EXHIBIT 2.1
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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CHANGE TECHNOLOGY PARTNERS, INC.,
CTP/N MERGER CORP.,
AND
NEUROLOGIX, INC.
DATED AS OF AUGUST 13, 2003
TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS AND CONSTRUCTION....................................................2
1.1 SPECIFIC DEFINITIONS............................................................2
1.2 ADDITIONAL DEFINITIONS..........................................................5
1.3 INTERPRETATION..................................................................6
ARTICLE II THE MERGER......................................................................6
2.1 THE MERGER......................................................................6
2.2 EFFECTIVE TIME; CLOSING.........................................................7
2.3 EFFECTS OF THE MERGER...........................................................7
2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS........................................7
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.................................7
2.6 CONVERSION OF SECURITIES........................................................7
2.7 EXCHANGE OF CERTIFICATES.......................................................12
2.8 DELIVERY OF CTP COMMON STOCK TO EXCHANGE AGENT.................................13
2.9 TREATMENT OF NEUROLOGIX STOCK OPTIONS..........................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF NEUROLOGIX...................................14
3.1 ORGANIZATION AND QUALIFICATION.................................................14
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; ENFORCEABILITY...........................14
3.3 CONFLICTS; CONSENTS AND APPROVALS..............................................14
3.4 CAPITALIZATION.................................................................15
3.5 NO LITIGATION; COMPLIANCE WITH LAWS; PERMITS...................................15
3.6 TITLE TO ASSETS................................................................16
3.7 TAXES..........................................................................16
3.8 INTELLECTUAL PROPERTY..........................................................18
3.9 FINANCIAL STATEMENTS...........................................................19
3.10 UNDISCLOSED LIABILITIES........................................................20
3.11 ENVIRONMENTAL MATTERS..........................................................20
3.12 MATERIAL CONTRACTS.............................................................20
3.13 INSURANCE......................................................................21
3.14 AFFILIATE TRANSACTIONS.........................................................22
3.15 EMPLOYEE BENEFIT PLANS.........................................................22
3.16 FUNDED DEBT....................................................................22
3.17 OTHER BUSINESS NAMES...........................................................22
3.18 REQUIRED ACTIONS...............................................................23
3.19 FDA APPROVAL...................................................................23
3.20 NO MATERIAL ADVERSE CHANGE.....................................................23
3.21 BROKERAGE......................................................................23
3.22 FULL DISCLOSURE................................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CTP AND SUBCORP..............................24
4.1 ORGANIZATION AND QUALIFICATION.................................................24
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT; ENFORCEABILITY...........................24
4.3 CONFLICTS; CONSENTS AND APPROVALS..............................................24
4.4 CAPITALIZATION.................................................................25
4.5 CTP SEC DOCUMENTS AND OTHER PUBLIC DISCLOSURES.................................25
4.6 NO MATERIAL ADVERSE CHANGE.....................................................26
4.7 NO LITIGATION; COMPLIANCE WITH LAWS; PERMITS...................................26
4.8 TAX RETURNS....................................................................26
4.9 TITLE TO ASSETS................................................................29
4.10 NO DEFAULT.....................................................................29
4.11 INTELLECTUAL PROPERTY..........................................................29
4.12 NO CURRENT OPERATIONS..........................................................29
4.13 UNDISCLOSED LIABILITIES........................................................29
4.14 FUNDED DEBT....................................................................30
4.15 OTHER BUSINESS NAMES...........................................................30
4.16 ENVIRONMENTAL MATTERS..........................................................30
4.17 MATERIAL CONTRACTS.............................................................31
4.18 EMPLOYEE BENEFIT PLANS.........................................................32
4.19 INSURANCE......................................................................32
4.20 CTP'S NET CASH ASSETS..........................................................32
4.21 BROKERAGE......................................................................32
4.22 FULL DISCLOSURE................................................................32
4.23 FORMER CEO SEVERANCE...........................................................32
4.24 AFFILIATE TRANSACTIONS.........................................................33
ARTICLE V COVENANTS OF THE PARTIES.......................................................33
5.1 DISCLOSURE LETTERS; ACCESS AND INFORMATION.....................................33
5.2 AFFIRMATIVE COVENANTS..........................................................34
5.3 NEGATIVE COVENANTS.............................................................35
5.4 CLOSING DOCUMENTS..............................................................37
5.5 FURTHER ACTIONS................................................................37
5.6 PUBLIC ANNOUNCEMENTS...........................................................38
5.7 STOCKHOLDERS' MEETING..........................................................38
5.8 PREPARATION OF THE REGISTRATION STATEMENT......................................38
5.9 AFFILIATES OF NEUROLOGIX.......................................................39
5.10 BOARD OF DIRECTORS OF CTP......................................................40
5.11 MERGER SUBSIDIARY..............................................................40
5.12 NO SOLICITATION................................................................40
5.13 REORGANIZATION TREATMENT.......................................................43
5.14 DIRECTORS' AND OFFICERS' INSURANCE.............................................43
5.15 STOCK OPTION PLAN..............................................................43
5.16 NEUROLOGIX LOAN................................................................44
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ARTICLE VI CONDITIONS.....................................................................44
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY....................................44
6.2 CONDITIONS TO CTP'S AND SUBCORP'S OBLIGATIONS..................................45
6.3 CONDITIONS TO NEUROLOGIX'S OBLIGATIONS.........................................46
ARTICLE VII TERMINATION AND AMENDMENT......................................................47
7.1 TERMINATION....................................................................47
7.2 EFFECT OF TERMINATION..........................................................49
7.3 AMENDMENT......................................................................50
7.4 EXTENSION; WAIVER..............................................................50
ARTICLE VIII MISCELLANEOUS..................................................................50
8.1 NOTICES........................................................................50
8.2 INTERPRETATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.....................51
8.3 COUNTERPARTS; TELECOPIED SIGNATURES............................................52
8.4 ENTIRE AGREEMENT...............................................................52
8.5 NO THIRD PARTY BENEFICIARIES...................................................52
8.6 GOVERNING LAW..................................................................52
8.7 CONSENT TO JURISDICTION; VENUE; NO TRIAL BY JURY...............................52
8.8 SPECIFIC PERFORMANCE...........................................................53
8.9 ASSIGNMENT.....................................................................53
8.10 EXPENSES.......................................................................53
8.11 SEVERABILITY...................................................................53
8.12 NO STRICT CONSTRUCTION.........................................................53
8.13 KNOWLEDGE......................................................................53
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is made and
entered into as of the 13th day of August, 2003, by and among Change Technology
Partners, Inc., a Delaware corporation ("CTP"), CTP/N Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of CTP ("SUBCORP"), and Neurologix,
Inc., a Delaware corporation ("NEUROLOGIX").
PRELIMINARY STATEMENTS
A CTP and Neurologix desire to engage in a transaction
consisting of the merger of Subcorp with and into Neurologix, with Neurologix as
the surviving corporation (the "MERGER"). Pursuant to the Merger, each share of
Neurologix Stock issued and outstanding at the Effective Time will be converted
into the right to receive CTP Common Stock, and Neurologix will become a wholly
owned subsidiary of CTP, all as more fully provided herein.
B The respective boards of directors of Neurologix and CTP have
determined that the Merger is consistent with and in furtherance of the
long-term business strategy of each and that it is in the best interests of the
holders of shares of Neurologix Stock and CTP Common Stock to have a continuing
equity interest in the combined businesses of CTP and Neurologix through the
ownership of CTP Common Stock after the Effective Time.
C The respective boards of directors of CTP, Subcorp and
Neurologix have determined that the Merger, structured in the manner
contemplated herein, is desirable and in the best interests of their respective
stockholders and, by resolutions duly adopted, have approved and adopted this
Agreement.
D For federal income tax purposes, the Parties intend that the
Merger constitute a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (including any successor code), and
the rules and regulations promulgated thereunder (the "CODE").
E Concurrently with the execution of this Agreement, and as a
condition to the willingness of CTP to enter into this Agreement, certain
Stockholders and holders of Neurologix Notes have entered into a Voting
Agreement with CTP, Subcorp and Neurologix dated as of the date hereof, under
which, among other things, those Stockholders have agreed to (i) convert shares
of Neurologix Stock into, and to exchange their interests in the Neurologix Note
for, shares of Neurologix Common Stock prior to the Effective Time, (ii) execute
an irrevocable written consent with respect to all of their shares of Neurologix
Stock in favor of adoption of this Agreement and the Merger, (iii) irrevocably
waive any and all rights to dissent from the Merger and seek appraisal of their
Neurologix Stock, and (iv) take other actions in furtherance of the transactions
contemplated by this Agreement (the "VOTING AGREEMENT").
F Concurrently with execution of this Agreement, CTP shall loan
Neurologix the principal amount of $750,000 secured by a first priority
perfected security interest in all of
the assets of Neurologix (the "Loan") in accordance with the provisions of this
Agreement and the related agreements evidencing the Loan.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, the parties hereto (the
"PARTIES") hereby represent, warrant, covenant and agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 SPECIFIC DEFINITIONS. For purposes of this Agreement, the
following terms shall have the following meanings:
"AFFILIATE" means, with respect to any entity (the "SUBJECT ENTITY"),
any Person or other entity which controls, is controlled by, or is under common
control with, the Subject Entity, provided, however, that with respect to the
representations and warranties set forth in Article III of this Agreement
(except as otherwise specifically provided in such representations and
warranties), "Affiliate" shall not include Palisade Capital Management, LLC or
any related entities. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities,
by contract or otherwise.
"AMENDMENTS" means the amendments to CTP's certificate of incorporation
to (i) increase the number of authorized shares of CTP Common Stock to 750
million shares, (ii) decrease the par value of CTP Common Stock to $.001 per
share, (iii) change the name of CTP to Neurologix, Inc.; and (iv) divide CTP's
board of directors into 3 classes, with staggered three-year terms for each
class.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks located in New York, New York are not open for the
general transaction of business.
"CTP COMMON STOCK" means the Common Stock, par value $.01 per share, of
CTP.
"CTP MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition of CTP and its Subsidiaries, taken as a whole; provided,
however, that (x) in no event shall any effect that results from (a) the public
announcement or pendency of the transactions contemplated hereby or any actions
taken in compliance with this Agreement or (b) changes affecting the United
States economy generally constitute a CTP Material Adverse Effect; and (y) a
decrease in the market price of CTP Common Stock will not constitute a CTP
Material Adverse Effect (except with respect to an effect which, independent of
such decrease, would constitute a CTP Material Adverse Effect).
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"CTP MEETING" means the annual or special meeting of CTP's stockholders
called to vote upon the Merger, this Agreement and the transactions contemplated
hereby, the Amendments and the election of directors contemplated herein.
"CTP'S NET CASH ASSETS" means as of the Closing Date the aggregate
amount of CTP's unencumbered cash and cash equivalents, in excess of (i.e., net
of) all liabilities (actual and contingent, accrued and unaccrued) and
contractual commitments of CTP and its Subsidiaries, including, but not limited
to, obligations incurred and to be incurred in closing or terminating operations
of all current businesses, terminating all existing contractual commitments and
other obligations; provided, however, that in calculating CTP's Net Cash Assets
there shall be (i) excluded from the calculation of liabilities (or, if
previously paid, there shall be credited to the amount of cash) up to $500,000
of legal, accounting, Financial Advisor and other fees and expenses incurred by
CTP that are directly related to the Merger, this Agreement and the Loan and
(ii) included in the calculation of CTP's unencumbered cash and cash equivalents
the outstanding principal amount of the Loan and accrued but unpaid interest
thereon. In determining the amount of any contractual commitments or other
accrued claims, CTP shall not be entitled to any discount from the full
contractual amount of any liability unless it is finally settled or compromised
prior to the Closing Date. To the extent that there are any pending or
threatened litigations or other claims or contingent liabilities at the Closing
Date, the estimated cost to CTP of each such litigation, claim or liability
(including all legal costs and professional fees required to resolve any such
litigation, claim or liability) shall be established, disputed or modified in
accordance with the procedures set forth in Section 2.6.3.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" means Continental Stock Transfer or such other Person
or entity reasonably acceptable to CTP as Neurologix shall designate to serve as
the Exchange Agent hereunder.
"FINANCIAL ADVISOR" means BNY Capital Markets, Inc.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL ENTITY" means any domestic or foreign international,
national, federal, state, provincial or local governmental, regulatory or
administrative authority, agency, commission, court, tribunal, arbitral body or
self-regulated entity.
"LIENS" means liens, encumbrances, charges, adverse claims, security
interests, pledges, mortgages, title restrictions and other limitations on use,
other than restrictions on transfer imposed by federal or state securities laws
or under this Agreement and the Voting Agreement.
"NEUROLOGIX COMMON STOCK" means the Common Stock, par value $.001 per
share, of Neurologix.
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"NEUROLOGIX HOLDER" means any holder of Neurologix Stock or any other
Neurologix security.
"NEUROLOGIX MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, operations, assets or financial condition of Neurologix; provided,
however, that in no event shall any effect that results from (a) the public
announcement or pendency of the transactions contemplated hereby or any actions
taken in compliance with this Agreement, (b) changes affecting Neurologix's
industry generally or (c) changes affecting the United States economy generally
constitute a Neurologix Material Adverse Effect.
NEUROLOGIX NOTE" means the 6% Amended and Restated Secured Promissory
Note of Neurologix in the aggregate principal amount of $2.0 million, payable to
Palisade Private Partnership, L.P., Xx. Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx,
due in October 2007.
"NEUROLOGIX SERIES A PREFERRED" means the Convertible Preferred Stock,
par value $.001 per share, of Neurologix.
"NEUROLOGIX SERIES B PREFERRED" means the Series B Convertible
Preferred Stock, par value $.001 per share, of Neurologix.
"NEUROLOGIX STOCK" means, collectively, the Neurologix Common Stock,
the Neurologix Series A Preferred and the Neurologix Series B Preferred.
"Neurologix Stock" shall also include any equity security issued by Neurologix
between the date hereof and the Closing Date that is not Neurologix Common
Stock, Neurologix Series A Preferred or Neurologix Series B Preferred.
"NEUROLOGIX WRITTEN CONSENT" means a valid written consent of
Neurologix's stockholders approving the Merger, this Agreement and the
transactions contemplated hereby.
"PERSON" means any individual, corporation, partnership, limited
liability company, business trust, sole proprietorship, Governmental Entity, or
other entity.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"STOCKHOLDER" means a holder of record of shares of Neurologix Stock
immediately prior to the Effective Time. "STOCKHOLDERS" shall mean all such
holders.
