AGREEMENT AND PLAN OF MERGER BY AND AMONG CEPHALON, INC., CEPSAL ACQUISITION CORP., SALMEDIX, INC., DAVID S. KABAKOFF, ARNOLD L. ORONSKY AND PAUL KLINGENSTEINAgreement and Plan of Merger |
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Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CEPHALON, INC.,
CEPSAL ACQUISITION CORP.,
SALMEDIX, INC.,
DAVID S. KABAKOFF,
ARNOLD L. ORONSKY
AND
PAUL KLINGENSTEIN
Dated as of May 12, 2005
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this “ Agreement “), dated as of May 12, 2005, by and among CEPHALON, INC., a Delaware corporation (“ Parent “), CEPSAL ACQUISITION CORP., a Delaware corporation (“ Acquisition Corp. “), SALMEDIX, INC., a Delaware corporation (the “ Company “) and David S. Kabakoff, an individual, Arnold L. Oronsky, an individual and Paul Klingenstein, an individual, as the Stockholders’ Representatives (solely as to Section 2.5 of this Agreement. Certain capitalized terms used in this Agreement have the meanings ascribed to them in Article X.
RECITALS
A. The Company is a Delaware corporation with its principal executive office located at 9381 Judicial Drive, Suite 160, San Diego, CA 92121.
B. Parent is a Delaware corporation with its principal offices located at 41 Moores Rd., Frazer, PA 19355. Acquisition Corp. is a wholly-owned direct subsidiary of Parent and was formed to merge with and into the Company (the “ Merger “) so that, as a result of the Merger, the Company will survive and become a wholly-owned subsidiary of Parent.
C. The respective Boards of Directors of Parent, Acquisition Corp. and the Company have determined that this Agreement and the consummation of the Merger in accordance with the laws of the State of Delaware and subject to the terms and conditions of this Agreement, is advisable and in the best interests of Parent, Acquisition Corp. and the Company and their respective stockholders.
D. Parent, in its capacity as the sole stockholder of Acquisition Corp., has approved Acquisition Corp.’s execution of this Agreement and consummation of the Merger.
E. As a condition and inducement to Parent’s willingness to enter into this Agreement, concurrently with the execution of this Agreement, each of the Persons identified on Exhibit A have entered into a Voting and Release Agreement substantially in the form attached hereto as Exhibit B , which Voting and Release Agreement shall provide for, among other things, such Person’s approval of the Merger and agreement to vote its shares of common stock, par value $0.001 per share, of the Company (“ Company Common Stock “) (including shares of Company Common Stock issuable upon the conversion or exercise of options, warrants and convertible securities held by them) and its shares of Preferred Stock (including shares of Preferred Stock issuable upon the exercise of Warrants) in a manner consistent with such approval and agreement to waive such Person’s rights to dissent from the Merger and the other transactions contemplated hereby under Section 262 of the Delaware General Corporation Law (the “ DGCL “).
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F. Certain officers and employees of the Company have executed and delivered to Parent certain acknowledgements with respect to existing employment agreements and/or consulting agreements that by their terms will take effect as of the Effective Time.
G. Parent, Acquisition Corp., and the Company desire to make certain representations and warranties, covenants and agreements in connection with the Merger and also to set forth the terms and conditions of the Merger, all as set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I THE MERGER; ADDITIONAL ACTIONS.
Section 1.1. The Merger . At the Effective Time, upon the terms and subject to the conditions of this Agreement, Acquisition Corp. shall be merged with and into the Company in accordance with the provisions of the DGCL. The Company shall be the surviving corporation in the Merger (the “ Surviving Corporation “). As a result of the Merger, all of the respective outstanding shares of capital stock or any securities exchangeable or convertible into capital stock of the Company and Acquisition Corp. shall be converted or cancelled in the manner provided in Article II.
Section 1.2. Effective Time . At the Closing, a certificate of merger (the “ Certificate of Merger “) shall be duly prepared and executed by the Surviving Corporation and thereafter delivered to the Secretary of State of the State of Delaware (the “ Secretary of State “) for filing, as provided in Section 251 of the DGCL, on the Closing Date. The parties shall make all other filings required under the DGCL, and the Merger shall become effective at the time of the filing of the Certificate of Merger with the Secretary of State, or at such later time as may be agreed by Parent and the Company and stated in the Certificate of Merger (the date and time of such filing (or stated later time, if any) being referred to herein as the “ Effective Time “).
Section 1.3. Closing . The closing of the Merger (the “ Closing “) shall take place at the offices of Dechert, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103, on a date and at a time to be specified by the parties, which shall in no event be later than 10:00 a.m., local time, on the second business day following satisfaction of the conditions set forth in Article VI, other than those conditions that by their nature cannot be satisfied until the Closing, but subject to the fulfillment or waiver of those conditions, unless this Agreement has been theretofore terminated pursuant to its terms, or on such other date, time and place as the parties may mutually agree (the “ Closing Date “). At the Closing there shall be delivered to Parent, Acquisition Corp. and the Company the certificates and other documents and instruments required to be delivered under Article VI.
Section 1.4. Effects of the Merger . At the Effective Time, the effects of the Merger shall be as provided in the applicable provisions of the DGCL.
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Section 1.5. Certificate of Incorporation, By-Laws and Officers and Directors of the Surviving Corporation .
(a) The certificate of incorporation of the Company, as in effect immediately prior to the Effective Time, shall be amended at and as of the Effective Time so as to read in its entirety as set forth in Exhibit C and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided by law and such certificate of incorporation.
(b) The by-laws in the form set forth in Exhibit D shall be the by-laws of the Surviving Corporation at and as of the Effective Time until thereafter amended as provided by law, the certificate of incorporation of the Surviving Corporation and such by-laws.
(c) From and after the Effective Time, the directors and officers of the Surviving Corporation shall be as set forth on Exhibit E hereto, until their respective successors are duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and by-laws.
Section 1.6. Further Assurances . Each party hereto shall execute such further documents and instruments and take such further actions as may reasonably be requested by one or more of the others to consummate the Merger, to vest the Surviving Corporation with full title to all assets, properties, rights, approvals, immunities and franchises of Acquisition Corp. and the Company or to otherwise effect the purposes of this Agreement.
ARTICLE II CONVERSION OF SHARES.
