executive order or governmental decree to remain closed.

 

Buyer” has the meaning set forth in the first paragraph of this Agreement.

 

Buyer Benefit Plan” has the meaning set forth in Section 6.12.

 

Buyer Certificate” means a certificate delivered by the Buyer (without qualification as to knowledge, materiality or otherwise), signed on behalf of the Buyer by an authorized officer of the Buyer, to the effect that each of the conditions specified in clauses (a) and (b) of Section 7.2 is satisfied in all respects.

 

Buyer Closing Stock Price” means the volume-weighted average price, rounded to four decimal points, of shares of Buyer Common Stock on NASDAQ (as reported on Bloomberg L.P. under the function “VWAP”) for the period of the ten (10) consecutive trading days ending on the second full trading day prior to the Closing Date.

 

Buyer Common Stock” means the common stock, $0.001 par value per share, of Buyer.

 

Buyer Deductible Amount” has the meaning set forth in Section 8.5(b).

 

Buyer Indemnified Parties” means the Buyer and its Affiliates (including, after the Closing, the Company, the Surviving Corporation and the Subsidiaries).

 

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Buyer Material Adverse Effect” means any Change that, individually or in the aggregate with all other Changes, has had or could reasonably be expected to have a material adverse effect on the ability of the Buyer or the Transitory Subsidiary to perform their respective obligations under (including, for the avoidance of doubt, payment of Contingent Consideration), or to consummate the transactions contemplated by, this Agreement.

 

Buyer Preferred Stock” has the meaning set forth in Section 4.4.

 

Buyer Prepared Returns” has the meaning set forth in Section 9.3(a).

 

Buyer SEC Reports” has the meaning set forth in Section 4.6.

 

CERCLA” means the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended.

 

Certificate” means a certificate which as of immediately prior to the Effective Time represented outstanding shares of Company Stock.  For the avoidance of doubt, if and to the extent outstanding shares of Company Stock are represented by Certificates held in electronic form via the platform maintained by the Company’s transfer agent, eShares, Inc. (DBA Carta, Inc.), then references herein to “Certificate” shall refer to such certificate in electronic form.

 

Certificate of Merger” means the certificate of merger or other appropriate documents prepared and executed in accordance with Section 251(c) of the DGCL.

 

Change” means any change, event, circumstance or development.

 

Claim Notice” means written notification which contains (a) a description of the Damages incurred or reasonably expected to be incurred by the Indemnified Party and the Claimed Amount of such Damages, to the extent then known, (b) a statement that the Indemnified Party is entitled to indemnification under Article VIII for such Damages and a reasonable explanation of the basis therefor, and (c) a demand for payment in the amount of such Damages.

 

Claimed Amount” means the amount of any Damages incurred or reasonably expected to be incurred by an Indemnified Party and set forth in a Claim Notice.

 

Closing” means the closing of the transactions contemplated by this Agreement.

 

Closing Adjustment Items” means, without duplication, (a) the Company Transaction Expenses, (b) the Employee Amount, (c) if the Closing Cash exceeds the amount of the Closing Indebtedness, a negative number (which, for the avoidance of doubt, shall reduce the Estimated Closing Adjustment and the Final Closing Adjustment) equal to the amount by which the Closing Cash exceeds the amount of the Closing Indebtedness, (d) if the amount of the Closing Indebtedness exceeds the Closing Cash, the amount by which the Closing Indebtedness exceeds the Closing Cash, (e) if Closing Net Working Capital is less than the Working Capital Target, the amount of such shortfall, and (f) if the Closing Net Working Capital exceeds the Working Capital Target, a negative number (which, for the avoidance of doubt, shall reduce the Estimated Closing Adjustment and the Final Closing Adjustment) equal to such excess.

 

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Closing Adjustment Statement” means the statement of the Closing Adjustment Items prepared in accordance with the provisions of Section 2.6.

 

Closing Cash” means all cash and cash equivalents held by the Company or any Subsidiary (plus the amount of all un-cleared deposits of the Company and its Subsidiaries outstanding, and less the amount of all un-cleared checks or withdrawals of the Company or any Subsidiary outstanding), measured as of immediately prior to the Effective Time and determined in accordance with GAAP applied on a basis consistent with the application thereof to the most recent audited financial statements included in Company Financial Statements (to the extent consistent with GAAP).

 

Closing Cash Consideration” means an amount in cash equal to, without duplication, (i) the Base Cash Purchase Price, plus (ii) the aggregate exercise price or measurement price of all Vested Company Options outstanding as of immediately prior to the Effective Time, plus (iii) the portion of the aggregate exercise price or measurement price of all Company Warrants outstanding as of immediately prior to the Effective Time (determined by ratably allocating such aggregate exercise price based on the proportion that the Closing Cash Consideration bears to the Aggregate Closing Consideration, as set forth on the Closing Date Allocation Schedule), minus (iv) the Estimated Closing Adjustment (which for the avoidance of doubt may be a positive or negative number), minus (v) the Escrow Amount and minus (vi) the Company Equityholder Representative Expense Amount.

 

Closing Company Stockholder and Warrantholder Consideration” means (a) the Aggregate Closing Consideration, minus (b) the aggregate portion thereof payable in respect of Vested Company Options pursuant to Section 2.5(a), minus (c) the aggregate exercise price or measurement price of all Vested Company Options and Company Warrants outstanding as of immediately prior to the Effective Time; provided that the amounts deducted pursuant to clauses (b) and (c) of this definition shall be allocated to the Closing Cash Consideration, in each case as set forth on the Closing Date Allocation Schedule.

 

Closing Date” means (a) a date to be specified by the Buyer, which shall be no later than the second (2nd) Business Day after the satisfaction or waiver of the conditions set forth in Article VII (other than the delivery of items to be delivered at the Closing and other than satisfaction of those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the delivery of such items and the satisfaction or waiver of such conditions at the Closing) or (b) such other date as may be mutually agreed to by the Company and the Buyer; provided, that, unless otherwise consented to in writing by the Buyer, the Closing Date shall not be earlier than the date that is the earliest to occur of (x) thirty-one (31) days after the letter described in Section 2.5(a)(iv) shall have been delivered to all holders of Company Equity Awards, and (y) second (2nd) Business Day after the Buyer shall have received fully executed Surrender Agreements from holders of Company Equity Awards representing 100% (measured based upon the number of shares of Company Stock underling such Company Equity Awards) of the total Company Equity Awards outstanding as of immediately prior to the Effective Time.

 

Closing Date Allocation Schedule” means a schedule, prepared by the Company in the format of the Preliminary Closing Date Allocation Schedule and dated as of the Closing Date (as

 

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such schedule may be updated, corrected, amended or modified in accordance with Section 2.7(a) from time to time after the Effective Time), setting forth (i) the Company’s calculations of the Aggregate Closing Consideration, the Closing Cash Consideration and the Closing Stock Consideration, and (ii) for each Company Equityholder: (a) the name and address for such Company Equityholder; (b) the number of shares of each class of Company Stock held as of the Closing Date by such Company Equityholder; (c) to the extent such Company Equityholder holds shares of Company Preferred Stock, the number of shares of Company Common Stock issuable upon conversion of the shares of each such series of Company Preferred Stock (assuming such conversion occurs as of immediately prior to the Effective Time) in accordance with the Company Certificate of Incorporation; (d) the number of shares of Company Common Stock subject to Company Equity Awards outstanding immediately prior to the Effective Time (after giving effect to the full acceleration of vesting in connection with the transactions contemplated by this Agreement or otherwise) held by such Company Equityholder (and, if applicable, the exercise price or measurement price thereof); (e) the amount to be paid to such Company Equityholder pursuant to Section 2.1(c) and pursuant to Section 2.5(a); (f) the portion of the Aggregate Closing Consideration attributable to such Company Equityholder’s Company Stock, Company Warrants and Company Equity Awards; (g) whether the Company reasonably believes that such Company Equityholder is an “accredited investor” pursuant to Regulation D under the Securities Act; and (h) the portion of any Future Payments attributable to such Company Equityholder’s Company Stock, Company Warrants and Company Equity Awards; and (i) such Company Equityholder’s expected Pro Rata Share, expressed as a percentage.

 

Closing Indebtedness” means all Indebtedness of the Company and the Subsidiaries to the extent outstanding at the Effective Time, including, for the avoidance of doubt, any Indebtedness under the Bridge Loan Agreement; provided, that any Pre-Closing Taxes included in Closing Indebtedness shall be determined as of close of business on the Closing Date, but for the avoidance of doubt shall exclude any Taxes incurred as a result of any actions set forth in the proviso to the definition of “Pre-Closing Taxes”; provided, further that no amounts included as current liabilities in the calculation of Closing Net Working Capital to the extent resulting in a dollar for dollar adjustment in the Estimated Closing Adjustment or Final Closing Adjustment shall be included in Closing Indebtedness.

