Exhibit 2.1
FINAL EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
between
BIOSANTE PHARMACEUTICALS, INC.
and
CELL GENESYS, INC.
Dated as of June 29, 2009
Table of Contents
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Page
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ARTICLE I DEFINITIONS
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2
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SECTION 1.01.
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Definitions
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2
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ARTICLE II THE MERGER
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12
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SECTION 2.01.
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The Merger
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12
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SECTION 2.02.
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Effective Time; Closing
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12
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SECTION 2.03.
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Effect of the Merger
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12
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SECTION 2.04.
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Conversion of Securities
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12
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SECTION 2.05.
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Company Stock Options
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13
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SECTION 2.06.
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Restricted Awards
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14
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SECTION 2.07.
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Treatment of the Convertible Notes
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15
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SECTION 2.08.
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Certificate of Incorporation; Bylaws
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15
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SECTION 2.09.
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Directors and Officers
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15
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SECTION 2.10.
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Taking of Necessary Action; Further
Action
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15
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SECTION 2.11.
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Calculation of Net Cash
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15
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ARTICLE III DELIVERY OF BIOSANTE COMMON
SHARES
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16
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SECTION 3.01.
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Exchange of Certificates
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16
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SECTION 3.02.
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Stock Transfer Books
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19
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SECTION 3.03.
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No Appraisal Rights
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20
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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20
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SECTION 4.01.
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Organization and Qualification;
Subsidiaries
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20
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SECTION 4.02.
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Certificate of Incorporation and
Bylaws
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21
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SECTION 4.03.
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Capitalization
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21
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SECTION 4.04.
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Authority Relative to This Agreement
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23
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SECTION 4.05.
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No Conflict; Required Filings and
Consents
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24
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SECTION 4.06.
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Permits
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24
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SECTION 4.07.
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SEC Filings; Financial Statements
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25
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SECTION 4.08.
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Absence of Certain Changes or Events
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27
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SECTION 4.09.
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Absence of Litigation
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27
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SECTION 4.10.
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Employee Benefit Plans
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28
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SECTION 4.11.
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Labor and Employment
Matters
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31
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i
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Page
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SECTION 4.12.
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Real Property; Leases
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32
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SECTION 4.13.
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Intellectual Property
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33
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SECTION 4.14.
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Taxes
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34
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SECTION 4.15.
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Environmental Matters
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35
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SECTION 4.16.
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Company Rights Agreement
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36
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SECTION 4.17.
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Material Contracts
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36
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SECTION 4.18.
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Insurance
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38
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SECTION 4.19.
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Compliance
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38
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SECTION 4.20.
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Bank Accounts
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39
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SECTION 4.21.
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Board Approval; Vote Required
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39
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SECTION 4.22.
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Opinions of Financial Advisors
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40
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SECTION 4.23.
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Brokers
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40
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SECTION 4.24.
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No Fundamental Change
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40
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF
BIOSANTE
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40
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SECTION 5.01.
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Corporate Organization
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41
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SECTION 5.02.
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Organizational Documents
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41
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SECTION 5.03.
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Capitalization
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41
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SECTION 5.04.
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Authority Relative to This Agreement
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42
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SECTION 5.05.
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No Conflict; Required Filings and
Consents
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43
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SECTION 5.06.
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SEC Filings; Financial Statements
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43
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SECTION 5.07.
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Board Approval; Vote Required
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45
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SECTION 5.08.
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Ownership of Shares
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46
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SECTION 5.09.
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Availability of Funds
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46
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SECTION 5.10.
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Opinion of Financial Advisor
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46
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SECTION 5.11.
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Absence of Certain Changes or Events
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46
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SECTION 5.12.
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Absence of Litigation
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46
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SECTION 5.13.
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Intellectual Property
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46
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SECTION 5.14.
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Compliance
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47
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ARTICLE VI CONDUCT OF BUSINESS PENDING THE
MERGER
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48
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SECTION 6.01.
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Conduct of Business by the Company Pending the
Merger
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48
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SECTION 6.02.
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Conduct of Business by BioSante Pending the
Merger
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51
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ARTICLE VII ADDITIONAL AGREEMENTS
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51
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SECTION 7.01.
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Registration Statement; Joint Proxy
Statement
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51
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ii
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Page
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SECTION 7.02.
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Company Stockholder Meeting
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54
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SECTION 7.03.
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BioSante Stockholder Meeting; BioSante Board
Recommendation
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54
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SECTION 7.04.
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Access to Information;
Confidentiality
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55
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SECTION 7.05.
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No Solicitation of Transactions
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56
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SECTION 7.06.
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Employee Benefits Matters
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59
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SECTION 7.07.
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Notification of Certain Matters
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60
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SECTION 7.08.
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Further Action; Reasonable Best
Efforts
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61
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SECTION 7.09.
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Tax Matters
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61
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SECTION 7.10.
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Third-Party Consents and Notices
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61
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SECTION 7.11.
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NASDAQ Listing
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62
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SECTION 7.12.
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Subsequent Financial Statements
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62
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SECTION 7.13.
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Public Announcements
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62
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SECTION 7.14.
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Resignation of Directors
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62
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SECTION 7.15.
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Section 16 Matters
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62
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SECTION 7.16.
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Indemnification; Directors’ and
Officers’ Insurance
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62
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SECTION 7.17.
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Convertible Notes
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63
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SECTION 7.18.
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Form S-8
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64
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SECTION 7.19.
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Termination of Executive Officers
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64
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ARTICLE VIII CONDITIONS TO THE MERGER
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64
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SECTION 8.01.
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Conditions to the Obligations of Each
Party
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64
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SECTION 8.02.
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Conditions to the Obligations of
BioSante
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65
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SECTION 8.03.
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Conditions to the Obligations of the
Company
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66
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ARTICLE IX TERMINATION, AMENDMENT AND
WAIVER
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66
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SECTION 9.01.
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Termination
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66
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SECTION 9.02.
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Effect of Termination
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67
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SECTION 9.03.
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Payment of Certain Fees and Expenses
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68
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SECTION 9.04.
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Amendment
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70
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SECTION 9.05.
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Waiver
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70
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ARTICLE X GENERAL PROVISIONS
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70
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SECTION 10.01.
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Non-Survival of Representations, Warranties and
Agreements
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70
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SECTION 10.02.
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Notices
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70
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iii
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Page
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SECTION 10.03.
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Severability
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72
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SECTION 10.04.
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Entire Agreement; Assignment
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72
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SECTION 10.05.
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Parties in Interest
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72
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SECTION 10.06.
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Interpretation
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73
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SECTION 10.07.
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Specific Performance
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73
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SECTION 10.08.
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Governing Law; Jurisdiction
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73
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SECTION 10.09.
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Headings
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73
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SECTION 10.10.
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Counterparts
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73
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SECTION 10.11.
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Waiver of Jury Trial
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73
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iv
SCHEDULES
Company Disclosure Schedules
BioSante Disclosure Schedules
EXHIBITS
Exhibit A-1
Form of Company Voting
Agreement
Exhibit A-2
Form of BioSante Voting
Agreement
v
AGREEMENT AND PLAN OF MERGER, dated
as of June 29, 2009 (this “ Agreement ”),
between BIOSANTE PHARMACEUTICALS, INC., a Delaware corporation
(“ BioSante ”) and CELL GENESYS, INC., a
Delaware corporation (the “ Company
”).
WHEREAS, upon the terms and subject
to the conditions of this Agreement and in accordance with the
General Corporation Law of the State of Delaware (the “
DGCL ”), the Company will merge with and into BioSante
(the “ Merger ”);
WHEREAS, the Board of Directors of
the Company (the “ Company Board ”) has
(i) determined that the Merger is in the best interests of the
Company and its stockholders, (ii) approved, and declared it
advisable to enter into, this Agreement, and (iii) resolved to
recommend that this Agreement be adopted by the stockholders of the
Company;
WHEREAS, (i) the Board of
Directors of BioSante (the “ BioSante Board ”)
has (i) determined that the Merger is in the best interests of
BioSante and its stockholders, (ii) approved, and declared it
advisable to enter into, this Agreement, and (iii) resolved to
recommend that this Agreement be adopted by the stockholders of
BioSante and that the stockholders of BioSante approve the
issuance of shares of common stock, par value $0.0001 per share, of
BioSante (“ BioSante Common Shares ”), to the
stockholders of the Company pursuant to this Agreement (the “
BioSante Share Issuance ”);
WHEREAS, concurrently with the
execution and delivery of this Agreement and as a condition to
BioSante’s willingness to enter into this Agreement, Stephen
A. Sherwin, M.D, (the “ Company Principal
Stockholder ”), is entering into a voting agreement
with BioSante substantially in the form attached hereto as
Exhibit A-1 (the “ Company Voting
Agreement ”), pursuant to which, among other things, the
Company Principal Stockholder has agreed to vote or cause to be
voted the Shares (as defined herein) beneficially owned by him in
favor of approval and adoption of this Agreement and the
transactions contemplated hereby (including the Merger), upon the
terms and subject to the conditions set forth in the Company Voting
Agreement;
WHEREAS, concurrently with the
execution and delivery of this Agreement and as a condition to the
Company’s willingness to enter into this Agreement, Stephen
M. Simes, Ross Mangano, Phillip B. Donenberg, JO & Co. and
Louis W. Sullivan, M.D. (the “ BioSante Principal
Stockholders ”) are entering into a voting agreement with
the Company substantially in the form attached hereto as
Exhibit A-2 (the “ BioSante Voting
Agreement ”), pursuant to which, among other things, the
BioSante Principal Stockholders have agreed to vote or cause to be
voted the BioSante Common Shares beneficially owned by them in
favor of approval and adoption of this Agreement and the
transactions contemplated hereby (including the Merger) and the
approval of the BioSante Share Issuance, upon the terms and subject
to the conditions set forth in the BioSante Voting Agreement;
and
WHEREAS, immediately prior to the
execution and delivery of this Agreement and as a condition to
BioSante’s willingness to enter into this Agreement, certain
current executive officers of the Company listed in
Section 4.11(e) of the Company Disclosure Schedule (the
“ Executives ”) have delivered to Parent a
letter agreement agreeing to execute and deliver to Parent releases
in the form attached to such letter agreement (the “
Executive Release ”) as a
condition to the receipt of any payments due to
them under their retention letters and change of control and
severance agreement.
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, BioSante and
the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01.
Definitions.
(a)
For purposes of this Agreement:
“ affiliate ” of
a specified person means a person who, at the time of
determination, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified person.
“ BioSante Disclosure
Schedule ” means BioSante’s disclosure schedule
delivered by BioSante to the Company concurrently with the delivery
of this Agreement.
