Section 3.6.
Capitalization and Related Matters
.
(a) As of the date hereof, the
authorized capital stock of the Company consists of 55,000,000 shares of Company Common Stock and 38,670,716 shares of Company Preferred Stock. As of the date hereof:
(i) 3,890,973 shares of Company Common Stock are issued and outstanding and 38,443,420 shares of Company Preferred Stock are issued and
outstanding;
(ii) 8,839,505 shares of Company Common Stock are reserved for issuance and issuable upon or otherwise
deliverable under the Company’s 1996 Stock Option Plan and 2000 Stock Plan (collectively, the “
Company Stock Plans
”) or otherwise in connection with the exercise of outstanding Company Options and the vesting of outstanding
Other Stock Awards. Section 3.6(a)(ii) of the Company Disclosure Schedule sets forth the names of all holders, the number of shares of Company Common Stock covered thereby, the vesting schedule and the exercise prices for the Company Options
and the outstanding Other Stock Awards;
(iii) 2,173,843 shares of Company Common Stock are reserved for issuance and
issuable upon exercise of the Company Warrants (other than the GE Preferred Warrant). As of the date hereof, 181,818 shares of Series B Preferred Stock are reserved for issuance and issuable upon exercise of the GE Preferred Warrant and, after the
Conversion and immediately prior to the Closing, 181,818 shares of Company Common Stock will be reserved for issuance and issuable upon exercise of the GE Preferred Warrant. Section 3.6(a)(ii) of the Company Disclosure Schedule sets forth the
names of all holders of Company Warrants, the number of shares of Company Common Stock and Company Preferred Stock (including the class and series thereof) issuable thereunder, the respective exercise prices for such Company Common Stock and Company
Preferred Stock and the respective expiration dates of the Company Warrants; and
(iv) the number of shares of Company
Common Stock required to be issued in order to effect the Conversion, including, without limitation, the conversion of all Bridge Notes outstanding immediate prior to the Effective Time, will be reserved for issuance not less than one Business Day
prior to the Closing Date.
(b) The outstanding shares of Company Common Stock and Company Preferred Stock (i) have been duly
authorized and validly issued and are fully paid and nonassessable and (ii) were issued in compliance with all applicable federal and state securities laws. All grants of Company Options and Other Stock Awards were validly issued and properly
approved by the Company’s Board of Directors in accordance with all applicable law and no such grants involved any “backdating” or similar practices with respect to the effective date of grant. Except as set forth above in
Section 3.6(a), no shares of capital stock of the Company are outstanding and the Company does not have outstanding any options, warrants or other securities convertible into or exchangeable or exercisable for any shares of capital stock or any
rights to subscribe for or to purchase or otherwise acquire, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock
of the Company, or any stock or securities convertible into or exchangeable or exercisable for any capital stock of the Company; and the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire,
or to register under the Securities Act, any shares of capital stock. Except as set forth above in Section 3.6(a), the Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.
Section 3.7.
Subsidiaries and Equity Investments
.
The Company does not have any Subsidiaries, and does not have any direct or indirect equity or other ownership interest, or any investment
(other than investments that constitute cash or cash equivalents), in any other Person.
Section 3.8.
Financial Statements
.
The Company has heretofore made available to Parent copies of the audited balance sheets of the Company as of December 31, 2006 and December 31,
2005, together with the related statements of operations, stockholders’ equity (deficit) and cash flows for the fiscal years then ended and the notes thereto, accompanied by the reports thereon of Ernst & Young LLP, (b) copies of
the unaudited balance
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sheet of the Company as of September 30, 2007 (the “
Company Interim Balance Sheet
”), together with the related unaudited statements of
operations, stockholders’ equity (deficit) and cash flow for the nine months then ended and the notes thereto (all the financial statements referred to in clauses (a) and (b) above being hereinafter collectively referred to as the
“
Company Financial Statements
”). The Company Financial Statements, including the notes and schedules thereto, (i) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and
(ii) present fairly in all material respects the financial position, results of operations and changes in financial position of the Company as of such dates and for the periods then ended (subject, in the case of the unaudited interim Company
Financial Statements described in clause (b) above, to notes and normal year-end audit adjustments consistent with prior periods).
Section 3.9.
Absence of Certain Changes or Events
.
(a) Between
September 30, 2007 and the date of this Agreement, there has not been:
(i) any Company Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to the assets or properties of the Company (other than any
for which insurance awards have been received or guaranteed);
(iii) any change in any method of accounting or accounting
practice of the Company, except for any such change required by reason of a concurrent change in GAAP; or
(iv) any loss of
the employment, services or benefits of the chief executive officer of the Company and members of the Company’s senior management who report directly to such chief executive officer.
(b) Between September 30, 2007 and the date of this Agreement, the Company has operated in the ordinary course of its business and consistent with
past practice and has not:
(i) failed to discharge or satisfy any material Lien or pay or satisfy any material obligation
or liability (whether absolute, accrued, contingent or otherwise), other than Permitted Liens and liabilities being contested in good faith and for which adequate reserves have been made and reflected in the Company Financial Statements;
(ii) mortgaged, pledged or subjected to any Lien (other than Permitted Liens) any of its assets, properties or rights;
(iii) sold or transferred any of its material assets or cancelled any material debts or claims or waived any material rights;
(iv) disposed of any material patents, trademarks or copyrights or any material patent, trademark or copyright applications or
registrations;
(v) disclosed any of its material Trade Secrets, except pursuant to written confidentiality obligations;
(vi) defaulted on any material obligation;
(vii) entered into any transaction material to its business, except in the ordinary course of business and consistent with past practice;
(viii) granted any material increase in the compensation or benefits of its employees other than increases in accordance
with past practice not exceeding $50,000 in the aggregate, or entered into any employment, change of control, retention or severance agreement or arrangement with any of them;
(ix) made or committed to make any capital expenditure with respect to any periods after the date hereof or additions to property, plant
and equipment used in its operations other than ordinary repairs and maintenance in excess of $100,000 in the aggregate;
(x) laid off or terminated the employment of any significant number of its employees;
(xi) discontinued the
offering of any material services or product;
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(xii) incurred any material obligation or liability for the payment of severance
benefits;
(xiii) declared, paid, or set aside for payment any dividend or other distribution in respect of shares of its
capital stock or other securities, or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or other securities, or agreed to do so; or
(xiv) entered into any agreement or made any commitment to do any of the foregoing.
Section 3.10.
Tax Matters
.
(a)(i) The Company has filed when due all income Tax
Returns and all other material Tax Returns required by applicable law to be filed with respect to the Company; and (ii) all income Taxes and all other material Taxes owed by the Company, if required to have been paid, have been paid (except for
Taxes which are being contested in good faith and for which adequate reserves have been made and reflected in the Company Financial Statements).
(b) There is no action, suit, proceeding, investigation, audit or claim now pending with respect to the Company in respect of any income Tax or other material Tax, nor has any claim for additional Tax been asserted in writing by any taxing
authority.
(c) Since January 1, 2000, no claim has been made in writing by any taxing authority in a jurisdiction where the Company
has not filed a Tax Return that it is or may be subject to Tax by such jurisdiction.
(d)(i) There is no outstanding request for any
extension of time for the Company to pay any Taxes or file any Tax Returns; (ii) there has been no waiver or extension of any applicable statute of limitations for the assessment or collection of any Taxes of the Company that is currently in
force; and (iii) the Company is not a party to or bound by any agreement, whether written or unwritten, providing for the payment of Taxes, payment for Tax losses, entitlements to refunds or similar Tax matters.
(e) The Company has withheld and paid all Taxes required to be withheld in connection with any amounts paid or owing to any employee, creditor,
independent contractor or other Person.
(f) The Company has not 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)(1)(A)(ii) of the Code.
(g) The Company
has not distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
(h) There is no Lien, other than a Permitted Lien, affecting any of the assets, properties or rights of the Company that arose in connection with any
failure or alleged failure to pay any Tax.
(i) The Company has not taken or agreed to take any action, and is not aware of any fact or
circumstance, that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 3.11.
Absence of Undisclosed Liabilities
.
There are no material liabilities or obligations of the Company of the type required to be reflected on a balance sheet in the liabilities
column in accordance with GAAP of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances that could reasonably be expected to result in
such a liability or obligation, other than (A) liabilities or obligations disclosed and provided for on the Company Interim Balance Sheet or (B) liabilities or obligations incurred in the ordinary course of business consistent with past
practice since the date of the Company Interim Balance Sheet. The Company is not directly or indirectly liable upon or with respect to (by discount, repurchase agreements or otherwise), or obliged in any other way to provide funds in respect of, or
to guarantee or assume, any debt, obligation or dividend of any other Person.
Section 3.12.
Company Property
.
(a) The Company owns no real property.
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(b) Section 3.12(b) of the Company Disclosure Schedule sets forth a list of all leases, licenses,
permits, subleases and occupancy agreements, together with all material amendments thereto, in which the Company has a leasehold interest or similar occupancy rights, whether as lessor or lessee, and (i) which are material to the operations of
the Company, or (ii) which involve payments by the Company in excess of $100,000 per year (each, a “
Company Lease
” and collectively, the “
Company Leases
”; the property covered by Company Leases under which the
Company is a lessee is referred to herein as the “
Company Leased Real Property
”). The Company is not a party to any Company Contract (other than a Lease) with the lessor of any Company Leased Real Property, which gives such lessor
any right to terminate or adversely alter the terms of the Company Lease to which such lessor is a party. The Company enjoys peaceful and undisturbed possession of the Company Leased Real Property pursuant to the Company Leases. No option has been
exercised under any of such Company Leases, except options the exercise of which have been evidenced by a written document, a true, complete and accurate copy of which has been made available to Parent with the corresponding Company Lease. The
transactions contemplated by this Agreement do not require the consent or approval of the other party to any Company Lease.
(c) Since
September 30, 2007, no Company Lease has been modified or amended in any way materially adverse to the business of the Company and no party to any Company Lease has given the Company written notice of or, to the Knowledge of the Company, made a
claim against the Company with respect to any breach or default thereunder.
(d) Other than rights incidental to the provision of services
established in the ordinary course of business, none of the Company Leased Real Property is subject to any option, lease, sublease, license or other agreement granting to any Person any right to the use, occupancy or enjoyment of such property or
any portion thereof or to obtain title to all or any portion of such property.
(e) All material improvements, systems and fixtures on the
Company Leased Real Property are in good operating condition and repair and generally are adequate and suitable in all material respects for the present and continued use, operation and maintenance thereof as now used, operated or maintained. All
improvements on the Company Leased Real Property constructed by or on behalf of the Company were constructed in compliance in all material respects with applicable laws, ordinances and regulations affecting such Company Leased Real Property.
Section 3.13.
Assets of the Company
.
(a) The assets, properties and rights of
the Company constitute all of the assets, properties and rights which are used in the operation of the Company’s business as currently conducted. There are no material assets, properties, rights or interests of any kind or nature that the
Company has been using, holding or operating in its business prior to the Closing that will not be used, held or owned by the Company immediately following the Closing.
(b) The Company has good and valid fee simple title, free and clear of any Liens other than Permitted Liens, to, or a valid leasehold interest under enforceable Leases in, all of its material assets, properties and
rights.
Section 3.14.
Intellectual Property
.
(a) Except as would not have a Company
Material Adverse Effect, the Company owns, or has valid and enforceable licenses to use, all the Intellectual Property used by the Company, and such Intellectual Property represents all intellectual property rights necessary for the conduct of its
business as and where conducted on the date hereof. The Company is in compliance in all material respects with all licenses relating to the protection of such of the Intellectual Property used by the Company pursuant to license or other agreement.
To the Knowledge of the Company, there are no conflicts with or infringements of any Intellectual Property owned or used by the Company by any other Person. To the Knowledge of the Company, the conduct of the business of the Company does not
conflict with, violate, misappropriate, misuse or infringe any proprietary right of any other Person. There is no claim, suit, action or proceeding pending or, to the Knowledge of the Company, threatened, against
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the Company: (i) alleging any such conflict, violation, misappropriation, misuse or infringement with or of any other Person’s proprietary rights;
or (ii) challenging the Company’s ownership or use of, or the validity or enforceability of, any Intellectual Property owned or used by the Company.
(b) Section 3.14(b) of the Company Disclosure Schedule sets forth a complete and current list of all registrations, applications or filings with any Governmental Entity pertaining to the Intellectual Property
owned by the Company (the “
Company Registered Intellectual Property
”) as of the date hereof and the owner of record, date of application or issuance, and relevant jurisdiction as to each. All Company Registered Intellectual Property
is owned by the Company, free and clear of all Liens other than Permitted Liens. All Company Registered Intellectual Property is valid, subsisting, unexpired, and all renewal fees and other maintenance fees that have fallen due on or prior to the
Closing have been paid. There are no actions that must be taken or payments that must be made by the Company within one hundred eighty (180) days of the Closing that, if not taken or paid, would adversely affect the Intellectual Property owned
or used by the Company or the right of the Company to use the same as and where used as of the date hereof. To the Knowledge of the Company, no Company Registered Intellectual Property is the subject of any proceeding before any Governmental Entity
in any jurisdiction, including any office action or other form of preliminary or final refusal of registration. The consummation of the transactions contemplated by this Agreement will not alter or impair in any material respect any Intellectual
Property owned or used by the Company.
(c) Section 3.14(c) of the Company Disclosure Schedule sets forth a complete list of all
material license agreements pertaining to Intellectual Property owned or used by the Company as of the date hereof, except for agreements pertaining to commercially available, off-the-shelf software. The Company is not under any obligation to pay
royalties or other payments in connection with any agreement, nor restricted from assigning its rights respecting any Intellectual Property owned or used by the Company. The Company will not be, as a result of the execution and delivery of this
Agreement or the performance of its obligations under this Agreement, in breach of any agreement relating to the Intellectual Property owned or used by the Company. The Company is not in material default under any such agreement.
(d) The Company has not made any claim of a violation, infringement, misuse or misappropriation by any other Person (including any employee or former
employee of the Company) of its rights to, or in connection with, any Intellectual Property owned or used by the Company, which claim is pending. The Company has not entered into any agreement to indemnify any other Person against any charge of
infringement of any Intellectual Property owned or used by the Company.
(e) With respect to each material Trade Secret of the Company, the
documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. The Company has
taken all reasonable precautions to protect the secrecy, confidentiality and value of its material Trade Secrets. The Trade Secrets of the Company are not part of the public knowledge or literature, and, to the Knowledge of the Company, have not
been used, divulged, or appropriated for the benefit of any Person (other than the Company, Parent or Merger Sub), except pursuant to an enforceable confidentiality and non-disclosure agreement and, to the Knowledge of the Company, no Person has
materially breached such agreement to the detriment of the Company, Parent, or Merger Sub. No Trade Secret of the Company is subject to any adverse claim or, to the Knowledge of the Company, has been challenged or threatened in any way.
Section 3.15.
Software
.
To the Knowledge of the Company, none of the operating and applications computer software programs and databases used by the Company that are material to the conduct
of its business (collectively, the “
Company Software
”), nor any use thereof, conflicts with, infringes upon or violates any intellectual property or other proprietary right of any other Person and, no claim, suit, action or other
proceeding with respect to any such infringement or violation is pending or, to the Knowledge of the Company, threatened.
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Section 3.16.
Licenses and Permits
.
(a) The Company owns or possesses all
right, title and interest in and to each license, permit, franchise, registration, authorization and approval that has been issued or granted to the Company by any Governmental Entity and is material to the operation of the Company’s business
(the “
Company Licenses and Permits
”) and has taken all necessary action to maintain such Company Licenses and Permits. Each Company License and Permit has been duly obtained, is valid and in full force and effect, and is not subject
to any pending or, to the Knowledge of the Company, threatened administrative, judicial or other proceeding to revoke, cancel, suspend or declare invalid such Company License and Permit in any respect. The Company Licenses and Permits are sufficient
and adequate in all material respects to permit the continued lawful conduct of the business of the Company, and none of the operations of the Company are being conducted in a manner that violates in any material respect any of the terms or
conditions under which any Company License and Permit was granted.
(b) The operations of the Company are in compliance in all material
respects with applicable federal and state law and the published rules, regulations, and policies promulgated by any Governmental Entity, and the Company has not done anything or failed to do anything that could reasonably be expected to cause the
loss of any of the Company Licenses and Permits.
(c) No petition, action, investigation, notice of violation or apparent liability, notice
of forfeiture, order to show cause, complaint, or proceeding seeking to revoke, reconsider the grant of, cancel, suspend, or modify any of the Company Licenses and Permits is pending or, to the Knowledge of the Company, threatened. No notices have
been received by and, no claims have been filed against, the Company alleging a failure to hold any requisite permits, regulatory approvals, licenses and other authorization.
Section 3.17.
Compliance with Law
.
(a) The operations of the business of the
Company have been conducted in accordance in all material respects with all applicable laws, regulations, orders and other requirements of all Governmental Entities (including, without limitation, the United States Department of Health and Human
Services, the Centers for Medicare and Medicaid Services and the Office of Inspector General of the United States Department of Health and Human Services) having jurisdiction over the Company or its assets, properties or operations, including,
without limitation, such laws, regulations, orders and other requirements relating to state or federal anti-kickback sales and marketing practices, off label promotion and government health care program price reporting and, to the extent applicable
to the Company and/or its operations, Good Clinical Practices, Good Laboratory Practices, advertising and promotion, pre-marketing and post-marketing adverse drug experience and adverse drug reaction reporting. Since January 1, 2006, the
Company has not received notice of any material violation (or any investigation with respect thereto) of any such law, regulation, order or other legal requirement, and the Company is not in material default with respect to any order, writ,
judgment, award, injunction or decree of any national, state or local court or governmental or regulatory authority or arbitrator, domestic or foreign, applicable to any of its assets, properties or operations. Neither the Company nor, to the
Knowledge of the Company, any of the agents, employees, vendors or suppliers of the Company has been excluded from participation in any “federal health care program,” as defined under 42 U.S.C. §1320a-7b(f), for the provision of items
or services for which payment may be made under such federal health care program, nor been debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded by any state or federal department or agency.
(b) The Company’s management has (i) implemented a system of internal control over financial reporting sufficient to provide reasonable
assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and (ii) has disclosed, based on its most recent evaluation, to the Company’s auditors
and the audit committee of the Company’s Board of Directors (A) any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report
financial data and have identified for the Company’s auditors any material weaknesses in internal controls and (B) any fraud, whether or not material, that involves
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management or other employees who have a significant role in the Company’s internal controls. The Company has made available to Parent a summary of any
such disclosure made by management to the Company’s auditors and the audit committee of the Company’s Board of Directors.
Section 3.18.
Litigation
.
There are no material claims, actions, suits, proceedings, subpoenas or, to the Knowledge of the Company, investigations (each, an “
Action
”)
pending or, to the Knowledge of the Company, threatened, before any Governmental Entity, or before any arbitrator, of any nature, brought by or against any of the Company or, to the Knowledge of the Company, any of its officers or directors
involving or relating to the Company, the assets, properties or rights of the Company or the transactions contemplated by this Agreement. There is no material judgment, decree, injunction, rule or order of any Governmental Entity or before any
arbitrator, of any nature outstanding or, to the Knowledge of the Company, threatened against the Company.
Section 3.19.
Contracts
.
(a) Section 3.19(a) of the Company Disclosure
Schedule sets forth a complete and correct list of all Company Contracts as of the date hereof.
(b) Each Company Contract is valid,
binding and enforceable against the Company and, to the Knowledge of the Company, against each other party thereto in accordance with its terms, and is in full force and effect. The Company has performed all material obligations required to be
performed by it to date under, and is not in material default or delinquent in performance, status or any other respect (claimed or actual) in connection with, any Company Contract, and no event has occurred which, with due notice or lapse of time
or both, would constitute such a default thereunder. To the Knowledge of the Company, no other party to any Company Contract is in material default in respect thereof, and no event has occurred which, with notice or lapse of time or both, would
constitute such a default. The Company has made available to Parent or its representatives true and complete originals or copies of all the Company Contracts.
(c) A “
Company Contract
” means any agreement, contract or commitment, oral or written, to which either the Company is a party or by which it or any of its assets are bound constituting:
(i) a contract or agreement for the purchase, license (as licensee) or lease (as lessee) by the Company of services, materials, products,
personal property, supplies, Intellectual Property rights or other assets from any supplier or vendor or for the furnishing of services to the Company reasonably expected to involve total payments by the Company after the date hereof in excess of
$25,000;
(ii) a mortgage, indenture, security agreement, guaranty, pledge and other agreement or instrument relating to the
borrowing of money or extension of credit in excess of $50,000 (other than accounts receivable or accounts payable in the ordinary course of business and consistent with past practice), or any agreement or instrument relating to any financial grant
to the Company;
(iii) an employment, change of control, retention, severance or material consulting agreement;
(iv) a joint venture, partnership or limited liability company agreement with third parties;
(v) a non-competition agreement or any other agreement or obligation which purports to limit in any material respect (i) the manner
in which, or the localities in which, the business of the Company may be conducted or (ii) the ability of the Company to provide any type of service or product presently provided by the Company;
(vi) an agreement containing any exclusivity clause, most-favored-nations clause, benchmarking clause or marked-to-market pricing
provision;
(vii) a Lease requiring annual payments in excess of $100,000;
(viii) an agreement limiting or restricting the ability of the Company to make distributions or declare or pay dividends in respect of its
capital stock or other securities, as the case may be;
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(ix) an agreement or offer to acquire all or a substantial portion of the capital stock,
business, property or assets of any other Person;
(x) any material collaboration agreement;
(xi) any material agreement with a scientific advisor(s) or any scientific advisory firm or business;
(xii) any material transfer agreement that is material to the Company’s business; or
(xiii) any other material agreement not in the ordinary course of the business of the Company.
(d) Without limiting, and in furtherance of, the foregoing provisions of this Section 3.19: (i) the Company has made available to Parent or its
representatives a true and complete original or copy of the Bridge Note Amendment; (ii) the Bridge Note Amendment is valid, binding and enforceable against the Company and, to the Knowledge of the Company, against each other party thereto in
accordance with its terms, and is in full force and effect; (iii) the Company has performed all material obligations required to be performed by it under, and is not in material default or delinquent in performance, status or any other respect
(claimed or actual) in connection with, the Bridge Note Amendment, and no event has occurred which, with due notice or lapse of time or both, would constitute such a default thereunder; and (iv) to the Knowledge of the Company, no other party
to the Bridge Note Amendment is in material default in respect thereof, and no event has occurred which, with notice or lapse of time or both, would constitute such a default.
Section 3.20.
Employee Plans
.
(a) Section 3.20(a) of the Company
Disclosure Schedule sets forth: (i) all “employee benefit plans,” as defined in Section 3(3) of ERISA, and all material employee benefit programs, policies, or arrangements, including, without limitation, any such programs,
policies, or arrangements providing severance pay, sick leave, vacation pay, salary continuation, disability, retirement benefits, deferred compensation, bonus pay, incentive pay, equity or equity-based compensation, stock purchase, hospitalization
insurance, medical insurance, life insurance, cafeteria benefits, dependent care reimbursements, prepaid legal benefits, scholarships or tuition reimbursements, currently sponsored or maintained by the Company or to which the Company is obligated to
contribute thereunder for current or former employees of the Company (the “
Company Employee Benefit Plans
”), and (ii) all “employee pension plans,” as defined in Section 3(2) of ERISA, currently maintained or
sponsored by the Company or any trade or business (whether or not incorporated) which is under control or treated as a single employer with the Company under Section 414(b), (c), (m), or (o) of the Code (a “
Company ERISA
Affiliate
”) or to which the Company or any Company ERISA Affiliate is obligated to contribute thereunder (the “
Company Pension Plans
”).
(b) True, correct and complete copies of the following documents, with respect to each of the Company Employee Benefit Plans and Company Pension Plans, have been made available to Parent, to the extent applicable:
(i) all plans and related trust documents, and amendments thereto; (ii) Forms 5500 filed for the three most recent plan years; (iii) the most recent IRS determination letter; (iv) the most recent summary plan descriptions, annual
reports and material modifications; (v) the most recent actuarial report, if any; and (vi) written descriptions of all non-written agreements relating to the Company Employee Benefit Plans. In addition, the most recent financial statements
and actuarial valuations for the Company Pension Plans have been made available to Parent.
(c) None of the Company Employee Benefit Plans
or Company Pension Plans is a multiemployer plan, as defined in Section 3(37) of ERISA or subject to Title IV of ERISA or Section 412 of the Code. The Company has not incurred any liability due to a complete or partial withdrawal from a
multiemployer plan or due to the termination or reorganization of a multiemployer plan (except for any such liability that has been satisfied in full), and no events have occurred and no circumstance exists, to the Knowledge of the Company, that
would reasonably be expected to result in any liability to the Company or a Company ERISA Affiliate.
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(d) Each Company Pension Plan that is intended to qualify under Section 401 of the Code has received
a determination letter from the IRS, or can rely on an opinion letter, that it so qualifies and that the trust is exempt from taxation under Section 501 of the Code, and to the Knowledge of the Company, nothing has occurred since the date of
determination that would reasonably be expected to cause the loss of such qualification or exemption or the imposition of any material liability, penalty or tax under ERISA or the Code.
(e) All contributions (including all employer contributions and employee salary reduction contributions) and all premiums required to have been paid
under any of the Company Employee Benefit Plans or Company Pension Plans or by law (without regard to any waivers granted under Section 412 of the Code) to any funds or trusts established thereunder or in connection therewith have been made by
the due date thereof (including any valid extension).
(f) There are no pending actions, claims or lawsuits which have been asserted or
instituted against the Company Employee Benefit Plans or Company Pension Plans, the assets of any of the trusts under such plans or the plan sponsor or the plan administrator, or against any fiduciary of the Company Employee Benefit Plans or Company
Pension Plans with respect to the operation or administration of such plans or the investment of plan assets (other than routine benefit claims), nor does the Company have Knowledge of facts which could form the basis for any such claim or lawsuit.
No Company Employee Benefit Plan or Company Pension Plan has been the subject of an audit, investigation or examination by any Governmental Entity to the Knowledge of the Company.
(g) None of the Company Employee Benefit Plans provide retiree life or retiree health benefits except as may be required under COBRA or any similar state
or local law.
(h) Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will,
either alone or together with the occurrence of subsequent events, (i) increase any benefits otherwise payable under any Company Employee Benefit Plan or Company Pension Plan, (ii) result in the acceleration of the time of payment or
vesting of any benefits including, but not limited to, benefits under any Company Employee Benefit Plan or Company Contract to any current or former employee, or (iii) entitle any current or former employee, officer, director or independent
contractor of the Company to a payment or benefit that is not deductible by reason of Section 280G of the Code.
(i) With respect to
each Company Option and Other Stock Award, (i) each such Company Option and Other Stock Award has been granted with an exercise price no lower than “fair market value” (within the meaning of Section 409A of the Code) as of the
grant date, (ii) the “grant date” of such Company Option and Other Stock Award as reflected in the Company’s option and stock ledger is the same date of grant as determined in accordance with applicable tax laws and GAAP, and
(iii) such option has been properly expensed by the Company in accordance with GAAP.
(j) Each “nonqualified deferred
compensation plan” (as defined in Section 409A(d)(1) of the Code) of the Company has been operated, since January 1, 2005, in good faith compliance with Section 409A of the Code, IRS Notice 2005-1, and other applicable notices
required by law.
Section 3.21.
Insurance
.
The Company has made available to Parent true, complete and accurate copies of the material surety bonds, fidelity bonds and all material policies of title,
liability, fire, casualty, business interruption, workers’ compensation and other forms of insurance insuring the Company and its assets, properties and operations. All such policies and bonds are in full force and effect. The Company is not in
material default under any provisions of any such policy or bond nor has the Company received any notice of cancellation of, or cancelled, any such policy or bond. For all material claims made under such policies and bonds, the Company has timely
complied with any applicable notice provisions.
Section 3.22.
Affiliate Transactions
.
There are no transactions, agreements, arrangements or understandings between the Company, on the one hand, and any director, officer or stockholder of
the Company, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities
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Act (if such Act were applicable to the Company) other than ordinary course of business employment agreements and similar employee arrangements otherwise set
forth in Section 3.24 of the Company Disclosure Schedule (or any such ordinary course employment agreements and similar arrangements not required to be set forth in Section 3.24 of the Company Disclosure Schedule).
Section 3.23.
Relationships with Customer, Suppliers and Research Collaborators
.
Section 3.23 of the Company Disclosure Schedule sets forth a list of the top 10 customers and the top
10 suppliers, in each case by dollar amount paid to the Company by such customers and suppliers, respectively, for the fiscal year ended December 31, 2006, and the respective amounts paid by such customers and suppliers during such fiscal year.
To the Knowledge of the Company, no such customer or supplier has expressed to the Company its intention to cancel or otherwise terminate or materially reduce or modify its relationship with the Company. To the Knowledge of the Company, no research
collaborator of the Company has expressed to the Company its intention to cancel or otherwise terminate or materially reduce or modify its relationship with the Company.
Section 3.24.
Labor Matters
.
(a) The Company is not a party to (i) any
outstanding employment agreements or contracts with officers, managers or employees of the Company that are not terminable at will; (ii) any agreement, policy or practice that requires it to pay termination, change of control or severance pay
to salaried, non exempt or hourly employees of the Company (other than as required by law); (iii) any collective bargaining agreement or other labor union contract applicable to its employees nor does the Company have Knowledge of any
activities or proceedings of any labor union or other organization to organize any such employees; or (iv) any material consulting agreements with any Person providing services to the Company.
(b)(i) The Company is in compliance in all material respects with all applicable laws relating to employment and employment practices, the classification
of employees, wages, hours, collective bargaining, unlawful discrimination, civil rights, safety and health, workers’ compensation and terms and conditions of employment; (ii) there are no charges with respect to or relating to the Company
pending or, to the Knowledge of the Company, threatened before the Equal Employment Opportunity Commission or any state, local or foreign agency responsible for the prevention of unlawful employment practices; and (iii) the Company has not
received any notice from any Governmental Entity responsible for the enforcement of labor or employment laws of an intention to conduct an investigation of the Company and no such investigation is in progress.
(c) There has been no “mass layoff” or “plant closing” as defined by the Worker Adjustment and Retraining Notification Act or any
similar state or local “plant closing” law (“
WARN
”) with respect to the current or former employees of the Company.
Section 3.25.
Environmental Matters
.
(a) The Company is and has been at all
times in compliance in all material respects with all applicable laws, regulations, common law and other requirements of Governmental Entities relating to pollution, to the protection of the environment or to natural resources
(“
Environmental Laws
”). The Company has in effect all material licenses, permits and other authorizations required under all Environmental Laws in connection with the conduct of the Company’s business and is in compliance in
all material respects with all such licenses, permits and authorizations.
(b) The Company has not received any notice of violation or
potential liability under any Environmental Laws from any Person or any Governmental Entity or any inquiry, request for information, or demand letter under any Environmental Law relating to operations or properties of the Company which could
reasonably be expected to result in the Company incurring material liability under Environmental Laws. The Company is not subject to any orders arising under Environmental Laws nor are there any administrative, civil or criminal actions, suits,
proceedings or investigations pending or, to the Knowledge of the Company, threatened, against
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the Company under any Environmental Law which could reasonably be expected to result in the Company incurring material liability under Environmental Laws.
The Company has not entered into any agreement pursuant to which the Company has assumed or will assume any liability under Environmental Laws, including, without limitation, any obligation for costs of remediation, of any other Person.
(c) To the Knowledge of the Company, there has been no release or threatened release of a hazardous substance, hazardous waste, contaminant,
pollutant, toxic substance or petroleum and its fractions, the presence of which requires investigation or remediation under any applicable Environmental Law (“
Hazardous Material
”), on, at or beneath any of the Company Leased Real
Property or other properties currently or previously owned or operated by the Company or any surface waters or groundwaters thereon or thereunder which requires any material disclosure, investigation, cleanup, remediation, monitoring, abatement,
deed or use restriction by the Company, or which would be expected to give rise to any other material liability or damages to the Company under any Environmental Laws.
