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CONTRIBUTION AGREEMENT

Contribution Agreement

CONTRIBUTION AGREEMENT | Document Parties: TENBY PHARMA INC | Sirion Therapeutics, Inc You are currently viewing:
This Contribution Agreement involves

TENBY PHARMA INC | Sirion Therapeutics, Inc

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Title: CONTRIBUTION AGREEMENT
Governing Law: Delaware     Date: 9/18/2006
Law Firm: Feldman Weinstein & Smith LLP,Hill, Ward & Henderson, P.A.,Paul, Hastings, Janofsky & Walker LLP.    

CONTRIBUTION AGREEMENT, Parties: tenby pharma inc , sirion therapeutics  inc
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Exhibit 10.9

CONTRIBUTION AGREEMENT

      This Contribution Agreement (this “Agreement” ) is made and entered into as of September 13, 2006, by and among Tenby Pharma Inc. , a Delaware corporation ( “Pubco” ), Sirion Therapeutics, Inc. , a North Carolina corporation (the “Company” ), and each of the shareholders of the Company listed on Schedule A attached hereto (each, a “Contributor” and collectively, the “Contributors” ). Certain capitalized terms used in this Agreement are defined in Exhibit A attached hereto and incorporated herein by reference.

RECITALS

      Whereas, the parties desire to set forth the terms and conditions pursuant to which: (i) each of the Contributors holding shares of Company Common Stock shall contribute all of its shares of Company Common Stock to Pubco in exchange for shares of Pubco Common Stock; and (ii) each of the Contributors holding shares of Company Series A Preferred Stock or Company Series A-1 Preferred Stock shall contribute all of its shares of Company Series A Preferred Stock and/or Company Series A-1 Preferred Stock to Pubco in exchange for shares of Pubco Series A Preferred Stock (the contributions referred to in clauses (i) and (ii) being collectively referred to herein as the “Contribution” );

      Whereas, immediately following the execution and delivery of this Agreement by the parties hereto, Pubco is entering into that certain Series A Preferred Stock Purchase Agreement (the “Purchase Agreement” ) with the investors listed on the signature pages thereto (collectively, the “Purchasers” ), pursuant to which the Purchasers will purchase from Pubco shares of Pubco Series A Preferred Stock (the “Stock Purchase” ); and

      Whereas, insofar as the Contribution and the Stock Purchase (collectively, the “Transfers” ) are being made pursuant to a single plan in exchange for shares of Pubco Common Stock and Pubco Series A Preferred Stock that will collectively represent at least 80% of the total combined voting power of all classes of Pubco voting stock and at least 80% of the total number of shares of all other classes of Pubco capital stock, it is intended that the Transfers qualify and are treated as a tax-free transfer under Section 351 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “Code” ).

      Now, Therefore, in consideration of the foregoing and the respective covenants, agreements and representations and warranties set forth herein, the parties to this Agreement, intending to be legally bound, hereby agree as follows:

AGREEMENT

1.

 

Description of Contribution.

      1.1 Contribution. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined below): (i) each of the Contributors holding shares of Company Common Stock shall contribute all of its shares of Company Common Stock to Pubco in exchange for that number of shares of Pubco Common Stock as is set forth in Section 1.3 ; and (ii) each of the Contributors holding shares of Company Series A Preferred Stock or Company Series A-1 Preferred Stock shall contribute all of its shares of Company

 


 

Series A Preferred Stock or Company Series A-1 Preferred Stock, as applicable, to Pubco in exchange for that number of shares of Pubco Series A Preferred Stock as is set forth in Section 1.3 .

      1.2 Closing; Effective Time. The consummation of the Contribution (the “Closing” ) shall take place at the offices of Pubco at 10:00 a.m. Eastern Time (the “Effective Time” ) on the date of this Agreement (the “Closing Date” ).