"SUBSIDIARY" when used with reference to a Person, shall mean any
entity (i) the accounts of which would be consolidated with those of such Person
in such Person's financial statements if such financial statements were prepared
in accordance with GAAP or (ii) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests or more than 50% of the profits or losses are owned, controlled or
held by such Person and/or one or more subsidiaries of such Person.
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"TAXES" means (i) any and all federal, state, provincial, local,
foreign and other taxes, levies, fees, imposts, duties, and similar governmental
charges (including any interest, fines, assessments, penalties or additions to
tax imposed in connection therewith or with respect thereto) including, without
limitation (x) taxes imposed on, or measured by, income, franchise, profits or
gross receipts, and (y) ad valorem, value added, capital gains, sales, goods and
services, use, real or personal property, capital stock, license, branch,
payroll, estimated withholding, employment, social security (or similar),
unemployment, compensation, utility, severance, production, excise, stamp,
occupation, premium, windfall profits, transfer and gains taxes, and customs
duties, and (ii) any transferee liability in respect of any items described in
clause (i) above.
"TAX RETURNS" means any and all reports, returns, declarations, claims
for refund, elections, disclosures, estimates, information reports or returns or
statements required to be supplied to a Governmental Entity in connection with
Taxes, including any schedule or attachment thereto or amendment thereof.
1.2 ADDITIONAL DEFINITIONS. The following terms are defined in the
following sections of this Agreement:
TERM SECTION
ACCOUNTANTS 2.6.3.5
AGREEMENT Heading
ALLOCATION 2.6.3.3
CERTIFICATES 2.7.1
CERTIFICATE OF MERGER 2.2
CLOSING 2.2
CLOSING DATE 2.2
CODE Preliminary Statements
COMPETING TRANSACTION 5.12
CTP Heading
CTP CALCULATION 2.6.3.4
CTP DISCLOSURE LETTER 5.1
CTP EXCHANGE OPTION 2.9
CTP EXISTING OPTION 4.4
CTP IN-THE-MONEY OPTIONS 2.6.3
DGCL 2.1
DISCLOSURE LETTERS 5.1
EFFECTIVE TIME 2.2
ENVIRONMENTAL LAWS 3.11
EXCHANGE RATIO 2.6.3
EXCLUDED SHARES 2.6.1
FDA 3.19
FORMER CEO 4.24
INTELLECTUAL PROPERTY 3.8
IRS 3.7.11
LOAN Preliminary Statements
MATERIAL CONTRACTS 3.12
MERGER Preliminary Statements
NEUROLOGIX Heading
NEUROLOGIX AFFILIATE'S LETTER 5.9
NEUROLOGIX DISCLOSURE LETTER 5.1
NEUROLOGIX FINANCIAL STATEMENTS 3.9
NEUROLOGIX IN-THE-MONEY OPTIONS 2.6.3
NEUROLOGIX OPTION 3.4
NEUROLOGIX REACTION NOTICE 2.6.3.5
NEW STOCK OPTION PLAN 5.15
OUTSIDE DATE 7.1.3
PARTIES Preliminary Statements
POTENTIAL ACQUIROR 5.12.1
PRODUCT 3.19
PROSPECTUS/PROXY STATEMENT 5.8.1
REGISTRATION STATEMENT 5.8.1
SEC DOCUMENTS 4.5
SECRETARY OF STATE 2.2
SUBCORP Heading
SURVIVING CORPORATION 2.1
TOTAL CTP EXISTING SHARES 2.6.3
TOTAL CTP STOCK CONSIDERATION 2.6.3
TOTAL NEUROLOGIX EXISTING SHARES 2.6.3
UPDATED WORKSHEET 2.6.3.4
VOTING AGREEMENT Preliminary Statements
WORKSHEET 2.6.3.3
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1.3 INTERPRETATION. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereto,"
"hereof" and words of similar import refer to this Agreement as a whole and not
to any particular Section or paragraph hereof; (ii) words importing the
masculine gender shall also include the feminine and neutral genders, and vice
versa; (iii) words importing the singular shall also include the plural, and
vice versa; and (iv) the word "including" means "including without limitation."
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the provisions of the Delaware General
Corporation Law (the "DGCL"), Subcorp shall be merged with and into Neurologix
at the Effective Time. As a result of the Merger, the separate corporate
existence of Subcorp shall cease and Neurologix shall continue its corporate
existence under the laws of the State of Delaware. Neurologix, in its capacity
as the corporation surviving the Merger, is hereinafter sometimes referred to as
the "SURVIVING CORPORATION."
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2.2 EFFECTIVE TIME; CLOSING. Upon completion of the Closing on the
Closing Date, the Parties shall cause the Merger to be consummated by filing
with the Secretary of State of the State of Delaware (the "SECRETARY OF STATE")
a certificate of merger (the "CERTIFICATE OF MERGER") in such form as is
required by and executed in accordance with Section 251 of the DGCL. The Merger
shall become effective (the "EFFECTIVE TIME") at 12:01 a.m. on the date when the
Certificate of Merger is filed with the Secretary of State or at such later time
and date as shall be agreed upon by CTP and Neurologix and specified in the
Certificate of Merger. Prior to the filing referred to in this Section 2.2, the
closing of the Merger (the "CLOSING") shall be held at the offices of Xxxxxxxxxx
Xxxxxxx PC, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000, or such other
place as the Parties may agree, on a date specified by Neurologix (provided that
such date is, absent CTP's concurrence, no more than five Business Days
following the first date upon which all conditions set forth in Article VI
(other than the conditions which may be satisfied solely by the delivery of
documentation within the control of the Party required to deliver such
documentation) have been satisfied or waived), or at such other date as CTP and
Neurologix may agree, provided that the conditions set forth in Article VI have
been satisfied or waived at or prior to such date. The date on which the Closing
takes place is referred to herein as the "CLOSING DATE."
2.3 EFFECTS OF THE MERGER. From and after the Effective Time, the
Merger shall have the effects set forth in Sections 259 through 261 of the DGCL.
2.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. At the Effective
Time, (i) the certificate of incorporation of Neurologix as in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation, with a new corporate name to be
designated by Neurologix and (ii) the by-laws of Neurologix in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation, in each case until amended in accordance with applicable law.
2.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. From and
after the Effective Time, the individuals listed on Section 2.5 of the
Neurologix Disclosure Letter shall be the directors and officers of the
Surviving Corporation, in each case until their respective successors are duly
elected and qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation and the DGCL. On or prior to the Closing Date, Subcorp shall deliver
to Neurologix a written resignation, in form and substance satisfactory to
Neurologix, from each officer and director of Subcorp, effective as of the
Effective Time.
2.6 CONVERSION OF SECURITIES. At the Effective Time, by virtue of
the Merger, and without any action on the part of any of the Parties, the
securities of the constituent corporations shall be converted as follows:
2.6.1 CANCELLATION OF TREASURY STOCK AND CTP-OWNED STOCK. Each
share of Neurologix Stock owned by Neurologix or by CTP that is issued
and outstanding immediately prior to the Effective Time (collectively,
the "EXCLUDED SHARES") shall be automatically canceled and shall cease
to exist, and no shares of CTP Common Stock or other consideration
shall be paid in exchange for those Excluded Shares.
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2.6.2 SUBCORP'S STOCK. Each share of common stock, par value
$.001 per share, of Subcorp issued and outstanding immediately prior to
the Effective Time shall be automatically converted into one fully paid
and nonassessable share of common stock, par value $.001 per share, of
the Surviving Corporation. Such newly issued shares shall thereafter
constitute all of the issued and outstanding capital stock of the
Surviving Corporation, and shall be owned by CTP.
2.6.3 NEUROLOGIX STOCK. If immediately prior to the Closing,
(i) CTP's Net Cash Assets are at least $7.5 million, and (ii)
Neurologix has not raised cash proceeds between the date hereof and the
Closing through the issuance and sale of additional equity securities,
then upon consummation of the Merger, (x) each share of Neurologix
Common Stock, Neurologix Series A Preferred (on an as-converted to
Neurologix Common Stock basis) and Neurologix Series B Preferred (on an
as-converted to Neurologix Common Stock basis) issued and outstanding
immediately prior to the Effective Time (excluding Excluded Shares and
Dissenting Shares) shall be converted into that number of shares of CTP
Common Stock multiplied by the Exchange Ratio, and (y) the aggregate
number of shares of CTP Common Stock issuable at the Effective Time
shall equal the Total CTP Stock Consideration.
EXCHANGE RATIO = TOTAL CTP EXISTING SHARES MULTIPLIED BY 2
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Total Neurologix Existing Shares
TOTAL CTP STOCK CONSIDERATION = Total Neurologix Existing Shares
multiplied by Exchange Ratio
WHERE:
"TOTAL CTP EXISTING SHARES" means the number of shares of CTP Common
Stock (i) issued and outstanding prior to the Effective Time, (ii)
issuable upon conversion of all CTP convertible securities including
shares of CTP Series A Preferred Stock, and (iii) issuable upon
exercise of all CTP Existing Options with an exercise price per share
that is less than or equal to $0.03, which options, as reflected in the
CTP Disclosure Letter, provide for the purchase of 12,000,000 shares of
CTP Common Stock (the "CTP IN-THE-MONEY OPTIONS").
"TOTAL NEUROLOGIX EXISTING SHARES" means the number of shares of
Neurologix Common Stock (i) issued and outstanding prior to the
Effective Time, (ii) issuable upon conversion of all Neurologix
convertible securities including shares of Neurologix Series A
Preferred and Neurologix Series B Preferred, (iii) issuable upon
exchange of the Neurologix Note as provided in the Voting Agreement and
(iv) issuable upon exercise of all Neurologix Options with an exercise
price per share less than or equal to $0.25, which options, as
reflected in the Neurologix Disclosure Letter, provide for the purchase
of 232,000 shares of Neurologix Common Stock (the "NEUROLOGIX
IN-THE-MONEY OPTIONS"), in each case, excluding all Excluded Shares but
including all Dissenting Shares.
2.6.3.1 At the Effective Time, all shares of Neurologix Stock
that have been converted into the right to receive shares of CTP Common
Stock shall be
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automatically canceled and shall cease to exist, and the holders
thereof shall cease to have any rights with respect to such shares,
other than the right to receive certificates representing shares of CTP
Common Stock upon surrender of the relevant instrument in accordance
with Section 2.7.
2.6.3.2 Upon consummation of the Merger, each Neurologix
Option outstanding immediately prior to the Effective Time shall be
converted into a CTP Exchange Option pursuant to the provisions of
Section 2.9.
2.6.3.3 Annexed to CTP's Disclosure Letter is a worksheet
setting forth a description of the allocation of the Total CTP Stock
Consideration among the Neurologix Holders (the "Allocation") that
would be in effect if the Total CTP Stock Consideration was determined
as of the date hereof based upon CTP's Net Cash Assets at this date
(including a reasonable estimate of all costs and liabilities of all
pending litigations and other claims and contingent liabilities, and an
estimate of the costs required to wind down CTP's business), the number
of shares of CTP Common Stock and CTP Existing Options outstanding at
this date, the number of shares of Neurologix Stock and the number of
Neurologix Options outstanding at this date, and the number of shares
of Neurologix Common Stock issuable upon conversion of the Neurologix
Note (the "WORKSHEET").
2.6.3.4 At least five Business Days prior to the time set for
the Closing, CTP shall deliver to Neurologix CTP's good faith
calculation of the Allocation (the "CTP CALCULATION"), which shall (a)
be prepared in accordance with the provisions of Section 2.6.3 or
2.6.4, as applicable, (b) be reflected in the form of the Worksheet
(the "UPDATED WORKSHEET"), (c) include CTP's good faith estimate of
CTP's Net Cash Assets as of the Closing Date, and (d) set forth (i) the
calculation of the Total CTP Stock Consideration, (ii) each of the
calculations contemplated by Section 2.6.3 or 2.6.4, as applicable, and
(iii) confirm the number of shares of CTP Common Stock outstanding and
the number of shares of CTP Common Stock issuable upon the exercise
and/or conversion of all CTP convertible securities including the CTP
Series A Preferred Stock and CTP In-the-Money Options. At least seven
Business Days prior to the time set for the Closing, Neurologix shall
deliver to CTP a certificate setting forth the total number of shares
of Neurologix Common Stock then outstanding and the number of shares of
Neurologix Common Stock issuable upon the exercise and/or conversion of
the other Neurologix Stock, the Neurologix In-the-Money Options and the
Neurologix Note then outstanding, which CTP shall use in preparing the
CTP Calculation. In addition, CTP shall, following the date hereof and
through Closing, apprise Neurologix of (a) any pending or threatened
litigations, claims and other contingent liabilities that were not
reflected on the Worksheet and (b) any event or fact that occurs, or of
which CTP becomes aware, after the date hereof that could reasonably
affect the estimate of any litigation, claim and other contingent
liability listed on the Worksheet.
2.6.3.5 Promptly, but in no event later than two Business Days
after receipt of the CTP Calculation, Neurologix shall deliver to CTP a
notice (the "NEUROLOGIX REACTION NOTICE") specifying whether Neurologix
concurs with the CTP Calculation or disputes any aspect of the CTP
Calculation. To enable Neurologix to evaluate the CTP
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Calculation, CTP and its Subsidiaries shall make available to CTP and
its representatives all of the personnel, properties, contracts, books
and records, and all other documents and data of CTP and its
Subsidiaries that Neurologix shall reasonably request. In the event
that the Neurologix Reaction Notice indicates that Neurologix concurs
with the CTP Calculation, the CTP Calculation shall be determinative
for purposes of determining the Allocation at Closing. With respect to
any liability or obligation of CTP or its Subsidiaries for which an
estimate of the amount thereof is set forth on the Worksheet, the
parties hereto agree that such estimate shall be the amount of such
liability or obligation for purposes of the CTP Calculation and that
Neurologix shall not dispute such estimate unless (i) the actual amount
of such liability or obligation becomes known after the date hereof, in
which case such actual amount shall be used in the CTP Calculation (ii)
any event occurs after the date of this Agreement as a result of which
any party hereto no longer believes that such estimate is reasonable or
(iii) any party hereto becomes aware, after the date of this Agreement,
of any fact (including, without limitation, any change, modification,
or clarification of any fact of which such party was aware prior to the
date of this Agreement) as a result of which such party no longer
believes that such estimate is reasonable. CTP and Neurologix agree
that to the extent the receivable owing to CTP in connection with CTP's
lease for 00 Xxxx 00xx Xxxxxx (the "Xxxxxx Receivable") is not
collected by CTP prior to Closing and provided that Neurologix receives
a letter from the lessor reasonably satisfactory to Neurologix to the
effect that the Xxxxxx Receivable will be paid within a reasonable time
after Closing, the Xxxxxx Receivable shall be included in the
calculation of CTP's Net Cash Assets less a $40,000 reserve. CTP and
Neurologix agree that to the extent any other receivable set forth on
the Worksheet is not collected prior to Closing, such receivable (less
a reserve mutually agreed to by CTP and Neurologix) shall be included
in the calculation of CTP's Net Cash Assets if, and only if, CTP can
provide assurance reasonably satisfactory to Neurologix that such
receivable shall be paid within a reasonable time after Closing.