 

Closing Net Working Capital” means the Company’s current assets (excluding Closing Cash) less current liabilities as of the Effective Time, each determined in accordance with (a) GAAP applied on a basis consistent with the application thereof to the most recent audited financial statements included in Company Financial Statements (to the extent consistent with GAAP) and (b) the example calculation included as Schedule NWC hereto. For the avoidance of doubt, no Taxes shall be included in the calculation of Closing Net Working Capital.

 

Closing Payment Certificate” means a certificate, signed by an executive officer of the Company on behalf of the Company, which (a) sets forth (i) a calculation of the Series A Preference Amount and the Series B Preference Amount, (ii) a calculation of the Closing Waterfall Per Share Amount, (iii) a calculation of the payments to be made by the Buyer in accordance with Section 2.1(d)(ii), (iv) the identity of each Person entitled to a payment pursuant to Section 2.1(d)(ii), (v) the amount due to each such Person and (vi) the applicable wire instructions for the account or accounts of such Person and (b) attaches the Closing Date Allocation Schedule as a schedule thereto.

 

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Closing Payroll Taxes” means the employer portion of any payroll or employment Taxes incurred or accrued with respect to payments in respect of Vested Company Options, Company Option exercises, bonuses, termination, severance or other compensatory payments (including the Employee Amount) made in connection with the transactions contemplated by this Agreement to the extent payable at or in connection with Closing; provided, that no amounts included as current liabilities in the calculation of Closing Net Working Capital or Closing Indebtedness, in each case, to the extent resulting in a dollar for dollar adjustment in the Estimated Closing Adjustment or Final Closing Adjustment shall be included in Closing Payroll Taxes.

 

Closing Stock Consideration” means a number of shares of Buyer Common Stock equal to (a) (i) $150,000,000 plus (ii) the portion of the aggregate exercise price or measurement price of all Company Warrants outstanding as of immediately prior to the Effective Time (determined by ratably allocating such aggregate exercise price based on the proportion that the Closing Stock Consideration bears to the Aggregate Closing Consideration, as set forth on the Closing Date Allocation Schedule), divided by (b) the Buyer Closing Stock Price; provided, that that if such number of shares shall equal or exceed twenty percent (20%) of the total number of shares of Buyer Common Stock issued and outstanding immediately prior to the Closing (the “Share Cap”), then such number of shares paid at Closing shall be reduced by the number of such shares that exceed the Share Cap (for purposes of this calculation, rounded up to the nearest whole share), and the Closing Cash Consideration shall be increased by the Share Adjustment Amount. The Buyer shall notify the Company in writing at least one (1) Business Day prior to the Closing of any such adjustment.

 

Closing Waterfall Per Share Amount” means with respect to a share of Company Stock, Company Equity Award or Company Warrant:

 

(a) with respect to the payment of the first $2,050,000 (in cash or Buyer Common Stock, as applicable) of Aggregate Closing Consideration in excess of the Aggregate Preferred Stock Preference Amount, $2,050,000 divided by the number of Fully Diluted Shares (excluding, for this purpose, the number of the number of shares of Company Class B Common Stock, Company Class C Common Stock and Company Class D Common Stock then outstanding or underlying any Company Equity Awards then outstanding);

 

(b) with respect to the payment of the next $5,000,000 (in cash or Buyer Common Stock. as applicable) of Aggregate Closing Consideration in excess of (A) $2,050,000 plus (B) the Aggregate Preferred Stock Preference Amount, $5,000,000 divided by the number of Fully Diluted Shares (excluding, for this purpose, the number of the number of shares of Company Class C Common Stock and Company Class D Common Stock then outstanding or underlying any Company Equity Awards then outstanding);

 

(c) with respect to the payment of the next $5,000,000 (in cash or Buyer Common Stock, as applicable) of Aggregate Closing Consideration in excess of (A) $7,050,000 plus (B) the Aggregate Preferred Stock Preference Amount, $5,000,000 divided by the number of Fully Diluted Shares (excluding, for this purpose, the number of the number of shares of Company Class D Common Stock then outstanding or underlying

 

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any Company Equity Awards then outstanding); and

 

(d) with respect to the payment of any remaining amounts of Aggregate Closing Consideration in excess of (A) $12,050,000 plus (B) the Aggregate Preferred Stock Preference Amount, such remaining Aggregate Closing Consideration divided by the denominator of which is the number of Fully Diluted Shares.

 

For the avoidance of doubt, (1) all Closing Waterfall Per Share Amounts shall be constituted of Aggregate Closing Consideration consisting of the relative proportions of Closing Cash Consideration and Closing Stock Consideration (except, in the case of Vested Company Options, which shall be composed entirely of Closing Cash Consideration determined in accordance with Section 2.5(a)(i)) and (2) any class of Company Stock (or any Company Equity Award or Company Warrant convertible or exercisable into such class of Company Common Stock) specifically referenced in clauses (a), (b) or (c) above as excluded for purposes of the calculations set forth in such clauses shall not be entitled to any Closing Waterfall Per Share Amounts pursuant to such clauses (a), (b) or (c).

 

COBRA” means the requirements for continuation health coverage under ERISA Section 601 et seq. and Section 4980B of the Code and any comparable state Laws.

 

Code” means the Internal Revenue Code of 1986, as amended.

 

Company” has the meaning set forth in the first paragraph of this Agreement.

 

Company Certificate” means a certificate delivered by the Company (without qualification as to knowledge, materiality or otherwise), signed on behalf of the Company by the President and the Chief Financial Officer of the Company, to the effect that each of the conditions specified in paragraphs (c) through (g), (i), (l) and (n) of Section 7.1 are satisfied.

 

Company Certificate of Incorporation” means, subject to Section 5.1(i), the certificate of incorporation of the Company, as amended or restated from time to time and in effect immediately prior to the Effective Time.

 

Company Class A Common Stock” means the Class A common stock, $0.001 par value per share, of the Company.

 

Company Class B Common Stock” means the Class B common stock, $0.001 par value per share, of the Company.

 

Company Class C Common Stock” means the Class C common stock, $0.001 par value per share, of the Company.

 

Company Class D Common Stock” means the Class D common stock, $0.001 par value per share, of the Company.

 

Company Class E Common Stock” means the Class E common stock, $0.001 par value per share, of the Company.

 

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Company Common Stock” means the Company Class A Common Stock, Company Class B Common Stock, Company Class C Common Stock, Company Class D Common Stock, and Company Class E Common Stock.

 

Company Disclosure Schedule” means the Company Disclosure Schedule provided by the Company to the Buyer on the date hereof.

 

Company Employee” means any employee (whether current or former) of the Company or any Subsidiary.

 

Company Equityholder” means any holder of Company Stock, Company Equity Awards or Company Warrants as of immediately prior to the Effective Time.

 

Company Equity Award” means each Company Option and Company Restricted Stock Award outstanding as of immediately prior to the Effective Time.  For the avoidance of doubt, “Company Equity Award” shall not include any shares of Company Stock which are or were subject to a Company Restricted Stock Award to the extent fully-vested as of immediately prior to (but giving effect to the occurrence of) the Effective Time.

 

Company Equityholder Representative” has the meaning set forth in the first paragraph of this Agreement.

 

Company Equityholder Representative Account Payment” has the meaning set forth in Section 2.4(c).

 

Company Equityholder Representative Expense Amount” means $250,000.

 

Company Financial Statements” means (a) as of the date of this Agreement, the Preliminary Company Financial Statements and (b) following their delivery by the Company pursuant to Section 6.10(a), the Final Company Financial Statements.

 

Company Intellectual Property” means the Company Owned Intellectual Property and the Company Licensed Intellectual Property.

 

Company Joint Venture” means Agilis GTRI Japan, Inc., an entity organized under the laws of Japan.

 

Company’s Knowledge,” “Knowledge of the Company” and words of similar effect means the knowledge of each of the individuals identified in Section K of the Company Disclosure Schedule, in each case after due and reasonable inquiry, with the understanding that knowledge will not be imputed to the Company or any individual where the Company has not conducted a freedom to operate search.  Notwithstanding anything to the contrary herein, “Company’s Knowledge,” “Knowledge of the Company” and words of similar effect shall mean, solely in the case of (i) references in this Agreement to the Company’s Knowledge or Knowledge of the Company of matters related to the Company Joint Venture and (ii) the representations and warranties set forth in Section 3.27, the actual knowledge without any duty of inquiry of each of the individuals identified in Section K of the Company Disclosure Schedule.

 

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Company Licensed Intellectual Property” means all Intellectual Property that is, or is purported to be, licensed to the Company or any Subsidiary by any third party.