(d) The Company has not arranged for the disposal of any Hazardous Material, or transported any Hazardous Material, in a manner that has given, or could reasonably be expected to give, rise to any material liability
for any damages or costs of remediation.
(e) The Company has made available to Parent copies of all environmental studies, investigations,
reports or assessments concerning the Company, the Company Leased Real Property and any real property currently or previously owned or operated by the Company.
Section 3.26.
No Brokers
.
No broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission
from, the Company in connection with this Agreement or the transactions contemplated hereby, other than Piper Jaffray & Co. and JP Morgan. The Company has heretofore furnished to Parent a complete and correct copy of all written agreements
between the Company and Piper Jaffray & Co. or JP Morgan pursuant to which Piper Jaffray & Co. or JP Morgan would be entitled to any payment relating to the transactions contemplated hereby, and there are no other understandings,
arrangements or agreements (whether written or oral) between the Company and Piper Jaffray & Co. and/or JP Morgan pursuant to which Piper Jaffray & Co. and/or JP Morgan would be entitled to any payment relating to the transactions
contemplated hereby.
Section 3.27.
Information Supplied
.
The information supplied or to be supplied by the Company specifically for inclusion in the Registration Statement or the proxy statement to be included
therein or any amendment or supplement thereto (the “
Proxy Statement
”) to be sent to the stockholders of Parent in connection with the Parent stockholders meeting to approve and adopt this Agreement and the transactions contemplated
hereby (the “
Parent Stockholders Meeting
”) shall not, on the date that the Registration Statement is declared effective by the SEC, the date that the Proxy Statement is first mailed to the stockholders of Parent or at the time of
the Parent Stockholders Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 3.28.
Board Approval
.
The Board of Directors of the Company, at a meeting duly called and held, by unanimous vote (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are advisable and fair to, and in the best interests of, the Company and its stockholders, (ii) approved this Agreement and the transactions contemplated hereby, including the Merger, and
(iii) resolved to recommend that the holders of the shares of Company Common Stock and Company Preferred Stock approve and adopt this Agreement and the transactions contemplated hereby, including the Merger.
Section 3.29.
Vote Required
.
The only vote (the “
Required Company Vote
”) of the holders of all classes and series of the Company’s outstanding capital stock or other
securities that is necessary to approve and adopt this Agreement and the transactions contemplated hereby, including the Conversion and the Merger, is the
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affirmative vote of (a) the holders of a majority of the outstanding shares of Company Common Stock and Company Preferred Stock, voting together as a
single class, (b) the holders of at least 65% of the outstanding shares of Series A1 Preferred Stock and Series A3 Preferred Stock, voting together as a single class, (c) the holders of at least 60% of the outstanding shares of Series B
Preferred Stock, voting as a separate class, and (d) the holders of at least 67% of the outstanding shares of Company Preferred Stock, voting together as a single class on an as converted basis. The Voting Agreement Stockholders constitute
(i) the holders of approximately 36% of the outstanding shares of Company Common Stock and Company Preferred Stock, together as a single class, (ii) the holders of approximately 64% of the outstanding shares of Series A1 Preferred Stock
and Series A3 Preferred Stock, voting together as a single class, (iii) the holders of approximately 37% of the outstanding shares of Series B Preferred Stock, voting as a separate class, and (iv) the holders of approximately 51% of the
outstanding shares of Company Preferred Stock, voting together as a single class on an as converted basis.
Section 3.30.
Bridge Note Amendment
.
The Bridge Note Amendment has been executed and delivered by the Majority Holders and no other consent or approval of holders of the Bridge Notes is
necessary or required in order for the Company to consummate the transactions contemplated by this Agreement, including, without limitation, the conversion of all Bridge Notes that are outstanding as of immediately prior to the Effective Time into
shares of Company Common Stock pursuant to the Conversion.
Section 3.31.
FDA and Related Matters
.
(a) The Company is not required under
FDA Law or otherwise to obtain any clearances or approvals from the FDA to conduct its current business, and the Company has not received notice from the FDA indicating any right or intention by the FDA to regulate any of the Company’s
business.
(b) Company has no obligations to submit reports and filings to the FDA.
(c) There is no civil, criminal or administrative action, suit, demand, claim, complaint, hearing, notice of violation, investigation, notice, demand
letter, proceeding or request for information pending, with respect to any FDA Laws. The Company is in material compliance with all FDA Laws. There is no act, omission, event or circumstance of which the Company has Knowledge that may give rise to
any such action, suit, demand, claim, complaint, hearing, notice of violation, investigations, notice, demand letter, proceeding or request, or any such liability: against, involving or of the Company, or against, involving or of any other Person
(including, without limitation, any FDA Company Contractor) that could be imputed or attributed to the Company, in each case as would have a Company Material Adverse Effect.
(d) All prospective, investigational clinical trials conducted by or on behalf of the Company have been and are being conducted in material compliance
with the applicable requirements of Good Laboratory Practices and Good Clinical Practices (as applicable), and all applicable requirements relating to protection of human subjects contained in 21 C.F.R. Parts 50, 54, and 56.
Section 3.32.
Trust Fund
.
The Company hereby acknowledges that it is aware of and has reviewed the final prospectus of Parent, dated March 2, 2006 (the “
Prospectus
”)
and the Trust Agreement, and that, except for a portion of the interest earned on the amounts held in the Trust Fund, Parent may disburse monies from the Trust Fund only: (a) to its public stockholders in the event of the redemption of their
shares or the dissolution and liquidation of Parent; (b) to Parent and CRT Capital Group LLC (with respect to CRT Capital Group LLC’s deferred underwriting compensation only) after Parent consummates a business combination (as described in
the Prospectus); (c) as consideration to the sellers of a target business with which Parent completes a business combination; or (d) to pay certain obligations with respect to Taxes.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Except as set forth in the disclosure schedule delivered to the Company by Parent in connection with the execution and delivery of this Agreement (the
“
Parent Disclosure Schedule
”) (it being understood that any matter disclosed in any section of the Parent Disclosure Schedule shall be deemed to be disclosed in any other section of the Parent Disclosure Schedule if (i) it is
readily apparent from such disclosure that it applies to such other section or (ii) such disclosure is cross-referenced in such other section), Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:
Section 4.1.
Corporate Organization
.
Each of Parent and Merger Sub is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite
corporate power to own its properties and assets and to conduct its business as now conducted. True, accurate and complete copies of the Parent Organizational Documents and the Merger Sub Organizational Documents, with all amendments thereto to the
date hereof, have been made available to the Company or its representatives.
Section 4.2.
Qualification to Do Business
.
Each of the Company and Merger Sub is duly qualified to do business as a foreign corporation and is in good standing in every jurisdiction in
which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or in good standing would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
Section 4.3.
No Conflict or Violation
.
The execution, delivery and performance by each of Parent and Merger Sub of this Agreement do not and will not (i) violate or conflict with any
provision of any Parent Organizational Document or Merger Sub Organizational Document, (ii) assuming that Parent and Merger Sub make the filings specified in Section 4.4 hereof (and assuming compliance by the Company with Sections 3.3 and
3.4 hereof), violate any provision of law, or any order, judgment or decree of any Governmental Entity, (iii) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default under any Parent Contract or
result in the creation or imposition of any Lien (other than any Permitted Lien) upon any of the assets, properties or rights of Parent or Merger Sub or result in or give to others any rights of cancellation, modification, amendment, acceleration,
revocation or suspension of any of the Parent Contracts or obligations thereunder, or Parent Licenses and Permits or (iv) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default under any contract,
agreement or instrument to which Parent or Merger Sub is a party or by which it is bound or to which any of its properties or assets is subject, except in the cases of the immediately preceding clauses (iii) and (iv), for any such violations,
breaches or defaults that would not, individually or in the aggregate, have a Parent Material Adverse Effect.
Section 4.4.
Consents and Approvals
.
No consent, waiver, authorization or approval of any Governmental Entity or any other Person, and no declaration or notice to or filing or registration
with any Governmental Entity or any other Person, is required in connection with the execution and delivery of this Agreement by Parent or Merger Sub or the performance by each of Parent or Merger Sub of its obligations hereunder, except for such
consents, waivers, authorizations, approvals, declarations, notices, filings or registrations, which if not obtained or made would not have a Parent Material Adverse Effect or prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
Section 4.5.
Authorization and Validity of Agreement
.
Each of Parent and Merger Sub has the requisite corporate power and authority to execute, deliver and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Merger Sub and the performance by each of them of its obligations hereunder and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of Directors of Parent and Merger Sub and all other necessary corporate action on the part of Parent and Merger Sub, other than the adoption of this Agreement by the stockholders of Parent,
and no other corporate proceedings on the part of Parent and Merger
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Sub are necessary to authorize this Agreement and the transactions contemplated hereby. The Board of Directors of Parent has duly authorized the adoption of
(i) the Amended and Restated Parent Certificate of Incorporation in the form attached as
Exhibit B
hereto (the “
Amended and Restated Parent Charter
”) and (ii) the 2008 Equity Incentive Plan in the form attached
as
Exhibit C
hereto (“
2008 Equity Incentive Plan
”), each of which shall become effective at the Effective Time, in each case subject to the approval and adoption thereof by the stockholders of Parent. This Agreement has been
duly and validly executed and delivered by Parent and Merger Sub and, assuming due execution and delivery by the Company, constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against them in accordance with its
terms, subject to (i) the effect of bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors’ rights generally, (ii) general equitable principles
(whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.
Section 4.6.
Capitalization and Related Matters
.
The authorized capital stock of Parent consists of (i) 40,000,000 shares of Parent Common Stock, of which 18,750,000 shares were
outstanding as of November 30, 2007 and (ii) 1,000,000 shares of preferred stock, $0.0001 par value, none of which are outstanding. No shares of Parent Common Stock have been issued between March 8, 2006 and the date hereof. All
issued and outstanding shares of the capital stock of Parent are duly authorized, validly issued, fully paid and nonassessable, and no class of capital stock is entitled to (or has been issued in violation of) preemptive rights. As of the date
hereof, there are (i) 15,000,000 outstanding warrants with an exercise price of $6.00 per share issued in the IPO (the “
IPO Warrants
”) and (ii) 833,334 outstanding warrants with an exercise price of $6.00 per share issued
on March 2, 2006 immediately prior to the IPO (such warrants, together with the IPO Warrants, the “
Parent Warrants
”). All outstanding shares of Parent Common Stock and all outstanding Parent Warrants have been issued and
granted in compliance with (x) all applicable securities laws and other applicable laws and regulations, and (y) all requirements set forth in any applicable Parent contract. Except as set forth above in this Section 4.6, no shares of
capital stock of Parent are outstanding and Parent does not have outstanding any options, warrants or other securities convertible into or exchangeable or exercisable for any shares of capital stock or any rights to subscribe for or to purchase or
otherwise acquire, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or known claims of any other character relating to the issuance of, any capital stock of Parent, or any stock or securities
convertible into or exchangeable or exercisable for any capital stock of Parent; and Parent is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire, or to register under the Securities Act, any shares
of capital stock. Except as set forth above in this Section 4.6, Parent does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any matter. Parent has delivered to Company complete and correct copies of the Parent Warrants including all documents relating thereto. All shares of Parent Common Stock to be
issued in connection with the Merger and the other transactions contemplated hereby will, when issued in accordance with the terms hereof, have been duly authorized and be validly issued, fully paid and non-assessable, free and clear of all Liens.
Except as contemplated by this Agreement, there are no registration rights and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreements or understandings to which Parent is a party or by which the Parent is bound with
respect to any equity securities of any class of Parent.
Section 4.7.
Subsidiaries and Equity Investments
.
Parent does not have any Subsidiaries, and does not have any direct or indirect equity or other ownership interest, or any investment
(other than investments that constitute cash or cash equivalents) in, any other Person, except Merger Sub. Merger Sub does not have any Subsidiaries, and does not have any direct or indirect equity or other ownership interest, or any investment
(other than investments that constitute cash or cash equivalents) in, any other Person.
Section 4.8.
Parent SEC Reports
.
Parent has timely filed all required registration statements, reports, schedules, forms, statements and other documents required to be filed by it with the
SEC since March 8, 2006 (collectively, as they have been amended since the time of their filing and including all exhibits thereto, the “
Parent SEC Reports
”). None of the Parent SEC Reports, as of their respective dates (or if
amended or
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superseded by a filing prior to the date of this Agreement or the Closing Date, then on the date of such filing), contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited financial statements and unaudited
interim financial statements (including, in each case, the notes and schedules, if any, thereto) included in the Parent SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present (subject, in the case of the unaudited interim financial statements included therein, to normal year-end adjustments and the absence of complete footnotes) in all material respects the financial position of Parent as of the
respective dates thereof and the results of their operations and cash flows for the respective periods then ended.
Section 4.9.
Absence of Certain Changes or Events
.
(a) Between
September 30, 2007 and the date of this Agreement, there has not been:
(i) any Parent Material Adverse Effect;
(ii) any material loss, damage, destruction or other casualty to the assets or properties of Parent (other than any for
which insurance awards have been received or guaranteed);
(iii) any change in any method of accounting or accounting
practice of Parent, except for any such change required by reason of a concurrent change in GAAP; or
(iv) any loss of the
employment, services or benefits of the president of Parent and members of Parent’s senior management who report directly to such president.
(b) Between September 30, 2007 and the date of this Agreement, Parent has not:
(i) failed to discharge or
satisfy any material Lien or pay or satisfy any material obligation or liability (whether absolute, accrued, contingent or otherwise), other than Permitted Liens and liabilities being contested in good faith and for which adequate reserves have been
made and reflected in the Parent SEC Reports;
(ii) mortgaged, pledged or subjected to any Lien (other than Permitted Liens)
any of its assets, properties or rights;
(iii) sold or transferred any of its material assets or cancelled any material
debts or claims or waived any material rights;
(iv) disposed of any material patents, trademarks or copyrights or any
material patent, trademark or copyright applications or registrations;
(v) disclosed any of its material Trade Secrets;
(vi) defaulted on any material obligation;
(vii) entered into any transaction material to its business, except in the ordinary course of business and consistent with past practice;
(viii) granted any material increase in the compensation or benefits of its employees, or entered into any employment,
change of control, retention or severance agreement or arrangement with any of them;
(ix) made or committed to make any
capital expenditure with respect to any periods after the date hereof or additions to property, plant and equipment used in its operations;
(x) laid off or terminated the employment of any significant number of its employees;
(xi)
discontinued the offering of any material services or product;
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(xii) incurred any material obligation or liability for the payment of severance
benefits;
(xiii) declared, paid, or set aside for payment any dividend or other distribution in respect of shares of its
capital stock or other securities, or redeemed, purchased or otherwise acquired, directly or indirectly, any shares of its capital stock or other securities, or agreed to do so; or
(xiv) entered into any agreement or made any commitment to do any of the foregoing.
Section 4.10.
Tax Matters
.
(a)(i) Parent has filed when due all income Tax
Returns and all other material Tax Returns required by applicable law to be filed with respect to Parent; and (ii) all income Taxes and all other material Taxes owed by Parent, if required to have been paid, have been paid (except for Taxes
which are being contested in good faith and for which adequate reserves have been made and reflected in parent financial statements contained in the Parent SEC Reports).
(b) There is no action, suit, proceeding, investigation, audit or claim now pending with respect to Parent in respect of any income Tax or other material Tax, nor has any claim for additional Tax been asserted in
writing by any taxing authority.
(c) Since January 1, 2006, no claim has been made in writing by any taxing authority in a
jurisdiction where Parent has not filed a Tax Return that it is or may be subject to Tax by such jurisdiction.
(d)(i) There is no
outstanding request for any extension of time for Parent to pay any Taxes or file any Tax Returns; (ii) there has been no waiver or extension of any applicable statute of limitations for the assessment or collection of any Taxes of Parent that
is currently in force; and (iii) Parent is not a party to or bound by any agreement, whether written or unwritten, providing for the payment of Taxes, payment for Tax losses, entitlements to refunds or similar Tax matters.
(e) Parent has withheld and paid all Taxes required to be withheld in connection with any amounts paid or owing to any employee, creditor, independent
contractor or other Person.
(f) Parent has not 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)(1)(A)(ii) of the Code.
(g) Parent has not
distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.
(h) There is no Lien, other than a Permitted Lien, affecting any of the assets, properties or rights of Parent that arose in connection with any failure
or alleged failure to pay any Tax.
(i) Parent has not taken or agreed to take any action, and is not aware of any fact or circumstance,
that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 4.11. Absence of Undisclosed Liabilities.
There are no material liabilities or obligations of Parent or Merger Sub of the type required to be reflected on a balance sheet in the liabilities column in
accordance with GAAP of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances that could be reasonably expected to result in such a
liability or obligation, other than (A) liabilities or obligations disclosed and provided for in the consolidated balance sheet of Parent as of September 30, 2007 included in the Parent SEC Reports (the “
Parent Interim Balance
Sheet
”), or (B) liabilities or obligations incurred in the ordinary course of business consistent with past practice since the date of the Parent Interim Balance Sheet. Neither Parent nor Merger Sub is directly or indirectly liable
upon or with respect to (by discount, repurchase agreements or otherwise), or obliged in any other way to provide funds in respect of, or to guarantee or assume, any material debt, obligation or dividend of any other Person.
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Section 4.12.
Parent Property
.
(a) Neither Parent nor Merger Sub owns any real
property.
(b) Section 4.12(b) of the Parent Disclosure Schedule sets forth a list of all leases, licenses, permits, subleases and
occupancy agreements, together with all material amendments thereto, in which the Company has a leasehold interest or similar occupancy rights, whether as lessor or lessee, and (i) which are material to the operations of Parent or Merger Sub,
or (ii) which involve payments by Parent or Merger Sub in excess of $100,000 per year (each, a “
Parent Lease
” and collectively, the “
Parent Leases
”; the property covered by Parent Leases under which Parent or
Merger Sub is a lessee is referred to herein as the “
Parent Leased Real Property
”). Neither Parent nor Merger Sub is a party to any Parent Contract (other than a Lease) with the lessor of any Parent Leased Real Property, which gives
such lessor any right to terminate or adversely alter the terms of the Parent Lease to which such lessor is a party. Parent or Merger Sub enjoys peaceful and undisturbed possession of the Parent Leased Real Property pursuant to the Parent Leases. No
option has been exercised under any of such Parent Leases, except options the exercise of which have been evidenced by a written document, a true, complete and accurate copy of which has been made available to the Company with the corresponding
Parent Lease. The transactions contemplated by this Agreement do not require the consent or approval of the other party to any Parent Lease.
(c) Since June 30, 2007, no Parent Lease has been modified or amended in any way materially adverse to the business of Parent and no party to any Parent Lease has given Parent or Merger Sub written notice of, or made a claim against
any of them with respect to, any breach or default thereunder.
(d) All material improvements, systems and fixtures on the Parent Leased
Real Property are in good operating condition and repair and generally are adequate and suitable in all material respects for the present and continued use, operation and maintenance thereof as now used, operated or maintained. All improvements on
the Parent Leased Real Property constructed by or on behalf of Parent were constructed in compliance in all material respects with applicable laws, ordinances and regulations affecting such Parent Leased Real Property.
Section 4.13.
Assets of Parent and Merger Sub
.
(a) The assets, properties and
rights of Parent and Merger Sub constitute all of the assets, properties and rights which are used in the operation of Parent’s and Merger Sub’s business as currently conducted. There are no material assets, properties, rights or interests
of any kind or nature that Parent or Merger Sub has been using, holding or operating in its business prior to the Closing that will not be used, held or owned by Parent immediately following the Closing.
(b) Each of Parent and Merger Sub has good and valid fee simple title, free and clear of any Liens other than Permitted Liens, to, or a valid leasehold
interest under enforceable Leases in, all of its material assets, properties and rights.
Section 4.14.
Intellectual Property
.
(a) Except as would not have a Parent
Material Adverse Effect, Parent or Merger Sub owns, or has valid and enforceable licenses to use, all the Intellectual Property used by Parent or Merger Sub, and such Intellectual Property represents all intellectual property rights necessary for
the conduct of their respective businesses as and where conducted on the date hereof. Parent and Merger Sub are in compliance in all material respects with all licenses relating to the protection of such of the Intellectual Property used by Parent
and/or Merger Sub pursuant to license or other agreement. To the Knowledge of Parent, there are no conflicts with or infringements of any Intellectual Property owned or used by Parent or Merger Sub by any other Person. To the Knowledge of Parent,
the conduct of the business of Parent and Merger Sub does not conflict with, violate, misappropriate, misuse or infringe any proprietary right of any other Person. There is no claim, suit, action or proceeding pending or, to the
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Knowledge of Parent, threatened, against Parent or Merger Sub: (i) alleging any such conflict, violation, misappropriation, misuse or infringement with
or of any other Person’s proprietary rights; or (ii) challenging Parent’s or Merger Sub’s ownership or use of, or the validity or enforceability of, any Intellectual Property owned or used by Parent or Merger Sub.
(b) Section 4.14(b) of the Parent Disclosure Schedule sets forth a complete and current list of all registrations, applications or filings with any
Governmental Entity pertaining to the Intellectual Property owned by Parent or Merger Sub (the “
Parent Registered Intellectual Property
”) as of the date hereof and the owner of record, date of application or issuance, and relevant
jurisdiction as to each. All Parent Registered Intellectual Property is owned by Parent or Merger Sub, free and clear of all Liens other than Permitted Liens. All Parent Registered Intellectual Property is valid, subsisting, unexpired, and all
renewal fees and other maintenance fees that have fallen due on or prior to the Closing have been paid. There are no actions that must be taken or payments that must be made by Parent or Merger Sub within one hundred eighty (180) days of the
Closing that, if not taken or paid, would adversely affect the Intellectual Property owned or used by the Parent or Merger Sub or the right of Parent or Merger Sub to use the same as and where used as of the date hereof. To the Knowledge of Parent,
no Parent Registered Intellectual Property is the subject of any proceeding before any Governmental Entity in any jurisdiction, including any office action or other form of preliminary or final refusal of registration. The consummation of the
transactions contemplated by this Agreement will not alter or impair in any material respect any Intellectual Property owned or used by Parent or Merger Sub.
(c) Section 4.14(c) of the Parent Disclosure Schedule sets forth a complete list of all material license agreements pertaining to Intellectual Property owned or used by Parent or Merger Sub as of the date hereof,
except for agreements pertaining to commercially available, off-the-shelf software. Neither Parent nor Merger Sub is under any obligation to pay royalties or other payments in connection with any agreement, nor restricted from assigning its rights
respecting any Intellectual Property owned or used by Parent or Merger Sub. Neither Parent nor Merger Sub will be, as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of
any agreement relating to the Intellectual Property owned or used by Parent or Merger Sub. Neither Parent nor Merger Sub is in material default under any such agreement.
(d) Neither Parent nor Merger Sub has made any claim of a violation, infringement, misuse or misappropriation by any other Person (including any employee or former employee of Parent) of its rights to, or in
connection with, any Intellectual Property owned or used by Parent or Merger Sub, which claim is pending. Neither Parent nor Merger Sub has entered into any agreement to indemnify any other Person against any charge of infringement of any
Intellectual Property owned or used by Parent or Merger Sub.
(e) With respect to each material Trade Secret of Parent and Merger Sub, the
documentation relating to such Trade Secret is current, accurate, and sufficient in detail and content to identify and explain it and to allow its full and proper use without reliance on the knowledge or memory of any individual. Each of Parent and
Merger Sub has taken all reasonable precautions to protect the secrecy, confidentiality and value of its material Trade Secrets. The Trade Secrets of Parent and Merger Sub are not part of the public knowledge or literature, and, to the Knowledge of
Parent, have not been used, divulged, or appropriated for the benefit of any Person (other than the Company, Parent or Merger Sub), except pursuant to an enforceable confidentiality and non-disclosure agreement and, to the Knowledge of Parent, no
Person has materially breached such agreement to the detriment of the Company, Parent, or Merger Sub. No Trade Secret of Parent or Merger Sub is subject to any adverse claim or, to the Knowledge of Parent, has been challenged or threatened in any
way.
Section 4.15.
Software
.
To the Knowledge of Parent, none of the operating and applications computer software programs and databases used by Parent or Merger Sub that are material to the
conduct of its business (collectively, the “
Parent Software
”), nor any use thereof, conflicts with, infringes upon or violates any intellectual property or other proprietary right of any other Person and, no claim, suit, action or
other proceeding with respect to any such infringement or violation is pending or, to the Knowledge of Parent, threatened.
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Section 4.16.
Licenses and Permits
.
(a) Parent owns or possesses all right,
title and interest in and to each license, permit, franchise, registration, authorization and approval that has been issued or granted to Parent by any Governmental Entity and is material to the operation of the Parent’s business (the
“
Parent Licenses and Permits
”) and has taken all necessary action to maintain such Parent Licenses and Permits. Each Parent License and Permit has been duly obtained, is valid and in full force and effect, and is not subject to any
pending or, to the Knowledge of Parent, threatened administrative, judicial or other proceeding to revoke, cancel, suspend or declare invalid such Parent License and Permit in any respect. The Parent Licenses and Permits are sufficient and adequate
in all material respects to permit the continued lawful conduct of the business of Parent, and none of the operations of Parent are being conducted in a manner that violates in any material respect any of the terms or conditions under which any
Parent License and Permit was granted.
(b) The operations of Parent are in compliance in all material respects with applicable federal and
state law and the published rules, regulations, and policies promulgated by any Governmental Entity, and Parent has not done anything or failed to do anything that could reasonably be expected to cause the loss of any of the Parent Licenses and
Permits.
(c) No petition, action, investigation, notice of violation or apparent liability, notice of forfeiture, order to show cause,
complaint, or proceeding seeking to revoke, reconsider the grant of, cancel, suspend, or modify any of the Parent Licenses and Permits is pending or, to the Knowledge of Parent, threatened. No notices have been received by, and no claims have been
filed against, Parent alleging a failure to hold any requisite permits, regulatory approvals, licenses and other authorization.
Section 4.17.
Compliance with Law
.
(a) The operations of the business of Parent
and Merger Sub have been conducted in accordance in all material respects with all applicable laws, regulations, orders and other requirements of all Governmental Entities having jurisdiction over Parent, Merger Sub or their assets, properties or
operations. Since January 1, 2006, Parent has not received notice of any material violation (or any investigation with respect thereto) of any such law, regulation, order or other legal requirement, and Parent is not in material default with
respect to any order, writ, judgment, award, injunction or decree of any national, state or local court or governmental or regulatory authority or arbitrator, domestic or foreign, applicable to any of its assets, properties or operations.
(b) Parent’s management has (i) implemented (x) disclosure controls and procedures to ensure that material information
relating to Parent is made known to the management of Parent and (y) a system of internal control over financial reporting sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, and (ii) has disclosed, based on its most recent evaluation, to Parent’s auditors and the audit committee of Parent’s Board of Directors (A) any significant
deficiencies in the design or operation of internal controls which could adversely affect Parent’s ability to record, process, summarize and report financial data and have identified for Parent’s auditors any material weaknesses in
internal controls and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Parent’s internal controls. Parent has made available to the Company a summary of any such disclosure
made by management to Parent’s auditors and the audit committee of Parent’s Board of Directors.
Section 4.18.
Litigation
.
There are no material Actions pending or, to the Knowledge of Parent, threatened, before any Governmental Entity, or before any arbitrator, of any nature, brought
by or against any of Parent, Merger Sub or, to the Knowledge of Parent, any of its respective officers or directors involving or relating to Parent or Merger Sub or the assets, properties or rights of Parent or Merger Sub or the transactions
contemplated by this Agreement. There is no material judgment, decree, injunction, rule or order of any Governmental Entity or before any arbitrator, of any nature outstanding or, to the Knowledge of Parent, threatened against Parent or Merger Sub.
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Section 4.19.
Contracts
.
(a) Section 4.19(a) of the Parent Disclosure
Schedule sets forth a complete and correct list of all Parent Contracts as of the date hereof.
(b) Each Parent Contract is valid, binding
and enforceable against Parent or Merger Sub and, to the Knowledge of Parent, against each other party thereto in accordance with its terms, and is in full force and effect. Each of Parent and Merger Sub have performed all material obligations
required to be performed by it to date under, and is not in material default or delinquent in performance, status or any other respect (claimed or actual) in connection with, any Parent Contract, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default thereunder. To the Knowledge of Parent, no other party to any Parent Contract is in material default in respect thereof, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default. Parent has made available to the Company or its representatives true and complete originals or copies of all the Parent Contracts.
(c) A “
Parent Contract
” means any agreement, contract or commitment, oral or written, to which either Parent or Merger Sub is a party or by which it or any of its assets are bound constituting:
(i) a contract or agreement for the purchase, license (as licensee) or lease (as lessee) by Parent or Merger Sub of
services, materials, products, personal property, supplies, Intellectual Property rights or other assets from any supplier or vendor or for the furnishing of services to Parent or Merger Sub reasonably expected to involve total payments by Parent or
Merger Sub after the date hereof in excess of $25,000;
(ii) a mortgage, indenture, security agreement, guaranty, pledge and
other agreement or instrument relating to the borrowing of money or extension of credit in excess of $50,000 (other than accounts receivable or accounts payable in the ordinary course of business and consistent with past practice);
(iii) an employment, change of control, retention, severance or material consulting agreement;
(iv) a joint venture, partnership or limited liability company agreement with third parties;
(v) a non-competition agreement or any other agreement or obligation which purports to limit in any material respect (i) the manner
in which, or the localities in which, the business of Parent or Merger Sub may be conducted or (ii) the ability of Parent or Merger Sub to provide any type of service or product presently provided by Parent or Merger Sub;
(vi) an agreement containing any exclusivity clause, most-favored-nations clause, benchmarking clause or marked-to-market pricing
provision;
(vii) a Lease requiring annual payments in excess of $100,000;
(viii) an agreement limiting or restricting the ability of Parent or Merger Sub to make distributions or declare or pay dividends in
respect of its capital stock or other securities, as the case may be;
(ix) an agreement or offer to acquire all or a
substantial portion of the capital stock, business, property or assets of any other Person; or
(x) any other material
agreement not in the ordinary course of the business of Parent.
Section 4.20.
Employee Plans
.
(a) Neither Parent nor Merger Sub has:
(i) any “employee benefit plans” as defined in Section 3(3) of ERISA; or (ii) any material employee benefit programs, policies, or arrangements, including, without limitation, any such programs, policies, or arrangements
providing severance pay, sick leave, vacation pay, salary continuation, disability, retirement benefits, deferred compensation, bonus pay, incentive pay, equity or equity-based compensation, stock purchase, hospitalization insurance, medical
insurance, life insurance, cafeteria benefits, dependent care reimbursements, prepaid legal benefits, scholarships or tuition reimbursements, currently sponsored or maintained by it or to which it is obligated to contribute thereunder for current or
former employees of Parent and Merger Sub.
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(b) Neither the execution and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will, either alone or together with the occurrence of subsequent events, (i) result in the acceleration of the time of payment or vesting of any benefits including, but not limited to, benefits under any Parent Contract to
any current or former employee, or (ii) entitle any current or former employee, officer, director or independent contractor of Parent or Merger Sub to a payment or benefit that is not deductible by reason of Section 280G of the Code.
(c) No Parent Contract, warrant or other compensatory or equity-based arrangement with any employee, officer or director of Parent
contains any provision requiring Parent to pay on behalf of, or otherwise reimburse, any such individual for any income or excise taxes due by such individual upon payment of any benefits by Parent, other than any such obligations as required by
applicable laws or regulations.
Section 4.21.
Insurance
.
Parent has made available to the Company a true, complete and accurate copy of the material surety bonds, fidelity bonds and all material policies of title,
liability, fire, casualty, business interruption, workers’ compensation and other forms of insurance insuring each of Parent and Merger Sub and their assets, properties and operations. All such policies and bonds are in full force and effect.
None of Parent or Merger Sub is in material default under any provisions of any such policy of insurance nor has any of Parent or Merger Sub received notice of cancellation of or cancelled any such insurance. For all material claims made under such
policies and bonds, Parent and Merger Sub have timely complied with any applicable notice provisions.
Section 4.22.
Affiliate Transactions
.
