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Agreement And Plan Of Merger

Agreement and Plan of Merger

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 This Agreement and Plan of Merger involves

ACUCELA INC. | Acucela Inc | Acucela North America Inc | Acucela US, Kubota Holdings and US Merger Co | Kubota Pharmaceutical Holdings Co, Ltd

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Washington     Date: 8/10/2016
Industry: Biotechnology and Drugs     Law Firm: Wilson Sonsini     Sector: Healthcare

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AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is entered into as of August 9, 2016, by and among Acucela Inc., a Washington corporation (“ Acucela US ”), Acucela Japan KK, a wholly-owned subsidiary of Acucela US organized under the laws of Japan and to be renamed Kubota Pharmaceutical Holdings Co., Ltd. (“ Kubota Holdings ”) upon completion of the Merger (as defined in Recital 1), and Acucela North America Inc., a Washington corporation and wholly-owned subsidiary of Kubota Holdings to be renamed Acucela Inc. (“ US Merger Co ”).

RECITALS:

1.     The Boards of Directors of each of Acucela US, Kubota Holdings and US Merger Co have unanimously determined that it is advisable and in the best interests of their respective shareholders to reorganize so that Kubota Holdings will become the parent company of Acucela US as a result of the merger of Acucela US with and into US Merger Co, with US Merger Co surviving as a wholly owned subsidiary of Kubota Holdings to be renamed Acucela Inc. (the “ Merger ”).

2.     Prior to the Merger, Kubota Holdings shall authorize a forward split of its authorized and outstanding shares of common stock held by Acucela US, such that the total number of outstanding shares of Kubota Holdings common stock (each an “ Kubota Holdings Common Share ”) is equal to the number of outstanding shares of Acucela US common stock (“ Acucela US Common Stock ”) as of immediately prior to the Effective Time (as defined in Section 1.2) (the “ Forward Split ”).

3.     The Boards of Directors of each of Acucela US, Kubota Holdings and US Merger Co have unanimously approved the Merger, this Agreement and, to the extent applicable, the other transactions described herein upon the terms and subject to the conditions set forth in this Agreement, and whereby each issued share of Acucela US Common Stock shall be cancelled and converted into the right to receive one Kubota Holdings Common Share.

4.    The parties to this Agreement intend that the Merger qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and that this Agreement shall be, and hereby is, adopted as a “plan of reorganization” for purposes of Section 368(a) of the Code.

5.     The Merger requires, among other things, the adoption of this Agreement by the affirmative vote of a majority of the outstanding shares of Acucela US Common Stock entitled to vote on the matter.

NOW THEREFORE, in consideration of the foregoing and of the covenants and agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

 

 

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ARTICLE I

THE MERGER

SECTION 1.1 The Merger .   Upon the terms and subject to the conditions of this Agreement, and in accordance with the Washington Business Corporation Act (the “ WBCA ”), at the Effective Time (as defined in Section 1.2), Acucela US shall be merged with and into US Merger Co, the separate corporate existence of Acucela US shall thereupon cease and US Merger Co shall continue as the surviving corporation in the Merger (sometimes hereinafter referred to as the “ Surviving Corporation ”). The Merger shall have the effects set forth in the WBCA.

SECTION 1.2 Filing Articles of Merger; Effective Time .   As soon as practicable following the satisfaction or, to the extent permitted by applicable law, waiver of the conditions set forth in Article IV, if this Agreement shall not have been terminated prior thereto as provided in Section 5.1, US Merger Co and Acucela US shall cause articles of merger (the “ Articles of Merger ”) meeting the requirements of Section 23B.11.090 of the WBCA to be properly executed and filed in accordance with such section and otherwise make all other filings or recordings as required by the WBCA in connection with the Merger. The Merger shall become effective at such time that US Merger Co shall have designated in the Articles of Merger as the effective time of the Merger (the “ Effective Time ”).

 

ARTICLE II
CHARTER DOCUMENTS,
DIRECTORS AND OFFICERS

SECTION 2.1 Articles of Incorporation of Surviving Corporation .   The Articles of Incorporation of the Surviving Corporation shall be the Articles of Incorporation of US Merger Co in effect immediately prior to the Effective Time; provided, however , that at the Effective Time, Article I of the Articles of Incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is Acucela Inc.” Such Articles of Incorporation shall thereafter continue to be the Articles of Incorporation of the Surviving Corporation until amended as provided therein and under the WBCA.

SECTION 2.2 Bylaws of Surviving Corporation . From and after the Effective Time, the Bylaws of US Merger Co in effect immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation, until duly amended in accordance with applicable law.

SECTION 2.3 Directors of Surviving Corporation . From and after the Effective Time, the directors of US Merger Co immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each such director to serve in such capacity until his or her earlier death, resignation or removal or until his or her successor is duly elected or appointed.