 

Company Material Adverse Effect” means any Change that, individually or in the aggregate with all other Changes, has had or could reasonably be expected to have a material adverse effect on the business, assets, liabilities, capitalization, financial condition, or results of operations of the Company and the Subsidiaries, taken as a whole, other than any Change to the extent arising after the date hereof and resulting from (i) Changes in the United States economy in general, so long as such changes do not disproportionately affect the business of the Company and the Subsidiaries taken as a whole and (ii) Changes in the industry in which the Company and the Subsidiaries operate, so long as such Changes do not disproportionately affect the business of the Company and the Subsidiaries, taken as a whole; (iii) any Changes in financial or securities markets in general, except to the extent such Changes disproportionately affect the Company, compared to similarly-situated companies in the industries in which the Company operates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; global, national or regional political conditions; or earthquakes, hurricanes, tornadoes or other natural disasters, in each case except to the extent such Changes disproportionately affect the Company, compared to similarly-situated companies in the industries in which the Company operates; (v) any Changes in applicable Laws or accounting rules, including GAAP, except to the extent such Changes disproportionately affect the Company, compared to similarly-situated companies in the industries in which the Company operates; (vi) the public announcement of the transactions contemplated by this Agreement; or (vii) any failure, in and of itself, by the Company to meet any internal projections, forecasts or revenue or earnings predictions (it being understood that, unless the subject of a separate exclusion in this definition, the facts and circumstances giving rise to such failure may be taken into account to determine whether a Company Material Adverse Effect has occurred).  For the avoidance of doubt, the parties agree that the terms “material,” “materially” and “materiality” as used in this Agreement with an initial lower case “m” shall have their respective customary and ordinary meanings, without regard to the meaning ascribed to Company Material Adverse Effect.

 

Company Option” means an option to purchase Company Common Stock issued by the Company pursuant to the Company Stock Plan.

 

Company Owned Intellectual Property” means all Intellectual Property owned or purported to be owned by the Company or any Subsidiary, in whole or in part.

 

Company Plan” means any Employee Benefit Plan providing benefits to any employees, independent contractors, directors, or officers of the Company or any Subsidiary that is sponsored or maintained by the Company or any Subsidiary or with respect to which the Company or any Subsidiary has made or is required to make payments, transfers or contributions or may have any actual or potential liability.

 

Company Preferred Stock” means the Company Series A Preferred Stock and the Company Series B Preferred Stock.

 

Company Registrations” means Intellectual Property Registrations that are registered or filed in the name of the Company or any Subsidiary, alone or jointly with others.

 

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Company Restricted Stock Award” means each award of restricted Company Common Stock that is unvested as of immediately prior to the Effective Time.

 

Company Series A Preferred Stock” means the Series A convertible preferred stock, $0.001 par value per share, of the Company.

 

Company Series B Preferred Stock” means the Series B convertible preferred stock, $0.001 par value per share, of the Company.

 

Company Source Code” means the source code for any Software included in the Customer Offerings or Internal Systems or other confidential information constituting, embodied in or pertaining to such Software.

 

Company Stock” means the Company Common Stock and the Company Preferred Stock (including, for the avoidance of doubt, all Company Common Stock issued in accordance with a Company Restricted Stock Award).

 

Company Stock Plan” means the Company’s 2017 Long-Term Incentive Plan.

 

Company Stockholder” means each holder of Company Stock as of immediately prior to the Effective Time.

 

Company Stockholder Approval” means the adoption of this Agreement and the approval of the Merger, by execution of Written Consents, by (a) a majority of the votes represented by the outstanding shares of Company Stock entitled to vote on this Agreement and the Merger (on a converted to Company Common Stock basis) and (b) a majority of the votes represented by the outstanding shares of Company Series B Preferred Stock entitled to vote on this Agreement and the Merger.

 

Company Transaction Expenses” means all costs and expenses of the Company or any Subsidiary incurred in connection with the negotiation, preparation and execution of this Agreement and the consummation of the transactions contemplated hereby, including any brokerage fees and commissions, finders’ fees or financial advisory fees and any fees and expenses of counsel or accountants payable by the Company or any Subsidiary and all costs and expenses with respect to the “tail policy” described in Section 9.2(b).  For the avoidance of doubt, (i) no Taxes or amounts included in the Employee Amount shall be included in Company Transaction Expenses, and (ii) no amounts included as current liabilities in the calculation of Closing Net Working Capital or Closing Indebtedness, in each case, to the extent resulting in a dollar for dollar adjustment in the Estimated Closing Adjustment or Final Closing Adjustment shall be included in Company Transaction Expenses.

 

Company Warrant” means each warrant or other contractual right to purchase or acquire shares of Company Stock; provided, that Company Equity Awards shall not be considered Company Warrants.

 

Company Warrant Obligations” means any payment, liability or other obligation owed to any Person pursuant to or otherwise in respect of any Company Warrants in excess of any amounts owed to such Person pursuant to, or not expressly contemplated by, Article II hereof.

 

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Confidentiality Agreement” means the Confidentiality Agreement, dated as of January 19, 2018, by and between the Company and the Buyer.

 

Confidentiality Suspension” has the meaning set forth in Section 6.10(e).

 

Contingent Consideration” has the meaning set forth in Section 2.8.

 

Continuing Claim” means the aggregate amount of all then-pending Claimed Amounts pursuant to any Claim Notices or Expected Claim Notices delivered to the Company Equityholder Representative prior to the Non-Fundamental Expiration Date in accordance with this Article VIII.

 

Contract” has the meaning set forth in Section 3.13(a).

 

Controlling Party” means the party controlling the defense of any Third Party Action.

 

Customer Offerings” means (a) the products that the Company or any Subsidiary (i) currently develops, manufactures, markets, distributes, makes available, sells or licenses to third parties, or (ii) has developed, manufactured, marketed, distributed, made available, sold or licensed to third parties within the previous six years, or (iii) currently plans to develop, manufacture, market, distribute, make available, sell or license to third parties in the future and (b) the services that the Company or any Subsidiary (i) currently provides or makes available to third parties, or (ii) has provided or made available to third parties within the previous six years, or (iii) currently plans to provide or make available to third parties in the future.

 

Damages” means any and all claims, debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), monetary damages, fines, fees, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, reasonable costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other expenses of litigation, arbitration or other dispute resolution procedures), but excluding, in each case, any exemplary or punitive damages, except to the extent such damages are finally awarded and actually paid by an Indemnified Party to an unaffiliated third party in connection with a Legal Proceeding against such Indemnified Party.

 

Deal Communications” has the meaning set forth in Section 12.11(c).

 

Deductible Amount” has the meaning set forth in Section 8.5(a).

 

D&O Indemnified Persons” has the meaning set forth in Section 9.2(a).

 

D&O Provisions” has the meaning set forth in Section 9.2(a).

 

DGCL” means the Delaware General Corporation Law of the State of Delaware.

 

DOL” means the United States Department of Labor.

 

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Disclosure Statement” means a written information statement containing the information prescribed by Section 6.2(a).

 

Dispute” means the dispute resulting if the Company Equityholder Representative in a Response disputes the liability of the Company Equityholders for all or part of a Claimed Amount.

 

Dissenting Shares” means shares of Company Stock held as of the Effective Time by a Company Stockholder who has not voted such shares of Company Stock in favor of the adoption of this Agreement and with respect to which appraisal shall have been duly demanded and perfected in accordance with Section 262 of the DGCL and not effectively withdrawn or forfeited prior to the Effective Time.

 

Documentation” means printed, visual or electronic materials, reports, white papers, documentation, specifications, designs, flow charts, code listings, instructions, user manuals, frequently asked questions, release notes, recall notices, error logs, diagnostic reports, marketing materials, packaging, labeling, service manuals and other information describing the use, operation, installation, configuration, features, functionality, pricing, marketing or correction of a product, whether or not provided to end users.

 

Effective Time” means the time at which the Surviving Corporation files the Certificate of Merger with the Secretary of State of the State of Delaware or such later time as is established by the Buyer and the Company and set forth in the Certificate of Merger.

 

EMA” has the meaning set forth in Section 3.20(a).

 

Employee” has the meaning set forth in Section 6.12.

 

Employee Amount” means all amounts payable by the Company pursuant to (a) any Transaction Bonus Plan or (b) any other change in control bonus plan, severance plan, change of control, retention or similar arrangement of the Company or any Subsidiary, in each case of this clause (b) payable as a result of the Merger or any of the other transactions contemplated by this Agreement; provided, however, that “Employee Amount” shall (w) include all amounts payable by or on behalf of the Company in connection with or as a result of the termination of the Company Employees listed on Schedule 5.1(i) and any other Company Employees terminated by the Company prior to the Closing, (x) exclude all Taxes, (y) exclude any change in control bonus plan, severance plan, change of control, retention or similar arrangement to the extent triggered by or resulting from actions taken by Buyer, the Surviving Corporation, any of its or their Affiliates or any Company Employee, in each case, after the Effective Time, and (z) exclude any amounts included as current liabilities in the calculation of Closing Net Working Capital to the extent resulting in a dollar for dollar adjustment in the Estimated Closing Adjustment or Final Closing Adjustment.