“ BioSante Material Adverse
Effect ” means any event, occurrence, development, change
or effect that (i) is, individually or in the aggregate with
all other events, occurrences, developments, changes and effects,
materially adverse to the business, properties, assets (tangible or
intangible), liabilities, condition (financial or otherwise) or
results of operations of BioSante and its subsidiaries, taken as a
whole, other than any event, occurrence, development, change or
effect described in clause (i) resulting primarily from any of
the following: (A) changes in the United States economy
or financial markets as a whole, so long as such conditions do not
adversely affect BioSante or its subsidiaries in a materially
disproportionate manner relative to other similarly situated
participants in the industries, geographies or markets in which
they operate, (B) general changes in the industries in which
BioSante and its subsidiaries operate, so long as such conditions
do not adversely affect BioSante or its subsidiaries in a
materially disproportionate manner relative to other participants
in the industries in which BioSante and its subsidiaries operate,
(C) any change in any applicable Law, rule or regulation
or GAAP or interpretation thereof after the date of this Agreement,
(D) the commencement, occurrence, continuation or escalation
of any war, armed hostilities or acts of terrorism involving or
affecting the United States of America or any part thereof, and
(E) any claim or litigation arising from allegations of breach
of fiduciary duty relating to this Agreement or the Merger, or of
disclosure violations in securities filings made in connection with
this Agreement or the Merger; or (ii) would reasonably be
expected to prevent or materially delay the consummation of the
Merger or prevent or materially delay BioSante from performing its
obligations under this Agreement.
“ BioSante Share Value
” means the closing price of a BioSante Common Share on the
Nasdaq Global Market on the date the Effective Time
occurs.
2
“ BioSante Stockholder
Approval ” means: (i) the adoption of this Agreement
at the BioSante Stockholder Meeting by holders of a majority of the
outstanding BioSante Common Shares and Special Shares, voting
together as a single class, in accordance with the DGCL and
BioSante’s certificate of incorporation and bylaws and
(ii) the approval of the BioSante Share Issuance at the
BioSante Stockholder Meeting by a majority of votes cast by holders
of BioSante Common Shares and Special Shares, voting together as a
single class, in accordance with the DGCL, the requirements of
NASDAQ and BioSante’s certificate of incorporation and
bylaws.
“ BioSante Significant
Subsidiary ” means a subsidiary of BioSante that would
constitute a “significant subsidiary” of BioSante
within the meaning of Rule 1.02(w) of Regulation S-X
as promulgated by the SEC.
“ business day ”
means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks
are not required or authorized to close in The City of New
York.
“ Code ” means
the United States Internal Revenue Code of 1986, as
amended.
“ Company Disclosure
Schedule ” means the Company’s disclosure schedule
delivered by the Company to BioSante concurrently with the delivery
of this Agreement.
“ Company Material Adverse
Effect ” means any event, occurrence, development, change
or effect that (i) is, individually or in the aggregate with
all other events, occurrences, developments, changes and effects,
materially adverse to the business, properties, assets (tangible or
intangible), liabilities, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as
a whole, other than any event, occurrence, development, change or
effect described in clause (i) resulting primarily from any of
the following: (A) the announcement of the execution of
this Agreement, or the pendency of consummation of the Merger,
(B) changes in the United States economy or financial markets
as a whole, so long as such conditions do not adversely affect the
Company or its Subsidiaries in a materially disproportionate manner
relative to other similarly situated participants in the
industries, geographies or markets in which they operate,
(C) any change in any applicable Law, rule or regulation
or GAAP or interpretation thereof after the date of this Agreement,
(D) the commencement, occurrence, continuation or escalation
of any war, armed hostilities or acts of terrorism involving or
affecting the United States of America or any part thereof,
(E) any claim or litigation arising from allegations of breach
of fiduciary duty relating to this Agreement or the Merger, or of
disclosure violations in securities filings made in connection with
this Agreement or the Merger, and (F) any action taken by the
Company or any of its Subsidiaries as contemplated or permitted by
this Agreement or with BioSante’s consent; or (ii) would
reasonably be expected to prevent or materially delay the
consummation of the Merger or prevent or materially delay the
Company from performing its obligations under this Agreement.
For the avoidance of doubt, a Company Material Adverse Effect shall
be deemed to have occurred if a Fundamental Change (as defined in
the New Notes Indenture (as defined in Section 7.17)) under
the New Convertible Notes shall have occurred or an event of
default shall have occurred that has triggered acceleration of
repayment of the New Convertible Notes under the New Notes
Indenture, except in each case to the extent any such Fundamental
Change or event
3
of default has resulted from the failure of
BioSante to comply with the terms of Section 7.17, and if the
occurrence of such Fundamental Change or event of default is
evidenced by either: (i) an Order issued by a court of
competent jurisdiction, or (ii) a written acknowledgement or
agreement by the Company. The intent of the foregoing
sentence is to simply provide an example of a Company Material
Adverse Effect and is not meant to define the only parameters under
which the occurrence of a Fundamental Change or event of default
under the Old Notes Indenture and/or the New Notes Indenture may or
may not constitute a Company Material Adverse Effect.
“ Company Stockholder
Approval ” means the adoption of this Agreement at the
Company Stockholder Meeting by holders of a majority of the
outstanding Shares in accordance with the DGCL and the
Company’s certificate of incorporation and bylaws.
“ control ”
(including the terms “ controlled by ”, “
controlling ” and “ under common control
with ”) means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
“ D&O Insurance
” means directors’ and officers’ liability
insurance and fiduciary liability insurance.
“ Environment ”
means ambient air, indoor air, surface water, groundwater, soil,
surface or subsurface strata and natural resources such as
wetlands, flora and fauna.
“ Environmental Law
” means the common law and all laws, statutes, rules,
regulations, codes, ordinances, orders, judgments and decrees
relating to pollution or the protection of the Environment or of
human health or safety, including those relating to the use,
handling, distribution, generation, transportation, storage,
treatment, Release or exposure to Hazardous Materials.
“ Environmental Permits
” means all licenses, approvals, authorizations,
notifications and identification numbers required under
Environmental Laws.
“ Exchange Ratio
” shall be 0.1615; provided, however , that if the Net
Cash at the Determination Date is more than $500,000 greater than
or less than the Target Net Cash at the Determination Date, then
the Exchange Ratio shall be equal to:
|
If Net Cash at the Determination Date
is:
|
|
Then the Exchange Ratio shall
be:
|
|
|
|
|
|
$5,000,001 or more above Target Net
Cash
|
|
0.2424
|
|
|
|
|
|
$4,750,001 to $5,000,000 above Target Net
Cash
|
|
0.2376
|
|
|
|
|
|
$4,500,001 to $4,750,000 above Target Net
Cash
|
|
0.2329
|
|
|
|
|
|
$4,250,001 to $4,500,000 above Target Net
Cash
|
|
0.2283
|
4
|
$4,000,001 to $4,250,000 above Target Net
Cash
|
|
0.2238
|
|
|
|
|
|
$3,750,001 to $4,000,000 above Target Net
Cash
|
|
0.2193
|
|
|
|
|
|
$3,500,001 to $3,750,000 above Target Net
Cash
|
|
0.2150
|
|
|
|
|
|
$3,250,001 to $3,500,000 above Target Net
Cash
|
|
0.2107
|
|
|
|
|
|
$3,000,001 to $3,250,000 above Target Net
Cash
|
|
0.2065
|
|
|
|
|
|
$2,750,001 to $3,000,000 above Target Net
Cash
|
|
0.2024
|
|
|
|
|
|
$2,500,001 to $2,750,000 above Target Net
Cash
|
|
0.1983
|
|
|
|
|
|
$2,250,001 to $2,500,000 above Target Net
Cash
|
|
0.1943
|
|
|
|
|
|
$2,000,001 to $2,250,000 above Target Net
Cash
|
|
0.1904
|
|
|
|
|
|
$1,750,001 to $2,000,000 above Target Net
Cash
|
|
0.1866
|
|
|
|
|
|
$1,500,001 to $1,750,000 above Target Net
Cash
|
|
0.1828
|
|
|
|
|
|
$1,250,001 to $1,500,000 above Target Net
Cash
|
|
0.1791
|
|
|
|
|
|
$1,000,001 to $1,250,000 above Target Net
Cash
|
|
0.1755
|
|
|
|
|
|
$750,001 to $1,000,000 above Target Net
Cash
|
|
0.1719
|
|
|
|
|
|
$500,001 to $750,000 above Target Net
Cash
|
|
0.1684
|
|
|
|
|
|
Between $500,000 above Target Net Cash and
$500,000 below Target Net Cash
|
|
0.1615
|
|
|
|
|
|
$500,001 to $750,000 below Target Net
Cash
|
|
0.1517
|
|
|
|
|
|
$750,001 to $1,000,000 below Target Net
Cash
|
|
0.1485
|
|
|
|
|
|
$1,000,001 to $1,250,000 below Target Net
Cash
|
|
0.1454
|
|
|
|
|
|
$1,250,001 to $1,500,000 below Target Net
Cash
|
|
0.1423
|
|
|
|
|
|
$1,500,001 to $1,750,000 below Target Net
Cash
|
|
0.1393
|
|
|
|
|
|
$1,750,001 to $2,000,000 below Target Net
Cash
|
|
0.1363
|
|
|
|
|
|
$2,000,001 to $2,250,000 below Target Net
Cash
|
|
0.1333
|
|
|
|
|
|
$2,250,001 to $2,500,000 below Target Net
Cash
|
|
0.1304
|
5
|
$2,500,001 to $2,750,000 below Target Net
Cash
|
|
0.1276
|
|
|
|
|
|
$2,750,001 to $3,000,000 below Target Net
Cash
|
|
0.1248
|
|
|
|
|
|
$3,000,001 to $3,250,000 below Target Net
Cash
|
|
0.1220
|
|
|
|
|
|
$3,250,001 to $3,500,000 below Target Net
Cash
|
|
0.1193
|
|
|
|
|
|
$3,500,001 to $3,750,000 below Target Net
Cash
|
|
0.1166
|
|
|
|
|
|
$3,750,001 to $4,000,000 below Target Net
Cash
|
|
0.1139
|
|
|
|
|
|
$4,000,001 to $4,250,000 below Target Net
Cash
|
|
0.1113
|
|
|
|
|
|
$4,250,001 to $4,500,000 below Target Net
Cash
|
|
0.1087
|
|
|
|
|
|
$4,500,001 to $4,750,000 below Target Net
Cash
|
|
0.1062
|
|
|
|
|
|
$4,750,001 to $5,000,000 below Target Net
Cash
|
|
0.1036
|
“ Hazardous Materials
” means any chemical, substance, waste, pollutant, compound,
mixture or constituent in any form, including asbestos and
asbestos-containing materials, radon, mold, petroleum and petroleum
products, including crude oil and any fractions thereof, which are
regulated or can give rise to liability under any Environmental
Law.