There are no transactions, agreements, arrangements or understandings between Parent or Merger Sub, on the one hand, and any director or executive
officer of Parent, on the other hand, that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act other than ordinary course of business employment agreements and similar employee arrangements otherwise set
forth in Section 4.23 of the Parent Disclosure Schedule (or any such ordinary course employment agreements and similar arrangements not required to be set forth in Section 4.23 of the Parent Disclosure Schedule).
Section 4.23.
Labor Matters
.
(a)(i) Neither Parent nor Merger Sub is a party to
any outstanding employment agreements or contracts with officers, managers or employees of either of Parent or Merger Sub that are not terminable at will; (ii) neither Parent nor Merger Sub is a party to any agreement, policy or practice that
requires it to pay termination, change of control or severance pay to salaried, non exempt or hourly employees of such company (other than as required by law); (iii) neither Parent nor Merger Sub is a party to any collective bargaining
agreement or other labor union contract applicable to its employees nor does Parent have Knowledge of any activities or proceedings of any labor union or other organization to organize any such employees; or (iv) neither Parent nor Merger Sub
is a party to any material consulting agreements with any Person providing services to Parent or Merger Sub.
(b)(i) Each of Parent and
Merger Sub is in compliance in all material respects with all applicable laws relating to employment and employment practices, the classification of employees, wages, hours, collective bargaining, unlawful discrimination, civil rights, safety and
health, workers’ compensation and terms and conditions of employment; (ii) there are no charges with respect to or relating to either Parent or Merger Sub pending or, to the Knowledge of Parent, threatened before the Equal Employment
Opportunity Commission or any state, local or foreign agency responsible for the prevention of unlawful employment practices; and (iii) neither Parent nor Merger Sub has received any notice from any national, state, local or foreign agency
responsible for the enforcement of labor or employment laws of an intention to conduct an investigation of either of Parent or Merger Sub and no such investigation is in progress.
(c) There has been no “mass layoff” or “plant closing” as defined by WARN with respect to the current or former employees of Parent
or Merger Sub.
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Section 4.24.
Environmental Matters
.
Each of Parent and Merger Sub is, and has been at all times prior to the date hereof, in compliance in all material respects with all applicable
Environmental Laws. Parent has not received any notice of violation or potential liability under any Environmental Laws from any Person or any Governmental Entity inquiry, request for information, or demand letter under any Environmental Law
relating to operations or properties of Parent or Merger Sub which could reasonably be expected to result in Parent or Merger Sub incurring material liability under Environmental Laws. None of Parent or Merger Sub is subject to any orders arising
under Environmental Laws nor are there any administrative, civil or criminal actions, suits, proceedings or investigations pending or, to the Knowledge of Parent, threatened, against Parent or Merger Sub under any Environmental Law which would
reasonably be expected to result in Parent or Merger Sub incurring material liability under Environmental Laws. None of Parent or Merger Sub has entered into any agreement pursuant to which Parent or Merger Sub has assumed or will assume any
liability under Environmental Laws, including, without limitation, any obligation for costs of remediation, of any other Person.
Section 4.25.
No Brokers
.
No broker, finder or similar intermediary has acted for or on behalf of, or is entitled to any broker’s, finder’s or similar fee or other commission
from, Parent or Merger Sub in connection with this Agreement or the transactions contemplated hereby, other than Duff & Phelps, LLC. Parent has heretofore furnished to the Company a complete and correct copy of all written agreements
between Parent or Merger Sub and Duff & Phelps, LLC pursuant to which Duff & Phelps, LLC would be entitled to any payment relating to the transactions contemplated hereby, and there are no other understandings, arrangements or
agreements (whether written or oral) between the Company and Duff & Phelps, LLC pursuant to which Duff & Phelps, LLC would be entitled to any payment relating to the transactions contemplated hereby.
Section 4.26.
State Takeover Statutes; Rights Agreement
.
The Board of Directors of Parent has taken all action necessary to ensure that any restrictions on business combinations contained
in the DGCL, including Section 203 of the DGCL, will not apply to the Merger, the Voting Agreement or the transactions contemplated by this Agreement. No other “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute or regulation or any anti-takeover provision in Parent’s Organizational Documents is, or at the Effective Time will be, applicable to Parent, the Parent Common Stock, the Merger or the
other transactions contemplated by this Agreement or the Voting Agreement. Parent does not have a poison pill or a shareholders rights agreement in effect.
Section 4.27. Information Supplied.
The information in the Registration Statement and Proxy Statement shall not, on the date the Proxy Statement is first mailed to the stockholders of Parent or at the time of
the Parent Stockholders Meeting or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Section 4.28.
Board Approval
.
The Board of Directors of each of Parent and Merger Sub, at meetings duly called and held, duly (i) determined that this Agreement and the transactions
contemplated hereby are advisable and fair to, and in the best interests of, Parent, Merger Sub and their respective stockholders, (ii) approved this Agreement, the Voting Agreement and the transactions contemplated hereby, including the Merger
and the issuance of Parent Common Stock in connection with the Merger, the Amended and Restated Parent Charter and the 2008 Equity Incentive Plan and (iii) resolved to recommend that their respective stockholders approve and adopt this
Agreement and the transactions contemplated hereby, including the Merger, the Amended and Restated Parent Charter and the 2008 Equity Incentive Plan.
Section 4.29.
Vote Required
.
(a) The only vote of holders of any class or
series of capital stock of Parent necessary to approve this Agreement and the transactions contemplated hereby is the approval and adoption thereof by (i) the holders of a majority of the outstanding shares of Parent Common Stock, and
(ii) by the holders of a majority of the outstanding shares of Parent Common Stock issued by the Parent in the initial public offering of Parent Common
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Stock (such initial public offering, the “
IPO
” and such shares, the “
IPO Shares
”), voted at the Parent Stockholders
meeting;
provided
,
however
, that Parent may not consummate the Merger if the holders of 20% or more in interest of the IPO Shares shall have (x) voted against the approval and adoption of this Agreement and the transactions
contemplated hereby and (y) properly demanded that Parent convert such shares into cash pursuant to Parent’s Amended and Restated Certificate of Incorporation (such approval of stockholders without any such demands for conversion of 20% or
more of the IPO Shares, the “
Required Parent Vote
”).
(b) Parent, as the sole stockholder of Merger Sub, has approved and
adopted this Agreement and the transactions contemplated hereby.
Section 4.30.
Trust Funds; Liquidation
.
(a) As of the date hereof, Parent has
at least $113,500,000, plus accrued interest (the “
Trust Fund
”) invested in (i) “Government Securities,” which shall mean any Treasury Bill issued by the United States government, having a maturity of one hundred and
eighty days or less; or (ii) any open ended investment company registered under the Investment Company Act of 1940 that holds itself out as a money market fund and bears the highest (AAA) credit rating issued by a United States nationally
recognized rating agency such as Standard & Poor’s Corporation or Moody’s Investor Services in a trust account at a New York branch of Lehman Brothers, Inc. (the “
Trust Account
”), held in trust by Continental
Stock Transfer & Trust Company (the “
Trustee
”) pursuant to the Investment Management Trust Agreement dated as of March 2, 2006, between Parent and the Trustee (the “
Trust Agreement
”). Upon consummation
of the Merger and notice thereof to the Trustee and compliance with the delivery requirements set forth in Exhibit A to the Trust Agreement, the Trust Account will terminate and the Trustee shall thereupon be obligated to release as promptly as
practicable to Parent the Trust Fund held in the Trust Account, which Trust Fund will be free of any Lien whatsoever and, after taking into account any funds paid to holders of IPO Shares who shall have (A) voted against the approval and
adoption of this Agreement and (B) demanded that Parent convert their IPO Shares into cash pursuant to the Parent Charter, shall be an amount at least equal to $90,800,000.
(b) Parent has provided to the Trustee a copy of the letter of intent, dated as of September 8, 2007, between Parent and the Company, together with
a certified copy of a unanimous resolution of the Board of Directors of Parent affirming that such letter of intent is in effect, in compliance with Section 2(d) of the Trust Agreement and has complied with the requirements of the first proviso
to Section 1(j) of the Trust Agreement to extend the date for liquidation of the Trust Fund as provided therein. Parent has not delivered to the Trustee a Termination Letter (as defined in the Trust Agreement).
(c) Effective as of the Effective Time, the obligations of Parent to dissolve or liquidate within the specified time period contained in the Parent
Charter will terminate, and effective as of the Effective Time Parent shall have no obligation whatsoever to dissolve and liquidate the assets of Parent by reason of the consummation of the Merger or the transactions contemplated thereby, and
following the Effective Time no Parent stockholder shall be entitled to receive any amount from the Trust Account except to the extent such stockholder voted against the approval and adoption of this Agreement and the transactions contemplated
thereby and demanded, contemporaneously with such vote, that Parent convert such stockholder’s shares of Parent Common Stock into cash pursuant to the Parent Charter.
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ARTICLE V.
COVENANTS OF THE COMPANY.
The Company hereby covenants as follows:
Section 5.1.
Conduct of Business Before the Closing Date
.
(a) Except as set
forth on Section 5.1(a) of the Company Disclosure Schedule, the Company covenants and agrees that, during the period from the date hereof to the earlier of the termination of this Agreement in accordance with its terms and the Effective Time
(except as otherwise specifically contemplated by the terms of this Agreement), unless Parent shall otherwise consent in writing (such consent not to be unreasonably withheld): (i) the business of the Company shall be conducted, in all material
respects, in the ordinary course of business and in a manner consistent with past practice; (ii) the Company shall use its commercially reasonable efforts to continue to maintain, in all material respects, its assets, properties, rights and
operations in accordance with present practice in a condition suitable for their current use and (iii) the Company shall use its commercially reasonable efforts consistent with the foregoing to conduct the business of the Company in compliance
with applicable laws in all material respects, to preserve intact the business organization of the Company, to keep available the services of the present officers and key employees of the Company and to preserve, in all material respects, the
present relationships of the Company with persons with which the Company has significant business relations. Without limiting the generality of the foregoing, except as set forth on Section 5.1(a) of the Company Disclosure Schedule, the Company
shall not (except as specifically contemplated by the terms of this Agreement), between the date of this Agreement and the earlier of the termination of this Agreement in accordance with its terms and the Effective Time, directly or indirectly do,
any of the following without the prior written consent of Parent (such consent not to be unreasonably withheld):
(i) make
any change in any of the Company Organizational Documents, except as required pursuant to Section 5.7 hereof; issue any additional shares of capital stock (other than upon the exercise of Company Options, Other Stock Awards and Company Warrants
or conversion of Company Preferred Stock or Bridge Notes, in each case outstanding on the date hereof or granted after the date hereof to the extent expressly permitted by this Agreement or consented to by Parent in writing) or other equity
securities or grant any option, warrant or right to acquire any capital stock or other equity securities or issue any security convertible into or exchangeable or exercisable for such securities or alter in any way any its outstanding securities or
make any change in outstanding shares of capital stock or other ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or
otherwise;
(ii) make any sale, assignment, transfer, abandonment, sublease, assignment or other conveyance of its tangible
assets, Company Leased Real Property or rights or any part thereof other than dispositions in the ordinary course of business and consistent with past practice;
(iii) sell, transfer, exclusively license or abandon any of its Intellectual Property;
(iv) subject any of its assets, properties or rights, or any part thereof, to any Lien other than Permitted Liens;
(v)(A) redeem, retire, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock or other ownership interests
of the Company except for redemptions, purchases or other acquisitions of capital stock or other ownership interests required under the terms of any plans, arrangements or other Company Contracts existing on the date hereof between the Company and
any director, consultant or employee of the Company (to the extent complete and accurate copies of such plans, arrangements or other Company Contracts (or, with respect to Company Stock Options, forms of stock option agreements) have been heretofore
made available to Parent or (B) declare, set aside or pay any dividends or other distribution in respect of such shares or interests;
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(vi) acquire, lease or sublease any material tangible assets, raw materials or properties
(including any real property), other than in the ordinary course of business and consistent with past practice;
(vii) enter
into any new (or amend any existing to increase benefits) employee benefit plan, program or arrangement or any new (or amend any existing to increase benefits) employment, severance, change of control or consulting agreement, grant any general
increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment) or grant any increase in the compensation payable or to become payable to any employee,
except (A) as otherwise provided pursuant to the terms of any plan or agreement, (B) as required by law, (C) to the extent necessary to avoid imposition of any taxes under Section 409A or Section 4999 of the Code or
(D) for increases in compensation or benefits to, or entry into agreements with, non-officer (e.g., rank-and-file) employees in accordance with pre-existing contractual provisions and/or consistent with past practice;
(viii) contractually commit to make capital expenditures for any post-Closing period in excess of $225,000 in the aggregate;
(ix) pay, lend or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement or
arrangement with, any of its Affiliates;
(x) fail to use commercially reasonable efforts to keep in full force and effect
insurance comparable in amount and scope to coverage maintained on the date of this Agreement;
(xi) make any change in any
method of accounting or accounting principle, method, estimate or practice except for any such change required by reason of a change in GAAP, or write off as uncollectible any accounts receivable, except in the ordinary course of business and
consistent with past practice;
(xii) make or change any material Tax election, change an annual accounting period, adopt or
change any material accounting method, settle any material Tax claim or assessment relating to the Company, surrender any right to claim a refund of material Taxes, consent to any extension or waiver of the limitation period applicable to any Tax
claim or assessment relating to the Company, or take any other similar action relating to the filing of any material Tax Return or the payment of any material Tax;
(xiii) settle, release or forgive any material claim or litigation or waive any material right thereto which has not been properly
reserved on the books of the Company;
(xiv) make, enter into, modify, amend in any manner that would be reasonably expected
to have an adverse effect on the Company or terminate, or waive any right or remedy under, any Company Contract, bid or expenditure, where such Company Contract, bid or expenditure is for a Company Contract entailing payments in excess of $25,000,
other than in the ordinary course of business and consistent with past practice;
(xv) lend money to any Person or incur or
guarantee any indebtedness for borrowed money or enter into any capital lease obligation in excess of $50,000;
(xvi) use
any of the Company’s funds or other assets to pay down or pay off any of the Company’s indebtedness for borrowed money outstanding as of the date of the Company’s Interim Balance Sheet, or incurred by the Company thereafter, other
than drawdowns and repayments under the Company’s revolving credit facilities consistent with the past cash management practices of the Company;
(xvii) take any action to accelerate the vesting of, or cause any restriction to lapse with respect to, any stock-based compensation;
(xviii) form or organize any Subsidiary of the Company or purchase or otherwise acquire any direct or indirect equity or other ownership
interest, or any investment (other than investments that constitute cash or cash equivalents) in, any other Person;
(xix)
modify or amend the Bridge Note Agreement; or
(xx) commit to do any of the foregoing.
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(xxi) Nothing contained in this Agreement shall give to Parent or Merger Sub, directly or
indirectly, rights to control or direct the operations of the Company prior to the Closing Date. Prior to the Closing Date, the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of
their respective operations.
Section 5.2.
Notice of Breach
.
From and after the date hereof and until the earlier to occur of the Closing Date or the termination of this Agreement in accordance with its terms, the
Company shall promptly give to Parent written notice with reasonable particularity upon having Knowledge of any matter that may reasonably be expected to constitute a breach of any representation, warranty, agreement or covenant of the Company
contained in this Agreement to the extent that such breach would cause the conditions set forth in Section 8.2 to not be satisfied.
Section 5.3.
Affiliate Letter
.
The Company shall deliver on the date hereof a letter to Parent identifying all persons who, to the Knowledge of the Company, are “affiliates” of
the Company for purposes of Rule 145 under the Securities Act.
Section 5.4.
Conversion of Company Preferred Stock
.
Subject only to receipt of the requisite approvals of the holders of Company Preferred Stock pursuant to the respective terms of such
Company Preferred Stock, the Company shall take all corporate action necessary to cause all shares of Company Preferred Stock that are outstanding as of immediately prior to the Effective Time to be converted into shares of Company Common Stock
pursuant to the Conversion in accordance with the terms of such Company Preferred Stock.
Section 5.5.
Company Acquisition Proposals
.
(a) The Company shall not (whether
directly or indirectly through Affiliates, directors, officers, employees, advisors, agents, representatives or other intermediaries), nor shall (directly or indirectly) the Company authorize or permit any of its officers, directors, agents,
representatives or advisors to, (i) solicit, initiate or take any action to facilitate or encourage the submission of inquiries, proposals or offers from any Person relating to any Company Acquisition Proposal, or agree to or endorse any
Company Acquisition Proposal; (ii) enter into any agreement to (x) facilitate or further the consummation of, or consummate, any Company Acquisition Proposal, (y) approve or endorse any Company Acquisition Proposal or (z) in
connection with any Company Acquisition Proposal, require it to abandon, terminate or fail to consummate the Merger; (iii) enter into or participate in any discussions or negotiations in connection with any Company Acquisition Proposal or
inquiry with respect to any Company Acquisition Proposal, or furnish to any Person any information with respect to its business, properties or assets in connection with any Company Acquisition Proposal or inquiry with respect to any Company
Acquisition Proposal; or (iv) agree to resolve or take any of the actions prohibited by clauses (i), (ii) or (iii) of this sentence. The Company shall immediately cease, and cause its advisors, agents and other intermediaries to
immediately cease, any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing and shall demand the return or destruction of any information provided with respect to such
activities, discussion or negotiations. For purposes of this Section 5.5, the term “
Person
” means any person, corporation, entity or “group,” as defined in Section 13(d) of the Exchange Act, other than Parent or
any Subsidiaries of Parent.
“
Company Acquisition Proposal
” means any offer or proposal for a merger, reorganization,
recapitalization, consolidation, share exchange, business combination or other similar transaction involving the Company that would result in the direct or indirect acquisition by any other Person or “group” (within the meaning of
Section 13(d) of the Exchange Act) of securities representing more than 50% of the voting power of the Company or more than 50% of the assets of the Company.
(b) Notwithstanding the foregoing, the Board of Directors of the Company, or the Company, as applicable, directly or indirectly through advisors, agents or other intermediaries, may (i) comply with Rule 14e-2
promulgated under the Exchange Act with regard to any Company Acquisition Proposal, so long as any such
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compliance, except to the extent permitted by clause (iv) of this Section 5.5(b), rejects any Company Acquisition Proposal and reaffirms its
recommendation of the transactions contemplated by this Agreement, (ii) prior to obtaining the Required Company Vote, engage in negotiations or discussions with any Person that has made an unsolicited bona fide written Company Acquisition
Proposal not resulting from or arising out of a breach of Section 5.5(a) hereof, (iii) prior to obtaining the Required Company Vote, make any disclosure to the Company’s stockholders with regard to any Company Acquisition Proposal as
is required (based on the advice of the Company’s outside legal counsel) by any applicable statute, law, rule or regulation, (iv) prior to obtaining the Required Company Vote, furnish to such Person nonpublic information relating to the
Company pursuant to a confidentiality and standstill agreement with terms that are, in the aggregate, no less favorable to the Company than those contained in the Confidentiality Agreement and/or (v) prior to obtaining the Required Company
Vote, withdraw or modify or change in a manner adverse to Parent its approval or recommendation of this Agreement or the transactions contemplated hereby, provided that the Board of Directors of the Company, or the Company, as applicable, shall be
permitted to take an action described in the foregoing clauses (ii), (iv) or (v) if, and only if, prior to the taking of such particular action, the Board of Directors of the Company (x) has determined in good faith, after
consultation with the Company’s financial advisor and outside legal counsel, that such Company Acquisition Proposal is reasonably likely to result in a Company Superior Proposal, in the case of either of the foregoing clauses (ii) or (iv),
or constitutes a Company Superior Proposal, in the case of the foregoing clause (v), and (y) has determined in good faith, after consultation with its outside legal counsel, that failing to take such action may reasonably be expected to, in the
case of either of the foregoing clauses (ii) or (iv), or would, in the case of the foregoing clause (iv), be inconsistent with its fiduciary duties under applicable law.
“
Company Superior Proposal
” means any proposal (on its most recently amended or modified terms, if amended or modified) made by a third
party to enter into any transaction involving a Company Acquisition Proposal (a “
Company Alternative Transaction
”) that the Board of Directors of determines in its good faith judgment (after consultation with the Company’s
outside legal counsel and financial advisor) to be more favorable to the Company’s stockholders than this Agreement and the transactions contemplated hereby, taking into account all terms and conditions of the Company Alternative Transaction
(including any break-up fees, expense reimbursement provision and financial terms, the anticipated timing, conditions and prospects for completion of the Company Alternative Transaction, including the prospects for obtaining regulatory approvals and
financing, and any third party approvals). Reference to “this Agreement” and “the transactions contemplated hereby” in this paragraph shall be deemed to include any proposed alteration of the terms of this Agreement or the
transactions contemplated hereby that are agreed to by Parent after it receives written notice from the Company pursuant to Section 5.5(d) hereof of the existence of, the identity of the Person making, and the terms and conditions of, any
Company Acquisition Proposal.
(c) Notwithstanding anything in this Section 5.5 to the contrary, if, at any time prior to obtaining
the Required Company Vote, the Company’s Board of Directors determines (i) in good faith in response to a Company Acquisition Proposal that was unsolicited and that did not otherwise result from a breach of Section 5.5(a) hereof, that
such proposal is a Company Superior Proposal and (ii) in consultation with its outside legal counsel, that failing to take such action would be inconsistent with its fiduciary duties, the Board of Directors of the Company may withdraw, modify
or amend its recommendation of the Merger and the other transactions contemplated hereby;
provided
,
however
, that prior to any such withdrawal, modification or amendment to the recommendation of the Company’s Board of Directors,
the Company shall have given Parent five (5) Business Days’ written notice (it being understood and agreed that any amendment to the amount or form of consideration of the Company Superior Proposal shall require a new notice and a new five
(5) Business Day period) advising Parent that the Company’s Board of Directors intends to take such action, specifying the material terms and conditions of the Company Superior Proposal and that the Company shall, during such five
(5) Business Day period, negotiate in good faith with Parent to make such adjustments to the terms and conditions of this Agreement such that such Company Acquisition Proposal would no longer constitute a Company Superior Proposal.
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(d) The Company shall notify Parent promptly (but in any event within two Business Days) after receipt or
occurrence of (i) any Company Acquisition Proposal, (ii) any request for information with respect to any Company Acquisition Proposal, (iii) any inquiry, proposal, discussions or negotiation with respect to any Company Acquisition
Proposal, and (iv) the material terms and conditions of any such Company Acquisition Proposal, request for information, inquiry, proposal, discussion or negotiation and the identity of the Person making any such Company Acquisition Proposal,
request for information, inquiry or proposal or with whom discussions or negotiations are taking place. In addition, the Company shall promptly (but in any event within two Business Days) after the receipt thereof, provide to Parent copies of any
written documentation material to understanding such Company Acquisition Proposal, request for information, inquiry, proposal, discussion or negotiation (“
Other Company Acquisition Documentation
”) which is received by the Company
from the Person (or from any representatives or agents of such Person) making such Company Acquisition Proposal, request for information, inquiry or proposal or with whom such discussions or negotiations are taking place. The Company shall not
terminate, waive, amend or modify any provision of any existing standstill or confidentiality agreement to which it is a party, and the Company shall enforce the provisions of any such agreement. The Company shall keep Parent reasonably informed of
the status and details (including any amendments or proposed amendments) of any such Company Acquisition Proposal or request for information and keep Parent reasonably informed as to the material details of any information requested of or provided
by the Company and as to the material details of all discussions or negotiations with respect to any such Company Acquisition Proposal, request for information, inquiry or proposal and shall provide to Parent within two Business Days after receipt
thereof all copies of any additional Other Company Acquisition Documentation received by the Company from the Person (or from any representatives or agents of such Person) making such Company Acquisition Proposal, request for information, inquiry or
proposal or with whom such discussions or negotiations are taking place. The Company shall promptly make available to Parent any non-public information concerning the Company that is made available to any other Person in connection with any Company
Acquisition Proposal that was not previously provided to Parent. The Board of Directors of the Company shall promptly consider in good faith (in consultation with the Company’s outside legal counsel and financial advisor) any proposed
alteration of the terms of this Agreement or the Merger proposed by Parent in response to any Company Acquisition Proposal.
Section 5.6.
Lock-Up Agreement
.
The Company shall use its commercially reasonable efforts to cause each Former Company Stockholder listed on Schedule 5.6 attached hereto to execute and
deliver to Parent at or prior to the Closing a lock-up agreement, substantially in the form attached hereto as
Exhibit D
(each, a “
Lock-Up Agreement
”).
Section 5.7.
Company Charter Amendment
. Subject only to receipt of the requisite approvals of the holders of Company Common Stock and Company Preferred Stock pursuant to applicable Delaware law
and the respective terms of such Company Common Stock and Company Preferred Stock, the Company shall take all corporate action necessary to cause Company Charter Amendment to be filed with the Secretary of State of the State of Delaware and be in
full force and effect not less than one Business Day prior to the Closing Date.
ARTICLE VI.
COVENANTS OF PARENT AND MERGER SUB.
Parent and Merger Sub hereby covenant as follows:
Section 6.1.
Conduct of Business Before the Closing Date
.
(a) Except as set
forth in Section 6.1(a) of the Parent Disclosure Schedule, Parent covenants and agrees that, during the period from the date hereof to the earlier of the termination of this Agreement in accordance with its terms and the Effective Time (except
as otherwise specifically contemplated by the terms of this Agreement), unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld): (i) the businesses of Parent and Merger Sub shall be conducted, in all
material respects, in the ordinary course of
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business and in a manner consistent with past practice; (ii) Parent shall use its commercially reasonable efforts to continue to maintain, in all
material respects, its assets, properties, rights and operations in accordance with present practice in a condition suitable for their current use and (iii) Parent shall use its commercially reasonable efforts consistent with the foregoing to
conduct the business of Parent in compliance with applicable laws in all material respects, including without limitation the timely filing of all reports, forms or other documents with the SEC required to be filed with the SEC by Parent pursuant to
the Securities Act, the Exchange Act and/or the Sarbanes-Oxley Act, to preserve intact the business organization of Parent, to keep available the services of the present officers and key employees of Parent and to preserve, in all material respects,
the present relationships of Parent with persons with which Parent has significant business relations. Without limiting the generality of the foregoing, except as set forth on Section 6.1(a) of the Parent Disclosure Schedule, neither Parent nor
Merger Sub shall (except as specifically contemplated by the terms of this Agreement), between the date of this Agreement and the earlier of the termination of this Agreement in accordance with its terms and the Effective Time, directly or
indirectly do, any of the following without the prior written consent of the Company (such consent not to be unreasonably withheld):
(i) make any change in any of the Parent Organizational Documents or the Merger Sub Organizational Documents; issue any additional shares of capital stock or other equity securities or grant any option, warrant or right to acquire any
capital stock or other equity securities or issue any security convertible into or exchangeable or exercisable for such securities or alter in any way any its outstanding securities or make any change in outstanding shares of capital stock or other
ownership interests or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise, or agree to register under the Securities Act any
capital stock of Parent or Merger Sub;
(ii) make any sale, assignment, transfer, abandonment, sublease, assignment or other
conveyance of its tangible assets, Parent Leased Real Property or rights or any part thereof other than dispositions in the ordinary course of business and consistent with past practice;
(iii) sell, transfer, exclusively license or abandon any of its Intellectual Property;
(iv) subject any of its assets, properties or rights, or any part thereof, to any Lien other than Permitted Liens;
(v) redeem, retire, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock, membership interests or
partnership interests or other ownership interests of Parent and Merger Sub, except for redemptions, purchases or other acquisitions of capital stock or other ownership interests required under the terms of any plans, arrangements or other Parent
Contracts existing on the date hereof between Parent and any director, consultant or employee of Parent (to the extent complete and accurate copies of such plans, arrangements or other Parent Contracts (or, with respect to stock options, forms of
stock option agreements) have been heretofore made available to the Company or (B) declare, set aside or pay any dividends or other distribution in respect of such shares or interests;
(vi) acquire, lease or sublease any material tangible assets, raw materials or properties (including any real property) other than in the
ordinary course of business and consistent with past practice;
(vii) enter into any employee benefit plan, program or
arrangement or any employment, severance, change of control or consulting agreement, grant any general increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or
commitment) or grant any increase in the compensation payable or to become payable to any employee, except (A) as otherwise provided pursuant to the terms of any agreement, (B) as required by law, or (C) to the extent necessary to
avoid imposition of any taxes under Section 409A or Section 4999 of the Code;
(viii) contractually commit to make
capital expenditures for any post-Closing period;
(ix) pay, lend or advance any amount to, or sell, transfer or lease any
properties or assets to, or enter into any agreement or arrangement with, any of its Affiliates (other than as between Parent and Merger Sub);
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(x) fail to use commercially reasonable efforts to keep in full force and effect
insurance comparable in amount and scope to coverage maintained on the date of this Agreement;
(xi) make any change in any
method of accounting or accounting principle, method, estimate or practice except for any such change required by reason of a change in GAAP, or write off as uncollectible any accounts receivable;
(xii) make or change any material Tax election, change an annual accounting period, adopt or change any material accounting method, settle
any material Tax claim or assessment relating to Parent or any of its Subsidiaries, surrender any right to claim a refund of material Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment
relating to Parent or any of its Subsidiaries, or take any other similar action relating to the filing of any material Tax Return or the payment of any material Tax;
(xiii) settle, release or forgive any material claim or litigation or waive any material right thereto which has not been properly
reserved on the books of Parent or its Subsidiaries;
(xiv) make, enter into, modify, amend in any manner that would be
reasonably expected to have an adverse effect on Parent and Merger Sub or terminate, or waive any right or remedy under, any Parent Contract, bid or expenditure, where such Parent Contract, bid or expenditure is for a Parent Contract entailing
payments in excess of $25,000, other than in the ordinary course of business and consistent with past practice;
(xv) lend
money to any Person or incur or guarantee any indebtedness for borrowed money or enter into any capital lease obligation in excess of $50,000;
(xvi) use any of Parent’s or Merger Sub’s funds or other assets to pay down or pay off any of Parent’s or Merger Sub’s indebtedness for borrowed money outstanding as of the date of the Parent
Interim Balance Sheet, or incurred by Parent or Merger Sub thereafter;
(xvii) take any action to accelerate the vesting of,
or cause any restriction to lapse with respect to, any stock-based compensation;
(xviii) form or organize any Subsidiary of
Parent or Merger Sub or purchase or otherwise acquire any direct or indirect equity or other ownership interest, or any investment (other than investments that constitute cash or cash equivalents) in, any other Person (provided that Parent may
purchase or acquire such interests, or make investments in, Merger Sub);
(xix) amend or modify the escrow agreement listed
as Item 14 in Section 4.19(a) of the Parent Disclosure Schedule in such a manner as to cause the Company securities of the “Initial Stockholders” identified therein that are held in escrow thereunder to be released from such
escrow prior to the date on which such agreement currently provides that they shall be released from such escrow; or
(xx)
commit to do any of the foregoing.
(b) Nothing contained in this Agreement shall give to the Company, directly or indirectly, rights to
control or direct the operations of Parent or Merger Sub prior to the Closing Date. Prior to the Closing Date, Parent and Merger Sub shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of
their respective operations.
Section 6.2.
Indemnification Continuation
.
(a) For purposes of this
Section 6.2, (i) “
Indemnified Person
” shall mean any person who is now, or has been at any time prior to the Effective Time, an officer or director of the Company or who was serving at the request of the Company as an
officer or director of another corporation, joint venture or other enterprise or as general partner of any partnership or trustee of any trust, and can provide evidence thereof to Parent acceptable to Parent in its sole discretion and
(ii) “
Proceeding
” shall mean any claim, action, suit, proceeding or investigation.
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(b) Parent shall cause the Surviving Corporation to assume the obligations with respect to all rights to
indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors or officers of the Company as provided in the
Company Organizational Documents or any indemnification Contract between such directors or officers and the Company (in each case, as in effect and made available to Parent as of the date hereof or as amended or entered into prior to the Closing in
accordance with this Agreement or with the written consent of Parent), without further action, as of the Effective Time and such obligations shall survive the Merger and shall continue in full force and effect in accordance with their terms.