 

Employee Benefit Plans” means all (a) “employee benefit plans,” as defined in Section 3(3) of ERISA, together with plans or arrangements that would be so defined if they were not (i) otherwise exempt from ERISA by Section 3(3) of ERISA or another Section of ERISA, (ii) maintained outside the United States or (iii) individually negotiated or applicable only to one individual and (b) any other written or oral benefit arrangement or obligation to provide benefits

 

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as compensation for services rendered, including employment or consulting agreements (except for agreements that provide for at will employment that can be terminated at no cost to the Company and the Subsidiaries and that have been entered into on the Company’s standard forms of employment agreement or offer letter), severance agreements, arrangements, plans or pay policies, stay or retention bonuses or compensation, incentive (including equity or equity-linked) plans, programs or arrangements, patent award programs, sick leave, vacation pay, plant closing benefits, salary continuation or insurance for disability, consulting, or other compensation arrangements, retirement, deferred compensation, bonus, stock option or purchase plans or programs, hospitalization, medical insurance, life insurance, tuition reimbursement or scholarship programs, any plans subject to Section 125 of the Code and any plans providing benefits or payments in the event of a change of control, change in ownership or effective control, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof.

 

Employee Option” means each Company Option granted to the holder in the holder’s capacity as, or that had vesting tied to the holder’s performance of services as, an employee of the Company (or a Subsidiary or other Affiliate of the Company) for applicable employment Tax purposes.

 

Environmental Law” means any Law relating to the environment, occupational health and safety, or exposure of persons or property to Materials of Environmental Concern, including any statute, regulation, administrative decision or order pertaining to:   (a) the presence of or the treatment, storage, disposal, generation, transportation, handling, distribution, manufacture, processing, use, import, export, labeling, recycling, registration, investigation or remediation of Materials of Environmental Concern or documentation related to the foregoing; (b) air, water and noise pollution; (c) groundwater and soil contamination; (d) the release, threatened release, or accidental release into the environment, the workplace or other areas of Materials of Environmental Concern, including emissions, discharges, injections, spills, escapes or dumping of Materials of Environmental Concern; (e) transfer of interests in or control of real property which may be contaminated; (f) community or worker right-to-know disclosures with respect to Materials of Environmental Concern; (g) the protection of wild life, marine life and wetlands, and endangered and threatened species; (h) storage tanks, vessels, containers, abandoned or discarded barrels and other closed receptacles; and (i) health and safety of employees and other persons.  As used above, the term “release” shall have the meaning set forth in CERCLA.

 

Equity Interest” means, with respect to any Person, (a) any share, partnership or membership interest, unit of participation or other similar interest (however designated) in such Person and (b) any warrant, purchase right, conversion right, exchange right or other agreement which would entitle any other Person to acquire any such interest in such Person (including share appreciation, phantom share, profit participation or other similar rights).

 

Equityholder Indemnified Parties” means the Company Equityholders and their respective Affiliates.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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ERISA Affiliate” means any entity that is, or at any applicable time was, a member of (a) a controlled group of corporations (as defined in Section 414(b) of the Code), (b) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (c) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Company or any Subsidiary.

 

Escrow Account” means the account established pursuant to the Escrow Agreement to hold the Escrow Amount.

 

Escrow Agent” means JPMorgan Chase Bank, N.A., as escrow agent pursuant to the Escrow Agreement, or any successor escrow agent pursuant to the Escrow Agreement.

 

Escrow Agreement” means the Escrow Agreement in the form attached hereto as Exhibit C.

 

Escrow Amount” means $2,500,000 of cash.

 

Escrow Fund” means, as of any time, the Escrow Amount, including any interest or other amounts earned thereon prior to such time, less (a) any investment losses thereon incurred prior to such time and (b) disbursements therefrom prior to such time in accordance with this Agreement and the Escrow Agreement.

 

Estimated Closing Adjustment” means the sum of the estimated amount of the Closing Adjustment Items as of the Closing Date to be delivered with the Estimated Closing Adjustment Statement in accordance with the provisions of Section 2.6(a).

 

Estimated Closing Adjustment Statement” has the meaning set forth in Section 2.6(a).

 

Exchange and Paying Agent” means American Stock Transfer & Trust Company, LLC.

 

Exchange and Paying Agent Agreement” means an agreement to be entered into at or prior to the Effective Time by the Exchange and Paying Agent and the Buyer, governing the disbursement of the Payment Fund.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Expected Claim Notice” means a notice that, as a result of a legal proceeding instituted by or written claim made by a third party, the Buyer reasonably expects to incur Damages for which it is entitled to indemnification under Article VIII.

 

Exploit” means develop, design, test, modify, make, use, sell, have made, used and sold, import, reproduce, market, distribute, commercialize, support, maintain, correct and create derivative works of.

 

FDA” has the meaning set forth in Section 3.20(a).

 

Final Closing Adjustment” has the meaning set forth in Section 2.6(f).

 

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Final Closing Adjustment Items” has the meaning set forth in Section 2.6.

 

Final Closing Adjustment Statement” has the meaning set forth in Section 2.6.

 

Final Company Financial Statements” means:

 

(a)           the consolidated audited balance sheets and statements of income, changes in stockholders’ equity and cash flows of the Company as of the end of and for each of the fiscal years ended December 31, 2016 and 2017, as certified without qualification by BDO USA, LLP, the Company’s independent public accountants;

 

(b)           the consolidated unaudited balance sheets and statements of income, changes in stockholders’ equity and cash flows of the Company as of the end of and for each of the completed fiscal quarters for the years 2017 and 2018 (through June 30, 2018), upon which review procedures have been performed by BDO USA, LLP, the Company’s independent public accountants; and

 

(c)           the consolidated unaudited balance sheets of the Company for any calendar month between the date of this Agreement and the Closing Date, and the related consolidated unaudited statements of operations, changes in stockholders’ equity and cash flows for each of the months then ended.

 

Firm” has the meaning set forth in Section 12.11(a).

 

Force Majeure Event” means, with respect to a Person, an event beyond the control of such Person (or any Person acting on its behalf), which by its nature could not have been foreseen by such Person (or such Person), or, if it could have been foreseen, was unavoidable, and includes, acts of God, storms, floods, riots, fires, pandemics, sabotage, civil commotion or civil unrest, a suspension or material limitation in trading in securities generally on the New York Stock Exchange and/or the Nasdaq Global Select Market, a suspension or material limitation in trading in the Company’s securities on the Nasdaq Global Select Market, a general moratorium on commercial banking activities declared by either federal or New York authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States, the failure or inoperability of the EDGAR system of the Securities and Exchange Commission, interference by civil or military authorities, acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources.

 

Fully Diluted Shares” means a number of shares of Company Stock equal to (a) the aggregate number of shares of Company Common Stock outstanding as of immediately prior to the Effective Time (other than the shares of Company Stock to be cancelled in accordance with Section 2.1(b)), plus (b) the aggregate number of shares of Company Common Stock issuable upon conversion of the Company Preferred Stock outstanding immediately prior to the Effective Time (assuming such conversion occurs immediately prior to the Effective Time) in accordance with the Company Certificate of Incorporation, plus (c) the aggregate number of shares of Company Common Stock subject to Vested Company Options and Company Warrants outstanding as of immediately prior to the Effective Time.  Fully Diluted Shares shall be deemed to be held by a Company Equityholder to the extent the corresponding shares of Company Stock

 

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or Company Equity Awards or Company Warrants are held by such Company Equityholder as of immediately prior to the Effective Time.

 

Fundamental Representations” has the meaning set forth in Section 8.4(a).

 

Future Payments” means, collectively, (a) any Final Closing Adjustment that may become payable to Company Equityholders pursuant to Section 2.6, plus (b) any portion of the Escrow Fund that may become distributable to Company Equityholders pursuant to this Agreement and the Escrow Agreement, plus (c) any portion of any Contingent Consideration that may become distributable to Company Equityholders pursuant to this Agreement (including any Holdback Amount which become distributable to Company Equityholders pursuant to the terms of this Agreement), plus (d) any Company Equityholder Representative Account Payment that may become distributable to Company Equityholders pursuant to this Agreement.

 

GAAP” means United States generally accepted accounting principles.