      1.3 Contribution Consideration. The following consideration shall be payable to the Contributors as a result of the Contribution: (i) 3,327,833 shares of Pubco Common Stock (the “Aggregate Common Stock Consideration” ); and (ii) 1,672,036 shares of Pubco Series A Preferred Stock (the “ Aggregate Preferred Stock Consideration ” and, together with the Aggregate Common Stock Consideration, the “Aggregate Contribution Consideration” ). Such Aggregate Contribution Consideration shall be payable to the Contributors as follows:

          (a) Each share of Company Series A Preferred Stock held by a Contributor as of immediately prior to the Effective Time shall entitle such Contributor to receive, in accordance with Section 1.4 , 13.7925 shares of Pubco Series A Preferred Stock (the “Series A Per Share Contribution Consideration” ).

          (b) Each share of Company Series A-1 Preferred Stock held by a Contributor as of immediately prior to the Effective Time shall entitle such Contributor to receive, in accordance with Section 1.4 , 12.50 shares of Pubco Series A Preferred Stock (the “Series A-1 Per Share Contribution Consideration” ).

          (c) Each share of Company Common Stock held by a Contributor as of immediately prior to the Effective Time shall entitle such Contributor to receive, in accordance with Section 1.4 , 12.50 shares of Pubco Common Stock (the “Common Stock Per Share Contribution Consideration” ).

1.4 Delivery of Contribution Consideration.

          (a) At the Closing: (i) the Contributors will provide to Pubco (1) completed and executed letters of transmittal in customary form for use in effecting the surrender of all Contributed Interests in exchange for the Applicable Per Share Contribution Consideration, and (2) all certificates representing the Contributed Interests held by such Contributors; and (ii) Pubco will provide to each Contributor (A) a Pubco stock certificate representing that number of shares of Pubco Series A Preferred Stock representing such Contributor’s portion of the Aggregate Preferred Stock Consideration (as determined in accordance with Section 1.3 ), and (B) a Pubco stock certificate representing that number of shares of Pubco Common Stock representing such holder’s portion of the Aggregate Common Stock Consideration (as determined in accordance with Section 1.3 ). In lieu of any fractional shares of Pubco Common Stock or Pubco Series A Preferred Stock that any Contributor would otherwise be entitled to receive, such Contributor shall be paid cash in an amount equal to the product of (1) the number of fractional shares of Pubco Common Stock or Pubco Series A Preferred Stock, as applicable, which such Contributor would otherwise be entitled to receive, multiplied by (2) $8.00.

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          (b) Pubco shall be entitled to deduct and withhold from the Applicable Per Share Contribution Consideration payable or otherwise deliverable to any Contributor pursuant to this Agreement such amounts as Pubco is required to deduct or withhold therefrom under the Code or under any provision of state, local or foreign tax law. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Contributor to whom such amounts would otherwise have been paid.

      1.5 Tax Consequences. For federal income tax purposes, the Transfers are intended to constitute a tax-free transfer of property to Pubco within the meaning of Section 351 of the Code, and the parties shall report the transactions contemplated by the Transaction Documents consistent with such intent and shall take no position in any Tax filing or Legal Proceeding inconsistent therewith. None of Pubco, the Contributors or the Company has taken or failed to take, and after the Effective Time, Pubco and the Contributors shall not take or fail to take, any action which reasonably could be expected to cause the Transfers to fail to qualify as a tax-free transfer of property to Pubco within the meaning of Section 351 of the Code.

      1.6 Further Action. If, at any time after the Closing Date, any further action is determined by Pubco to be necessary or desirable to carry out the transactions contemplated by the Transaction Documents or to vest Pubco with full right, title and possession of and to all Contributed Interests, the officers and directors of Pubco shall be fully authorized (in the name of the Company, the Contributors or otherwise) to take such action.

2. Representations and Warranties of the Company. Except as set forth on the Company Disclosure Schedule, the Company hereby represents and warrants, as of the date hereof, to and for the benefit of Pubco, as follows:

      2.1 Due Organization; Subsidiaries; Etc. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina and as a foreign corporation qualified to do business in the State of Florida, and has all necessary power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all Company Contracts to which it is a party. The Company, together with its predecessors, has not conducted any business under or otherwise used, for any purpose or in any jurisdiction, any fictitious name, assumed name, trade name or other name, other than the names “Sirion Therapeutics, Inc.” and, prior to the consummation of the Sirion/Sytera Merger, “Sytera, Inc.” The Company is not and has not been required to be qualified, authorized, registered or licensed to do business as a foreign corporation in any jurisdiction other than Florida and California. Other than RxDR, the Company has no Subsidiaries, does not own any controlling interest in any Entity and has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect equity or other financial interest in, any Entity. RxDR is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida and has all necessary power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all Company Contracts to which it is a party. The Company directly owns all of the issued and outstanding membership interests of RxDR free and clear of any liens and all of such membership interests are validly issued and free of preemptive and similar rights. The Company has not agreed and is not obligated to make any

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future investment in or capital contribution to any Entity. Neither the Company nor any of the stockholders of the Company has ever approved, or commenced any Legal Proceeding or made any election contemplating, the dissolution or liquidation of the Company’s business or affairs.

      2.2 Certificate of Incorporation and Bylaws; Records. The Company has delivered to Pubco accurate and complete (through the date hereof) copies of: (i) the certificate of incorporation and bylaws, including all amendments thereto, of the Company; (ii) the certificate of formation and limited liability company operating agreement, or similar organizational documents, of RxDR; (iii) the stock records of the Company; and (iv) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the holders of Company Securities, the board of directors of the Company and all committees of the board of directors of the Company (the items described in the foregoing clauses “(i)”, “(ii)”, “(iii)” and “(iv)” of this Section 2.2 being collectively referred to herein as the “Company Documents” ). There have been no formal meetings held of, or corporate actions taken by, the stockholders of the Company, the board of directors of the Company or any committee of the board of directors of the Company, or the members of RxDR, the board of managers of RxDR or any committee of the board of managers of RxDR, that are not fully reflected in the Company Documents. There has not been any violation of any of the Company Documents, and at no time has the Company or RxDR taken any action that is inconsistent in any material respect with the Company Documents. The books of account, equity records, minute books and other records of the Company and RxDR are accurate, up-to-date and complete in all material respects, and have been maintained in accordance with Legal Requirements and prudent business practices.

      2.3 Capitalization, Etc.

          (a) The authorized capital stock of the Company consists of: (i) 600,000 shares of Company Common Stock, of which 266,227 shares have been issued and are outstanding; (ii) 30,600 shares of Company Series A Preferred Stock, of which 30,599 have been issued and are outstanding; and (iii) 100,000 shares of Company Series A-1 Preferred Stock, all of which have been issued and are outstanding. All of the outstanding shares of the Company capital stock have been duly authorized and validly issued and are fully paid and nonassessable. All of the outstanding shares of capital stock of the Company and all of the outstanding subscriptions, options, calls, warrants or rights (whether or not currently exercisable) to acquire any shares of capital stock or other securities of the Company have been issued in compliance with all applicable federal and state securities laws and other applicable Legal Requirements and all requirements set forth in the Company Documents and Company Contracts. No shares of capital stock of the Company are subject to a repurchase option in favor of the Company, and the Company has never repurchased, redeemed or otherwise reacquired any shares of the Company capital stock or other securities of the Company. Collectively, the Contributed Interests to be transferred by the Contributors to Pubco in connection with the Contribution represent 100% of the shares of outstanding capital stock of the Company.

          (b) Except as set forth on Schedule 2.3(b) of the Company Disclosure Schedule, there are no: (i) outstanding subscriptions, options, calls, warrants or rights (whether or not currently exercisable) to acquire any shares of capital stock of the Company or other securities of the Company; (ii) outstanding securities, notes, instruments or obligations that are or may become convertible into or exchangeable for any shares of capital stock of the Company

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or other securities of the Company; (iii) outstanding or authorized stock appreciation, phantom stock or similar rights with respect to the capital stock of the Company; (iv) Contracts (other than this Agreement) under which the Company is or may become obligated to sell, transfer, exchange or issue any shares of capital stock of the Company or any other securities of the Company; (v) agreements, voting trusts, proxies or understandings with respect to the voting, or registration under the Securities Act, or any shares of the Company; or (vi) conditions or circumstances that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of the Company Securities or any shares of the capital stock or other securities of the Company.

          (c) Schedule 2.3(c) of the Company Disclosure Schedule sets forth a complete and accurate list of all of the stock option plans and other stock or equity-related plans of the Company.