(c) In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and other assets to any person, then, and in each such case, Parent
shall cause proper provision to be made so that the successors and assigns of the Surviving Corporation shall expressly assume the obligations set forth in this Section 6.2. In the event (A) the Surviving Corporation transfers any material
portion of its assets, in a single transaction or in a series of transactions or (B) the ability of the Surviving Corporation to satisfy the obligations referred to in this Section 6.2 is impaired in any material respect, Parent will
either assume such obligations or take such other action to ensure that the Surviving Corporation can satisfy such obligations.
(d) Parent
shall, or shall cause the Surviving Corporation to, maintain in effect for six years from the Effective Time (the “
Tail Period
”), through the purchase of run-off coverage or otherwise, directors’ and officers’ liability
insurance covering the Indemnified Persons who are covered by the directors’ and officers’ liability insurance policy provided for directors and officers of the Company as of the date hereof (the “
Existing Policy
”), on
terms (other than with respect to minimum aggregate limits of liability for directors’ and officers’ liability insurance coverage) comparable to the Existing Policy and such coverage shall contain minimum aggregate limits of liability for
directors’ and officers’ liability insurance for the Indemnified Persons of at least $5,000,000 and deductibles no larger than those customary for such type of insurance coverage;
provided
,
however
, that the premiums payable
with respect to such insurance coverage for the entire Tail Period shall be paid in a single lump-sum payment at the commencement of the Tail Period.
(e) The provisions of this Section 6.2 shall survive the consummation of the Merger for a period of six years and are expressly intended to benefit each of the Indemnified Persons, his or her heirs and his or her
representatives and are in addition to, and not in substitution for, any other rights to indemnification or contribution that any such person may have by contract or otherwise;
provided
,
however
, that in the event that any claim or
claims for indemnification are asserted or made within such six-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims.
Section 6.3.
Notice of Breach
.
From and after the date hereof and until the earlier to occur of the Closing Date or the termination of this Agreement in accordance with its terms, Parent
shall promptly give to the Company written notice with reasonable particularity upon having Knowledge of any matter that may reasonably be expected to constitute a breach of any representation, warranty, agreement or covenant of Parent or Merger Sub
contained in this Agreement to the extent that such breach would cause the conditions set forth in Section 8.3 to not be satisfied.
Section 6.4.
Parent Acquisition Proposals
.
(a) None of Parent or any of its
Subsidiaries shall (whether directly or indirectly through Affiliates, directors, officers, employees, advisors, agents, representatives or other intermediaries), nor shall (directly or indirectly) any of Parent or any of its Subsidiaries authorize
or permit any of its or their officers, directors, agents, representatives, advisors or Subsidiaries to, (i) solicit, initiate or take any action to facilitate or encourage the submission of inquiries, proposals or offers from any Person
relating to any Parent Acquisition Proposal, or agree to or endorse any Parent Acquisition Proposal; (ii) enter into any agreement to (x) facilitate or further the consummation of, or consummate, any Parent Acquisition Proposal,
(y) approve or endorse any Parent
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Acquisition Proposal or (z) in connection with any Parent Acquisition Proposal, require it to abandon, terminate or fail to consummate the Merger;
(iii) enter into or participate in any discussions or negotiations in connection with any Parent Acquisition Proposal or inquiry with respect to any Parent Acquisition Proposal, or furnish to any Person any information with respect to its
business, properties or assets in connection with any Parent Acquisition Proposal or inquiry with respect to any Parent Acquisition Proposal; or (iv) agree to resolve or take any of the actions prohibited by clauses (i), (ii) or
(iii) of this sentence. Parent shall immediately cease, and cause its advisors, agents and other intermediaries to immediately cease, any and all existing activities, discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing and shall demand the return or destruction of any information provided with respect to such activities, discussion or negotiations. For purposes of this Section 6.4, the term “Person” means any person,
corporation, entity or “group,” as defined in Section 13(d) of the Exchange Act, other than the Company.
“
Parent
Acquisition Proposal
” means any offer or proposal for a merger, reorganization, recapitalization, consolidation, share exchange, business combination or other similar transaction involving Parent that would result in the direct or indirect
acquisition by any other Person or “group” (within the meaning of Section 13(d) of the Exchange Act) of securities representing more than 50% of the voting power of Parent or more than 50% of the assets of Parent.
(b) Notwithstanding the foregoing, the Board of Directors of Parent, or Parent, as applicable, directly or indirectly through advisors, agents or other
intermediaries, may (i) comply with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to any Parent Acquisition Proposal, so long as any such compliance, except to the extent permitted by clause (iv) of this
Section 6.4(b) rejects any Parent Acquisition Proposal and reaffirms its recommendation of the transactions contemplated by this Agreement, (ii) prior to obtaining the Required Parent Vote, engage in negotiations or discussions with any
Person that has made an unsolicited bona fide written Parent Acquisition Proposal not resulting from or arising out of a breach of Section 6.4(a) hereof, (iii) prior to obtaining the Required Parent Vote, make any disclosure to
Parent’s stockholders with regard to any Parent Acquisition Proposal as is required (based on the advice of Parent’s outside legal counsel) by any applicable statute, law, rule or regulation, (iv) prior to obtaining the Required
Parent Vote, furnish to such Person nonpublic information relating to Parent pursuant to a confidentiality and standstill agreement with terms that are, in the aggregate, no less favorable to Parent than those contained in the Confidentiality
Agreement and/or (v) prior to obtaining the Required Parent Vote, withdraw or modify or change in a manner adverse to the Company its approval or recommendation of this Agreement or the transactions contemplated hereby, provided that the Board
of Directors of Parent, or Parent, as applicable, shall be permitted to take an action described in the foregoing clauses (ii), (iv) or (v) if, and only if, prior to the taking of such particular action, the Board of Directors of Parent
(x) has determined in good faith, after consultation with Parent’s financial advisor and outside legal counsel, that such Parent Acquisition Proposal is reasonably likely to result in a Parent Superior Proposal, in the case of either of
the foregoing clauses (ii) or (iv), or constitutes a Parent Superior Proposal, in the case of the foregoing clause (v), and (y) has determined in good faith, after consultation with its outside legal counsel, that failing to take such
action may reasonably be expected to, in the case of either of the foregoing clauses (ii) or (iv), or would, in the case of the foregoing clause (iv), be inconsistent with its fiduciary duties under applicable law.
“
Parent Superior Proposal
” means any proposal (on its most recently amended or modified terms, if amended or modified) made by a third
party to enter into any transaction involving a Parent Acquisition Proposal (a “
Parent Alternative Transaction
”) that the Board of Directors of Parent determines in its good faith judgment (after consultation with Parent’s
outside legal counsel and financial advisor) to be more favorable to Parent’s stockholders than this Agreement and the transactions contemplated hereby, taking into account all terms and conditions of the Parent Alternative Transaction
(including any break-up fees, expense reimbursement provision and financial terms, the anticipated timing, conditions and prospects for completion of the Parent Alternative Transaction, including the prospects for obtaining regulatory approvals and
financing, and any third party approvals). Reference to “this Agreement” and “the transactions contemplated hereby” in this paragraph shall be deemed to include any proposed alteration of the terms of this Agreement or the
transactions contemplated
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hereby that are agreed to by the Company after it receives written notice from the Company pursuant to Section 6.4(c) hereof of the existence of, the
identity of the Person making, and the terms and conditions of, any Parent Acquisition Proposal.
(c) Parent shall notify the Company
promptly (but in any event within two Business Days) after receipt or occurrence of (i) any Parent Acquisition Proposal, (ii) any request for information with respect to any Parent Acquisition Proposal, (iii) any inquiry, proposal,
discussions or negotiation with respect to any Parent Acquisition Proposal, and (iv) the material terms and conditions of any such Parent Acquisition Proposal, request for information, inquiry, proposal, discussion or negotiation and the
identity of the Person making any such Parent Acquisition Proposal, request for information, inquiry or proposal or with whom discussions or negotiations are taking place. In addition, Parent shall promptly (but in any event within two Business
Days) after the receipt thereof, provide to the Company copies of any written documentation material to understanding such Parent Acquisition Proposal, request for information, inquiry, proposal, discussion or negotiation (“
Other Parent
Acquisition Documentation
”) which is received by Parent from the Person (or from any representatives or agents of such Person) making such Parent Acquisition Proposal, request for information, inquiry or proposal or with whom such
discussions or negotiations are taking place. Parent shall not, and shall cause each of its Subsidiaries not to, terminate, waive, amend or modify any provision of any existing standstill or confidentiality agreement to which it or any of its
Subsidiaries is a party, and Parent shall, and shall cause its Subsidiaries to, enforce the provisions of any such agreement. Parent shall keep the Company reasonably informed of the status and details (including any amendments or proposed
amendments) of any such Parent Acquisition Proposal or request for information and keep the Company reasonably informed as to the material details of any information requested of or provided by Parent and as to the material details of all
discussions or negotiations with respect to any such Parent Acquisition Proposal, request for information, inquiry or proposal and shall provide to the Company within two Business Days after receipt thereof all copies of any additional Other Parent
Acquisition Documentation received by Parent from the Person (or from any representatives or agents of such Person) making such Parent Acquisition Proposal, request for information, inquiry or proposal or with whom such discussions or negotiations
are taking place. Parent shall promptly make available to the Company any non-public information concerning Parent that is made available to any other Person in connection with any Parent Acquisition Proposal that was not previously provided to the
Company. The Board of Directors of Parent shall promptly consider in good faith (in consultation with Parent’s outside legal counsel and financial advisor) any proposed alteration of the terms of this Agreement or the Merger proposed by the
Company in response to any Parent Acquisition Proposal.
Section 6.5.
Colorado Approval
.
Parent shall use its commercially reasonable efforts to obtain the Colorado Approval as promptly as reasonably practicable after the date hereof.
ARTICLE VII.
ADDITIONAL COVENANTS OF THE PARTIES.
Section 7.1.
Preparation of Registration Statement and Proxy Statement; Parent Stockholders Meeting; Tax Opinion Matters
.
(a) As promptly as practicable after the execution of this Agreement, Parent shall, with full cooperation from the Company, prepare and file the
Registration Statement, which shall include the Proxy Statement, with the SEC. Parent shall use its reasonable best efforts to cause the Registration Statement to be declared effective by the SEC as soon after such filing as practicable. The Proxy
Statement shall, among other things, (i) include the recommendation of the Board of Directors of Parent in favor of approval and adoption of this Agreement and the Merger, except to the extent the Board of Directors of Parent shall have
withdrawn or modified its approval or recommendation of this Agreement to the extent such action is permitted by Section 6.4 hereof, the Amended and Restated Parent Charter and the 2008 Equity Incentive Plan; (ii) request approval from
Parent’s stockholders of the Merger and this Agreement upon the terms set forth herein, (iii) request approval for the Amended and
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Restated Parent Charter and (iv) request approval of the 2008 Equity Incentive Plan. Parent shall use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders as promptly as practicable after the Registration Statement is declared effective by the SEC. Parent shall promptly provide copies to the Company, consult with the Company and, with full cooperation from
the Company, prepare written responses with respect to any written comments received from the SEC with respect to the Registration Statement or Proxy Statement and advise the Company of any material oral comments received from the SEC. The
Registration Statement and Proxy Statement shall comply as to form in all material respects with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act.
(b) Parent shall make all necessary filings with respect to the Merger and the transactions contemplated thereby under the Securities Act and the
Exchange Act and applicable “blue sky” laws and the rules and regulations thereunder. Parent will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement has been declared effective by the
SEC or any supplement or amendment to the Registration Statement or Proxy Statement has been filed, or any request by the SEC for amendment of the Registration Statement or Proxy Statement or comments thereon and responses thereto or requests by the
SEC for additional information. No amendment or supplement to the Registration Statement or Proxy Statement shall be filed without the approval of the Company, which approval shall not be unreasonably withheld, conditioned or delayed. If at any time
prior to the Effective Time, any information relating to Parent or the Company, or any of their respective Affiliates, officers or directors, should be discovered by Parent or the Company that should be set forth in an amendment or supplement to the
Registration Statement or Proxy Statement, so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required
by law, disseminated to the stockholders of Parent.
(c) Prior to the time at which the Registration Statement is declared effective by the
SEC: (i) the Company shall execute and deliver to Cooley Godward Kronish LLP and to Willkie Farr & Gallagher LLP a tax representation letter in substantially the form of Exhibit E-1; and (ii) Parent shall execute and deliver
to Cooley Godward Kronish LLP and to Willkie Farr & Gallagher LLP a tax representation letter in substantially the form of Exhibit E-2. Following the delivery of such tax representation letters: (A) the Company shall use its
commercially reasonable efforts to cause Cooley Godward Kronish LLP to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation S-K under the Securities Act; and (B) Parent shall use its commercially reasonable
efforts to cause Willkie Farr & Gallagher LLP to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation S-K under the Securities Act. Both such opinions shall be filed as exhibits to the Registration
Statement at the time it is declared effective by the SEC. In rendering such opinions, each of such counsel shall be entitled to rely on such tax representation letters.
Section 7.2.
Access to Information
.
Upon reasonable notice, each party shall afford to each other and its representatives reasonable access during normal business hours, during the period
prior to the Effective Time, to all of such party’s officers, employees, properties, offices, plants and other facilities and books and records and, during such period, each party shall furnish promptly to each other and its representatives,
consistent with such party’s legal obligations, all other information concerning such party’s business, properties and personnel as the other party may reasonably request;
provided
,
however
, that
each party may restrict the foregoing access to the extent that, in its reasonable judgment, (i) providing such access would result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to
confidentiality if such party shall have used all reasonable efforts to obtain the consent of such third party to such access, or (ii) any law, treaty, rule or regulation of any Governmental Entity applicable to such party requires such party
to preclude the other party and its representatives from gaining access to any properties or information. Each party will hold any such information that is non-public in confidence to the extent required by, and in accordance with, the provisions of
that certain Confidentiality Agreement, dated September 5, 2007 (the “Confidentiality Agreement”), between the Company and Parent.
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Section 7.3.
Efforts
.
(a) Subject to the terms and conditions of this
Agreement, each party will use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the Merger
and the other transactions contemplated by this Agreement as soon as practicable after the date hereof.
(b) Each of Parent and the Company
shall, in connection with the efforts referenced in Section 7.3(a) hereof to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under any Regulatory Law, (i) use its commercially
reasonable efforts to cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private party; (ii) promptly inform
the other party of any communication received by such party from, or given by such party to, the Antitrust Division of the Department of Justice (the “
DOJ
”), the Federal Trade Commission (the “
FTC
”) or any other
governmental authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, and (iii) permit the other party to review any
communication given by it to, and consult with each other in advance of any meeting or conference with, the DOJ, the FTC or any such other governmental authority or, in connection with any proceeding by a private party, with any other Person, and to
the extent permitted by the DOJ, the FTC or such other applicable governmental authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences. For purposes of this Agreement,
“
Regulatory Law
” means the Sherman Act, as amended, the Clayton Act, as amended, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the Federal Trade Commission Act, as amended, and all other federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint
of trade or lessening of competition through merger or acquisition. In furtherance and not in limitation of the covenants of the parties contained in Section 7.3(a) hereof and this Section 7.3(b), each party hereto shall use its reasonable
best efforts to resolve objections, if any, as may be asserted with respect to the transactions contemplated by this Agreement under any Regulatory Law. Notwithstanding anything herein to the contrary, neither Parent nor the Company shall be
required to agree to any terms, conditions, modifications with respect to obtaining any consents, permits, waivers, approvals, authorizations or orders in connection with the Merger or the consummation of the transactions contemplated by this
Agreement that would result in, or would be reasonably likely to result in, (i) either individually or in the aggregate, a Company Material Adverse Effect or a Parent Material Adverse Effect or (ii) Parent, the Company or Merger Sub having
to cease, sell or otherwise dispose of any assets or business (including the requirement that any such assets or business be held separate).
(c) Each party shall use its commercially reasonable efforts to obtain all consents, waivers, authorizations and approvals of all third parties, including Governmental Entities, necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement, and to provide any notices to third parties required to be provided prior to the Effective Time; provided that, without the prior written consent of Parent or the Company, as applicable, neither the
Company nor Parent shall incur any significant expense or liability or agree to any significant modification to any contractual arrangement to obtain such consents waivers, authorizations or approvals.
Section 7.4.
Reorganization
.
(a) The Parties intend that the Merger qualify as
a reorganization within the meaning of Section 368(a) of the Code and will report it as such for federal, state and local income Tax purposes. None of the parties will knowingly take any action or fail to take any action, which action or
failure to act would cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code and the regulations promulgated thereunder.
(b) Each of the Company and Parent shall use its reasonable best efforts to provide the officers’ representations and to obtain the opinions
referred to in Section 8.2(e) and Section 8.3(g) hereof, respectively.
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Section 7.5.
Maintenance of Insurance
.
Each party will use its commercially reasonable efforts to maintain in full force and effect through the Closing Date all material insurance policies
applicable to such party and their respective properties and assets in effect on the date hereof.
Section 7.6.
Public Announcements
.
Each of the Company, Parent and Merger Sub agrees that, except as otherwise required by applicable law, no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior written consent of the Company and Parent (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be
required by law or the rules or regulations of any applicable United States securities exchange, in which case the party required to make the release or announcement shall use its reasonable best efforts to allow the other party reasonable time to
comment on such release or announcement in advance of such issuance, it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party.
Section 7.7.
Board of Directors and Officers
.
(a) Parent shall take or cause
to be taken all corporate actions necessary for the Board of Directors of Parent, as of the Effective Time, to be comprised of nine (9) members classified into three (3) classes, and to otherwise be constituted in accordance with and as
set forth in Section 7.7(b) hereof.
(b) Parent shall use its reasonable best efforts to cause the Company Designated Directors and
Parent Designated Directors set forth on Schedule 7.7(b) attached hereto to be the sole members of the Board of Directors of Parent as of the Effective Time, to serve as directors of Parent until their successors are duly elected and qualified.
The Company Designated Directors and Parent Designated Directors shall be classified as set forth on Schedule 7.7(b) attached hereto. At all times the composition of the Board of Directors of Parent shall comply with all applicable laws, rules
and regulations, including the applicable rules and regulations of the OTC Bulletin Board or any other securities exchange or market on which securities of Parent are listed or traded.
(c) Parent shall use its reasonable best efforts to cause the individuals listed on Schedule 7.7(c) attached hereto to be appointed as officers of
Parent, in the respective offices set forth opposite their names on Schedule 7.7(c) attached hereto, as of the Effective Time.
Section 7.8.
No Shareholder Rights Plan
.
From the date hereof through the earlier of termination of this Agreement and the Effective Time, neither party will adopt, approve, or agree to
adopt, a shareholder rights plan or other similar plan commonly referred to as a “poison pill”.
Section 7.9.
Stockholder Litigation
.
Each of Parent and the Company shall keep the other such party informed of, and cooperate with the other such party in connection with, any stockholder
litigation or claim against it and/or its directors or officers relating to the Merger or the other transactions contemplated by this Agreement;
provided
,
however
, that no settlement in connection with such stockholder litigation shall
be agreed to without the other such party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
Section 7.10.
Trust Fund Closing Confirmation; Colorado Statute Compliance
.
(a) Promptly after the Effective Time, Parent shall (i) give to the Trustee the notice attached as Exhibit A to the Trust Agreement, (ii) provide to the Trustee an affidavit or certificate of a firm regularly engaged in the
business of soliciting proxies and tabulating stockholder votes verifying the vote of the Parent’s stockholders regarding the transactions contemplated hereby, (iii) cause to be delivered to the Trustee by counsel to Parent written
notification that (A) the Merger has been consummated and (B) the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute has been met and (iv) deliver written instructions to the Trustee with respect to the
transfer of the funds held in the Trust Fund.
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(b) Not later than 48 hours prior to the Effective Time, Parent shall (i) give the Trustee advance
notice of the Effective Time, and (ii) cause the Trustee to provide a written confirmation to Parent confirming the dollar amount of the Trust Fund balance held by the Trustee in the Trust Account that will be released to Parent upon
consummation of the Merger.
(c) Parent shall not deliver to the Trustee any Termination Letter (as defined in the Trust Agreement), other
than the Termination Letter contemplated by this Section 7.10.
Parent shall file with the Colorado Securities Commissioner a Form ES
in accordance with Section 11-51-302(6) of the Colorado Statute and Rule 51-3.4 of the Colorado Statute not less than ten days prior to the Effective Time.
Section 7.11.
Company Stockholder Consents
.
The Company shall obtain executed written consents, in the form attached hereto as
Exhibit F
, from the stockholders of the Company
constituting the Required Company Vote, and the Company shall deliver executed copies of such stockholders’ consents to Parent not later than two hours after the execution and mutual delivery of this Agreement by the parties hereto. Parent
shall hold such executed written consents of stockholders and, upon the Closing, redeliver such written consents to the Company. In the event that this Agreement is terminated in accordance with the provisions of Section 9.1, Parent shall
promptly destroy, or redeliver to the Company, such written consents that are in the possession of Parent.
Section 7.12.
Employees and Employee Benefits
.
At the Effective Time, Parent shall assume all employment agreements between the Company and its employees as disclosed on Section 7.12
of the Company Disclosure Schedule and all employment agreements entered into by the Company prior to the Effective Time in accordance with Section 5.1 hereof, in each case to the extent that such assumption is permitted under the terms of such
employment agreements. Until the first anniversary of the Closing Date, Parent shall continue the employment of the Company’s employees at the Closing at base compensation levels and a target bonus opportunity equal to or greater than each such
employee’s base compensation level and target bonus opportunity as an employee of the Company on the date hereof. Following the Closing and until the first anniversary of the Closing Date, such Company employees shall be eligible to receive
employee benefits that are substantially comparable to the employee benefits such employees were eligible to receive under the Company’s plans and programs immediately prior to the Closing Date, and will receive credit for purposes of
eligibility and vesting for service as an employee of the Company. For this purpose, the term “employee benefits” refers to benefits offered under any “employee welfare benefit plan” under Section 3(1) of ERISA and any
“employee pension benefit plan” under Section 3(2) of ERISA, and also includes vacation benefits. For not less than one year following the Closing Date, Parent shall maintain, or shall cause the Surviving Corporation to maintain,
employee benefit plans for those persons who remain employees of the Company after the Closing Date that are substantially comparable to (or more favorable than) those provided pursuant to the employee benefit plans and arrangements and perquisites
in effect on the date hereof. Nothing contained in this Section 7.12, express or implied: (a) shall be construed to establish, amend, or modify any benefit plan, program, agreement or arrangement, (b) shall limit or restrict the
ability of Parent or the Company to amend, modify, terminate, or establish any benefit plan, program, agreement or arrangement, in whole or in part, at any time, (c) is intended to confer upon any current or former employee any right to
employment or continued employment for any period of time by reason of this Agreement, or any right to a particular term or condition of employment, or (d) shall create any third party beneficiary rights in any current or former employee,
director or consultant of the Company.
ARTICLE VIII.
CONDITIONS PRECEDENT
Section 8.1.
Conditions to Each Party’s Obligation to Effect the Merger
.
The obligations of the Company, Parent and Merger Sub to effect the Merger are subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a)
No Injunctions or Restraints, Illegality
. No statute, rule,
regulation, executive order, decree or ruling shall have been adopted or promulgated, and no temporary restraining order, preliminary or permanent injunction
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or other order issued by a court or other U.S. governmental authority of competent jurisdiction shall be in effect, having the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger;
provided
,
however
, that the provisions of this Section 8.1(a) shall not be available to any party whose failure to fulfill its obligations pursuant to Section 7.3
hereof shall have been the cause of, or shall have resulted in, any such order or injunction.
(b)
Governmental Entity Consents and
Approvals
. All consents, waivers, authorizations and approvals of any Governmental Entity required in connection with the execution, delivery and performance of this Agreement and set forth on Schedule 8.1(b) shall have been duly obtained
and shall be in full force and effect on the Closing Date.
(c)
Registration Statement
. The Registration Statement shall have been
declared effective by the SEC and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC.
(d)
Parent Stockholder Approval
. This Agreement and the transactions contemplated hereby shall have been duly approved by the Required Parent
Vote.
(e)
Company Stockholder Approval
. This Agreement and the transactions contemplated hereby shall have been duly approved by
the Required Company Vote.
Section 8.2.
Additional Conditions to Obligations of Parent and Merger Sub
.
The obligations of Parent and Merger Sub to effect the Merger are subject to the satisfaction of, or waiver by
Parent, on or prior to the Closing Date, of the following additional conditions:
(a)
Representations and Warranties
. (i) The
representations and warranties of the Company contained in Sections 3.1, 3.5, 3.26, 3.28, 3.29 and 3.30 hereof shall be true and correct in all respects, in each case both when made and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier time, in which case as of such time), (ii) the representations and warranties of the Company contained in Section 3.6(a) hereof and clause (i) and the last two sentences of
Section 3.6(b) hereof shall be true and correct in all respects (except for inaccuracies which are
de minimus
in amount), in each case both when made and at and as of the Closing Date, as if made at and as of such time (except to the
extent expressly made as of an earlier time, in which case as of such time), and (iii) all other representations and warranties of the Company set forth herein shall be true and correct both when made and at and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an earlier time, in which case as of such time), except where the failure of such representations and warranties to be so true and correct (without giving effect to any
limitation as to “materiality” or “Company Material Adverse Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Parent shall
have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
(b)
Performance of
Obligations of the Company
. The Company shall have performed in all material respects and complied in all material respects with all agreements and covenants required to be performed or complied with by it under this Agreement at or prior to the
Closing Date. Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect.
(c)
Company Material Adverse Effect
. During the period from the date hereof to the Closing Date, there shall not have been a Company Material Adverse Effect.
(d)
Conversion of Company Preferred Stock and Bridge Notes
. The Conversion shall have occurred and no Company Preferred Stock (or rights to
acquire Company Preferred Stock) or Bridge Notes shall be outstanding.
(e)
Opinion of Counsel
. Parent shall have received from
Willkie Farr & Gallagher LLP, tax counsel to Parent, a written opinion, dated the Closing Date, in form and substance reasonably satisfactory to Parent, on the
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basis of certain facts, representations and assumptions set forth in such opinion, to the effect that the Merger will be treated for federal income Tax
purposes as a reorganization qualifying under the provisions of Section 368(a) of the Code and that each of Parent and the Company will be a party to the reorganization within the meaning of Section 368(a) of the Code. In rendering such
opinion, such counsel shall be entitled to rely upon representation letters executed by officers of Parent and the Company substantially in the forms attached as
Exhibit E-1
and
Exhibit E-2
hereto (allowing for such amendments to the
representations contained in any such letter as counsel to Parent and counsel to the Company each deem necessary).
(f)
Bridge Note
Amendment
. Neither the Bridge Note Amendment nor any of the terms of the Bridge Note Agreement amended or modified thereby shall have been amended or modified and the Bridge Note Amendment shall be in full force and effect.
(g)
Lock-Up Agreements
. Each Former Company Stockholder listed on Schedule 8.2(g) shall have executed and delivered to Parent a Lock-Up
Agreement, and each such Lock-Up Agreement shall be in full force and effect.
(h)
Company Charter Amendment
. The Company Charter
Amendment shall have been filed with the Secretary of State of the State of Delaware and shall be in full force and effect.
(i)
Escrow
Agreement
. The Escrow Agent and the Stockholder Representative shall have executed and delivered to Parent the Escrow Agreement, and the Stockholder Representative shall have executed and delivered to the Escrow Agent the Escrow Agreement, and
the Escrow Agreement shall be in full force and effect.
Section 8.3.
Additional Conditions to Obligations of the Company
.
The obligations of the Company to effect the Merger are subject to the satisfaction of, or waiver by the Company, on or
prior to the Closing Date, of the following additional conditions:
(a)
Representations and Warranties
. (i) The representations
and warranties of Parent and Merger Sub contained in Sections 4.1, 4.5, 4.25, 4.28 and 4.29 hereof shall be true and correct in all respects, in each case both when made and at and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier time, in which case as of such time), (ii) the representations and warranties of Parent and Merger Sub contained in Section 4.6 hereof shall be true and correct in all respects (except for
inaccuracies which are de minimus in amount), in each case both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier time, in which case as of such time), and
(iii) all other representations and warranties of Parent and Merger Sub set forth herein shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an
earlier time, in which case as of such time), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Parent Material Adverse
Effect” set forth therein) does not have, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. The Company shall have received a certificate signed on behalf of Parent by an executive
officer of Parent to such effect.
(b)
Performance of Obligations of Parent
. Parent shall have performed in all material respects
and complied in all material respects with all agreements and covenants required to be performed or complied with by it under this Agreement at or prior to the Closing Date. The Company shall have received a certificate signed on behalf of Parent by
an executive officer of Parent to such effect.
(c)
Parent Material Adverse Effect
. During the period from the date hereof to the
Closing Date, there shall not have been a Parent Material Adverse Effect.
(d)
Parent Charter and 2008 Equity Incentive Plan
.
Parent’s stockholders shall have adopted the Amended and Restated Parent Charter and the 2008 Equity Incentive Plan.
(e)
Registration Rights Agreement
. Subject to the satisfaction or waiver of the condition set forth in Section 8.2(g), Parent shall have executed and delivered to the Former Company Stockholders set forth on
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Schedule 8.3(e) attached hereto a registration rights agreement providing such Former Company Stockholders with the right to register their shares of
Parent Common Stock under the Securities Act upon terms and conditions that are consistent with those contained in the Existing Registration Rights Agreement with respect to the “Registrable Securities” held by the “Investors”
thereunder;
provided
,
however
, that such registration rights agreement shall provide that no such Former Company Stockholder may exercise any right thereunder to demand any such registration of its shares of Parent Common Stock until
after the Measurement Date.
(f)
Board of Directors
. The Board of Directors of Parent shall be constituted as set forth in
Section 7.7 hereof, effective as of the Effective Time.
(g)
Opinion of Counsel
. The Company shall have received from Cooley
Godward Kronish LLP, tax counsel to the Company, a written opinion, dated the Closing Date, in form and substance reasonably satisfactory to Parent, on the basis of certain facts, representations and assumptions set forth in such opinion, to the
effect that the Merger will be treated for federal income Tax purposes as a reorganization qualifying under the provisions of Section 368(a) of the Code and that each of Parent and the Company will be a party to the reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, such counsel shall be entitled to rely upon representation letters executed by officers of Parent and the Company substantially in the forms attached as
Exhibit E-1
and
Exhibit E-2
hereto (allowing for such amendments to the representations contained in any such letter as counsel to Parent and counsel to the Company each deem necessary).
(h)
Escrow Agreement
. The Escrow Agent and Parent shall have executed and delivered to the Stockholder Representative the Escrow Agreement, and
Parent shall have executed and delivered to the Escrow Agent the Escrow Agreement, and the Escrow Agreement shall be in full force and effect.
ARTICLE IX.
TERMINATION.
Section 9.1.