 

Governmental Entity” means any federal, state, local or foreign government or any court, arbitrational tribunal, administrative agency or commission or government authority acting under the authority of the federal or any state, local or foreign government.

 

Grant Date” has the meaning set forth in Section 3.2(d).

 

Holdback Amount” has the meaning set forth in Section 2.1(e)(iii).

 

Holdback Funds” means, as of any time of determination, the then balance (if any) of any Holdback Amount that has been deducted from Contingent Consideration pursuant to Section 2.1(e)(iii) and Section 8.5(d) of this Agreement, less (i) set offs or offsets therefrom in favor of Buyer Indemnified Parties prior to such time in accordance with this Agreement and (ii) any Claimed Amounts made against the Holdback Amount prior to such time in respect of a Continuing Claim (until such time as such Claimed Amounts are finally determined pursuant to this Agreement not to constitute Agreed Amounts or otherwise upon resolution of such claim hereunder).

 

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

Indebtedness” with respect to any Person means (a) any indebtedness or other obligation for borrowed money (including amounts outstanding under the Bridge Loan Agreement); (b) any obligation incurred for all or any part of the purchase price of property or other assets (including earnout, milestone, royalty and similar obligations) or for the cost of property or other assets constructed or of improvements thereto, in each case in this clause (b), other than accounts payable and accrued expenses included in current liabilities and incurred in respect of property purchased or services rendered in the Ordinary Course of Business and amounts payable to the Foundation for Angelman Syndrome Therapeutics; (c) the face amount of all letters of credit issued for the account of such Person; (d) obligations (whether or not such Person has assumed or become liable for the payment of such obligation) secured by Liens; (e) capitalized lease obligations; (f) all guarantees and similar obligations of such Person; (g) all accrued interest, fees and charges in respect of any indebtedness; (h) all bankers acceptances and overdrafts; (i) all

 

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interest, prepayment premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as a result of the prepayment or discharge of any indebtedness; and (j) all unpaid Pre-Closing Taxes.

 

Indemnified Party” or “Indemnified Parties” means the Buyer Indemnified Parties or the Equityholder Indemnified Parties, as applicable.

 

Indemnifying Party” or “Indemnifying Parties” means the Buyer or the Company Equityholders, as applicable.

 

Intellectual Property” means the following subsisting throughout the world:

 

(a)           Patent Rights;

 

(b)           Trademarks and all goodwill in the Trademarks;

 

(c)           copyrights, designs, data and database rights and registrations and applications for registration thereof, including moral rights of authors;

 

(d)           mask works and registrations and applications for registration thereof and any other rights in semiconductor topologies under the Laws of any jurisdiction;

 

(e)           inventions, invention disclosures, statutory invention registrations, trade secrets and confidential business information, know-how, scientific and technical information, data and technology, including medical, clinical, toxicological and other scientific data, manufacturing and product processes, algorithms, techniques and analytical methodology, research and development information, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, whether patentable or nonpatentable, whether copyrightable or noncopyrightable and whether or not reduced to practice; and

 

(f)            other proprietary rights relating to any of the foregoing (including remedies against past, present and future infringement thereof and rights of protection of interest therein under the Laws of all jurisdictions).

 

Intellectual Property Registrations” means Patent Rights, Trademarks (other than unregistered trademarks, service marks and trade dress), registered copyrights and designs, mask work registrations and applications for each of the foregoing.

 

Internal Systems” means the Software and Documentation and the computer, communications and network systems (both desktop and enterprise-wide), laboratory equipment, reagents, materials and test, calibration and measurement apparatus used by the Company or any Subsidiary in their business or operations or to develop, manufacture, fabricate, assemble, provide, distribute, support, maintain or test the Customer Offerings, whether located on the premises of the Company or any Subsidiary or hosted at a third party site.

 

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Investor Representation Letter” means a questionnaire to be delivered by each Company Equityholder regarding whether it is an “accredited investor” under Regulation D under the Securities Act, substantially in the form attached as Exhibit B hereto.

 

IRS” means the United States Internal Revenue Service.

 

knowing misrepresentation” means the making of a representation or warranty in this Agreement or in any certificate, document or instrument delivered at or prior to the Closing pursuant to the terms of this Agreement (in each case as qualified and limited by applicable provisions of the Company Disclosure Schedule) with the actual knowledge at the time of making the representation or warranty that such representation or warranty was false or inaccurate.

 

Law” means any United States federal, state or local or foreign law, common law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any decree, order, injunction, rule, judgment, consent of or by any Governmental Entity, or any Permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.

 

Lease” means any lease, sublease, license, or occupancy agreement pursuant to which the Company or any Subsidiary leases or subleases from or to another party any real property, or otherwise occupies any real property.

 

Legal Proceeding” means any action, suit, proceeding (including administrative proceeding), claim, complaint, hearing, information request, notice of violation, arbitration, inquiry or investigation of or before any Governmental Entity or before any arbitrator.

 

Letter of Transmittal” means a letter of transmittal in the form attached hereto as Exhibit D.

 

Lien” means any mortgage, pledge, security interest, encumbrance, charge or other lien (whether arising by contract or by operation of Law), other than (a) mechanic’s, material men’s and similar liens, (b) liens arising under worker’s compensation, unemployment insurance, social security, retirement and similar legislation, and (c) liens on goods in transit incurred pursuant to documentary letters of credit, (d) easements, rights-of-way, restrictions and other similar charges and encumbrances of record, (e) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith by appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, (f) purchase money liens securing rental payments under capital lease arrangements, (g) liens identified on title policies or preliminary title reports or other documents or writings included in the public records and (h) nonexclusive licenses of Intellectual Property, in each case, arising in the Ordinary Course of Business of the Company and the Subsidiaries and not material to the Company and the Subsidiaries, taken as a whole.

 

Materials of Environmental Concern” means any:  pollutants, contaminants or hazardous substances (as such terms are defined under CERCLA), pesticides (as such term is defined under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes (as such terms are defined under the Resource Conservation and Recovery

 

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Act), chemicals, other hazardous, radioactive or toxic materials, oil, petroleum and petroleum products (and fractions thereof), or any other material (or article containing such material) listed or subject to regulation under any Law due to its potential, directly or indirectly, to harm the environment or the health of humans or other living beings.

 

Merger” means the merger of the Transitory Subsidiary with and into the Company in accordance with the terms of this Agreement.

 

Most Recent Balance Sheet” means the unaudited balance sheet of the Company as of the Most Recent Balance Sheet Date.

 

Most Recent Balance Sheet Date” means May 31, 2018.

 

Neutral Accountant” means EisnerAmper LLP; provided that, if such firm is not available for any reason, the Neutral Accountant shall be an independent nationally recognized accounting firm selected in accordance with the rules of the New York, New York office of the American Arbitration Association.

 

Non-competition Party” means the persons or entities identified on Schedule NC.

 

Non-controlling Party” means the party not controlling the defense of any Third Party Action.

 

Non-Employee Option” means each Company Option that is not an Employee Option.

 

Non-Fundamental Cap” means an amount equal to (a) $26,000,000, plus (b) 12.5% of any Contingent Consideration in excess of the first $25,000,000 actually paid (or otherwise payable but for indemnity or holdback obligations hereunder) to the Company Equityholders.

 

Non-Fundamental Expiration Date” has the meaning set forth in Section 8.4(a).

 

Objection Notice” has the meaning set forth in Section 2.6(c).

 

Offering Suspension” has the meaning set forth in Section 6.10(e).

 

Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to frequency and amount).

 

Organizational Documents” means, with respect to any Person (other than an individual), (a) the certificate or articles of incorporation or organization and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and (b) all by-laws, voting agreements and similar documents, instruments or agreements relating to the organization or governance of such Person, in each case, as amended or supplemented.

 

Outside Date” means December 19, 2018.

 

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Patent Rights” means all patents, patent applications (including provisional patent applications), utility models, design registrations and certificates of invention and other governmental grants for the protection of inventions or industrial designs (including all related continuations, continuations-in-part, divisionals, reissues and reexaminations).

 

Payment Fund” means cash and shares of Buyer Common Stock in an amount sufficient to make payment of the portion of the Aggregate Closing Consideration payable to Company Equityholders through the Exchange and Paying Agent pursuant to Section 2.1(d)(ii).

 

Permits” means all permits, licenses, registrations, certificates, orders, exemptions, approvals, franchises, variances, clearances and similar rights issued by or obtained from any Governmental Entity (including those issued or required under Environmental Laws and those relating to the occupancy or use of owned or leased real property).

 

Person” means any natural person, firm, limited liability company, general or limited partnership, association, corporation, unincorporated organization, company, joint venture, trust, Governmental Entity or other entity.