“ Intellectual Property
” means intellectual property or similar proprietary rights
of any kind, including any and all: (i) United States,
non-United States and international patents, patent applications
including any continuations, continuations-in-part, re-issues,
reexamination certificates, statutory invention registrations and
any restorations or extensions of the foregoing,
(ii) trademarks, service marks, trade dress, logos, trade
names, corporate names and other source identifiers, and
registrations and applications for registration thereof, and the
goodwill associated with any of the foregoing,
(iii) copyrightable works, copyrights, mask works, and
registrations and applications for registration thereof,
(iv) confidential and proprietary information, including trade
secrets and know-how, (v) Internet domain names and
(vi) with respect to clauses (i) —
(iii) above the rights to sue or otherwise enforce and collect
all damages or any other consideration obtained or awarded for any
past, present or future infringement thereof.
“ Liens ” means
all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims
of third parties of any kind, including any easement, right of way
or other encumbrance to title, or any option, right of first
refusal, or right of first offer.
“ NASDAQ ” means
The NASDAQ Global Market.
“ Net Cash ”
means (x) the sum of:
(i)
the Company’s cash and cash equivalents, short-term
investments and restricted cash, in each case as of the
Determination Date and determined in a manner
6
consistent with the manner in which
such items were historically determined by the Company and in
accordance with the Company Balance Sheet, plus
(ii)
accrued interest receivable as of the Determination Date on the
Company’s cash and cash equivalents, short term investments
and restricted cash, determined in a manner consistent with the
manner in which such item was historically determined by the
Company, plus
(iii)
the Company’s accounts receivable, refundable deposits and
recoverable prepaid balances, in each case as of the Determination
Date and determined in a manner consistent with the manner in which
such items were historically determined by the Company and in
accordance with the Company Balance Sheet,
minus (y) the sum of (without
duplication):
(i)
the Company’s accounts payable and accrued expenses, in each
case as of the Determination Date and determined in a manner
consistent with the manner in which such items were historically
determined by the Company and in accordance with the Company
Balance Sheet, plus
(ii)
the amount of bona fide contractual commitments of the Company as
of the Determination Date, including commitments set forth on the
Company Disclosure Schedule or which have arisen prior to Closing,
in each case to the extent not cancelled or satisfied as of the
Determination Date or cancellable within 90 days after the
Determination Date without material cost or penalty,
plus
(iii)
the remaining cash cost of restructuring accruals as of the
Determination Date in a manner substantially consistent with the
manner in which such items were determined for the Company’s
unaudited consolidated balance sheet as of March 31, 2009
included in the Company’s Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 2009, as filed with the
SEC prior to the date of the Agreement, plus
(iv)
the cash cost of any change of control payments or severance
payments that are or become due to any employee of the Company in
connection with the Closing or any employee’s termination in
connection with, or immediately following, the Closing and the cash
cost of any current and future COBRA premium payments, excluding
any cash premium payments and related tax gross-up payments to the
Executives and current non-executive officers described in
Section 7.06 hereof, plus
(v)
the cash cost of any accrued and unpaid retention payments due to
any employee of the Company as of the Determination Date or any
retention payments that will become due to any employee of the
Company in connection with the Closing, plus
(vi)
the cash cost of any and all billed and unpaid Taxes for which the
Company is liable in respect of any period ending on or before the
Determination Date, plus
7
(vii)
in the event a Fundamental Change (as defined in the Old Notes
Indenture (as defined in Section 7.17)) under the Old
Convertible Notes shall have occurred or an event of default shall
have occurred that has triggered acceleration of repayment of the
Old Convertible Notes under the Old Notes Indenture, except in each
case to the extent any such Fundamental Change or event of default
has resulted from the failure of BioSante to comply with the terms
of Section 7.17, the amount of principal and accrued interest
then due and payable in respect of the Old Convertible Notes as a
result of any such Fundamental Change or event of default,
plus
(viii)
any remaining fees and expenses (including, but not limited to, any
attorney’s, accountant’s, financial advisor’s or
finder’s fees and any estimates thereof) as of the
Determination Date, for which the Company is liable incurred by the
Company in connection with this Agreement and the transactions
contemplated hereby or otherwise.
Notwithstanding the foregoing, the
amounts in clause (y) above shall exclude in each case all
accrued expenses, contractual commitments, restructuring accruals,
and fees and expenses, as applicable, to the extent related to
(A) the Company’s 2010 annual stockholders meeting,
(B) the audit of the Company’s financial statements for
the year ended December 31, 2009, (C) the preparation of
2009 Tax Returns, (D) an audit of the Company’s
terminated 401(k) plan for the year ended December 31,
2009, (E) the preparation of any Quarterly Report on
Form 10-Q due after the Closing Date, including any quarterly
review by external accountants, (F) license agreements related
to Company Licensed Intellectual Property, including the
cancellation thereof or any royalties payable thereunder, to the
extent that such amounts payable have been set forth in the Company
Disclosure Schedules as of the date hereof, (G) Company Owned
Intellectual Property, including the prosecution, maintenance,
abandonment or forfeiture thereof, other than legal and regulatory
costs incurred in the ordinary course with respect to the
Company’s patents, (H) any claim or litigation arising
from allegations of breach of fiduciary duty relating to this
Agreement or the Merger or of disclosure violations in securities
filings made in connection with this Agreement, (I) responding
to or resolving SEC comments on the Registration Statement or any
Company SEC Reports in connection therewith, provided, however,
that such expenses are reasonable, documented and itemized with
reasonable particularity and (J) any cash premium payments and
related tax gross-up payments to the Executives and current
non-executive officers described in Section 7.06
hereof.
“ person ” means
an individual, corporation, partnership, limited partnership,
limited liability company, syndicate, person (including a
“person” as defined in Section 13(d)(3) of
the Exchange Act), trust, association or entity or government,
political subdivision, agency or instrumentality of a
government.
“ Qualifying
Confidentiality Agreement ” means an executed agreement
with provisions requiring any person receiving nonpublic
information with respect to the Company to keep such information
confidential, which provisions to keep such information
confidential are no less restrictive in the aggregate to such
person than the Confidentiality Agreement is to BioSante, its
affiliates, and their respective personnel and representatives (it
being understood that such agreement with such person need not have
comparable standstill provisions); provided ,
8
that no such confidentiality agreement shall
conflict with any rights of BioSante or obligations of the Company
and the Subsidiaries under this Agreement.
“ Release ” means
any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, leaching,
dispersal or migration on, into or through the Environment or,
into, through or out of any property, facility or
equipment.
“ subsidiary ” or
“ subsidiaries ” of the Company, the Surviving
Corporation, BioSante or any other person means an affiliate
controlled by such person, directly or indirectly, through one or
more intermediaries.
“ Target Net Cash
” shall be equal to (i) if the Closing Date is on or
before August 31, 2009, $22,950,000, (ii) if the
Closing Date is on or between September 1, 2009 and
September 30, 2009, $22,100,000, (iii) if the Closing
Date is on or between October 1, 2009 and October 31,
2009, $21,250,000, (iv) if the Closing Date is on or between
November 1, 2009 and November 30, 2009, $20,400,000, or
(v) if the Closing Date is on or between December 1, 2009
and December 31, 2009, $19,650,000.
“ Tax Returns ”
means any return, declaration, report, election, claim for refund
or information return or other statement or form filed or required
to be filed with any taxing authority relating to Taxes, including
any schedule or attachment thereto or any amendment
thereof.
“ Taxes ” means
any and all (a) taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including:
taxes or other charges on or with respect to income, franchise,
windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers’
compensation, unemployment compensation or net worth; taxes or
other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value-added or gains taxes; license, registration
and documentation fees; and customers’ duties, tariffs and
similar charges, and (b) liability for the payment of any Tax
of another person (i) as a result of being a member of a
consolidated, combined, unitary or affiliated group that includes
any other person, or (ii) by reason of transferee or successor
liability imposed by law.
“ Taxing Authority
” means any Governmental Authority responsible for the
imposition or collection of any Tax.
