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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
VAXGEN, INC.,
TLW MERGER SUB, INC.,
TLW, LLC,
AND
RAVEN BIOTECHNOLOGIES, INC.
Dated as of November 12, 2007
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TABLE OF CONTENTS
Page
----
ARTICLE 1 THE
TRANSACTION......................................................2
1.1 The
Transaction...................................................2
1.2 Effective
Time....................................................2
1.3 Effect of Merger
I................................................3
1.4 Certificate Of Incorporation; Bylaws; Certificate
of Formation; Operating
Agreement.................................3
1.5 Directors and Officers of Surviving Corporation;
Board of Managers of Surviving Entity and
Parent..................3
1.6 Effect on Capital
Stock...........................................3
1.7
Escrow............................................................7
1.8 Exchange of
Certificates..........................................9
1.9 Stock Transfer
Books.............................................11
1.10 No Further Ownership Rights in Raven
Stock.......................11
1.11 Lost, Stolen or Destroyed
Certificates...........................11
1.12 Tax
Consequences.................................................11
1.13 Taking of Necessary Action; Further
Action.......................11
1.14 Effect of Merger
II..............................................12
1.15 Material Adverse
Effect..........................................12
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF
RAVEN.............................13
2.1 Organization of
Raven............................................13
2.2 Capital
Structure................................................13
2.3 Obligations with Respect to Capital
Stock........................14
2.4
Authority........................................................14
2.5 Section 203 of the Delaware General Corporation
Law Not
Applicable...............................................15
2.6 Raven Financial
Statements.......................................16
2.7 Absence of Certain Changes or
Events.............................16
2.8
Taxes............................................................16
2.9 Intellectual
Property............................................18
2.10 Compliance; Permits;
Restrictions................................21
2.11
Litigation.......................................................23
2.12 Brokers' and Finders'
Fees.......................................23
2.13 Employee Benefit
Plans...........................................23
2.14 Absence of Liens and Encumbrances; Condition
of
Equipment.....................................................27
2.15 Environmental
Matters............................................27
2.16 Labor
Matters....................................................28
2.17 Agreements, Contracts and
Commitments............................29
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2.18 Reorganization
Matters...........................................30
2.19 Registration Statement; Proxy
Statement..........................31
2.20 Board
Approval...................................................31
2.21 Books and
Records................................................31
2.22 Real Property
Leases.............................................31
2.23
Insurance........................................................32
2.24 Accounts
Receivable..............................................32
2.25 Certain Business
Practices.......................................33
2.26
Suppliers........................................................33
2.27 Government
Contracts.............................................33
2.28 Interested Party
Transactions....................................33
2.29 Warrants and Indemnity
Agreements................................33
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER
SUBS...................................................................33
3.1 Organization of Parent; Merger
Subs..............................34
3.2
Authority........................................................34
3.3 Section 203 Of The Delaware General Corporation
Law Not
Applicable...............................................35
3.4 Board
Approval...................................................35
3.5 SEC Filings; Financial
Statements................................35
3.6 Capital
Structure................................................36
3.7 Obligations With Respect To Capital
Stock........................37
3.8 Cash on Hand and No Undisclosed
Liabilities......................37
3.9 Absence of Certain Changes or
Events.............................37
3.10
Taxes............................................................37
3.11 Intellectual
Property............................................39
3.12 Compliance; Permits;
Restrictions................................40
3.13
Litigation.......................................................40
3.14 Brokers' and Finders'
Fees.......................................40
3.15 Employee Benefit
Plans...........................................40
3.16 Environmental
Matters............................................44
3.17 Labor
Matters....................................................45
3.18 Reorganization
Matters...........................................45
3.19 Registration Statement; Proxy
Statement/Prospectus...............47
3.20 Fairness Opinion and Board
Approval..............................47
3.21 Restrictions on Business
Activities..............................47
3.22 Government
Contracts.............................................47
3.23 Interested Party
Transactions....................................47
3.24 Books and
Records................................................47
3.25 Real Property
Leases.............................................48
3.26
Insurance........................................................48
3.27 Absence of Liens and Encumbrances; Condition of
Equipment........................................................49
3.28 Agreements, Contracts and
Commitments............................49
ARTICLE 4 CONDUCT OF BUSINESS PENDING THE
TRANSACTION.........................50
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4.1 Conduct of
Business..............................................50
ARTICLE 5 ADDITIONAL
AGREEMENTS...............................................52
5.1 Proxy Statement/Prospectus; Registration Statement;
Other............................................................52
5.2 Stockholder
Approvals............................................53
5.3 Access to Information;
Confidentiality...........................54
5.4 Consents;
Approvals..............................................54
5.5 Bridge
Loan......................................................54
5.6 Employee
Matters.................................................54
5.7 Director Indemnification and
Insurance...........................56
5.8 Notification of Certain
Matters..................................57
5.9 Monthly Financial
Statements.....................................57
5.10 Further
Action...................................................58
5.11 Public
Announcements.............................................58
5.12 Listing of Parent Common
Stock...................................58
5.13 Tax-Free
Reorganization..........................................58
5.14 Board of Directors of
Parent.....................................58
5.15 No
Solicitation..................................................59
5.16 Tax
Matters......................................................64
5.17 Intentionally
Omitted............................................64
5.18 Consultation Regarding Certain Closing
Conditions................64
ARTICLE 6 CONDITIONS TO THE
TRANSACTION.......................................64
6.1 Conditions to Obligation of Each Party to Effect
Merger
I.........................................................64
6.2 Additional Conditions to Obligations of
Parent...................65
6.3 Additional Conditions to Obligations of
Raven....................66
ARTICLE 7
TERMINATION.........................................................67
7.1
Termination......................................................67
7.2 Notice of Termination; Effect of
Termination.....................69
7.3 Termination
Fees.................................................69
7.4 Fees and
Expenses................................................70
ARTICLE 8
INDEMNIFICATION.....................................................70
8.1
Definitions......................................................70
8.2 Indemnification and Escrow
Fund..................................71
8.3 Limitations on
Indemnification...................................71
8.4 Assertion of
Claims..............................................71
8.5 Notice and Defense of Third Party
Claims.........................72
8.6 Survival of Representations and
Warranties.......................72
ARTICLE 9 GENERAL
PROVISIONS..................................................73
9.1
Notices..........................................................73
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9.2 Certain
Definitions..............................................74
9.3 Definitions
List.................................................74
9.4
Amendment........................................................81
9.5
Waiver...........................................................81
9.6
Headings.........................................................81
9.7
Severability.....................................................81
9.8 Entire
Agreement.................................................81
9.9
Assignment.......................................................82
9.10 Parties in
Interest..............................................82
9.11 Failure or Indulgence Not Waiver;
Remedies.......................82
9.12 Governing
Law....................................................82
9.13
Counterparts.....................................................82
Exhibit A Form of Voting Agreement
Exhibit B Form of Lock-Up Agreement
Exhibit C [Reserved]
Exhibit D Form of Escrow Agreement
Exhibit E Bridge Loan Documents
Exhibit F Certificate of Formation
Exhibit G Operating Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 12, 2007
(the
"Agreement"), among VAXGEN, INC., a Delaware corporation
("Parent"), TLW MERGER
SUB, INC., a newly-formed Delaware corporation wholly-owned by
Parent ("Merger
Sub I"), TLW, LLC, a newly-formed Delaware limited liability
company
wholly-owned by Parent ("Merger Sub II" and together with Merger
Sub I, the
"Merger Subs"), and RAVEN BIOTECHNOLOGIES, INC., a Delaware
corporation
("Raven").
RECITALS
WHEREAS, the Boards of Directors of Parent and Raven have each
determined
that it is advisable and in the best interests of their
respective stockholders
for Parent to enter into a business combination with Raven upon
the terms and
subject to the conditions set forth herein.
WHEREAS, upon the terms and subject to the terms and conditions
of this
Agreement, Parent, Merger Subs and Raven intend to effect (i) a
merger of Merger
Sub I with and into Raven with Raven as the surviving
corporation ("Merger I")
in accordance with the applicable provisions of the Delaware
General Corporation
Law ("Delaware Law"), and (ii) immediately following the
effectiveness of Merger
I, a merger of Raven with and into Merger Sub II in accordance
with the
applicable provisions of Delaware Law and the Delaware Limited
Liability Company
Act ("DLLCA") ("Merger II" and, together with Merger I, the
"Transaction"). Upon
consummation of the Transaction, Raven will cease to exist and
Merger Sub II
will succeed to all of Raven's business, assets and
liabilities.
WHEREAS, Parent, Merger Subs and Raven intend that Merger I and
Merger II
shall be treated as an integrated transaction and that the
Transaction shall
qualify as a reorganization within the meaning of Section 368(a)
of the Internal
Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated
thereunder (the "Treasury Regulations").
WHEREAS, in connection with Merger I, each outstanding share of
Raven
Series D Preferred Stock, $0.001 per share (the "Raven Series D
Preferred
Stock") shall be converted into the right to receive the Merger
Consideration,
upon the terms and subject to the conditions set forth herein;
and each
outstanding share of Raven capital stock other than Raven Series
D Preferred
Stock shall be cancelled and shall receive no Merger
Consideration.
WHEREAS, as a condition to the willingness of, and an inducement
to Parent
to enter into this Agreement, contemporaneously with the
execution and delivery
of this Agreement, each Raven stockholder listed on Schedule A
attached hereto
(each, a "Major Raven Stockholder") is entering into a voting
agreement in
substantially the form of Exhibit A attached hereto (the "Voting
Agreements"),
and each Major Raven Stockholder and Raven Affiliate listed on
Schedule B
attached hereto and each Parent Affiliate listed on Schedule B
is entering into
a lock-up agreement in substantially the form of Exhibit B
attached hereto (the
"Lock-Up Agreements"), under which such stockholder will agree
not to sell 100%
of the shares of Parent Common Stock he, she or it holds
immediately following
Merger I for a period of six months following the Effective Time
of Merger I.
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WHEREAS, Parent, Merger Subs and Raven desire to make
certain
representations and warranties and other agreements in
connection with the
Transaction.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants
and agreements herein contained, Parent, Merger Subs and Raven
hereby agree as
follows:
ARTICLE 1
THE TRANSACTION
1.1 The Transaction.
(a) Effective Time. At the Effective Time of Merger I (as
defined in
Section 1.2), and subject to and upon the terms and conditions
of this Agreement
and Delaware Law, Merger Sub I shall be merged with and into
Raven, and the
separate corporate existence of Merger Sub I shall cease. Raven
shall continue
as the surviving corporation in Merger I ("Surviving Corporation
I").
Immediately following the Effective Time of Merger I, and upon
the terms and
subject to the conditions set forth in this Agreement, and in
accordance with
Delaware Law, Surviving Corporation I will be merged with and
into Merger Sub
II, and the separate existence of Surviving Corporation I shall
cease. Merger
Sub II shall continue as the surviving entity in Merger II (the
"Surviving
Entity") and shall succeed to and assume all the rights and
obligations of Raven
in accordance with Delaware Law.
(b) Closing. Unless this Agreement shall have been terminated
and
the transactions herein contemplated shall have been abandoned
pursuant to
Section 7.1, and subject to the satisfaction or waiver of the
conditions set
forth in Article VI (other than those conditions that by their
nature are to be
satisfied at the Closing, but subject to the satisfaction or
waiver of such
conditions), the consummation of the Transaction will take place
as promptly as
practicable (and in any event within two business days) after
satisfaction or
waiver of the conditions set forth in Article VI, at the offices
of Cooley
Godward Kronish LLP, 3175 Hanover Street, Palo Alto, CA
94304-1130, unless
another date, time or place is agreed to in writing by the
parties hereto.
1.2 Effective Time. Upon the terms and subject to the provisions
of this
Agreement, the Agreement of Merger for Merger I, satisfying the
applicable
requirements of Delaware Law (the "Agreement of Merger"), and
such other
certificates, satisfying the applicable requirements of Delaware
Law, as are
required under Delaware Law, shall be duly executed by Raven and
Merger Sub I
and concurrently with the Closing filed with the Secretary of
State of the State
of Delaware in accordance with the relevant provisions of
Delaware Law (the time
of such filing with the Secretary of State of the State of
Delaware (or such
later time as may be agreed in writing by the parties hereto and
specified in
the Agreement of Merger) being the "Effective Time of Merger
I"). Upon the terms
and subject to the provisions of this Agreement, the Agreement
of Merger for
Merger II, satisfying the applicable requirements of Delaware
Law and the DLLCA
(the "Second Agreement of Merger"), and such other certificates,
satisfying the
applicable requirements of Delaware Law and the DLLCA, as are
required under
Delaware Law and DLLCA, shall be duly executed by Surviving
Corporation I and
Merger Sub II and
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concurrently with or as soon as practicable following the
Effective Time of
Merger I filed with the Secretary of State of the State of
Delaware in
accordance with the relevant provisions of Delaware Law and the
DLLCA (the time
of such filing with the Secretary of State of the State of
Delaware (or such
later time as may be agreed in writing by the parties hereto and
specified in
the Second Agreement of Merger) being the "Effective Time of
Merger II").
1.3 Effect of Merger I. The effect of Merger I shall be as
provided in
this Agreement and the applicable provisions of Delaware Law and
the DLLCA.
Without limiting the generality of the foregoing, and subject
thereto, at the
Effective Time of Merger I all the property, rights, privileges,
powers and
franchises of Raven shall vest in Surviving Corporation I, and
all debts,
liabilities, obligations and duties of Raven shall become the
debts,
liabilities, obligations and duties of Surviving Corporation
I.
1.4 Certificate Of Incorporation; Bylaws; Certificate of
Formation;
Operating Agreement.
(a) Certificate of Incorporation. The Certificate of
Incorporation of
Merger Sub I, as in effect immediately prior to the Effective
Time of Merger I,
shall be the Certificate of Incorporation of Surviving
Corporation I until
thereafter amended as provided by Delaware Law and such
Certificate of
Incorporation.
(b) Bylaws. The Bylaws of Merger Sub I, as in effect
immediately
prior to the Effective Time of Merger I, shall be the Bylaws of
Surviving
Corporation I until thereafter amended as provided by Delaware
Law, the
Certificate of Incorporation of Surviving Corporation I and such
Bylaws.
(c) Certificate of Formation. The Certificate of Formation of
the
Surviving Entity immediately after the Effective Time of Merger
II shall be in a
form attached as Exhibit F attached hereto.
(d) Operating Agreement. The Operating Agreement of the
Surviving
Entity immediately after the Effective Time of Merger II shall
be in a form
attached as Exhibit G attached hereto.
1.5 Directors and Officers of Surviving Corporation; Board of
Managers of
Surviving Entity and Parent. As of the Effective Time of Merger
I, the initial
directors of Surviving Corporation I shall be as set forth on
Schedule 1.5, each
to hold office in accordance with the Certificate of
Incorporation and Bylaws of
Surviving Corporation I, and the initial officers of Surviving
Corporation I
shall be as set forth on Schedule 1.5, in each case until their
respective
successors are duly elected or appointed and qualified. The
Board of Managers of
the Surviving Entity immediately after the Effective Time of
Merger II shall be
the respective individuals who are directors of Surviving
Corporation I
immediately prior to the Effective Time of Merger II. The
directors and officers
of Parent as of the Effective Time of Merger I shall be as
provided in Section
5.14 below.
1.6 Effect on Capital Stock. Upon the terms and subject to the
conditions
set forth in this Agreement, at the Effective Time of Merger I,
by virtue of
Merger I and without any action on the part of Parent, Merger
Sub, Raven or the
holders of any of the following securities:
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(a) Conversion of Securities.