      2.4 Company Financial Statements. The Company has furnished to Pubco a complete and correct copy of the Company’s: (i) unaudited balance sheet dated as of December 31, 2004 and the related statements of operations, shareholders’ equity, and cash flows for the twelve (12) months then ended; (ii) unaudited balance sheet dated as of December 31, 2005 and the related statements of operations, shareholders’ equity, and cash flows for the twelve (12) months then ended; and (iii) unaudited balance sheet dated as of June 30, 2006 and the related statements of operations, shareholders’ equity, and cash flows for the six (6) months then ended (collectively, the “Company Financial Statements” ). The Company Financial Statements are complete and correct, are consistent with the books and records of the Company and present fairly the assets, liabilities, financial condition and results of operations of the Company, as at the dates and for the periods indicated, have been prepared in accordance with GAAP, and have been prepared in good faith by the Company’s management from the books and records of the Company. The books and records of the Company are true, accurate and complete in all material respects.

      2.5 Equipment; Leasehold. Schedule 2.5 of the Company Disclosure Schedule sets forth a true and complete list of all inventory, machinery, equipment, furniture, office equipment, supplies, materials, vehicles and other material items of tangible personal property of every kind owned by the Company and RxDR and used in connection with their respective businesses (the Company Personal Property” ). All of the Company Personal Property and other tangible assets owned by or leased to the Company or RxDR are in good condition and repair (ordinary wear and tear excepted) and are adequate for the conduct of the Company’s or RxDR’s business in the manner in which such business is currently being conducted. Neither the Company nor RxDR owns any real property or any interest in real property, except for the leasehold interest created under the real property leases identified in Schedule 2.5 of the Company Disclosure Schedule (the “Company Leased Real Property” ).

      2.6 Intellectual Property.

          (a) Schedule 2.6(a) of the Company Disclosure Schedule accurately identifies: (i) each item of Registered IP in which the Company or RxDR has or purports to have an ownership interest of any nature (whether exclusively, jointly with another Person, or otherwise); (ii) the jurisdiction in which such item of Registered IP has been registered or filed and the applicable registration or serial number; and (iii) any other Person that has an ownership

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interest in such item of Registered IP and the nature of such ownership interest. The Company has provided to Pubco complete and accurate copies of all applications and correspondence with any Governmental Body related to each such item of Registered IP.

          (b) Schedule 2.6(b) of the Company Disclosure Schedule accurately identifies: (i) all Intellectual Property Rights or Intellectual Property licensed to the Company or RxDR (other than any non-customized software that is so licensed solely in executable or object code form pursuant to a non-exclusive, internal-use software license or is generally publicly available on standard terms for less than $1,000); and (ii) the corresponding Contract or Contracts pursuant to which such Intellectual Property Rights or Intellectual Property is or are licensed to the Company. Neither the Contribution nor any of the other transactions contemplated by the Transaction Documents will materially adversely alter or impair the Company’s Intellectual Property Rights or the Intellectual Property licensed to the Company or RxDR.

          (c) Schedule 2.6(c) of the Company Disclosure Schedule accurately identifies each Contract pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any of the Company IP. Neither the Company nor RxDR is bound by, and no Company IP is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of the Company or RxDR to use, exploit, assert, or enforce any Company IP anywhere in the world.

          (d) The Company or RxDR, as applicable, exclusively owns all right, title, and interest to and in the Company IP, free and clear of any Encumbrances. Without limiting the generality of the foregoing:

                (i)  All documents and instruments necessary to perfect the rights of the Company or RxDR, as applicable, in the Registered IP have been validly executed, delivered and filed in a timely manner with the appropriate Governmental Body;

                (ii)  Each Person who is or was an employee or contractor of the Company or RxDR and who is or was involved in the creation or development of any Company IP has signed a valid, enforceable written agreement containing an assignment of Intellectual Property Rights to the Company or RxDR, as applicable, and confidentiality provisions in favor of the Company or RxDR, as applicable, regarding the Company IP. No current or former Representative or Affiliate of the Company or RxDR has any claim, right (whether or not currently exercisable) or interest to or in any Company IP;