Section 2.1. Conversion of Capital Stock . Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any further action on the part of any holder of Company Capital Stock (as defined below):
(a) Capital Stock of Acquisition Corp . Each issued and outstanding share of the common stock, par value $.01 per share, of Acquisition Corp. (“ Acquisition Common Stock “) shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation (“ Surviving Corporation Common Stock “). Each certificate representing outstanding shares of Acquisition Common Stock shall at the Effective Time represent an equal number of shares of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Stock Owned by Parent and Acquisition Corp. All shares of Company Capital Stock that are owned by the Company as treasury stock and any shares of Company Capital Stock owned by Parent or Acquisition Corp. or by any direct or indirect wholly-owned Subsidiary of Parent or Acquisition Corp. automatically shall be cancelled and shall cease to exist and no consideration shall be delivered in exchange therefor.
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(c) Conversion of Company Capital Stock . All shares of Company Common Stock and shares of Series A preferred stock, par value $0.001 of the Company (“ Series A Preferred Stock “), Series B preferred stock, par value $0.001 of the Company (“ Series B Preferred Stock “), and Series C preferred stock, par value $0.001 of the Company (“ Series C Preferred Stock “ and together with the Series A Preferred Stock and Series B Preferred Stock, the “ Preferred Stock “) (but excluding shares to be cancelled in accordance with Section 2.1(b) and shares that are Dissenting Shares (as defined in Section 2.1(d) shall no longer be outstanding and shall be cancelled automatically and shall cease to exist, and each holder of a certificate representing any such shares of Company Capital Stock shall cease to have any rights with respect thereto, except the right to receive, without interest, the applicable Merger Price plus Earn Out Payments, if any, to be paid to such Person pursuant to Section 2.2, upon the surrender of such certificate in accordance with Section 2.4. The Company Common Stock and the Preferred Stock are sometimes referred to herein as the “ Company Capital Stock “. Exhibit F hereof shall set forth: (i) the name of each Stockholder; (ii) the portion of the Acquisition Price payable pursuant to this Section 2.1(c) to each Stockholder at Closing assuming full compliance by each Stockholder with the payment procedures contained in Section 2.4; (iii) the portion of the Acquisition Price to be withheld from each Stockholder pursuant to Section 2.3 in establishing the Stockholders’ Representatives Escrow Fund; (iv) the portion of the Acquisition Price to be paid to each Stockholder at Closing after deduction for the amount set forth in (iii) above; (v) the total amount, expressed both as an amount and as a percentage, payable to each Stockholder, if any, for Earn Out Payments pursuant to Section 2.2 (assuming the occurrence of both Earn Out Events); and (vi) the amount, expressed both as an amount and as a percentage, payable to each Stockholder, if any for each Earn Out Payment pursuant to Section 2.2.
(d) Dissenting Shares . Notwithstanding any provision of this Agreement to the contrary, each outstanding share of Company Capital Stock (the holder of which has not voted in favor of the Merger or consented thereto in writing and has perfected such holder’s right to an appraisal of such holder’s shares in accordance with the applicable provisions of the DGCL and has not effectively withdrawn or lost such right to appraisal (in each case, a “ Dissenting Share “)) shall not be converted into or represent a right to receive the applicable Merger Price or the Earn Out Payments, if any, otherwise payable on such share pursuant to Section 2.2 of this Agreement, but rather the holder thereof shall be entitled only to such rights as are granted by the applicable provisions of the DGCL; provided , however , that any Dissenting Share held by a Person at the Effective Time who shall, after the Effective Time, withdraw the demand for appraisal or lose the right of appraisal, in either case pursuant to the DGCL, shall be deemed to be converted into, as of the Effective Time, the right to receive the Merger Price applicable to such shares pursuant to Section 2.1(c) plus Earn Out Payments, if any, to be paid on such shares in accordance with Section 2.2 of this Agreement. The Company shall give Parent (x) prompt notice of any written demands for appraisal, withdrawals of demands for appraisal and any other instruments served pursuant to the applicable provisions of the DGCL relating to the appraisal process received by the Company and (y) prompt notice of and the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company will not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands
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(e) Treatment of Options . Prior to the date hereof, the Board of Directors of the Company (or, if appropriate, any committee thereof) has adopted appropriate resolutions and taken all other actions necessary to provide that each outstanding stock option (each an “ Option “) heretofore granted under the Company’s 2001 Stock Option/Stock Issuance Plan (the “ Company Stock Plan “), whether or not currently vested or exercisable at the Effective Time, and which remains outstanding immediately prior to the Effective Time, shall be cancelled, no longer be outstanding and cease to represent the right to acquire shares of Company Common Stock and in consideration for such cancellation, each holder of an Option shall, at the Effective Time, have the right to receive an amount in cash from Parent in respect thereof equal to the product of (x) the total number of shares of Company Common Stock subject or related to such Option, and (y) the excess, if any, of the Merger Price applicable to the Company Common Stock over the exercise price or purchase price, as the case may be, per share of Company Common Stock subject or related to such Option (subject to any applicable withholding taxes, the “ Cash Option Payment “) plus Earn Out Payments, if any, to be paid on such Option in accordance with Section 2.2 as if such Option had been exercised and converted into Company Common Stock immediately prior to the Effective Time. The Company Stock Plan and any Benefit Plan (or other plan, program or arrangement) providing for the issuance or grant of any other interest in respect of the capital stock of the Company shall terminate upon the Effective Time. The Company has taken all steps necessary to ensure that the Company is not or will not be bound by any Options, other options, warrants, rights or agreements which would entitle any person, other than the current stockholders of Acquisition Corp. or its Affiliates, to acquire any capital stock of the Surviving Corporation.
(f) Warrants . At the Effective Time, each warrant to purchase Company Capital Stock that is outstanding as of the Effective Time (the “ Warrants “) pursuant to any Warrant Agreements or otherwise shall be exercisable solely for a payment in cash from Parent equal to the product of (x) the total number of shares of Company Capital Stock subject or related to such Warrant, and (y) the excess, if any, of the Merger Price applicable to such type of Company Capital Stock over the exercise price per share of Company Capital Stock subject or related to such Warrant (the “ Cash Warrant Payment “) plus Earn Out Payments, if any, to be paid to the holder of such Warrant in accordance with Section 2.2 as if such Warrant had been exercised for Company Capital Stock immediately prior to the Effective Time. The Company shall take or cause to be taken, including as appropriate by its Board of Directors or the appropriate committee thereof, all steps necessary, if any, to give effect to the provisions of this Section 2.1(f). From and after the Effective Time, holders of Warrants shall have no rights with respect to their Warrants other than specifically provided in this Section 2.1(f).