Subject to the preceding three sentences, in the event that the
Neurologix Reaction Notice indicates that Neurologix disputes any
aspect of the CTP Calculation, CTP and Neurologix shall engage an
accountant mutually acceptable to CTP and Neurologix (the
"ACCOUNTANTS") to promptly review the determination of such aspect of
the CTP Calculation and resolve such dispute. In the event that such
disputes cannot be resolved prior to the date set for the Closing, the
date set for the Closing shall be deferred until such disputes are
resolved (but in no event later than the Outside Date). In the event
the dispute relates to an estimate of liability for pending or
threatened litigation, or other claim or contingent liability, the
parties will ask the Accountants to assist them in mediating the
dispute.
2.6.4 ADJUSTMENT IN CALCULATION OF EXCHANGE RATIO.
If immediately prior to the Closing, CTP's Net Cash Assets are
less than $7.5 million or if Neurologix has raised cash proceeds
between the date hereof and the Closing through the issuance and sale
of additional equity, then, for purposes of this Agreement, the
Exchange Ratio shall be calculated as follows:
EXCHANGE RATIO = TOTAL CTP EXISTING SHARES MULTIPLIED BY X
-----------------------------------------
Total Neurologix Existing Shares
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WHERE "X" IS THE QUOTIENT:
obtained by dividing (x) $15.0
million by (y) the lesser of the (i)
amount of CTP's Net Cash Assets as
of the Closing Date or (ii) $7.5
million.
In the event that Neurologix sells
any additional equity during the
period between the date hereof and
the Closing Date, the net cash
proceeds there from (after all
expenses incurred relating thereto)
shall be added to the numerator.
2.6.5 NO FRACTIONAL SHARES. No certificates or scrip
representing fractional shares of CTP Common Stock shall be issued as a
result of any conversion provided for in this Section 2.6. All
fractional shares shall be rounded to the nearest whole number, with .5
rounded up. If more than one certificate representing shares of
Neurologix Stock shall be surrendered for the account of the same
holder, the number of shares of Neurologix Common Stock for which
certificates have been surrendered shall be computed on the basis of
the aggregate number of shares (on an as-converted to Neurologix Common
Stock basis) represented by the certificates so surrendered. No cash
shall be paid in lieu of fractional shares.
2.6.6 ANTI-DILUTION PROTECTION.
2.6.6.1 To the extent not already taken into account in
computing the Exchange Ratio, in the event that, prior to the Effective
Time, CTP shall declare a stock dividend or other distribution payable
in shares of CTP Common Stock or securities convertible into shares of
CTP Common Stock, or effect a stock split, reclassification,
recapitalization, combination or any other comparable change with
respect to CTP Common Stock, the shares of CTP Common Stock to be
received by each Stockholder in the Merger shall be correspondingly
adjusted to reflect such dividend, distribution, stock split,
reclassification, recapitalization, combination or other comparable
change.
2.6.6.2 To the extent not already taken into account in
computing the Exchange Ratio, in the event that, prior to the Effective
Time, Neurologix shall declare a stock dividend or other distribution
payable in shares of Neurologix Common Stock or securities convertible
into shares of Neurologix Common Stock, or effect a stock split,
reclassification, recapitalization, combination or any other comparable
change with respect to Neurologix Common Stock, the shares of CTP
Common Stock to be received by each Stockholder in the Merger shall be
correspondingly adjusted to reflect such dividend, distribution, stock
split, reclassification, recapitalization, combination or other
comparable change.
2.6.7 DISSENTING STOCK. Any holder of shares of Neurologix
Stock shall have the right to appraisal in the manner provided in
Section 262 of the DGCL, and if all necessary requirements of the DGCL
are met, such shares shall be entitled to payment of the fair value of
such shares in accordance with the provisions of the DGCL ("DISSENTING
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STOCK"); provided, however, that (i) if any holder of Dissenting Stock
shall subsequently withdraw such holder's demand for appraisal of such
shares within sixty days of the Effective Time, or (ii) if any holder
fails to follow the procedures for establishing such holder's
entitlement to appraisal rights as provided in the DGCL, the right to
appraisal of such shares shall be forfeited and such shares shall
thereupon be deemed to have been converted into the right to receive
and to have become exchangeable for, as of the Effective Time, the
shares of CTP Common Stock such holder would have been entitled to
receive had such holder not exercised appraisal rights.
2.6.8 TAX CONSEQUENCES. It is intended that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a "plan of
reorganization" for the purposes of the Code.
2.7 EXCHANGE OF CERTIFICATES. The following provisions shall apply
with respect to the exchange of certificates pursuant to the Merger:
2.7.1 PROCEDURES. Prior to the Closing, CTP shall enter into
an exchange agency agreement with the Exchange Agent, in form and
substance satisfactory to Neurologix, pursuant to which the Exchange
Agent shall perform the obligations of the Exchange Agent described in
this Agreement. As soon as practicable after the Effective Time, CTP
shall mail, or shall cause the Exchange Agent to mail, to each holder
of record of a certificate or certificates (the "CERTIFICATES") which
immediately prior to the Effective Time represented issued and
outstanding shares of Neurologix Stock, a letter of transmittal in
customary form (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to CTP and shall be in such form and have
such other provisions as Neurologix and CTP may reasonably specify,
including customary waivers and releases of liability and which shall
contain instructions for effecting the surrender of the Certificates in
exchange for certificates representing shares of CTP Common Stock).
Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal, the holder of such
Certificate shall be entitled to receive in exchange therefor (and CTP
shall cause the Exchange Agent to promptly deliver) a certificate
representing that number of whole shares of CTP Common Stock which such
holder has the right to receive pursuant to Section 2.6 rounded to the
nearest whole number. Any Certificate so surrendered shall be
immediately canceled. No cash shall be payable in lieu of the issuance
of fractional shares. In the event of a transfer of ownership of shares
of Neurologix Stock which is not registered on the transfer records of
Neurologix, a certificate representing the proper number of whole
shares of CTP Common Stock may be issued to such transferee if the
Certificate representing such shares of Neurologix Stock held by such
transferee is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence
that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.7, each Certificate shall
be deemed at any time after the Effective Time to represent only the
right to receive upon surrender a certificate representing shares of
CTP Common Stock.
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2.7.2 STOCK TRANSFER BOOKS; EXTINCTION OF STOCKHOLDER RIGHTS.
At the Effective Time, the stock transfer books of Neurologix shall be
closed with respect to the shares of Neurologix Stock outstanding
immediately prior to the Effective Time. All shares of CTP Common Stock
issued upon surrender of a Certificate in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to that Certificate and the shares of Neurologix
Stock represented thereby, and there shall be no further registration
of transfers on the stock transfer books of Neurologix of shares of
Neurologix Stock outstanding immediately prior to the Effective Time.
If, after the Effective Time, a Certificate is presented to the
Surviving Corporation for any reason, it shall be canceled and
exchanged for certificates representing shares of CTP Common Stock as
provided in this Article II.
2.7.3 LOST CERTIFICATES. In the event that any Certificate
shall have been lost, stolen or destroyed, upon the Exchange Agent's
receipt of appropriate evidence as to such loss, theft or destruction
and as to the ownership of such Certificate by the Person claiming such
Certificate to be lost, stolen or destroyed, and the receipt by CTP and
the Exchange Agent of reasonably appropriate and customary
indemnification, CTP shall cause the Exchange Agent to deliver, in
exchange for such lost, stolen or destroyed Certificate, shares of CTP
Common Stock deliverable in respect thereof as determined in accordance
with the provisions of this Agreement.
2.8 DELIVERY OF CTP COMMON STOCK TO EXCHANGE AGENT. At or prior to
the Effective Time, CTP shall deposit with the Exchange Agent, for the benefit
of each Stockholder, for exchange in accordance with this Article II,
certificates representing the shares of CTP Common Stock issuable to each
Stockholder pursuant to Section 2.6 upon conversion of outstanding shares of
Neurologix Stock.
2.9 TREATMENT OF NEUROLOGIX STOCK OPTIONS. Prior to the Effective
Time, CTP and Neurologix shall take all such actions as may be necessary such
that at the Effective Time each unexpired and unexercised Neurologix Option
prior to the Effective Time shall, by virtue of the Merger and without any
action by the holder of such Neurologix Option, be automatically converted at
the Effective Time into an option (an "CTP EXCHANGE OPTION") to purchase that
number of shares of CTP Common Stock equal to the number of shares of Neurologix
Common Stock covered by such Neurologix Option multiplied by the Exchange Ratio,
which number shall be correspondingly adjusted (to the extent not already taken
into account in computing the Exchange Ratio) to reflect the effect of any
adjustment made pursuant to Section 2.6.4. Each CTP Exchange Option shall have
an exercise price equal to the exercise price which existed under the
corresponding Neurologix Option divided by the Exchange Ratio but in no event
less than the par value of the shares of CTP Common Stock underlying such CTP
Exchange Option. With the exception of the adjustments set forth above and the
fact that the CTP Exchange Options shall be administered by the Compensation
Committee of CTP's board of directors or such other committee as shall be
designated from time to time by such board, the terms and conditions of each CTP
Exchange Option shall be identical to the terms and conditions to which the
corresponding Neurologix Option was subject immediately prior to the Effective
Time; provided that with respect to any Neurologix Option that is an "INCENTIVE
STOCK OPTION" within the meaning of Section 422 of the Code, the foregoing
conversion shall be carried out in a manner satisfying the requirements of
Section 424(a) of the Code. In connection with the
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issuance of CTP Exchange Options, CTP shall (i) reserve for issuance the number
of shares of CTP Common Stock that will become subject to CTP Exchange Options
pursuant to this Section 2.9 and (ii) register the shares of CTP Common Stock
subject to the CTP Exchange Options on a registration statement on Form S-8 to
the extent that such shares are so registerable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NEUROLOGIX
Neurologix represents and warrants to CTP and Subcorp as follows:
3.1 ORGANIZATION AND QUALIFICATION. Neurologix is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the power and authority to own, lease and operate its
properties and to conduct its business as presently conducted. Neurologix is
duly qualified or licensed to transact business as a foreign corporation and is
in good standing in each jurisdiction in which the conduct of its business or
the ownership, leasing or operation of its property requires such qualification,
except for failures to be so qualified or in good standing which would not,
singly or in the aggregate with all such other failures, have a Neurologix
Material Adverse Effect. Neurologix has no Subsidiaries, and except as set forth
on Section 3.1 of the Neurologix Disclosure Letter, Neurologix does not own,
directly or indirectly, any shares of capital stock of, or any other security or
interest convertible into or exchangeable or exercisable for shares of capital
stock of or other ownership interests in, any other Person.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; ENFORCEABILITY. The
execution, delivery and performance of this Agreement are within the corporate
power and authority of Neurologix and have been duly and validly authorized by
all requisite corporate action on the part of Neurologix. This Agreement has
been duly executed and delivered by Neurologix and is a legal, valid and binding
obligation of Neurologix, enforceable against Neurologix in accordance with its
terms, except insofar as its enforcement may be limited by (a) bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally and (b) equitable principles limiting the availability of
equitable remedies. All persons who executed this Agreement on behalf of
Neurologix have been duly authorized to do so.
3.3 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement by Neurologix nor the consummation of the
transactions contemplated hereby will: (a) conflict with, or result in a breach
of any provision of, Neurologix's certificate of incorporation or by-laws; (b)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with the giving of notice, the passage
of time or otherwise, would constitute a default) under, or entitle any party
(with the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or result in the creation of any
Lien upon any of the properties or assets of Neurologix under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, contract, undertaking, agreement, lease or other instrument or
obligation to which Neurologix is a party or by which Neurologix is bound; (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Neurologix or its properties or assets; or (d) require any action
or consent or approval of, or review by, or registration or filing by Neurologix
or any of its
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Affiliates with, any third party or any Governmental Entity, other than filing
of the Certificate of Merger and registrations or other actions required under
federal and state securities laws as are contemplated by this Agreement.
3.4 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Neurologix consists solely of: (a) 20,000,000 shares of Neurologix
Common Stock and (b) 1,000,000 shares of Neurologix preferred stock, of which
500 of such shares have been designated as Neurologix Series A Preferred and
562,500 of such shares have been designated as Neurologix Series B Preferred. As
of the date hereof there are 2,490,583 shares of Neurologix Common Stock issued
and outstanding, 147 shares of Neurologix Series A Preferred issued and
outstanding, which are convertible into 2,205,000 shares of Neurologix Common
Stock, and 490,754 shares of Neurologix Series B Preferred issued and
outstanding, which are convertible into 490,754 shares of Neurologix Common
Stock, and no shares of Neurologix Stock were held in Neurologix's treasury.
There are no options, warrants or other securities, rights or agreements
outstanding that entitle any Person to acquire (either currently or upon the
passage of time or the occurrence of any condition or event) any shares of
Neurologix Common Stock or any other security convertible into or exchangeable
or exercisable for Neurologix Common Stock, other than as set forth in the
immediately preceding sentence and except for (x) stock options to purchase
257,000 shares of Neurologix Common Stock granted by Neurologix to current or
former directors, officers, employees, consultants or representatives of
Neurologix or to other persons with relationships to Neurologix (each, a
"NEUROLOGIX OPTION") and (y) the Neurologix Note which the holders thereof
(including all Persons having a participatory interest therein) and Neurologix
have agreed will be exchanged, pursuant to the terms of the Voting Agreement,
for Neurologix Common Stock, at a price of $6 per share (383,040 shares if
computed at June 30, 2003).