                (iii)  With respect to Company IP in the form of licenses of third party Intellectual Property and Intellectual Property Rights, no funding, facilities or personnel of any Governmental Body within the jurisdictions covered by the license were used, directly or indirectly, to develop or create, in whole or in part, such Company IP. With respect to all other Company IP, no funding, facilities or personnel of any Governmental Body were used, directly or indirectly, to develop or create, in whole or in part, such Company IP;

                (iv)  Each of the Company and RxDR has taken all reasonable steps to maintain the confidentiality of and otherwise protect and enforce its rights in all proprietary

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information that the Company or RxDR, as applicable, holds, or purports to hold, as a trade secret;

                (v)  Neither the Company nor RxDR has assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, any Company IP to any other Person; and

                (vi)  Neither the Company nor RxDR is, or has ever been, a member or promoter of, or a contributor to, any industry standards body or similar organization that could require or obligate the Company or RxDR, as applicable, to grant or offer to any other Person any license or right to any Company IP.

          (e) (i) With respect to Company IP in the form of licenses from third parties of Intellectual Property and Intellectual Property Rights: (A) each item of Company IP that is Registered IP is in compliance with all Legal Requirements and is valid and in full force and effect; and (B) no application for any type of Registered IP filed by or on behalf of the Company or RxDR has been abandoned, allowed to lapse or rejected; and

               (ii) With respect to all other Company IP, each item of Company IP that is Registered IP is and at all times has been maintained in compliance with all Legal Requirements and all filings, payments and other actions required to be made or taken to maintain such item of Registered IP in full force and effect have been made by the applicable deadline; and each such item of Registered IP is valid and in full force and effect. No application for any type of Registered IP filed by or on behalf of the Company or RxDR has been abandoned, allowed to lapse or rejected. No item of Company IP that is Registered IP is subject to any maintenance fees or Taxes or actions falling due within ninety (90) days after the Closing Date.

          (f) To the Company’s Knowledge, no Person has infringed, misappropriated or otherwise violated or is currently infringing, misappropriating or otherwise violating any Company IP.

          (g) To the Company’s Knowledge, none of the Company IP owned or licensed by the Company or RxDR currently infringes, misappropriates or otherwise violates or has ever infringed (directly, contributorily, by inducement or otherwise), misappropriated or otherwise violated any Intellectual Property Right of any other Person. Without limiting the generality of the foregoing:

                (i)  To the Company’s Knowledge, no infringement, misappropriation or similar claim or Legal Proceeding is pending or has been threatened against the Company or RxDR; and

                (ii)  Except as set forth on Schedule 2.6(g)(ii), neither the Company nor RxDR is bound by any Contract to indemnify, defend, hold harmless or reimburse any other Person with respect to any Intellectual Property infringement, misappropriation or any similar claim. Neither the Company nor RxDR has ever assumed, or agreed to discharge or otherwise take responsibility for, any existing or potential liability of another Person for the infringement, misappropriation or violation of any Intellectual Property Right.

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      2.7 Contracts. Schedule 2.7 of the Company Disclosure Schedule identifies each Company Contract and provides an accurate description of the terms of each Company Contract that is not in written form. The Company has delivered to Pubco accurate and complete copies of all written Company Contracts. Each Company Contract is valid, binding and enforceable by the Company in accordance with its terms subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies. Neither the Company nor RxDR has violated or breached, or committed any default under, any Company Contract, and, to the Company’s Knowledge, no other Person has violated or breached, or committed any default under, any Company Contract. Schedule 2.7 of the Company Disclosure Schedule provides an accurate and complete list of all Consents required under any Company Contract to consummate the transactions contemplated by the Transaction Documents.

      2.8 Finder’s Fee. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Contribution or any of the other transactions contemplated by the Transaction Documents based upon any arrangements or agreements made by or on behalf of the Company.