(a) Upon the Surviving Corporation’s or Parent’s first acceptance of the filing of a New Drug Application (“ NDA “) seeking the United States Food and Drug Administration (“ FDA “) approval of Treanda for the treatment of non-Hodgkins lymphoma (“ NHL “) or chronic lymphocytic leukemia (“ CLL “), Parent shall: (i) within five (5) days of such filing provide the Stockholders’ Representatives with written notice thereof in accordance with Section 11.5 of this
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Agreement, (ii) on or before ten (10) days following the occurrence of such filing deposit with the Payment Agent, for the benefit of the Stockholders (other than holders of Dissenting Shares), an aggregate amount of fifteen million dollars ($15,000,000) (less any amount thereof, if any, which would otherwise have been payable to holders of Dissenting Shares) by wire transfer of immediately available funds and (iii) cause the Payment Agent to pay to each Stockholder (other than holders of Dissenting Shares), a cash amount, without interest, equal to such Stockholder’s applicable pro-rata percentage of such amount as set forth on Exhibit F hereof.
(b) Upon receipt of FDA Approval for the treatment of NHL or CLL, Parent shall: (i) within five (5) days of such approval provide the Stockholders’ Representatives with written notice thereof in accordance with Section 11.5 of this Agreement, (ii) on or before ten (10) days following the occurrence of such approval deposit with the Payment Agent, for the benefit of the Stockholders (other than holders of Dissenting Shares), an aggregate amount of twenty-five million dollars ($25,000,000) (less any amount thereof, if any, which would otherwise have been payable to holders of Dissenting Shares) by wire transfer of immediately available funds and (iii) cause the Payment Agent to pay to each Stockholder (other than holders of Dissenting Shares), a cash amount, without interest, equal to such Stockholder’s applicable pro-rata percentage of such amount as set forth on Exhibit F hereof.
(c) For the purposes of this Section 2.2,
(i) any distributions made by Parent pursuant to Sections 2.2(a) and (b) shall hereinafter sometimes be referred to individually as an “ Earn Out Payment “ and collectively as the “ Earn Out Payments ”; and
(ii) the occurrence of any of the events described in Sections 2.2(a) and (b) that require payment shall hereinafter sometimes be referred to individually as an “ Earn Out Event “ and collectively as the “ Earn Out Events ”.
(d) Off-Set Rights . Notwithstanding anything to the contrary contained herein, Parent’s obligation to pay the Earn Out Payments herein shall be subject to the Surviving Corporation’s and Parent’s right to off-set against amounts to which the Surviving Corporation and Parent may be entitled to from time to time as indemnity payments pursuant to Article VII hereof.
(e) Operations of the Business . Except as to obligations related to the continued development of Treanda set forth below in this Section 2.2(e), the Parties understand and agree that Parent shall have complete discretion with respect to all decisions related to the research, development, manufacture, marketing, pricing and distribution of the compounds, product candidates and business of the Surviving Corporation and Parent. Following the Effective Time, Parent agrees to use, or to cause the Surviving Corporation to use, Commercially Reasonable Efforts to seek FDA Approval for the treatment of NHL or CLL. Parent agrees to devote, or cause Surviving Corporation to devote, Commercially Reasonable Efforts to conduct at least one Phase III clinical trial of Treanda in NHL in a timely manner following the Effective Time.
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(f) Change of Control of Parent . Notwithstanding anything to the contrary contained herein, if, following a Change of Control (as defined below) of Parent, the business strategy of Parent or any successor to Parent or any subsidiary thereof including the Surviving Corporation (collectively, a “ Successor Entity “) changes such that the Successor Entity fails to use Commercially Reasonable Efforts to (i) file an NDA for approval of Treanda for the treatment of NHL or CLL and/or (ii) obtain FDA Approval for the treatment of NHL or CLL (each a “ Trigger Event “), then the Earn Out Payments, to the extent not already paid in accordance with this Section 2.2, shall become immediately due and payable and Parent shall: (i) provide the Stockholders’ Representatives with written notice in accordance with Section 11.5 of this Agreement of such Trigger Event no later than five (5) days following the occurrence of such Trigger Event, (ii) deposit with the Payment Agent, for the benefit of the Stockholders (other than holders of Dissenting Shares) the aggregate amount of such Earn Out Payments by wire transfer of immediately available funds no later than ten (10) days following the occurrence of such Trigger Event and (iii) cause the Payment Agent, immediately following the deposit of the funds in accordance with subsection (ii) above, to pay to each Stockholder (other than holders of Dissenting Shares), a cash amount, without interest, equal to such Stockholder’s applicable pro-rata percentage of such amount as set forth on Exhibit F hereof. “ Change of Control “ as used in this Section 2.2(f) shall mean a transaction which results in (a) the voting securities of Parent immediately prior to such transaction ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such transaction; (b) any third party (other than a trustee or other fiduciary holding securities under an employee benefit plan) becoming the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of Parent; or (c) a sale or other disposition to a Third Party of all or substantially all of the assets or business of Parent.
(g) By approving this Agreement, the Stockholders understand and agree that following the Effective Time: (i) except as set forth in Sections 2.2(e) and 5.13, Parent will not have any obligation or liability relating to any business plan of the Company or be legally bound by any such plan; (ii) Parent shall have no obligation to consult with or discuss the business of the Surviving Corporation and Parent with the Stockholders (provided Parent shall have the obligation to provide information to the Stockholders’ Representatives in accordance with Section 2.5(c)); (iii) Parent shall have no obligation to retain any employees of the Company; (iv) the Stockholders shall have no claim against Parent or the Surviving Corporation in connection with the Earn Out Payments, if any, except pursuant to this Section 2.2, and (v) subject to Parent/Surviving Corporation’s obligations under this Section 2.2, the Earn Out Payments, if any, are contingent on the occurrence of the Earn Out Events and there is no guarantee such events will occur. Parent makes no representation and expresses no opinion as to the value of this Section 2.2 to the Stockholders.
Section 2.3. Deposits of Funds at Closing . On or before the Closing Date, Parent shall deposit with the Payment Agent the Acquisition Price payable to the Stockholders set forth on Exhibit F minus $250,000 to be deposited with an escrow agent for the purpose of paying the expenses, if any, incurred by the Stockholders’ Representatives in connection with this Agreement (the “ Stockholders’ Representatives Escrow Fund “). The Stockholders’
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Representatives Escrow Fund will be withheld on a pro-rata basis from the holders of Company Capital Stock set forth on Exhibit F hereof based on such holder’s applicable percentage of the Acquisition Price and deposited into the Stockholders’ Representatives Escrow Fund to be held under the terms of an escrow agreement to be entered into by and between the Stockholders’ Representatives and an escrow agent identified by the Company. Promptly following the earlier of (a) June 30, 2008 or (b) one (1) year following the occurrence of the Earn Out Event set forth in Section 2.2(a), the Stockholders’ Representatives shall cause any amount remaining in the Stockholders’ Representatives Escrow Fund and not otherwise allocable to any outstanding expenses incurred by the Stockholders’ Representatives during the Indemnity Period to be deposited with the Payment Agent and shall cause the Payment Agent to pay to each holder of Company Capital Stock (other than holders of Dissenting Shares), a cash amount, without interest, equal to such holder’s applicable pro-rata percentage of such remaining amount, based on the percentages set forth in Exhibit F .