Termination
. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, and
except as provided below, whether before or after approval of the matters presented in connection with the Merger by the stockholders of Parent or the Company:
(a) By mutual written consent of Parent and the Company;
(b) By either the Company or Parent if the
Registration Statement has not been declared effective by the SEC on or before the SEC Effectiveness Date;
provided
,
however
, that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party
whose breach of any representation or warranty or failure to fulfill any obligation under this Agreement has been the primary cause of the failure of the Registration Statement to be declared effective on or before the SEC Effectiveness Date;
(c) By either the Company or Parent if the Effective Time shall not have occurred on or before the Expiration Date;
(d) By either the Company or Parent if any Governmental Entity shall have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting or making illegal the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable;
(e) By either the Company or Parent if the vote of stockholders of Parent has been taken and approval by the stockholders of Parent required for the
consummation of the Merger shall not have been obtained by reason of the failure to obtain the Required Parent Vote at the Parent Stockholders Meeting (or any adjournment or postponement thereof);
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(f) By the Company if, prior to the Parent Stockholders Meeting, the Board of Directors of Parent shall
have failed to recommend or shall have withdrawn or modified or amended in a manner adverse to the Company its approval or recommendation of this Agreement or the Merger, or shall have approved or recommended a Parent Acquisition Proposal other than
the transactions contemplated by this Agreement (or the Board of Directors of Parent shall have resolved to do any of the foregoing), whether or not permitted by Section 6.4 hereof;
(g) By Parent if the Company fails to deliver to Parent copies of executed written consents of stockholders of the Company constituting the Required
Company Vote not later than two hours after the execution and mutual delivery of this Agreement by the parties hereto as provided in Section 7.11 hereof;
(h) By Parent (i) if, prior to the receipt of the Required Company Vote, the Board of Directors of the Company shall have failed to recommend or shall have withdrawn or modified or amended in a manner adverse to
Parent its approval or recommendation of this Agreement or the Merger, or shall have approved or recommended a Company Acquisition Proposal other than the transactions contemplated by this Agreement (or the Board of Directors of the Company shall
have resolved to do any of the foregoing), whether or not permitted by Section 5.5 hereof, or (ii) if the Company Charter Amendment shall have not been filed with the Secretary of State of the State of Delaware and shall not be in full
force and effect at least one Business Day prior to the Expiration Date;
(i) By Parent or the Company if the holders of 20% or more of the
IPO Shares entitled to vote on the Merger (i) vote against the approval and adoption of this Agreement and (ii) elect to convert their IPO Shares into cash from the Trust Fund;
(j) By the Company if there shall have been a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub contained
in this Agreement such that the conditions set forth in Sections 8.3(a) or 8.3(b) hereof would not be satisfied and (i) such breach is not reasonably capable of being cured or (ii) if such breach is reasonably capable of being cured, such
breach shall not have been cured prior to the Expiration Date, provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.1(j) if the Company is then in material breach of any of its
representations, warranties, covenants or agreements contained in this Agreement; or
(k) By Parent if there shall have been a breach of
any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement such that the conditions set forth in Sections 8.2(a) or 8.2(b) hereof would not be satisfied and (i) such breach is not reasonably
capable of being cured or (ii) if such breach is reasonably capable of being cured, such breach shall not have been cured prior to the Expiration Date, provided that Parent shall not have the right to terminate this Agreement pursuant to this
Section 9.1(k) if Parent or Merger Sub is then in material breach of any of its representations, warranties, covenants or agreements contained in this Agreement.
Section 9.2.
Effect of Termination
.
(a) In the event of termination of this
Agreement by either the Company or Parent as provided in Section 9.1 hereof, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent, Merger Sub or the Company or their respective officers
or directors except with respect to this Section 9.2 and Article XI, provided that the termination of this Agreement shall not relieve any party from any liability for any willful, material breach of any covenant or agreement or willful,
material breach of any representation or warranty in this Agreement occurring prior to termination.
(b) If Parent or the Company shall
terminate this Agreement pursuant to Section 9.1(b) (unless a breach by Parent of any representation or warranty in, or failure of Parent to fulfill any obligation of Parent under, this Agreement has been the primary cause of the failure of the
Registration Statement to be declared effective on or before such date) or Parent shall terminate this Agreement pursuant to Section 9.1(g), then the Company shall pay to Parent the Parent Expenses incurred on or after November 21, 2007,
within five Business Days after delivery to the Company of written notice of the amount of such Parent Expenses.
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(c)(i) If Parent shall terminate this Agreement pursuant to Section 9.1(h), then the Company shall
pay to Parent, not later than two Business Days following such termination, an amount equal to $4,000,000, plus the Parent Expenses, within five Business Days after delivery to the Company of written notice of the amount of such Parent Expenses; and
(ii) if the Company shall terminate this Agreement pursuant to Section 9.1(f), then Parent shall pay to the Company, not later than two Business Days following such termination, an amount equal to $4,000,000, plus the Company Expenses,
within five Business Days after delivery to Parent of written notice of the amount of such Company Expenses.
(d) All payments under this
Section 9.2 shall be made by wire transfer of immediately available funds to an account designated by the payee to the payor.
Section 9.3.
Acknowledgement
.
Each of Parent and the Company acknowledges that the agreements contained in this Section 9.2 are an integral part of the transactions contemplated by
this Agreement and are not a penalty, and that, without these agreements, neither such party, as a beneficiary under certain of these agreements, would enter into this Agreement. If the payor fails to pay promptly the fee due pursuant to this
Section 9.2, the payor will also pay to the payee the payee’s reasonable costs and expenses (including legal fees and expenses) in connection with any action, including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of the unpaid fee under this Section 9.3, accruing from its due date, at an interest rate per annum equal to two percentage points in excess of the prime commercial lending rate quoted by Citibank,
N.A. Any change in the interest rate hereunder resulting from a change in such prime rate will be effective at the beginning of the date of such change in such prime rate.
Section 9.4.
Intentionally Omitted.
Section 9.5.
Amendment
.
This Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of Parent and the Company, but, after any such 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 on behalf of each of the parties hereto.
Section 9.6.
Extension; Waiver
.
At any time prior to the Effective Time, the parties hereto, 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. 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. 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 those rights.
ARTICLE X.
INDEMNIFICATION.
Section 10.1.
No Additional Representations or Warranties; Survival
.
(a) Except for
the representations and warranties contained in Article III hereof, Parent and Merger Sub acknowledge that (i) neither the Company nor any other Person has made any other express or implied representation or warranty with respect to the Company
and (ii) neither Parent nor Merger Sub has relied upon any representations or warranties with respect to the Company that are not contained in Article III hereof. The Company disclaims any representation or warranty, whether made by the Company
or any of its Affiliates, officers, directors, employees, agents or representatives that are not contained in Article III hereof. Except for the
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representations and warranties contained in Article IV hereof, the Company acknowledges that (i) none of Parent, Merger Sub or any other Person has made
any other express or implied representation or warranty with respect to Parent and Merger Sub and (ii) the Company has not relied upon any representations or warranties with respect to Parent or Merger Sub that are not contained in Article IV
hereof. Parent and Merger Sub disclaim any representation or warranty, whether made by Parent, Merger Sub or any of their respective Affiliates, officers, directors, employees, agents or representatives that are not contained in Article IV
hereof.
(b) The representations and warranties contained in this Agreement shall survive the Closing for the purposes of Article X until
the first anniversary of the Closing Date and shall thereafter terminate (and any claim relating to the subject matter of any such representation or warranty must be made on or before such anniversary date or such claim shall be deemed to have been
waived);
provided
,
however
, that the representations and warranties contained in Section 3.5, Section 3.6(a), clause (i) and the last two sentences of Section 3.6(b), Section 3.26, Section 3.29 and
Section 3.30 hereof, and Section 4.5, Section 4.6, Section 4.25 and Section 4.29 hereof shall survive the Closing (and any claim with respect to the subject matter thereof may be made) until all claims relating to the
subject matter thereof shall have been barred by the relevant statutes of limitations (by which time any such claim shall have been made or such claim shall be deemed to have been waived). The covenants contained in this Agreement shall survive the
Closing indefinitely or until, by their respective terms, they are no longer operative. No claim for indemnification hereunder may be asserted after the expiration of the period during which such claim may be made as provided herein, but any such
claim theretofore asserted may be pursued after such expiration.
Section 10.2.
Indemnification by Former Company Stockholders
.
(a) Notwithstanding the
Closing and regardless of any investigation at any time made by or on behalf of Parent or Merger Sub or of any knowledge or information that Parent or Merger Sub may have, the Former Company Stockholders shall severally (and not jointly) indemnify
and fully defend, save and hold harmless Parent and Merger Sub, any Affiliate of Parent or Merger Sub, and their respective directors, officers, agents and employees (collectively, the “
Parent Indemnitees
”) from any damage,
liability, loss, cost, expense (including all reasonable attorneys’ fees), deficiency, interest, penalty, impositions, assessments or fines (collectively, “
Losses
”) arising out of or resulting from:
(i) any breach by the Company of any of its covenants contained in this Agreement;
(ii) any breach of any warranty or the inaccuracy of any representation of the Company contained in Article III of this Agreement; or
(iii) Parent’s and Merger Sub’s enforcement of their rights under this Section 10.2.
(b) Notwithstanding anything herein to the contrary:
(i) subject to the other limitations contained herein, the Parent Indemnitees shall be entitled to be indemnified in respect of Section 10.2(a)(ii) and Section 10.2(a)(iii) with respect thereto (other than
in the case of a willful breach of any obligation under this Article X) solely from the Escrowed Shares in accordance with the Escrow Agreement, and no Losses of any Parent Indemnitees shall be indemnifiable pursuant to Section 10.2(a)(ii)
unless and until all such Losses exceed $1,500,000, in which case such Losses shall be indemnifiable only to the amount thereof in excess of $250,000;
provided
,
however
, that the foregoing limitations contained in this
Section 10.2(b)(i) shall not apply to any (A) fraud or willful misrepresentation, or (B) breaches of any of the representations and warranties contained in Section 3.5, Section 3.6(a), clause (i) and the last two
sentences of Section 3.6(b), Section 3.26, Section 3.29 or Section 3.30 hereof;
(ii) subject to
Section 10.2(b)(i) above, the maximum amount for which any single Former Company Stockholder shall be liable with respect to all claims covered by Section 10.2(a)(ii) hereof and Section 10.2(a)(iii) with respect thereto (other than in
the case of a willful breach of any obligation under
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this Article X) shall not exceed 20% of such Former Company Stockholder’s Pro Rata Share of the aggregate Per Share Merger Consideration, Milestone
Consideration Per Share and Top-Up Consideration Per Share issued and paid to all Former Company Stockholders pursuant to Article I hereof;
(iii) subject to Sections 10.2(b)(i) and Section 10.2(b)(ii) above, the maximum amount for which any single Former Company Stockholder shall be liable with respect to any single claim under
Section 10.2(a)(ii) hereof and Section 10.2(a)(iii) with respect thereto (other than in the case of a willful breach of any obligation under this Article X) shall not exceed the product of (A) the aggregate amount of the Loss
incurred by the Parent Indemnitees in connection with such Loss and (B) such Former Company Stockholder’s Pro Rata Share; and
(iv) in all cases determining whether there has been a breach of any of the Company’s representations and warranties contained in Article III hereof, or in determining the amount of any Losses with respect to
such breach, such representations and warranties shall be read without regard to any materiality qualifier (including, without limitation, any reference to Company Material Adverse Effect) contained therein.
Section 10.3.
Indemnification by Parent
.
(a) Notwithstanding the Closing and
regardless of any investigation at any time made by or on behalf of the Company or of any knowledge or information that the Company may have, Parent shall indemnify and fully defend, save and hold harmless the Former Company Stockholders from any
Losses arising out of or resulting from:
(i) any breach by Parent or Merger Sub of any of its respective covenants
contained in this Agreement;
(ii) any breach of any warranty or the inaccuracy of any representation of Parent or Merger
Sub contained in Article IV of this Agreement; or
(iii) the Former Company Stockholders’ enforcement of their rights
under this Section 10.3.
(b) Notwithstanding anything herein to the contrary:
(i) subject to the other limitations contained herein, no Losses of any Former Company Stockholders shall be indemnifiable pursuant to
Section 10.3(a)(ii) unless and until all such Losses exceed $1,500,000, in which case such Losses shall be indemnifiable only to the amount thereof in excess of $250,000;
provided
,
however
, that the foregoing limitations contained
in this Section 10.3(b)(i) shall not apply to any (A) fraud or willful misrepresentation, or (B) breaches of any of the representations and warranties contained in Section 4.5, Section 4.6, Section 4.25 or
Section 4.29 hereof;
(ii) subject to Section 10.3(b)(i) above, the maximum amount for which Parent and Merger Sub
shall be liable with respect to all claims covered by Section 10.3(a)(ii) hereof shall not exceed 20% of the aggregate Per Share Merger Consideration, Milestone Consideration Per Share and Top-Up Consideration Per Share issued and paid to all
Former Company Stockholders pursuant to Article I hereof;
(iii) subject to Sections 10.3(b)(i) and Section 10.3(b)(ii)
above, the maximum amount for which Parent shall be liable to any single Former Company Stockholder with respect to all claims covered by Section 10.3(a)(ii) hereof shall not exceed 20% of such Former Company Stockholder’s Pro Rata Share
of the aggregate Per Share Merger Consideration issued and paid to all Former Company Stockholders pursuant to Article I hereof; and
(iv) in all cases determining whether there has been a breach of any of the Parent’s or Merger Sub’s representations and warranties contained in Article IV hereof, or in determining the amount of any Losses with respect to such
breach, such representations and warranties shall be read without regard to any materiality qualifier (including, without limitation, any reference to Parent Material Adverse Effect) contained therein.
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Section 10.4.
Procedures for Third Party Claim Indemnification
.
(a) If the
Former Company Stockholders have become obligated to a Parent Indemnitee pursuant to Section 10.2 hereof, or if any suit, action, investigation, claim or proceeding is begun, made or instituted by a third party as a result of which the Former
Company Stockholders may become obligated to a Parent Indemnitee hereunder, such Parent Indemnitee shall give prompt written notice thereof to the Stockholder Representative (on behalf of the Former Company Stockholders);
provided
,
however
, that the failure of the Parent Indemnitee to give prompt written notice to the Stockholder Representative (on behalf of the Former Company Stockholders) shall not relieve such Former Company Stockholders of their indemnification
obligations hereunder, except to the extent such Former Company Stockholders shall have been materially prejudiced by such failure. The Former Company Stockholders (through the Stockholder Representative) agree to defend, contest or otherwise
protect the Parent Indemnitee against any such suit, action, investigation, claim or proceeding at the sole cost and expense of the Former Company Stockholders. The Parent Indemnitee shall have the right, but not the obligation, to participate at
its own expense in the defense thereof by counsel of the Parent Indemnitee’s choice and shall in any event cooperate with and assist the Former Company Stockholders to the extent reasonably possible. The Stockholder Representative (on behalf of
the Former Company Stockholders) shall not compromise or settle any such suit, action, investigation, claim or proceeding unless (x) such compromise or settlement is on exclusively monetary terms and shall be paid entirely by the Former Company
Stockholders and the Parent Indemnitee receives an unconditional release in such compromise or settlement or (y) the Parent Indemnitee shall have consented in writing to the terms of such compromise or settlement, which consent shall not be
unreasonably withheld. If the Stockholder Representative (on behalf of the Former Company Stockholders) fails timely to defend, contest or otherwise protect against such suit, action, investigation, claim or proceeding, the Parent Indemnitee shall
have the right to do so, including, without limitation, the right to make any compromise or settlement thereof, and the Parent Indemnitee shall be entitled to recover the entire cost thereof from the Former Company Stockholders (subject to Sections
10.2(b)(i) and (ii) hereof), including, without limitation, reasonable attorneys’ fees, disbursements and amounts paid as the result of such suit, action, investigation, claim or proceeding.
(b) If Parent has become obligated to the Former Company Stockholders pursuant to Section 10.3 hereof, or if any suit, action, investigation, claim
or proceeding is begun, made or instituted by a third party as a result of which Parent may become obligated to a Former Company Stockholder hereunder, the Stockholder Representative (on behalf of the Former Company Stockholders) shall give prompt
written notice thereof to Parent;
provided
,
however
, that the failure of the Stockholder Representative (on behalf of the Former Company Stockholders) to give prompt written notice to Parent shall not relieve Parent of its
indemnification obligations hereunder, except to the extent Parent shall have been materially prejudiced by such failure. Parent agrees to defend, contest or otherwise protect the Former Company Stockholders against any such suit, action,
investigation, claim or proceeding at its sole cost and expense. The Former Company Stockholders (through the Stockholder Representative) shall have the right, but not the obligation, to participate at their own expense in the defense thereof by
counsel of the Stockholder Representative’s choice and shall in any event cooperate with and assist Parent to the extent reasonably possible. Parent shall not compromise or settle any such suit, action, investigation, claim or proceeding unless
(x) such compromise or settlement is on exclusively monetary terms and shall be paid entirely by Parent and the Former Company Stockholders receive an unconditional release in such compromise or settlement or (y) the Stockholder
Representative (on behalf of the Former Company Stockholders) shall have consented in writing to the terms of such compromise or settlement, which consent shall not be unreasonably withheld. If Parent fails timely to defend, contest or otherwise
protect against such suit, action, investigation, claim or proceeding, the Former Company Stockholders shall have the right to do so, including, without limitation, the right to make any compromise or settlement thereof, and the Former Company
Stockholders shall be entitled to recover the entire cost thereof from Parent (subject to Sections 10.3(b)(i) and (ii) hereof), including, without limitation, reasonable attorneys’ fees of one counsel to the Former Company Stockholders,
disbursements and amounts paid as the result of such suit, action, investigation, claim or proceeding.
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Section 10.5.
Payments
.
(a) All amounts payable with respect to Losses
pursuant to this Article X shall be settled:
(i) in the case of any claim by Parent, (A) with respect to
Section 10.2(a)(ii) (other than with respect to any breach of the representations contained in Section 3.5, Section 3.6(a), clause (i) and the last two sentences of Section 3.6(b), Section 3.26, Section 3.29 or
Section 3.30) and Section 10.2(a)(iii) with respect thereto (other than in the case of a willful breach of any obligation under this Article X), solely by collection of Escrowed Shares from the Escrow Agent pursuant to the Escrow
Agreement, until all such Escrowed Shares have been so collected (or are subject to such collection), or are otherwise released, from escrow pursuant to the Escrow Agreement, and (B) with respect to (x) Section 10.2(a)(i) hereof,
(y) Section 10.2(a)(ii) hereof as to any breach of the representations contained in Section 3.5, Section 3.6(a), clause (i) and the last two sentences of Section 3.6(b), Section 3.26, Section 3.29 or
Section 3.30 or (z) Section 10.2(a)(iii) hereof (except as otherwise expressly provided in the immediately preceding clause (A)), first, by collection of Escrowed Shares from the Escrow Agent pursuant to the Escrow Agreement, until
such Escrowed Shares have been so collected (or are subject to such collection) or are otherwise released, from escrow pursuant to the Escrow Agreement, and second, by payment in cash by check or wire transfer of immediately available funds; and
(ii) in the case of any claim by the Stockholder Representative (on behalf of the Former Company Stockholders), by payment
in cash by check or wire transfer of immediately available funds.
(b) The value of each Escrowed Share for purposes of making payments to
Parent on account of Losses in accordance with the provisions of this Article X shall be deemed to be the Parent Common Stock Price. In case of a payment owed by the Former Company Stockholders to Parent pursuant to this Article X in respect of
which Parent collects Escrowed Shares pursuant to the Escrow Agreement, upon such collection, each Former Company Stockholder shall be deemed to have delivered and surrendered to Parent its Pro Rata Share of the Escrowed Shares so collected by
Parent.
(c) Except in the case of fraud or willful misrepresentation, the indemnification provisions set forth in this Article X shall be
the sole and exclusive remedy of the parties for monetary damages with respect to the transactions contemplated hereby.
Section 10.6.
Stockholder Representative
.
(a) Joel P. Adams is hereby
designated by the Former Company Stockholders to serve as their agent as the initial Stockholder Representative hereunder with respect to the matters set forth in this Article X and by its signature below it hereby acknowledges such appointment and
agrees to serve in such capacity on the terms and subject to the conditions set forth herein. Effective only upon the Effective Time, the Stockholder Representative (including any successor or successors thereto) shall act as the representative of
the Former Company Stockholders, and shall be authorized to act on behalf of the Former Company Stockholders and to take any and all actions required or permitted to be taken by the Stockholder Representative under this Article X with respect to any
claims (including the settlement thereof) made by any Parent Indemnitee for indemnification pursuant to this Article X (including, without limitation, the exercise of the power to agree to, negotiate, enter into settlements and compromises of, and
comply with orders of courts with respect to, any claims for indemnification). The Stockholder Representative shall be the only party entitled to assert the rights of the Former Company Stockholders hereunder and the Stockholder Representative shall
perform all of the obligations (other than payment) of the Former Company Stockholders under this Article X. Any Person shall be entitled to rely on all statements, representations and decisions of the Stockholder Representative.
(b) The Former Company Stockholders shall be bound by all actions taken by the Stockholder Representative in his, her or its capacity as such. The
Stockholder Representative shall promptly, and in any event within 10 Business Days, provide written notice to the Former Company Stockholders of any action taken
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on behalf of them by the Stockholder Representative pursuant to the authority delegated to the Stockholder Representative under this Article X. Neither the
Stockholder Representative nor any of its directors, officers, agents or employees, if any, shall be liable to any person for any error of judgment, or any action taken, suffered or omitted to be taken under this Agreement, except in the case of its
gross negligence or willful misconduct. The Stockholder Representative shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement.
(c) Each Former Company Stockholder shall, severally and not jointly, hold harmless and reimburse the Stockholder Representative from and against such
Former Company Stockholder’s ratable share of any and all liabilities, losses, damages, claims, costs or expenses (including the reasonable fees and expenses of any legal counsel retained by the Stockholder Representative) suffered or incurred
by the Stockholder Representative arising out of or resulting from any action taken or omitted to be taken by the Stockholder Representative under this Agreement;
provided
,
however
, that no such Former Company Stockholder shall be so
liable in excess of such Former Company Stockholder’s pro rata portion of the aggregate Per Share Merger Consideration issued and paid to all Former Company Stockholders pursuant to Article I hereof. The Stockholder Representative shall not be
entitled to any compensation for his, her or its services in such capacity.
(d) In the event that the Stockholder Representative shall
resign or be unable to act for any reason, the Stockholder Representative (or his, her or its legal representative) shall select a successor Stockholder Representative to fill such vacancy, and such successor shall be deemed to be the Stockholder
Representative for all purposes of this Agreement. Upon the appointment of a successor Stockholder Representative under this Agreement, such successor Stockholder Representative will succeed to and become vested with all of the rights, powers,
privileges and duties of the predecessor Stockholder Representative under this Agreement, and the predecessor Stockholder Representative will be discharged from such predecessor Stockholder Representative’s duties and obligations under this
Agreement.
ARTICLE XI.
MISCELLANEOUS.
Section 11.1.
Disclosure Schedules
.
The inclusion of any information in the Company Disclosure Schedule, the Parent Disclosure Schedule or the disclosure schedules accompanying this
Agreement will not be deemed an admission or acknowledgment, in and of itself, solely by virtue of the inclusion of such information in such schedules, that such information is required to be listed in such schedules or that such information is
material to any party or the conduct of the business of any party.
Section 11.2.
Successors and Assigns
.
No party hereto shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other parties hereto and
any such attempted assignment without such prior written consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the successors and permitted assigns of the parties hereto.
Section 11.3.
Governing Law; Jurisdiction
.
This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of Delaware. The parties
hereto irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent to the jurisdiction of, the courts of the State of Delaware.
Section 11.4.
Expenses
.
All fees and expenses incurred in connection with the Merger, including, without limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by a party in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby, shall be the obligation of the respective party
incurring such fees and expenses, except as provided in Section 9.2 hereof.
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Section 11.5.
Severability; Construction
.
(a) In the event that any part of this
Agreement is declared by any court or other judicial or administrative body of competent jurisdiction to be null, void or unenforceable, said provision shall survive to the extent it is not so declared, and all of the other provisions of this
Agreement shall remain in full force and effect.
(b) The parties have participated jointly in the negotiation and drafting of this
Agreement. If any ambiguity or question of intent arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of the authorship of any
provision of this Agreement.
Section 11.6.
Notices
.
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of
service if served personally on the party to whom notice is to be given; (ii) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service; (iii) on
the date of transmission if transmitted by facsimile and appropriate mechanical confirmation is received or (iv) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:
if to Parent or Merger Sub, to:
Oracle Healthcare Acquisition Corp.
200 Greenwich Ave., 3rd Floor
Greenwich, Connecticut 06830
Attn: Joel Liffmann
Fax: (203) 862-1613
with a copy to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, New York 10019
Attn: William H. Gump, Esq.
Fax: (212) 728-9285
if to Company or Stockholders, to
Precision Therapeutics, Inc.
2516 Jane Street
Pittsburgh, PA 15203
Attn: Sean C. McDonald
President & Chief Executive Officer
Fax: (412) 481-1597
with a copy to:
Cooley
Godward Kronish LLP
Five Palo Alto Square, 3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Suzanne Sawochka Hooper
Fax: (650) 849-7400
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If to Stockholders’ Representative:
Joel P. Adams
c/o Adams Capital Management
500 Blackburn Avenue
Sewickley, PA 15143
Fax: (412) 749-9459
Any party may change its address for the purpose of this Section by giving the other party written
notice of its new address in the manner set forth above.
Section 11.7.
Entire Agreement
.
This Agreement and the Confidentiality Agreement contain the entire understanding among the parties hereto with respect to the transactions contemplated
hereby and supersede and replace all prior and contemporaneous agreements and understandings, oral or written, with regard to such transactions. All Exhibits and Schedules hereto and any documents and instruments delivered pursuant to any provision
hereof are expressly made a part of this Agreement as fully as though completely set forth herein.
Section 11.8.
Parties in Interest
.
Except for (i) the rights of the holders of securities of the Company to receive the Per Share Merger Consideration, the Milestone Consideration Per
Share and the Top-Up Consideration Per Share following the Effective Time in accordance with the terms of this Agreement (of which such security holders are the intended beneficiaries following the Effective Time), (ii) the rights to continued
indemnification and insurance pursuant to Section 6.2 hereof (of which the Persons entitled to indemnification or insurance, as the case may be, are the intended beneficiaries following the Effective Time), and (iii) the rights of the
Parent Indemnitees not signatory to this Agreement and the Former Company Stockholders under Article X hereof (of which such Persons are intended beneficiaries following the Effective Time), nothing in this Agreement is intended to confer any rights
or remedies under or by reason of this Agreement on any Persons other than the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement is intended to relieve or discharge the obligations or liability of any
third Persons to the Company or Parent. No provision of this Agreement shall give any third parties any right of subrogation or action over or against the Company or Parent.
Section 11.9.
Section and Paragraph Headings
.
The section and paragraph headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
Section 11.10.
Counterparts
.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument.
Section 11.11.
Specific Performance
.
The parties 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. Accordingly, the parties further agree that each party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce specifically the terms
and provisions hereof in any court of competent jurisdiction (subject to the provisions of Section 11.3), this being in addition to any other right or remedy to which such party may be entitled under this Agreement, at law or in equity.
Section 11.12.
Definitions
.
As used in this Agreement:
“
2002 GE
Warrant
” shall mean the warrant, dated September 25, 2002, to purchase up to 8,929 shares of Company Common Stock, which warrant initially contemplated the issuance of up to 125,000 shares of Company Common Stock until the
Company’s consummation of a 1-for-14 stock split with respect to the Company Common Stock.
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“
2005 GE Warrant
” shall mean the warrant, dated February 17, 2005, to purchase up
to 26,000 shares of Company Common Stock.
“
2006 GE Warrant
” shall mean the warrant, dated August 18, 2006, to
purchase up to 7,955 shares of Company Common Stock.
“
2008 Equity Incentive Plan
” shall have the meaning set forth in
Section 4.5 hereof.
“
Action
” shall have the meaning set forth in Section 3.18 hereof.
“
Affiliate
” shall mean, with respect to any Person, any other Person that directly, or through one or more intermediaries, controls or
is controlled by or is under common control with such Person.
“
Aggregate Exercise Price
” shall mean the aggregate
exercise price of all Company Options, Other Stock Awards and Company Warrants outstanding after the Conversion and immediately prior to the Effective Time.
“
Agreement
” shall have the meaning set forth in the Preamble hereto.
“
Amended and
Restated Parent Charter
” shall have the meaning set forth in Section 4.5 hereof.
“
Board of Directors
” shall
mean the Board of Directors of any specified Person and any committees thereof.
“
Bridge Note Agreement
” shall mean that
certain Note Purchase Agreement dated as of August 23, 2007, by and among the Company and the purchasers party thereto, as such Note Purchase Agreement shall have been amended by the Bridge Note Amendment and is in effect on the date hereof.
“
Bridge Note Amendment
” shall mean that certain Amendment to Note Purchase Agreement, dated as of December 3, 2007,
by and among the Company and the persons and entities named on the Schedule of Purchasers attached thereto with respect to the Bridge Note Agreement and the Bridge Notes issued pursuant thereto.
“
Bridge Notes
” shall mean the notes issued under the Bridge Note Agreement.
“
Bridge Warrants
” shall mean the warrants, each dated August 22, 2003, to purchase, in the aggregate, up to 1,884,830 shares of
Company Common Stock.
“
Business Day
” shall mean any day other than a Saturday, Sunday or any other day on which banks are
required or authorized to close in the City of New York.
“
Certificate
” shall have the meaning set forth in
Section 2.1 hereof.
“
Certificate of Merger
” shall have the meaning set forth in Section 1.3 hereof.
“
Closing
” shall have the meaning set forth in Section 1.2 hereof.
“
Closing Date
” shall have the meaning set forth in Section 1.2 hereof.
“
COBRA
” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985.
“
Code
” shall have the meaning set forth in the Recitals hereto.
“
Colorado Approval
” shall mean the approval of the applicable Governmental Entity in Colorado to release the funds held in the Trust
Fund to Parent without distribution thereof to the Parent’s stockholders on or after March 8, 2008.
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“
Company
” shall have the meaning set forth in the Preamble hereto.
“
Company Acquisition Proposal
” shall have the meaning set forth in Section 5.5 hereof.
“
Company Alternative Transaction
” shall have the meaning set forth in Section 5.5 hereof.
“
Company Charter Amendment
” shall mean an amendment to the Company’s Third Amended and Restated Certificate of Incorporation that
increases the number of shares of Company Common Stock that the Company is authorized to issue by a sufficient amount to reserve for issuance and issue the number of shares of Company Common Stock that will be required to be issued in order to
effect the Conversion, including, without limitation, the conversion of all Bridge Notes outstanding immediate prior to the Effective Time.
“
Company Common Stock
” shall have the meaning set forth in the Recitals hereto.
“
Company
Contract
” shall have the meaning set forth in Section 3.19(c) hereof.
“
Company Designated Directors
” shall
mean the individuals identified as “Company Designated Directors” on Schedule 7.7(b) attached hereto.
“
Company
Disclosure Schedule
” shall have the meaning set forth in the introductory paragraph of Article III hereof.
“
Company
Employee Benefit Plans
” shall have the meaning set forth in Section 3.20(a) hereof.
“
Company ERISA
Affiliate
” shall have the meaning set forth in Section 3.20(a) hereof.
“
Company Expenses
” shall mean all of
the Company’s actual and reasonably documented out-of-pocket fees and expenses (including fees and expenses of counsel, accountants, financial advisors or consultants and commitment and funding fees) actually incurred by the Company and its
respective affiliates on or prior to the termination of this Agreement in connection with the transactions contemplated by this Agreement, which amount shall not exceed $1,000,000.
“
Company Financial Statements
” shall have the meaning set forth in Section 3.8 hereof.
“
Company Interim Balance Sheet
” shall have the meaning set forth in Section 3.8 hereof.
“
Company Lease
” shall have the meaning set forth in Section 3.12(b) hereof.
“
Company Leased Real Property
” shall have the meaning set forth in Section 3.12(b) hereof.
“
Company Licenses and Permits
” shall have the meaning set forth in Section 3.16(a) hereof.
“
Company Material Adverse Effect
” shall mean any event, change, circumstance, effect, development or state of facts that, individually
or in the aggregate, (a) is, or is reasonably likely to become, materially adverse to the business, condition (financial or otherwise) or results of operations of the Company or (b) would prevent or materially impair or materially delay
the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated hereby;
provided
,
however
, that none of the following shall be deemed, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Company Material Adverse Effect: (i) any event, change,
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circumstance, effect, development or state of facts arising out of or attributable to (A) general economic conditions or conditions in securities
markets; (B) the industry or industry sector in which the Company operates, except, in the case of the foregoing clauses (A) and (B), to the extent that such event, change, circumstance, effect, development or state of facts affects the
Company in a materially disproportionate manner when compared to the effect of such event, change, circumstance, effect, development or state of facts on other Persons in the industry in which the Company operates; (C) the announcement or
pendency of the Merger or any of the other transactions contemplated by this Agreement (including any loss of employees, any cancellation of or delay in customer orders or any disruption in business relationships); (D) any action, omission,
event, change, circumstance, effect, development, or state of facts the risk of the occurrence of which is expressly disclosed in the Company Disclosure Schedule; (E) changes in GAAP or changes in laws, rules or regulations applicable to the
Company; (F) any act of terrorism or war, or any armed hostilities; (G) compliance with the terms of, or the taking of any action required by, this Agreement; (H) the taking of any action by Parent or any action approved or consented
to by Parent in writing; (I) any breach of this Agreement by Parent; or (J) any action required to be taken under laws, rules, regulations or agreements (to the extent in effect and made available to Parent as of the date hereof)
applicable to the Company; (ii) any failure, in and of itself, by the Company to meet any projections, forecasts or revenue or earnings predictions for any period ending on or after the date of this Agreement (it being understood that the facts
or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or will be, a Company Material Adverse Effect), or (iii) any adverse effect on the
business, financial condition or results of operations of the Company that, by its nature, would not reasonably be expected to, and does not, last more than three months.