(i) Raven Series D Preferred Stock.
(1) In accordance with the terms of the Restated Certificate
of Incorporation of Raven, each holder of shares of Raven Series
D Preferred
Stock issued and outstanding immediately prior to the Effective
Time of Merger I
shall be entitled to receive, prior and in preference to any
holder of Raven
Series A Preferred Stock, Raven Series B Preferred Stock, Raven
Series C
Preferred Stock or Raven Common Stock, an amount equal to two
times (2X) the
Original Issue Price of the Raven Series D Preferred Stock, plus
any declared
but unpaid dividends (the "Series D Preference Amount"), unless
the amount
distributable to the holders of Series D Preferred Stock shall
be insufficient
to permit the payment to such holders of the full Series D
Preference Amount, in
which case the entire amount legally available for distribution
shall be
distributed ratably among the holders of the Raven Series D
Preferred Stock in
proportion to the Series D Preferred Amount each such holder is
otherwise
entitled to receive. Each share of Raven Series D Preferred
Stock issued and
outstanding immediately prior to the Effective Time of Merger I
(excluding any
shares to be canceled pursuant to Section 1.6(b)) shall be
canceled and
extinguished and automatically converted, subject to Section
1.6(i), into the
right to receive (i) 0.171284 share(s) (the "Exchange Ratio") of
validly issued,
fully paid and nonassessable shares of common stock of Parent,
$0.01 par value
per share ("Parent Common Stock"), subject to adjustment as set
forth in this
Agreement (the "Initial Merger Consideration"), and cash in lieu
of any
fractional shares of Parent Common Stock to be issued or paid in
consideration
therefor, and (ii) the right to receive a pro rata share of any
release of
shares of Parent Common Stock held in the Escrow Fund to the
holders of Raven
Series D Preferred Stock receiving Merger Consideration (the
"Raven
Stockholders") in accordance with Section 8.2 and the Escrow
Agreement.
(2) Notwithstanding the foregoing, the number of Parent
Common Shares to be issued to the Raven Stockholders is subject
to the following
adjustments: (i) If, on the date that is no later than fourteen
(14) days prior
to the estimated date of the Effective Time of Merger I, the
total amount of
cash, cash equivalents and marketable securities held by Parent,
plus the amount
of outstanding indebtedness of Raven to Parent under the Bridge
Loan (such total
being the "Actual Cash Balance") is less than Guaranteed Closing
Cash Balance,
as defined below, then the number of shares of Parent Common
Stock to be issued
to the Raven Stockholders as provided in Section 1.6(a)(i)(1)
above shall be
increased by an amount equal to the quotient obtained by
dividing (A) the amount
by which the Actual Cash Balance is less than the Guaranteed
Closing Cash
Balance by (B) the Parent Share Value; provided that in no event
shall any
increase to the number of shares of Parent Common Stock to be
issued to the
Raven Stockholders result in the number of shares of Parent
Common Stock
issuable to Raven Stockholders in Merger I representing more
than 49.99% of the
number of shares of Parent Common Stock outstanding as of
immediately prior to
the Effective Time of Merger I; (ii) if, immediately prior to
the Effective Time
of Merger I, the fees, expenses, liabilities and obligations
incurred by Raven
in connection with the transactions contemplated by this
Agreement, including
without limitation those owing to current and former Raven
employees, directors
and consultants relating to retention, severance and bonuses
payable as of the
Closing pursuant to agreements between Raven and such Raven
employees, directors
and consultants, and required to be paid in cash exceeds the
amount of cash held
by Raven (other
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than cash provided under the Bridge Loan Agreement between Raven
and Parent)
immediately prior to the Effective Time of Merger I (such
deficiency being a
"Cash Deficiency Amount"), then the number of shares of Parent
Common Stock to
be issued to the Raven Stockholders as provided in Section
1.6(a)(i)(1) above
shall be decreased by an amount equal to the quotient obtained
by dividing (A)
the Cash Deficiency Amount by (B) the Parent Share Value; and
(iii) if, on the
date that is three days after the Parent Stockholders meeting at
which Merger I
is approved, the full amount of the "Commitments" under that
certain Note
Purchase Agreement dated November 12, 2007 by and among Raven
and the parties
thereto ("Note Purchase Agreement") has not been funded and
received by Raven in
accordance with the terms thereof, then the Exchange Ratio to be
used on Section
1.6(a)(i)(1) shall be changed to 0.07569. For purposes of this
agreement,
"Guaranteed Closing Cash Balance" shall be $64,000,000 if the
Effective Time of
Merger I occurs on or before March 31, 2008. Should the
Effective Time of Merger
I occur later than March 31, 2008, the Guaranteed Closing Cash
Balance shall be
reduced by $50,000 per day. For purposes of this Agreement,
"Parent Share Value"
shall mean the average of the last sale prices of the Parent
Common Stock quoted
on the "Pink Sheets" for the ten (10) trading days ending on the
trading day
immediately preceding the date of this Agreement.
(ii) Other Series of Raven Preferred Stock and Raven Common
Stock. Each share of Raven Series A Preferred Stock, Raven
Series B Preferred
Stock, Raven Series C Preferred Stock and Raven Common Stock
issued and
outstanding immediately prior to the Effective Time of Merger I
shall, by virtue
of Merger I, be canceled and extinguished without any conversion
thereof and
without payment of any consideration therefor and cease to
exist, all in
accordance with the Restated Certificate of Incorporation of
Raven as a result
of the allocation of the Merger Consideration to the liquidation
preference of
the Series D Preferred Stock as set forth therein.
(b) Cancellation. Each Share held in the treasury of Raven and
each
Share owned by Parent or by any direct or indirect wholly owned
subsidiary of
Raven or Parent immediately prior to the Effective Time of
Merger I shall, by
virtue of Merger I and without any action on the part of the
holder thereof,
cease to be outstanding, be canceled and extinguished without
any conversion
thereof and without payment of any consideration therefor and
cease to exist.
(c) Capital Stock of Merger Sub I. Each share of common stock,
par
value $0.001 per share, of Merger Sub I issued and outstanding
immediately prior
to the Effective Time of Merger I shall be converted into and
exchanged for one
validly issued, fully paid and nonassessable share of common
stock, $0.001 par
value per share, of Surviving Corporation I. Each stock
certificate of Merger
Sub I evidencing ownership of any such shares shall, as of the
Effective Time of
Merger I, evidence ownership of such shares of common stock of
Surviving
Corporation I.
(d) Restricted Stock. At the Effective Time of Merger I,
those
shares of Raven Common Stock subject to vesting or other
restrictions shall
fully vest and any restrictions and rights of repurchase thereon
fully lapse.
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(e) Warrants. All warrants to purchase Raven Series D
Preferred
Stock (the "Series D Warrants") outstanding as of the Effective
Time of Merger I
shall be assumed by Parent and shall continue to have, and be
subject to, the
same terms and conditions as are in effect immediately prior to
the Effective
Time of Merger I, except that such Series D Warrants shall be
exercisable for
that number of whole shares of Parent Common Stock equal to the
product (rounded
down to the nearest whole number of shares of Parent Common
Stock, with no cash
being payable for any fractional share eliminated by such
rounding) of (i) the
number of shares of Raven Series D Preferred Stock that were
issuable upon
exercise of such Series D Warrant immediately prior to the
Effective Time of
Merger I and (ii) the Exchange Ratio, and the per share exercise
price of each
such Series D Warrant shall be adjusted by dividing (A) the per
share exercise
price of such Series D Warrant immediately prior to the
Effective Time of Merger
I by (B) the Exchange Ratio.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall
be
adjusted to reflect fully (i) the effect of any stock split,
reverse split,
stock dividend (including any dividend or distribution of
securities convertible
into Parent Common Stock or Raven Series D Preferred Stock),
reorganization,
recapitalization or other like change with respect to Parent
Common Stock or
Raven Series D Preferred Stock occurring after the date hereof
and prior to the
Effective Time of Merger I, and (ii) any change in the number of
shares of
Series D Preferred Stock outstanding as of immediately prior to
the Effective
Time of Merger I from 188,470,593.
(g) Fractional Shares. No fraction of a share of Parent Common
Stock
will be issued, but in lieu thereof each holder of Raven Series
D Preferred
Stock who would otherwise be entitled to a fraction of a share
of Parent Common
Stock (after aggregating all fractional shares of Parent Common
Stock to be
received by such holder) shall receive from Parent an amount of
cash (rounded to
the nearest whole cent), without interest, equal to the product
of (i) such
fraction, multiplied by (ii) the applicable price per share
calculated in
accordance with Section 1.6(a).
(h) Dissenting Shares. Any holder of shares of Raven Common
Stock or
Raven Preferred Stock issued and outstanding immediately prior
to the Effective
Time of Merger I with respect to which dissenters' rights, if
any, are available
by reason of Merger I pursuant to Section 262 of Delaware Law
and/or Chapter 13
of the California General Corporation Law (the "CGCL") who has
not voted in
favor of Merger I or consented thereto in writing and who
complies with Section
262 of Delaware Law and/or Chapter 13 of the CGCL ("Dissenting
Shares") shall
not be entitled to receive any portion of the Merger
Consideration pursuant to
this Article 1, unless such holder fails to perfect, effectively
withdraws or
loses its dissenters' rights under Delaware Law and/or the CGCL.
Such holder
shall be entitled to receive only such rights as are granted
under Section 262
of Delaware Law and/or Chapter 13 of the CGCL. If any such
holder fails to
perfect, effectively withdraws or loses such dissenters' rights
under Delaware
Law and/or the CGCL, as applicable, such Dissenting Shares shall
thereupon be
deemed to have been converted as of the Effective Time of Merger
I into the
right to receive the Merger Consideration to which such shares
of Raven Common
Stock or Raven Preferred Stock are entitled pursuant to this
Article 1, if any,
without interest. Prior to the Effective Time of Merger I, Raven
shall not,
except with the prior written consent of Parent, make any
payment with respect
to, or settle or offer to settle, any such demands, or agree to
do any of the
foregoing. Any payments made with respect to Dissenting Shares
shall be made
solely by the Surviving Entity, and no funds or other
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property have been or shall be provided by Parent, Merger Sub I
or Merger Sub II
for such payment.
1.7 Escrow Escrow.
(i) At the Effective Time of Merger I, to provide funds for
the
satisfaction of any claims for indemnification made by Parent
Indemnified
Persons pursuant to Article 8 of this Agreement, Parent shall
deliver 10% of the
shares of Parent Common Stock to which each Raven Stockholder
(each, an "Escrow
Participant" and collectively, the "Escrow Participants") is
entitled pursuant
to this Article 1 (collectively, the "Escrow Amount") to an
escrow account (the
"Escrow Account") to be established by Parent with U.S. Bank
(the "Escrow
Agent"), to be held by the Escrow Agent pursuant to the terms of
the escrow
agreement set forth as Exhibit D attached hereto (the "Escrow
Agreement").
(ii) The certificate representing the Escrow Shares shall be
retained in the Escrow Account until released pursuant to
Section 1.7(b) below.
During the period in which the Escrow Amount is retained in the
Escrow Account,
the Escrow Amount will be held for the benefit of the registered
holders of the
Escrow Amount, and such registered holders shall be entitled to
vote the Escrow
Shares and to receive the economic benefit of any dividends paid
with respect to
the Escrow Shares as provided in the Escrow Agreement. From and
after the
Effective Time of Merger I, unless and until it is determined
that a Parent
Indemnified Person is entitled to retain the Escrow Shares in
respect of
indemnification claims, the Escrow Shares shall appear as issued
and outstanding
on the balance sheet of Parent.
(b) Release of Escrow.
(i) Within five (5) Business Days following the Expiration
Date,
in accordance with the terms of the Escrow Agreement, the Escrow
Agent shall
distribute to the Escrow Participants, at their respective
addresses and in
proportion to their respective Pro Rata Amount set forth on the
Closing
Consideration Exhibit to the Escrow Agreement, any Escrow Shares
deposited into
the Escrow Account pursuant to this Section 1.7 less (i) the
number of Escrow
Shares paid to Parent in satisfaction of indemnification claims
made by Parent
prior to the Expiration Date pursuant to Article 8 hereof, and
(ii) a number of
Escrow Shares which the Escrow Agent shall retain equal to the
aggregate amount
of indemnification claims made by Parent pursuant to Article 8
hereof which
shall be outstanding and unresolved (the "Aggregate Outstanding
Claims"), or, in
the event that the Aggregate Outstanding Claims exceed the
remaining number of
Escrow Shares, all remaining Escrow Shares (such number of
retained Escrow
Shares and such number of retained Escrow Shares as such amount
and number may
be further reduced after the Expiration Date by distributions to
the Escrow
Participants by Parent pursuant to Article 8 hereof and amounts
paid to Parent
in satisfaction of indemnification claims made by Parent prior
to the Expiration
Date pursuant to Article 8 hereof, the "Retained Escrow
Consideration").
(ii) In the event and to the extent that after the
Expiration
Date any outstanding indemnification claim made by a Parent
Indemnified Person
pursuant to Article 8 hereof is resolved against such Parent
Indemnified Person
(or is resolved in favor of a Parent Indemnified Person but in a
smaller amount
than originally retained by the Escrow Agent on
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<PAGE>
behalf of Parent), the Escrow Agent shall deliver to the Escrow
Participants, at
their respective addresses and in proportion to their respective
Pro Rata Amount
set forth on the Closing Consideration Exhibit to the Escrow
Agreement, an
amount of the Retained Escrow Consideration corresponding to the
amount of the
outstanding indemnification claim resolved against such Parent
Indemnified
Person (or, in the case where the indemnification claim is
resolved in favor of
a Parent Indemnified Person but in a smaller amount than
originally retained by
Parent, the difference between the amount resolved in favor of
such Parent
Indemnified Person and the amount originally retained), unless
the remaining
Aggregate Outstanding Claims would exceed the Retained Escrow
Consideration
after such distribution, in which case the Escrow Agent shall
retain in the
Escrow Account a number of Escrow Shares equal in value to the
amount of the
remaining Aggregate Outstanding Claims.
(c) Escrow Participant Representative.
(i) Shareholder Representative Services, LLC is hereby
appointed
and constituted the "Escrow Participant Representative" under
this Agreement,
and as such shall serve as agent for and have all powers as
attorney-in-fact of
each Escrow Participant, for and on behalf of each Escrow
Participant, to take
the following actions in connection with the negotiation,
settlement and
compromise of indemnification claims pursuant to Article 8 of
this Agreement and
the release of the Escrow Amount in connection therewith: to
give and receive
notices of communications; to agree to, negotiate or enter into
settlements and
compromises of and comply with orders of courts with respect to
any disputes
involving any claims made by Parent Indemnified Persons or the
Escrow
Participants under this Agreement; to sign receipts, consents or
other documents
to effect any of the transactions contemplated by this
Agreement; and to take
all actions necessary or appropriate in the judgment of the
Escrow Participant
Representative in connection with the foregoing. In no event
shall the consent
of any Escrow Participant be required for the Escrow Participant
Representative
to settle or compromise any claim or dispute on behalf of the
Escrow
Participants.
(ii) If the Escrow Participant Representative elects to
resign
as Escrow Participant Representative for any reason, the Escrow
Participant
Representative shall notify Parent of its intent to resign, and
Escrow
Participants representing at least a majority of the aggregate
Escrow Shares
shall, by written notice to Parent, appoint a successor Escrow
Participant
Representative within five (5) Business Days after receiving
notice of such
resignation. Escrow Participants representing at least a
majority of the
aggregate Escrow Amount may, at any time, by written notice to
Parent, appoint a
replacement Escrow Participant Representative.