Section 2.4. Payment for Certificates, Options and Warrants .
(a) Payment Procedures . As soon as reasonably practicable (and in any event not later than five (5) business days) after the Effective Time, the Surviving Corporation shall cause to be mailed to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Capital Stock (the “ Certificates “) whose shares are converted in accordance with Section 2.1(c) into the right to receive the applicable Merger Price plus Earn Out Payments, if any, to be paid to such holder in accordance with Section 2.2 of this Agreement, to each holder of record of an agreement representing outstanding Options for which a Cash Option Payment is to be made in accordance with Section 2.1(e) (the “ Option Agreements “) plus Earn Out Payments, if any, to be paid to such holder in accordance with Section 2.2 of this Agreement, and to each holder of record of a Warrant for which a Cash Warrant Payment is to be made in accordance with Section 2.1(f) plus Earn Out Payments, if any, to be paid to such holder in accordance with Section 2.2 of this Agreement, (i) a letter of transmittal in substantially the form set forth on Exhibit G and (ii) customary instructions for use in effecting the surrender of the Certificates, Option Agreements or Warrant, as the case may be, in exchange for the portions of the Merger Price deposited with the Payment Agent plus the right to receive Earn Out Payments in accordance with Section 2.2 of this Agreement. Upon surrender of a Certificate, Option Agreement, or Warrant to the Payment Agent, together with such letter of transmittal, duly executed and completed in accordance with its terms, the holder of such Certificate, Option Agreement or Warrant shall be entitled to receive in exchange therefor a check representing, (i) in the case of a Certificate, such portion, if any, of the aggregate Merger Price per share of Company Capital Stock represented thereby which such holder has the right to receive in accordance with the provisions of Section 2.1(c) and in an amount with respect to such holder as set forth on Exhibit F plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement, and the Certificate so surrendered shall forthwith be cancelled, (ii) in the case of an Option Agreement, such portion of the Cash Option Payment represented thereby which such holder has the right to receive in accordance with Section 2.1(e) plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement, and (iii) in the case of a Warrant, such portion of
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the Cash Warrant Payment represented thereby which such holder has the right to receive in accordance with Section 2.1(f) plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement. If any Merger Price is to be remitted to a person whose name is other than that in which the Certificate for shares of Company Capital Stock surrendered for exchange is registered, it shall be a condition of such exchange that the Certificate so surrendered shall be properly endorsed, with signature guaranteed, or otherwise in proper form for transfer, and that the person requesting such exchange shall have paid any transfer and/or other taxes required by reason of the remittance of Merger Price to a person whose name is other than that of the registered holder of the Certificate surrendered, or the person requesting such exchange shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Except as otherwise provided in this Agreement, in no event shall the holder of any Certificate, Option Agreement or Warrant be entitled to receive interest on any funds to be received in the Merger. Until surrendered as contemplated by this Section 2.4(a), each Certificate (other than Certificates representing Dissenting Shares) shall be deemed at all times after the Effective Time to represent only the right to receive the Merger Price plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement, each Warrant shall be deemed at all times after the Effective Time to represent only the right to receive the Cash Warrant Payment plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement, and each Option Agreement shall be deemed at all times after the Effective Time to represent only the right to receive the Cash Option Payment plus the right to receive Earn Out Payments, if any, in accordance with Section 2.2 of this Agreement.
(b) No Further Ownership Rights in Company Capital Stock . From and after the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Capital Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.
(c) Termination of Exchange Fund . Any portion of the Acquisition Price deposited by Parent with the Payment Agent which remains undistributed to the Stockholders for six (6) months after the Effective Time as well as any portion of an Earn Out Payment deposited by Parent with the Payment Agent in accordance with Section 2.2 of this Agreement which remains undistributed to the Stockholders for six (6) months after the occurrence of an applicable Earn Out Event shall be delivered to Parent, upon demand, and any Stockholders who have not theretofore complied with this Article II shall thereafter look only to Parent (subject to abandoned property, escheat and other similar laws) as general creditors for payment of their claim for the applicable Merger Price or Earn Out Payment, if any, to be received in accordance with Section 2.2. Neither Parent nor the Surviving Corporation shall be liable to any Stockholder for cash representing any portion of the Acquisition Price or any portion of an Earn Out Payment delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.
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Section 2.5. Stockholders’ Representatives .
(a) The Stockholders, by adopting this Agreement and the transactions contemplated hereby, irrevocably appoint the Stockholders’ Representatives as their agents for purposes of (i) the determination of the occurrence of an Earn Out Event pursuant to Section 2.2, (ii) the resolution of any disputes related to the occurrence of an Earn Out Event, (iii) the resolution of any disputes for which Parent may seek indemnification or offset pursuant to Article VII, (iv) the enforcement of any rights the Holders may have against Parent or the Surviving Corporation under this Agreement and (v) amendments to this Agreement pursuant to Section 11.6. Each of David S. Kabakoff, Arnold L. Oronsky and Paul Klingenstein hereby accepts his appointment as a Stockholders’ Representative. Parent shall be entitled to deal exclusively with the Stockholders’ Representatives on all matters relating to (A) the determination of the occurrence of an Earn Out Event pursuant to Section 2.2, (B) the resolution of any disputes related to the occurrence of an Earn Out Event, (C) the resolution of any disputes for which Parent may seek indemnification or offset pursuant to Article VII, and (D) the enforcement of any rights the Stockholders may have against Parent or the Surviving Corporation under this Agreement, and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Stockholder by the Stockholders’ Representatives, and on any other action taken or purported to be taken on behalf of any Stockholder by the Stockholders’ Representatives, as fully binding upon such Stockholder. The Stockholders’ Representatives shall not be responsible for any act done or omitted thereunder as the Stockholders’ Representatives while acting in good faith and without gross negligence or willful misconduct. The Stockholders shall jointly and severally indemnify the Stockholders’ Representatives and hold the Stockholders’ Representatives harmless against any loss, liability or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Stockholders’ Representatives and arising out of or in connection with the acceptance or administration of the Stockholders’ Representatives’ duties hereunder, including the reasonable fees and expenses of any legal counsel or other professional retained by the Stockholders’ Representatives, in connection with the acceptance and administration of the Stockholders’ Representatives’ duties hereunder.