3.5 NO LITIGATION; COMPLIANCE WITH LAWS; PERMITS. There is no (i)
action, suit, claim, proceeding, demand, arbitration, hearing, complaint,
examination or investigation pending or, to the best of Neurologix's knowledge,
threatened against or affecting Neurologix, at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign or any other
Governmental Entity (including, without limitation, any action, suit, claim,
proceeding, demand arbitration, hearing, complaint, examination or investigation
against any director, officer or employee of Neurologix or other person for whom
Neurologix may be liable), (ii) arbitration proceeding relating to Neurologix
pending under collective bargaining agreements or otherwise, or (iii)
governmental inquiry pending or, to the best of Neurologix's knowledge,
threatened against or affecting Neurologix (including without limitation any
inquiry as to the qualification of Neurologix to hold or receive any license or
permit), except as would not have, either individually or in the aggregate, a
Neurologix Material Adverse Effect. Neurologix has complied with all material
laws, rules, regulations and orders applicable to its business, operations,
properties, assets, products and services. Neurologix has all necessary permits,
licenses, grants, consents, approvals and other authorizations required to
conduct its business as now conducted, except such permits, licenses, grants,
consents, approvals and other authorizations that, if not obtained, would have,
either individually or in the aggregate, a Neurologix Material Adverse Effect,
and such permits, licenses, grants, consents, approvals, and other
authorizations are in full force and effect. No suspension or cancellation of
any such permit, license, grant, consent and authorization is pending or, to the
best of Neurologix's
-15-
knowledge, threatened. No such suspension or cancellation will result from
transactions contemplated by this Agreement.
3.6 TITLE TO ASSETS. Neurologix has good and marketable title to
or a valid leasehold interest in, or licenses to, its properties and assets and
all such properties and assets owned by Neurologix are free and clear of all
Liens, except for (i) Liens for current taxes not yet due and payable and minor
imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations of Neurologix, (ii) Liens granted to
CTP and the holders of the Neurologix Note and (iii) as set forth on Section 3.6
of the Neurologix Disclosure Letter. Each lease or agreement to which Neurologix
is a party under which it is a lessee of any property, real or personal, is a
valid and existing agreement without any default of Neurologix thereunder and,
to the best of Neurologix's knowledge, without any default thereunder of any
other party thereto. To the best of Neurologix's knowledge, no event has
occurred and is continuing which, with due notice or lapse of time or both,
would constitute a default or event of default by Neurologix under any such
lease or agreement or, to the best of Neurologix's knowledge, by any other party
thereto.
3.7 TAXES. As of the date of this Agreement:
3.7.1 all Tax Returns required to be filed by or with respect
to Neurologix have been properly prepared and timely filed, and all
such Tax Returns (including information provided therewith or with
respect to thereto) are true, complete and correct in all material
respects;
3.7.2 Neurologix has paid all Taxes owed by it (whether or not
shown on any Tax Return), and has made adequate provision for any Taxes
that are not yet due and payable, for all taxable periods, or portions
thereof, ending on or before the date hereof;
3.7.3 Neurologix has given or otherwise made available to CTP
true, correct and complete copies of all Tax Returns, examination
reports and statements of deficiencies for taxable periods, or
transactions consummated, for which the applicable statutory periods of
limitations have not expired;
3.7.4 there are no outstanding agreements extending or waiving
the statutory period of limitations applicable to any claim for, or the
period for the collection or assessment or reassessment of, Taxes due
from Neurologix for any taxable period and no request for any such
waiver or extension is currently pending;
3.7.5 to the knowledge of Neurologix, no audit or other
proceeding by any Governmental Entity is pending or threatened with
respect to any Taxes due from or with respect to Neurologix, no
Governmental Entity has given notice of any intention to assert any
deficiency or claim for additional Taxes against Neurologix, and no
claim has been made by any Governmental Entity in a jurisdiction where
Neurologix does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction, and all deficiencies for Taxes asserted
or assessed against Neurologix have been fully and timely paid, settled
or properly reflected in the most recent audited financial statements;
-16-
3.7.6 there are no Liens for Taxes upon the assets or
properties of Neurologix, except for statutory Liens for current Taxes
not yet due;
3.7.7 Neurologix has not taken any reporting position on a Tax
Return, which reporting position (i) if not sustained would be
reasonably likely, absent disclosure, to give rise to a penalty for
substantial understatement of federal income Tax under Section 6662 of
the Code (or any similar provision of state, local, or foreign Tax
law), and (ii) has not adequately been disclosed on such Tax Return in
accordance with Section 6662(d)(2)(B) of the Code (or any similar
provision of state, local, or foreign Tax law);
3.7.8 Neurologix has withheld (or will withhold) from its
employees, independent contractors, creditors, stockholders and third
parties and timely paid to the appropriate Governmental Entity proper
and accurate amounts in all material respects for all periods ending on
or before the Closing Date in compliance with all Tax withholding and
remitting provisions of applicable laws and have each complied in all
material respects with all Tax information reporting provisions of all
applicable laws;
3.7.9 Neurologix has not constituted a "distributing
corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of shares
qualifying for tax-free treatment under Section 355 of the Code (i) in
the two years prior to the date of this Agreement or (ii) in a
distribution that could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e)
of the Code) in conjunction with this acquisition.
3.7.10 Neurologix has not agreed, and is not required to make,
any adjustment under Section 481(a) of the Code, and to the knowledge
of Neurologix, no Governmental Entity has proposed any such adjustment
or change in accounting method;
3.7.11 any adjustment of Taxes of Neurologix made by the
Internal Revenue Service (the "IRS"), which adjustment is required to
be reported to the appropriate state, local, or foreign governmental
authorities, has been so reported;
3.7.12 Neurologix has not executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any similar provision
of state, local or foreign law, and Neurologix is not subject to any
private letter ruling of the IRS or comparable ruling of any other
Governmental Entity;
3.7.13 there is no contract, agreement, plan, or arrangement
covering any person that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by CTP,
Subcorp, or Neurologix by reason of Section 280G of the Code;
3.7.14 Neurologix is not a party to any contract, agreement or
other arrangement which could result in the payment of amounts that
could be nondeductible by reason of Section 162(m) of the Code;
-17-
3.7.15 Neurologix has not entered into a transaction that is
being accounted for under the installment method of Section 453 of the
Code or similar provision of state, local or foreign law;
3.7.16 Neurologix has not filed a consent under Section 341(f)
of the Code;
3.7.17 Neurologix is not a party to any lease arrangement
involving a defeasance of rent, interest or principal;
3.7.18 Neurologix is not a direct or indirect beneficiary of a
guarantee of Tax benefits or any other arrangement that has the same
economic effect (including an indemnity from a seller or lessee of
property, or other insurance) with respect to any transaction or Tax
opinion relating to Neurologix;
3.7.19 Neurologix does not owe any "corporate acquisition
indebtedness" within the meaning of Section 279 of the Code;
3.7.20 Neurologix has never been (i) a "passive foreign
investment company," (ii) a "foreign personal holding company," (iii) a
"foreign sales corporation," (iv) a "foreign investment company," or
(v) a person other than a United States person, each within the meaning
of the Code;
3.7.21 Neurologix is not a "personal holding company" within
the meaning of Section 542 of the Code;
3.7.22 Neurologix has no elections in effect for federal
income tax purposes under Sections 108, 168, 338, 441, 472, 1017 or
4977 of the Code or any other material Tax election; and
3.7.23 Neurologix is not an "investment company" within the
meaning of Section 368(a)(2)(F) of the Code.
3.8 INTELLECTUAL PROPERTY. Neurologix owns or possesses licenses
or other rights to all patents, patent applications, trademarks, copyrights,
know-how, trade secrets and other intellectual property ("INTELLECTUAL
PROPERTY") necessary to the conduct of its business as currently conducted by
it, free and clear of any Liens (except as set forth on Section 3.8 of the
Neurologix Disclosure Letter) and without any Neurologix obligation to any
person or entity for royalties, fees or commissions (except pursuant to various
licenses, research, development and consulting agreements which have been
provided to counsel to CTP). Section 3.8 of the Neurologix Disclosure Letter
sets forth a true and complete list of all registrations and issuances of, and
applications for, any Intellectual Property owned or purported to be owned by
Neurologix, setting forth the serial or registration number and name or title of
each item of Intellectual Property. To the best of Neurologix's knowledge,
Neurologix's operations do not infringe upon or conflict with the asserted
rights of any other person under any Intellectual Property. To the best of
Neurologix's knowledge, all such Intellectual Property owned, purported to be
owned or licensed by Neurologix, or which Neurologix otherwise uses, reproduces,
prepares derivative works based upon, distributes, performs, displays, makes,
has made, sells, offers to sell and imports (collectively, "PRACTICES"), is
valid and enforceable and has
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not been challenged in any judicial or administrative proceeding. To the best of
Neurologix's knowledge, no claim is pending or threatened against Neurologix to
the effect that any such Intellectual Property owned or licensed by Neurologix,
or which Neurologix otherwise Practices, is invalid or unenforceable by
Neurologix. To the best of Neurologix's knowledge, no Person nor such Person's
business or products has infringed, misused, misappropriated or conflicted with
such Intellectual Property owned, purported to be owned or licensed by
Neurologix, or which Neurologix otherwise Practices or currently is infringing,
misusing, misappropriating or conflicting with such Intellectual Property owned,
purported to be owned or licensed by Neurologix, or which Neurologix otherwise
Practices. To the best of Neurologix's knowledge, Neurologix has made, or is
diligently preparing to make, all statutorily required filings in the United
States, if any, to record its interests, and taken reasonable actions to protect
its rights in such Intellectual Property owned or licensed by Neurologix, or
which Neurologix otherwise Practices. Except as set forth on Section 3.8 of the
Neurologix Disclosure Letter, Neurologix is: (i) diligently preparing to file
patent applications in the United States and all foreign jurisdictions in which
Neurologix currently contemplates conducting business for all inventions which
Neurologix owns or with respect to which Neurologix has the contractual right to
control the filing of a patent application and which Neurologix believes are
material to its business within a sufficient time period to avoid statutory
disqualification of any such potential application; and (ii) diligently
prosecuting all patent applications it has previously filed and which it deems
to be material to its business. Except as set forth on Section 3.8 of the
Neurologix Disclosure Letter, each present or past employee, officer or
consultant who developed any part of any product of Neurologix or any
Intellectual Property that is or will be Practiced by Neurologix has executed an
invention assignment agreement with Neurologix substantially in the form
provided to counsel to CTP. It is not necessary for the business of Neurologix
to acquire the rights to Practice any Intellectual Property owned by any present
or past director, officer, employee or consultant of Neurologix (or Persons
Neurologix presently intends to hire), except for such rights which Neurologix
already has acquired. To the knowledge of Neurologix, at no time during the
conception or reduction to practice of any of the Intellectual Property that is
or currently is intended to be Practiced by Neurologix was any developer,
inventor or other contributor to such Intellectual Property operating under any
grants from any Governmental Authorities or subject to any employment agreement,
invention, assignment, nondisclosure agreement or other contract with any Person
(other than institutions to which Neurologix is a party to research or license
agreements, copies of which agreements have been delivered to CTP's counsel)
that could adversely affect the rights of Neurologix to such Intellectual
Property. Neurologix is a joint owner, together with Rockefeller University
("RU") and Xxxxxx Xxxxxxxxx University ("TJU"), and is an exclusive licensee of
RU's and TJU's interest in, the intellectual property contained in United States
provisional patent application No. 60/292,604, filed on May 22,2001, titled
"Transcriptional Regulation of Target Genes" Xxxxxxx & Xxxxxxx Docket No.
2573-1-001P, and the related non-provisional patent application No. 10/151,702
(publication no. 20020087264 A1), which bears the same title (collectively, the
"MDT IP") subject to an agreement between Neurologix and Medtronic Neurological,
dated as of February 28, 2002. The MDT IP (i) is not necessary to the conduct of
Neurologix's business as currently conducted or its current product strategy,
and (ii) will not be part of Neurologix's Phase I human clinical trials of gene
therapy for the treatment of Xxxxxxxxx'x disease.
3.9 FINANCIAL STATEMENTS. Attached as Section 3.9 of the
Neurologix Disclosure Letter are the audited balance sheet of Neurologix as of
December 31, 2002, and the related
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audited statements of income, changes in stockholders' equity and cash flows of
Neurologix for the year ended December 31, 2002, each prepared in accordance
with GAAP applied on a consistent basis, and the unaudited balance sheet of
Neurologix as of June 30, 2003 and the related unaudited statements of income
and cash flows for the six months then ended (the "NEUROLOGIX FINANCIAL
STATEMENTS"). The Neurologix Financial Statements fairly present (subject, in
the case of any unaudited interim statements, to normal, year-end adjustments,
none of which will be material) the financial condition of Neurologix and the
results of Neurologix's operations and cash flows as at the dates and for the
periods to which they apply, as the case may be, and such statements have been
prepared in conformity with GAAP.
3.10 UNDISCLOSED LIABILITIES. Neurologix has no liabilities or
obligations of any kind whatsoever, whether known or unknown, absolute, accrued,
contingent or otherwise, or whether due or to become due, other than those (i)
reflected in the Neurologix Financial Statements including the footnotes
thereto, (ii) that arise under the contracts delivered to CTP's counsel or in
Section 3.10 of the Neurologix Disclosures Letter, (iii) incurred in the
ordinary course of business since June 30, 2003 and which would not have a
Neurologix Material Adverse Effect or (iv) as would not have an impact on
Neurologix's unencumbered cash and cash equivalents in excess of (i.e., net of)
all liabilities (actual and contingent, accrued and unaccrued) and contractual
commitments of Neurologix.
3.11 ENVIRONMENTAL MATTERS. Neurologix has complied in all material
respects with all federal, state or local statutes, ordinances, orders,
judgments, rulings or regulations relating to protection of the environment or
natural resources or to environmental regulation or control (collectively,
"ENVIRONMENTAL LAWS"). Neurologix, to its knowledge, is not the subject of any
federal, state, local or foreign investigation, and Neurologix has not received
any written notice or claim, or entered into any negotiations or agreements with
any person, relating to any material liability or material remedial action under
any applicable Environmental Laws. Neither Neurologix nor any of its officers,
employees, representatives or agents, nor, to the knowledge of Neurologix, any
other person, has utilized, treated, stored, processed, released, manufactured,
discharged, spilled or otherwise disposed of any odor, pollutant, contaminant or
other substance defined as hazardous or toxic by any Environmental Law, or any
waste or by-products thereof, at any real property or any other facility owned
or leased by Neurologix, in violation of any applicable statutes, regulations,
ordinances or directives of any Governmental Entity or court, except as would
not have a Neurologix Material Adverse Effect.