      2.9 Compliance with Legal Requirements. Each of the Company and RxDR is, and has at all times been, in compliance with all applicable material Legal Requirements. To the Company’s Knowledge, each of the Company and RxDR is, and has at all times been, in compliance with all other applicable Legal Requirements. Neither the Company nor RxDR has ever received any notice or other communication from any Person regarding any actual or possible violation of, or failure to comply with, any Legal Requirement. Each of the Company and RxDR has obtained all material permits, certificates and licenses required by any Legal Requirement for the conduct of its business and the ownership of its assets. Neither the Company nor RxDR is in violation of any such permit, certificate or license, and no Legal Proceedings are pending or, to the Knowledge of the Company, threatened to revoke or limit any such permit, certificate or license.

      2.10 Legal Proceedings. There is no pending Legal Proceeding, and to the Company’s Knowledge, no Person has threatened to commence any Legal Proceeding, that (i) involves or affects the Company or RxDR or any of the assets owned or used by the Company or RxDR, or (ii) that challenges the Contribution or any of the other transactions contemplated by the Transaction Documents. No Legal Proceeding has ever been commenced that involves or affects the Company or RxDR or the assets owned by the Company or RxDR. There is no Order in which the Company or RxDR is named or to which any of the assets of the Company or RxDR is subject.

      2.11 No Undisclosed Liabilities. Neither the Company nor RxDR has any Liabilities, except for (i) Liabilities reflected on the Company Financial Statements, (ii) accounts payable incurred in the ordinary course of business since the date of the last balance sheet reflected in the Company Financial Statements, none of which are material in nature or exceed $25,000, (iii) Liabilities under the Company Contracts, and (iv) Liabilities incurred in connection with the negotiation of the Transaction Documents and the transactions contemplated thereby.

      2.12 Tax Matters. All Tax Returns required to be filed by or on behalf of the Company or RxDR with any Governmental Body before the Closing Date (the “Company

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Returns” ): (i) have been or will be filed on or before the applicable due date (including any extensions of such due date); (ii) have been, or will be when filed, accurately and completely prepared in all material respects in compliance with all applicable Legal Requirements; and (iii) have been provided or made available to Pubco. All Taxes owed by the Company or RxDR have been paid when due, whether or not such amounts are shown on any Company Returns. The Company Financial Statements fully accrue all actual and contingent Liabilities for unpaid Taxes with respect to all periods through the date thereof and each of the Company and RxDR has made adequate provision for unpaid Taxes after that date in its books and records. No Company Return has ever been examined or audited by any Governmental Body. No claim or Legal Proceeding is pending or has been threatened against or with respect to the Company or RxDR in respect of any Tax. There are no unsatisfied Liabilities for Taxes, including Liabilities for interest, additions to tax and penalties thereon and related expenses, with respect to which any notice of deficiency or similar document has been received by the Company or RxDR (other than Liabilities for Taxes asserted under any such notice of deficiency or similar document which are being contested in good faith by the Company or RxDR, as applicable, and with respect to which adequate reserves for payment have been established). There are no liens for Taxes upon any of the assets of the Company or RxDR except liens for current Taxes not yet due and payable.

      2.13 Employee and Labor Matters.

          (a) Schedule 2.13(a) of the Company Disclosure Schedule contains a list of all of the employees of the Company and RxDR as of the date of this Agreement and correctly reflects, in all material respects, the nature and amount of all compensation payable to them, their dates of employment and their positions. All of the employees listed on Schedule 2.13(a) of the Company Disclosure Schedule are “at will” employees. Each of the Company and RxDR has at all times complied with all material Legal Requirements related to the employment of its employees. Except as set forth on Schedule 2.13 , each of the Company and RxDR has compensated all individuals for, or otherwise cancelled or satisfied all of its obligations with respect to, all accrued vacation, deferred compensation and other similar benefits. Since January 1, 2006, neither the Company nor RxDR has increased the salary or benefits level of any of its employees.

          (b) Except as set forth on Schedule 2.13(b) of the Company Disclosure Schedule, there are no Plans, as defined below, contributed to, maintained or sponsored by the Company or RxDR, to which the Company or RxDR is obligated to contribute or with respect to which the Company or RxDR has any liability or potential liability, whether direct or indirect. For purposes of this Agreement, the term “Plans” shall mean: (a) employee benefit plans as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ( “ERISA” ), whether or not funded and whether or not terminated, (b) employment agreements, and (c) personnel policies or fringe benefit plans, policies, programs and arrangements, whether or not subject to ERISA, whether or not funded, and whether or not terminated, including without limitation, stock bonus, deferred compensation, pension, severance, bonus, vacation, travel, incentive, and health, disability and welfare plans.