 

Post-Closing Payroll Taxes” means the employer portion of any payroll or employment Taxes payable as a result of or in connection with the consummation of the transactions contemplated hereby to the extent such Taxes are not Closing Payroll Taxes.  For the avoidance of doubt, Post-Closing Payroll Taxes will (i) not be included within the calculation of Aggregate Closing Consideration, (ii) not be included within the Taxes for which the Company Equityholders must provide indemnification pursuant to Article VIII, (iii) not reduce the amount of Aggregate Consideration payable to the Company Equityholders and (iv) be borne solely by Buyer or the Surviving Corporation.

 

Post-Closing Disbursement Certificate” means a certificate, provided by the Company Equityholder Representative, which (a) sets forth (i) a calculation of any disbursements to be made for the benefit of Company Equityholders pursuant to Section 2.1(e)(ii), Section 2.1(e)(iii), Section 2.4(c), Section 2.7(c), Section 2.8 and/or the Escrow Agreement, as applicable, (ii) the identity of each Person entitled to such disbursement or payment, (iii) the amount due to each such Person pursuant to Section 2.1(e)(ii), Section 2.1(e)(iii), Section 2.4(c), Section 2.7(c), Section 2.8 and/or the Escrow Agreement, as applicable (calculated by multiplying the aggregate amount of such disbursement by such Company Equityholder’s Pro Rata Share), and (iv) the applicable wire instructions for the account or accounts of such Person, and (b) attaches a schedule, prepared by the Company Equityholder Representative in the format of the Closing Date Allocation Schedule, setting forth, for each Company Equityholder:  (a) such Company Equityholder’s name and address; (b) the number of shares of each class of Company Stock held as of the Closing Date by such Company Equityholder or underlying Company Options or Company Warrants held by such Company Equityholder; and (c) the amount to be paid to such Company Equityholder pursuant to Section 2.1(e)(ii), Section 2.1(e)(iii), Section 2.4(c), Section 2.7(c), Section 2.8 and/or the Escrow Agreement, as applicable.

 

PPACA” has the meaning set forth in Section 3.17(g).

 

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Preliminary Closing Date Allocation Schedule” means the schedule attached hereto as Schedule AS and dated the date hereof, setting forth (i) the Company’s calculations of the Aggregate Closing Consideration, the Closing Cash Consideration, the Closing Stock Consideration and the Escrow Amount, and (ii) for each Company Equityholder: (a) the name and address for such Company Equityholder; (b) the number of shares of each class of Company Stock expected to be held as of the Closing Date by such Company Equityholder; (c) to the extent such Company Equityholder holds shares of Company Preferred Stock, the number of shares of Company Common Stock expected to be issuable upon conversion of the shares of each such series of Company Preferred Stock (assuming such conversion occurs as of immediately prior to the Effective Time) in accordance with the Company Certificate of Incorporation; (d) the number of shares of Company Common Stock subject to Company Equity Awards expected to be outstanding immediately prior to the Effective Time (after giving effect to the full acceleration of vesting in connection with the transactions contemplated by this Agreement or otherwise) held by such Company Equityholder (and, if applicable, the exercise price or measurement price thereof); (e) the amount estimated to be paid to such Company Equityholder pursuant to Section 2.1(c) and pursuant to Section 2.5(a); (f) the portion of the Aggregate Closing Consideration attributable to such Company Equityholder’s Company Stock, Company Warrants and Company Equity Awards; (g) whether the Company’s reasonably believes that such Company Equityholder is an “accredited investor” pursuant to Regulation D under the Securities Act; and (h) the portion of any Future Payments attributable to such Company Equityholder’s Company Stock, Company Equity Awards and Company Warrants; and (i) such Company Equityholder’s expected Pro Rata Share, expressed as a percentage.

 

Preliminary Company Financial Statements” means:

 

(a)                                 the consolidated unaudited balance sheets and statements of income, changes in stockholders’ equity and cash flows of the Company as of the end of and for each of the fiscal years ended December 31, 2016 and 2017; and

 

(b)                                 the consolidated unaudited balance sheets of the Company for any interim periods, including at May 31, 2018 and the comparable prior year period(s), and any calendar month between the date of this Agreement and the Closing Date, and the related consolidated unaudited statements of operations, changes in stockholders’ equity and cash flows for each of the months then ended.

 

Pre-Closing Period” means the period commencing on the date of this Agreement and ending at the Effective Time or such earlier date as this Agreement is terminated in accordance with its terms.

 

Pre-Closing Tax Period” means (i) any Tax period ending on or before the Closing Date and (ii) with respect to any Straddle Period, the portion of such period ending on the Closing Date.

 

Pre-Closing Tax Contest” has the meaning set forth in Section 9.3(c).

 

Pre-Closing Taxes” means: (i) any Taxes of the Company or any Subsidiary due and payable for, or allocated in accordance with Section 9.3 to, any taxable period (or portion

 

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thereof) ending on or before the Closing Date (including any Closing Payroll Taxes); (ii) any Taxes for which the Company or any Subsidiary has any liability under Treasury Regulation Section 1.1502-6 or under any comparable or similar provision of state, local or foreign Laws as a result of being a member of an affiliated, consolidated, combined, unitary or similar group on or prior to the Closing Date; (iii) any Taxes for which the Company or any Subsidiary has any liability as a transferee or successor, or pursuant to any contractual obligation (excluding any customary commercial contracts entered into in the Ordinary Course of Business and not primarily related to Taxes), which Tax is attributable to the operations of the Company or any Subsidiary on or prior to the Closing Date or to an event or transaction occurring before the Closing; and (iv) the Company Equityholders’ share of any Transfer Taxes pursuant to Section 9.3; provided, however, that “Pre-Closing Taxes” shall not include (a) any Taxes attributable to any election under Section 338 or 336(e) of the Code with respect to the transactions contemplated by this Agreement, (b) any Post-Closing Payroll Taxes, (c) any Taxes resulting from any transactions occurring on the Closing Date after the Closing outside the Ordinary Course of Business (other than as explicitly contemplated by this Agreement), (d) any Transfer Taxes to the extent to be borne by Buyer as pursuant to Section 9.3, or (e) any Taxes taken into account in the calculation of Aggregate Consideration.

 

Principal Stockholders” has the meaning set forth in the recitals to this Agreement.

 

Privileged Deal Communications” has the meaning set forth in Section 12.11(c).

 

Pro Rata Share” means, with respect to any shares of Company Stock, any Company Equity Award or any Company Warrants, a fraction, (a) the numerator of which is the number of shares of Company Common Stock represented thereby or subject thereto (as applicable) as of immediately prior to the Effective Time (it being understood that the number of shares of Company Common Stock represented by a share of Company Preferred Stock shall be the number of shares of Company Common Stock issuable upon conversion thereof pursuant to the Company Certificate of Incorporation (assuming that such conversion occurred as of immediately prior to the Effective Time)), and (b) the denominator of which is the number of Fully Diluted Shares; provided, that when used in this Agreement to refer to indemnity obligations of the Company Equityholders pursuant to Article VIII where Buyer Indemnified Parties are satisfying such indemnity obligations by means of direct recourse against a Company Equityholder (i.e., not by means of recovery against the Escrow Fund, Holdback Amount or set-off against Contingent Consideration), “Pro Rata Share” means, with respect to any Company Equityholder, a fraction, (a) the numerator of which is equal to, without duplication, the portion of Closing Cash Consideration and Closing Stock Consideration (assuming for the purposes of valuing such value equals the relevant number of shares of Buyer Common Stock multiplied by the Buyer Closing Stock Price) such Company Equityholder received in respect of his, her or its shares of Company Stock, Company Options and Company Warrants pursuant to Article II, and (b) the denominator of which is equal to, without duplication, $150,000,000 plus the Closing Cash Consideration paid in respect of all shares of Company Stock, Company Options and Company Warrants pursuant to Article II.

 

Reasonable Best Efforts” means best efforts, to the extent commercially reasonable.

 

Registration Statement” has the meaning set forth in Section 6.10(c).

 

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Regulatory Authorities” means the FDA, EMA or any other Governmental Entity in another country or jurisdiction that is a counterpart to the FDA and holds responsibility for granting Regulatory Approval for a product, or otherwise regulating the research, development or commercialization of a product, in such country, including the EMA, and any successor(s) thereto.

 

Representatives” means, with respect to any Person, such Person’s officers and directors (or persons holding comparable positions), employees, consultants, independent contractors, subcontractors, leased employees, volunteers, temporary workers, equityholders, accountants, legal and other representatives, agents, executors, heirs, successors and permitted assigns.

 

Representative Losses” has the meaning set forth in Section 2.4(d).

 

Required Company Information” has the meaning set forth in Section 6.10(a).

 

Response” means a written response containing the information provided for in Section 8.3(c).

 

Safety Notices” has the meaning set forth in Section 3.20(e).