3.12 MATERIAL CONTRACTS. Except as set forth in Section 3.12 of the
Neurologix Disclosure Letter, Neurologix is not a party to or bound by any:
3.12.1 employment agreement (other than those that are
terminable by Neurologix without cost or penalty upon 60 days' or less
notice);
3.12.2 operating or capital lease, whether as lessor or
lessee, with respect to any real property;
3.12.3 contract, whether as licensor or licensee, for the
license of any patent, know-how, trademark, trade name, service xxxx,
copyright or other intangible asset;
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3.12.4 loan or guaranty agreement, indenture or other
instrument, contract or agreement under which any money has been
borrowed or loaned or any note, bond or other evidence of indebtedness
has been issued;
3.12.5 mortgage, security agreement, conditional sales
contract, capital lease or similar agreement which effectively creates
a lien on any assets of Neurologix;
3.12.6 contract restricting Neurologix in any material respect
from engaging in business or from competing with any other parties;
3.12.7 plan of reorganization;
3.12.8 partnership, joint venture or similar agreement;
3.12.9 collective bargaining agreement;
3.12.10 "material contract" (as defined in Item 601(b)(10) of
Regulation S-K of the SEC);
3.12.11 contract or commitment (whether written or oral) which
continues for a period of more than six months from the date hereof or
requires payments, in the aggregate, in excess of $50,000;
3.12.12 investment banking or other professional service
agreement;
3.12.13 agreement regarding acquisitions or dispositions of a
material portion of Neurologix's assets other than in the ordinary
course of Neurologix's business;
3.12.14 outstanding loan or loan commitment to any person or
any factoring, credit line or subordination agreement; or
3.12.15 any power of attorney outstanding or any contract,
commitment or liability (whether absolute, accrued, contingent or
otherwise), as guarantor, surety, cosigner, endorser, co-maker,
indemnitor in respect of the contract or commitment of any other
Person.
All of the foregoing are collectively referred to as "Neurologix Material
Contracts." To the extent Neurologix Material Contracts are evidenced by
documents, true and complete copies thereof (and summaries of oral Neurologix
Material Contracts) have been delivered or made available to CTP. Each
Neurologix Material Contract is in full force and effect. Neurologix and, to the
best of Neurologix's knowledge, each other party thereto have in all material
respects performed all of the obligations required to be performed by them to
date, have received no notice of default and are not in default (with due notice
or lapse of time or both) under any Neurologix Material Contract.
3.13 INSURANCE. Section 3.13 of the Neurologix Disclosure Letter
sets forth a list of all insurance policies which Neurologix currently has in
effect, and the status of any unpaid claims thereunder. True and correct copies
of such insurance policies have been made available to CTP.
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All premiums due and payable under all such policies have been paid, and to
Neurologix's knowledge, Neurologix is in compliance in all material respects
with the terms and conditions of all such policies.
3.14 AFFILIATE TRANSACTIONS. Except as set forth on Section 3.14 of
the Neurologix Disclosure Letter, there are no other transactions, agreements,
arrangements or understandings between Neurologix, on the one hand, and any
officer, director, employee, family member of any of the foregoing, or any
Affiliate (including, without limitation, Palisade Capital Management LLC and
its Affiliates) of Neurologix or other persons, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K under the Securities
Act of 1933, as amended.
3.15 EMPLOYEE BENEFIT PLANS. Except as set forth in Section 3.15 of
the Neurologix Disclosure Letter, neither Neurologix nor any of its Affiliates
maintains, sponsors or otherwise has any obligation or liability with respect to
any "employee benefit plan" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) or any other plan,
policy, contract or arrangement (whether written or oral), including any plan,
policy, contract or arrangement providing bonuses, stock options, stock purchase
rights, deferred compensation, health or welfare benefits, vacation or sick
benefits, or any other employee fringe benefits (each an "Employee Benefit
Plan"), and there exists no circumstances, whether known or unknown, contingent
or otherwise, under which Neurologix could have any material liability, whether
direct or indirect, with respect to any Employee Benefit Plan that Neurologix or
any of its Affiliates maintained, sponsored or otherwise had any obligation or
liability with respect to prior to the Closing Date. No suit is currently
pending, or to Neurologix's knowledge is being threatened, by any former
employee alleging wrongful termination, breach of an employment agreement,
discrimination or any other payments from Neurologix.
3.16 FUNDED DEBT.
3.16.1 Except as set forth in (i) the balance sheet of
Neurologix as of December 31, 2002 and the footnotes thereto included
in the Neurologix Financial Statements, (ii) the balance sheet of
Neurologix as of June 30, 2003 and the footnotes thereto included in
the Neurologix Financial Statements, or (iii) Section 3.16 of the
Neurologix Disclosure Letter, Neurologix does not have any term or
funded debt, debt to banks or debt to Affiliates. No event has occurred
which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default by
Neurologix which has not been cured or waived under any agreement or
other instrument relating to any funded debt, bank loan or debt to
Affiliates.
3.16.2 Except as set forth in Section 3.16 of the Neurologix
Disclosure Letter, Neurologix is not a guarantor of the obligations of
any Person.
3.16.3 There are no accrued or declared dividends on any
shares of any of Neurologix's capital stock that have not been paid.
3.17 OTHER BUSINESS NAMES. Section 3.17 of the Neurologix
Disclosure Letter sets forth each business name or registered trade name
currently used by Neurologix in connection with its business, and each
jurisdiction, if any in which such name is registered.
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3.18 REQUIRED ACTIONS. Pursuant to the Voting Agreement, a majority
of the holders of each class of the capital stock of Neurologix has committed to
take all action in accordance with the federal securities laws, the DGCL, its
certificate of incorporation and its by-laws necessary to obtain the consent and
approval of its Stockholders to the Merger, this Agreement and the transactions
contemplated hereby. Neurologix's board is recommending to its Stockholders
approval of the Merger and the transactions contemplated by this Agreement and
declaring its advisability.
3.19 FDA APPROVAL. (i) Neurologix has no knowledge that any
Governmental Entity, including, but not limited to, the United States Food and
Drug Administration (the "FDA"), will ultimately prohibit the marketing, sale,
license or use in the United States or any other jurisdiction in which
Neurologix expects to exploit its Intellectual Property of any product proposed
to be developed, produced or marketed by Neurologix, or with third parties
(each, a "PRODUCT"), (ii) no Product is on clinical hold and Neurologix does not
have any reason to expect that any Product is reasonably likely to be placed on
clinical hold, (iii) Neurologix has made available to CTP all submissions to the
FDA and the FDA responses (and other material correspondence received from or
submitted to the FDA), including, but not limited to, all FDA warning letters,
regulatory letters and notice of adverse finding letters and the relevant
responses, received by Neurologix or any agent thereof relative to the
development of its Products, (iv) to the knowledge of Neurologix, the FDA has
not prohibited any product or production process from being marketed or used in
the United States which product or process is substantially similar to any
Product in composition, (v) neither Neurologix nor, to the knowledge of
Neurologix, the employees, consultants, contractors, and sub-contractors of
Neurologix, has ever been sanctioned, formally or otherwise, by the FDA, and
(vi) there has not been any suspensions or debarments by the FDA or other
federal departments and state regulatory bodies against Neurologix, or, to the
knowledge of Neurologix, any current or former employee, consultant, contractor
or subcontractor of Neurologix. Neither Neurologix, nor to its knowledge any
officer, employee or agent of Neurologix, has knowingly made an untrue statement
of a material fact or fraudulent statement to the FDA or other Governmental
Entity.
3.20 NO MATERIAL ADVERSE CHANGE. Except as set forth on Section
3.20 of the Neurologix Disclosure Letter, since December 31, 2002, Neurologix
has conducted its business in the ordinary course consistent with past practice,
and there has not been any material adverse change in the business, financial
condition, prospects, assets or operations of Neurologix.
3.21 BROKERAGE. No broker or finder has rendered services to
Neurologix or, to the best of Neurologix's knowledge, to any Stockholder in
connection with this Agreement or the transactions contemplated hereby, other
than Palisade Capital Securities, L.L.C. Neurologix has agreed to pay Palisade
Capital Securities, L.L.C. an aggregate of $200,000 at the Effective Time for
such services. Other than as set forth in this Section 3.21, there is no
agreement executed by Neurologix which will obligate Neurologix or any of its
successors or Affiliates to pay any brokerage or finder's fee in the future with
respect to any type of commercial, corporate, financial, acquisition, banking,
borrowing or other business transaction.
3.22 FULL DISCLOSURE. No representation or warranty made in this
Article III, and no certification furnished or to be furnished by Neurologix
pursuant to this Agreement, contains or
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will contain any untrue statement of a material fact or omits, or will omit, to
state a material fact necessary to make the statements contained herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CTP AND SUBCORP
CTP and Subcorp represent and warrant to Neurologix as follows:
4.1 ORGANIZATION AND QUALIFICATION. Each of CTP and Subcorp is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the power and authority to own, lease and
operate its properties and to conduct its business as now conducted. Each of CTP
and Subcorp is duly qualified or licensed to transact business as a foreign
corporation, and is in good standing in each jurisdiction in which the conduct
of its business or the ownership, leasing or operation of its property requires
such qualification, except for failures to be so qualified or in good standing
which would not, singly or in the aggregate with all such other failures, have a
CTP Material Adverse Effect. CTP has no Subsidiaries (other than Subcorp and
Iguana Studios, Inc., a Delaware corporation which is inactive). CTP has no
interests in any other Person other than inactive subsidiaries with no material
assets or liabilities. Subcorp was formed solely for the purpose of engaging in
the transactions contemplated by this Agreement and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated by this Agreement.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT; ENFORCEABILITY. The
execution, delivery and performance of this Agreement are within the corporate
power and authority of CTP and Subcorp and have been duly and validly authorized
by all requisite corporate action on the part of CTP and Subcorp. This Agreement
has been duly executed and delivered by CTP and Subcorp and is a legal, valid
and binding obligation of CTP and Subcorp, enforceable against CTP and Subcorp
in accordance with its terms, except insofar as its enforcement may be limited
by (a) bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (b) equitable principles limiting
the availability of equitable remedies. All persons who executed this Agreement
on behalf of CTP and Subcorp have been duly authorized to do so.
4.3 CONFLICTS; CONSENTS AND APPROVALS. Neither the execution and
delivery of this Agreement by CTP and Subcorp nor the consummation of the
transactions contemplated hereby will: (a) conflict with, or result in a breach
of any provision of, CTP or Subcorp's certificate of incorporation or by-laws;
(b) violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with the giving of notice, the passage
of time or otherwise, would constitute a default) under, or entitle any party
(with the giving of notice, the passage of time or otherwise) to terminate,
accelerate, modify or call a default under, or result in the creation of any
Lien upon any of the properties or assets of CTP or Subcorp under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, contract, undertaking, agreement, lease or other instrument or
obligation to which CTP or Subcorp is a party or by which CTP or Subcorp is
bound; (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to CTP or Subcorp or their respective properties or
assets; or (d) require any action or consent or approval of, or review by, or
registration or filing
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by CTP or Subcorp or any of their respective Affiliates with, any third party or
any Governmental Entity, other than the filing of the Certificate of Merger and
registrations or other actions required under federal and state securities laws
as are contemplated by this Agreement.
4.4 CAPITALIZATION. As of the date hereof, the authorized capital
stock of CTP consists solely of: (a) 500,000,000 shares of CTP Common Stock, and
(b) 5,000,000 shares of CTP preferred stock, of which 500,000 of such shares
have been designated as CTP Series A Preferred Stock and 4,000,000 of such
shares have been designated as CTP Series B Preferred Stock. As of the date
hereof, there are 182,003,920 shares of CTP Common Stock issued and outstanding,
645 shares of CTP Series A Preferred Stock issued and outstanding, which are
convertible into 645 shares of CTP Common Stock, and no shares of CTP Series B
Preferred Stock issued and outstanding. There are no options, warrants or other
securities, rights or agreements outstanding that entitle any person to acquire
(either currently or upon the passage of time or the occurrence of any condition
or event) any shares of CTP Common Stock or any other security convertible into
or exchangeable or exercisable for CTP Common Stock, except for such stock
options to purchase shares of CTP Common Stock granted by CTP to current or
former directors, officers, employees, consultants or representatives of CTP or
to other persons with relationships to CTP (each, a "CTP EXISTING OPTION") as
are set forth in the CTP Disclosure Letter. Each outstanding share of CTP Common
Stock is, and all shares of CTP Common Stock to be issued in connection with the
transactions contemplated hereby will be, duly authorized and validly issued,
fully paid and nonassessable, with no personal liability attaching to the
ownership thereof, and each outstanding share of CTP Common Stock has not been,
and all shares of CTP Common Stock to be issued in connection with the
transactions contemplated hereby will not be, issued in violation of any
preemptive or similar rights. As of the date hereof, except as set forth on
Section 4.4 of the CTP Disclosure Letter, CTP did not have, and was not bound
by, any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of any shares
of CTP Common Stock or any other equity securities of CTP or any securities
representing the right to purchase or otherwise receive any shares of CTP Common
Stock. Section 4.4 of the CTP Disclosure Letter sets forth with respect to each
CTP Existing Option (i) the name of the holder thereof, (ii) its exercise price,
(iii) its expiration date, and (iv) its vesting schedule.
4.5 CTP SEC DOCUMENTS AND OTHER PUBLIC DISCLOSURES. CTP has timely
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since January 1, 2000 under the Exchange Act (such
documents, as supplemented and amended since the time of filing, collectively,
the "SEC DOCUMENTS"). The SEC Documents, including any financial statements or
schedules included therein, after giving effect to any amendment or restatement
thereof (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (b) complied in all material respects with the
applicable requirements of the Exchange Act. CTP has previously provided to
Neurologix's counsel true and complete copies of the SEC Documents filed since
June 30, 2002. The audited consolidated financial statements and unaudited
consolidated interim financial statements of CTP and its consolidated
Subsidiaries included or incorporated by reference in the SEC Documents at the
time (a) filed complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, (b) were prepared in accordance with GAAP applied on a
consistent basis
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during the periods involved (except as may be indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC), and
(c) fairly present (subject, in the case of unaudited interim statements, to
normal, year-end adjustments) the consolidated financial position of CTP and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended in conformity with
GAAP.
4.6 NO MATERIAL ADVERSE CHANGE. Except (i) as set forth in the SEC
Documents at least five Business Days prior to the date of this Agreement or on
Section 4.6 of the CTP Disclosure Letter, and (ii) for the disposition and/or
termination of the business and operations of CTP and its Subsidiaries, since
December 31, 2002, there has not been any material adverse change in the
business, financial condition, prospects, assets or operations of CTP.