(iii) Notice or communications to or from the Escrow
Participant
Representative pursuant to this Section 1.7 given in accordance
with Section 9.1
hereof shall constitute notice to or from each of the Escrow
Participants.
(iv) A decision, act, consent or instruction of the Escrow
Participant Representative pursuant to this Section 1.8 shall
constitute a
decision, act, consent or instruction of each and all of the
Escrow
Participants, and shall be final, binding and conclusive upon
each and all of
the Escrow Participants, and Parent shall be entitled to rely
upon any decision,
act, consent or instruction of the Escrow Participant
Representative as being
the decision, act,
8
<PAGE>
consent or instruction of each and all of the Escrow
Participants, and Parent
shall be relieved from any liability to any Person for any acts
done by it in
accordance with such decision, act, consent or instruction.
(v) The Escrow Participant Representative shall promptly
notify
each Escrow Participant in the event of any decision, act,
consent or
instruction of the Escrow Participant Representative pursuant to
this Section
1.7(c). Each Escrow Participant, severally in proportion to its
respective Pro
Rata Amount and not jointly, with right of contribution among
them, shall
indemnify and hold harmless the Escrow Participant
Representative with respect
to any claim, loss, damage, cost and liability against such
Escrow Participant
Representative, including without limitation reasonable
attorneys' fees and
costs, arising from any decision, act, inaction, consent or
instruction of such
Escrow Participant Representative pursuant to this Section
1.7(c) from out of
the Escrow Account, unless and to the extent that such claim
arises from such
Escrow Participant Representative's gross negligence or willful
misconduct. The
Escrow Participant Representative shall not be liable to any
Raven Stockholder
for any act done or omitted hereunder as Escrow Participant
Representative
except to the extent the Escrow Participant Representative has
acted with gross
negligence or willful misconduct.
(vi) The Escrow Participant Representative shall have no
duties
or responsibilities except those expressly set forth herein and
in the Escrow
Agreement. The Escrow Participant Representative may consult
with its own
counsel. Any fees and expenses incurred by the Escrow
Participant Representative
shall be reimbursable by the Raven Stockholders through the
Escrow Account. The
Escrow Participant Representative may rely on any notice,
instruction,
certificate, statement, request, consent, confirmation,
agreement or other
instrument which it reasonably believes to be genuine and to
have been signed or
presented by a proper Person or Persons.
1.8 Exchange of Certificates.
(a) Exchange Agent. Parent shall supply, or shall cause to
be
supplied, to or for the account of a bank or trust company
designated by Parent
(the "Exchange Agent"), in trust for the benefit of the holders
of Raven Series
D Preferred Stock, for exchange in accordance with this Section
1.8, through the
Exchange Agent, certificates evidencing the Parent Common Stock
constituting the
Initial Merger Consideration and issuable pursuant to this
Agreement in exchange
for outstanding Shares.
(b) Exchange Procedures. Promptly following the Effective Time
of
Merger I, Parent will instruct the Exchange Agent to mail to
each holder of
record of a certificate or certificates which immediately prior
to the Effective
Time of Merger I evidenced outstanding Shares (the
"Certificate(s)") (i) a
letter of transmittal (which shall specify that delivery shall
be effected, and
risk of loss and title to the Certificate(s) shall pass, only
upon proper
delivery of the Certificate(s) to the Exchange Agent and shall
be in such form
and have such other provisions as Parent and Raven may mutually
agree) and (ii)
instructions to effect the surrender of the Certificate(s) in
exchange for the
certificates evidencing shares of Parent Common Stock and, in
lieu of any
fractional shares thereof, cash. The letter of transmittal shall
also specify
that the Raven Stockholder, by executing the letter of
transmittal and
surrendering the Certificate(s) in connection with Merger I,
agrees to the
appointment of the Escrow Participant Representative.
9
<PAGE>
Upon surrender of a Certificate for cancellation to the Exchange
Agent together
with such letter of transmittal, duly executed, and such other
customary
documents as may be reasonably required pursuant to such
instructions, the
holder of such Certificate shall be entitled to receive in
exchange therefor (A)
certificate(s) evidencing that number of whole shares of Parent
Common Stock
which such holder has the right to receive in accordance with
the Exchange Ratio
in respect of the Shares formerly evidenced by such Certificate,
if any, (B) any
dividends or other distributions to which such holder is
entitled pursuant to
Section 1.6(g), (C) the right to receive a pro rata share of any
distribution to
the Raven Stockholders as of the Effective Time of Merger I
pursuant to Section
8.2 hereof and the Escrow Agreement, if any, and (D) cash in
lieu of fractional
shares of Parent Common Stock to which such holder is entitled
pursuant to
Section 1.6(h), if any (the rights to receive such shares of
Parent Common
Stock, dividends, distributions and cash described in these
clauses (A) through
(D), being, collectively, the "Merger Consideration"), and the
Certificate so
surrendered shall forthwith be canceled. In the event of a
transfer of ownership
of Shares which is not registered in the transfer records of
Raven as of the
Effective Time of Merger I, Parent Common Stock and cash may be
issued and paid
in accordance with this Article I to a transferee if the
Certificate evidencing
such Shares is presented to the Exchange Agent, accompanied by
all documents
required to evidence and effect such transfer pursuant to this
Section 1.8(b)
and by evidence that any applicable stock transfer taxes have
been paid. Until
so surrendered, each outstanding Certificate that, prior to the
Effective Time
of Merger I, represented Shares will be deemed from and after
the Effective Time
of Merger I, for all corporate purposes, other than the payment
of dividends, to
evidence the right to receive the Merger Consideration.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or
other distributions declared or made after the Effective Time of
Merger I, with
respect to Parent Common Stock with a record date after the
Effective Time of
Merger I, shall be paid to the holder of any unsurrendered
Certificate until the
holder of such Certificate shall surrender such Certificate.
Subject to
applicable law, following surrender of any such Certificate,
there shall be paid
to the record holder of the certificates representing whole
shares of Parent
Common Stock issued in exchange therefor, without interest, at
the time of such
surrender, the amount of dividends or other distributions with a
record date
after the Effective Time of Merger I theretofore paid with
respect to such whole
shares of Parent Common Stock.
(d) Transfers of Ownership. If any certificate for shares of
Parent
Common Stock is to be issued in a name other than that in which
the Certificate
surrendered in exchange therefor is registered, it will be a
condition of the
issuance thereof that the Certificate so surrendered will be
properly endorsed
and otherwise in proper form for transfer and that the person
requesting such
exchange will have paid to Parent or any person designated by it
any transfer or
other taxes required by reason of the issuance of a certificate
for shares of
Parent Common Stock in any name other than that of the
registered holder of the
certificate surrendered, or established to the satisfaction of
Parent or any
agent designated by it that such tax has been paid or is not
payable.
(e) No Liability. Notwithstanding anything to the contrary in
this
Section 1.8, neither Parent nor Raven shall be liable to any
holder of Raven
Series D Preferred Stock or Parent Common Stock for any Merger
Consideration (or
dividends or distributions with respect
10
<PAGE>
thereto) delivered to a public official pursuant to any
applicable abandoned
property, escheat or similar law.
(f) Withholding Rights. Parent, the Surviving Entity and the
Exchange
Agent shall be entitled to deduct and withhold from the Merger
Consideration
otherwise payable pursuant to this Agreement to any holder of
Shares, such
amounts as Parent, the Surviving Entity or the Exchange Agent is
required to
deduct and withhold with respect to the making of such payment
under the Code or
any provision of state, local, provincial or foreign tax law. To
the extent that
amounts are so withheld and remitted to the appropriate
Governmental Entity,
such withheld amounts shall be treated for all purposes of this
Agreement as
having been paid to the holder of the Shares in respect of which
such deduction
and withholding was made by Parent, the Surviving Entity or the
Exchange Agent.
1.9 Stock Transfer Books. Subject to Section 1.8(b), at the
Effective Time
of Merger I, the stock transfer books of Raven shall be closed,
and there shall
be no further registration of transfers of Raven Common Stock or
Raven Preferred
Stock thereafter on the records of Raven.
1.10 No Further Ownership Rights in Raven Stock. The Merger
Consideration
delivered upon the surrender for exchange of Shares in
accordance with the terms
hereof shall be deemed to have been issued in full satisfaction
of all rights
pertaining to such Shares, and there shall be no further
registration of
transfers on the records of the Surviving Entity of Shares which
were
outstanding immediately prior to the Effective Time of Merger I.
If, after the
Effective Time of Merger I, Certificates are presented to the
Surviving Entity
for any reason, they shall be canceled and exchanged as provided
in this Article
I.
1.11 Lost, Stolen or Destroyed Certificates. In the event any
Certificates
shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in
exchange for such lost, stolen or destroyed Certificates, upon
the making of an
affidavit (with indemnity) of that fact by the holder thereof,
such shares of
Parent Common Stock and cash in lieu of fractional shares as may
be required
pursuant to Section 1.6. The parties shall cooperate and use
reasonable efforts
to identify and obtain all Certificates to be exchanged, and to
finalize the
letter of transmittal to be provided to the Exchange Agent,
prior to the
Effective Time.
1.12 Tax Consequences. It is intended by the parties hereto that
Merger I
and Merger II shall be treated as a single integrated
transaction and shall
constitute a reorganization within the meaning of Section 368(a)
of the Code.
The parties hereto hereby adopt this Agreement as a "plan of
reorganization"
within the meaning of Treasury Regulations Sections 1.368-2(g)
and 1.368-3(a).
1.13 Taking of Necessary Action; Further Action. Each of Parent
and Raven
in good faith will take all such commercially reasonable and
lawful action as
may be necessary or appropriate in order to effectuate Merger I
in accordance
with this Agreement as promptly as possible. If, at any time
after the Effective
Time of Merger I, any such further action is necessary or
desirable to carry out
the purposes of this Agreement and to vest the Surviving Entity
with full right,
title and possession to all assets, property, rights,
privileges, powers and
11
<PAGE>
franchises of Raven, the Board of Managers of the Surviving
Entity is fully
authorized in the name of the company or otherwise to take, and
will take, all
such lawful and necessary action.
1.14 Effect of Merger II. By virtue of Merger II and without any
further
action on the part of Parent, Merger Sub II or Surviving
Corporation I, (i) each
membership interest of Merger Sub II outstanding immediately
prior to Merger II
shall be unchanged and shall remain issued and outstanding and
(ii) each share
of common stock of Surviving Corporation I outstanding prior to
Merger II shall
be cancelled without consideration and shall cease to be an
outstanding share of
Surviving Corporation I stock.
1.15 Material Adverse Effect.
(a) When used in this Agreement with respect to Raven, the
term
"Material Adverse Effect" means any change or effect that,
individually or in
the aggregate, is or would reasonably be expected to be,
materially adverse to
the business, assets (including intangible assets), condition
(financial or
otherwise) or results of operations, taken as a whole, of Raven
or on the
ability of Raven to complete the Closing pursuant to the terms
hereof and/or
comply with its obligations hereunder, in each case excluding
any change or
effect arising from or relating to any action taken by Raven at
Parent's written
request; 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
Material
Adverse Effect with respect to Raven: (i) changes in prevailing
economic or
market conditions in the United States, which changes or
developments do not
disproportionately affect Raven relative to other participants
in the
biotechnology industry in any material respect; (ii) changes or
developments in
the biotechnology industry generally, which changes or
developments do not
disproportionately affect Raven relative to other participants
in the
biotechnology industry in any material respect; (iii) changes or
developments in
financial or securities markets or in connection with general
economic,
political or regulatory conditions, which changes do not
disproportionately
affect Raven in any material respect; (iv) any adverse effect
resulting from or
relating to any change in applicable laws or regulations or
accounting
requirements or principles; (v) the execution, delivery and
performance of this
Agreement or the consummation of the transactions contemplated
hereby; or (vi)
hostilities, acts of war, sabotage or terrorism or military
actions or any
escalation or material worsening of any such hostilities, acts
of war, sabotage
or terrorism or military actions existing or underway as of the
date hereof. In
addition, a Raven Material Adverse Effect will not include a
loss of employees
that occurs as a result of the announcement of this Agreement or
the pendency of
the transactions contemplated in this Agreement that would not
reasonably be
expected either to (x) materially delay the development of
RAV12, Raven's
pre-clinical drug candidates in development as of the date of
this Agreement,
and/or Raven's research and development collaboration activities
as of the date
of this Agreement, or (y) to materially impair Raven's ability
to develop its
core technologies or intellectual property.
(b) When used in this Agreement with respect to Parent, the
term
"Material Adverse Effect" means any change or effect that,
individually or in
the aggregate, is or would reasonably be expected to be,
materially adverse to
the business, assets (including intangible assets), condition
(financial or
otherwise) or results of operations, taken as a whole, of Parent
or on the
ability of Parent, as the case may be, to complete the Closing
pursuant to the
terms hereof
12
<PAGE>
and/or comply with its obligations hereunder, in each case
excluding any change
or effect arising from or relating to any action taken by Parent
at Raven's
written request; 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 Material
Adverse Effect with respect to Parent (i) changes in prevailing
economic or
market conditions in the United States, which changes or
developments do not
disproportionately affect Parent relative to other participants
in the
biotechnology industry in any material respect; (ii) changes or
developments in
the biotechnology industry generally, which changes or
developments do not
disproportionately affect Parent relative to other participants
in the
biotechnology industry in any material respect; (iii) changes or
developments in
financial or securities markets or in connection with general
economic,
political or regulatory conditions, which changes do not
disproportionately
affect Parent in any material respect; (iv) any adverse effect
resulting from or
relating to any change in applicable laws or regulations or
accounting
requirements or principles; (v) the execution, delivery and
performance of this
Agreement or the consummation of the transactions contemplated
hereby; or (vi)
hostilities, acts of war, sabotage or terrorism or military
actions or any
escalation or material worsening of any such hostilities, acts
of war, sabotage
or terrorism or military actions existing or underway as of the
date hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF RAVEN
Raven hereby represents and warrants to Parent that, except as
set forth in the
written disclosure schedule delivered by Raven to Parent (it
being understood
that any such exception shall be deemed to qualify the section
or subsection of
this Agreement to which it corresponds in number and each other
section or
subsection to which the relevance of such disclosure is
reasonably apparent on
its face) (the "Raven Disclosure Schedule"):
2.1 Organization of Raven. Each of Raven and its subsidiaries is
a
corporation duly organized, validly existing and in good
standing under the laws
of the jurisdiction of its incorporation, has all requisite
corporate power and
authority to own, lease and operate its property and to carry on
its business as
now being conducted and as proposed to be conducted, and is duly
qualified to do
business and in good standing as a foreign corporation in each
jurisdiction in
which the failure to be so qualified would reasonably be
expected to have a
Material Adverse Effect on Raven. Raven has made available to
Parent a true and
complete list of all of Raven's subsidiaries, together with the
jurisdiction of
incorporation of each subsidiary. Raven made available a true
and correct copy
of the Certificate of Incorporation and Bylaws of Raven and
similar governing
instruments of each of its subsidiaries, each as amended to
date, to counsel for
Parent.