(b) If one of the Stockholders’ Representatives shall die, become disabled or otherwise be unable to fulfill his responsibilities as agent of the Stockholders, then the Stockholders holding a majority of the shares of Company Capital Stock as of immediately prior to the Effective Time, shall, within ten (10) calendar days after such death or disability, appoint a successor agent and, promptly thereafter, shall notify Parent of the identity of such successor. Any such successor shall become one of the “Stockholders’ Representative” for purposes of (1) the determination of the occurrence of an Earn Out Event pursuant to Section 2.2, (2) the resolution of any disputes related to the occurrence of an Earn Out Event, (3) the resolution of any disputes for which Parent may seek indemnification or offset pursuant to Article VII, (4) the enforcement of any rights the Stockholders may have against Parent or the Surviving Corporation under this Agreement and (5) amendments to this Agreement pursuant to Section 11.6.
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(c) At the request of the Stockholders’ Representatives, upon reasonable notice and at a reasonable time and location on no more than a semi-annual basis, the Stockholders’ Representatives will be provided a status update with respect to the clinical trials of Treanda and have access to management of Parent to ask questions with respect to Parent’s compliance with the covenants set forth in Section 2.2 above; provided that prior to receiving any status update or having access to management, each such Stockholder’s Representative has entered into a confidentiality agreement substantially in the form set forth in Exhibit I hereof.
(d) In the event that the Stockholders’ Representatives shall dispute the occurrence of an Earn Out Event or a request for indemnification or setoff under Article VII, then the Stockholders’ Representatives shall jointly provide written notice to Parent (the “ Dispute Notice “) specifying the amount disputed and the basis for the dispute, together with supporting documentation reflecting the analysis and justification thereof. Parent and the Stockholders’ Representatives shall thereafter attempt to resolve the dispute set forth in the Dispute Notice in accordance with Section 7.7 of this Agreement.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Acquisition Corp. and to Parent that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as through the Closing Date were substituted for the date of this Agreement throughout this Article III (except for those representations and warranties which address matters only as of a particular date (which shall have been true and correct as of such date)), except as set forth in the disclosure schedule delivered by the Company to Parent on the date hereof and initialed by the Parties (the “ Disclosure Schedule “). Subject to the foregoing, the Company represents and warrants to Acquisition Corp. and Parent as follows:
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to carry on its business as it is now being conducted and to own, use and lease its assets and properties. The Company is duly qualified or licensed as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of its business or the ownership, leasing or operation of its assets and properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) The Company does not own and has not owned, directly or indirectly, any equity or similar interest in or have any other ownership right in any other Person, nor does it have any obligation to purchase any shares of stock, other securities or other form of investment in any other Person.
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(a) As of the date of this Agreement, the total authorized shares of capital stock of the Company consisted solely of (i) 101,200,000 shares of Company Common Stock, of which 6,975,132 shares were issued and outstanding; (ii) 10,100,000 shares of Series A Preferred Stock, of which 10,100,000 shares were issued and outstanding; (iii) 29,255,319 shares of Series B Preferred Stock, of which 29,255,319 shares were issued and outstanding; and (iv) 43,571,430 shares of Series C Preferred Stock, of which 42,857,144 shares were issued and outstanding. As of the date of this Agreement, 403,389 shares of Company Common Stock and no shares of Preferred Stock were held in treasury. No shares of Preferred Stock were issued after the date of this Agreement, and no shares of Company Common Stock were issued after the date of this Agreement, other than pursuant to the conversion of Preferred Stock or the exercise of Options or the Warrants outstanding as of the date of this Agreement. As of the date of this Agreement, 93,757,772 shares of Company Common Stock were reserved for issuance of which (i) 789,020 shares were reserved for issuance upon the exercise of Warrants (714,286 shares of which are issuable upon conversion of the shares of Series C Preferred Stock underlying one of the Warrants) issued pursuant to warrant agreements listed on Section 3.2(a) of the Disclosure Schedule (the “ Warrant Agreements “), (ii) 10,352,900 shares were reserved for issuance upon the exercise of Options under the Company Stock Plan, 7,860,410 shares of which were subject to outstanding Options, and (iii) 82,615,852 shares of Company Common Stock were reserved for issuance upon the conversion of the outstanding shares of Preferred Stock. As of the date of this Agreement, 714,286 shares of Series C Preferred Stock were reserved for issuance upon the exercise of a warrant issued pursuant to a Warrant Agreement which is identified on Section 3.2(a) of the Disclosure Schedule as exercisable into Series C Preferred Stock. At the Effective Time, the Warrants then outstanding, if any, will be exercised for the number of shares of Company Common Stock and Preferred Stock each such Warrant is convertible or exercisable for, in accordance with Section 3.2(a) of the Disclosure Schedule. All the outstanding shares of Company Common Stock and Preferred Stock have been duly authorized and validly issued and are fully paid and nonassessable. No shares of capital stock have been issued by the Company at any time in violation of the preemptive rights of any stockholder of the Company. All shares of capital stock previously issued by the Company were offered, issued and sold in compliance in all material respects with all applicable Federal and state securities laws and regulations. Set forth on Schedule 3.2(a) of the Disclosure Schedule is a true, complete and accurate list of every holder of Company Capital Stock, Options, Warrants and/or any other equity interest or right to receive equity interest of the Company as of the date of this Agreement and the equity interest held by such holder as well as the exercise price or strike price of each Option or Warrant.
(b) Other than as set forth on Section 3.2(a) of the Disclosure Schedule, there are no existing agreements, subscriptions, options, warrants, calls, commitments, trusts (voting or otherwise), or rights of any kind whatsoever between the Company and any Person, and none of the foregoing exist, granting any interest in or the right to purchase or otherwise acquire from the Company or granting to the Company any interest in or the right to purchase or otherwise acquire from any Person, at any time, or upon the occurrence of any stated event, any securities of the Company, whether or not presently issued or outstanding. There are no other outstanding securities of the Company or, to the Company’s Knowledge, any other Person which are convertible into or exchangeable for other securities of the Company. There are no proxies,
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agreements or understandings with respect to the voting of the shares of Company Capital Stock to which the Company is a party or, to the Company’s Knowledge, to which any other Person is a party. The Company shall cause each outstanding Option to become fully vested and exercisable immediately prior to the Effective Time.