4.7 NO LITIGATION; COMPLIANCE WITH LAWS; PERMITS. Except as set
forth in the SEC Documents at least five Business Days prior to the date of this
Agreement or on Section 4.7 of the CTP Disclosure Letter, there is no (i)
action, suit, claim, proceeding, demand, arbitration, hearing, complaint,
examination or investigation pending or, to the best of the CTP's knowledge,
threatened against or affecting CTP, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any other
Governmental Entity (including, without limitation, any action, suit, claim,
proceeding, demand, arbitration, hearing complaint, examination or investigation
against any director, officer or employee of CTP or other person for whom CTP
may be liable), (ii) arbitration proceeding relating to CTP pending under
collective bargaining agreements or otherwise, or (iii) governmental inquiry
pending or, to the best of CTP's knowledge, threatened against or affecting CTP
(including without limitation any inquiry as to the qualification of CTP to hold
or receive any license or permit), except as would not have, either individually
or in the aggregate, a CTP Material Adverse Effect. CTP has complied with all
material laws, rules, regulations and orders applicable to its business,
operations, properties, assets, products and services. CTP had all necessary
permits, licenses and other authorizations required to conduct its business as
conducted in the past, except such permits, licenses, grants, consents,
approvals and other authorizations that, if not obtained, would have, either
individually or in the aggregate, a CTP Material Adverse Effect.
4.8 TAX RETURNS. As of the date of this Agreement:
4.8.1 all Tax Returns required to be filed by or with respect
to CTP have been properly prepared and timely filed, and all such Tax
Returns (including information provided therewith or with respect to
thereto) are true, complete and correct in all material respects;
4.8.2 CTP has fully and timely paid all Taxes owed by them
(whether or not shown on any Tax Return), and have made adequate
provision for any Taxes that are not yet due and payable, for all
taxable periods, or portions thereof, ending on or before the date
hereof;
4.8.3 CTP has given or otherwise made available to Neurologix
true, correct and complete copies of all Tax Returns, examination
reports and statements of deficiencies
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for taxable periods, or transactions consummated, for which the
applicable statutory periods of limitations have not expired;
4.8.4 there are no outstanding agreements extending or waiving
the statutory period of limitations applicable to any claim for, or the
period for the collection or assessment or reassessment of, Taxes due
from CTP or Subcorp for any taxable period and no request for any such
waiver or extension is currently pending;
4.8.5 no audit or other proceeding by any Governmental Entity
is pending or, to the knowledge of CTP or Subcorp, threatened with
respect to any Taxes due from or with respect to CTP or Subcorp, no
Governmental Entity has given notice of any intention to assert any
deficiency or claim for additional Taxes against CTP or Subcorp, and no
claim has been made by any Governmental Entity in a jurisdiction where
CTP or Subcorp do not file Tax Returns that CTP or Subcorp is or may be
subject to taxation by that jurisdiction, and all deficiencies for
Taxes asserted or assessed against CTP or Subcorp have been fully and
timely paid, settled or properly reflected in the most recent audited
financial statements;
4.8.6 there are no Liens for Taxes upon the assets or
properties of CTP or Subcorp, except for statutory Liens for current
Taxes not yet due;
4.8.7 CTP has not taken any reporting position on a Tax
Return, which reporting position (i) if not sustained would be
reasonably likely, absent disclosure, to give rise to a penalty for
substantial understatement of federal income Tax under Section 6662 of
the Code (or any similar provision of state, local, or foreign Tax
law), and (ii) has not adequately been disclosed on such Tax Return in
accordance with Section 6662(d)(2)(B) of the Code (or any similar
provision of state, local, or foreign Tax law);
4.8.8 CTP has withheld (or will withhold) from its employees,
independent contractors, creditors, stockholders and third parties and
timely paid to the appropriate Governmental Entity proper and accurate
amounts in all material respects for all periods ending on or before
the Closing Date in compliance with all Tax withholding and remitting
provisions of applicable laws and have each complied in all material
respects with all Tax information reporting provisions of all
applicable laws;
4.8.9 CTP has not constituted a "distributing corporation" or
a "controlled corporation" (within the meaning of Section 355(a)(1)(A)
of the Code) in a distribution of shares qualifying for tax-free
treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution that could
otherwise constitute part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with this acquisition.
4.8.10 CTP has not agreed, and is required to make, any
adjustment under Section 481(a) of the Code, and to the knowledge of
CTP and Subcorp, no Governmental Entity has proposed any such
adjustment or change in accounting method;
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4.8.11 any adjustment of Taxes of CTP or Subcorp made by the
IRS, which adjustment is required to be reported to the appropriate
state, local, or foreign governmental authorities, has been so
reported;
4.8.12 neither CTP nor Subcorp has executed or entered into a
closing agreement pursuant to Section 7121 of the Code or any similar
provision of state, local or foreign law, and neither CTP nor any of
its Subsidiaries is subject to any private letter ruling of the IRS or
comparable ruling of any other Governmental Entity;
4.8.13 there is no contract, agreement, plan, or arrangement
covering any person that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by CTP,
Subcorp, or Neurologix by reason of Section 280G of the Code;
4.8.14 none of CTP and Subcorp is a party to any contract,
agreement or other arrangement which could result in the payment of
amounts that could be nondeductible by reason of Section 162(m) of the
Code;
4.8.15 neither CTP nor Subcorp has entered into a transaction
that is being accounted for under the installment method of Section 453
of the Code or similar provision of state, local or foreign law;
4.8.16 CTP has not filed a consent under Section 341(f) of the
Code;
4.8.17 CTP is not a party to any lease arrangement involving a
defeasance of rent, interest or principal;
4.8.18 CTP is not a direct or indirect beneficiary of a
guarantee of Tax benefits or any other arrangement that has the same
economic effect (including an indemnity from a seller or lessee of
property, or other insurance) with respect to any transaction or Tax
opinion relating to CTP and Subcorp;
4.8.19 CTP does not owe any "corporate acquisition
indebtedness" within the meaning of Section 279 of the Code;
4.8.20 CTP has never been (i) a "passive foreign investment
company," (ii) a "foreign personal holding company," (iii) a "foreign
sales corporation," (iv) a "foreign investment company," or (v) a
person other than a United States person, each within the meaning of
the Code;
4.8.21 CTP is not a "personal holding company" within the
meaning of Section 542 of the Code; and
4.8.22 CTP has no elections in effect for federal income tax
purposes under Sections 108, 168, 338, 441, 472, 1017 or 4977 of the
Code or any other material Tax election.
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4.9 TITLE TO ASSETS. CTP and its Subsidiaries have good and
marketable title to or a valid leasehold interest in their respective properties
and assets and all such properties and assets owned by them are free and clear
of all Liens, except (i) for Liens for current taxes not yet due and payable and
minor imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations of CTP, and (ii) as set forth on
Section 4.9 of the CTP Disclosure Letter. Each lease or agreement to which CTP
or any of its Subsidiaries is a party under which it is a lessee of any
property, real or personal, is a valid and existing agreement without any
default of CTP or any such Subsidiaries thereunder and, to the best of CTP's
knowledge, without any default thereunder of any other party thereto. To the
best of CTP's knowledge, no event has occurred and is continuing which, with due
notice or lapse of time or both, would constitute a default or event of default
by CTP or any of its Subsidiaries under any such lease or agreement or, to the
best of CTP's knowledge, by any other party thereto.
4.10 NO DEFAULT. CTP, and to the best of CTP's knowledge, each
other party thereto, have in all material respects performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any lease,
agreement or contract now in effect to which CTP is a party.
4.11 INTELLECTUAL PROPERTY. To the best of CTP's knowledge, no
claim is pending or overtly threatened to the effect that the prior or current
operations of CTP infringe or infringed upon or conflict or conflicted with the
asserted rights of any other person under any patents, patent applications,
trademarks, copyrights, know-how, trade secrets and other intellectual property.
4.12 NO CURRENT OPERATIONS. Except as set forth on Section 4.12 of
the CTP Disclosure Letter, CTP and its Subsidiaries have no current business
operations. Except as set forth in Section 4.12 of the CTP Disclosure Letter or
the SEC Documents, CTP and its Subsidiaries have (i) disposed (whether by sale,
liquidation or otherwise) of all of their active business operations on or prior
to June 30, 2003 and (ii) neither CTP nor its Subsidiaries have any liabilities
or obligations to the acquirors of such business operations, nor did the terms
of disposition require them to retain any liabilities of such disposed business
operations.
4.13 UNDISCLOSED LIABILITIES.
4.13.1 As of the date hereof, neither CTP nor any of its
Subsidiaries has any liabilities or obligations of any kind or nature
whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, other than those (i)
reflected in the most recent balance sheet, including the footnotes
thereto (the "Recent Balance Sheet"), included in CTP's consolidated
financial statements (the "CTP Financial Statements") contained in the
SEC Documents, (ii) contractual liabilities or liabilities related to
litigation or other claims or contingent liabilities estimated on the
Worksheet, (iii) incurred in the course of disposing of and winding
down the Company's existing business since June 30, 2003 and estimated
through Closing on the Worksheet or (iv) as would not change CTP's Net
Cash Assets or the number of shares of CTP Common Stock outstanding.
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4.13.2 As of the Closing Date, neither CTP nor any of its
Subsidiaries has any liabilities or obligations of any kind or nature
whatsoever, whether known or unknown, absolute, accrued, contingent or
otherwise, or whether due or to become due, other than those (i)
reflected in the most Recent Balance Sheet included in CTP's Financial
Statements contained in the SEC Documents, (ii) contractual liabilities
or liabilities related to litigation or other claims or contingent
liabilities estimated on the Updated Worksheet, (iii) incurred in the
course of disposing of and winding down the Company's existing business
since June 30, 2003 and estimated through Closing on the Updated
Worksheet or (iv) as would not change CTP's Net Cash Assets or the
number of shares of CTP Common Stock outstanding.
4.14 FUNDED DEBT.
4.14.1 Except as set forth in (i) the consolidated balance
sheet of CTP and its consolidated Subsidiaries as of December 31, 2002
and the footnotes thereto set forth in CTP's Annual Report on Form 10-K
for the fiscal year ended December 31, 2002, (ii) the consolidated
balance sheet of CTP and its consolidated Subsidiaries as of June 30,
2003 and the footnotes thereto set forth in CTP's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2003, or (iii) Section 4.14 of
the CTP Disclosure Letter, none of CTP nor Subcorp has any term or
funded debt, debt to banks or debt to Affiliates. No event has occurred
which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default by CTP
which has not been cured or waived under any agreement or other
instrument relating to any funded debt, bank loan or debt to
Affiliates.
4.14.2 Except as set forth in Section 4.14 of the CTP
Disclosure Letter, neither CTP nor Subcorp is a guarantor of the
obligations of any Person.
4.14.3 There are no accrued or declared dividends on any
shares of any of CTP's capital stock that have not been paid.
4.15 OTHER BUSINESS NAMES. Neither CTP nor any of its Subsidiaries
currently uses a business name or registered trade name.
4.16 ENVIRONMENTAL MATTERS. CTP has complied in all material
respects with all Environmental Laws. Neither CTP nor Subcorp is, to CTP's
knowledge, the subject of any federal, state, local or foreign investigation,
and neither CTP nor Subcorp has received any written notice or claim, or entered
into any negotiations or agreements with any person, relating to any material
liability or material remedial action under any applicable Environmental Laws.
Neither CTP nor Subcorp, nor any of their respective officers, employees,
representatives or agents, nor, to the knowledge of CTP, any other person, has
utilized, treated, stored, processed, released, manufactured, discharged,
spilled or otherwise disposed of any odor, pollutant, contaminant or other
substance defined as hazardous or toxic by any Environmental Law, or any waste
or by-products thereof, at any real property or any other facility owned or
leased by CTP or Subcorp, in violation of any applicable statutes, regulations,
ordinances or directives of any Governmental Entity or court, except as would
not have a CTP Material Adverse Effect.
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4.17 MATERIAL CONTRACTS. Except as set forth in the list of
material contracts in Part II, Section 6 of CTP's most recent Form 10-Q or
Section 4.17 of the CTP Disclosure Letter, neither CTP nor its Subsidiaries is a
party to or bound by any:
4.17.1 employment agreement (other than those that are terminable by
CTP or any Subsidiary without cost or penalty upon 60 days' or less notice);
4.17.2 operating or capital lease, whether as lessor or lessee, with
respect to any real property;
4.17.3 contract, whether as licensor or licensee, for the license of
any patent, know-how, trademark, trade name, service xxxx, copyright or other
intangible asset;
4.17.4 loan or guaranty agreement, indenture or other instrument,
contract or agreement under which any money has been borrowed or loaned or any
note, bond or other evidence of indebtedness has been issued;
4.17.5 mortgage, security agreement, conditional sales contract,
capital lease or similar agreement which effectively creates a lien on any
assets of CTP or its Subsidiaries;
4.17.6 contract restricting CTP or any of its Subsidiaries in any
material respect from engaging in business or from competing with any other
parties;
4.17.7 plan of reorganization;
4.17.8 partnership, joint venture or similar agreement;
4.17.9 collective bargaining agreement;
4.17.10 "material contract" (as defined in Item 601(b)(10) of
Regulation S-K of the SEC);
4.17.11 contract or commitment (whether written or oral) which
continues for a period of more than six months from the date hereof or requires
payments, in the aggregate, in excess of $50,000;
4.17.12 investment banking or other professional service agreement;
4.17.13 agreement regarding acquisitions or dispositions of a material
portion of CTP's assets other than in the ordinary course of CTP's business;
4.17.14 outstanding loan or loan commitment to any person or any
factoring, credit line or subordination agreement; or
4.17.15 any power of attorney outstanding or any contract, commitment
or liability (whether absolute, accrued, contingent or otherwise), as guarantor,
surety, cosigner, endorser, co-maker, indemnitor in respect of the contract or
commitment of any other Person.
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All of the foregoing are collectively referred to as the "CTP Material
Contracts." To the extent CTP Material Contracts are evidenced by documents,
true and complete copies thereof (and summaries of oral CTP Material Contracts)
have been delivered or made available to Neurologix. Each Material Contract is
in full force and effect. CTP and, to the best of CTP's knowledge, each other
party thereto have in all material respects performed all of the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any CTP
Material Contract.
4.18 EMPLOYEE BENEFIT PLANS. Except as set forth in Section 4.18 of
the CTP Disclosure Letter, neither CTP nor any of its Affiliates maintains,
sponsors or otherwise has any obligation or liability with respect to any
Employee Benefit Plan, and there exists no circumstances, whether known or
unknown, contingent or otherwise, under which CTP could have any material
liability, whether direct or indirect, with respect to any Employee Benefit Plan
that CTP or any of its Affiliates maintained, sponsored or otherwise had any
obligation or liability with respect to prior to the Closing Date. No suit is
currently pending, or to CTP's knowledge is being threatened, by any former
employee alleging wrongful termination, breach of an employment agreement,
discrimination or any other payments from CTP.