“
Company Options
” shall have the meaning set forth in Section 1.10(a) hereof.
“
Company Organizational Documents
” shall mean the Third Amended and Restated Certificate of Incorporation and the Bylaws of the Company, together with all amendments thereto.
“
Company Pension Plans
” shall have the meaning set forth in Section 3.20(a) hereof.
“
Company Preferred Stock
” shall have the meaning set forth in the Recitals hereto.
“
Company Registered Intellectual Property
” shall have the meaning set forth in Section 3.14(b) hereof.
“
Company Software
” shall have the meaning set forth in Section 3.15 hereof.
“
Company Stock Plans
” shall have the meaning set forth in Section 3.6(a) hereof.
“
Company Superior Proposal
” shall have the meaning set forth in Section 5.5 hereof.
“
Company Warrants
” shall mean, collectively, the Bridge Warrants, the GE Warrants, the National City Warrant and the Series Warrants.
“
Confidentiality Agreement
” shall have the meaning set forth in Section 7.2 hereof.
“
Conversion
” shall mean the conversion, immediately prior to the Effective Time, of any and all shares of Company Preferred Stock and
Bridge Notes that are outstanding immediately prior to the Effective Time into Company Common Stock.
“
DGCL
” shall mean
the Delaware General Corporation Law.
“
Dissenting Shares
” shall have the meaning set forth in Section 1.8(e) hereof.
“
DOJ
” shall have the meaning set forth in Section 7.3(b) hereof.
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“
Effective Date
” shall mean the date on which the Effective Time falls.
“
Effective Time
” shall have the meaning set forth in Section 1.3 hereof.
“
Encumbrance
” shall mean any claim, lien, pledge, option, right of first refusal or offer, preemptive right, charge, easement, security
interest, deed of trust, mortgage, right of way, covenant, restriction, encumbrance or other right of third parties.
“
Environmental Laws
” shall have the meaning set forth in Section 3.25(a) hereof.
“
ERISA
”
shall mean the Employee Retirement Income Security Act of 1974, as amended.
“
Escrow Agent
” shall have the meaning set
forth in the Escrow Agreement.
“
Escrow Agreement
” shall mean an Escrow Agreement, substantially in the form attached as
Exhibit G
hereto.
“
Escrowed Shares
” shall have the meaning set forth in Section 2.10 hereof.
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Exchange Ratio
” shall mean the quotient obtained by dividing (a) the Exchange Ratio Factor, by (b) the Parent
Common Stock Price.
“
Exchange Ratio Factor
” shall mean the quotient obtained by dividing (a) the sum of (i) the
product of (A) 22,500,000 and the (B) Parent Common Stock Price and (ii) the Aggregate Exercise Price, by (b) the Fully Diluted Share Amount.
“
Excluded Shares
” shall have the meaning set forth in Section 1.8(c) hereof.
“
Existing Policy
” shall have the meaning set forth in Section 6.2(d) hereof.
“
Existing Registration
Rights Agreement
” shall mean that certain Registration Rights Agreement, dated as of March 2, 2006, by and among Parent and the “Investors” identified therein, as such Registration Rights Agreement may be amended from time to
time.
“
Expiration Date
” shall mean (a) March 2, 2008, if the Colorado Approval shall have not been obtained on or
before February 29, 2008, or (b) March 8, 2008, if the Colorado Approval shall have been obtained on or before February 29, 2008.
“
FDA
” shall mean the United States Food and Drug Administration and corresponding Governmental Entities.
“
FDA Company Contractor
” shall mean any Person with which the Company formerly or presently had or has any agreement or arrangement (whether oral or written) under which that Person has or had physical possession of, or was
or is obligated to develop, test, process, investigate, manufacture or produce, any FDA Regulated Product on behalf of the Company.
“
FDA Law
” shall mean any law, statute, regulation, judicial or administrative interpretation, or standard international guidance relating to any FDA Regulated Product, including, without limitation, the FDCA, the FDA
Modernization Act of 1997, Stand Alone Provisions, Pub. L. No. 105-115, 111 Stat. 2295 (1997), and equivalent statutes and regulations adopted by countries, international bodies and other jurisdictions, in addition to the United States, where
the Company has facilities, does business, or directly or through others sells or offers for sale any FDA Regulated Product.
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“
FDA Regulated Product
” shall mean any product or component including, without
limitation, any medical device, that is studied, used, held or offered for sale for human research or investigation or clinical use.
“
FDCA
” shall mean the Federal Food, Drug and Cosmetic Act of 1938, as amended, and the rules and regulations promulgated thereunder.
“
Former Company Stockholders
” shall mean the holders of Company Common Stock immediately prior to the Effective Time other than holders of Dissenting Shares and shares of Company Common Stock owned or
held by Parent, Merger Sub, the Company or any direct or indirect wholly owned Subsidiary of Parent or the Company.
“
FTC
”
shall have the meaning set forth in Section 7.3(b) hereof.
“
Fully Diluted Share Amount
” shall mean the number of
shares of Company Common Stock outstanding on a fully diluted basis immediately prior to the Effective Time, assuming (a) the conversion or exercise (as applicable) of all Company Preferred Stock, Company Options, Other Stock Awards and Company
Warrants that are outstanding at such time, (b) the conversion of all Bridge Notes that are outstanding at such time in accordance with the terms of the Bridge Note Purchase Agreement and (c) the conversion, exercise or exchange (as
applicable) of any other options, warrants or other rights to acquire shares of Company Common Stock that are outstanding at such time.
“
GAAP
” shall mean United States generally accepted accounting principles as in effect from time to time, consistently applied.
“
GE Preferred Warrant
” shall mean the warrant, dated December 29, 2006, to purchase up to 181,818 shares of Series B Preferred Stock.
“
GE Warrants
” shall mean, collectively, the 2002 GE Warrants, the 2005 GE Warrants, the 2006 GE Warrants and the GE Preferred Warrant.
“
Good Clinical Practices
” shall mean, with respect to the Company at any given time, such standards of good clinical
practice as are required by any Governmental Entity having jurisdiction over the Company or its business.
“
Good Laboratory
Practices
” shall mean with respect to the Company at any given time, the then current standards for pharmaceutical laboratories, as set forth in the FDCA, and such standards of good laboratory practices as are required by any Governmental
Entity having jurisdiction over the Company or its business.
“
Governmental Entity
” shall mean any federal, state, local
or foreign governmental, regulatory or administrative authority, branch, agency or commission or any court, tribunal or judicial body.
“
Hazardous Material
” shall have the meaning set forth in Section 3.25(c) hereof.
“
Indemnified
Person
” shall have the meaning set forth in Section 6.2(a) hereof.
“
Intellectual Property
” shall mean all
of the following, owned or used by any Person: material (i) trademarks and service marks, trade dress, product configurations, trade names and other indications of origin, applications or registrations in any jurisdiction pertaining to the
foregoing and all goodwill associated therewith; (ii) inventions (whether or not patentable), discoveries, improvements, ideas, know-how, formula methodology, processes, technology, software (including password unprotected interpretive code or
source code, object code, development documentation, programming tools, drawings, specifications and data) and applications and patents in any jurisdiction pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part,
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renewals or extensions; (iii) trade secrets, including confidential information and the right in any jurisdiction to limit the use or disclosure
thereof; (iv) copyrighted and copyrightable writings, designs, software, mask works or other works, applications or registrations in any jurisdiction for the foregoing and all moral rights related thereto; (v) database rights;
(vi) Internet Web sites, domain names and applications and registrations pertaining thereto and all intellectual property used in connection with or contained in all versions of the Web sites of such Person; (vii) rights under all
agreements relating to the foregoing; and (viii) claims or causes of action arising out of or related to past, present or future infringement or misappropriation of the foregoing.
“
IPO
” shall have the meaning set forth in Section 4.29(a) hereof.
“
IPO Shares
” shall have the meaning set forth in Section 4.29(a) hereof.
“
IPO Warrants
” shall have the meaning set forth in Section 4.6 hereof.
“
IRS
” shall mean the United States Internal Revenue Service.
“
Knowledge
” shall mean, with respect to any Person, the actual knowledge of the executive officers of the Person after reasonable
inquiry of the senior employees of such Person who have administrative or operational responsibility for the particular subject matter in question.
“
Leases
” shall mean, with respect to any Person, all leases (including subleases, licenses, any occupancy agreement and any other agreement) of real or personal property, in each case to which such Person is a party,
whether as lessor, lessee, guarantor or otherwise, or by which it or its properties or assets are bound, or which otherwise relate to the operation of its business.
“
Lien
” shall mean any mortgage, pledge, security interest, encumbrance or title defect, lease, lien (statutory or other), conditional sale agreement, claim, charge, limitation or restriction.
“
Lock-Up Agreement
” shall have the meaning set forth in Section 5.6 hereof.
“
Losses
” shall have the meaning set forth in Section 10.2 hereof.
“
Majority Holders
” shall have the meaning set forth in the Bridge Note Agreement.
“
Measurement Date
” shall mean the day that is 180 days after the Closing Date.
“
Measurement Date Price
” shall mean average closing sale price per share of Parent Common Stock as reported on the OTC Bulletin Board
(or any other securities exchange or market on which the Parent Common Stock is listed or traded) for the consecutive period beginning at 9:30 a.m. New York time on the seventh trading day immediately preceding the Measurement Date and concluding at
4:00 p.m. New York time on the trading day immediately preceding the Measurement Date.
“
Merger
” shall have the meaning
set forth in the Recitals hereto.
“
Merger Sub
” shall have the meaning set forth in the Preamble hereto.
“
Merger Sub Organizational Documents
” shall mean the Certificate of Incorporation and the Bylaws of Merger Sub, together with all
amendments thereto.
“
Milestone Consideration
” shall have the meaning set forth on
Exhibit H
hereto.
“
Milestone Consideration Per Share
” shall mean the number of shares of Parent Common Stock equal to the product of (i) one
multiplied by (ii) quotient obtained by dividing (a) the Milestone Consideration, if any, by
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(b) the Fully Diluted Share Amount (which for purposes of this definition only, shall include only those Company Options and Company Warrants that are
outstanding at the Effective Time and remain outstanding at the time the Milestone Consideration Per Share is paid).
“
National
City Warrant
” shall mean the warrant, dated January 11, 2001, to purchase up to 21,639 shares of Company Common Stock, which warrant initially contemplated the issuance of up to 302,943 shares of Company Common Stock until the
Company’s consummation of a 1-for-14 stock split with respect to the Company Common Stock.
“
Other Company Acquisition
Documentation
” shall have the meaning set forth in Section 5.5(d) hereof.
“
Other Parent Acquisition
Documentation
” shall have the meaning set forth in Section 6.4(c) hereof.
“
Other Stock Awards
” shall have
the meaning set forth in Section 1.10(b) hereof.
“
Parent
” shall have the meaning set forth in the Preamble hereto.
“
Parent Acquisition Proposal
” shall have the meaning set forth in Section 6.4 hereof.
“
Parent Alternative Transaction
” shall have the meaning set forth in Section 6.4 hereof.
“
Parent Common Stock
” shall have the meaning set forth in the Recitals hereto.
“
Parent Common Stock Price
” shall mean the average closing sales price per share of Parent Common Stock as reported on the OTC Bulletin
Board for the consecutive period beginning at 9:30 a.m. New York time on the thirteenth trading day immediately preceding the Closing Date and concluding at 4:00 p.m. New York time on the third trading day immediately preceding the Closing Date.
“
Parent Contract
” shall have the meaning set forth in Section 4.19(c) hereof.
“
Parent Designated Directors
” shall mean the individuals identified as “Parent Designated Directors” on Schedule 7.7(b)
attached hereto.
“
Parent Disclosure Schedule
” shall have the meaning set forth in the introductory paragraph of Article
IV hereof.
“
Parent Expenses
” shall mean all of the Parent’s actual and reasonably documented out-of-pocket fees and
expenses (including fees and expenses of counsel, accountants, financial advisors or consultants and commitment and funding fees) actually incurred by Parent, Merger Sub and their respective affiliates on or prior to the termination of this
Agreement in connection with the transactions contemplated by this Agreement, which amount shall not exceed $1,000,000.
“
Parent
Indemnitees
” shall have the meaning set forth in Section 10.2(a) hereof.
“
Parent Interim Balance Sheet
”
shall have the meaning set forth in Section 4.11 hereof.
“
Parent Lease
” shall have the meaning set forth in
Section 4.12(b) hereof.
“
Parent Leased Real Property
” shall have the meaning set forth in Section 4.12(b)
hereof.
“
Parent Licenses and Permits
” shall have the meaning set forth in Section 4.16(a) hereof.
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“
Parent Material Adverse Effect
” shall mean any event, change, circumstance, effect,
development or state of facts that, individually or in the aggregate, (a) is, or is reasonably likely to become, materially adverse to the business, condition (financial or otherwise) or results of operations of Parent or (b) would prevent
or materially impair or materially delay the ability of Parent to perform its obligations under this Agreement or to consummate the transactions contemplated hereby;
provided
,
however
, that none of the following shall be deemed, either
alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Parent Material Adverse Effect: (i) any event, change, circumstance, effect, development or state
of facts arising out of or attributable to (A) general economic conditions or conditions in securities markets; (B) the industry or industry sector in which Parent operates, except, in the case of the foregoing clauses (A) and (B), to
the extent that such event, change, circumstance, effect, development or state of facts affects Parent in a materially disproportionate manner when compared to the effect of such event, change, circumstance, effect, development or state of facts on
other Persons in the industry in which Parent operates; (C) the announcement or pendency of the Merger or any of the other transactions contemplated by this Agreement (including any loss of employees, any cancellation of or delay in customer
orders or any disruption in business relationships); (D) any action, omission, event, change, circumstance, effect, development, or state of facts the risk of the occurrence of which is expressly disclosed in the Parent Disclosure Schedule;
(E) changes in GAAP or changes in laws, rules or regulations applicable to Parent; (F) any act of terrorism or war, or any armed hostilities; (G) compliance with the terms of, or the taking of any action required by, this Agreement;
(H) the taking of any action by the Company or any action approved or consented to by the Company in writing; (I) any breach of this Agreement by the Company; or (I) any action required to be taken under laws, rules, regulations or
agreements (to the extent in effect and made available to the Company as of the date hereof) applicable to Parent; (ii) any failure, in and of itself, by Parent to meet any projections, forecasts or revenue or earnings predictions for any
period ending on or after the date of this Agreement (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or
will be, a Parent Material Adverse Effect), or (iii) any adverse effect on the business, financial condition or results of operations of Parent that, by its nature, would not reasonably be expected to, and does not, last more than three months.
“
Parent Organizational Documents
” shall mean the Amended and Restated Certificate of Incorporation and the Amended and
Restated Bylaws of Parent, together with all amendments thereto.
“
Parent Preferred Stock
” shall mean the undesignated
preferred stock, par value $0.001 per share, of Parent.
“
Parent Registered Intellectual Property
” shall have the meaning
set forth in Section 4.14(b) hereof.
“
Parent SEC Reports
” shall have the meaning set forth in Section 4.8
hereof.
“
Parent Software
” shall have the meaning set forth in Section 4.15 hereof.
“
Parent Stockholders Meeting
” shall have the meaning set forth in Section 3.27 hereof.
“
Parent Superior Proposal
” shall have the meaning set forth in Section 6.4 hereof.
“
Parent Warrants
” shall have the meaning set forth in Section 4.6 hereof.
“
Permitted Liens
” shall mean (a) Liens for utilities and current Taxes not yet due and payable, (b) mechanics’,
carriers’, workers’, repairers’, materialmen’s, warehousemen’s, lessor’s, landlord’s and other similar Liens arising or incurred in the ordinary course of business not yet due and payable, (c) Liens for Taxes,
assessments, or governmental charges or levies on a Person’s properties if the same shall not at the time be delinquent or thereafter can be paid without penalty or are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been included on the balance sheet of the applicable Person, (d) easements, restrictive covenants and similar Encumbrances or impediments against any assets or properties of
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an entity and which individually or in the aggregate do not materially interfere with the business of such entity or the operation of the property as
currently conducted to which they apply, (e) minor irregularities and defects of title which individually or in the aggregate do not materially interfere with an entity’s business or the operation of the property as currently conducted to
which they apply, (f) Liens disclosed on the existing title policies, title commitments and/or surveys which have been previously provided or made available to Parent or the Company, as applicable, none of which materially interfere with the
business of the Company or Parent, as applicable, or Parent’s Subsidiaries or the operation of the property as presently conducted to which they apply, (g) Liens granted in respect of any indebtedness or securing any obligations with
respect thereto, (h) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions or other social security or retirement benefits or similar legislation, (i) deposits securing
liability to insurance carriers under insurance or self-insurance arrangements, (j) deposits to secure the performance of bids, tenders, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business, (k) Liens arising from protective filings and (l) Liens in favor of a banking institution arising as a matter of applicable law encumbering deposits (including the
right of set-off) held by such banking institution incurred in the ordinary course of business and which are within the general parameters customary in the banking industry.
“
Permitted Transfer
” shall mean, with respect to any Person, any Transfer by such Person to: (a) any Affiliate of such Person; and
(b) if such Person is a natural person, (i) any lineal descendant or ancestor or sibling (by birth or adoption) of such Person, (ii) any spouse or former spouse of any of such Person or any such descendant, ancestor or sibling of such
Person, (iii) any legal representative or estate of such Person or any such descendant, ancestor or sibling of such Person, (iv) any trust maintained for the benefit of such Person or any such descendant, ancestor or sibling of such Person
and (v) any corporation, private charitable foundation or other organization controlled by such Person or any such descendant, ancestor or sibling of such Person.
“
Per Share Escrow Consideration
” shall mean the number of shares of Parent Common Stock equal to the quotient obtained by dividing (a) 2,250,000 by (b) the number of shares of Company Common
Stock held by Former Company Stockholders immediately prior to the Effective Time.
“
Per Share Merger Consideration
” shall
mean the number of shares of Parent Common Stock equal to the product of (a) one and (b) the Exchange Ratio.
“
Person
” shall mean an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d) of the Exchange Act).
“
Proceeding
” shall have the meaning set forth in Section 6.2(a) hereof.
“
Pro Rata Share
” shall mean, with respect to any Former Company Stockholder, the quotient of (i) the number of shares of Company
Common Stock owned of record by such Former Company Stockholder immediately prior to the Effective Time and (ii) the total number of shares of Company Common Stock issued and outstanding immediately prior to the Effective Time.
“
Prospectus
” shall have the meaning set forth in Section 3.32 hereof.
“
Proxy Statement
” shall have the meaning set forth in Section 3.27 hereof.
“
Registration Statement
” shall mean the registration statement on Form S-4 or any amendment or supplement thereto pursuant to which
shares of Parent Common Stock issuable in the Merger will be registered with SEC.
“
Regulatory Law
” shall have the meaning
set forth in Section 7.3(b) hereof.
“
Required Company Vote
” shall have the meaning set forth in Section 3.29
hereof.
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“
Required Parent Vote
” shall have the meaning set forth in Section 4.29(a) hereof.
“
Rollover Option
” shall have the meaning set forth in Section 1.10(a) hereof.
“
Sarbanes-Oxley Act
” shall mean the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder.
“
SEC
” shall mean the United States Securities and Exchange Commission.
“
SEC Effectiveness Date
” shall mean (a) February 6, 2008, if the Colorado Approval shall have not been obtained on or before such
date, or (b) February 11, 2008, if the Colorado Approval shall have been obtained on or before February 6, 2008.
“
Securities Act
” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Series I Warrants
” shall mean the warrants, dated February 2, 1998, February 4, 1998, February 6, 1998, February 14, 1998, February 23, 1998, March 4,
1998, March 19, 1998, March 31, 1998, April 11, 1998, May 11, 1998, July 29, 1998, August 10, 1998, August 24, 1998, September 1, 1998, September 14,
1998, September 29, 1998 and October 21, 1998, to purchase, in the aggregate, up to 110,286 shares of Company Common Stock, which warrants initially contemplated the issuance of up to 1,543,725 shares of Company Common Stock, in the
aggregate, until the Company’s consummation of a 1-for-14 stock split with respect to the Company Common Stock.
“
Series II
Warrants
” shall mean the warrants, each dated June 30, 1999, to purchase, in the aggregate, up to 64,814 shares of Company Common Stock, which warrants initially contemplated the issuance of up to 907,375 shares of Company Common
Stock, in the aggregate, until the Company’s consummation of a 1-for-14 stock split with respect to the Company Common Stock.
“
Series III Warrants
” shall mean the warrants, each dated April 28, 2000, to purchase, in the aggregate, up to 49,390 shares of Company Common Stock, which warrants initially contemplated the issuance of up to 691,423
shares of Company Common Stock, in the aggregate, until the Company’s consummation of a 1-for-14 stock split with respect to the Company Common Stock.
“
Series A Preferred Stock
” shall have the meaning set forth in the Recitals hereto.
“
Series A1 Preferred Stock
” shall have the meaning set forth in the Recitals hereto.
“
Series A3
Preferred Stock
” shall have the meaning set forth in the Recitals hereto.
“
Series B Preferred Stock
” shall have
the meaning set forth in the Recitals hereto.
“
Series Warrants
” shall mean, collectively, the Series I Warrants, the
Series II Warrants and the Series III Warrants.
“
Stockholder Representative
” shall mean, initially, Joel P. Adams, and
each successor thereto appointed by its respective predecessor.
“
Subsidiary
” when used with respect to any party shall
mean any corporation, partnership or other organization, whether incorporated or unincorporated, (i) of which such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority of the voting interests in such partnership) or (ii) at least a
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majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries.
“
Surviving Corporation
” shall have the meaning set forth in Section 1.1 hereof.
“
Tail Period
” shall have the meaning set forth in Section 6.2(d) hereof.
“
Tax Return
” shall mean any report, return, information return, filing, claim for refund or other information, including any schedules
or attachments thereto, and any amendments to any of the foregoing required to be supplied to a taxing authority in connection with Taxes.
“
Taxes
” shall mean all federal, state, local or foreign taxes, including, without limitation, income, gross income, gross receipts, production, excise, employment, sales, use, transfer, ad valorem, value added, profits,
license, capital stock, franchise, severance, stamp, withholding, Social Security, employment, unemployment, disability, worker’s compensation, payroll, utility, windfall profit, custom duties, personal property, real property, taxes required
to be collected from customers on the sale of services, registration, alternative or add-on minimum, estimated and other taxes, governmental fees or like charges of any kind whatsoever, including any interest, penalties or additions thereto; and
“Tax” shall mean any one of them.
“
The Other Party
” shall mean, with respect to the Company, Parent and , with
respect to Parent, the Company.
“
Top-Up Consideration
” shall mean, in the event that (a) no Top-Up MAC shall have
occurred during the period commencing on the Closing Date and ending on the Measurement Date and (b) a positive difference between (i) $175,000,000 and (ii) the product of (A) 22,500,000 and (B) the Measurement Date Price
shall exist, the lesser of (x) a number of shares of Parent Common Stock equal to the quotient obtained by dividing (1) the amount of such positive difference by (2) the Measurement Date Price and (y) 6,666,667 shares of Parent
Common Stock;
provided
,
however
, that, at the option of the Board of Directors of Parent (which option shall be exercisable at any time and from time to time after the Closing Date), the Top-Up Consideration may consist, in whole or in
part, of cash; it being understood that, if some or all of the Top-Up Consideration shall consist of cash, (i) the Stockholders’ Representative shall be provided at least 10 days’ prior notice of such determination by the Board of
Directors of Parent, (ii) the number of shares of Parent Common Stock comprising the Top-Up Consideration (which number shall be determined as provided above in this definition) shall be reduced by a number of shares of Parent Common Stock
equal to the aggregate amount of such cash divided by the Measurement Date Price, and (iii) the maximum amount of cash that may be paid as Top-Up Consideration shall not exceed the product of (w) 24.9%, (x) the mean of the highest and
lowest market prices of Parent Common Stock on the Closing Date, (y) the aggregate number of shares of Company Common Stock outstanding at the Effective Time, and (z) the Exchange Ratio (substituting, for this purpose only,
“20,250,000” for “22,500,000” in the definition of “Exchange Ratio Factor”).
“
Top-Up Consideration
Per Share
” shall mean: (a) to the extent that the Top-Up Consideration (if any) consists of shares of Parent Common Stock, a number of such shares of Parent Common Stock equal to the product of (i) one multiplied by (ii) the
quotient obtained by dividing (a) such shares of Parent Common Stock comprising Top-Up Consideration by (b) the Fully Diluted Share Amount (which for purposes of this definition only, shall include only those Company Options and Company
Warrants that are outstanding at the Effective Time and remain outstanding at the time the Top-Up Consideration Per Share is paid); and (b) to the extent that the Top-Up Consideration (if any) consists of cash, an amount of such cash equal to
the product of (i) one multiplied by (ii) the quotient obtained by dividing (a) such amount of cash comprising Top-Up Consideration by (b) the Fully Diluted Share Amount (which for purposes of this definition only, shall include
only those Company Options and Company Warrants that are outstanding at the Effective Time and remain outstanding at the time the Top-Up Consideration Per Share is paid).
A-70
“
Top-Up MAC
” shall mean any event, change, circumstance, effect, development or state of
facts that, individually or in the aggregate, (a) is, or is reasonably likely to become, materially adverse to the business, condition (financial or otherwise) or results of operations of Parent or the Surviving Corporation and (b) results
from (i) any civil, criminal or administrative action, suit, demand, claim, complaint, hearing, notice of violation, investigation, notice, demand letter, proceeding or request for information, by or with respect to the FDA, (ii) a
violation of law or (c) circumstances requiring the restatement of any of the financial statements of Parent or the Surviving Corporation with respect to the Company or any of its business, assets, properties, liabilities or operations
(A) prior to the Closing Date or (B) during any periods from and after the Closing Date (other than with respect to the transactions contemplated in this Agreement).
“
Trade Secret
” shall mean trade secrets, inventions, discoveries, improvements, ideas, know-how, formula, methodology, processes, and
other rights in know-how and confidential and other non-public information.
“
Transfer
” shall mean any sale, assignment,
pledge, hypothecation or other disposition or encumbrance, either voluntarily or involuntarily and with or without consideration.
“
Treasury Regulations
” shall have the meaning set forth in the Recitals hereto.
“
Trust Account
”
shall have the meaning set forth in Section 4.30(a) hereof.
“
Trust Agreement
” shall have the meaning set forth in
Section 4.30(a) hereof.
“
Trustee
” shall have the meaning set forth in Section 4.30(a) hereof.
“
Trust Fund
” shall have the meaning set forth in Section 4.30(a) hereof.
“
Voting Agreement
” shall have the meaning set forth in the Recitals hereto.
“
Voting Agreement Stockholders
” shall have the meaning set forth in the Recitals hereto.
“
WARN
” shall have the meaning set forth in Section 3.24(c) hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be executed as of
the date first above written.
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ORACLE HEALTHCARE ACQUISITION CORP.
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By:
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/s/ Joel D. Liffmann
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Name:
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Joel D. Liffmann
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Title:
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President and Chief Operating Officer
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PTI ACQUISITION SUB, INC.
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By:
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/s/ Joel D. Liffmann
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Name:
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Joel D. Liffmann
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Title:
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President and Chief Executive Officer
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PRECISION THERAPEUTICS, INC.
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By:
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/s/ Sean C. McDonald
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Name:
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Sean C. McDonald
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Title:
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President and Chief Executive Officer
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The undersigned joins as a party to the foregoing Agreement and Plan of Merger for the
limited purposes provided in Article X of the Agreement.
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/s/ Joel P.
Adams
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Name:
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Joel P. Adams, as initial Stockholder Representative of the Former Company Stockholders
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EXHIBIT A
Form of Certificate of Merger
1
EXHIBIT B
Form of Amended and Restated Parent Charter
1
EXHIBIT C
Form of 2008 Equity Incentive Plan
1
EXHIBIT D
Form of Lock-Up Agreement
1
EXHIBIT E-1
Form of Company Tax Representation Letter
1
EXHIBIT E-2
Form of Parent Tax Representation Letter
1
EXHIBIT F
Form of Written Consent of Company Stockholders
1
EXHIBIT G
Form of Escrow Agreement
EXHIBIT H
Milestone Consideration
1. Definitions.
In addition to the terms defined elsewhere in
this Agreement, for purposes of this Exhibit H, the terms below shall have the following meanings:
“
Acceleration Event
” means the consummation of a sale, license, transfer or other disposition of all or substantially all of Parent’s or the Surviving Corporation’s assets.
“
Milestone Consideration
” means the payment due upon the earlier to be achieved of Milestone One or Milestone Two.
“
Milestone One Share Amount
” means 4,250,000 shares of Parent Common Stock.
“
Milestone Two Share Amount
” means 3,187,500 shares of Parent Common Stock.
“
Trailing 12-Month Revenue
” means the aggregate net revenue recognized by the Company and/or the Surviving Corporation in
accordance with GAAP on a basis consistent with past practices during any 12 month period, excluding any revenue derived from any Person or its business, operations, material properties or material assets to the extent that any of such Person,
business, operation, properties or assets is or are directly or indirectly acquired by the Company or the Surviving Corporation from and after the Closing Date.
“
Commercially Reasonable Efforts
” means applying effort and providing resources at levels no less than the Company has
applied and provided historically, and in no event lesser efforts or resources than normally used by a company of a size comparable to the Surviving Corporation with respect to sales of products and services with similar commercial potential and at
a similar stage of development.
For the avoidance of doubt, the term “gynecologic cancer” does not include breast cancer.
2. Milestones
2.1
Milestone One.
Upon the achievement by the Company and/or the Surviving Corporation on or prior to June 30, 2010 of either (i) Trailing 12-Month Revenue resulting from sales of services or products for use
in connection with non-gynecologic cancers in excess of $7,000,000, (ii) Trailing 12-Month Revenue resulting from sales of services or products for any use in excess of $40,000,000 or (iii) cumulative aggregate net revenue from sales of
services or products for use in connection with non-gynecologic cancers in excess of $10,000,000 recognized by the Company and/or the Surviving Corporation in accordance with GAAP on a basis consistent with past practices (each of clauses (i),
(ii) and (iii), a “
Milestone
”), Milestone Consideration in the amount of the Milestone One Share Amount shall be payable as provided in Sections 1.8(c)(ii) and 1.10 of this Agreement and shall be treated and issued as
provided in Section 2.11 of this Agreement.
2.2
Milestone Two.
Upon the achievement by the
Company and/or the Surviving Corporation after June 30, 2010, but on or prior to December 31, 2010, of a Milestone, Milestone Consideration in the amount of the Milestone Two Share Amount shall be payable as provided in
Sections 1.8(c)(ii) and 1.10 of this Agreement and shall be treated and issued as provided in Section 2.11 of this Agreement.
2.3
Payment.
The Milestone Consideration required to be paid as indicated above shall be paid within 10 Business Days after the determination of the achievement of the earlier to be achieved of a
Milestone described in Section 2.1 or 2.2 above (as the case may be), which determination shall be made in good faith by the Board of Directors of Parent within 45 days after the end of each calendar quarter following the Closing Date. Prior to
such payment, if Parent should split, combine or otherwise reclassify the Parent Common Stock, or pay a stock dividend or other stock distribution in Parent Common Stock, or otherwise change the Parent Common Stock into any other securities, or make
any other stock dividend or distribution in capital stock (or securities convertible into or exchangeable for capital stock) of Parent in respect of the
1
Parent Common Stock, then the applicable Milestone Consideration shall be equitably adjusted to reflect such split, combination, reclassification, dividend
or other distribution or change.