(b)
The following terms have the meaning set forth in the Sections set
forth below:
|
Defined Term
|
|
Location of
Definition
|
|
Acquisition Proposal
|
|
§7.05(f)
|
|
Action
|
|
§4.09
|
|
Adjustment
|
|
§3.01(f)
|
|
Agreement
|
|
Preamble
|
|
BioSante 10-K
|
|
Article V
|
9
|
Defined Term
|
|
Location of
Definition
|
|
BioSante
|
|
Preamble
|
|
BioSante Board
|
|
Recitals
|
|
BioSante Common Shares
|
|
Recitals
|
|
BioSante Licensed Intellectual
Property
|
|
§5.13
|
|
BioSante Owned Intellectual Property
|
|
§5.13
|
|
BioSante Principal Stockholders
|
|
Recitals
|
|
BioSante Recommendation
|
|
§7.01(c)
|
|
BioSante SEC Reports
|
|
§5.06(a)
|
|
BioSante Share Issuance
|
|
Recitals
|
|
BioSante Stockholder Meeting
|
|
§7.01(a)
|
|
BioSante Voting Agreement
|
|
Recitals
|
|
Blue Sky Laws
|
|
§4.05(b)
|
|
Cash Threshold
|
|
§8.02(e)
|
|
Certificate of Merger
|
|
§2.02
|
|
Certificates
|
|
§3.01(b)
|
|
Change in Company Recommendation
|
|
§7.01(b)
|
|
Change in Control Severance
Agreements
|
|
§7.06(c)
|
|
Change in BioSante Recommendation
|
|
§7.01(c)
|
|
Closing
|
|
§2.02
|
|
Closing Date
|
|
§2.02
|
|
Company
|
|
Preamble
|
|
Company Balance Sheet
|
|
§4.07(c)
|
|
Company Board
|
|
Recitals
|
|
Company Common Stock
|
|
§2.04(a)
|
|
Company Licensed Intellectual
Property
|
|
§4.13
|
|
Company Material Contracts
|
|
§4.17(a)
|
|
Company Owned Intellectual Property
|
|
§4.13
|
|
Company Permits
|
|
§4.06
|
|
Company Plans
|
|
§4.10(a)
|
|
Company Preferred Stock
|
|
§4.03(a)
|
|
Company Principal Stockholder
|
|
Recitals
|
|
Company Recommendation
|
|
§7.01(b)
|
|
Company Representatives
|
|
§7.05(a)
|
|
Company Restricted Award
|
|
§2.06
|
|
Company Rights
|
|
§4.03(a)
|
|
Company 10-K
|
|
Article IV
|
|
Company Rights Agreement
|
|
§4.16
|
|
Company SEC Reports
|
|
§4.07(a)
|
|
Company Stock Awards
|
|
§4.03(a)
|
|
Company Stock Option Plans
|
|
§2.05(a)
|
|
Company Stock Options
|
|
§2.05(a)
|
|
Company Stockholder Meeting
|
|
§7.01(a)
|
|
Company Voting Agreement
|
|
Recitals
|
|
Confidentiality Agreement
|
|
§7.04(b)
|
|
Convertible Notes
|
|
§4.03(a)
|
10
|
Defined Term
|
|
Location of
Definition
|
|
Current Company SEC Reports
|
|
Article IV
|
|
Current BioSante SEC Reports
|
|
Article V
|
|
Determination Date
|
|
§2.11(a)
|
|
DGCL
|
|
Recitals
|
|
Effective Time
|
|
§2.02
|
|
ERISA
|
|
§4.10(a)
|
|
ERISA Affiliate
|
|
§4.10(a)
|
|
Estimated Net Cash Schedule
|
|
§2.11(a)
|
|
Exchange Act
|
|
§4.07(a)
|
|
Exchange Agent
|
|
§3.01(a)
|
|
Exchange Fund
|
|
§3.01(a)
|
|
Executive Release
|
|
Recitals
|
|
Executives
|
|
Recitals
|
|
Existing D&O Insurance
|
|
§7.16(b)
|
|
Expenses
|
|
§9.03(a)
|
|
FDA
|
|
§4.19(a)
|
|
GAAP
|
|
§4.07(b)
|
|
Governmental Authority
|
|
§4.05(b)
|
|
Indemnified Parties
|
|
§7.16(a)
|
|
Indenture
|
|
§7.17
|
|
IRS
|
|
§4.10(b)
|
|
Joint Proxy Statement
|
|
§7.01(a)
|
|
knowledge of the Company
|
|
§10.06
|
|
knowledge of BioSante
|
|
§10.06
|
|
Law
|
|
§4.05(a)
|
|
Merger
|
|
Recitals
|
|
Multiemployer Plan
|
|
§4.10(d)
|
|
New Convertible Notes
|
|
§4.03(a)
|
|
New Notes Indenture
|
|
§7.17
|
|
Net Cash Calculation
|
|
§2.11(a)
|
|
Notice of Superior Proposal
|
|
§7.05(d)(i)
|
|
Notice Period
|
|
§7.05(d)(i)
|
|
Old Convertible Notes
|
|
§4.03(a)
|
|
Old Notes Indenture
|
|
§7.17
|
|
Order
|
|
§8.01(d)
|
|
Per Share Merger Consideration
|
|
§2.04(a)
|
|
Preference Shares
|
|
§5.03(a)
|
|
Registration Statement
|
|
§7.01(a)
|
|
Regulation M-A Filing
|
|
§7.01(e)
|
|
SEC
|
|
§4.07(a)
|
|
Securities Act
|
|
§4.05(b)
|
|
Special Shares
|
|
§5.03(a)
|
|
Specified Company Stock Options
|
|
§2.05(a)
|
|
Shares
|
|
§2.04(a)
|
|
Subsidiary
|
|
§4.01(a)
|
11
|
Defined Term
|
|
Location of
Definition
|
|
Superior Proposal
|
|
§7.05(g)
|
|
Surviving Corporation
|
|
§2.01
|
|
Termination Date
|
|
§9.01(b)(i)
|
|
Termination Fee
|
|
§9.03(b)
|
|
Transfer Taxes
|
|
§7.09
|
|
Warn Act
|
|
§4.11(d)
|
|
Warrant Exchange Agreement
|
|
§2.05(b)
|
|
Warrants
|
|
§2.05(b)
|
ARTICLE II
THE MERGER
SECTION 2.01.
The Merger. At the Effective Time, upon the terms and
subject to the conditions of this Agreement and in accordance with
the DGCL, the Company shall be merged with and into BioSante.
As a result of the Merger, the separate corporate existence of the
Company shall cease and BioSante shall continue as the surviving
corporation of the Merger (the “ Surviving Corporation
”), and the separate corporate existence of BioSante with all
its rights, privileges, immunities, powers and franchises shall
continue as contemplated hereby.
SECTION 2.02.
Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VIII , the parties hereto shall
cause the Merger to be consummated by filing a certificate of
merger (the “ Certificate of Merger ”) with the
Secretary of State of the State of Delaware in such form as is
required by, and executed in accordance with, the relevant
provisions of the DGCL (the date and time of such filing of the
Certificate of Merger (or such later time as may be agreed by each
of the parties hereto and specified in the Certificate of Merger)
being the “ Effective Time ”). Immediately
prior to such filing of the Certificate of Merger, a closing of the
Merger (the “ Closing ”) shall be held at the
offices of O’Melveny & Myers LLP, 2765 Sand Hill
Road, Menlo Park, California 94025, or such other place as the
parties shall agree, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in
Article VIII . The date of the Closing is
referred to as the “ Closing Date .”
SECTION 2.03.
Effect of the Merger . The effect of the Merger at and
following the Effective Time shall be as provided in the applicable
provisions of the DGCL and this Agreement.
SECTION 2.04.
Conversion of Securities.
(a)
Conversion of Company Common Stock . Subject to
Section 3.01(e) , at the Effective Time, by virtue of
the Merger and without any action on the part of BioSante or the
Company, or any holder of any Shares (as defined herein), each
share of common stock, par value $0.001 per share, of the Company
(“ Company Common Stock ”) (all shares of
Company Common Stock being collectively referred to as the “
Shares ”) issued and outstanding
12
immediately prior to the
Effective Time (other than Shares to be canceled in accordance with
Section 2.04(b) ) shall be converted into the right to
receive a number of validly issued, fully paid and non-assessable
BioSante Common Shares equal to the Exchange Ratio (the “
Per Share Merger Consideration ”).
(b)
Cancellation of Certain Shares. At the Effective
Time, by virtue of the Merger and without any action on the part of
BioSante or the Company, all Shares owned by the Company or
BioSante or any direct or indirect wholly owned subsidiary of the
Company or BioSante immediately prior to the Effective Time shall,
by virtue of the Merger, and without any action on the part of the
holder thereof, automatically be canceled without any conversion
thereof and retired and shall cease to exist and no consideration
shall be delivered in exchange therefor, and each holder of a
certificate or certificates representing any such Shares shall
cease to have any rights with respect thereto.
(c)
Capital Stock of BioSante. At the Effective Time, by
virtue of the Merger and without any action on the part of BioSante
or the Company, each BioSante Common Share issued and outstanding
immediately prior to the Effective Time shall become one duly
authorized, validly issued, fully paid and non-assessable share of
common stock of the Surviving Corporation and each Special Share
issued and outstanding immediately prior to the Effective Time
shall become one duly authorized, validly issued, fully paid and
non-assessable share of Class C Special Shares, $0.0001 par
value, of the Surviving Corporation.
SECTION 2.05.
Company Stock Options .
(a)
At a time mutually agreed upon by BioSante and the Company, but in
no event less than 30 days prior to the Effective Time, the
administrator of the Amended and Restated 1998 Incentive Stock
Option Plan, the 2001 Nonstatutory Option Plan, the 2001
Non-Employee Directors Stock Option Plan and the 2005 Equity
Incentive Plan (collectively, as amended, supplemented or modified,
the “ Company Stock Option Plans ”) shall
provide appropriate notice to holders of all options outstanding
under the Company Stock Option Plans (the “ Company Stock
Options ”) that such Company Stock Options other than the
Company Stock Options listed on Schedule 2.05(a) hereto (the
“ Specified Company Stock Options ”), whether or
not vested and whether or not exercisable, shall be fully vested
and exercisable until immediately prior to the Effective
Time. Upon the Effective Time, all Company Stock Options
other than the Specified Company Stock Options shall
terminate. The Specified Company Stock Options, whether or
not vested, shall by virtue of the Merger be assumed by BioSante
and shall remain outstanding following the Effective Time.
Each such Specified Company Stock Option so assumed by BioSante
will continue to have, and be subject to, the same terms and
conditions of such options immediately prior to the Effective Time
(including, without limitation, any vesting provisions), except
that: (i) each Specified Company Stock Option will be solely
exercisable (or will become exercisable in accordance with its
terms) for that number of whole BioSante Common Shares equal to the
product of the number of shares of Company Common Stock that were
issuable upon exercise of such Specified Company Stock Option
immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of BioSante Common
Shares; and (ii) the per share exercise price for the BioSante
Common Shares issuable upon exercise of such assumed Specified
Company Stock Option will be equal to the quotient determined by
dividing the exercise price per share of Company
13
Common Stock at which such
Specified Company Stock Option was exercisable immediately prior to
the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent. BioSante shall comply with the terms of all such
Specified Company Stock Options and use its reasonable best efforts
to ensure, to the extent required by, and subject to the provisions
of, the Company Stock Option Plans and permitted under the Code,
that any Specified Company Stock Options that qualified for tax
free treatment under Section 422 of the Code prior to the
Effective Time continue to so qualify after the Effective
Time. BioSante shall take all corporate actions necessary to
reserve for issuance a sufficient number of BioSante Common Shares
for delivery upon exercise of all Specified Company Stock Options
pursuant to the terms set forth in this Section 2.05(a).
From and after the Effective Time, all references to the Company in
the Company Stock Option Plans and the applicable stock option
agreements issued thereunder shall be deemed to refer to BioSante,
which shall assume the Company Stock Options Plans as of the
Effective Time by virtue of this Agreement and without any further
action. Prior to the Effective Time, the Company shall take
all actions necessary to effect the transactions contemplated by
this Section 2.05(a). The Company will not take any
action to accelerate the vesting, change the exercisability or
extend the expiration date of any Specified Company Stock Options
beyond what is contractually required as of April 1, 2009
(including those change of control agreements and arrangements with
current executive officers identified in
Section 4.10(a) of the Company Disclosure Schedule), and
will take any action that is permitted to take so that the vesting,
exercisability and expiration date of such Specified Company Stock
Options is not accelerated or changed, and each Specified Company
Stock Option shall be exercisable for a period of time determined
in strict compliance with such contractual
requirements.