Section 3.3. Authority . The Company has full 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, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized and approved by the Company’s Board of Directors, and except for (a) the filing of the Certificate of Merger pursuant to the DGCL and (b) the receipt of the Company Stockholder Approval, no other corporate proceedings on the part of the Company or its stockholders are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by the Company. Assuming the due authorization, execution and delivery of this Agreement by Parent and Acquisition Corp., this Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).
Section 3.4. No Conflicts; Governmental Requirements .
(a) The execution, delivery and performance by the Company of this Agreement and, assuming the receipt of Company Stockholder Approval, the consummation of the Merger do not, and will not, (i) violate or conflict with any provision of the certificate of incorporation or by-laws of the Company, (ii) subject to the governmental filings and other matters referred to in Section 3.4(b), violate any law, rule, regulation, ordinance or applicable constitution or order, writ, injunction, judgment, award, restriction, ruling or decree of any court, arbitrator or federal, state, local or foreign governmental or regulatory entity (or any department, agency, authority or political subdivision thereof) applicable to the Company or the transactions contemplated hereby, or (iii) result in a violation or breach of, conflict with, or constitute a default (or an event which, with the passage of time or the giving of notice, or both, would reasonably be expected to constitute a default) under, or result in or give rise to any right of termination, modification, cancellation or acceleration, or require any consent, approval or notice under, any note, bond, indenture, license, lien, franchise, mortgage, loan or credit agreement, contract, agreement, lease, permit, guaranty or other agreement, instrument or obligation to which the Company is a party or by which any of its assets or properties may be bound, except, in the case of clauses (ii) or (iii) of this Section 3.4(a), for any violation, breach, conflict, default, right or lack of consent, approval or notice that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(b) Except for (i) the filing of a premerger notification report by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “ HSR Act “), (ii) the filing of the Certificate of Merger pursuant to the DGCL, (iii) any other consents, approvals, authorizations, permissions, notices or filings which if not obtained or made would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or materially delay or hinder or render unlawful the consummation of the Merger or the other transactions contemplated by this Agreement or (iv) consents, approvals, authorizations, permissions, notices or filings which have heretofore been obtained or made, as the case may be, by the Company, are in full force and effect and copies of which have been provided to Parent, the execution and delivery of this Agreement by the Company do not, and the performance by the Company of this Agreement will not, require any consent, approval, authorization or permission of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign.
Section 3.5. Regulatory Matters .
(a) The manufacturing, processing, distribution, labeling and storage of clinical trial supplies performed by or, to the Company’s Knowledge, on behalf of the Company are in material compliance with all laws, rules, regulations or orders administered or issued by the FDA and any other Governmental Entity responsible for regulating the pharmaceutical industry as applicable to products in pre-commercial clinical development in accordance with industry standard practices.
(b) To the Company’s Knowledge, all pre-clinical and clinical investigations conducted or sponsored by the Company are being conducted in material compliance with all applicable experimental protocols, laws, rules and regulations, including the applicable Good Laboratory Practice and Good Clinical Practice requirements relating to informed consent and institutional review boards designed to ensure the protection of the rights and welfare of human subjects as set forth in 21 C.F.R. Parts 50, 54, 56, 58 and 312, as well as federal and state laws, rules and regulations restricting the use and disclosure of individually identifiable health information.
(c) The Company has made available to Parent all material information known to it with respect to the safety or efficacy of the Product Candidates. To the Company’s Knowledge, the Company is not in possession of information that would reasonably be expected to lead to the denial by FDA of an application for regulatory approval necessary for the sale (“ Regulatory Approva l“) in the United States of Treanda for use as a single agent for the NHL indication specified in the SPA Resubmission, provided that the development of Treanda for such indication proceeds in adherence to the Treanda Development Plan dated March 15, 2005, as updated in the SPA Resubmisson dated April 29, 2005 and by the Update to IND # 67,554 dated April 11, 2005. To the Company’s Knowledge, the Company is not in possession of information that would reasonably be expected to lead to the denial by FDA of Regulatory Approval in the United States of Treanda for CLL. To the Company’s Knowledge, if the development of SDX-101 for the indication of CLL in the United States proceeds in adherence
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with the SDX-101 development plan dated March 17, 2005, the Company is not in possession of information that would reasonably be expected to lead to the denial by FDA of Regulatory Approval in the United States of SDX-101 for CLL. The Company’s Treanda Development Plan dated March 15, 2005, the Company’s SDX-101 Development Plan dated March 17, 2005, the SPA Re-submission (with respect to a single agent) dated April 29, 2005 and the Update to IND # 67,554 dated April 11, 2005 have been delivered to Parent.
(d) The Company (i) has not received any FDA Form 483, notice of adverse finding, warning letters or other written correspondence or notice from FDA or any other Governmental Entity responsible for regulating the pharmaceutical industry alleging or asserting noncompliance with any applicable laws; (ii) has no Knowledge or reason to believe that the FDA or other such Governmental Entity is considering such action described in subsection (i) above; (iii) has no Knowledge of any actual or threatened prosecution, injunction, seizure, civil fine, suspension, recall or other enforcement action or proceeding by FDA or other Governmental Entity responsible for regulating the pharmaceutical industry alleging that the Company is not currently in compliance with any and all applicable laws, regulations or orders; and (iv) has no Knowledge that any such Governmental Entity is considering such action described in subsection (iii) above; in each of (i) through (iv) above, except for such actions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s Knowledge, none of the Company Workers is or has been the subject of any of the foregoing pending or threatened actions or proceedings.
(e) To the Company’s Knowledge, no data generated by it or on its behalf is the subject of any regulatory or other action, either pending or threatened, by the FDA or other Governmental Entity responsible for regulating the pharmaceutical industry relating to the truthfulness of such data.
(f) To the Company’s Knowledge, it is not the subject, officially or otherwise, of any pending or threatened investigation by the FDA pursuant to its Fraud, Untrue, Material Facts, Bribery, and Illegal Gratuities Final Policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto, or by the Department of Health and Human Services Office of Inspector General (“ OIG “) or United States Department of Justice (“ DOJ “) pursuant to the Federal Anti-Kickback Statute 42 U.S.C. Section 1320a-7(b) and the Civil False Claims Act (31 U.S.C. Section 3729 et seq.) and the regulations promulgated pursuant to such statutes.