2.2 Capital Structure. The authorized capital stock of Raven
consists of
447,000,000 shares of Common Stock, par value $0.001 per share,
of which there
are 22,225,614 shares issued and outstanding as of the date of
this Agreement
and 254,834,607 shares of Preferred Stock, par value $0.001 per
share, of which
2,305,000 shares have been designated Series A Preferred Stock,
12,420,760
shares have been designated Series B Preferred Stock, 51,638,254
shares have
been designated Series C Preferred Stock and 188,470,593 shares
have been
designated as Series D Preferred Stock, and 2,305,000 shares of
Series A
Preferred Stock,
13
<PAGE>
12,420,760 shares of Series B Preferred Stock, 51,638,254 shares
of Series C
Preferred Stock, and 164,599,208 shares of Series D Preferred
Stock are issued
and outstanding as of such date. No shares of capital stock are
held in Raven's
treasury. All outstanding shares of Raven Common Stock and Raven
Preferred Stock
are duly authorized, validly issued, fully paid and
non-assessable and are not
subject to preemptive rights created by statute, the Certificate
of
Incorporation or Bylaws of Raven or any agreement or document to
which Raven is
a party or by which it is bound, and were issued in compliance
with all
applicable federal and state securities laws. As of the date
hereof, Raven has
reserved an aggregate of 4,636,387 shares of Common Stock, net
of exercises, for
issuance to employees, consultants and non-employee directors
pursuant to the
Raven Stock Option Plan, under which stock options (the "Raven
Options") are
outstanding for an aggregate of 44,123,643 shares. All shares of
Raven Common
Stock subject to issuance as aforesaid, upon issuance on the
terms and
conditions specified in the instruments pursuant to which they
are issuable,
would be duly authorized, validly issued, fully paid and
non-assessable. Section
2.2 of the Raven Disclosure Schedule lists each holder of Raven
Common Stock and
Raven Preferred Stock, each outstanding option and warrant to
acquire shares of
Raven Common Stock or Raven Preferred Stock, as applicable, the
name of the
holder of such option or warrant, the number of shares subject
to such option or
warrant, the exercise price of such option or warrant, the
number of shares as
to which such option or warrant will have vested at such date,
the vesting
schedule and termination date of such option or warrant and
whether the
exercisability of such option or warrant will be accelerated in
any way by the
transactions contemplated by this Agreement or for any other
reason, indicating
the extent of acceleration, if any.
2.3 Obligations with Respect to Capital Stock. Except as set
forth in
Section 2.3 of the Raven Disclosure Schedule, there are no
equity securities of
any class of Raven, or any securities exchangeable or
convertible into or
exercisable for such equity securities, authorized, issued,
reserved for
issuance or outstanding. Except for securities Raven owns,
directly or
indirectly through one or more subsidiaries, there are no equity
securities of
any class of any subsidiary of Raven, or any security
exchangeable or
convertible into or exercisable for such equity securities,
issued, reserved for
issuance or outstanding. Except as set forth in Section 2.3 of
the Raven
Disclosure Schedule, there are no options, warrants, equity
securities, calls,
rights (including preemptive rights), commitments or agreements
of any character
to which Raven or any of its subsidiaries is a party or by which
it is bound
obligating Raven or any of its subsidiaries to issue, deliver or
sell, or cause
to be issued, delivered or sold, or to repurchase, redeem or
otherwise acquire,
or cause the repurchase, redemption or acquisition of, any
shares of capital
stock of Raven or any of its subsidiaries or obligating Raven or
any of its
subsidiaries to grant, extend, accelerate the vesting of or
enter into any such
option, warrant, equity security, call, right, commitment or
agreement. Except
as set forth on Section 2.3 of the Raven Disclosure Schedule,
there are no
registration rights and, to the knowledge of Raven, there are no
voting trusts,
proxies or other agreements or understandings with respect to
any equity
security of any class of Raven or with respect to any equity
security of any
class of any of its subsidiaries.
2.4 Authority.
(a) Raven has all requisite corporate power and authority to
enter
into this Agreement and to consummate the transactions
contemplated hereby. The
execution and delivery of this Agreement and the consummation of
the
transactions contemplated hereby have
14
<PAGE>
been duly authorized by all necessary corporate action on the
part of Raven, and
the filing and recordation of the Certificate of Merger pursuant
to Delaware Law
in a form reasonably agreed to by the parties. This Agreement
has been duly
executed and delivered by Raven and, assuming the due
authorization, execution
and delivery by Parent, constitutes the valid and binding
obligation of Raven,
enforceable in accordance with its terms, except as
enforceability may be
limited by bankruptcy and other similar laws and general
principles of equity.
The execution and delivery of this Agreement by Raven does not,
and the
performance of this Agreement will not, (i) conflict with or
violate the
Certificate of Incorporation or Bylaws of Raven or the
equivalent organizational
documents of any of its subsidiaries, (ii) subject to obtaining
the approval of
Raven's stockholders of Merger I as contemplated in Section 5.2
and compliance
with the requirements set forth in Section 2.4(b) below,
conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to Raven
or any of its subsidiaries or by which its or any of their
respective properties
is bound or affected, or (iii) result in any breach of or
constitute a default
(or an event that with notice or lapse of time or both would
become a default)
under, or impair Raven's rights or alter the rights of
obligations of any third
party under, or give to others any rights of termination,
amendment,
acceleration or cancellation of, or result in the creation of a
lien or
encumbrance on any of the properties or assets of Raven or any
of its
subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract,
agreement, lease, license, permit, franchise or other instrument
or obligation
to which Raven or any of its subsidiaries is a party or by which
Raven or any of
its subsidiaries or its or any of their respective properties
are bound or
affected, except to the extent such conflict, violation, breach,
default,
impairment or other effect would not, in the case of the
provisions of this
clause (iii), reasonably be expected to have a Material Adverse
Effect or
prevent or materially delay the consummation of Merger I or
other transactions
contemplated by this Agreement. Section 2.4 of the Raven
Disclosure Schedule
lists all material consents, waivers and approvals under any of
Raven's or any
of its subsidiaries' agreements, contracts, licenses or leases
required to be
obtained in connection with the consummation of the transactions
contemplated
hereby.
(b) No consent, approval, order or authorization of, or
registration,
declaration or filing with any court, administrative agency or
commission or
other governmental authority or instrumentality ("Governmental
Entity") is
required by or with respect to Raven in connection with the
execution and
delivery of this Agreement or the consummation of the
transactions contemplated
hereby, except for (i) the filing of the Certificate of Merger
with the
Secretary of State of the State of Delaware, (ii) such consents,
approvals,
orders, authorizations, registrations, declarations and filings
as may be
required under applicable federal and state securities laws and
the laws of any
foreign country and (iii) such other consents, authorizations,
filings,
approvals and registrations which, if not obtained or made,
would not be
reasonably expected to have a Material Adverse Effect on Raven
or Parent or be
reasonably expected to have a material adverse effect on the
ability of the
parties to consummate Merger I.
2.5 Section 203 of the Delaware General Corporation Law Not
Applicable.
The Board of Directors of Raven has taken all necessary actions
so that the
restrictions contained in Section 203 of the Delaware General
Corporation Law
applicable to a "business combination" (as defined in Section
203) will not
apply to the execution, delivery or performance of this
Agreement or to the
consummation of Merger I or the other transactions contemplated
by this
Agreement.
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2.6 Raven Financial Statements. The audited consolidated
financial
statements (including any related notes thereto) representing
the financial
condition of Raven as of December 31, 2004, December 31, 2005
and December 31,
2006 and the unaudited financial statements (including the notes
thereto)
representing the financial condition of Raven as of September
30, 2007 were
prepared in accordance with U.S. generally accepted accounting
principles
("GAAP") applied on a consistent basis throughout the periods
involved (except
as may be indicated in the notes thereto) and fairly present the
consolidated
financial position of Raven and its subsidiaries as of the
respective dates
thereof and the consolidated results of its operations and cash
flows for the
periods indicated, except that the unaudited interim financial
statements are
subject to normal year-end adjustments which are not expected to
be material in
amount. Except as disclosed in Raven's audited consolidated
financial statements
(including the notes thereto) as of December 31, 2006 and the
unaudited
financial statements (including the notes thereto) as of
September 30, 2007
(collectively, the "Raven Financials"), neither Raven nor any of
its
subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise) of
a nature required to be disclosed on a balance sheet or in the
related notes to
the consolidated financial statements prepared in accordance
with GAAP which
are, individually or in the aggregate, material to the business,
results of
operations or financial condition of Raven and its subsidiaries
taken as a
whole, except (i) liabilities incurred in connection with the
transactions
contemplated in this Agreement, which shall be paid and
satisfied by Raven prior
to the Effective Time of Merger I, (ii) liabilities described on
Schedule 2.6 of
the Raven Disclosure Schedule, or (iii) liabilities incurred
following December
31, 2006 in the ordinary course of business consistent with past
practices in
both type and amount.
2.7 Absence of Certain Changes or Events. Except as set forth in
Section
2.7 of the Raven Disclosure Schedule, since December 31, 2006
through the date
of this Agreement, Raven has conducted its business only in the
ordinary course
of business consistent with past practice, and there has not
been: (i) any event
that has had, or that would be reasonably expected to result in,
a Material
Adverse Effect on Raven, (ii) any material change by Raven in
its accounting
methods, principles or practices, except as required by
concurrent changes in
GAAP, (iii) any revaluation by Raven of any of its assets having
a Material
Adverse Effect on Raven, or (iv) writing off of notes or
accounts receivable
other than in the ordinary course of business, or (v) other
actions, events or
occurrences that would have required the consent of Parent under
subsections
(a), (c), (d), (f), (g), (i) clauses (ii) and (iv) only, (k),
(l) or (n) of
Section 4.1 of this Agreement had such action, event or
occurrence taken place
after the execution and delivery of this Agreement.
2.8 Taxes.
(a) As used in this Agreement, the terms "Tax" and "Taxes" mean
all
income, profits, gross receipts, environmental, customs duty,
capital stock,
sales, use, occupancy, value added, ad valorem, stamp,
franchise, withholding,
payroll, employment, unemployment, disability, excise, property,
production and
other taxes, duties or assessments of any nature imposed by any
Governmental
Entity (whether national, local, municipal or otherwise) or
political
subdivision thereof, together with all interest, penalties and
additions imposed
with respect to such Taxes and any interest in respect of such
penalties or
additions.
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<PAGE>
(b) Each of the material returns, declarations, estimates,
information
statements or reports required to be filed with a Governmental
Entity with
respect to Taxes ("Tax Returns") by or with respect to Raven:
(i) has been
timely filed on or before the applicable due date (including any
extensions of
such due date) and (ii) is true and complete in all material
respects. All
material Taxes due and payable by Raven (whether or not shown to
be due on filed
Tax Returns) have been timely paid, except to the extent such
amounts are being
contested in good faith by Raven or are properly reserved for in
the Raven
Financials. There are no liens for Taxes on any asset of Raven
other than liens
for Taxes not yet due and payable.
(c) All material Taxes that Raven has been required to collect
or
withhold have been duly collected or withheld and, to the extent
required by
applicable law when due, have been duly and timely paid to the
proper
Governmental Entity.
(d) There has not been any audit, examination or other
administrative
or court proceeding for or relating to any liability in respect
of Taxes by any
Governmental Entity in respect of which Raven has received a
written notice, and
Raven has not been notified in writing by any Governmental
Entity that any such
audit, examination or other administrative or court proceeding
involving Taxes
is contemplated or pending. No extension of time with respect to
any date on
which a Tax Return was required to be filed by Raven is in force
(except where
such Tax Return was filed), and no waiver or agreement by or
with respect to
Raven is in force for the extension of time for the payment,
collection or
assessment of any Taxes, and no request has been made by Raven
in writing for
any such extension or waiver (except, in each case, in
connection with any
request for extension of time for filing Tax Returns). No claim
has been made in
writing to Raven by any Governmental Entity in a jurisdiction
where Raven does
not file Tax Returns that Raven is subject to taxation by that
jurisdiction and,
to Raven's knowledge, there are no facts or basis upon which any
such claim
could reasonably be made. No issues relating to any material
amount of Taxes
were raised by the relevant Governmental Entity in any completed
audit or
examination that would reasonably be expected to recur in a
later taxable
period.
(e) The unpaid Taxes of Raven did not, as of the date of
Raven's
audited financial statements for the fiscal year ended December
31, 2006, exceed
the reserve for Tax liability (excluding any reserve for
deferred Taxes
established to reflect timing differences between book and Tax
items) set forth
on the face of the balance sheet contained in such audited
financial statements.
Since the date of the most recent audited financial statements,
Raven has not
incurred any liability for Taxes outside of the ordinary course
of business or
otherwise inconsistent with past custom or practice.
(f) Raven has not agreed, or will not be required, to make
any
adjustment for any period after the date of this Agreement
pursuant to Section
481(a) of the Code by reason of any change in any accounting
method made prior
to the date hereof. There is no application pending with any
Governmental Entity
requesting permission for any such change in any accounting
method of Raven, and
the Internal Revenue Service has not issued in writing any
pending proposal
regarding any such adjustment or change in accounting
method.
(g) No closing agreements, private letter rulings, technical
advice
memoranda or similar agreements or rulings have been entered
into by Raven with
any taxing authority or
17
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issued by any taxing authority to Raven. There are no
outstanding rulings of, or
request for rulings with, any Governmental Entity addressed to
Raven that are,
or if issued would be, binding on Raven.
(h) Raven is not a party to any agreement with any third
party
relating to allocating or sharing the payment of, or liability
for, Taxes or Tax
benefits. Raven has no liability for the Taxes of any third
party under Treasury
Regulation ss.1.1502-6 (or any similar provision of state, local
or foreign law)
as a transferee or successor, by contract or otherwise (other
than entities for
which Raven is or was the common parent).
(i) Raven is not a member of an affiliated group of
corporations
within the meaning of Section 1504 of the Code or of any group
that has filed a
combined, consolidated or unitary Tax return under state, local
or foreign Tax
law (other than a group the common parent of which is
Raven).
(j) Raven does not (i) own a single member limited liability
company
which is treated as a disregarded entity, and (ii) is not a
stockholder of a
"controlled foreign corporation" as defined in Section 957 of
the Code.
(k) Raven has not participated in a "listed transaction" within
the
meaning of Treasury Regulation Section 1.6011-4(b). Raven
believes it has
substantial authority for or has disclosed on its respective
United States
federal income Tax Returns all positions taken therein that
could give rise to a
substantial understatement of United States federal income Tax
within the
meaning of Section 6662 of the Code.
(l) Raven is not (and has not been for the five-year period
ending at
Closing) a "United States real property holding corporation" as
defined in
Section 897(c)(2) of the Code and the applicable Treasury
Regulations.
(m) Raven does not have a permanent establishment in any country
other
than the United States, as defined in any applicable Tax treaty
between the
United States and such other country.
2.9 Intellectual Property. For purposes of this Agreement, the
following
terms shall be defined as follows:
(a) "IP Rights" means any and all of the following in any
country or
region: (A) Copyrights, Patent Rights, Trademark Rights, trade
dress rights,
domain name registrations, website addresses, trade secrets,
technology
licenses, know-how, confidential information, shop rights and
all other
intellectual and industrial property rights; and (B) the right
(whether at law,
in equity, by contract or otherwise) to enjoy or otherwise
exploit any of the
foregoing, including the right to sue for and seek remedies
against past,
present and future infringements of any or all of the foregoing
or injury to the
good will therein, to institute and prosecute all suits and
proceedings and take
all actions that may be necessary or proper to collect, assert
or enforce any
claim, right or title of any kind in and to any and all of the
foregoing under
the laws of any jurisdiction worldwide.