4.19 INSURANCE. Section 4.19 of the CTP Disclosure Letter sets
forth a list of all insurance policies which CTP and Subcorp currently have in
effect, and the status of any unpaid claims thereunder. True and correct copies
of such insurance policies have been made available to Neurologix. All premiums
due and payable under all such policies have been paid, and to CTP's knowledge,
CTP and Subcorp are in compliance in all material respects with the terms and
conditions of all such policies.
4.20 CTP'S NET CASH ASSETS. CTP's Net Cash Assets (assuming for
purposes of such calculation that the Closing Date is the date hereof and that
the estimates of pending litigations and other claims and contingent liabilities
and costs to wind down CTP's business set forth on the Worksheet are reasonable)
are as reflected on the Worksheet.
4.21 BROKERAGE. No broker or finder has rendered services to CTP or
Subcorp or, to the best of CTP's knowledge, to any stockholder of CTP in
connection with this Agreement or the transactions contemplated hereby. There is
no agreement executed by CTP or Subcorp which will obligate CTP or Subcorp or
any of its successors or Affiliates to pay any brokerage or finder's fee in the
future with respect to any type of commercial, corporate, financial,
acquisition, banking, borrowing or other business transaction.
4.22 FULL DISCLOSURE. When taken together with the SEC Documents,
no representation or warranty made in this Article IV, and no certification
furnished or to be furnished by CTP or Subcorp pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits, or
will omit, to state a material fact necessary to make the statements contained
herein or therein not misleading.
4.23 FORMER CEO SEVERANCE. In exchange for obtaining a release from
Xxxxxxx X. Xxxxx, the former chief executive officer of CTP (the "Former CEO"),
of any and all other claims he may have against CTP or its affiliates, CTP shall
not have paid the Former CEO any consideration other than as previously paid or
provided for on the Worksheet.
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4.24 AFFILIATE TRANSACTIONS. Except as set forth in Section 6 of
Part II of CTP's most recent Form 10-Q or on Section 4.24 of the CTP Disclosure
Letter, there are no other transactions, agreements, arrangements or
understandings between CTP, on the one hand, and any officer, director,
employee, family member of any of the foregoing, or any Affiliate of CTP or
other persons, on the other hand, that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act of 1933, as amended.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 DISCLOSURE LETTERS; ACCESS AND INFORMATION. (a) On or prior to
the date hereof, CTP has delivered to Neurologix and Neurologix has delivered to
CTP a letter (respectively, the "CTP Disclosure Letter" and the "Neurologix
Disclosure Letter" and, collectively, the "Disclosure Letters") setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more representations or warranties contained
herein or to one or more of its covenants contained herein; provided that the
mere inclusion of an item in the Disclosure Letters as an exception to a
representation or warranty shall not be deemed an admission by a Party that such
item represents a material exception or fact, event or circumstance or that such
item is reasonably likely to result in a CTP Material Adverse Effect or
Neurologix Material Adverse Effect, as applicable.
(b) Prior to the Closing, Neurologix shall be entitled to make or
cause to be made such reasonable investigation of CTP or Subcorp, and the
financial and legal condition thereof, as Neurologix reasonably deems necessary
or advisable, and CTP and Subcorp shall cooperate with any such investigation.
Prior to the Closing, CTP shall be entitled to make or cause to be made such
reasonable investigation of Neurologix, and the financial and legal condition
thereof, as CTP reasonably deems necessary or advisable, and Neurologix shall
cooperate with any such investigation. In furtherance of the foregoing, but not
in limitation thereof, each of the Parties shall (a) permit the other Parties
and their respective agents and representatives to have reasonable access to its
premises, operating systems, computer systems (hardware and software), computer
equipment and books and records upon reasonable notice during regular business
hours, and (b) use all reasonable commercial efforts to cause its accountants to
furnish to such Party and its accountants access to all work papers relating to
any of the periods covered by the Neurologix Financial Statements, with respect
to Neurologix, or to the financial statements contained in the SEC Documents,
with respect to CTP and its Subsidiaries, subject to the execution by the Party
seeking such disclosure of such reasonable and customary documentation as such
accountants shall request to be executed.
(c) Neither Neurologix nor its representatives shall use any
information provided to it in confidence by CTP or Subcorp for any purpose
unrelated to this Agreement. None of CTP, Subcorp, nor their respective
representatives, shall use any information provided to any of them in confidence
by Neurologix for any purpose unrelated to this Agreement. Except with respect
to publicly available documents, in the event that this Agreement is terminated,
(a) CTP and Subcorp will deliver to Neurologix all documents obtained by them
from Neurologix in confidence or otherwise and any copies thereof in the
possession of CTP, Subcorp, or their
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respective agents and representatives or, at the option of Neurologix, CTP and
Subcorp shall cause all of such documents and all of such copies to be destroyed
and shall certify the destruction thereof to Neurologix and (b) Neurologix will
deliver to CTP all documents obtained by it from CTP or Subcorp in confidence or
otherwise and any copies thereof in the possession of Neurologix or its agents
and representatives or, at the option of CTP, Neurologix shall cause all of such
documents and all of such copies to be destroyed and shall certify the
destruction thereof to CTP.
(d) Notwithstanding anything herein to the contrary, any Party to
this Agreement (and each employee, representative, or other agent of any Party
to this Agreement) may disclose to any and all Persons, without limitation of
any kind, the tax treatment and tax structure of the transactions contemplated
by this Agreement, and all materials of any kind (including opinions or other
tax analyses) related to such tax treatment and tax structure; PROVIDED that
this sentence shall not permit any Person to disclose the name of, or other
information that would identify, any Party to such transactions or to disclose
confidential commercial information regarding such transactions; PROVIDED
FURTHER that this sentence shall not be effective with respect to any Person
until the earliest of the date of a public announcement (if any) of discussions
relating to any such transaction involving such Person, the date of a public
announcement (if any) of any such transaction involving such Person or the date
of the execution of a definitive agreement to enter into any such transaction
involving such Person, it being understood that there are no limits at any time
on the ability of any Party to consult its own independent tax advisor regarding
the tax treatment or tax structure of the transaction.
5.2 AFFIRMATIVE COVENANTS. Prior to the Closing, except as
otherwise expressly provided herein, the Parties shall (and shall cause each of
its Subsidiaries to):
5.2.1 use reasonable commercial efforts to keep in full force
and effect its corporate existence and all material rights, franchises,
intellectual property rights and goodwill relating or pertaining to its
businesses;
5.2.2 conduct its operations only in the ordinary course of
business consistent with past practice (except in connection with the
disposition and/or termination of the business and operations of CTP
and its Subsidiaries);
5.2.3 maintain its books, accounts and records in accordance
with past practice;
5.2.4 TAX MATTERS
5.2.4.1 prepare, in the ordinary course of business and
consistent with past practice (except as otherwise required by law),
and timely file all Tax Returns required to be filed by it (or them) on
or before the Closing Date ("POST SIGNING RETURNS");
5.2.4.2 fully and timely pay all Taxes due and payable in
respect of such Post Signing Returns that are so filed;
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5.2.4.3 properly reserve (and reflect such reserve in its
books and records and financial statements), in accordance with past
practice and in the ordinary course of business, for all Taxes payable
by it (or them) for which no Post Signing Return is due prior to the
Closing Date;
5.2.4.4 consult with one another with respect to all
material Post-Signing Returns and deliver drafts of such Post-Signing
Returns to one another no later than ten (10) business days prior to
the date (including extensions) on which such Post-Signing Returns are
required to be filed;
5.2.4.5 promptly notify one another of any material
federal, state, local or foreign income or franchise and any other
suit, claim, action, investigation, proceeding or audit (collectively,
"ACTIONS") pending against or with respect to it (or them) in respect
of any Tax matter, including (without limitation) Tax liabilities and
refund claims, and not settle or compromise any such Tax matter or
Action without the consent of the other Parties;
5.2.4.6 not make or revoke any Tax election or adopt or
change a tax accounting method without consent of the other Parties;
5.2.5 use reasonable commercial efforts to obtain all
authorizations, consents, waivers, approvals or other actions and to
make all filings and applications necessary or desirable to consummate
the transactions contemplated hereby and to cause the conditions to
Neurologix's obligation to close to be satisfied and to cause the
conditions to CTP's obligation to close to be satisfied; and
5.2.6 promptly notify the other Parties in writing if, prior
to the consummation of the Closing, to its knowledge (a) any of the
representations and warranties made by it herein cease to be accurate
and complete in all material respects (except for any representation
and warranty which is qualified hereunder as to materiality, as to
which such notification shall be given if the Party obtains knowledge
that such representation and warranty is inaccurate in any respect) or
(b) it fails to comply with or satisfy any material covenant, condition
or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this
Section 5.2.6 shall not limit or otherwise affect the remedies
available hereunder.
5.3 NEGATIVE COVENANTS. Prior to the Closing, except as otherwise
expressly provided herein, the Parties shall not (and shall cause each of its
Subsidiaries to not):
5.3.1 change any method or principle of accounting in a manner
that is inconsistent with past practice (except for any change required
by the SEC or GAAP);
5.3.2 take any action that would likely result in the
representations and warranties set forth herein (other than
representations made as of a particular date) becoming false or
inaccurate in any material respect (or, as to representations and
warranties, which, by their terms, are qualified as to materiality,
becoming false or inaccurate in any respect);
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5.3.3 take or omit to be taken any action, or permit any of
its Affiliates to take or to omit to take any action, which would
reasonably be expected to result in a CTP Material Adverse Effect or
Neurologix Material Adverse Effect, as applicable;
5.3.4 consummate the acquisition of any entity (by merger,
combination, purchase of the equity of such entity or purchase of all
or substantially all of the assets of such entity);
5.3.5 enter into any contract or transaction outside the
ordinary course of business consistent with past practice;
5.3.6 (i) issue any security (including any option or warrant)
to any Person, including, without limitation, convertible securities,
or incur any indebtedness to any Person, other than upon stock option
exercises, the conversion of Neurologix Series A Preferred, Neurologix
Series B Preferred and the Neurologix Note as described in Section 2.6
of this Agreement, or (ii) enter into any contract, understanding or
arrangement with respect to the sale, voting, registration or
repurchase of its capital stock, except in the case of either of the
foregoing clauses (i) and (ii), the issuance and sale for cash of not
more than $1 million (net of expenses) of additional equity securities
by Neurologix
5.3.7 other than the adoption of the Amendments by CTP's board
of directors and the approval of the amendments by CTP's shareholders,
effect any change to its certificate of incorporation or by-laws; or
5.3.8 agree or commit to take any action precluded by this
Section 5.3.
5.3.9 make, declare or pay any dividend or distribution on,
or, directly or indirectly, redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities convertible or
exchangeable into or exercisable for any shares of its capital stock;
5.3.10 except for increases in salary, wages and benefits of
officers or employees consistent with past practice, in conjunction
with new hires, promotions or other bona fide changes in job status or
pursuant to existing collective bargaining agreements, (i) increase the
compensation or benefits payable or to become payable to its directors,
officers or employees, (ii) pay any compensation or benefits not
required by any existing plan or arrangement (including the granting of
stock options, stock appreciation rights, shares of restricted stock or
performance units) or grant any severance or termination pay to (except
pursuant to existing agreements, plans or policies or as part of the
disposition and/or termination of the business and operations of CTP
and its Subsidiaries), or enter into any employment or severance
agreement with, any director, officer or other employee or (iii)
establish, adopt, enter into, amend or take any action to accelerate
rights under any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
savings, welfare, deferred compensation, employment, termination,
severance or other employee benefit plan, agreement, trust, fund,
policy or arrangement for the benefit or welfare of any directors,
officers or current or former employees, except in each case to the
extent required by applicable law;
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5.3.11 incur, assume or prepay any long-term indebtedness or
incur or assume any short-term indebtedness (including, in either case,
by issuance of debt securities), other than in the ordinary course of
business consistent with past practice under existing lines of credit;
5.3.12 assume, guarantee, endorse or otherwise become liable
or responsible for the obligations of any other Person;
5.3.13 make any loans, advances or capital contributions to,
or investments in, any other Person except in the ordinary course of
business consistent with past practice or in accordance with the terms
of this Agreement;
5.3.14 make any loans to its directors, officers or
shareholders;
5.3.15 waive, release, assign, settle or compromise any
material rights, claims or litigation except in connection with the
disposition and/or termination of the business and operations of CTP
and its Subsidiaries;
5.3.16 pay, discharge or satisfy any material liabilities,
other than in the ordinary course of business consistent with past
practice except in connection with the disposition and/or termination
of the business and operations of CTP and its Subsidiaries; or
5.3.17 propose, authorize, agree or commit to take any action
precluded by this Section 5.3.
5.4 CLOSING DOCUMENTS. Neurologix shall, prior to or on the
Closing Date, execute and deliver, or cause to be executed and delivered, to CTP
the documents or instruments described in Section 6.2. CTP and Subcorp shall,
prior to or on the Closing Date, execute and deliver, or cause to be executed
and delivered, to Neurologix the documents or instruments described in Section
6.3.
5.5 FURTHER ACTIONS. Subject, in the case of CTP, to Section
5.12.1.2 below, each of the Parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other Parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable under the circumstances (after taking into effect all such
factors as shall reasonably effect timing hereunder), the Merger and the other
transactions contemplated by this Agreement, including (A) the obtaining of all
other necessary actions or non-actions, waivers, consents, licenses, permits,
authorizations, orders and approvals from governmental authorities and the
making of all other necessary registrations and filings, (B) the obtaining of
all consents, approvals or waivers from third parties related to or required in
connection with the Merger that are necessary to consummate the Merger and the
transactions contemplated by this Agreement or required to prevent a CTP
Material Adverse Effect or a Neurologix Material Adverse Effect from occurring
prior to or after the Effective Time, (C) the taking of all action necessary to
ensure that the Merger constitutes a reorganization within the meaning of
Section 368(a) of the Code, and (D) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. If any "control share
acquisition", "business combination", voting restriction or other form of
takeover
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statute or regulation (collectively, "BUSINESS COMBINATION RESTRAINT(S)") is or
shall become applicable to the transactions contemplated hereby or any shares of
CTP Common Stock to be issued pursuant to the Merger, each of the Parties, and
its board of directors, shall grant such approvals and take all such actions as
are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practical on the terms contemplated hereby and
otherwise act to eliminate the effects of such Business Combination Restraints
on the transactions contemplated hereby, including without limitation taking all
action to ensure that the restrictions of Section 203 of the DGCL will not apply
to or affect Palisade Capital Management, LLC and its Affiliates or any other
shareholder of Neurologix if it is deemed an "interested stockholder" under
Section 203 of the DGCL. CTP represents that it has taken any such actions which
were required prior to the execution of this Agreement.