          (c) Except as set forth on Schedule 2.13(c) of the Company Disclosure Schedule, none of the Initial Sytera FTEs is obligated under any Contract, or subject to any Order, that would conflict with his or her obligation to use his or her best efforts to promote the interests of the Company or Pubco after the Closing Date, or that conflicts with the business of

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the Company as presently conducted. During the past ten (10) years, to the Knowledge of the Company, none of the Initial Sytera FTEs has been (i) charged with, indicted for or convicted of any misdemeanor related to moral turpitude or any felony; (ii) a party to a proceeding with respect to any misdemeanor related to moral turpitude or any felony; or (iii) the subject of a bankruptcy proceeding or has been the officer or director of a company that has been the subject of a bankruptcy proceeding. The Company is not aware that any Initial Sytera FTE has plans to terminate his or her employment with the Company, as a result of the Contribution or otherwise.

      2.14 Authority; Binding Nature of Agreement. The Company has all necessary corporate power and authority to enter into and to perform its obligations under the Transaction Documents, and the execution, delivery and performance by the Company of the Transaction Documents have been duly authorized by all necessary action on the part of the Company, its board of directors and each of its stockholders. Each of the Transaction Documents to which the Company is a party constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

      2.15 Non-Contravention. Neither the execution, delivery or performance of the Transaction Documents, nor the consummation of any of the transactions contemplated thereby, will directly or indirectly (with or without notice or lapse of time): (i) result in a violation of any of the provisions of the Company Documents; (ii) to the Company’s Knowledge, result in a violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated by the Transaction Documents or to exercise any remedy or obtain any relief under any, Legal Requirement or any Order to which the Company, RxDR, or any of the assets owned, used or controlled by the Company or RxDR, is subject; or (iii) result in a violation or breach of, or result in a default under, with or without notice or lapse of time, any provision of any Company Contract.

      2.16 Environmental Protection. No substances that are defined by Legal Requirements concerning the environment as toxic materials, hazardous wastes or hazardous substances (including without limitation any asbestos, oils, petroleum-derived compound or pesticides) (collectively, Hazardous Materials ) are or, to the Knowledge of the Company, have been located in, on or about the Company Leased Real Property. To the Knowledge of the Company, the Company Leased Real Property has not been used for the storage, manufacture or disposal of Hazardous Materials, and neither the Company nor RxDR has used, or provided permission to others to use, the Company Leased Real Property for the storage, manufacture or disposal of Hazardous Materials. Specifically, but without limitation, to the Knowledge of the Company, there are and have been no storage tanks located on the Company Leased Real Property. To the Knowledge of the Company, no Hazardous Materials have been transported off site from the Company Leased Real Property.

      2.17 Insurance. Schedule 2.17 to the Company Disclosure Schedule contains a brief description of all insurance policies maintained by the Company or RxDR with respect to their respective businesses and assets and the Company Leased Real Property. Such policies are valid, binding and enforceable in accordance with their terms, are in full force and effect, and all premiums due thereon have been paid.

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      2.18 Related Party Transactions. Except as set forth on Schedule 2.18 to the Company Disclosure Schedule, the Company Contracts do not include any agreement with or any other commitment to (a) any officer or director of the Company or RxDR; (b) any individual related by blood or marriage to any such officer or director; or (c) any Entity in which the Company, RxDR or any such officer, director or related person has an equity or participating interest.

      2.19 FDA Matters.

          (a) Each of the Company and RxDR has been and is in compliance in all material respects with all applicable Legal Requirements, including the United States Federal Food, Drug and Cosmetic Act, as amended from time to time, and all regulations promulgated thereunder (the “FFDCA” ), in its development efforts related to any Product or any product of RxDR (an “RxDR Product” )and in conducting any related clinical trials. Neither the Company nor RxDR has (i) made to the FDA any untrue statement of a material fact regarding any Product or RxDR Product (whether in any submission or otherwise)


 
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