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<PAGE>
(b) "Copyrights" means all copyrightable and copyrighted
works,
registered or unregistered, published or unpublished, including
without
limitation databases and other compilations of information and
all categories of
works eligible for protection under U.S. and international
copyright law,
including rights of authorship, exclusive ownership, of
attribution and
integrity, and include exclusive rights to use, copy, publish,
reproduce,
distribute, perform, display sell, assign, adapt, create
derivative works,
import, export, and transmit, as well as exclusive rights to
register, seek
registration, obtain renewals and extensions of registrations,
together with all
other rights and interests accruing under U.S. and international
copyright law.
(c) "Material Raven IP Rights" means all Raven IP Rights other
than
those which, individually or in the aggregate, are not material
to the conduct
of the current Raven business; provided, however, that all Raven
IP Rights that
relate directly to and are necessary for the development of the
Raven Programs
and Candidates shall constitute Material Raven IP Rights.
(d) "Patent Rights" means all invention disclosure documents,
issued
patents, pending patent applications and abandoned patents and
patent
applications provided that they can be revived (which for
purposes of this
Agreement shall include utility models, design patents,
industrial designs,
certificates of invention and applications for certificates of
invention and
priority rights) in any country or region, including all
provisional
applications, substitutions, continuations,
continuations-in-part, divisions,
renewals, reissues, re-examinations and extensions thereof.
(e) "Raven IP Rights" means all IP Rights owned solely or
co-owned by
Raven or in which Raven has any right, title or interest.
(f) "Raven Programs and Candidates" means the drug discovery
programs
and platform technologies of Raven, including its cell line
development and
whole cell immunization technologies, conditioned cell
immunization technology,
antibody discoveries, and tumor stem cell discoveries, including
identification,
purification and testing development and technology, and the
drug candidates
which may be derived therefrom, including without limitation
murine, chimeric
and humanized Rav 12, Rav 13, Rav 14, Rav 15, Rav 17, Rav 18,
Rav 19 antibodies.
A "drug" as used in this section connotes any prophylactic
and/or therapeutic
composition.
(g) "Trademark Rights" means all trademarks, service marks,
domain
names, web site addresses, intranet sites, trade dress, logos,
trade names,
corporate names, business identifiers, registered or
unregistered, together with
all translations, transliterations, adaptations, derivations,
and combinations
thereof and including all goodwill associated therewith, and all
applications,
registrations, and renewals in connection therewith, and all
rights to register,
seek registration, maintain and obtain renewals of
registrations, together with
all other rights and interests accruing under U.S. trademark law
or the national
or regional trademark laws of any applicable jurisdiction
worldwide.
(h) Part 1 of Section 2.9(b) of the Raven Disclosure Schedule
lists
all of the Patent Rights and all registered Trademark Rights (or
Trademark
Rights for which applications for registration have been filed)
owned solely by
Raven as of the date hereof, setting forth in
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<PAGE>
each case the jurisdictions in which patents have been issued,
patent
applications have been filed, trademarks have been registered
and trademark
applications have been filed, along with the respective
application,
registration or filing number and prosecution status or
subsequent registration
activity thereof. Part 2 of Section 2.9(b) of the Raven
Disclosure Schedule
lists, as of the date hereof, all of the Patent Rights and all
registered
Trademark Rights (or Trademark Rights for which applications for
registration
have been filed) in which Raven has any co-ownership interest,
other than those
owned solely by Raven, setting forth in each case the
jurisdictions in which
patents have been issued, patent applications have been filed,
trademarks have
been registered and trademark applications have been filed,
along with the
respective application, registration or filing number and
prosecution status or
subsequent registration activity thereof. Part 3 of Section
2.9(b) of the Raven
Disclosure Schedule lists, to the knowledge of Raven as of the
date hereof, all
of the material Patent Rights and all registered Trademark
Rights (or Trademark
Rights for which applications for registration have been filed)
in which Raven
has any right, title or interest (indicating where that right,
title or interest
is exclusive to Raven), other than those owned solely or
co-owned by Raven.
(i) Section 2.9(c) of the Raven Disclosure Schedule lists all
oral and
written contracts, agreements, licenses and other arrangements
in effect as of
the date of this Agreement under which any third party has
licensed, granted or
conveyed to Raven any right, title or interest in or to any
Material Raven IP
Rights, other than "shrink wrap" or "click through" license
agreements
accompanying widely available computer software that has not
been modified or
customized for Raven, or use licenses included in the purchase
agreements for
certain general consumables of Raven, including but not limited
to PCR kits,
assays and chemicals.
(j) Section 2.9(d) of the Raven Disclosure Schedule lists all
written
contracts, agreements, licenses or other arrangements in effect
as of the date
of this Agreement under which Raven has licensed, granted or
conveyed to any
third party any right, title or interest in or to any Material
Raven IP Rights.
(k) Raven owns, co-owns or otherwise possesses legally
enforceable
rights to in and to all Material Raven IP Rights, free and clear
of all liens,
pledges, charges, leases, mortgages and other encumbrances
(other than Permitted
Encumbrances), and for Material Raven IP Rights owned or
co-owned by Raven, also
free and clear of exclusive licenses and non-exclusive licenses
not granted in
the ordinary course of business. Raven owns exclusively all IP
Rights necessary
for and comprising the Raven Programs and Candidates. No party
is overtly
challenging in writing to Raven the right, title or interest of
Raven in, to or
under the Material Raven IP Rights, or the validity,
enforceability or claim
construction of any Patent Rights owned or co-owned or
exclusively licensed to
Raven, and there is no opposition, cancellation, proceeding,
written objection
or written claim, pending in any court or with any regulatory
body with regard
to any Material Raven IP Rights and the Material Raven IP Rights
are not subject
to any outstanding order, judgment, decree or agreement
adversely affecting
Raven's use thereof or its rights thereto. To the knowledge of
Raven, no valid
basis exists for any of the foregoing challenges or claims.
(l) Raven's current policies and procedures to protect and
maintain
the confidentiality of the proprietary know-how and trade
secrets included in
the Raven IP Rights are listed on Section 2.9(f) of the Raven
Disclosure
Schedule. Raven has taken all reasonable
20
<PAGE>
measures to protect and maintain the Raven IP Rights. All
current and former
officers and employees of, and consultants and independent
contractors to, Raven
who have contributed to the creation or development of any
Material Raven IP
Rights have assigned all such rights to Raven, and have executed
and delivered
to Raven an agreement (containing no exceptions or exclusions
from the scope of
its coverage) regarding the protection of proprietary
information and the
assignment to Raven, of any IP Rights arising from services
performed for Raven
by such persons, the forms of which agreements and any
individual material
variations thereof have been made available in a data room for
review by Parent
or its advisors. To the knowledge of Raven, no current or former
officers and
employees of, or consultants or independent contractors to,
Raven have breached
any material term of any such agreements.
(m) The conduct of the Current Raven Business does not
infringe,
constitute contributory infringement, inducement to infringe,
misappropriation
or unlawful use of any valid and enforceable IP Rights of any
other person.
"Current Raven Business" means all business related to the Raven
Programs and
Candidates. Raven has not received any oral or written claims
for or notice of
infringement, contributory infringement, inducement to
infringe,
misappropriation or unlawful use of any IP Rights of any other
Person.
(n) As of the date of this Agreement, Raven has received no
notice or
information that any Material Raven IP Rights are being
infringed or
misappropriated by any third party.
(o) Neither the execution, delivery or performance of this
Agreement
by Raven nor the consummation by Raven of the transactions
contemplated by this
Agreement will contravene, conflict with or result in any
limitation on Raven's
right, title or interest in or to any Raven IP Rights.
2.10 Compliance; Permits; Restrictions.
(a) Except for any conflicts, defaults or violations which would
not
reasonably be expected to have a Material Adverse Effect on
Raven, neither Raven
nor any of its subsidiaries is in conflict with, or in default
or violation of
(i) any law, rule, regulation, order, judgment or decree
applicable to Raven or
any of its subsidiaries or by which its or any of their
respective properties is
bound or affected, or (ii) any note, bond, mortgage, indenture,
contract,
agreement, lease, license, permit, franchise or other instrument
or obligation
to which Raven or any of its subsidiaries is a party or by which
Raven or any of
its subsidiaries or its or any of their respective properties is
bound or
affected. No investigation or review by any governmental or
regulatory body or
authority is pending or, to the knowledge of Raven, threatened
against Raven or
its subsidiaries, nor, to Raven's knowledge, has any
governmental or regulatory
body or authority indicated an intention to conduct the
same.
(b) Except where the failure to hold a permit, license,
variance,
exemption, order or approval from governmental authorities would
be reasonably
expected to have a Material Adverse Effect on Raven, Raven and
its subsidiaries
hold all permits, licenses, variances, exemptions, orders and
approvals from
governmental authorities which are necessary to the operation of
the business of
Raven and its subsidiaries taken as a whole (collectively, the
"Raven Permits").
Raven and its subsidiaries are in compliance with the terms of
the Raven
21
<PAGE>
Permits, except where the failure to so comply would not have a
Material Adverse
Effect on Raven. No action, proceeding, revocation proceeding,
amendment
procedure, writ, injunction or claim is pending or, to the
knowledge of Raven,
threatened, which seeks to revoke or limit any Raven Permit. A
true, complete
and correct list of the Raven Permits is set forth in Section
2.10(b) of the
Raven Disclosure Schedule, which further sets forth all material
consents
required to be obtained in order for such Raven Permits to
continue in place or
to be available to the Surviving Entity immediately following
the Closing.
(c) All biological and drug products being manufactured,
distributed
or developed by or on behalf of Raven ("Raven Pharmaceutical
Products") that are
subject to the jurisdiction of the Food and Drug Administration
("FDA") are
being manufactured, labeled, stored, tested, distributed, and
marketed in
compliance in all respects with all applicable requirements
under the Federal
Food, Drug, and Cosmetic Act ("FDCA"), the Public Health Service
Act, their
applicable implementing regulations, and all comparable state
laws and
regulations, except as would not reasonably be expected to have
a Material
Adverse Effect on Raven.
(d) All clinical trials conducted by or on behalf of Raven have
been,
and are being conducted in compliance with the applicable
requirements of Good
Clinical Practice, Informed Consent, and all applicable
requirements relating to
protection of human subjects contained in 21 CFR Parts 50, 54,
and 56, except as
would not reasonably be expected to have a Material Adverse
Effect on Raven.
(e) All manufacturing operations for drug products conducted by
or for
the benefit of Raven have been and are being conducted in
accordance with the
FDA's current Good Manufacturing Practices for drug and
biological products,
except as would not reasonably be expected to have a Material
Adverse Effect on
Raven. In addition, Raven is in compliance with all applicable
registration and
listing requirements set forth in 21 U.S.C. Section 360 and 21
CFR Part 207 and
all similar applicable laws and regulations, except as would not
reasonably be
expected to have a Material Adverse Effect on Raven.
(f) Neither Raven nor any representative of Raven, nor to
the
knowledge of Raven, any of its licensees or assignees of Raven
IP Rights has
received any notice that the FDA or any other Governmental
Entity has initiated,
or threatened to initiate, any action to suspend any clinical
trial, suspend or
terminate any Investigational New Drug Application sponsored by
Raven or
otherwise restrict the preclinical research on or clinical study
of any Raven
Pharmaceutical Product or any biological or drug product being
developed by any
licensee or assignee of Raven IP Rights based on such
intellectual property, or
to recall, suspend or otherwise restrict the manufacture of any
Raven
Pharmaceutical Product.
(g) Neither Raven nor, to the knowledge of Raven, any of its
officers,
key employees, agents or clinical investigators acting for
Raven, has committed
any act, made any statement or failed to make any statement that
would
reasonably be expected to provide a basis for the FDA to invoke
its policy with
respect to "Fraud, Untrue Statements of Material Facts, Bribery,
and Illegal
Gratuities" set forth in 56 Fed. Reg. 46191 (September 10, 1991)
and any
amendments thereof. Additionally, neither Raven, nor to the
knowledge of Raven,
any officer, key employee or agent of Raven has been convicted
of any crime or
engaged in any conduct that
22
<PAGE>
would reasonably be expected to result in (i) debarment under 21
U.S.C. Section
335a or any similar state law or (ii) exclusion under 42 U.S.C.
Section 1320a-7
or any similar state law or regulation.
(h) All animal studies or other preclinical tests performed
in
connection with or as the basis for any regulatory approval
required for the
Raven Pharmaceutical Products (1) either (x) have been conducted
in accordance,
in all material respects, with applicable Good Laboratory
Practice requirements
contained in 21 CFR Part 58, or (y) were not required to be
conducted in
accordance with Good Laboratory Practice requirements contained
in 21 CFR Part
58 and (2) have employed the procedures and controls generally
used by qualified
experts in animal or preclinical study of products comparable to
those being
developed by Raven.
(i) Raven has made available to Parent copies of any and all
notices
of inspectional observations, establishment inspection reports
and any other
documents received from the FDA, that indicate or suggest lack
of compliance
with the regulatory requirements of the FDA. Raven has made
available to Parent
for review all correspondence to or from the FDA, minutes of
meetings, written
reports of phone conversations, visits or other contact with the
FDA, notices of
inspectional observations, establishment inspection reports, and
all other
documents concerning communications to or from the FDA, or
prepared by the FDA
or which bear in any way on Raven's compliance with regulatory
requirements of
the FDA, or on the likelihood of timing of approval of any Raven
Pharmaceutical
Products.
(j) Raven has not been notified in writing of any proceedings
pending
with respect to a violation by Raven of the FDCA, FDA
regulations adopted
thereunder, the Controlled Substance Act or any other
legislation or regulation
promulgated by any other United States governmental entity.
2.11 Litigation. Except as set forth in Section 2.11 of the
Raven
Disclosure Schedule, as of the date of this Agreement, there is
no action, suit,
proceeding, claim, arbitration or investigation pending, or as
to which Raven or
any of its subsidiaries has received any notice of assertion.
There are not any
overtly threatened actions, suits, proceedings, claims for
arbitration or
investigations against Raven or any of its subsidiaries which
would reasonably
be expected to have a Material Adverse Effect on Raven.
2.12 Brokers' and Finders' Fees. Except as set forth in Section
2.12 of
the Raven Disclosure Schedule, Raven has not incurred, nor will
it incur,
directly or indirectly, any liability for brokerage or finders'
fees or agents'
commissions or any similar charges in connection with this
Agreement or any
transaction contemplated hereby.
2.13 Employee Benefit Plans.
(a) Section 2.13 of the Raven Disclosure Schedule sets forth, as
of
the date of this Agreement, a complete and accurate list of each
plan, program,
policy, practice, contract, agreement or other arrangement
providing for
employment, compensation, retirement, pension, deferred
compensation, loans,
severance, separation, relocation, repatriation, expatriation,
visas, work
permits, termination pay, performance awards, bonus, incentive,
stock option,
stock purchase, stock bonus, phantom stock, stock appreciation
right,
supplemental retirement, profit
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sharing, fringe benefits, cafeteria benefits, medical benefits,
life insurance,
disability benefits, accident benefits, salary continuation,
accrued leave,
vacation, sabbatical, sick pay, sick leave, unemployment
benefits or other
benefits, whether written or unwritten, including each
"voluntary employees
beneficiary association" ("VEBA"), under Section 501(c)(9) of
the Code and each
"employee benefit plan" within the meaning of Section 3(3) of
the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), in
each case, for
active, retired or former employees, directors or consultants,
which is
currently sponsored, maintained, contributed to, or required to
be contributed
to or with respect to which any material liability is reasonably
expected to be
borne by Raven or any trade or business (whether or not
incorporated) that is or
at any relevant time was treated as a single employer with Raven
within the
meaning of Section 414 of the Code (an "ERISA Affiliate"),
(collectively, the
"Raven Employee Plans"). Neither Raven nor, to the knowledge of
Raven, any other
person or entity, has made any commitment to modify, change or
terminate any
Raven Employee Plan, other than with respect to a modification,
change or
termination required by ERISA or the Code. There are no loans by
Raven to any of
its officers, employees, contractors or directors outstanding on
the date
hereof, except pursuant to loans under any Raven Employee Plan
intended to
qualify under Section 401(k) of the Code, and there have never
been any loans by
Raven subject to Regulation U of the Board of Governors of the
Federal Reserve
System as from time to time in effect and any successor to all
or a portion
thereof establishing margin requirements.