(b)
Each outstanding and unexercised warrant existing on the date of
this Agreement (the “ Warrants ”) shall be
treated in accordance with the terms of the Warrants as set forth
in Section 4.03(2) of the Company Disclosure
Schedule, and the contractual obligations thereunder shall, by
virtue of the Merger, be assumed by BioSante to the extent such
obligations would survive a Merger under the terms of the Warrants
as set forth in Section 4.03(2) of the Company
Disclosure Schedule; provided , however , that
pursuant to the Warrant Exchange Agreement, dated as of
May 17, 2009, by and between the Company and Capital Ventures
International (the “ Warrant Exchange Agreement
”), the Company shall pay or cause to be paid the Company
Call Consideration (as defined in the Warrant Exchange Agreement)
at least three (3) Business Days prior to the anticipated
Closing Date if Capital Ventures International (“ CVI
”) so consents (which the Company will use commercially
reasonable efforts to obtain as promptly as practicable after the
date hereof) or, if CVI does not so consent, immediately prior to
the Closing with respect to the outstanding portion of the
Remainder Warrant (as defined in the Warrant Exchange Agreement)
and, upon such payment, the Remainder Warrant shall not be assumed
by BioSante and shall be cancelled.
SECTION 2.06.
Restricted Awards . Immediately prior to the Effective
Time, any restricted stock, restricted stock units, other
equity-based awards or any other outstanding rights of any kind to
acquire or receive Company Common Stock (other than Company Stock
Options) (each, a “ Company Restricted Award ”)
outstanding immediately prior to the Effective Time that are
unvested or subject to risk of forfeiture, restrictions on transfer
or other restrictions or conditions under the Company Stock Option
Plans, any applicable award agreement or any other agreement with
the Company, shall be fully vested and no longer subject to any
restriction or other condition to which the applicable Company
Restricted Award was subject. At the
14
Effective Time, such fully vested Company
Restricted Awards or, as the case may be, the number of shares of
Company Common Stock subject to such Company Restricted Award,
shall be exchanged for fully-vested BioSante Common Shares pursuant
to Section 2.04 .
SECTION 2.07.
Treatment of the Convertible Notes . The Convertible
Notes defined in Section 4.03(a) shall be treated as set
forth in Section 7.17.
SECTION 2.08.
Certificate of Incorporation; Bylaws.
(a)
At the Effective Time, the certificate of incorporation of BioSante
as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until
thereafter amended as provided by Law and such certificate of
incorporation.
(b)
At the Effective Time, the bylaws of BioSante as in effect
immediately prior to the Effective Time shall be the bylaws of the
Surviving Corporation until thereafter amended as provided by Law,
the certificate of incorporation of the Surviving Corporation and
such bylaws.
SECTION 2.09.
Directors and Officers . At the Effective Time (and
for the avoidance of doubt by virtue of the Merger and without any
action on the part of BioSante or the Company or any holder of any
Shares, BioSante Common Shares or Special Shares), the directors of
BioSante (as approved by Company in accordance with
Section 4.21 ) immediately prior to the Effective Time
and Stephen A. Sherwin, M.D. and John T. Potts, Jr., M.D.,
shall be appointed as the initial directors of the Surviving
Corporation, each such director to hold office in accordance with
the DGCL, the certificate of incorporation and bylaws of the
Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified or until the
earlier of their death, resignation or removal, and the officers of
BioSante immediately prior to the Effective Time shall, subject to
the applicable provisions of the certificate of incorporation and
bylaws of the Surviving Corporation, be the initial officers of the
Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified or until the
earlier of their death, resignation or removal.
SECTION 2.10.
Taking of Necessary Action; Further Action . If, at
any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to
vest the Surviving Corporation with full right, title and
possession to all assets, properties, rights, privileges,
immunities, powers and franchises of the Company and BioSante, the
Company will take all such lawful and necessary action.
SECTION 2.11.
Calculation of Net Cash .
(a)
For the purposes of this Agreement, the “ Determination
Date ” shall be the date that is ten (10) calendar
days prior to the earlier to occur of the date originally scheduled
for the BioSante Stockholder Meeting and the date originally
scheduled for the Company Stockholder Meeting, as agreed upon by
BioSante and the Company at least fifteen (15) calendar days prior
to the earlier to occur of the date originally scheduled for the
BioSante Stockholder Meeting and the date originally scheduled for
the Company Stockholder Meeting. Within one (1) calendar
day following the Determination Date, the Company shall deliver to
BioSante a
15
schedule (a “ Net
Cash Schedule ”) setting forth, in reasonable detail, the
Company’s calculation of Net Cash (as determined in
accordance with the definition of Net Cash set forth in
Article I) (the “ Net Cash Calculation ”)
as of such applicable Determination Date prepared by the
Company’s Chief Financial Officer. The Company shall
make the work papers and back-up materials used in preparing the
applicable Net Cash Schedule available to BioSante and, if
requested by BioSante, its accountants and counsel at reasonable
times and upon reasonable notice.
(b)
Within two (2) calendar days after the Company delivers the
Net Cash Schedule to BioSante (the “ Response Date
”), BioSante shall have the right to dispute any part of such
Net Cash Schedule by delivering a written notice to that effect to
the Company (a “ Dispute Notice ”). Any
Dispute Notice shall identify in reasonable detail the nature of
any proposed revisions to the Net Cash Calculation and shall be
accompanied by reasonably detailed materials supporting the basis
for such proposed revisions.
(c)
If on or prior to the Response Date, (i) BioSante notifies the
Company in writing that it has no objections to the Net Cash
Calculation set forth in the Net Cash Schedule or
(ii) BioSante fails to deliver a Dispute Notice as provided in
Section 2.11(b) , then the Net Cash Calculation as set
forth in the Net Cash Schedule shall be deemed to have been finally
determined for purposes of this Agreement and to represent the Net
Cash at the Determination Date for purposes of this
Agreement.
(d)
If BioSante delivers a Dispute Notice on or prior to the Response
Date as provided in Section 2.11(b) , then
representatives of the Company and BioSante shall promptly meet and
attempt in good faith to promptly resolve the disputed
item(s) and negotiate an agreed-upon determination of Net Cash
within two (2) calendar days after the Response Date, which
agreed upon Net Cash amount shall be deemed to have been finally
determined for purposes of this Agreement and to represent the Net
Cash at the Determination Date for purposes of this
Agreement.
(e)
Once the Net Cash at the Determination Date has been finally
determined, which shall be no later than five (5) calendar
days after the Determination Date, the Company shall issue a press
release publicly announcing (i) the Company’s Net Cash
at the Determination Date, (ii) whether the minimum Net Cash
condition set forth in Section 8.02(e) has been
satisfied, and (iii) any adjustment to the Exchange Ratio
based on the Company’s Net Cash at the Determination
Date.
ARTICLE III
DELIVERY OF BIOSANTE COMMON
SHARES
SECTION 3.01.
Exchange of Certificates.
(a)
Exchange Agent . From and after the Effective Time,
BioSante shall deposit, or shall cause to be deposited, with
Computershare or another bank or trust company selected by BioSante
and reasonably acceptable to and approved in advance by the Company
(the “ Exchange Agent ”), for the benefit of the
holders of Shares, (i) for exchange in accordance
16
with this
Article III through the Exchange Agent, certificates
or, at BioSante’s option, evidence of shares in book entry
form, representing BioSante Common Shares issuable to holders of
Shares in the Merger pursuant to Section 2.04 as of the
Effective Time, (ii) immediately available funds, from time to
time as required to make payments in lieu of any fractional shares
pursuant to Section 3.01(e) and (iii) any
cash or other consideration from time to time as required for any
dividends or other distributions pursuant to
Section 3.01(c) (such cash and certificates (or,
as the case may be, evidence of book entry form) for BioSante
Common Shares, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the “
Exchange Fund ”). The Exchange Agent shall,
pursuant to irrevocable instructions, deliver the BioSante Common
Shares contemplated to be issued pursuant to
Section 2.04 , dividends or other distributions
contemplated to be delivered pursuant to
Section 3.01(c) and the cash in lieu of
fractional shares contemplated to be paid pursuant to
Section 3.01(e) out of the Exchange Fund.
Except as contemplated by Section 3.01(g) hereof,
the Exchange Fund shall not be used for any other
purpose.
(b)
Exchange Procedures.
(i)
As promptly as practicable after the Effective Time, BioSante shall
cause the Exchange Agent to mail to each person who was, at the
Effective Time, a holder of record of Shares whose Shares were
converted into the right to receive the Per Share Merger
Consideration pursuant to Section 2.04(a) :
(A) a letter of transmittal (which shall be in customary form
reasonably agreed upon by BioSante and Company, and shall specify
that delivery shall be effected, and risk of loss and title to the
certificates evidencing such Shares (the “
Certificates ”) shall pass, only upon proper delivery
of the Certificates (or an affidavit of loss in lieu thereof) to
the Exchange Agent); and (B) instructions for use in effecting
the surrender of the Certificates (or an affidavit of loss in lieu
thereof) pursuant to such letter of transmittal.
(ii)
Upon surrender to the Exchange Agent of a Certificate (or an
affidavit of loss in lieu thereof) for cancellation, together with
such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents
as may reasonably be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor (A) a certificate or, at BioSante’s option,
evidence of shares in book entry form, representing that number of
whole BioSante Common Shares which such holder has the right to
receive in respect of the Shares formerly represented by such
Certificate (after taking into account all Shares then held by such
holder), (B) cash in lieu of any fractional BioSante Common
Shares to which such holder is entitled pursuant to
Section 3.01(e) , and (C) any dividends or other
distributions to which such holder is entitled pursuant to
Section 3.01(c) , and the Certificate (or an affidavit
of loss in lieu thereof) so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares
that is not registered in the transfer records of the Company, a
certificate representing the proper number of BioSante Common
Shares, cash in lieu of any fractional BioSante Common Shares to
which such holder is entitled pursuant to
Section 3.01(e) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 3.01(c) may be delivered to a transferee
if the Certificate (or an affidavit of loss in lieu thereof)
representing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer Taxes
have been paid. Until surrendered as contemplated by this
Section 3.01 , each Certificate shall be deemed at all
times after the Effective Time to represent
17
only the right to receive
upon such surrender the certificate representing BioSante Common
Shares, cash in lieu of any fractional BioSante Common Shares to
which such holder is entitled pursuant to
Section 3.01(e) and any dividends or other
distributions to which such holder is entitled pursuant to
Section 3.01(c) .