 

SEC” means the United States Securities and Exchange Commission.

 

Securities Act” means the Securities Act of 1933, as amended.

 

Series A Preference Amount” means, with respect to each share of Company Series A Preferred Stock outstanding immediately prior to the Effective Time, an amount equal to (a) $1.0974 plus (b) any accrued but unpaid dividends (whether or not declared) thereon, as set forth on the Closing Payment Certificate.

 

Series B Preference Amount” means, with respect to each share of Company Series B Preferred Stock outstanding immediately prior to the Effective Time, an amount equal to (a) $2.000 plus (b) any accrued but unpaid dividends (whether or not declared) thereon, as set forth on the Closing Payment Certificate.

 

Share Adjustment Amount” means (a) zero dollars or (b) only if the Closing Stock Consideration is reduced as provided for in the definition of Closing Stock Consideration, an amount equal to the Buyer Closing Stock Price multiplied by the number of shares (for purposes of this calculation, rounded up to the nearest whole share) of Buyer Common Stock reduced pursuant to such option.

 

Share Cap” has the meaning set forth in the definition of Closing Stock Consideration.

 

Software” means computer software code, applications, utilities, development tools, diagnostics, databases and embedded systems, whether in source code, interpreted code or object code form.

 

Stockholders Agreement” means the Stockholders Agreement attached hereto as Exhibit F.

 

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Straddle Period” means any taxable period that includes but does not end on the Closing Date.

 

Subsidiary” means any corporation, partnership, trust, limited liability company or other non-corporate business enterprise in which the Company (or another Subsidiary) holds stock or other ownership interests representing (a) more than 50% of the voting power of all outstanding stock or ownership interests of such entity or (b) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity; provided, that, for the avoidance of doubt, the Company Joint Venture shall be deemed to not be a “Subsidiary” of the Company for all purposes hereunder.

 

Surrender Agreement” means the Surrender and Joinder Agreement in the form attached hereto as Exhibit G.

 

Surviving Corporation” means the Company, as the surviving corporation in the Merger.

 

Tax Contest” means any audit, other administrative proceeding or inquiry or judicial proceeding involving Taxes.

 

Tax Returns” means any and all reports, returns (including information returns), declarations, or statements relating to Taxes, including any schedule or attachment thereto and any amendment thereof, filed with or submitted to any Governmental Entity in connection with the determination, assessment, collection or payment of Taxes or in connection with the administration, implementation or enforcement of or compliance with any legal requirement relating to any Tax.

 

Taxes” means any and all taxes, charges, fees, duties, contributions, levies or other similar assessments or liabilities in the nature of a tax, including income, gross receipts, corporation, ad valorem, premium, value-added, net worth, capital stock, capital gains, documentary, recapture, alternative or add-on minimum, disability, registration, recording, excise, real property, personal property, sales, use, license, lease, service, service use, transfer, withholding, employment, unemployment, insurance, social security, national insurance, business license, business organization, environmental, workers compensation, payroll, profits, severance, stamp, occupation, escheat, windfall profits, customs duties, franchise, estimated and other taxes of any kind whatsoever imposed by the United States of America or any state, local or foreign government, or any agency or political subdivision thereof, and any interest, fines, penalties, assessments or additions to tax imposed with respect to or related to such items.

 

Third Party Action” means any Legal Proceeding by a Person other than a party for which indemnification may be sought by the Buyer under Article VIII.

 

Trademarks” means all registered trademarks and service marks, logos, Internet domain names, corporate names and doing business designations and all registrations and applications for registration of the foregoing, common law trademarks and service marks and trade dress.

 

Transaction Bonus Plan” means any bonus plan implemented by the Company or any Subsidiary in connection with the transactions contemplated by this Agreement.

 

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Transaction Deductions” means any income Tax deductions that are deductible on or prior to the Closing Date and result from or are attributable to expenses, fees or payments that are made or borne by the Company Equityholders in connection with the transactions contemplated hereby including (a) amounts that are included in Closing Indebtedness, Company Transaction Expenses or that otherwise reduce the Aggregate Consideration payable to the Company Equityholders, and (b) amounts payable in respect of Company Options to the extent payable at or in connection with Closing; provided that, to the extent applicable, Buyer and the Company agree to make the safe harbor election set forth in IRS Revenue Procedure 2011-29 to determine the amount of deductions attributable to the payment of any success-based fees within the scope of such revenue procedure.

 

Transfer Taxes” has the meaning set forth in Section 9.3(a).

 

Transitory Subsidiary” has the meaning set forth in the first paragraph of this Agreement.

 

Working Capital Target” means negative two million five hundred thousand dollars (-$2,500,000).

 

Written Consent” shall mean a written consent of the stockholders of the Company in the form attached hereto as Exhibit H.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1                        Notices.  All notices and other communications hereunder shall be in writing and shall be deemed duly delivered (i) four (4) Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, (ii) one (1) Business Day after being sent for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service or (iii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date of such receipt is not a Business Day) of transmission by facsimile or electronic mail, in each case to the intended recipient as set forth below:

 

(a)                                 if to the Buyer or the Transitory Subsidiary or (after the Effective Time) the Company, to:

 

PTC Therapeutics, Inc.

100 Corporate Court

South Plainfield, NJ 0708

Attention:        Mark E. Boulding, Executive VP and Chief Legal Officer

Telecopy:        (908) 222-7000

Email copy:    legal@ptcbio.com

 

with a copy (which shall not constitute notice) to:

 

Wilmer Cutler Pickering Hale and Dorr LLP

7 World Trade Center

New York, New York 10007

 

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Attention:

Hal J. Leibowitz, Esq.

 

Steven D. Singer, Esq.

 

Brian A. Johnson, Esq.

Telecopy:

(617) 526-6461

Email copy:

hal.leibowitz@wilmerhale.com

 

steven.singer@wilmerhale.com

 

brian.johnson@wilmerhale.com

 

(b)                                 if (prior to the Effective Time) to the Company, to:

 

Agilis Biotherapeutics, Inc

245 First Street, Suite 1800

Cambridge, MA 02142

Attention:

Mark J. Pykett, VMD, Ph.D., President and CEO

Email:

mpykett@agilisbio.com

Telecopy:

(617) 444-8405

 

with a copy (which shall not constitute notice) to:

 

Cooley LLP

500 Boylston Street, 14th Floor

Boston, MA 02116

 

Attention: Miguel J. Vega

Telecopy: (617) 937-2400

Email copy: mvega@cooley.com

 

(c)                                  if to any Company Equityholder after the Effective Time or the Company Equityholder Representative, to:

 

Shareholder Representative Services LLC

950 17th Street, Suite 1400

Denver, CO 80202

 

Attention: Managing Director

Telecopy: (303) 623-0294

Email copy: deals@srsacquiom.com

 

with a copy (which shall not constitute notice) to:

 

Cooley LLP

500 Boylston Street, 14th Floor

Boston, MA 02116

Attention: Miguel J. Vega

Telecopy: (617) 937-2400

Email copy: mvega@cooley.com

 

Any party to this Agreement may give any notice or other communication hereunder using any other means (including personal delivery, messenger service, ordinary mail or electronic mail), but no such notice or other communication shall be deemed to have been duly

 

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given unless and until it actually is received by the party for whom it is intended.  Any party to this Agreement may change the address to which notices and other communications hereunder are to be delivered by giving the other parties to this Agreement notice in the manner herein set forth.

 

12.2                        Entire Agreement.  This Agreement (including the schedules and exhibits hereto and the documents and instruments referred to in this Agreement that are to be delivered at the Closing) and the Company Equityholder Representative’s engagement letter constitute the entire agreement among the parties to this Agreement and supersedes any prior understandings, agreements or representations by or among the parties hereto, or any of them, written or oral, with respect to the subject matter hereof; provided that the Confidentiality Agreement shall remain in effect in accordance with its terms.

 

12.3                        Third-Party Beneficiaries.  This Agreement is not intended to, and shall not, confer upon any other Person any rights or remedies hereunder, except that the Buyer Indemnified Parties shall be third-party beneficiaries of Article VIII.

 

12.4                        Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of Law or otherwise by any of the parties hereto without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void, except that the Buyer or the Transitory Subsidiary may transfer or assign its rights and obligations under this Agreement, in whole or from time to time in part, to one (1) or more of their Affiliates; provided, that such transfer or assignment shall not relieve the Buyer or the Transitory Subsidiary of its primary liability for its obligations hereunder or enlarge, alter or change any obligation of any other party hereto or due to the Buyer or the Transitory Subsidiary; provided, further, that the Buyer and Transitory Sub may transfer or assign all or any part of their respective rights, in whole or in part, under this Agreement to MidCap Financial Trust, the administrative agent under that certain Credit and Security Agreement, dated as of May 5, 2017, by and among MidCap Financial Trust, the Buyer and certain other financial institutions as lenders thereunder or any other any lender of the Buyer (or any administrative or collateral agent on behalf of itself and such lender(s)) as collateral security (it being understood that such transfer or assignment shall not relieve the Buyer and the Transitory Sub of their respective obligations hereunder or enlarge, alter or change any obligation of any other party hereto).  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.