(b) Documents. Raven has made available to Parent true and
complete
copies of each of Raven Employee Plans and related plan
documents, including
trust documents, group annuity contracts, plan amendments,
insurance policies or
contracts, participant agreements, employee booklets,
administrative service
agreements, summary plan descriptions, compliance and
nondiscrimination tests
(including 401(k) and 401(m) tests) for the last three plan
years, standard
COBRA forms and related notices, registration statements and
prospectuses and,
to the extent still in its possession, any material employee
communications
relating thereto. With respect to each Raven Employee Plan that
is subject to
ERISA reporting requirements, Raven has made available in a data
room for review
by Parent copies of the Form 5500 reports filed for the last
three (3) plan
years. Raven has made available in a data room for review by
Parent the most
recent Internal Revenue Service determination or opinion letter
issued with
respect to each such Raven Employee Plan, and to Raven's
knowledge, nothing has
occurred since the issuance of each such letter that would
reasonably be
expected to cause the loss of the tax-qualified status of any
Raven Employee
Plan subject to Code Section 401(a). Raven has made available in
a data room for
review by Parent all filings made by Raven or any ERISA
Affiliate of Raven with
any Governmental Entity with respect to any Raven Employee Plan
to the extent
relevant to any ongoing obligation or liability of Raven,
including any filings
under the IRS' Employee Plans Compliance Resolution System
Program or any of its
predecessors or the Department of Labor Delinquent Filer
Program.
(c) Compliance. Each Raven Employee Plan is being, and has
been,
administered substantially in accordance with its terms and in
material
compliance with the requirements prescribed by any and all
statutes, rules and
regulations (including ERISA and the Code). Raven and each ERISA
Affiliate are
not in material default under or material violation of, and have
no knowledge of
any material default or material violation by any other party
to, any of Raven
Employee Plans. Any Raven Employee Plan intended to be qualified
under Section
401(a) of the Code has either obtained from the Internal Revenue
Service a
favorable
24
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determination letter as to its qualified status under the Code,
including all
currently effective amendments to the Code, and the
corresponding related
exemption of its trust from U.S. federal income taxation under
Section 501(a) of
the Code, if applicable, or has applied to the Internal Revenue
Service for such
favorable determination letter within the remedial amendment
period under
Section 401(b) of the Code. None of Raven Employee Plans
promises or provides
retiree medical or other retiree welfare benefits to any person.
Raven has not
engaged in, or participated in, any transaction which would be
considered a
non-exempt "prohibited transaction," as such term is defined in
Section 406 of
ERISA or Section 4975 of the Code, and to Raven's knowledge, no
other
third-party fiduciary and/or party-in-interest has engaged in
any such
"prohibited transaction" with respect to any Raven Employee
Plan. Neither Raven
nor any ERISA Affiliate is subject to any liability or penalty
under Sections
4976 through 4980 of the Code or Title I of ERISA with respect
to any Raven
Employee Plan. All contributions required to be made by Raven or
any ERISA
Affiliate to any Raven Employee Plan have been timely paid or
accrued on Raven
Balance Sheet, if required under GAAP. With respect to each
Raven Employee Plan,
no "reportable event" within the meaning of Section 4043 of
ERISA (excluding any
such event for which the thirty (30) day notice requirement has
been waived
under the regulations to Section 4043 of ERISA) has occurred,
nor has any event
described in Section 4062, 4063 or 4041 of ERISA occurred. Each
Raven Employee
Plan subject to ERISA has prepared in good faith and timely
filed all requisite
governmental reports, which were true and correct in all
material respects as of
the date filed, and has properly and timely filed and
distributed or posted all
notices and reports to employees required under ERISA to be
filed, distributed
or posted with respect to each such Raven Employee Plan. No
suit, administrative
proceeding or action has been brought, or to the knowledge of
Raven is overtly
threatened in communication with Raven, against or with respect
to any such
Raven Employee Plan, including any audit or inquiry by the
Internal Revenue
Service or the United States Department of Labor (other than
routine claims for
benefits arising under such plans). There has been no amendment
to, or written
interpretation or announcement by Raven or any ERISA Affiliate
regarding any
Raven Employee Plan that would materially increase the expense
of maintaining
such Raven Employee Plan above the level of expense incurred
with respect to
that plan for the fiscal year ended December 31, 2006. None of
the assets of
Raven or any ERISA Affiliate is, or may reasonably be expected
to become, the
subject of any lien arising under Section 302 of ERISA or
Section 412(n) of the
Code. All contributions and payments pursuant to Raven Employee
Plans are
deductible under Section 162 or 404 of the Code. No assets of
any Raven Employee
Plan are subject to a material amount of Tax as unrelated
business taxable
income under Section 511 of the Code, and no excise Tax could be
imposed upon
Raven under Chapter 43 of the Code. With respect to Raven
Employee Plans, no
event has occurred and, to the knowledge of Raven, there exists
no condition or
set of circumstances in connection with which Raven would
reasonably expect to
be subject to any material liability (other than for liabilities
with respect to
routine benefit claims) under the terms of, or with respect to,
such Raven
Employee Plans, ERISA, the Code or any other applicable law.
(d) No Title IV or Multiemployer Plan. Neither Raven nor any
ERISA
Affiliate has ever maintained, established, sponsored,
participated in or
contributed to, or is obligated to contribute to, or otherwise
incurred any
obligation or liability (including any contingent liability)
under, any
"multiemployer plan" (as defined in Section 3(37) of ERISA) or
any "pension
plan" (as defined in Section 3(2) of ERISA) subject to Title IV
of ERISA or
Section 412 of the Code. Neither Raven nor any ERISA Affiliate
has, as of the
date of this
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Agreement, any actual or potential withdrawal liability
(including any
contingent liability) for any complete or partial withdrawal (as
defined in
Sections 4203 and 4205 of ERISA) from any multiemployer
plan.
(e) No Self-Insured Plans. Neither Raven nor any ERISA Affiliate
has
ever maintained, established, sponsored, participated in or
contributed to any
self-insured plan that is governed by ERISA and that provides
benefits to
employees (including any such plan pursuant to which a stop-loss
policy or
contract applies).
(f) COBRA, FMLA, HIPAA, Cancer Rights. With respect to each
Raven
Employee Plan, Raven is in material compliance with (i) the
applicable health
care continuation and notice provisions of the Consolidated
Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations
thereunder or any state
law governing health care coverage extension or continuation;
(ii) the
applicable requirements of the Family and Medical Leave Act of
1993 and the
regulations thereunder; (iii) the applicable requirements of the
Health
Insurance Portability and Accountability Act of 1996 ("HIPAA");
and (iv) the
applicable requirements of the Cancer Rights Act of 1998. Raven
has no material
unsatisfied obligations to any employees, former employees or
qualified
beneficiaries pursuant to COBRA, HIPAA or any state law
governing health care
coverage extension or continuation.
(g) Section 409A. No payment pursuant to any Raven Employee Plan
or
other arrangement with respect to any "service provider" (as
such term is
defined in Section 409A of the Code and the United States
Department of Treasury
Regulations and IRS guidance thereunder), including the grant,
vesting or
exercise of any stock option, has subjected or will subject any
person to tax
pursuant to Section 409A(1) of the Code, whether pursuant to the
consummation of
the transactions contemplated by this Agreement or otherwise.
All Raven Options
have been appropriately authorized by the Board of Directors of
Raven or an
appropriate committee thereof, including approval of the option
exercise price
or the methodology for determining the option exercise price and
the substantive
option terms. Each Raven Option granted to an employee or other
service provider
that is subject to income tax under United States laws was
granted at an
exercise price not less than the fair market value of Raven's
Common Stock as
determined under Section 409A of the Code and the applicable
United States
Department of Treasury regulations as of the date the Raven
Option was granted
(within the meaning of United States Department of Treasury
Regulation
ss.1.409A-1(b)(5)(vi)(B)). No Raven Option has been designated
by the Board of
Directors of Raven, or the committee thereof which approved such
Raven Option,
to take effect on a date prior to the date of grant of such
Raven Option (within
the meaning of United States Department of Treasury
Regulation
ss.1.409A-1(b)(5)(vi)(B)), and neither the Board of Directors of
Raven or any
committee thereof has established the exercise price of any
Raven Option
following the designated date of grant of such Raven Option.
(h) Effect of Transaction. The consummation of Merger I will not
(i)
entitle any current or former employee or other service provider
of Raven or any
ERISA Affiliate to severance benefits or any other payment
(including
unemployment compensation, golden parachute, bonus or benefits
under any Raven
Employee Plan), except as expressly provided in Section 2.13 of
the Raven
Disclosure Schedule; (ii) accelerate the time of payment or
vesting of any such
benefits or increase the amount of compensation due any such
employee or service
26
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provider; (iii) result in the forgiveness of any indebtedness;
(iv) result in
any obligation to fund future benefits under any Raven Employee
Plan; or (v)
result in the imposition of any restrictions with respect to the
amendment or
termination of any of Raven Employee Plans. No benefit payable
or that may
become payable by Raven pursuant to any Raven Employee Plan in
connection with
the transactions contemplated by this Agreement or as a result
of or arising
under this Agreement shall constitute an "excess parachute
payment" (as defined
in Section 280G(b)(1) of the Code) subject to the imposition of
an excise Tax
under Section 4999 of the Code or the deduction for which would
be disallowed by
reason of Section 280G of the Code. Each Raven Employee Plan can
be amended,
terminated or otherwise discontinued after the Effective Time of
Merger I in
accordance with its terms, without material liability to Parent
or Raven other
than ordinary administration expenses typically incurred in a
termination event.
(i) Raven is not a party to any contract, agreement, plan or
arrangement, including but not limited to the provisions of this
Agreement,
covering any employee or former employee of Raven that,
individually or in the
aggregate, would reasonably be expected to give rise to the
payment of any
material amount that would be subject to the deductibility
limits of Section 404
of the Code.
(j) Raven does not sponsor, contribute to or have any liability
with
respect to any employee benefit plan, program or arrangement
that provides
benefits to non-resident aliens with no United States source
income outside of
the United States.
(k) With respect to each Raven Employee Plan that is an
"employee
welfare benefit plan" within the meaning of Section 3(2) of
ERISA, other than
any health care reimbursement plan under Section 125 of the
Code, all claims
incurred (including claims incurred but not reported) by
employees, former
employees and their dependents thereunder for which Raven is, or
will become,
liable are (i) insured pursuant to a contract of insurance
whereby the insurance
company bears any risk of loss with respect to such claims, (ii)
covered under a
contract with a health maintenance organization (an "HMO")
pursuant to which the
HMO bears the liability for such claims, or (iii) reflected as a
liability or
accrued for on Raven Financial Statements for the fiscal year
ended December 31,
2006.
2.14 Absence of Liens and Encumbrances; Condition of Equipment.
Raven and
each of its subsidiaries has good and valid title to, or, in the
case of leased
properties and assets, valid leasehold interests in, all
material tangible
properties and assets, real, personal and mixed, necessary for
use in its
business, free and clear of any liens or encumbrances except as
reflected in the
Raven Financials and except for liens for Taxes not yet due and
payable. Each
such tangible asset is in a good state of maintenance and
repair, free from
material defects and in good operating condition (subject to
normal wear and
tear) and is suitable for the purposes for which it presently is
used.
2.15 Environmental Matters. Except as would not individually or
in the
aggregate reasonably be expected to have a Material Adverse
Effect on Raven:
(a) Hazardous Material. No underground storage tanks and no
amount of
any substance that has been designated by any Governmental
Entity or by
applicable federal, state or local law, to be radioactive,
toxic, hazardous or
otherwise a danger to health or the environment,
27
<PAGE>
including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and
all substances listed as hazardous substances pursuant to the
Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended, or
defined as a hazardous waste pursuant to the United States
Resource Conservation
and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant
to said laws, (a "Hazardous Material"), but excluding office and
janitorial
supplies, are present, as a result of the deliberate actions of
Raven or any of
its subsidiaries, or, to Raven's knowledge, as a result of any
actions of any
third party or otherwise, in, on or under any property,
including the land and
the improvements, ground water and surface water thereof, that
Raven or any of
its subsidiaries has at any time owned, operated, occupied or
leased.
(b) Hazardous Material Activities. To the knowledge of Raven,
neither
Raven nor any of its subsidiaries has transported, stored, used,
manufactured,
disposed of, released or exposed its employees or others to
Hazardous Materials
in violation of any law in effect on or before the date hereof,
nor has Raven or
any of its subsidiaries disposed of, transported, sold, or
manufactured any
product containing a Hazardous Material (collectively,
"Hazardous Material
Activities") in violation of any rule, regulation, treaty or
statute promulgated
by any Governmental Entity in effect prior to or as of the date
hereof to
prohibit, regulate or control Hazardous Materials or any
Hazardous Material
Activity.
(c) Permits. Raven and its subsidiaries currently hold all
material
environmental approvals, permits, licenses, clearances and
consents (the "Raven
Environmental Permits") necessary for the conduct of Raven's and
its
subsidiaries' Hazardous Material Activities and other businesses
of Raven and
its subsidiaries as such activities and businesses are currently
being
conducted.
(d) Environmental Liabilities. No material action,
proceeding,
revocation proceeding, amendment procedure, writ, injunction or
claim is pending
or, to the knowledge of Raven, threatened concerning any Raven
Environmental
Permit, Hazardous Material or any Hazardous Material Activity of
Raven or any of
its subsidiaries. Raven is not aware of any fact or circumstance
which would
reasonably be expected to involve Raven or any of its
subsidiaries in any
environmental litigation or impose upon Raven or any of its
subsidiaries any
environmental liability.
2.16 Labor Matters.
(a) Section 2.16(a) of the Raven Disclosure Schedule sets forth
a
true, complete and correct list of all employees of Raven along
with their
position and actual annual rate of compensation. All employees
have entered into
nondisclosure and assignment of inventions agreements with
Raven, true, complete
and correct copies of which have previously been made available
to Parent. To
the knowledge of Raven, no employee of Raven is in violation of
any term of any
patent disclosure agreement, non-competition agreement, or any
restrictive
covenant (i) to Raven, or (ii) to a former employer relating to
the right of any
such employee to be employed because of the nature of the
business conducted by
Raven or to the use of trade secrets or proprietary information
of others. No
key employee or group of employees has threatened to terminate
employment with
Raven or, to the knowledge of Raven (which for
28
<PAGE>
purposes of this representation only shall mean actual
knowledge), has plans to
terminate such employment.
(b) Raven is not a party to or bound by any collective
bargaining
agreement, nor has it experienced any strikes, grievances,
claims of unfair
labor practices or other collective bargaining disputes.