(c)
Distributions with Respect to Unexchanged BioSante Common
Shares. No dividends or other distributions declared or
made after the Effective Time with respect to the BioSante Common
Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the
BioSante Common Shares represented thereby, and no cash payment in
lieu of any fractional shares shall be paid to any such holder
pursuant to Section 3.01(e) , until the holder of such
Certificate shall surrender such Certificate (or an affidavit of
loss in lieu thereof). Subject to the effect of escheat or
other applicable Laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing
whole BioSante Common Shares issued in exchange therefor, without
interest, (i) the amount of any cash payable with respect to
any fractional BioSante Common Shares to which such holder is
entitled pursuant to Section 3.01(e) and the
amount of dividends or other distributions with a record date after
the Effective Time and theretofore paid with respect to such whole
BioSante Common Shares, and (ii) at the appropriate payment
date, the amount of dividends or other distributions, with a record
date after the Effective Time but prior to surrender and a payment
date occurring after surrender, payable with respect to such whole
BioSante Common Shares.
(d)
No Further Rights in Company Common Stock. All
BioSante Common Shares issued upon surrender of a Certificate in
accordance with the terms of this Article III and any
cash paid pursuant to Section 3.01(c) or
Section 3.01(e) shall be deemed to have been
issued in full satisfaction of all rights pertaining to the Shares
formerly represented by such Certificate.
(e)
No Fractional Shares. No certificates or scrip
representing fractional BioSante Common Shares shall be issued upon
the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to
any other rights of a stockholder of BioSante. Each holder of
a fractional share interest (after aggregating all fractional
BioSante Common Shares issuable to such holder) shall be paid an
amount in cash (without interest, rounded to the nearest whole cent
equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into
account all fractional share interests then held by such holder)
would otherwise be entitled by (ii) the BioSante Share
Value. As promptly as practicable after the determination of
the amount of cash, if any, to be paid to holders of fractional
share interests, the Exchange Agent shall so notify BioSante, and
BioSante shall deposit such amount with the Exchange Agent and
shall cause the Exchange Agent to forward payments to such holders
of fractional share interests subject to and in accordance with the
terms of Section 3.01(b) and
Section 3.01(c) .
(f)
Adjustments of Exchange Ratio. If, between the date
of this Agreement and the Effective Time, there is a
reorganization, recapitalization, reclassification, stock split,
reverse stock split, stock dividend or distribution (including any
dividend or distribution of securities convertible into BioSante
Common Shares or Company Common Stock), extraordinary cash
dividend, subdivision, issuer tender or exchange offer,
combination, exchange of shares or other similar change with
respect to, or rights issued in respect of, the
BioSante
18
Common Shares or Company
Common Stock (each, an “ Adjustment ”), the
Exchange Ratio shall be adjusted accordingly, without duplication,
to provide the holders of Shares with the same economic effect as
contemplated by this Agreement prior to such
Adjustment.
(g)
Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of the
Shares for nine months after the Effective Time shall be delivered
to BioSante, upon demand, and any holders of Shares who have not
theretofore complied with this Article III shall
thereafter look only to BioSante (subject to abandoned property,
escheat or other similar laws) for the Per Share Merger
Consideration, any cash in lieu of fractional BioSante Common
Shares to which they are entitled pursuant to
Section 3.01(e) and any dividends or other
distributions with respect to the BioSante Common Shares to which
they are entitled pursuant to Section 3.01(c) .
Neither BioSante nor the Surviving Corporation shall be liable to
any holder of Shares for any Per Share Merger Consideration (or
dividends or distributions with respect to BioSante Common Shares),
or other cash properly delivered to a public official pursuant to
any abandoned property, escheat or similar Law.
(h)
Withholding Rights. Each of the Company, the
Surviving Corporation and BioSante shall be entitled to deduct and
withhold from the consideration or other amounts payable pursuant
to this Agreement to any holder of Shares, Company Stock Options,
Company Restricted Awards or other interests in the Company such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any provision of
state, local or foreign Law relating to Taxes. To the extent
that amounts are so withheld by the Company, the Surviving
Corporation or BioSante, as the case may be, and paid to the
appropriate taxing authority, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to
the holder of the Shares, Company Stock Options, Company Restricted
Awards or other interests in the Company in respect of which such
deduction and withholding was made by the Company, the Surviving
Corporation or BioSante, as the case may be.
(i)
Lost, Stolen, Destroyed or Unissued Certificates. If
any Certificate shall have been lost, stolen or destroyed, or was
never issued, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen, destroyed or
unissued and, if required by the Surviving Corporation in its
reasonable discretion, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen, destroyed or unissued Certificate
the whole number of BioSante Common Shares, any cash in lieu of
fractional BioSante Common Shares to which the holders thereof are
entitled pursuant to Section 3.01(e) and any
dividends or other distributions to which the holders thereof are
entitled pursuant to Section 3.01(c).
SECTION 3.02.
Stock Transfer Books . At the Effective Time, the
stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of Shares that were
outstanding immediately prior to the Effective Time thereafter on
the records of the Company. From and after the Effective
Time, the holders of Certificates representing Shares outstanding
immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares, except as otherwise provided in
this Agreement or by Law.
19
On or after the Effective Time, any Certificates
presented to the Exchange Agent or BioSante for any reason shall be
canceled and converted in accordance with the terms of this
Article III .
SECTION 3.03.
No Appraisal Rights . In accordance with
Section 262 of the DGCL, no appraisal rights shall be
available to holders of Shares in connection with the
Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
As an inducement to BioSante to
enter into this Agreement, except (i) as set forth in the
Company Disclosure Schedule (with specific reference to the
particular section or subsection of this Agreement to which the
information set forth in the Company Disclosure Schedule relates;
provided , that any information set forth in one section or
subsection of the Company Disclosure Schedule shall be deemed to
apply to each other section or subsection thereof to which its
relevance is reasonably apparent); and (ii) as disclosed in
the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2008 (the “ Company 10-K
”) and other Company SEC Reports filed after the fiscal year
ended December 31, 2008, but prior to the date of this
Agreement (other than disclosures in the “Risk Factors”
sections thereof or any disclosures included therein that are
cautionary, predictive or forward-looking in nature) (the “
Current Company SEC Reports ”); provided , that
in no event shall any disclosure contained in such Current Company
SEC Reports be deemed to be an exception to any representation or
warranty contained in Section 4.03(a) ,
Section 4.05(b) or Section 4.08 , and
it being understood that any matter set forth in the Current
Company SEC Reports shall be deemed to qualify any representation
or warranty in this Article IV only to the extent that
the description of such matter in such Current Company SEC Reports
would be reasonably inferred to be a qualification with respect to
such representation and warranty), the Company hereby represents
and warrants to BioSante as follows:
SECTION 4.01.
Organization and Qualification; Subsidiaries.
(a)
Each of the Company and each subsidiary of the Company (each, a
“ Subsidiary ”) is a legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions where such concept is applicable) under the laws of
the jurisdiction of its organization and has the requisite
corporate or similar power and authority and all necessary
approvals from Governmental Authorities to own, lease and operate
its properties and to carry on its business as it is now being
conducted, except where the failure of any Subsidiary to be so
organized, existing or in good standing or to have such power,
authority and approvals would not, individually or in the
aggregate, have a Company Material Adverse Effect. The
Company and each Subsidiary is duly qualified or licensed as a
foreign corporation to do business, and is in good standing (with
respect to jurisdictions where such concept is applicable), in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such
qualification or licensing necessary or desirable, except for such
failures to be so qualified or licensed and in good standing that,
individually or in the aggregate, would not have a Company Material
Adverse Effect.
20
(b)
Section 4.01(b) of the Company Disclosure
Schedule sets forth all of the Subsidiaries of the Company in
existence as of the date of this Agreement, together with the
jurisdiction of incorporation or organization of each such
Subsidiary and the percentage of the outstanding capital stock or
other equity interests of each such Subsidiary owned by the Company
and its other Subsidiaries. There are no outstanding
contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire, or register under any
securities Law, any Shares or any capital stock of any Subsidiary
or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, the Company or any
Subsidiary.
SECTION 4.02.
Certificate of Incorporation and Bylaws . The Company
has heretofore furnished to BioSante a complete and correct copy of
the certificate of incorporation and the bylaws or equivalent
organizational documents, each as amended to date, of the Company
and each of the Subsidiaries. Such certificates of
incorporation, bylaws or equivalent organizational documents are in
full force and effect. Neither the Company nor any Subsidiary
is in violation of any of the provisions of its certificate of
incorporation, bylaws or equivalent organizational
documents.
SECTION 4.03.
Capitalization .
(a)
The authorized capital stock of the Company consists of
(i) 275,000,000 Shares, and (ii) 5,000,000 shares of
preferred stock, par value $0.001 per share (“ Company
Preferred Stock ”). As of June 29, 2009,
(i) 109,618,787 Shares were issued and outstanding (not
including Shares held in the treasury of the Company), all of which
are duly authorized, validly issued, fully paid and non-assessable,
(ii) no Shares are held by the Subsidiaries,
(iii) 12,729,729 Shares were reserved for future issuance for
grant or available for grant Company Stock Options pursuant to the
Company Stock Option Plans, (iv) 32,000 Shares were reserved
for future issuance pursuant to outstanding Company Restricted
Awards (together with the Company Stock Options, the “
Company Stock Awards ”), (v) 135,604 Shares were
reserved for future issuance pursuant to the Company’s
outstanding 3.125% Convertible Senior Notes due 2011 (the “
Old Convertible Notes ”), (vi) 30,563,235
Shares were reserved for future issuance pursuant to the
Company’s outstanding 3.125% Convertible Senior Notes due
2013 (the “ New Convertible Notes ” and,
together with the Old Convertible Notes, the “ Convertible
Notes ”), (vii) 796,918 Shares were reserved for
future issuance pursuant to outstanding warrants issued to
Kingsbridge Capital Limited, (viii) 2,162,162 Shares were
reserved for future issuance pursuant to outstanding warrants
issued in the Company’s 2007 registered direct offerings,
(ix) 1,848,467 Shares were reserved for future issuance
pursuant to outstanding warrants issued pursuant to the Warrant
Exchange Agreement (the “ CVI Warrant ”), and
(x) no shares of Company Preferred Stock were issued and
outstanding. Except as disclosed in
Section 4.03(1) of the Company Disclosure
Schedule, and except for the Preferred Shares Purchase Rights (the
“ Company Rights ”) issued pursuant to the
Company Rights Agreement, there are no options, warrants,
convertible debt or other convertible instruments or other rights,
agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Company or
obligating the Company to issue or sell any shares of capital stock
of, or other equity interests in, the Company.