(g) To the Company’s Knowledge, neither it nor any of the Company Workers has knowingly committed any act, made any statement, or failed to make any statement, that would reasonably be expected to provide a basis for the FDA to invoke its Fraud, Untrue, Material Facts, Bribery, and Illegal Gratuities Final Policy or that would reasonably be expected to provide a basis for liability under the Federal Anti-Kickback Statute or the Civil False Claims Act and any regulations promulgated thereunder.
(h) Neither the Company nor to the Company’s Knowledge, any of the Company Workers, or any licensees, licensors or assignees of the Company Intellectual Property has received any notice that the FDA or any other Governmental Entity responsible for
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regulating the pharmaceutical industry has initiated, or threatened in writing, or to the Company’s Knowledge, orally to initiate, suspend or terminate any Investigational New Drug Application sponsored by the Company, or to recall, suspend or otherwise restrict the manufacture of any pharmaceutical product of the Company.
(i) To the Company’s Knowledge, all animal studies or other preclinical tests performed in connection with or as the basis for any regulatory approval required for the Product Candidates either (x) have been conducted in accordance, in all material respects, with applicable Good Laboratory Practice requirements contained in 21 CFR Part 58, (y) were pilot safety studies or (z) involved experimental research techniques that are not generally performed by registered GLP testing laboratories and have employed the procedures and controls generally used by qualified experts in animal or preclinical study of products comparable to those being developed by the Company.
(j) To the Company’s Knowledge, there are no proceedings pending with respect to a violation by the Company of the FDCA, FDA regulations adopted thereunder or any other legislation or regulation promulgated by any other Governmental Entity responsible for regulating the pharmaceutical industry, except for such proceedings as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(k) No employee of the Company is in violation of any term of any patent disclosure agreement, or to the Company’s Knowledge, any non-competition agreement or any restrictive covenant (i) in favor of the Company, or (ii) to a former employer relating to the right of any such employee to be employed because of the nature of the business conducted by the Company or to the use of trade secrets or proprietary information of others. To the Company’s Knowledge, as of the date of this Agreement, no key employee or group of employees has any plans to terminate employment with the Company.
Section 3.6. Books and Records . The minute books and other similar records of the Company as made available to Parent and its Representatives prior to the execution of this Agreement contain a true and complete record, in all material respects as of the date of this Agreement, of all actions taken at all meetings and by all written consents in lieu of meetings of the stockholders, the board of directors and all committees of the board of directors of the Company. The stock transfer ledger and other similar records of the Company as made available to Parent prior to the execution of this Agreement contain true and complete records, in all material respects as of the date of this Agreement, of all stock transfers related to the Company’s capital stock. The Company has previously furnished to Parent true, complete and correct copies of the certificate of incorporation and the by-laws of the Company as in effect on the date hereof.
Section 3.7. Financial Statements . The financial statements of the Company for the years ended December 31, 2002, 2003 and 2004 (the “ Audited Financial Statements “) and for the two months ended February 28, 2005 (the “ Interim Financial Statements “ and, together with the Audited Financial Statements, the “ Financial Statements “) included in Section 3.7 of the Company Disclosure Schedule were prepared in accordance with U.S. generally accepted accounting principles (“ GAAP “) applied on a consistent basis during the periods involved and
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fairly present in all material respects the financial position of the Company, as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of the Interim Financial Statements, to normal year-end adjustments and the absence of footnotes). The Financial Statements have been prepared from and are in accordance with the books and records of the Company, and the Company has made available to Parent true and correct copies of the auditor’s report relating to the Audited Financial Statements.
Section 3.8. Absence of Undisclosed Liabilities . Except as reflected on the balance sheet included in the Interim Financial Statements, the Company has not incurred any liability or obligation of any nature (whether direct or indirect, matured or unmatured, or absolute, accrued, contingent or otherwise) other than liabilities or obligations (other than obligations for borrowed money or in respect of capitalized leases) reasonably incurred after February 28, 2005 in the ordinary course of business in an amount in excess of $50,000 individually or $250,000 in the aggregate. All amounts of outstanding indebtedness owed by the Company are repayable at any time without requiring the payment of any premium on the part of the Company or resulting in any penalty to the Company.
Section 3.9. Absence of Certain Changes or Events .
Since January 1, 2005 through the date hereof:
(a) There has not been any split, combination, redemption, subdivision or reclassification of any of the Company’s capital stock or any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or property) in respect of, in lieu of, or in substitution for, shares of the Company’s capital stock;
(b) There has not been any material increase or material modification of the compensation or benefits payable by the Company to any Company Workers or directors;
(c) there has not been any change or any threat of any change in any of the Company’s relations with, or any loss or threat of loss of any of their suppliers except as has not or would not, individually or in the aggregate reasonably be expected to have a Material Adverse Effect, or any alteration in any material respect of the customary practices with respect to the payment of accounts payable of the Company;
(d) the Company has not discharged or satisfied any Liens, or paid or satisfied any of their respective obligations or liabilities, (whether absolute, accrued, contingent or otherwise) other than (i) liabilities shown or reflected on the Interim Balance Sheet, or (ii) liabilities incurred in the ordinary course of business consistent with past practice and which are not in an amount in excess of $50,000 individually or $250,000 in the aggregate;
(e) the Company has not failed to pay or perform, or delayed its payment or performance of, any material obligation in a manner materially inconsistent with its past practice;
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(f) other than as required by GAAP, there has not been any change by the Company of its method of accounting or keeping its books of account or accounting practice, including any change in any assumptions underlying or methods of calculating, any bad debt, contingency, tax or other reserves or any changes in estimates or valuations;
(g) there has not been, by the Company, any disposition of or failure to keep in effect any rights in, to or for the use of any material Company Intellectual Property in North America, the European Union, Japan or Australia, which is or has been used in the ordinary course of business consistent with past practice;
(h) incurred any indebtedness for borrowed money or issued any debt securities or assumed, guaranteed or endorsed, or otherwise as an accommodation become responsible for, the obligations of any Person (absolute, accrued, contingent or otherwise), or made any loans or advances except pursuant to existing lines of credit or other existing credit facilities in the ordinary course of business; and
(i) the Company has not committed to any of the foregoing.
(a) Section 3.10(a) of the Disclosure Schedule contains a true, complete and correct list (designating the relevant owners, lessors and lessees) of all equipment, fixtures and other personal property owned, leased, subleased or managed by the Company which has a net book value or commitment in excess of $10,000. Copies of all personal property leases and bills of sale of the Company relating to the property identified on Section 3.10 of the Disclosure Schedule have been made available to Parent by the Company.