(c) Except as disclosed in Section 2.16(c) of the Raven
Disclosure
Schedule, Raven is not a party to any written: (i) agreement
with any current or
former employee the benefits of which are contingent upon, or
the terms of which
will be materially altered by, the consummation of Merger I or
other
transactions contemplated by this Agreement; (ii) agreement with
any current or
former employee of Raven providing any term of employment or
compensation
guarantee extending for a period longer than one year from the
date hereof or
for the payment of compensation in excess of $50,000 per annum;
or (iii)
agreement or plan the benefits of which will be increased, or
the vesting of the
benefits of which will be accelerated, upon the consummation of
Merger I.
2.17 Agreements, Contracts and Commitments. Except as set forth
in Section
2.17 of the Raven Disclosure Schedule, neither Raven nor any of
its subsidiaries
is a party to or is bound by:
(a) any bonus, deferred compensation, severance, incentive
compensation, pension, profit-sharing or retirement plans, or
any other employee
benefit plans or arrangements;
(b) any employment or consulting agreement, contract or
commitment
with any officer or director level employee, not terminable by
Raven or any of
its subsidiaries on thirty (30) days notice without liability,
except to the
extent general principles of wrongful termination law may limit
Raven's or any
of its subsidiaries' ability to terminate employees at will;
(c) any agreement or plan, including, without limitation, any
stock
option plan, stock appreciation right plan or stock purchase
plan, any of the
benefits of which will be increased, or the vesting of benefits
of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the
basis of any of the transactions contemplated by this
Agreement;
(d) any agreement of indemnification or guaranty not entered
into in
the ordinary course of business other than indemnification
agreements between
Raven or any of its subsidiaries and any of its officers or
directors;
(e) any agreement, contract or commitment containing any
covenant
limiting the freedom of Raven or any of its subsidiaries to
engage in any line
of business or compete with any person;
(f) any agreement, contract or commitment relating to
capital
expenditures and involving future obligations in excess of
$50,000 and not
cancelable without penalty;
29
<PAGE>
(g) any agreement, contract or commitment currently in force
relating
to the disposition or acquisition of assets not in the ordinary
course of
business or any ownership interest in any corporation,
partnership, joint
venture or other business enterprise;
(h) any mortgages, indentures, loans or credit agreements,
security
agreements or other agreements or instruments relating to the
borrowing of money
or extension of credit;
(i) any joint marketing or development agreement;
(j) any distribution agreement (identifying any that contain
exclusivity provisions); or
(k) any other agreement, contract or commitment (excluding real
and
personal property leases) which involve payment by Raven or any
of its
subsidiaries under any such agreement, contract or commitment of
$50,000 or more
in the aggregate and is not cancelable without penalty within
thirty (30) days.
Neither Raven nor any of its subsidiaries, nor to Raven's
knowledge any other
party to a Raven Contract (as defined below), has breached,
violated or
defaulted under, or received notice that it has breached,
violated or defaulted
under, any of the terms or conditions of any of the agreements,
contracts or
commitments to which Raven is a party or by which it is bound of
the type
described in clauses (a) through (k) above (any such agreement,
contract or
commitment, a "Raven Contract") in such manner as would permit
any other party
to cancel or terminate any such Raven Contract, or would permit
any other party
to seek damages, in either case as would reasonably be expected
to have a
Material Adverse Effect on Raven. Each Raven Contract is valid,
binding,
enforceable and in full force and effect.
2.18 Reorganization Matters.
(a) Raven currently conducts a "historic business" within the
meaning
of Treasury Regulations Section 1.368-1(d), and no assets of
Raven have been
sold, transferred, or otherwise disposed of that would prevent
Parent from
continuing the "historic business" of Raven or from using a
"significant
portion" of Raven's "historic business assets" in a business
following the
Transaction, as such terms are used in Treasury Regulations
Section 1.368-1(d).
(b) Other than any amounts paid by Raven in respect of (i)
Dissenting
Shares, (ii) the cancellation of options or warrants to purchase
capital stock
of Raven or (iii) the conversion of principal and interested
payable under the
subordinated promissory notes issued pursuant to the Note
Purchase Agreement
into shares of Series D Preferred Stock or the conversion of
such shares of
Series D Preferred Stock into Raven Common Stock, neither Raven
nor any Person
related to Raven within the meaning of Treasury Regulations
Section
1.368-1(e)(3), (e)(4) and (e)(5) has redeemed, purchased or
otherwise acquired,
or made any distributions with respect to, any of Raven's
capital stock prior to
and in contemplation of the Transaction, or otherwise as part of
a plan of which
the Transaction is a part.
(c) The fair market value of the assets of Raven exceeds the sum
of
(1) the amount of the liabilities of Raven immediately prior to
the Transaction
and the liabilities, if any,
30
<PAGE>
to which the transferred assets of Raven are subject, and (2)
the amount of any
money and the fair market value of any other property (other
than Parent Common
Stock) received by Raven Stockholders in connection with the
Transaction. The
liabilities of Raven and the liabilities, if any, to which the
transferred
assets of Raven are subject, were incurred by Raven in the
ordinary course of
its business.
(d) Raven is not an investment company within the meaning of
Section
368(a)(2)(F)(iii) and (iv) of the Code.
(e) Raven is not under the jurisdiction of a court in a Title 11
or
similar case within the meaning of Section 368(a)(3)(A) of the
Code.
(f) Except as specifically set forth in the Agreement, Raven
will pay
its respective expenses, if any, incurred in connection with the
Transaction,
and Raven has not agreed to assume, and will not directly or
indirectly assume,
any expense or liability, whether fixed or contingent, of any
Raven Stockholder.
2.19 Registration Statement; Proxy Statement. The information
supplied by
Raven for inclusion in the Registration Statement and the Proxy
Statement shall
not contain any untrue statement of a material fact or omit to
state any
material fact required to be stated therein or necessary in
order to make the
statements therein, in light of the circumstances under which
they are made, not
false or misleading, or omit to state any material fact
necessary to correct any
statement provided to Parent and included in any earlier
communication with
respect to the solicitation of proxies for the Parent
Stockholders' Meeting
which has become false or misleading. If at any time prior to
the Effective Time
of Merger I, any event relating to Raven or any of its
affiliates, officers or
directors should be discovered by Raven which should be set
forth in an
amendment to the Registration Statement or a supplement to the
Proxy Statement,
Raven shall promptly inform Parent. Notwithstanding the
foregoing, Raven makes
no representation or warranty with respect to any information
supplied by Parent
which is contained in any of the foregoing documents.
2.20 Board Approval. The Board of Directors of Raven has, as of
the date
of this Agreement, determined (i) that Merger I is fair to, and
in the best
interests of Raven and its stockholders, and (ii) to recommend
that the
stockholders of Raven approve this Agreement (the "Raven
Recommendation").
2.21 Books and Records. The minute books of Raven and its
subsidiaries
made available to counsel for Parent contain accurate summaries,
in all material
respects, of all meetings of directors (or committees thereof)
and stockholders
or actions by written consent since the time of incorporation of
Raven or such
subsidiaries, as the case may be. The books and records of Raven
accurately
reflect in all material respects the assets, liabilities,
business, financial
condition and results of operations of Raven and have been
maintained in
accordance with good business and bookkeeping practices.
2.22 Real Property Leases. As of the date of this Agreement,
Raven does
not own any real property. Section 2.22 of the Raven Disclosure
Schedule sets
forth all real property leases or subleases to or by Raven,
including the term
of such lease, any extension and expansion
31
<PAGE>
options and the rent payable under it. Raven has made available
to Parent true,
complete and correct copies of the leases and subleases (as
amended to date)
listed in Section 2.22 of the Raven Disclosure Schedule. With
respect to each
lease and sublease listed in Section 2.22 of the Raven
Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable
and in
full force and effect and will continue to be legal, valid,
binding, enforceable
and in full force and effect immediately following the Effective
Time of Merger
I in accordance with the terms thereof as in effect immediately
prior to the
Effective Time of Merger I;
(b) Raven is not in material breach or violation of, or default
under,
any such lease or sublease, and no event has occurred, is
pending or, to the
knowledge of Raven, is threatened, which, after the giving of
notice, with lapse
of time, or otherwise, would constitute a material breach or
default by Raven
or, to the knowledge of Raven, any other under such lease or
sublease;
(c) Raven has not assigned, transferred, conveyed, mortgaged,
deeded
in trust or encumbered any interest in any lease or sublease;
and
(d) there are no liens, easements, covenants or other
restrictions
applicable to the real property subject to such lease, except
for recorded
easements, covenants and other restrictions which do not
materially impair the
intended use or the occupancy by Raven of the property subject
thereto.
2.23 Insurance.
(a) Section 2.23(a) of the Raven Disclosure Schedule sets forth
each
insurance policy (including fire, theft, casualty, general
liability, workers
compensation, business interruption, environmental, product
liability and
automobile insurance policies and bond and surety arrangements)
to which Raven
is a party (the "Insurance Policies"). The Insurance Policies
are in full force
and effect, maintained with reputable companies against loss
relating to the
business, operations and properties and such other risks as
companies engaged in
similar business as Raven would, in accordance with good
business practice,
customarily insure. All premiums due and payable under the
Insurance Policies
have been paid on a timely basis and Raven is in compliance in
all material
respects with all other terms thereof. True, complete and
correct copies of the
Insurance Policies have been made available to Parent.
(b) There are no material claims pending as to which coverage
has been
questioned, denied or disputed. All material claims thereunder
have been filed
in a due and timely fashion and Raven has not been refused
insurance for which
it has applied or had any policy of insurance terminated (other
than at its
request), nor has Raven received notice from any insurance
carrier that: (i)
such insurance will be canceled or that coverage thereunder will
be reduced or
eliminated; or (ii) premium costs with respect to such insurance
will be
increased, other than premium increases in the ordinary course
of business
applicable on their terms to all holders of similar
policies.
2.24 Accounts Receivable. All accounts receivable of Raven
reflected on
the Raven Balance Sheet are valid, current and collectible
subject to no setoffs
or counterclaims (within
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<PAGE>
thirty (30) days after the date on which it first became due and
payable) and
without taking into account the applicable reserve for bad debts
on the Raven
Balance Sheet. All accounts receivable of Raven that have arisen
since the Raven
Balance Sheet Date are valid, current and collectible (within
thirty (30) days
after the date on which it first became due and payable),
subject to no setoffs
or counterclaims and net of a reserve for bad debts
proportionate in amount to
the reserve shown on the Raven Balance Sheet.
2.25 Certain Business Practices. Neither Raven nor, to the
knowledge of
Raven, any director, officer, employee or agent of Raven has:
(i) used any funds
for unlawful contributions, gifts, entertainment or other
unlawful payments
relating to political activity; (ii) made any unlawful payment
to any foreign or
domestic government official or employee or to any foreign or
domestic political
party or campaign or violated any provision of the Foreign
Corrupt Practices Act
of 1977, as amended; or (iii) made any other unlawful
payment.
2.26 Suppliers. Section 2.26 of the Raven Disclosure Schedule
sets forth a
true, complete and correct list of each supplier that is the
sole supplier of
any significant product or service to Raven. Since December 31,
2006, there has
not been: (A) any materially adverse change in the business
relationship of
Raven with any supplier named in the Raven Disclosure Schedule;
or (B) any
change in any material term (including credit terms) of the
sales agreements or
related agreements with any supplier named in the Raven
Disclosure Schedule.
2.27 Government Contracts. Raven has not been suspended or
debarred from
bidding on contracts with any governmental authority, and no
such suspension or
debarment has been initiated or threatened. The consummation of
Merger I and
other transactions contemplated by this Agreement will not
result in any such
suspension or debarment of Raven or Parent (assuming that no
such suspension or
debarment will result solely from the identity of Parent).
2.28 Interested Party Transactions. Except as set forth in
Section 2.28 of
the Raven Disclosure Schedule, no event has occurred during the
past three years
that would be required to be reported by Raven as a Certain
Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K, if
Raven were
required to report such information in periodic reports pursuant
to the Exchange
Act.
2.29 Warrants and Indemnity Agreements. Except as set forth in
Section
2.29 of the Raven Disclosure Schedule, as of the Effective Time
of Merger I, all
warrants to acquire common stock of Raven shall terminate with
no further
obligations binding upon Raven or the Surviving Entity as of the
Effective Time
of Merger I, and neither Raven nor the Surviving Entity shall
have any
liabilities with respect thereto. Except as set forth in Section
2.29 of the
Raven Disclosure Schedule, all indemnification agreements
between Raven and any
individual shall have been amended and restated in substantially
the form
provided to Parent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBS
Each of Parent and Merger Subs hereby represents and warrants to
Raven and the
Raven Stockholders as of immediately prior to the Effective Time
of Merger I
that except as set forth in the
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written disclosure schedule delivered by Parent and Merger Subs
to Raven (it
being understood that any such exception shall be deemed to
qualify the section
or subsection of this Agreement to which it corresponds in
number and each other
section or subsection to which the relevance of such disclosure
is reasonably
apparent on its face) (the "Parent Disclosure Schedule"):
3.1 Organization of Parent; Merger Subs. Parent is a corporation
duly
organized, validly existing and in good standing under the laws
of the State of
Delaware, has all requisite corporate power and authority to
own, lease and
operate its property and to carry on its business as now being
conducted and as
proposed to be conducted, and is duly qualified to do business
and in good
standing as a foreign corporation in each jurisdiction in which
the failure to
be so qualified would have a Material Adverse Effect on Parent.
Parent has made
available a true and correct copy of the Certificate of
Incorporation and Bylaws
of Parent, each as amended to date, to counsel for Raven. Parent
owns 100% of
the issued and outstanding shares of capital stock of Merger Sub
I. Merger Sub I
is a corporation, duly organized, validly existing and in good
standing under
the laws of the State of Delaware. Merger Sub I has never
conducted any business
activities or operations and has never owned any property or
become party to or
bound by any contract or agreement other than this Agreement.
Merger Sub II is a
limited liability company, duly organized, validly existing and
in good standing
under the laws of the State of Delaware. Parent owns 100% of the
membership
interests of Merger Sub II. Merger Sub II has never conducted
any business
activities or operations and has never owned any property or
become party to or
bound by any contract or agreement other than this
Agreement.