3. Diligence and Acceleration Events
3.1
Commercially Reasonable Efforts and Reporting.
Parent shall, and shall cause the Surviving Corporation to
(i) use Commercially Reasonable Efforts to achieve a Milestone described in Section 2.1 above, and if no such Milestone achieved, to achieve a Milestone described in Section 2.2 above, (ii) provide quarterly reports to the
Stockholder Representative with respect to the sales of products and services applicable to the achievement of any Milestone within 45 days after the end of each calendar quarter following the Closing Date and (iii) provide reasonable access to
the Stockholder Representative or its agent to review the books and records of Parent and the Surviving Corporation, during normal business hours and at the offices of Parent and/or the Surviving Corporation, with respect to the status of the
achievement of a Milestone pursuant to Section 2.1 or 2.2.
3.2
Acceleration Events.
Parent shall
pay the entire Milestone One Share Amount in the event that an Acceleration Event occurs on or before June 30, 2010, and shall pay the entire Milestone Two Share Amount if an Acceleration Event occurs after June 30, 2010 but on or before
December 31, 2010.
4. Termination of Milestone Payment Obligations
4.1
Termination.
Notwithstanding anything in this Exhibit H to the contrary, in no event shall both the
Milestone One Share Amount and the Milestone Two Share Amount be paid or payable hereunder or otherwise by Parent or any of its Affiliates, and upon payment of the Milestone One Share Amount or the Milestone Two Share Amount as provided above, or in
the event that no Milestone is achieved on or before December 31, 2010, any and all obligations of Parent and the Surviving Corporation under this Exhibit H shall terminate and be of no further force or effect.
2
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER
(this “
Amendment
”) is made and entered into as of January 24, 2008 by
and among Oracle Healthcare Acquisition Corp., a Delaware corporation (“
Parent
”), PTI Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), Precision Therapeutics,
Inc., a Delaware corporation (the “
Company
”), and Joel P. Adams (the “
Stockholder Representative
”).
W
I T N E S S E T H
:
WHEREAS, on December 3, 2007, Parent, Merger Sub, the Company and, for the limited purposes provided in
Article X thereof, the Stockholder Representative entered into an Agreement and Plan of Merger (the “
Merger Agreement
”);
WHEREAS, the parties hereto desire to amend the Merger Agreement as provided herein;
WHEREAS, pursuant to Section 9.5 of the
Merger Agreement, the Merger Agreement may be amended by the parties thereto by action taken or authorized by their respective Boards of Directors and subject to any approval of stockholders required by applicable law;
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have approved and authorized the execution and delivery of this Amendment and the
performance of the transactions contemplated hereby; and
WHEREAS, the stockholders of the Company have approved the Merger Agreement and
this Amendment, and the Merger Agreement, as amended by this Amendment, will be submitted to the stockholders of Parent for their approval;
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as
follows:
SECTION 1.
AMENDMENTS TO MERGER AGREEMENT
1.1.
Section 11.12; Definition of Parent Common Stock Price
. Section 11.12
of the Merger Agreement is hereby amended by deleting the definition of “Parent Common Stock Price” contained therein in its entirety and inserting the following in lieu thereof:
“
Parent Common Stock Price
” shall mean $7.90.”
SECTION 2.
MISCELLANEOUS
2.1.
Full Force and Effect
. Except as expressly modified by this Amendment,
all of the terms, covenants, agreements, conditions and other provisions of the Merger Agreement shall remain in full force and effect in accordance with their respective terms. As used in the Merger Agreement, the terms “this Agreement,”
“herein,” “hereinafter,” “hereunder,” “hereto” and words of similar import shall mean and refer to, from and after the date hereof, unless the context otherwise requires, the Merger Agreement as amended by
this Amendment.
2.2.
Governing Law
. This Amendment shall be construed, performed and enforced in accordance with, and governed by,
the laws of the State of Delaware.
2.3.
Counterparts
. This Amendment may be executed in counterparts, each of which shall be deemed
an original, but all of which shall constitute the same instrument.
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2
IN WITNESS WHEREOF,
the parties hereto have caused this Amendment No. 1 to Agreement and
Plan of Merger to be duly executed as of the date first written above.
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ORACLE HEALTHCARE ACQUISITION CORP.
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By:
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/s/ Joel Liffmann
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Name: Joel Liffmann
Title: President and Chief Operating Officer
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PTI ACQUISITION SUB, INC.
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By:
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/s/ Joel Liffmann
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Name: Joel Liffmann
Title: President and Chief Operating Officer
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PRECISION THERAPEUTICS, INC.
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By:
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/s/ Sean McDonald
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Name: Sean McDonald
Title: President/CEO
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/s/ Joel P. Adams
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Name: Joel P. Adams, as initial Stockholder Representative of the Former Company Stockholders
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AMENDMENT NO. 2
TO
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER
(this “
Amendment
”) is made and entered into as of February 25, 2008 by
and among Oracle Healthcare Acquisition Corp., a Delaware corporation (“
Parent
”), PTI Acquisition Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), Precision Therapeutics,
Inc., a Delaware corporation (the “
Company
”), and Joel P. Adams (the “
Stockholder Representative
”).
W I T
N E S S E T H:
WHEREAS, on December 3, 2007, Parent, Merger Sub, the Company and, for the limited purposes provided in Article X
thereof, the Stockholder Representative entered into an Agreement and Plan of Merger (as amended on January 24, 2008, the “
Merger Agreement
”);
WHEREAS, the parties hereto desire to amend the Merger Agreement as provided herein;
WHEREAS, pursuant to
Section 9.5 of the Merger Agreement, the Merger Agreement may be amended by the parties thereto by action taken or authorized by their respective Boards of Directors and subject to any approval of stockholders required by applicable law;
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have approved and authorized the execution and delivery of this
Amendment and the performance of the transactions contemplated hereby; and
WHEREAS, the stockholders of the Company have approved the
Merger Agreement and this Amendment, and the Merger Agreement, as amended by this Amendment, will be submitted to the stockholders of Parent for their approval;
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally
bound, hereby agree as follows:
SECTION 1.
AMENDMENTS TO MERGER AGREEMENT
1.1.
Section 1.8(c)
. Section 1.8(c) of the Merger
Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:
“(c)
Company Common Stock
. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than the shares of Company Common Stock referred to in Section 1.8(b) hereof and shares of Company Common
Stock owned by Parent, Merger Sub or any other direct or indirect Subsidiary of Parent (collectively, “
Excluded Shares
”) and the Dissenting Shares) shall be converted into the right to receive the following, subject to
Section 2.4 hereof with respect to fractional shares, and to Section 2.10 hereof with respect to shares deposited with the Escrow Agent:
(i) the Per Share Merger Consideration; and
(ii) the Milestone Consideration Per Share (if
any).”
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1.2.
Section 1.10
. Section 1.10 of the Merger Agreement is hereby amended by deleting it
in its entirety and inserting the following in lieu thereof:
“1.10 Treatment of Options.
(a) At the Effective Time, each outstanding option to purchase a share of Company Common Stock (collectively, “
Company
Options
”) granted under any Company Stock Plan, whether or not then exercisable or vested, shall automatically be converted, by virtue of the Merger and without any action on the part of the holder thereof, into an option to acquire such
number of shares of Parent Common Stock (a “
Rollover Option
”) equal to the product of (x) the number of shares of Company Common Stock subject to such Company Option and (y) the Exchange Ratio (provided that any fractional
share resulting from such multiplication shall be rounded down to the nearest whole share). Each Rollover Option shall also include the right to receive the applicable Milestone Consideration Per Share (if any). Each Rollover Option shall be subject
to, and shall vest and remain exercisable in accordance with, the same terms and conditions of the Company Option it replaces, except that the exercise price per share of each Rollover Option shall be equal to the quotient of (i) the exercise
price per share of such Company Option and (ii) the Exchange Ratio (provided that such exercise price shall be rounded up to the nearest whole cent). The conversion of the Company Options to Rollover Options pursuant to this Section 1.10
shall be effected in a manner consistent with Section 424 of the Code. Parent shall take reasonable steps to ensure that any Company Option that qualifies as an “incentive stock option” under Section 422 of the Code immediately
prior to the Closing shall not lose its status as an incentive stock option as a result of the conversion to a Rollover Option described above. Following the Closing, Parent shall send to each holder of a Rollover Option a written notice setting
forth (i) the number of shares of Parent Common Stock subject to such Rollover Option, and (ii) the exercise price per share of Parent Common Stock issuable upon exercise of such Rollover Option. Not later than four (4) business days
(within the meaning of Form 8-K) after the Effective Time, Parent shall, with full cooperation from the Company prior to the Closing and from the Surviving Corporation following the Closing, prepare and file with the SEC a report on Form 8-K as
required with respect to the Merger. As soon as permissible following the filing of such report on Form 8-K, Parent shall file with the SEC a registration statement on Form S-8 registering the exercise of any Rollover Options. Parent shall use
commercially reasonable efforts (i) to cause, to the extent reasonably practicable, any shares of Parent Common Stock issued upon exercise of Rollover Options prior to the effectiveness of the registration statement on Form S-8 to be included
in the shares to be registered in the Registration Statement, and (ii) to cause such Form S-8 registration statement to remain effective for so long as any Rollover Options remain outstanding.
(b) All shares of restricted Company Common Stock granted under the Company Stock Plans (and any other shares of Company Common Stock
subject to vesting or future issuance under the Company Stock Plans) (collectively, “
Other Stock Awards
”) outstanding immediately prior to the Effective Time, whether or not then vested, shall be treated in the same manner as all
other shares of Company Common Stock outstanding immediately prior to the Effective Time;
provided
,
however
, that the Per Share Merger Consideration and the Milestone Consideration Per Share (if any) received by each holder in exchange
for the holder’s Other Stock Awards shall be subject to the terms and conditions (including vesting schedules) applicable to such Other Stock Awards as in effect prior to the Effective Time.
(c) The Company and Parent shall take all such steps and actions as may be required to cause the transactions contemplated by this
Section 1.10 and any other dispositions of Company equity securities (including derivative securities) or acquisitions of Parent equity securities (including derivative securities) in connection with this Agreement by each individual who
(i) is a director or officer of the Company or (ii) at the Effective Time will become a director or officer of Parent, to become exempt under Rule 16b-3 promulgated under the Exchange Act.”
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1.3.
Section 1.11
. Section 1.11 of the Merger Agreement is hereby amended by deleting it
in its entirety and inserting the following in lieu thereof:
“1.11 Treatment of Warrants.
From and
after the Effective Time:
(a)
Series I Warrants
. Pursuant to the provisions of Section 7(c) of the Series I
Warrants (as applicable), (i) each holder of a Series I Warrant shall have the right to receive upon the exercise of such Series I Warrant the kind and amount of shares of Parent Common Stock which such holder would have been entitled to
receive if immediately prior to the Effective Time such holder had held the number of shares of Company Common Stock which are then purchasable upon the exercise of such Series I Warrant (provided that such number of shares of Parent Common Stock
shall not be reduced for any shares which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) appropriate adjustment shall be made by Parent in the application of the provisions set
forth in each Series I Warrant with respect to the rights and interests thereafter of the holder thereof such that the provisions set forth in such Series I Warrant (including provisions with respect to adjustment of the “Purchase Price”
defined therein) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of Parent Common Stock deliverable upon the exercise of such Series I Warrant.
(b)
Series II Warrants
. Pursuant to the provisions of Section 7(b) of the Series II Warrants (as applicable), (i) each
holder of a Series II Warrant shall have the right to receive upon the exercise of such Series II Warrant the kind and amount of shares of Parent Common Stock which such holder would have been entitled to receive if immediately prior to the
Effective Time such holder had held the number of shares of Company Common Stock which are then purchasable upon the exercise of such Series II Warrant (provided that such number of shares of Parent Common Stock shall not be reduced for any shares
which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10) and (ii) appropriate adjustment shall be made by Parent in the application of the provisions set forth in each Series II Warrant with
respect to the rights and interests thereafter of the holder thereof such that the provisions set forth in such Series II Warrant (including provisions with respect to adjustment of the “Purchase Price” defined therein) shall thereafter be
applicable, as nearly as is reasonably practicable, in relation to any shares of Parent Common Stock deliverable upon the exercise of such Series II Warrant.
(c)
Series III Warrants
. Pursuant to the provisions of Section 7(b) of the Series III Warrants (as applicable), (i) each
holder of a Series III Warrant shall have the right to receive upon the exercise of such Series III Warrant the kind and amount of shares of Parent Common Stock which such holder would have been entitled to receive if immediately prior to the
Effective Time such holder had held the number of shares of Company Common Stock which are then purchasable upon the exercise of such Series III Warrant (provided that such number of shares of Parent Common Stock shall not be reduced for any shares
which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) appropriate adjustment shall be made by Parent in the application of the provisions set forth in each Series III Warrant with
respect to the rights and interests thereafter of the holder thereof such that the provisions set forth in such Series III Warrant (including provisions with respect to adjustment of the “Purchase Price” defined therein) shall thereafter
be applicable, as nearly as is reasonably practicable, in relation to any shares of Parent Common Stock deliverable upon the exercise of such Series III Warrant.
(d)
National City Warrant
. Pursuant to the provisions of Section 7(b) of the National City Warrant, (i) the holder of the
National City Warrant shall have the right to receive upon the exercise thereof the kind and amount of shares of Parent Common Stock which such holder would have been entitled to receive if immediately prior to the Effective Time such holder had
held the number of shares of Company Common Stock which are then purchasable upon the exercise of the National City Warrant (provided that such number of shares of Parent Common Stock shall not be reduced for any shares which would have otherwise
been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) appropriate adjustment shall be made by Parent in the application of the provisions set forth in the National City Warrant with respect to the rights and
interests thereafter of the holder thereof such that the provisions set forth in the National City Warrant (including provisions with respect to adjustment of the “Purchase Price” defined
A-3
therein) shall thereafter be applicable, as nearly as is reasonably practicable, in relation to any shares of Parent Common Stock deliverable upon the
exercise of the National City Warrant.
(e)
2002 GE Warrant
. Pursuant to the provisions of Section 7(a) of the
2002 GE Warrant, (i) the holder of such 2002 GE Warrant shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of the 2002 GE Warrant, and in lieu of the shares of
Company Common Stock theretofore issuable upon exercise of the 2002 GE Warrant, the shares of Parent Common Stock receivable pursuant to Article I hereof upon consummation of the Merger by a holder of the number of shares of Company Common Stock
purchasable under the 2002 GE Warrant immediately prior to the Effective Time (provided that such number of shares of Parent Common Stock shall not be reduced for any shares which would have otherwise been subject to deposit with the Escrow Agent as
provided in Section 2.10), and (ii) in the event that Parent issues to the holder of the 2002 GE Warrant a new warrant as a replacement of such 2002 GE Warrant, such replacement warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 7 of the 2002 GE Warrant.
(f)
2005 GE
Warrant
. Pursuant to the provisions of Section 7(a) of the 2005 GE Warrant, (i) the holder of such 2005 GE Warrant shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of the 2005 GE Warrant, and in lieu of the shares of Company Common Stock theretofore issuable upon exercise of the 2005 GE Warrant, the shares of Parent Common Stock receivable pursuant to Article I hereof upon consummation of
the Merger by a holder of the number of shares of Company Common Stock purchasable under the 2005 GE Warrant immediately prior to the Effective Time (provided that such number of shares of Parent Common Stock shall not be reduced for any shares
which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) in the event that Parent issues to the holder of the 2005 GE Warrant a new warrant as a replacement of such 2005 GE Warrant,
such replacement warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 7 of the 2005 GE Warrant.
(g)
2006 GE Warrant
. Pursuant to the provisions of Section 7(a) of the 2006 GE Warrant, (i) the holder of such 2006 GE
Warrant shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of the 2006 GE Warrant, and in lieu of the shares of Company Common Stock theretofore issuable upon exercise
of the 2006 GE Warrant, the shares of Parent Common Stock receivable pursuant to Article I hereof upon consummation of the Merger by a holder of the number of shares of Company Common Stock purchasable under the 2006 GE Warrant immediately prior to
the Effective Time (provided that such number of shares of Parent Common Stock shall not be reduced for any shares which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) in the event
that Parent issues to the holder of the 2006 GE Warrant a new warrant as a replacement of such 2006 GE Warrant, such replacement warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section 7 of the 2006 GE Warrant.
(h)
Bridge Warrant
. Pursuant to the provisions of
Section 3.01(d) of the Bridge Warrants (as applicable), (i) each Bridge Warrant shall be exercisable for the number of shares of Parent Common Stock to which a holder of the number of shares of Company Common Stock deliverable upon
exercise of such Bridge Warrant would have been entitled to receive pursuant to Article I hereof upon the consummation of the Merger (provided that such number of shares of Parent Common Stock shall not be reduced for any shares which would have
otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), (ii) appropriate adjustment shall be made in the application of the provisions of each Bridge Warrant with respect to the rights and interest thereafter
of the holder of such Bridge Warrant, to the end that the provisions set forth therein (including provisions with respect to changes in and other adjustments of the applicable number of shares of stock issuable upon exercise) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of Parent Common Stock deliverable upon the exercise of such Bridge Warrant.
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(i)
GE Preferred Warrant
. Pursuant to the provisions of Section 7(a) of the
GE Preferred Warrant, (i) the holder of such GE Preferred Warrant shall have the right to receive, at a total purchase price not to exceed that payable upon the exercise of the unexercised portion of the GE Preferred Warrant, and in lieu of the
shares of Company Common Stock theretofore issuable upon exercise of the GE Preferred Warrant (after giving effect to the Conversion), the shares of Parent Common Stock receivable pursuant to Article I hereof upon consummation of the Merger by a
holder of the number of shares of Company Common Stock purchasable under the GE Preferred Warrant (after giving effect to the Conversion) immediately prior to the Effective Time (provided that such number of shares of Parent Common Stock shall not
be reduced for any shares which would have otherwise been subject to deposit with the Escrow Agent as provided in Section 2.10), and (ii) in the event that Parent issues to the holder of the GE Preferred Warrant a new warrant as a
replacement of such GE Preferred Warrant, such replacement warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 7 of the GE Preferred Warrant.”
1.4.
Section 1.13
. Section 1.13 of the Merger Agreement is hereby amended by deleting it in its entirety and inserting
the following in lieu thereof:
“1.13 No Transfers of Contingent Consideration
.
Neither the Milestone Consideration Per Share nor the right to receive the Milestone Consideration Per Share may be Transferred by any Person other than pursuant to a Permitted Transfer,
provided
that nothing contained in this
Section 1.13 is intended to, nor shall it be deemed to, restrict or limit the ability of any holder of securities of the Company to Transfer such securities prior to the Effective Time.”
1.5.
Section 2.11
. Section 2.11 of the Merger Agreement is hereby amended by deleting it in its entirety and inserting the following in
lieu thereof:
“2.11 Treatment of Contingent Consideration; Issuance of Separate Share
Certificates
.
Any Parent Common Stock issued as Milestone Consideration hereunder shall be treated as comprised of two components, a principal component and an interest component, the amounts of which shall be determined
as provided in Treasury Regulation Section 1.483-4(b), Example (2), using the three-month test rate of interest provided for in Treasury Regulation Section 1.1274-4(a)(1)(ii) employing the semi-annual compounding period. As to such Parent
Common Stock, shares representing the principal component (with a value—determined on the date of issuance—equal to the principal component) and shares representing the interest component (with a value—determined on the date of
issuance—equal to the interest component) shall be represented by separate share certificates.”
1.6.
Section 8.3
.
Section 8.3 of the Merger Agreement is hereby amended by adding the following new paragraph (i) at the end thereof:
“(i)
Redemption Agreement
. The Redemption Agreement shall be in full force and effect.”
1.7.
Section 11.8
. Section 11.8 of the Merger Agreement is hereby amended by deleting it in its entirety and inserting the following in lieu thereof:
“11.8 Parties in Interest
.
Except for (i) the rights of the holders of securities of the
Company to receive the Per Share Merger Consideration and the Milestone Consideration Per Share following the Effective Time in accordance with the terms of this Agreement (of which such security holders are the intended beneficiaries following the
Effective Time), (ii) the rights to continued indemnification and insurance pursuant to Section 6.2 hereof (of which the Persons entitled to indemnification or insurance, as the case may be, are the intended beneficiaries following the
Effective Time), and (iii) the rights of the Parent Indemnitees not signatory to this Agreement and the Former Company Stockholders under Article X hereof (of which such Persons are intended beneficiaries following the Effective Time), nothing
in this Agreement is intended to confer any rights or remedies under or by reason of this Agreement on any Persons other than the parties hereto and their respective successors and permitted assigns. Nothing in this
A-5
Agreement is intended to relieve or discharge the obligations or liability of any third Persons to the Company or Parent. No provision of this Agreement
shall give any third parties any right of subrogation or action over or against the Company or Parent.”
1.8.
Section 11.12
.
(a) Section 11.12 of the Merger Agreement is hereby amended by deleting the definition of
“Exchange Ratio Factor” contained therein in its entirety and inserting the following definition of “Exchange Ratio Factor” in lieu thereof:
“
Exchange Ratio Factor
” shall mean the quotient obtained by dividing (a) the sum of (i) the product of
(A) 19,125,000 and the (B) Parent Common Stock Price and (ii) the Aggregate Exercise Price, by (b) the Fully Diluted Share Amount.”
(b) Section 11.12 of the Merger Agreement is hereby further amended by deleting the definition of “Per Share Escrow
Consideration” contained therein in its entirety and inserting the following definition of “Per Share Escrow Consideration” in lieu thereof:
“
Per Share Escrow Consideration
” shall mean the number of shares of Parent Common Stock equal to the quotient obtained by dividing (a) 1,912,500, by (b) the number of shares of Company
Common Stock held by Former Company Stockholders immediately prior to the Effective Time.”
(c) Section 11.12 of
the Merger Agreement is hereby further amended by adding thereto the following new definition of “Redemption Agreement” in alphabetical order:
“
Redemption Agreement
” shall mean that certain Redemption Agreement, dated as of February 25, 2008, by and among Parent and the “Stockholders” identified on the signature pages
thereto.”
(d) Section 11.12 of the Merger Agreement is hereby further amended by deleting the definitions of
“Top-Up Consideration”, “Top-Up Consideration Per Share” and “Top-Up MAC” contained therein in their entirety.
1.9.
Exhibit G
. Exhibit G to the Merger Agreement is hereby amended by deleting it in its entirety and replacing it with
Exhibit A
attached to this Amendment.
SECTION 2.
MISCELLANEOUS
2.1.
Full Force and Effect
. Except as expressly modified by this Amendment, all of the terms, covenants, agreements, conditions and other
provisions of the Merger Agreement shall remain in full force and effect in accordance with their respective terms. As used in the Merger Agreement, the terms “this Agreement,” “herein,” “hereinafter,”
“hereunder,” “hereto” and words of similar import shall mean and refer to, from and after the date hereof, unless the context otherwise requires, the Merger Agreement as amended by this Amendment.
2.2.
Governing Law
. This Amendment shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of
Delaware.
2.3.
Counterparts
. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of
which shall constitute the same instrument.
[remainder of page intentionally left blank]
A-6
IN WITNESS WHEREOF,
the parties hereto have caused this Amendment No. 2 to Agreement and
Plan of Merger to be duly executed as of the date first written above.
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ORACLE HEALTHCARE ACQUISITION CORP.
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By:
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/s/ J
OEL
L
IFFMANN
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Name:
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Joel Liffmann
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Title:
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President and Chief Operating Officer
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PTI ACQUISITION SUB, INC.
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By:
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/s/ J
OEL
L
IFFMANN
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Name:
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Joel Liffmann
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Title:
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President and Chief Operating Officer
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PRECISION THERAPEUTICS, INC.
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By:
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/s/ S
EAN
M
C
D
ONALD
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Name:
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Sean McDonald
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Title:
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President/CEO
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/s/ J
OEL
P. A
DAMS
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Name:
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Joel P. Adams, as initial Stockholder Representative of the Former Company Stockholders
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A-7
EXHIBIT A
Form of Escrow Agreement
ESCROW AGREEMENT, dated as of
, 2008 (this “
Agreement
”), by and among Oracle Healthcare Acquisition Corp., a Delaware corporation (“
Parent
”), Joel P. Adams, as
agent (in such capacity, the “
Stockholder Representative
”) for and on behalf of the Former Company Stockholders (as defined in the Merger Agreement (as hereinafter defined)), and
[
] (the “
Escrow
Agent
”). Capitalized, undefined terms used herein shall have the respective meanings ascribed to them in the Merger Agreement.
R E C I T A L S :
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
as of December 3, 2007, as amended on January 24, 2008 and February 25, 2008 (as so amended and as further amended from time to time, the “
Merger Agreement
”), by and among Parent, PTI Acquisition Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent (“
Merger Sub
”), and Precision Therapeutics, Inc., a Delaware corporation (the “
Company
”), concurrently with the execution and delivery of this Agreement, Merger
Sub will merge with and into the Company, with the Company surviving such merger as a wholly owned subsidiary of Parent upon the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS, pursuant to Section 2.10 of the Merger Agreement, (i) on the Closing Date, 1,912,500 shares (the “
Escrowed Shares
”)
of common stock, par value $0.0001 per share (the “
Parent Common Stock
”), of Parent, constituting the aggregate Per Share Escrow Consideration to be deducted from the aggregate Per Share Merger Consideration issuable to the Former
Company Stockholders pursuant to Article I of the Merger Agreement, shall be deposited by Parent with the Escrow Agent to be held in escrow for the purpose of satisfying any claims for indemnification made by the Parent Indemnitees under
Article X of the Merger Agreement, and (ii) the Escrowed Shares shall be administered in accordance with this Agreement; and
WHEREAS,
the parties hereto (collectively, the “
Parties
”) are entering into this Agreement to effectuate the intent of the provisions of the Merger Agreement described above;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements made herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, each intending to be legally bound, hereby agree as follows:
1.
Definitions.
In addition to the terms defined elsewhere herein or in the Merger Agreement, for purposes of this Agreement, the terms below shall have the following meanings:
“
Beneficial Ownership
” means, with respect to any securities, having beneficial ownership of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act, disregarding the phrase “within 60 days” in paragraph (d)(1)(i) thereof), including pursuant to any agreement, arrangement or understanding, whether or not in writing.
“
Claim Notice
” means a written notice to the Escrow Agent and the Stockholder Representative that is signed by Parent:
(a) requesting the Escrow Agent to release and deliver to Parent the Escrowed Shares or any portion thereof as set forth therein; (b) stating that a Parent Indemnitee has a bona fide claim of indemnity against the Former Company
Stockholders under Article X of the Merger Agreement; and (c) specifying in reasonable detail the nature and dollar amount (the “
Claimed Amount
”) of any such indemnification obligation and the factual basis of such
indemnity claim.
“
Disputed Amount
” means any Claimed Amount (or portion thereof) with respect to which the Stockholder
Representative shall have timely delivered a Response Notice in which the Stockholder Representative shall have indicated his (or its) disagreement with the release of Escrowed Shares to Parent in respect of such Claimed Amount (or portion thereof).
1
“
Dispute Settlement Agreement
” means, with respect to any Disputed Amount, a settlement
agreement executed by the Parent and the Stockholder Representative setting forth instructions to the Escrow Agent as to the number of Escrowed Shares, if any, to be released from the Escrow Account with respect to such Disputed Amount.
“
Final Decision
” means, with respect to any Disputed Amount: (a) a Dispute Settlement Agreement with respect to such Disputed Amount;
or (b) any award of the arbitrator (or, if applicable, arbitrators) referred to and as provided in Section 7(d) hereof setting forth instructions to the Escrow Agent as to the number of Escrowed Shares, if any, to be released from the Escrow Account
with respect to such Disputed Amount.
“
Response Notice
” means, with respect to any Claim Notice, a written notice to the
Escrow Agent and Parent that is signed by the Stockholder Representative in which the Stockholder Representative: (a) agrees that Escrowed Shares having a Stipulated Value equal to the Claimed Amount specified in such Claim Notice may be released to
Parent from the Escrow Account; (b) agrees that Escrowed Shares having a Stipulated Value equal to a portion, but not all, of the Claimed Amount (such portion, the “
Agreed Amount
”) may be released to Parent from the Escrow Account;
or (c) indicates that no part of such Escrowed Shares may be released to Parent with respect to the Claimed Amount specified in such Claim Notice.
“
Stipulated Value
” means, with respect to a share of Parent Common Stock, $7.90 (as adjusted for any stock dividend, stock split, stock distribution, combination or other similar adjustment with respect to the Parent Common
Stock).
“
Termination Date
” means the later of (a) the first anniversary of the date of this Agreement and
(b) in the event that Parent delivers a Claim Notice to the Escrow Agent and the Stockholders Representative as provided herein prior to the first anniversary of this Agreement and the Dispute Notice Period (as hereinafter defined) with respect
to such Claim Notice shall have not expired as of the date of such anniversary, the date on which such Dispute Notice Period shall have expired.
“
Transfer
” means, with respect to a security, the sale, transfer, pledge, hypothecation, encumbrance, assignment or disposition of such security or the Beneficial Ownership thereof, the offer to make such a sale, transfer
or other disposition, and each option, agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing. As a verb, “
Transfer
” shall have a correlative meaning.
2.
Appointment.
Parent and the Stockholder Representative hereby nominate, constitute and appoint the Escrow Agent, as escrow agent, to hold the
Escrowed Shares in escrow upon the terms and subject to the conditions set forth herein.
3.
Agreement of Escrow Agent.
The Escrow
Agent hereby accepts such appointment pursuant to Section 2 above and hereby further agrees to act as Escrow Agent and hold the Escrowed Shares in escrow in accordance with the terms, conditions and instructions contained in this Agreement.
4.
Deposit of Escrowed Shares.
Pursuant to Section 2.10 of the Merger Agreement, Parent has deposited the Escrowed Shares with
the Escrow Agent, which Escrowed Shares shall be held in escrow and distributed by the Escrow Agent in accordance with the terms and conditions of this Agreement. The Escrowed Shares shall collectively constitute an escrow fund (the “
Escrow
Fund
”) with respect to the indemnification rights of the Parent Indemnitees under Article X of the Merger Agreement. The Escrow Agent hereby accepts delivery of the Escrow Fund and to hold the Escrow Fund in an escrow account (the
“
Escrow Account
”), subject to the terms and conditions of this Agreement. The Escrow Fund shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor
of any Former Company Stockholder or of any party hereto. The Escrow Agent shall hold and safeguard the Escrow Fund until the Termination Date,
2
provided that if any Escrowed Shares comprising the Escrow Fund shall be required to be held in escrow by the Escrow Agent after the Termination Date
pursuant to Section 7(b) hereof, then the Escrow Agent shall continue to hold and safeguard such Escrowed Shares as the Escrow Fund until such Escrowed Shares shall have been released in accordance with Section 7(b) hereof.
5.
Tax Matters.
Notwithstanding any other provision in this Escrow Agreement to the contrary, for all tax purposes, each Former Company
Stockholder (a) shall be treated as the owner of the Escrowed Shares that are registered in its name, provided that, in the event that any such Escrowed Shares are distributed to Parent pursuant to this Agreement, after such distribution,
Parent shall be treated as the owner of such distributed Escrowed Shares, (b) shall report all gain or loss incurred as a result of or attributable to any transfer of the Escrowed Shares pursuant to the terms of this Escrow Agreement and shall
pay all taxes attributable thereto, and (c) shall report all income, gain, loss or deduction, if any, that is earned on, or derived from, the Escrowed Shares as their income in the taxable year or years in which such income may properly be
included, and pay all taxes attributable thereto.
6.
Rights of Former Company Stockholder in Escrowed Shares.