(b) The Company owns outright or has good and marketable fee title to or a valid leasehold or license interest in all of its Leased Real Property, material personal assets and properties (including those reflected as assets on the balance sheet included in the Interim Financial Statements), in each case free and clear of any Lien. The Company has all necessary personal assets, equipment and properties to engage in the business as currently conducted by the Company.
(c) The Company does not hold fee simple title to any real property, and all of the estate, right, title and interest of the Company in any real property is held under the Leases.
(d) Section 3.10 of the Disclosure Schedule sets forth a list of all of the written, or, to the Company’s Knowledge, oral leases, subleases or rights of occupancy pursuant to which the Company leases or subleases any real property or interest therein (collectively, as heretofore modified, amended or extended, the “ Leases “), including the identification of each of the lessors thereof and the street addresses of all of the real estate demised under each of the Leases (collectively, the “ Leased Real Property “). True and correct copies of (i) any leasehold title insurance policies and commitments, surveys, licenses, certificates of occupancy, plans, specifications, and permits pertaining to the Leased Real Estate that are in the possession or
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control of the Company, and (ii) each of the Leases, including all amendments, modifications and extensions thereof, and all subordination, non-disturbance and/or attornment agreements related thereto, have been made available by the Company to Acquisition Corp. and Parent. Each of the Leases is valid, binding, in full force and effect and enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by the effect of general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). The Company has not received any written notice of default under any Lease. Neither the Company, nor to the Company’s Knowledge, any other party to any Lease, is in material default under any Lease and no event has occurred that with the giving of notice, the passage of time or both would constitute such a default.
(e) There are no brokerage commissions or finder’s fees due from the Company (whether now or hereafter due) which are unpaid with regard to any of the Leases or the Leased Real Property.
(f) No real estate is necessary for the conduct of, or is material to, the business of the Company as currently conducted.
Section 3.11. Receivables; Accounts Payable; Clinical Materials .
(a) All receivables of the Company included in the Interim Financial Statements (i) are valid and collectible obligations (net of any reserve for collectability reflected in the Interim Financial Statements), of the respective makers thereof, (ii) were not and are not subject to any material offset or counterclaim, and (iii) have arisen from bona fide transactions by the Company in the ordinary course of their business consistent with past practice. The Company’s receivables are reflected on the balance sheet included in the Interim Financial Statements in accordance with GAAP applied on a basis consistent with past practice. Since the date of the Interim Financial Statements, there have not been any material write-offs as uncollectible of any of the Company’s receivables, except for write-offs in the ordinary course of business and consistent with past practice.
(b) Section 3.11(b) of the Disclosure Schedule sets forth a true and correct list of each account payable of the Company (and the age of such payable), as of the second business day immediately preceding the date of this Agreement.
(c) The clinical trial supply material inventory of the Company of Treanda and SDX-101 as of the date of this Agreement is described in Section 3.11(c) of the Disclosure Schedule. All such clinical trial supply materials are of such quality as to be useable for the clinical trials for Treanda and SDX-101 contemplated as of the date of this Agreement. As of the date of this Agreement, the Company will have sufficient clinical trial supply material inventory assuming quarantined clinical trial supply material is released to conduct a 60-patient clinical trial for Treanda and a 40-patient clinical trial for SDX-101. The Company expects the quarantined material to be released on a timely basis.
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(a) Section 3.12 of the Disclosure Schedule sets forth a true, correct and complete list of the following Contracts to which the Company is a party or is bound or by which the Company is affected:
(i) any Contract (or group of related Contracts) which creates a future obligation on the part of the Company in excess of $50,000;
(ii) any written or, to the Company’s Knowledge, oral waiver or release of the Company’s material rights against a third party since January 1, 2005;
(iii) any written or, to the Company’s Knowledge, oral debt instrument, including any loan agreement, line of credit, promissory note, security agreement or other evidence of indebtedness, where the Company is a lender, borrower or guarantor;
(iv) any Contract restricting the Company or, to the Company’s Knowledge, any of its employees from engaging in any activity or line of business or competing with any Person or limiting the ability of any Person to compete with the Company;
(v) any written or, to the Company’s Knowledge, oral alliance, cooperation, joint venture, partnership or similar agreement;
(vi) any Contract with respect to (A) Company Intellectual Property that grants to a third party any rights to such Company Intellectual Property (B) Company Intellectual Property by which the Company has obtained rights to such Company Intellectual Property or (C) Intellectual Property, other than the Company Intellectual Property, which, pursuant to the terms thereof, requires, or may require, upon the occurrence of certain events, payments by the Company in excess of $50,000;
(vii) (1) any lease or any sublease (where the Company is either a lessor, lessee, sublessee or sublessor), or (2) any contract for the purchase or sale of any real estate or any interest therein (where the Company is either seller or buyer), which requires payment by the Company in excess of $50,000;
(viii) any employment, severance or consulting Contract which will require the payment of amounts by the Company after the date of this Agreement in excess of $50,000 per annum;
(ix) any Contract which, if terminated, would reasonably be expected to result in a Material Adverse Effect;
(x) any Contract pursuant to which the Company is required to, or obtains rights to, undertake the development or commercialization of any pharmaceutical product;
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(xi) any Contract which provides rights to parties other than the Company which are contingent upon a merger, consolidation or other “change-in-control” of the Company; or
(xii) any other Contract that (A) involves the payment or potential payment, pursuant to the terms of any such agreement, by or to the Company of more than $50,000 and (B) cannot be terminated within 60 calendar days after giving notice of termination without resulting in any cost or penalty to the Company equal to at least $50,000 individually or $250,000 in the aggregate.
(b) The Contracts listed in Section 3.12(a) of the Disclosure Schedule are all the material agreements relating to the operation of the currently conducted business of the Company or to the property presently held or used by the Company or to which the Company is a party or to which it or any of its properties and assets is subject or bound. The Company has previously made available true, complete and correct copies of all such agreements (including all amendments) to Parent (or, in the case of oral agreements only, true, complete and correct descriptions thereof have been set forth in Section 3.12(a) of the Disclosure Schedule). Each Contract listed in Section 3.12(a) of the Disclosure Schedule is valid, binding and enforceable in accordance with its terms (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors rights generally and by the effect of general principles of equity, regardless of whether enforcement is considered in a proceeding in equity or at law) and the Company is not or, to the Company’s Knowledge, is not alleged to be, and, to the Company’s Knowledge, no other party to any such agreement is, in default in any material respect under any such Contract and, except as contemplated by this Agreement, after the Merger all of such Contracts will remain in full force and effect, except for agreements which, by their terms (without giving effect to the execution and delivery of this Agreement or the consummation of th | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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