3.2 Authority.
(a) Each of Parent and Merger Subs has all requisite corporate
power
and authority to enter into this Agreement and to consummate the
transactions
contemplated hereby. The execution and delivery of this
Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized
by all necessary corporate action on the part of Parent and
Merger Subs, subject
only to the approval of the transactions contemplated by this
Agreement by
Parent's stockholders as contemplated in Section 5.2 and the
filing and
recordation of the Certificate of Merger pursuant to Delaware
Law. This
Agreement has been duly executed and delivered by Parent and
Merger Subs and,
assuming the due authorization, execution and delivery of this
Agreement by
Raven, this Agreement constitutes the valid and binding
obligation of Parent and
Merger Subs, enforceable in accordance with its terms, except as
enforceability
may be limited by bankruptcy and other similar laws and general
principles of
equity. The execution and delivery of this Agreement by Parent
and Merger Subs
does not, and the performance of this Agreement by Parent and
Merger Subs will
not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of
Parent or Merger Sub I or the governing documents of Merger Sub
II, (ii) subject
to obtaining the approval of the transactions contemplated by
this Agreement by
Parent's stockholders as contemplated in Section 5.2 and
compliance with the
requirements set forth in Section 3.2(b) below, conflict with or
violate any
law, rule, regulation, order, judgment or decree applicable to
Parent or Merger
Subs or by which any of its respective properties are bound or
affected, or
(iii) result in any breach of or constitute a default (or an
event that with
notice or lapse of time or both would become a default) under,
or impair
Parent's, Merger Sub I's or Merger Sub II's rights or alter the
rights or
obligations of any third party under, or give to others any
rights of
termination, amendment, acceleration or cancellation of, or
result in the
creation of a lien or encumbrance on any of the properties
or
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assets of Parent or Merger Subs pursuant to, any note, bond,
mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other
instrument or obligation to which Parent or Merger Sub is a
party or by which
Parent, Merger Sub I or Merger Sub II or any of its respective
properties are
bound or affected, except, in the case of the provisions of this
clause (iii),
for any such conflicts, violations, defaults or other
occurrences that would not
have a Material Adverse Effect on Parent. Section 3.2 of the
Parent Disclosure
Schedule lists all material consents, waivers and approvals
under any of
Parent's agreements, contracts, licenses or leases required to
be obtained in
connection with the consummation of the transactions
contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration,
declaration or filing with any Governmental Entity is required
by or with
respect to Parent or Merger Subs in connection with the
execution and delivery
of this Agreement or the consummation of the transactions
contemplated hereby,
except for (i) the filing of the Registration Statement with the
SEC in
accordance with the Securities Act, (ii) the filing of the
Certificate of Merger
with the Secretary of State of the State of Delaware, (ii) the
filing of the
Proxy Statement with the SEC in accordance with the Exchange
Act, (iv) the
filing of a Current Report on Form 8-K with the SEC, (v) the
relisting of the
Parent Common Stock on an Approved Exchange, (vi) the filing of
an amendment to
Parent's Certificate of Incorporation with the Secretary of
State of the State
of Delaware, (vii) such consents, approvals, orders,
authorizations,
registrations, declarations and filings as may be required under
applicable
federal and state securities laws and the laws of any foreign
country and (vii)
such other consents, authorizations, filings, approvals and
registrations which,
if not obtained or made, would not reasonably be expected to
have a Material
Adverse Effect on Raven or Parent or prevent or materially delay
the
consummation of Merger I or the other transactions contemplated
by this
Agreement.
3.3 Section 203 Of The Delaware General Corporation Law Not
Applicable.
The Board of Directors of Parent has taken all necessary actions
so that the
restrictions contained in Section 203 of the Delaware General
Corporation Law
applicable to a "business combination" (as defined in Section
203) will not
apply to the execution, delivery or performance of this
Agreement or to the
consummation of Merger I or the other transactions contemplated
by this
Agreement.
3.4 Board Approval. The Board of Directors of Parent has, as of
the date
of this Agreement, determined (i) that Merger I is fair to, and
in the best
interests of Parent and its stockholders, and (ii) to recommend
that the
stockholders of Parent approve this Agreement and the issuance
of the Parent
Common Stock in Merger I (the "Parent Recommendation").
3.5 SEC Filings; Financial Statements.
(a) Parent has made available to Raven accurate and complete
copies of
all proxy statements, Certifications (as defined below) and
other statements,
reports, schedules, forms and other documents filed by Parent
with the SEC since
January 1, 2005 (the "Parent SEC Documents"), other than such
documents that can
be obtained on the SEC's website at www.sec.gov. As of the time
it was filed
with the SEC (or, if amended or superseded by a filing prior to
the date of this
Agreement, then on the date of such filing): (i) each of the
Parent SEC
Documents complied in all material respects with the applicable
requirements of
the Exchange Act and (ii) none of the Parent SEC Documents
contained any untrue
statement of a material fact
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or omitted to state a material fact required to be stated
therein or necessary
in order to make the statements therein, in the light of the
circumstances under
which they were made, not misleading. The certifications and
statements required
by (A) Rule 13a-14 under the Exchange Act and (B) 18 U.S.C.
ss.1350 (Section 906
of the Sarbanes-Oxley Act) relating to the Parent SEC Documents
(collectively,
the "Certifications") are accurate and complete and comply as to
form and
content with all applicable Legal Requirements. As used in this
Section 3.5, the
term "file" and variations thereof shall be broadly construed to
include any
manner in which a document or information is furnished, supplied
or otherwise
made available to the SEC.
(b) Parent maintains disclosure controls and procedures that
satisfy
the requirements of Rule 13a-15 under the Exchange Act. Such
disclosure controls
and procedures are designed to ensure that all material
information concerning
Parent is made known on a timely basis to the individuals
responsible for the
preparation of Parent's filings with the SEC and other public
disclosure
documents.
(c) The financial statements (including any related notes)
contained
or incorporated by reference in the Parent SEC Documents (the
"Parent
Financials"): (i) complied as to form in all material respects
with the
published rules and regulations of the SEC applicable thereto;
(ii) were
prepared in accordance with GAAP (except as may be indicated in
the notes to
such financial statements or, in the case of unaudited financial
statements, as
permitted by the SEC, and except that the unaudited financial
statements may not
contain footnotes and are subject to normal and recurring
year-end adjustments
that are not reasonably expected to be material in amount)
applied on a
consistent basis unless otherwise noted therein throughout the
periods
indicated; and (iii) fairly present the consolidated financial
position of
Parent as of the respective dates thereof and the consolidated
results of
operations and cash flows of Parent for the periods covered
thereby.
3.6 Capital Structure. The authorized capital stock of Parent
consists of
sixty-five million (65,000,000) shares of Common Stock, par
value $0.01 per
share, of which there were 33,106,523 shares issued and
outstanding as of the
date of this Agreement, and twenty million (20,000,000) shares
of preferred
stock, par value $0.01 per share, of which none were outstanding
as of the date
of this Agreement. No shares of capital stock are held in
Parent's treasury. All
outstanding shares of Parent Common Stock are duly authorized,
validly issued,
fully paid and non-assessable and are not subject to preemptive
rights created
by statute, the Certificate of Incorporation or Bylaws of Parent
or any
agreement or document to which Parent is a party or by which it
is bound, and
were issued in compliance with all applicable federal and state
securities laws.
As of the date hereof, Parent had reserved an aggregate of
5,550,052 shares of
Parent Common Stock, net of exercises, for issuance to
employees, consultants
and non-employee directors and directors upon exercise of
options granted
("Parent Options") pursuant to Parent's Amended and Restated
1996 Stock Option
Plan, and Parent's 1998 Director's Stock Option Plan
(collectively, the "Parent
Stock Option Plans"). Parent has reserved 1,664,654 shares, net
of exercises,
for issuance to holders of Warrants upon their exercise. Since
December 31,
2006, Parent has not issued any restricted stock units or
deferred stock awards.
All shares of Parent Common Stock subject to issuance as
aforesaid, upon
issuance on the terms and conditions specified in the
instruments pursuant to
which they are issuable, would be duly authorized, validly
issued, fully paid
and non-assessable. The shares of Parent Common Stock
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<PAGE>
issuable as Merger Consideration, upon issuance on the terms and
conditions
contemplated in this Agreement, would be duly authorized,
validly issued, fully
paid and non-assessable.
3.7 Obligations With Respect To Capital Stock. Except as set
forth in
Section 3.7 of the Parent Disclosure Schedule, there are no
options, warrants,
equity securities, calls, rights (including preemptive rights),
commitments or
agreements of any character to which Parent or any of its
subsidiaries is a
party or by which it is bound obligating Parent or any of its
subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or
sold, or to
repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or
acquisition of, any shares of capital stock of Parent or any of
its subsidiaries
or obligating Parent or any of its subsidiaries to grant,
extend, accelerate the
vesting of or enter into any such option, warrant, equity
security, call, right,
commitment or agreement. Except as set forth in the SEC
Documents, there are no
registration rights and, to the knowledge of Parent, there are
no voting trusts,
proxies or other agreements or understandings with respect to
any equity
security of any class of Parent or with respect to any equity
security of any
class of any of its subsidiaries.
3.8 Cash on Hand and No Undisclosed Liabilities. As of September
30, 2007,
Parent had $77,320,000 of cash, cash equivalents and marketable
securities.
Except as disclosed in the Parent Financials, neither Parent nor
any of its
subsidiaries has any liabilities (absolute, accrued, contingent
or otherwise) of
a nature required to be disclosed on a balance sheet or in the
related notes to
the consolidated financial statements prepared in accordance
with GAAP which
are, individually or in the aggregate, material to the business,
results of
operations or financial condition of Parent and its subsidiaries
taken as a
whole, except liabilities (i) provided for in the Parent
Financials, (ii)
liabilities incurred in connection with the transactions
contemplated in this
Agreement, all of which shall be paid at or prior to the
Effective Time of
Merger I out of Parent's pre-closing cash on hand, (iv)
disclosed in Section 3.8
of the Parent Disclosure Schedule, or (iv) incurred since
December 31, 2006 in
the ordinary course of business consistent with past
practices.
3.9 Absence of Certain Changes or Events. Since December 31,
2006 through
the date of this Agreement, Parent has conducted its business
only in the
ordinary course of business consistent with past practice, and
there has not
been: (i) any event that has had, or that would be reasonably
expected to result
in, a Material Adverse Effect on Parent, (ii) any material
change by Parent in
its accounting methods, principles or practices, except as
required by
concurrent changes in GAAP, (iii) any revaluation by Parent of
any of its assets
having a Material Adverse Effect on Parent, (iv) writing off
notes or accounts
receivable other than in the ordinary course of business, or (v)
any other
action, event or occurrence that would have required the consent
of Raven under
subsections (a), (c), (d), (f), (g), (i) clauses (ii) and (iv)
only, (k), (l),
or (n) of Section 4.1 of this Agreement had such action, event
or occurrence
taken place after the execution and delivery of this
Agreement.
3.10 Taxes.
(a) Each of the Tax Returns by or with respect to Parent: (i)
has been
timely filed on or before the applicable due date (including any
extensions of
such due date) and (ii) is true and complete in all material
respects. All
material Taxes due and payable by Parent (whether or not shown
to be due on
filed Tax Returns) have been timely paid, except to the
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extent such amounts are being contested in good faith by Parent
or are properly
reserved for in the Parent Financials.
(b) All material Taxes that Parent has been required to collect
or
withhold have been duly collected or withheld and, to the extent
required by
applicable law when due, have been duly and timely paid to the
proper
Governmental Entity.
(c) There has not been any audit, examination or other
administrative
or court proceeding for or relating to any liability in respect
of Taxes by any
Governmental Entity in respect of which Parent has received a
written notice,
and Parent has not been notified in writing by any Governmental
Entity that any
such audit, examination or other administrative or court
proceeding involving
Taxes is contemplated or pending. No extension of time with
respect to any date
on which a Tax Return was required to be filed by Parent is in
force (except
where such Tax Return was filed), and no waiver or agreement by
or with respect
to Parent is in force for the extension of time for the payment,
collection or
assessment of any Taxes, and no request has been made by Parent
in writing for
any such extension or waiver (except, in each case, in
connection with any
request for extension of time for filing Tax Returns). No claim
has been made in
writing to Parent by any Governmental Entity in a jurisdiction
where Parent does
not file Tax Returns that Parent is subject to taxation by that
jurisdiction
and, to Parent's knowledge, there are no facts or basis upon
which any such
claim could reasonably be made. No issues relating to any
material amount of
Taxes were raised by the relevant Governmental Entity in any
completed audit or
examination that would reasonably be expected to recur in a
later taxable
period.
(d) The unpaid Taxes of Parent did not, as of the date of
Parent's
audited financial statements for the fiscal year ended December
31, 2006, exceed
the reserve for Tax liability (excluding any reserve for
deferred Taxes
established to reflect timing differences between book and Tax
items) set forth
on the face of the balance sheet contained in such audited
financial statements.
Since the date of the most recent audited financial statements,
Parent has not
incurred any liability for Taxes outside of the ordinary course
of business or
otherwise inconsistent with past custom or practice.
(e) There are no liens for Taxes on any asset of Parent other
than
liens for Taxes not yet due and payable or not yet
delinquent.
(f) Parent has not agreed, or will not be required, to make
any
adjustment for any period after the date of this Agreement
pursuant to Section
481(a) of the Code by reason of any change in any accounting
method made prior
to the date hereof. There is no application pending with any
Governmental Entity
requesting permission for any such change in any accounting
method of Parent,
and the Internal Revenue Service has not issued in writing any
pending proposal
regarding any such adjustment or change in accounting
method.
(g) No closing agreements, private letter rulings, technical
advice
memoranda or similar agreements or rulings have been entered
into by Parent with
any taxing authority or issued by any taxing authority to
Parent. There are no
outstanding rulings of, or request for rulings with, any
Governmental Entity
addressed to Parent that are, or if issued would be, binding on
Parent.
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(h) Parent is not a party to any agreement with any third
party
relating to allocating or sharing the payment of, or liability
for, Taxes or Tax
benefits. Parent has no liability for the Taxes of any third
party under
Treasury Regulation ss.1.1502-6 (or any similar provision of
state, local or
foreign law) as a transferee or successor, by contract or
otherwise (other than
entities for which Parent is or was the common parent).
(i) Parent is not a member of an affiliated group of
corporations
within the meaning of Section 1504 of the Code or of any group
that has filed a
combined, consolidated or unitary Tax return under state, local
or foreign Tax
law (other than a group the common parent of which is
Parent).
(j) Parent does not (i) own a single member limited liability
company
which is treated as a disregarded entity, and (ii) is not a
stockholder of a
"controlled foreign corporation" as defined in Section 957 of
the Code.
(k) Parent has not participated in a "listed transaction" within
the
meaning of Treasury Regulation Section 1.6011-4(b). Parent
believes it has
substantial authority for or has disclosed on its respective
United States
federal income Tax Returns all positions taken therein that
could give rise to a
substantial understatement of United States federal income Tax
within the
meaning of Section 6662 of the Code.
(l) Parent is not (and has not been for the five-year period
ending at
Closing) a "United States real property holding corporation" as
defined in
Section 897(c)(2) of the Code and the applicable Treasury
Regulations.
(m) Parent does not have a permanent establishment in any
country
other than the United States, as defined in any applicable Tax
treaty between
the United States and such other country.
3.11 Intellectual Property.
(a) No party is overtly challenging in writing the right, title
or
interest of Parent in, to or under the material IP Rights owned
by or
exclusively licensed to Parent, or the validity, enforceability
or claim
construction of any Patent Rights owned or co-owned or
exclusively licensed to
Parent, and there is no opposition, cancellation, proceeding,
objection or claim
pending with regard to any material IP Rights owned by or
exclusively licensed
to Parent.
(b) To the knowledge of Parent, as of the date of this
Agreement, no
material IP Rights owned by or exclusively licensed to Parent
are being
infringed or misappropriated by any third party.
(c) Neither the execution, delivery or performance of this
Agreement
by Parent nor the consummation by Parent of the transactions
contemplated by
this Agreement will contravene, conflict with or result in any
limitation on
Parent's right, title or interest in or to any material IP
Rights.
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3.12 Compliance; Permits; Restrictions.
(a) Except for any conflicts, defaults or violations which would
not
reasonably be expected to have a Material Adverse Effect on
Parent, neither
Parent nor any of its subsidiaries is in conflict with, or in
default or
violation of (i) any law, rule, regulation, order, judgment or
decree applicable
to Parent or any of its subsidiaries or by which its or any of
their respective
properties is bound or affected, or (ii) any note, bond,
mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or
obligation to which Parent or any of its subsidiaries is a party
or by which
Parent or any of its subsidiaries or its or any of their
respective properties
is bound or affected. No investigation or review by any
governmental or
regulatory body or authority is pending or, to the knowledge of
Parent,
threatened against Parent or its subsidiaries, nor, to Parent's
knowledge, has
any governmental or regulatory body or authority indicated an
intention to
conduct the same.
(b) There are no biological and drug products being
manufactured,
distributed or developed by or on behalf of Parent that are
subject to the
jurisdiction of th
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