SECTION 2.4 Officers of Surviving Corporation . From and after the Effective Time, the officers of US Merger Co immediately prior to the Effective Time shall be the officers of the

 

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Surviving Corporation, each such officer to serve in such capacity until his or her earlier death, resignation or removal or until his or her successor is duly elected or appointed.

SECTION 2.5 Directors of Kubota Holdings . Prior to the Effective Time, Kubota Holdings agrees to take or cause to be taken all such actions as are necessary to form (1) an audit committee consisting of three outside directors (Shintaro Asako (chairman), Dr. Shiro Mita and Robert Takeuchi), (2) a compensation committee consisting of three outside directors (Robert Takeuchi (chairman), Shintaro Asako and Eisaku Nakamura) and (3) a nominating committee consisting of three directors, of whom two are outside directors (Dr. Ryo Kubota (chairman), Dr. Shiro Mita and Eisaku Nakamura).

 

ARTICLE III
CANCELLATION AND CONVERSION
OF STOCK

SECTION 3.1 Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of any of Acucela US, Kubota Holdings or US Merger Co:

(a)     Cancellation of Acucela US Stock . Each issued share of Acucela US Common Stock that is owned immediately prior to the Effective Time by Kubota Holdings, US Merger Co or any subsidiary of Acucela US shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered or deliverable in connection with such cancellation.

(b)     Conversion of Remaining Acucela US Shares . Each issued and outstanding share of Acucela US Common Stock (other than the shares of Acucela US Common Stock to be cancelled in accordance with Section 3.1(a) and other than Dissenting Shares (as defined in Section 3.3)) shall be cancelled and converted into the right to receive one validly issued, fully paid and nonassessable Kubota Holdings Common Share.

(c)     Treatment of Equity Awards .

(1) At the Effective Time, all unexpired, unexercised and outstanding options to purchase shares of Acucela US Common Stock (each an “ Acucela US Option ”) granted under the 2002 Stock Option/Restricted Stock Plan, the 2012 Equity Incentive Plan and the 2014 Equity Incentive Plan, as amended (the “ Company Equity Plans ”) shall be cancelled, and in exchange therefor, Kubota Holdings will issue stock acquisition rights ( shinkabu yoyakuken ) to purchase Kubota Holdings Common Shares (each an “ Kubota Holdings Option ”). Each such Kubota Holdings Option shall (1) be exercisable for the same number of Kubota Holdings Common Shares as such cancelled Acucela US Option, (2) have the same exercise price as such cancelled Acucela US Option, (3) be subject to the same vesting schedule as such cancelled Acucela US Option, (4) have the same material terms as such cancelled Acucela US Option (to the extent reasonably practicable under Japanese laws and regulations and not rendered inoperative by the application thereof after the Effective Time), and (5) not provide each holder of such cancelled

 

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Acucela US Option with any additional benefits not provided under such cancelled Acucela US Option. The substitution of each such Acucela US Option shall be completed in a manner that complies with Internal Revenue Code sections 409A and 424(a) so as to avoid imposition of additional taxes to the extent applicable.

(2) At the Effective Time all outstanding restricted stock units to acquire shares of Acucela US Common Stock (each an “ Acucela US RSU ”) shall be cancelled, and in exchange therefor, each holder of such Acucela US RSU will be awarded stock acquisition rights to purchase Kubota Holdings Common Shares (each a “ One Yen RSU ”). Each One Yen RSU shall (1) be exercisable for the same number of Kubota Holdings Common Shares as such cancelled Acucela US RSU, (2) have an exercise price of one (1) yen per Kubota Holdings Common Share, (3) be subject to the same vesting schedule as such cancelled Acucela US RSU, and (4) have material terms that are substantially similar to such cancelled Acucela US RSU (to the extent reasonably practicable under Japanese laws and regulations and not rendered inoperative by the application thereof after the Effective Time). The substitution of each such Acucela US RSU shall be completed in a manner that complies with Internal Revenue Code section 409A so as to avoid imposition of additional taxes to the extent applicable.

(3) At the Effective Time all outstanding shares of restricted stock of Acucela US (“ Acucela US Restricted Stock ”) shall be cancelled, and in exchange therefor, each holder of Acucela US Restricted Stock will be issued one share of Kubota Holdings Common Shares (“ Kubota Holdings Restricted Stock ”) for each share of Acucela US Restricted Stock. Each Kubota Holdings Restricted Stock shall be subject to restrictions that are substantially similar in all material respects to such Acucela US Restricted Stock (to the extent reasonably practicable under Japanese laws and regulations and not rendered inoperative by the application thereof after the Effective Time).

(4) Prior to the Effective Time, the Board of Directors of Acucela US shall adopt such resolutions and have taken all such other actions as may be reasonably necessary to terminate the Company Equity Plans.

SECTION 3.2 Payment Mechanics; Direct Registration of Kubota Holdings Shares .

(a)    Immediately following the Effective Time, US Merger Co shall deliver the Kubota Holdings Common Shares


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