Section 4.03(2) of the Company Disclosure
Schedule accurately sets forth each currently outstanding form of
Warrant issued by the Company and the following information with
respect to each such currently outstanding Warrant: (1) the
aggregate number and type of
21
shares receivable upon
exercise of such outstanding Warrants, the exercise price thereof,
and the expiration date, (2) whether or not as a result of the
Merger such Warrant by its terms will terminate, will not be
assumed by BioSante and will no longer be outstanding immediately
following the Merger and any required notices or consents with
respect thereto, (3) whether or not as a result of the Merger
such Warrant by its terms will be assumed by BioSante and the
corresponding calculation of the adjustment to such Warrant’s
number and type of shares receivable upon exercise thereof and the
exercise price thereunder immediately after the Effective Time and
any required notices or consents with respect thereto, and
(4) whether or not as a result of the Merger such Warrant by
its terms gives the Company or the Warrant Holder the right to call
or put, as applicable, the Warrant for cash or shares and the
corresponding cash or share consideration payable with respect
thereto.
(b)
The following information has been made available to BioSante prior
to the date of this Agreement with respect to each Company Stock
Award outstanding as of the date of this Agreement:
(i) the name of the Company Stock Award recipient;
(ii) the date on which such Company Stock Award was granted;
(iii) the date on which such Company Stock Award expires;
(iv) the exercise or purchase price of such Company Stock
Award; (v) the number of Shares subject to such Company Stock
Award; and (vi) the number of Shares vested pursuant to such
Company Stock Award.
(c)
No Subsidiary owns any capital stock of, or other equity interest
in, the Company. Each outstanding share of capital stock of,
or other equity interest in, each Subsidiary is duly authorized,
validly issued, fully paid and non-assessable, and each such share
is owned by the Company or another Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, limitations on the Company’s or any
Subsidiary’s voting rights, charges and other encumbrances,
except for limitations on transfer imposed by federal or state
securities Laws. There are no options, warrants, convertible
debt or other convertible instruments or other rights, agreements,
arrangements or commitments relating to the issued or unissued
capital stock of any Subsidiary or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, any Subsidiary. Neither the
Company nor any of its Subsidiaries owns any capital stock of, or
other equity interest in, any third party (other than the
Company’s ownership of capital stock of its
Subsidiaries).
(d)
The Company has made available to BioSante an accurate and complete
copy of the Company Stock Option Plans pursuant to which Company
has granted the Company Stock Awards that are currently outstanding
and the form of all stock award agreements evidencing such Company
Stock Awards. All Shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and non-assessable.
All outstanding Shares, all outstanding Company Stock Awards, and
all outstanding shares of capital stock of each Subsidiary have
been issued and granted in compliance in material respects with
(i) all applicable Laws, and (ii) all requirements set
forth in applicable contracts.
(e)
The exercise price of each of the Company Stock Options is the fair
market value of the Company Common Stock on the date of grant of
such option. Except pursuant to the terms of this Agreement
or as set forth in the Current Company SEC Reports, there are no
commitments or agreements of any character to which the Company is
bound
22
obligating the Company to
accelerate the vesting of any Company Stock Award as a result of
the Merger (whether alone or upon the occurrence of any additional
or subsequent events).
(f)
Since March 31, 2009, other than (i) pursuant to the
exercise of Company Stock Options outstanding as of
December 31, 2008 issued pursuant to the Company Stock Option
Plans, (ii) pursuant to and required by the terms of Company
Stock Awards outstanding as of December 31, 2008,
(iii) as permitted by the terms of Section 6.01 ,
(iv) pursuant to the terms of the Stock Purchase Agreement
between the Company and BioMed Realty, L.P., dated as of
April 8, 2009, (v) pursuant to the terms of the Warrant
Exchange Agreement, and (vi) as a result of the exchange offer
for the Old Convertible Notes, there has been no change in
(i) the outstanding capital stock of the Company,
(ii) the number of Company Stock Options or Company Stock
Awards outstanding, or (iii) the number of other options,
warrants or other rights to purchase Company capital
stock.
(g)
Since June 29, 2009, except as permitted by the terms of
Section 6.01 , the Company has not prepaid, purchased,
re-purchased or redeemed, in whole or in part, any Convertible
Notes, or otherwise made any payment with respect thereto, other
than payments of interest in accordance with the terms
thereof.
(h)
As of the date of this Agreement, the Conversion Price (as defined
in the Old Notes Indenture (as defined in Section 7.17
hereof)) of the Old Convertible Notes is $9.10, and the Conversion
Price (as defined in the New Notes Indenture (as defined in
Section 7.17 hereof)) of the New Convertible Notes is $0.68,
subject to adjustment after the date hereof as set forth
therein.
SECTION 4.04.
Authority Relative to This Agreement . The Company has
all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and, subject
to receipt of the Company Stockholder Approval, to consummate the
transactions contemplated hereby. The execution and delivery
of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger,
obtaining the Company Stockholder Approval and the filing and
recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery by BioSante, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting the
enforcement of creditors’ rights generally and by general
equitable principles. The Company Board has approved this
Agreement and the transactions contemplated hereby and such
approvals are sufficient so that the restrictions on business
combinations set forth in Section 203(a) of the DGCL
shall not apply to the Merger or any of the transactions
contemplated hereby, and such approvals have not been withdrawn or
modified. No other state “moratorium,”
“control share,” “fair price” or other
takeover statute or regulation is applicable to the Company with
respect to the Merger or the other transactions contemplated by
this Agreement.
23
SECTION 4.05.
No Conflict; Required Filings and Consents.
(a)
The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the certificate of incorporation
or bylaws or any equivalent organizational documents, each as
amended to date, of the Company or any Subsidiary,
(ii) assuming that all consents, approvals, authorizations and
other actions described in Section 4.05(b) have
been obtained, that all filings and obligations described in
Section 4.05(b) have been made and that the
Company Stockholder Approval has been obtained, conflict with or
violate any United States or non-United States (including without
limitation any state, local, international or foreign) statute,
law, ordinance, regulation, rule, code, writ, executive order,
injunction, judgment, decree or other order (“ Law
”) applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in any breach of, loss of any
benefit under, or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or
give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any
Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary or any property
of any of them is bound or affected, except, with respect to
clauses (ii) and (iii) above, for any such conflicts,
violations, breaches, defaults or other occurrences that,
individually or in the aggregate, would not have a Company Material
Adverse Effect.
(b)
The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not,
require any consent, approval, authorization or permit of, or
filing with or notification to, any United States federal, state,
county or local or non-United States government, governmental,
regulatory, Taxing or administrative authority, agency,
instrumentality or commission or any court, tribunal, or judicial
or arbitral body (a “ Governmental Authority ”),
except (i) for applicable requirements, if any, of the
Securities Act of 1933, as amended (the “Securities
Act ”), the Exchange Act, state securities or “blue
sky” laws (“ Blue Sky Laws ”) and filing
and recordation of appropriate merger documents as required by the
DGCL, and except as may be required in connection with Taxes
described in Section 7.09 and (ii) where the
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not,
individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 4.06.
Permits . Section 4.06 of the Company
Disclosure Schedule sets forth a true and correct list of all
material franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals
and orders of any Governmental Authority held by the Company or any
of its Subsidiaries (the “ Company Permits
”). Each of the Company and the Subsidiaries is in
possession of Company Permits necessary for each of the Company or
the Subsidiaries to own, lease and operate its properties or to
carry on its business as it is now being conducted, except where
the failure to have, or the suspension or cancellation of, any of
the Company Permits would not, individually or in the aggregate,
have a Company Material Adverse Effect. As of the date of
this Agreement, no suspension or cancellation of any material
Company Permit is pending or, to the knowledge of the Company,
threatened.
24
SECTION 4.07.
SEC Filings; Financial Statements.
(a)
The Company has filed all forms, reports, statements, schedules and
other documents required to be filed by it with the U.S. Securities
and Exchange Commission (the “ SEC ”) since
December 31, 2005 (collectively, the “ Company SEC
Reports ”). The Company SEC Reports (i) at the
time they were filed or, if amended, as of the date of such
amendment, complied in all material respects with all applicable
requirements of the Securities Act, or the Securities Exchange Act
of 1934, as amended (the “ Exchange Act ”), as
the case may be, and the rules and regulations promulgated
thereunder, each as in effect on the date so filed, except to the
extent updated, amended, restated or corrected by a subsequent
Company SEC Report filed with or furnished to the SEC by the
Company, and in either case, publicly available prior to the date
of this Agreement and (ii) did not, at the time they were
filed, or, if amended, as of the date of such amendment, contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading, except to the extent
updated, amended, restated or corrected by a subsequent Company SEC
Report. As of the date of this Agreement, the Company is
eligible for the use of Form S-3 for purposes of eligibility
for incorporation by reference on Form S-4. No
Subsidiary is required to file any form, report or other document
with the SEC. There are no outstanding comments from the
Staff of the SEC with respect to any of the Company SEC
Reports.
(b)
Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Reports (or
if amended prior to the date of this Agreement, as amended)
complied as to form, as of their respective dates of filing with
the SEC, in all material respects with all applicable accounting
requirements and with the published rules and regulations of
the SEC with respect thereto (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC), was
prepared in accordance with the then existing United States
generally accepted accounting principles (“ GAAP
”) applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by Form 10-Q of
the SEC) and each fairly presents, in all material respects, the
consolidated financial position, changes in stockholders’
equity, results of operations and cash flows of the Company and the
consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments).
(c)
Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as of
December 31, 2008, including the notes thereto (the “
Company Balance Sheet ”) or disclosed in the Company
10-K or other Current Company SEC Reports filed subsequent to the
date of the Company 10-K, neither the Company nor any Subsidiary
has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and
obligations, (i) incurred in the ordinary course of business
consistent with past practice since December 31, 2008,
(ii) relating to payment or performance obligations under
contracts that are either (1) disclosed in the Company
Disclosure Schedule or (2) not required to be so disclosed by
the terms of this Agreement (and including any of the foregoing
types of contracts that are entered into or obtained after the date
of this Agreement, as long as such action does not result in a
breach of this Agreement) in accordance with the terms and
conditions thereof which are not required by GAAP to be reflected
on a
25
regularly prepared balance
sheet or (iii) incurred in connection with the performance by
the Company of its obligations under this Agreement.
(d)
The Company has heretofore furnished or made available to BioSante
complete and correct copies of all material amendments and
modifications that have not been filed by the Company with the SEC
to all Company Material Contracts (except for such amendments or
modifications as would not affect the surviving provisions of such
Company Material Contracts as in effect on the date of this
Agreement).
(e)
The Company has timely filed all certifications and statements
required by (x) Rule 13a-14 or Rule 15d-14 under the
Exchange Act or (y) 18 U.S.C. Section 1350
(Section 906 of the Sarbanes-Oxley Act of 2002) with respect
to any Company SEC Report.