At all times during
which any Escrowed Shares are held in escrow by the Escrow Agent pursuant to this Agreement:
(a) the Former Company
Stockholders in whose name such Escrowed Shares are registered shall retain all of their respective rights as stockholders of the Company in respect of such Escrowed Shares, including, without limitation, the right to vote such Escrowed Shares;
(b) all dividends, if any, declared by the Board of Directors of Parent and paid by Parent in respect of such Escrowed
Shares shall be paid to the Former Company Stockholders in whose name such Escrowed Shares are registered; and
(c) such
Escrowed Shares shall not be Transferred and no Transfer of such Escrowed Shares shall be recorded or recognized by Parent or the Escrow Agent. This Section 6(c) shall not prohibit a Transfer of Escrowed Securities by a Former Company
Stockholder (i) if such Former Company Stockholder is an individual (
e.g.
, not a corporation, limited liability company, partnership, trust or other entity) (A) to any member of such Former Company Stockholder’s immediate family, or
to a trust for the benefit of such Former Company Stockholder or any member of such Former Company Stockholder’s immediate family, or (B) upon the death of such Former Company Stockholder, or (ii) if Former Company Stockholder is a partnership
or limited liability company, to one or more partners or members of such Former Company Stockholder or to a corporation that is an Affiliate of such Former Company Stockholder and is under common control with such Former Company Stockholder;
provided
,
however
, that a Transfer referred to in this sentence shall be permitted only if, as a condition precedent to such Transfer, the transferee in such Transfer agrees in a writing that is reasonably satisfactory in
form and substance to Parent and the Stockholder Representative that the Escrowed Shares so Transferred shall be subject to all of the terms of this Agreement, including the appointment of the Stockholder Representative in accordance with
Section 12 hereof and Section 10.6 of the Merger Agreement, as though such transferee were a Former Company Stockholder.
7.
Release.
(a) The Escrow Agent shall release from escrow and deliver the Escrowed Shares (or any portion thereof)
only as follows:
(i) in accordance with joint written instructions, signed by the Stockholder Representative and Parent,
directing the Escrow Agent to release the Escrowed Shares or any portion thereof as set forth therein;
(ii) no earlier than
30 days and no later than 35 days after the Escrow Agent’s receipt of, and in accordance with, a Claim Notice (a copy of which shall be sent simultaneously by Parent to the Stockholder Representative);
provided
,
however
, that if
not later than 25 days after receipt of such
3
Claim Request by the Escrow Agent (any such 25-day period, a “
Dispute Notice Period
”), the Stockholder Representative delivers to the Escrow
Agent and Parent a Response Notice indicating any Disputed Amount with respect to the Claim Amount set forth in such Claim Notice, then the Escrow Agent shall release to Parent only a number of Escrowed Shares equal to (A) the Agreed Amount, if
any, set forth in such Response Notice, divided by (B) the Stipulated Value;
provided
,
further
, that any Escrowed Shares that are subject to a Disputed Amount shall be released from escrow by the Escrow Agent only in accordance
with Section 7(a)(i) or 7(b) hereof or in accordance with a Final Decision with respect to such Disputed Amount;
provided
,
further
,
however
, that, in the event that the Stockholder Representative fails for any reason
whatsoever to deliver a Response Notice indicating a Disputed Amount with respect to any Claimed Amount set forth in a Claim Notice prior to the expiration of the Dispute Notice Period with respect to such Claim Notice, the Escrow Agent shall
release from escrow hereunder and deliver to Parent Escrowed Shares in accordance with such Claim Notice; or
(iii) in
accordance with Section 7(b) hereof.
(b) Promptly after the Termination Date, and in no event later than 10 days after
the Termination Date, the Escrow Agent shall release and deliver to the Former Company Stockholders (in accordance with written instructions provided by the Stockholder Representative) a number of Escrowed Shares equal to (i) the then remaining
Escrowed Shares, less (ii) a number of Escrowed Shares equal to (A) all Disputed Amounts, if any, that shall have not been resolved as of the Termination Date pursuant to a Final Decision, divided by (B) the Stipulated Value. If any Escrowed
Shares are retained by the Escrow Agent in respect of any Disputed Amount, such Escrowed Shares shall be released solely in accordance with Section 7(a)(i) or in accordance with a Final Decision with respect to such Disputed Amount.
(c) If the Stockholder Representative delivers a Response Notice (in accordance with Section 7(a)(ii) hereof) indicating that
there is a Disputed Amount, the Stockholder Representative and Parent shall attempt in good faith to promptly resolve the dispute related to such Disputed Amount. If Parent and the Stockholder Representative so resolve such dispute, they shall enter
into a Dispute Settlement Agreement memorializing such resolution, which resolution and Dispute Settlement Agreement shall be binding on all of the Former Company Stockholders and the Parent Indemnitees.
(d) If the Stockholder Representative and the Parent are unable to resolve the dispute relating to any Disputed Amount set forth in a
Response Notice that is delivered in accordance with Section 7(a)(ii) hereof within 60 days after the delivery of the Claim Notice in respect of which such Response Notice is delivered (any such 60-day period, an “
Initial Resolution
Period
”), then either Parent or the Stockholder Representative may submit such dispute to binding arbitration in the County of New York in the State of New York in accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect (the “
AAA Rules
”). If the Stockholder Representative or Parent shall elect to submit such dispute to binding arbitration, it shall give notice thereof to the other party (an “
Arbitration
Notice
”). Such arbitration shall be conducted by a single arbitrator mutually selected by Parent and the Stockholder Representative;
provided
,
however
, that, if Parent and the Stockholder Representative fail to mutually select
an arbitrator within three business days following such delivery of the Arbitration Notice, then such arbitration shall be conducted by three arbitrators: one selected by Parent; one selected by the Stockholder Representative; and the third selected
by the two arbitrators selected by Parent and the Stockholder Representative. If Parent or the Stockholder Representative fails to select an arbitrator within 10 days following the delivery of the Arbitration Notice, then the other shall be entitled
to select the second arbitrator. Parent and the Stockholder Representative shall use their respective reasonable efforts (i) to cause the arbitration hearing with respect to such arbitration to be conducted within 75 days after the appointment
of the mutually-selected arbitrator or the last of the three arbitrators, as the case may be, and (ii) to cause the decision of the arbitrator(s) to be furnished within 95 days after the appointment of the mutually-selected arbitrator or the
last of the three arbitrators, as the case may be. The parties further agree that discovery shall be completed at least 10 days prior to the date of such arbitration hearing. The decision of the arbitrator(s) shall relate solely: (A) to whether
the Parent Indemnitees are (or any of them is) entitled to recover the
4
Disputed Amount (or a portion thereof), and the portion of such Disputed Amount the Parent Indemnitees are (or any of them is) entitled to recover; and
(B) to the determination of the identity of the non-prevailing party of such arbitration, it being understood that, for purposes of this Section 7(d), the identity of the non-prevailing party shall be determined solely by the
arbitrator(s). The final decision of the arbitrator(s) shall be furnished to the Stockholder Representative, Parent and the Escrow Agent in writing and shall constitute a conclusive determination and resolution of the dispute in question, shall be
binding upon the Stockholder Representative, the Former Company Stockholders, Parent, the Parent Indemnitees and the Escrow Agent and shall not be contested by any of them. The non-prevailing party in any arbitration under this Section 7(d)
shall pay the reasonable and documented expenses (including attorneys’ fees) of the prevailing party, any additional reasonable and documented fees and expenses (including reasonable attorneys’ fees) of the Escrow Agent, and the fees and
expenses associated with the administration of the arbitration (including the arbitrators’ fees and expenses). Any such fees and expenses payable by the Former Company Stockholders may, at the direction of the Stockholder Representative, be
paid out of Escrowed Shares. The Escrow Agent shall release Escrowed Shares from the Escrow Account in connection with any Disputed Amount in accordance with the instructions contained any Final Decision relating to such Disputed Amount within five
business days after the delivery to it of such Final Decision.
(e) Except as otherwise provided herein, all Escrowed Shares
that are to be released from escrow to any Party by the Escrow Agent under this Section 7 shall be delivered to such Party in accordance with the written instructions of such Party.
8.
Term.
This Agreement shall terminate when all Escrowed Shares shall have been released from escrow in accordance with the terms hereof.
9.
Fee; Reimbursement of Expenses.
In consideration for its services hereunder, during the term hereof, the Escrow Agent shall be
paid a fee of $[ ] and shall be reimbursed for its reasonable and documented out-of-pocket expenses incurred in connection with
the performance of its services hereunder. Such fee and expense reimbursement shall be borne solely by Parent.
10.
Replacement of
Escrow Agent.
(a) The Escrow Agent may resign its duties and obligations hereunder by giving to the Stockholder
Representative and Parent written notice to that effect, but its resignation shall not become effective until a successor escrow agent shall have been appointed by mutual written agreement of the Stockholder Representative and Parent. In the event
the Escrow Agent resigns in accordance with this Section 10(a), the Escrow Agent shall be entitled to retain all fees theretofore paid to it pursuant to this Agreement. In the event the Escrow Agent is dissolved, becomes bankrupt or is
otherwise incapable of performing its duties and obligations hereunder, the Stockholder Representative and Parent shall, within 10 business days of the occurrence of the event which renders the Escrow Agent incapable of performing hereunder, by
mutual consent, appoint a successor escrow agent. The Escrow Agent shall, upon receipt of joint written instructions from the Stockholder Representative and Parent, deliver all then remaining Escrowed Shares held hereunder to any such successor
escrow agent. In the event the Stockholder Representative and Parent are unable to agree upon a successor escrow agent within 10 business days after receipt of the Escrow Agent’s written resignation or within 10 business days after the
occurrence of the event which renders the Escrow Agent incapable of performing hereunder, the Escrow Agent shall select a bank, financial institution, trust company or financial services company reasonably acceptable to the Stockholder
Representative and Parent as successor escrow agent and deliver all then remaining Escrowed Shares held hereunder to such successor escrow agent. Upon the appointment of a successor escrow agent in accordance with the terms hereof, such successor
escrow agent shall thereafter be deemed to be the “Escrow Agent” for all purposes under this Agreement. Notwithstanding anything to the contrary set forth in this Agreement, the Escrow Agent shall not have any duty to act, nor any
liability for failing to act, after giving notice of resignation, except only that the Escrow Agent shall comply with its obligations to deliver the Escrowed Shares held hereunder to a successor escrow agent as described herein.
5
(b) The Stockholder Representative and Parent shall have the power at any time by mutual
written consent to remove the Escrow Agent (with or without cause) by written notice. Such removal shall take effect upon delivery of the Escrowed Shares held hereunder to a successor escrow agent designated in joint written instructions signed by
the Stockholder Representative and Parent. The Escrow Agent shall deliver all of the Escrowed Shares held hereunder to the successor escrow agent without unreasonable delay after receiving the designation of such successor escrow agent.
11.
Concerning the Escrow Agent
. Neither the Escrow Agent nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their failure to comply with joint written instructions as provided for herein, its or their own gross negligence, willful misconduct or
knowing violation of the terms of this Agreement. Without limiting the generality of the foregoing, the Escrow Agent: (a) makes no representation or warranty with respect to this Agreement, except that the Escrow Agent represents and warrants
that it has duly executed and delivered this Agreement and that this Agreement is a valid, legal and binding obligation of the Escrow Agent enforceable against it in accordance with the terms hereof; (b) may consult with legal counsel selected
by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the prior written advice of such counsel; and (c) shall incur no liability under or in respect of this Agreement by acting upon any
notice, consent, certificate or other instrument or writing reasonably believed by it to be genuine and signed or sent by the proper Party or Parties.
12.
Stockholder Representative
. As provided in the Merger Agreement, by virtue of the adoption of the Merger Agreement, the Former Company Stockholders shall be deemed to have approved the indemnification and
escrow terms set forth in the Merger Agreement and this Agreement and the appointment of Joel P. Adams (or his successor or replacement) as the Stockholder Representative, to give and receive notices and communications, to authorize delivery to
Parent of Parent Common Stock, cash or other property from the Escrow Fund, to object to such deliveries, to agree to, negotiate, enter into settlements and compromises of, and comply with orders of courts with respect to, claims of Parent
Indemnitees hereunder, to take such other actions and to possess such other power and authority as is set forth in Section 10.6 of the Merger Agreement, and to take all actions necessary or appropriate in the reasonable judgment of the
Stockholder Representative for the accomplishment of the foregoing. The Stockholder Representative may be replaced in accordance with Section 10.6(d) of the Merger Agreement. Parent and the Escrow Agent shall be notified promptly in writing of
such appointment. Unless and until Parent and the Escrow Agent shall have received written notice of the appointment of a successor Stockholder Representative, Parent and the Escrow Agent shall be entitled to rely on, and shall be fully protected
relying on, the power and authority of the Stockholder Representative to act on behalf of the Former Company Stockholders. The provisions of this Section 12 are intended to supplement and be in furtherance of, and shall not, and shall not be
deemed or construed to, have the effect of limiting in any respect the provisions of Section 10.6 of the Merger Agreement.
13.
Indemnification of Escrow Agent
. The Stockholder Representative and Parent each agree to severally, but not jointly, indemnify and hold harmless the Escrow Agent against and in respect of (a) any claim made against the Escrow Agent
because of its acting or failing to act in connection with any of the transactions contemplated hereby and (b) any loss the Escrow Agent may sustain in carrying out the terms of this Agreement, including the reasonable and documented fees and
expenses of counsel;
provided
,
however
, that the Escrow Agent shall not be entitled to indemnification with respect to any claim or loss resulting from or arising out of its failure to comply with joint written instructions as provided
for herein, its gross negligence, willful misconduct or knowing violation of the terms of this Agreement.
14.
Notices
. All notices,
requests, claims, demands and other communications required or permitted to be given to any Party hereunder shall be in writing and shall be deemed to have been duly given to such Party (a) on the date received by such Party, if delivered
personally to such Party, (b) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service, in each case if sent for next day delivery to such Party,
(c) on the date of transmission, if transmitted to such
6
Party by facsimile and appropriate mechanical confirmation is received or (d) on the fifth day after mailing, if mailed to such Party by first class
mail, registered or certified, postage prepaid, in the case of the foregoing clauses (a), (b), (c) and (d) (as applicable), properly addressed to such Party at its address or facsimile number below (or to such other address or facsimile
number as such Party may have specified by notice given to the other Parties pursuant to this Section 14):
If to the Escrow Agent,
to:
[
]
[ ]
[ ]
[ ]
Attention:
[ ]
Facsimile: [ ]
if to Parent, to:
Oracle
Healthcare Acquisition Corp.
200 Greenwich Avenue
3rd Floor, Greenwich, CT 06830
Attention: Joel D. Liffmann
Facsimile: (203) 862-1613
With a copy to:
Willkie
Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Attention: William H. Gump, Esq.
Facsimile: (212) 728-8111
if to the Stockholder Representative, to:
Joel P. Adams
c/o Adams Capital Management
500 Blackburn Avenue
Sewickley, PA 15143
Facsimile: (412) 749-9459
7
15.
Assignment
. No Party may assign any of its rights or obligations under this Agreement without
the prior written consent of all of the other parties hereto, and any purported assignment without such consent shall be void
ab initio
. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
16.
Further Assurances
. In case at any time any further action is necessary or
desirable to carry out the purposes of this Agreement, each Party hereto will take such further action (including the execution and delivery of such further instruments and documents) as may be reasonably requested by any other Party.
17.
Governing Law
. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflict or choice of law (other than Section 5-1401 of the New York General Obligations Law).
18.
Miscellaneous
.
(a) This Agreement, the Merger Agreement and any other document
or instrument referred to herein constitute the entire, complete and exclusive statement of the terms of the agreement by and among the Parties with respect to the subject matter hereof and supersede any prior agreements, understandings, covenants,
promises, assurances, course of dealings, representations, warranties, or communications, whether oral or written, between the Parties with respect to such subject matter. No covenant, term, provision, representation or agreement not expressly
contained herein shall be implied as a matter of law, interpretation, course of performance or conduct of the Parties. Neither this Agreement nor any provision hereof may be amended, waived or modified except by written instrument signed by each
Party.
(b) Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege.
(c) The section headings of this Agreement are for
convenience of reference only and shall not in any way affect the meaning, construction or interpretation hereof.
(d) This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[remainder of page intentionally left blank]
8
IN WITNESS WHEREOF, the Parties have duly executed this Escrow Agreement as of the date first above
written.
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ORACLE HEALTHCARE ACQUISITION CORP.
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By:
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Name:
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Title:
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9
Annex B
February 25, 2008
Board of
Directors
Oracle Healthcare Acquisition Corp.
200 Greenwich
Avenue
3
rd
Floor
Greenwich, Connecticut 06830
Dear Directors:
The Board of Directors of Oracle Healthcare Acquisition Corp. (the “Company”) has engaged
Duff & Phelps, LLC (“Duff & Phelps”) to provide an opinion (the “Opinion”) to the Board of Directors of the Company (the “Board”) as of the date hereof as to (i) the fairness, from a financial
point of view, to the holders of the common stock of the Company of the consideration to be paid by the Company in the contemplated transaction described below (the “Proposed Transaction”) (without giving effect to any impact of the
Proposed Transaction on any particular stockholder other than in its capacity as a stockholder), and (ii) the Target (as defined below) having a fair market value equal to at least 80% of the Company’s net assets.
Duff & Phelps will receive a fee for its services. Other than this engagement, during the two years preceding the date of this Opinion,
Duff & Phelps has not had any material relationship with any party to the Proposed Transaction for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually
understood to be contemplated. This Opinion has been approved by the internal opinion committee of Duff & Phelps.
Description of the
Proposed Transaction
The Proposed Transaction is a merger pursuant to the Agreement and Plan of Merger, dated as of
December 3, 2007 and amended on January 24, 2008 (as so amended, the “Initial Merger Agreement”), by and among the Company, PTI Acquisition Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), and
Precision Therapeutics, Inc. (the “Target”), as such Initial Merger Agreement is to be amended pursuant to Amendment No. 2 thereto (the “Amendment”) to be entered into by and among the Company, Merger Sub and the Target (the
Initial Merger Agreement, as so amended by the Amendment, the “Merger Agreement”). The Merger Agreement provides, among other things, for the merger (the “Merger”) of Merger Sub with and into the Target, as a result of which the
Target will continue as the surviving corporation and will become a wholly owned subsidiary of the Company, following which the Company will change its name to Precision Therapeutics Corp. As set forth more fully in the Merger Agreement, at the
effective time of the Merger, (i) each share of Merger Sub common stock issued and outstanding immediately prior to such effective time will be converted into and become one validly issued, fully paid and non-assessable share of Target common
stock, and (ii) each outstanding share of Target common stock, restricted common stock, and each option and warrant to purchase Target common stock will be converted into the right to receive that number of shares of Company common stock or
options to purchase Company common stock, as applicable, as determined in accordance with the formula set forth in the Merger Agreement. In addition, the former holders of Target common stock receiving shares of Company common stock may be entitled
to additional consideration consisting of cash, Company common stock, or a combination thereof, upon the achievement of certain specified milestones. At your direction, we have assumed that the Company will issue (or reserve for issuance upon the
exercise or conversion of outstanding Target options, warrants and convertible debt), an aggregate of approximately 20.2 million shares of its common stock, as well as an adequate number of shares which may be issued upon payment of the
post-closing consideration described above, subject to certain adjustments (as to which we express no opinion) as provided in the Merger Agreement. The terms and conditions of the Merger are more fully set forth in the Merger Agreement.
Oracle Healthcare Acquisition Corp.
February 25, 2008
Page
2
of 4
Scope of Analysis
In connection with this Opinion, Duff & Phelps has made such reviews, analyses and inquiries as we have deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account
its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Our due diligence and scope of analysis with
regards to the Proposed Transaction included, but was not limited to, the following:
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1.
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A review of the following documents:
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a.
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Certain publicly available financial statements and other business and financial information of the Company and the Target, respectively, and the industry in which the Target
operates;
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b.
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Certain internal financial statements and other financial and operating data concerning the Company and the Target, respectively, which the Company and the Target have respectively
identified as being the most current financial statements available;
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c.
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Certain financial forecasts prepared by the managements of the Company and the Target, respectively;
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d.
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The Initial Merger Agreement;
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e.
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A draft of the Amendment dated as of the date hereof;
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2.
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A discussion of the operations, financial conditions, future prospects and projected operations and performance of the Company and the Target, respectively, and regarding the
Proposed Transaction with the managements of the Company and the Target, respectively;
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3.
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A review of the historical trading price and trading volume of the Company Common Stock and the publicly traded securities of certain other companies that we deemed relevant;
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4.
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A comparison of the financial performance of the Target with that of certain other publicly traded companies that we deemed relevant;
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5.
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A review of certain projections prepared and furnished to us by managements of the Company and Target regarding Target on a stand-alone basis and as a combined company with the
Company;
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6.
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A comparison of certain financial terms of the Proposed Transaction to financial terms, to the extent publicly available, of certain other business combination transactions that we
deemed relevant; and
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7.
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An undertaking of such other analyses and consideration of such other factors as we deemed appropriate.
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Assumptions, Qualifications and Limiting Conditions
In performing its analyses and rendering
this Opinion with respect to the Proposed Transaction, Duff & Phelps, with your consent:
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1.
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Relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from
private sources, including Company management, and did not independently verify such information;
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2.
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Assumed that any estimates, evaluations, forecasts and projections furnished to Duff & Phelps were reasonably prepared and based upon the best currently available
information and good faith judgment of the person furnishing the same;
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3.
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Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;
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4.
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Assumed that information supplied to Duff & Phelps and representations and warranties made in the Agreement are substantially accurate;
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Oracle Healthcare Acquisition Corp.
February 25, 2008
Page
3
of 4
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5.
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Assumed that all of the conditions required to implement the Proposed Transaction will be satisfied and that the Proposed Transaction will be completed in accordance with the
Agreement without any amendments thereto or any waivers of any terms or conditions thereof; and
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6.
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Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Proposed Transaction will be obtained without any adverse effect on
the Company or the contemplated benefits expected to be derived in the Proposed Transaction.
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In our analysis and in
connection with the preparation of this Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of
any party involved in the Proposed Transaction. To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based prove to be untrue in any material respect, this Opinion cannot and should not be relied upon.
Duff & Phelps did not make any independent evaluation, appraisal or physical inspection of the Company’s solvency or of any
specific assets or liabilities (contingent or otherwise). This Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s credit worthiness or otherwise as tax advice or as accounting
advice. Duff & Phelps has not been requested to, and did not, (a) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Proposed Transaction, or any alternatives to the Proposed
Transaction, (b) negotiate the terms of the Proposed Transaction, and therefore, Duff & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be
negotiated among the parties to the Agreement and the Transaction, or (c) advise the Board or any other party with respect to alternatives to the Proposed Transaction. In addition, Duff & Phelps is not expressing any opinion as to the
market price or value of the Company common stock after announcement of the Proposed Transaction. In rendering this Opinion, Duff & Phelps relied upon the fact that the Board and the Company have been advised by counsel as to all legal
matters with respect to the Proposed Transaction, including whether all procedures required by law to be taken in connection with the Proposed Transaction have been duly, validly and timely taken; and Duff & Phelps has not made, and assumes
no responsibility to make, any representation, or render any opinion, as to any legal matter.
In rendering this Opinion, Duff &
Phelps is not expressing any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the consideration to be received by the public
shareholders of the Company in the Proposed Transaction, or with respect to the fairness of any such compensation.
Duff & Phelps
has prepared this Opinion effective as of the date hereof. This Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date hereof, and Duff & Phelps disclaims any
undertaking or obligation to advise any person of any change in any fact or matter affecting this Opinion which may come or be brought to the attention of Duff & Phelps after the date hereof. Notwithstanding and without limiting the
foregoing, in the event that there is any change in any fact or matter affecting this Opinion after the date hereof and prior to the completion of the Proposed Transaction, Duff & Phelps reserves the right to change, modify or withdraw this
Opinion.
The basis and methodology for this Opinion have been designed specifically for the express purposes of the Board and may not
translate to any other purposes. This Opinion is not a recommendation as to how the Board or any stockholder should vote or act with respect to any matters relating to the Proposed Transaction (including, without limitation, with respect to the
exercise of rights to convert shares of Target common stock into cash). Further, we have not been requested to opine as to, and the Opinion does not in any manner address, the underlying business decision of the Company to engage in the Proposed
Transaction or the relative merits of the Proposed Transaction as compared to any alternative business transaction or strategy (including, without
Oracle Healthcare Acquisition Corp.
February 25, 2008
Page
4
of 4
limitation, a liquidation of the Company after not completing a business combination transaction within the allotted time). The decision as to whether to
proceed with the Proposed Transaction or any related transaction, nor does it indicate that the consideration paid is the best possibly attainable under any circumstances. Instead, it merely states whether the consideration in the Proposed
Transaction is within a range suggested by certain financial analyses. The decision as to whether to proceed with the Proposed Transaction or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which
this Opinion is based. This letter should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.
Subject to the prior written approval of Duff & Phelps (which approval shall not be unreasonably withheld), this Opinion may be included in its entirety in any proxy statement distributed to stockholders of the Company in
connection with the Proposed Transaction or other document required by law or regulation to be filed with the Securities and Exchange Commission, and you may summarize or otherwise reference the existence of this Opinion in such documents, provided
that any such summary or reference language shall also be subject to the prior written approval by Duff & Phelps. Except as described above, without our prior consent, this Opinion may not be quoted from or referred to, in whole or in part,
in any written document or used for any other purpose.
Conclusion
Based upon and subject to the foregoing, Duff & Phelps is of the opinion that (i) the consideration to be paid by the Company in the
Proposed Transaction is fair, from a financial point of view, to the holders of the Company’s common stock, and (ii) the Target has a fair market value equal to at least 80% of the Company’s net assets.
Respectfully submitted,
/
S
/
D
UFF
&
P
HELPS
,
LLC
D
UFF
&
P
HELPS
,
LLC
Annex C
REDEMPTION AGREEMENT
THIS REDEMPTION AGREEMENT
(this “
Agreement
”) is made
and entered into as of February 25, 2008 by and among Oracle Healthcare Acquisition Corp., a Delaware corporation (the “
Company
”), and the stockholders of the Company set forth on the signature pages hereto (each, a
“
Stockholder
”).
W I T N E S S E T H:
WHEREAS, each Stockholder owns the shares (the “
Redemption Shares
”) of common stock, par value $0.0001 per share (the “
Common Stock
”), of the Company set forth opposite such
Stockholder’s name on
Schedule I
attached hereto;
WHEREAS, the Company desires to repurchase and redeem all of the
Redemption Shares upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS, each Stockholder desires to sell to
the Company all of the Redemption Shares set forth opposite its name on
Schedule I
attached hereto upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, it is a condition to the consummation of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of
December 3, 2007 (as amended on January 24, 2008 and February 25, 2008, and as further amended from time to time, the “
Merger Agreement
”), by and among the Company, PTI Acquisition Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of the Company, Precision Therapeutics, Inc., a Delaware corporation, and, for the limited purposes provided in Article X thereof, the “Stockholder Representative” identified therein that this
Agreement be in full force and effect;
NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, hereby agree as follows:
1.
Redemption of Shares
. Each Stockholder hereby agrees to sell such Stockholder’s Redemption Shares to the Company, and the
Company hereby agrees to purchase and redeem such Redemption Shares from such Stockholder, upon the terms and subject to the conditions set forth in this Agreement.
2.
Purchase Price
. The purchase price (the “
Redemption Price
”) payable by the Company for each Redemption Share
purchased and redeemed by the Company pursuant to this Agreement shall be $0.0083.
3.
Redemption Closing
.
a. The closing (the “
Redemption Closing
”) of the purchase, redemption and sale of the Redemption Shares
hereunder shall take place simultaneously with the Effective Time (as defined in the Merger Agreement) (the date on which the Redemption Closing shall occur, the “
Redemption Date
”). The Redemption Closing shall take place at such
location as the parties hereto shall mutually agree.
b. At the Redemption Closing, the Company shall pay to each
Stockholder (by wire transfer of immediately available funds in accordance with written wire instructions delivered to the Company by such Stockholder not less than two business days prior to the Redemption Date or, if no such instructions are so
provided, by cashier’s or bank check payable to the order of such Stockholder) the aggregate Redemption Price payable to such Stockholder pursuant to
Section 2
hereof in respect of its Redemption Shares, against delivery by such
Stockholder to the Company of the original stock certificate(s) representing such Stockholder’s Redemption Shares, together with a duly executed stock power with respect to such Redemption Shares substantially in the form attached hereto as
Exhibit A
or a duly executed and notarized affidavit of lost share certificate and indemnity agreement in a form reasonably acceptable to the Company.
4.
Assignment; Binding Effect
. This Agreement shall be binding upon and shall
inure to the benefit of the executors, administrators, heirs, legal representatives, predecessors, successors and assigns of the parties hereto.
5.
Governing Law; Jurisdiction
. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of Delaware. The parties hereto irrevocably elect as the sole
judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent to the jurisdiction of, the courts of the State of Delaware.
6.
Miscellaneous
. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and
supersedes and merges all prior agreements or understandings, whether written or oral, with respect to such subject matter. This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each
of the parties hereto. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the
Agreement shall be enforceable in accordance with its terms.
7.
Effectiveness
. This Agreement shall not be effective
with respect to the Company and any Stockholder unless and until it is executed by the Company and such Stockholder, it being understood and agreed that upon such execution, the Agreement will be effective automatically with respect to the Company
and such Stockholder and without further action by any person or party and shall be deemed to have been mutually delivered and accepted by the parties immediately upon such execution.
8.
Further Assurances
. Each of the parties hereto agrees that, at the reasonable request of any other party hereto from time to
time after the Redemption Closing, it shall take such further actions, execute and deliver such further documents, and provide such further assurances, as may be necessary or appropriate to evidence or confirm the purchase and redemption of the
Redemption Shares by the Company hereunder.
9.
Counterparts; Facsimile Transmission
. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument. This Agreement may be executed by facsimile.
[remainder of page intentionally left blank]
C-2
IN WITNESS WHEREOF,
the parties hereto have caused this Redemption Agreement to be duly executed
as of the date first written above.
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COMPANY:
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ORACLE HEALTHCARE ACQUISITION CORP.
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By:
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/s/ J
OEL
D.
L
IFFMANN
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Name:
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Joel D. Liffmann
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Title:
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President and Chief Operating Officer
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STOCKHOLDERS:
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ORACLE HEALTHCARE HOLDING LLC
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By:
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/s/ L
ARRY
N.
F
EINBERG
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Name:
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Larry N. Feinberg
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Title:
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Managing Member
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LNF OHAC LLC
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By:
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/s/ L
ARRY
N.
F
EINBERG
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Name:
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Larry N. Feinberg
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Title:
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Managing Member
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JDL OHAC LLC
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By:
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/s/ J
OEL
D.
L
IFFMANN
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Name:
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Joel D. Liffmann
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Title:
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Managing Member
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GRANITE CREEK PARTNERS, L.L.C.
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By:
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/s/ M
ARK
A.
R
ADZIK
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Name:
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Mark A. Radzik
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Title:
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Managing Member
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/s/ J
OEL
D.
L
IFFMANN
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Name:
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Joel D. Liffmann
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/s/ G
EORGE
B
ICKERSTAFF
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Name:
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George Bickerstaff
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C-3
SCHEDULE I
Stockholders and Redemption Shares
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Stockholders
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Redemption Shares
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Oracle Healthcare Holding LLC
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718,749
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LNF OHAC LLC
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468,750
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JDL OHAC LLC
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468,690
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Granite Creek, L.L.C.
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187,500
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George Bickerstaff
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31,251
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Joel D. Liffmann
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60
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TOTAL
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1,875,000
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C-4
EXHIBIT A
FORM OF STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer all
of its right, title and interest in, to and under shares (the “
Shares
”) of common stock, par value $0.0001 per share, of ORACLE HEALTHCARE ACQUISITION CORP., a
Delaware corporation (the “
Company
”), unto the Company, all such Shares standing in the undersigned’s name and represented by the certificate numbered
, dated , 200 , and does hereby irrevocably
constitute and appoint any officer of the Company (or his or her designee) the undersigned’s attorney-in-fact to transfer the said Shares on the books of the Company with full power of substitution in the premises.
Dated: , 2008
C-5