 

12.5                        Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the court making such determination shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.  In the event such court does not exercise the power granted

 

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to it in the prior sentence, the parties hereto agree to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term.

 

12.6                        Counterparts and Signature.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall be considered one (1) and the same agreement and shall become effective when counterparts have been signed by each of the parties hereto and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  This Agreement may be executed and delivered by facsimile or by an electronic scan delivered by electronic transmission.

 

12.7                        Interpretation.  Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “either” and “or” are not exclusive and “include,” “includes” and “including” are not limiting; (b) “hereof,” “hereto,” “hereby,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (c) “date of this Agreement” refers to the date set forth in the initial caption of this Agreement; (d) “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean simply “if”; (e) the descriptive headings and table of contents included herein are included for convenience only and shall not affect in any way the meaning or interpretation of this Agreement or any provision hereof; (f) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a contract or agreement mean such contract or agreement as amended or otherwise supplemented or modified from time to time; (h) references to a Person are also to its permitted successors and assigns; (i) references to an “Article,” “Section,” “Exhibit” or “Schedule” refer to an Article or Section of, or an Exhibit or Schedule to, this Agreement; (j) references to “$” or otherwise to dollar amounts refer to the lawful currency of the United States; (k) solely for purposes of Article III, “written notice” or “notice in writing” or words to similar effect shall include electronic notice, including delivered by electronic mail; (l) references to a federal, state, local or foreign Law include any rules, regulations and delegated legislation issued thereunder; and (m) references to accounting terms used and not otherwise defined herein have the meaning assigned to them under GAAP.  When reference is made in this Agreement to information that has been “made available” to the Buyer, that shall consist of only the information that was (i) contained in the Company’s electronic data room no later than 5:00 p.m., Eastern time, on the first (1st) Business Day prior to the date of this Agreement or (ii) delivered to the Buyer or its counsel.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party hereto.  No summary of this Agreement prepared by any party shall affect the meaning or interpretation of this Agreement.  If any date on which a party is required to make a payment pursuant to the terms hereof is not a Business Day, then such party shall make such payment on the next succeeding Business Day.  Time shall be of the essence in this Agreement.

 

12.8                        Governing Law.  This Agreement (and any claims or disputes arising out of or related hereto or the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed in all respects, including validity, interpretation, and effect, by and construed in accordance with the internal Laws of the State of

 

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Delaware (including in respect of the statute of limitations or other limitations period applicable to any claim, controversy or dispute) without giving effect to any choice or conflict of Law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of Laws of any jurisdictions other than those of the State of Delaware.

 

12.9                        Remedies.

 

(a)                                 Except as otherwise provided in Section 8.5(j) with respect to the period from and after the Closing, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such party, and the exercise by a party of any one (1) remedy will not preclude the exercise of any other remedy.

 

(b)                                 The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, in each case without posting a bond or undertaking, this being in addition to any other remedy to which they are entitled at Law or in equity.  Each of the parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that (i) the party seeking such remedy has an adequate remedy at Law or (ii) an award of specific performance is not an appropriate remedy for any reason at Law or equity.

 

12.10                 Submission to Jurisdiction.  Each of the parties to this Agreement (a) consents to submit itself to the exclusive personal jurisdiction of the Court of Chancery of the State of Delaware, New Castle County, or, if that court does not have jurisdiction, a federal court sitting in Wilmington, Delaware in any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court, and (e) waives any right it may have to a trial by jury with respect to any action or proceeding arising out of or relating to this Agreement.  Each of the parties hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of any other party with respect thereto.  Any party hereto may make service on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 12.1.  Nothing in this Section 12.10, however, shall affect the right of any party to serve legal process in any other manner permitted by Law.

 

12.11                 Privilege Matters.

 

(a)                                 Notwithstanding that the Company has, from time to time prior to the date hereof, been represented by Cooley LLP (the “Firm”), each of Buyer and the Company agrees that, after the Closing, the Firm may represent any stockholder of the Company, any other

 

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Company Equityholder, the Company Equityholder Representative and/or any of the Affiliates of the Company Equityholder Representative in all matters related to this Agreement and the transactions contemplated hereby, including in respect of any indemnification claims pursuant to this Agreement.

 

(b)                                 In the event that a dispute arises between Buyer, the Company or the Surviving Corporation and a third party other than the Company Equityholder Representative, and such dispute relates to a matter for which Buyer may seek recovery pursuant to the terms of this Agreement, Buyer or the Surviving Corporation shall assert the attorney-client privilege on behalf of the Company Equityholder Representative to prevent disclosure of privileged materials to such third party and such privilege may be waived only with the prior written consent of the Company Equityholder Representative.

 

(c)                                  Buyer further agrees, on behalf of itself and, after the Closing, on behalf of the Surviving Corporation, that all communications in any form or format whatsoever between or among any of the Firm, the Company, any of the Company Equityholders, or any of the respective directors, officers employees or other representatives of the Company Equityholders or the Firm that relate solely to the negotiation, documentation and consummation of the transactions contemplated by this Agreement or any dispute arising under this Agreement (collectively, the “Deal Communications”) shall be deemed to be retained and owned collectively by the Company Equityholders, shall be controlled by the Company Equityholder Representative on behalf of the Company Equityholders and shall not pass to or be claimed by Buyer or the Surviving Corporation. All Deal Communications that are attorney-client privileged (the “Privileged Deal Communications”) shall remain privileged after the Effective Time and the privilege and the expectation of client confidence relating thereto shall belong solely to the Company Equityholder Representative and the Company Equityholders, shall be controlled by the Company Equityholder Representative on behalf of the Company Equityholders and shall not pass to or be claimed by Buyer or the Surviving Corporation.

 

(d)                                 Buyer agrees that it will not, and that it will cause the Surviving Corporation not to, knowingly and purposefully, (i) access or use the Deal Communications, including by way of review of any electronic data, communications or other information, or by seeking to have the Company Equityholder Representative or any Company Equityholder waive the attorney-client or other privilege, or by otherwise asserting that Buyer or the Surviving Corporation has the right to waive the attorney-client or other privilege or (ii) seek to obtain the Deal Communications from the Firm. In furtherance of the foregoing, it shall not be a breach of any provision of this Agreement if prior to the Closing the Company, the Company Equityholder Representative and/or any Company Equityholder, or any of their respective directors, officers employees or other representatives, takes any action to protect from access or remove from the premises of the Company (or any offsite back-up or other facilities) any Deal Communications, including by segregating, encrypting, copying, deleting, erasing, exporting or otherwise taking possession of any Deal Communications; provided, that none of the Company, the Company Equityholder Representative and/or any Company Equityholder, or any of their respective directors, officers employees or other representatives, may prevent access to or otherwise remove, any materials, documents or other information not constituting Deal Communications.

 

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(e)                                  The parties acknowledge and agree that this Section 12.11 shall not limit or otherwise prohibit the Buyer’s ability to (i) compel discovery of information that is not subject to an attorney-client privilege in the event that such information is relevant to a dispute that arises after the Closing, or (ii) in the event that Buyer or the Surviving Corporation receives a subpoena or other discovery request pursuant to Law that calls for the search for documents that may include Deal Communications, comply with its legal obligations.

 

[Remainder of the Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

 

BUYER:

 

 

 

PTC THERAPEUTICS, INC.

 

 

 

By:

/s/ Marcio Souza

 

 

 

 

Name:

Marcio Souza

 

 

 

 

Title:

Chief Operating Officer

 

 

 

 

TRANSITORY SUBSIDIARY:

 

 

 

AGILITY MERGER SUB, INC.

 

 

 

By:

/s/ Marcio Souza

 

 

 

 

Name:

Marcio Souza

 

 

 

 

Title:

President

 

 

 

 

COMPANY:

 

 

 

AGILIS BIOTHERAPEUTICS, INC.

 

 

 

By:

/s/ Mark Pykett

 

 

 

 

Name:

Mark Pykett

 

 

 

 

Title:

President and Chief Executive Officer

 

 

 

 



 

 

COMPANY EQUITYHOLDER REPRESENTATIVE:

 

 

 

SHAREHOLDER REPRESENTATIVE SERVICES LLC,

 

 

 

solely in its capacity as the Company Equityholder Representative

 

 

 

By:

/s/ Radha Subramanian

 

 

 

 

Name:

Radha Subramanian

 

 

 

 

Title:

Senior Director