(f)
The records, systems, controls, data and information of the Company
and its Subsidiaries are recorded, stored, maintained and operated
under means that are under the exclusive ownership and direct
control of the Company and its Subsidiaries or accountants
(including all means of access thereto and therefrom), except for
any non-exclusive and non-direct ownership and control that would
not reasonably be expected to have a material adverse effect on the
system of internal accounting controls described below in this
Section 4.07(f). The Company maintains disclosure
controls and procedures required by Rule 13a-15 or
Rule 15d-15 under the Exchange Act; such controls and
procedures are designed to ensure that all material information
concerning the Company and the Subsidiaries that is required to be
disclosed in the Company’s SEC filings and other public
disclosures is made known on a timely basis to the individuals
responsible for the preparation of the Company’s SEC filings
and other public disclosure documents.
(g)
The Company maintains a standard system of accounting, established
and administered in accordance with GAAP. The Company
maintains a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
or any other criteria applicable to such statements and to maintain
accountability for assets, (iii) access to assets is permitted
only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(h)
Since December 31, 2005, (i) neither the Company nor any
Subsidiary nor, to the knowledge of the Company, any director,
officer, employee, auditor, accountant or representative of the
Company or any Subsidiary, has received or otherwise had or
obtained knowledge of any material complaint, allegation, assertion
or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the
Company or any Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion
or claim that the Company or any Subsidiary has engaged in
questionable accounting or auditing practices, (ii) no
attorney representing the Company or any Subsidiary, whether or not
employed by the Company or any Subsidiary, has reported evidence of
a material violation of securities laws, breach of fiduciary duty
or similar violation by the Company or any of its officers,
directors, employees or agents to the Company
26
Board or any committee
thereof or to any director or officer of the Company, and
(iii) there have been no internal investigations regarding
accounting or revenue recognition discussed with, reviewed by or
initiated at the direction of the chief executive officer, chief
financial officer, general counsel, the Company Board or any
committee thereof that could have a material effect on accounting
or revenue recognition.
(i)
Except in response to any inquiries or interrogatories described in
Section 4.07(j) , to the knowledge of the Company, no
employee of the Company or any Subsidiary is providing information
to any law enforcement agency regarding the commission or possible
commission of any crime or the violation or possible violation of
any applicable Law by the Company or any Subsidiary the outcome of
which, as of the date of this Agreement, would, individually or in
the aggregate, have a Company Material Adverse Effect.
(j)
The Company is not in receipt of any non-routine inquiries or
interrogatories, whether in writing or, to the knowledge of the
Company, otherwise or, to the knowledge of the Company, is not the
subject of any investigation, audit, review or hearing by or in
front of (A) the SEC or NASDAQ, with respect to any of the
Company SEC Reports or any of the information contained therein, or
(B) any other Governmental Authority, with respect to the
conduct by the Company or any Subsidiary of its business or any
aspect thereof the outcome of which is, as of the date of this
Agreement, individually or in the aggregate, reasonably likely to
be materially adverse to the Company and the Subsidiaries, taken as
a whole.
SECTION 4.08.
Absence of Certain Changes or Events . Since
December 31, 2008 and except as set forth in the Company 10-K
or other Current Company SEC Reports filed subsequent to the date
of the Company 10-K, (a) except as expressly contemplated by
this Agreement, the Company and the Subsidiaries have conducted
their businesses in the ordinary course and in a manner consistent
with past practice in all material respects, (b) there has not
been any Company Material Adverse Effect and (c) none of the
Company or any Subsidiary has taken any action that, if taken after
the date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 6.01(b).
SECTION 4.09.
Absence of Litigation . Other than with respect to
employee benefit plans, labor and employment, intellectual
property, tax and environmental matters, which are the subjects of
Section 4.10, Section 4.11, Section 4.13,
Section 4.14 and Section 4.15, respectively, and except
as disclosed in the Company 10-K or other Current Company SEC
Reports filed subsequent to the date of the Company 10-K,
(a) there is no investigation of which the Company has
received notice and no litigation, suit, claim, action or
proceeding (an “ Action ”) pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary, or any property or asset of the Company or any
Subsidiary, before any Governmental Authority that would,
individually or in the aggregate, have a Company Material Adverse
Effect; and (b) neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to
any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of the
Company, continuing investigation by, any Governmental Authority,
or any order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority that would, individually or in
the aggregate, have a Company Material Adverse Effect.
27
SECTION 4.10.
Employee Benefit Plans .
(a)
Section 4.10(a)
of the Company
Disclosure Schedule lists as of the date of this Agreement each of
the following: (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ ERISA ”))
and all material bonus, stock option, stock purchase, restricted
stock, restricted stock unit, performance share, performance unit,
equity-based compensation, incentive, deferred compensation,
savings, retirement, disability, medical, insurance, supplemental
retirement, severance or other similar benefit plans, programs or
arrangements, and all material employment, termination, transaction
bonus, retention, change of control, severance or other material
contracts, arrangements, understandings or agreements to which the
Company, any Subsidiary or any ERISA Affiliate is a party, with
respect to which the Company, any Subsidiary or any ERISA Affiliate
has any liability or which are maintained, contributed to, required
to be contributed to or sponsored by the Company, any Subsidiary or
any ERISA Affiliate for the benefit of any current or former
employee, officer, director or independent contractor of the
Company, any Subsidiary or any ERISA Affiliate, (ii) each
employee benefit plan for which the Company or any Subsidiary would
incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in
respect of which the Company or any Subsidiary would incur
liability under Section 4212(c) of ERISA, and
(iv) any material contracts, arrangements or understandings
between the Company or any Subsidiary and any current or former
employee, officer, director or independent contractor of the
Company or any Subsidiary relating to a sale of the Company or any
Subsidiary (each of the items set forth in
clauses (i) through (iv), whether written or unwritten,
being referred to collectively as, the “ Company Plans
”). “ ERISA Affiliate ” means any
trade or business, whether or not incorporated, which together with
the Company would be deemed a “single employer” within
the meaning of Section 414(b), (c), or (m) of the Code or
Section 4001 of ERISA.
(b)
Except as set forth in the Company
Disclosure Schedule, the Company has furnished to BioSante true and
complete copies of:
(i)
all Company Plan
documents and related trust agreements or other agreements or
contracts evidencing any funding vehicle with respect thereto (and
amendments to any such documents);
(ii)
insurance
contracts that provide benefits for any Company Plan;
(iii)
service
agreements or other contracts with any third-party recordkeeper or
other service provider for a Company Plan;
(iv)
the three most
recent annual reports on Form 5500, including all schedules,
financial statements, attachments and/or audits thereto, with
respect to any Company Plan for which such a report (and/or audit)
is required;
(v)
the form of
summary plan description, including any summary of material
modifications thereto or other modifications communicated to
participants, currently in effect with respect to each Company
Plan;
28
(vi)
the most recent
determination letter with respect to each Company Plan intended to
qualify under Section 401(a) of the Code and the full and
complete application therefore submitted to the Internal Revenue
Service;
(vii)
material
correspondence with regulatory authorities (such as a copy of all
documents relating to a voluntary correction submission with the
Department of Labor or the Internal Revenue Service) with respect
to each Company Plan;
(viii)
all personnel
files and Company Plan records including, but not limited to, all
COBRA notices and election forms completed by any individual
entitled to COBRA under any Company Plan as of the
Closing;
(ix)
all documents
relating to the termination of any Company Plan within the past
three (3) years (including amendments, correspondence, notices
and election forms); and
(x)
a complete
spreadsheet that identifies each current or former Company employee
to whom the Company has or may incur any post-employment
obligations (such as severance benefits) and describes all amounts
owed to such individual, copies of all signed documents relating to
each such individual (such as a signed separation agreement and
release) and all other information necessary to determine amounts
owed to the employee as of the date hereof (with the Company
providing BioSante updated information for such individuals as of
the Effective Time)
(c)
Neither the
Company nor any Subsidiary has any binding commitment (i) to
create or incur any material liability with respect to or adopt any
material employee benefit plan, program or arrangement,
(ii) to enter into any material contract or agreement to
provide compensation or benefits to any individual, or
(iii) to modify or change in any material respect or terminate
any Company Plan, other than with respect to a modification, change
or termination required by ERISA, the Code or other applicable Law
or reasonably advisable in order to maintain the Company
Plan’s tax-qualified status or to comply with such applicable
Law.
(d)
None of the
Company Plans is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a “
Multiemployer Plan ”) or is subject to Part 3 of
Subtitle B of Title I or to Title IV of ERISA or Section 412
of the Code. Neither the Company nor any ERISA Affiliate has
contributed to a Multiemployer Plan within the six-year period
ending on the date of this Agreement. No Company Plan is a
“multiple employer welfare arrangement” as defined in
Section 3(40) of ERISA. Except as required by Law, none
of the Company Plans provides for post-termination or retiree
benefits, including but not limited to retiree medical, disability
or life insurance benefits, to any current or former employee,
officer or director or independent contractor of the Company or any
Subsidiary (other than (1) retirement or death benefits under
any plan intended to be qualified under Section 401(a) of
the Code, (2) disability benefits that have been fully
provided for by insurance under a Company Plan that constitutes an
“employee welfare benefit plan” within the meaning of
Section (3)(1) of ERISA, or (3) benefits in the
nature of severance pay with respect to one or more of the
employment contracts set forth on Section 4.10(a)
of the Company Disclosure Schedule).
29
(e)
Except as set
forth on Section 4.10(e) of the Company
Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby shall (either alone or in combination with another event)
(i) result in any payment becoming due, or increase the amount
of any compensation due, to any current or former employee,
officer, director or independent contractor of the Company and the
Subsidiaries; (ii) increase any benefits otherwise payable
under any Company Plan; (iii) result in the acceleration of
the time of payment or vesting of any compensation or benefits,
whether or not payable under a Company Plan; (iv) result in
the payment of any amounts that are reasonably expected to,
individually or in combination with any other such payment,
constitute an “excess parachute payment”, as defined in
Section 280G(b)(1) of the Code; (v) require the
Company to place in trust or otherwise set aside any amounts in
respect of severance pay or otherwise or (vi) result in the
triggering or imposition of any restrictions or limitations on the
rights of the Company to amend or terminate any Company
Plan.
(f)
Each Company Plan
is operated in all material respects in accordance with its terms
and the requirements of all applicable Laws including ERISA and the
Code. The Company and the Subsidiaries have performed, in all
material respects, all obligations required to be performed by them
under, are not in any respect in default under or in violation of,
and have no knowledge of
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