5.6 PUBLIC ANNOUNCEMENTS. Unless otherwise required by applicable
law, no Party shall make any press release or other public announcement
regarding the Merger or this Agreement without the prior written consent of the
other Parties hereto.
5.7 STOCKHOLDERS' MEETING. CTP shall take, as promptly as
practicable, all action in accordance with the federal securities laws, the
DGCL, its certificate of incorporation and its by-laws necessary to obtain the
consent and approval of its stockholders to the Merger, this Agreement and the
transactions contemplated hereby, including its board's recommending to its
stockholders approval of the Merger and the transactions contemplated by this
Agreement, the Amendments and the election of CTP's directors as contemplated
herein.
5.8 PREPARATION OF THE REGISTRATION STATEMENT.
5.8.1 CTP shall, as soon as is reasonably practicable, prepare
a prospectus/proxy statement (the "PROSPECTUS/PROXY STATEMENT") to be
included in a registration statement on Form S-4 as promulgated by the
SEC (the "REGISTRATION STATEMENT"). Once both Parties consent to the
filing of the Registration Statement with the SEC (which consent shall
not be unreasonably withheld), CTP shall file the Registration
Statement with the SEC. CTP and Neurologix shall use all reasonable
efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable thereafter and to maintain the
effectiveness of the Registration Statement through the Effective Time.
If, at any time prior to the Effective Time, Neurologix or CTP shall
obtain knowledge of any information contained in or omitted from the
Registration Statement that would require an amendment or supplement to
the Registration Statement or the Prospectus/Proxy Statement, the Party
obtaining such knowledge will so advise the other Party in writing and
both Neurologix and CTP will promptly take such action as shall be
required to amend or supplement the Registration Statement and/or the
Prospectus/Proxy Statement. Neurologix shall promptly furnish to CTP
all information concerning it as may be required for the
Prospectus/Proxy Statement and any supplements or amendments thereto,
including without limitation, financial statements in conformity with
all applicable provisions of the Securities Act and Exchange Act, as
the case may be. CTP and Neurologix shall cooperate in the preparation
of the Prospectus/Proxy Statement in a timely fashion and shall use all
reasonable efforts to clear the Registration Statement with the Staff
of the SEC. Promptly after the Registration Statement is declared
effective by the SEC, Neurologix shall use all reasonable efforts to
mail at the earliest practicable date
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to its Stockholders the Prospectus/Proxy Statement, which shall include
all information required under applicable law to be furnished to
Neurologix's Stockholders in connection with the Merger and the
transactions contemplated thereby. Promptly after the Registration
Statement is declared effective by the SEC, CTP shall use all
reasonable efforts to mail at the earliest practicable date to its
stockholders the Prospectus/Proxy Statement, which shall include all
information required under applicable law to be furnished to CTP's
stockholders in connection with the Merger and the transactions
contemplated thereby, the Amendments and the election of directors as
contemplated herein by Section 5.10.
5.8.2 None of the financial or other information to be
supplied by Neurologix or its representatives for inclusion in the
Registration Statement or the Prospectus/Proxy Statement, including all
amendments and supplements thereto, shall, in the case of the
Registration Statement, at (i) the time the Registration Statement
becomes effective, (ii) the Closing and (iii) the Effective Time, and,
in the case of the Prospectus/Proxy Statement, (iv) on the date or
dates the Prospectus/Proxy Statement is first mailed to CTP's
Stockholders, (v) at the date or dates of the CTP Meeting, (vi) at the
Closing, and (vii) at the Effective Time, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. Neurologix agrees that the financial statements of
Neurologix to be included in the Registration Statement and the
Prospectus/Proxy Statement will comply as to form in all material
respects with the applicable provisions of the Securities Act and the
Exchange Act, as the case may be.
5.8.3 None of the financial or other information supplied by
CTP for inclusion or incorporation by reference in the Registration
Statement or in the Prospectus/Proxy Statement, including all
amendments and supplements thereto, shall, in the case of the
Registration Statement, at (i) the time the Registration Statement
becomes effective, (ii) the Closing and (iii) the Effective Time, and,
in the case of the Prospectus/Proxy Statement, (iv) on the date or
dates the Prospectus/Proxy Statement is first mailed to CTP's
stockholders, (v) at the date or dates of the CTP Meeting, (vi) at the
Closing, and (vii) at the Effective Time, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. CTP agrees that the Registration Statement and the
Prospectus/Proxy Statement will (with respect to CTP and Subcorp)
comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act, as the case may
be.
5.9 AFFILIATES OF NEUROLOGIX. Within ten business days of the date
hereof, Neurologix shall cause each Person who may be at the Effective Time, or
was on the date hereof, an "affiliate" of Neurologix for purposes of Rule 145
under the Securities Act to execute and deliver to CTP a letter in the form and
substance of the letter annexed hereto as APPENDIX 5.9 (the "NEUROLOGIX
AFFILIATE'S LETTER"). Neurologix has provided CTP with a letter specifying all
of the persons or entities who, in Neurologix's opinion, may be deemed to be
"affiliates" of Neurologix under the preceding sentence. The foregoing
notwithstanding, CTP shall be entitled to place legends as specified in the
Neurologix Affiliate's Letter on the certificates evidencing any shares of the
CTP Common Stock to be received by (i) any such "affiliate" of Neurologix
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specified in such letter or (ii) any Person CTP reasonably identifies (by
written notice to Neurologix) as being a Person who may be deemed an "affiliate"
for purposes of Rule 145 under the Securities Act, and to issue appropriate stop
transfer instructions to the transfer agent for the CTP Common Stock, consistent
with the terms of the Neurologix Affiliate's Letter, regardless of whether such
Person has executed the Neurologix Affiliate's Letter and regardless of whether
such Person's name appears on the letter to be delivered pursuant to the
preceding sentence.
5.10 BOARD OF DIRECTORS OF CTP. On or prior to the Closing Date,
CTP shall deliver to Neurologix a written resignation, in form and substance
reasonably satisfactory to Neurologix, from each officer and director of CTP
(other than no more than two directors to be designated by CTP, referred to as
the "CTP Directors"), effective as of the Effective Time. At the Effective Time,
CTP's board of directors shall consist of the CTP Directors and the five members
of Neurologix's then current board of directors (the "Existing Neurologix
Directors") plus up to two additional members to be designated by Neurologix
(together with the Existing Neurologix Directors, the "Neurologix Designated
Directors"). Following the Effective Time, the board of directors of CTP shall
be free to fix the number of directors from time to time and to nominate, or
have a Nominating Committee nominate, such directors as such board or committee
may choose in its sole discretion. Upon the Closing of the Merger, pursuant to
an election of directors at the CTP Meeting, CTP's board of directors shall be
divided into three classes, as nearly equal in size as is practicable,
designated as Class I, Class II and Class III, respectively. At the first annual
meeting of CTP's stockholders following the dates of the Closing of the Merger,
the term of office of the Class I directors shall expire and Class I directors
shall be elected for a full term of three years. At the second annual meeting of
CTP's stockholders following the Closing of the Merger, the term of office of
the Class II directors shall expire and Class II directors shall be elected for
a full term of three years. At the third annual meeting of stockholders
following the Closing of the Merger, the term of office of the Class III
directors shall expire and Class III directors shall be elected for a full term
of three years. At each succeeding annual meeting of CTP's stockholders,
directors shall be elected for a full term of three years to succeed the
directors of the class whose terms expire at such annual meeting. At the
Effective Time, each of the CTP Directors shall be designated as Class III
directors and each of the Neurologix Designated Directors shall be designated by
Neurologix, in its discretion, as either Class I, Class II or Class III
directors as necessary to make each class of directors as nearly equal as
possible. At the CTP Meeting, CTP's stockholders shall take all action required
by applicable law to ensure that at the Effective Time, CTP's board of directors
will consist of the persons described in this Section 5.10.
5.11 MERGER SUBSIDIARY. Prior to the Effective Time, Subcorp shall
not conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than a
nominal amount of cash paid to Subcorp for the issuance of its stock to CTP) or
any material liabilities.
5.12 NO SOLICITATION.
5.12.1 CTP agrees that, during the term of this Agreement, it
shall not, and it shall cause its directors, officers, employees,
agents or representatives, not to, directly or indirectly, solicit,
initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any
proposal with respect to
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any recapitalization, merger, consolidation or other business
combination involving CTP or Subcorp, or acquisition of any capital
stock of CTP or Subcorp or 5% or more of the assets of CTP or any of
its Subsidiaries in a single transaction or a series of related
transactions, or any acquisition by CTP or Subcorp of any material
assets or capital stock of any other Person, or any liquidation of CTP
or Subcorp, or any combination of the foregoing (a "COMPETING
TRANSACTION"), or negotiate, explore or otherwise engage in discussions
with any Person (other than Neurologix and its directors, officers,
employees, agents and representatives) with respect to any Competing
Transaction or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or
any other transaction contemplated by this Agreement. CTP will
immediately cease all existing activities, discussions and negotiations
with any parties conducted heretofore with respect to any proposal for
a Competing Transaction. Notwithstanding the foregoing and anything to
the contrary contained in this Section 5.12.1 or in any other provision
of this Agreement, CTP and CTP's board of directors may ask questions
of, consider and clarify a proposal from, and conduct a due diligence
investigation of (but not negotiate with or provide any information to,
without Neurologix's prior written consent) any third party making an
unsolicited Competing Transaction (a "POTENTIAL ACQUIRER"), solely for
the purpose of evaluating such Competing Transaction, if CTP's board of
directors or any committee thereof determines, after consultation with
CTP's Financial Advisor and CTP's legal counsel, that (A) such third
party has submitted to CTP a Competing Transaction which has a
reasonable likelihood of resulting in a Superior Proposal (as defined
in Section 5.12.1.3), and (B) the failure to participate in such
process will constitute a breach of CTP's board of directors' fiduciary
duties under applicable law. In the event that CTP shall determine to
enter into the process described above, or shall receive any Competing
Transaction, it shall promptly (subject to obligations under any
confidentiality agreement) inform Neurologix in writing of the identity
of the Potential Acquirer and the material terms of such Competing
Transaction. If CTP, after consultation with its Financial Advisor and
CTP's legal counsel, determines that the Competing Transaction is a
Superior Proposal, and the failure to consider such Competing
Transaction would constitute a breach of CTP's board of directors'
fiduciary duties under applicable law, then it shall promptly notify
Neurologix of such determination, and CTP and CTP's board of directors,
if CTP has complied with the provisions of this Section 5.12.1, may
participate in discussions or negotiations (including, as a part
thereof, making any counterproposal) with the Potential Acquirer. In
the event that CTP shall determine to provide any information to such
Potential Acquirer following its determination that the Competing
Transaction is a Superior Proposal it shall promptly (within two (2)
Business Days) inform Neurologix orally and in writing as to the fact
that information is to be provided. CTP agrees that any non-public
information furnished to a Potential Acquirer will be pursuant to a
confidentiality agreement on terms no less favorable to CTP than the
confidentiality provisions contained in this Agreement. CTP will inform
Neurologix promptly of any related developments, discussions and
negotiations with respect to the Competing Transaction (including the
terms and conditions of the Competing Transaction and any modifications
or changes thereto).
5.12.1.1 Subject to Section 5.12.1.2 below, neither CTP's
board of directors nor any committee thereof shall (i) withdraw or
modify, or publicly propose to
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withdraw or modify, in a manner adverse to Neurologix, the approval or
recommendation by CTP's board of directors or committee thereof of this
Agreement and the Merger, (ii) approve or recommend, or propose
publicly to approve or recommend, any Competing Transaction or (iii)
cause CTP to enter into, approve or recommend, or propose publicly to
approve or recommend, or execute, any letter of intent, agreement in
principle, merger agreement, acquisition agreement, option agreement or
other agreement relating to any Competing Transaction or agree or
propose to agree to do any of the foregoing, or (iv) submit any
Competing Transaction at the CTP Meeting or any other stockholders
meeting for purposes of voting upon approval and adoption of the
Competing Transaction.
5.12.1.2 Notwithstanding Section 5.12.1.1 above, CTP's
board of directors (or any committee thereof) may withdraw or modify
its approval or recommendation of this Agreement or the Merger and
approve or recommend a Competing Transaction, if CTP has complied with
the provisions of this Section 5.12.1 and, in the event that CTP's
board of directors (or any committee thereof) determines in good faith,
after consultation with the Financial Advisor and CTP's legal counsel,
that the Competing Transaction is a Superior Proposal, and that the
failure to take such action would be a breach of CTP's board of
directors' or any such committee's fiduciary duties under applicable
law; provided, however, that prior to taking any such action, the
Company shall (A) notify Neurologix in writing that it intends to enter
into an agreement relating to a Superior Proposal (which notice shall
include the most recent draft of such Superior Proposal), (B) during
the two (2) Business Days following CTP's notice (or such longer period
as agreed to by the parties), CTP shall negotiate in good faith with
Neurologix to make such adjustments in the terms and conditions of such
Agreement such that the Competing Transaction is no longer a Superior
Proposal, and CTP's board of directors (or committee thereof) shall
have concluded, after termination of such time period, that the
Competing Transaction giving rise to CTP's obligations to provide
notice hereunder, continues to be a Superior Proposal, (C) pay the
termination fee set forth in Section 7.2.2.2 to Neurologix in full and
in immediately available funds and (D) deliver written acknowledgment
from CTP and from the other Person to the Competing Transaction that
CTP and such other Person have irrevocably waived any right to contest
such payment.
5.12.1.3 For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any bona fide written proposal (or its most recent
amended or modified terms, if amended or modified) made by a Potential
Acquirer to enter into an Acquisition Proposal, the effect of which
would be that (i) the Company stockholders would beneficially own less
than 20% of the voting stock, common stock and participating stock of
the combined or on-going entity, or (ii) the transaction would result
in the sale, transfer or other disposition of all or substantially all
of the assets of CTP and Subcorp, taken as a whole, and which CTP
determines in its good faith judgment, based on among other things, the
advice of the Financial Advisor, if consummated, would result in a
transaction more favorable to CTP's stockholders from a financial point
of view than the Merger, taking into account all relevant factors
(including whether, in the good faith judgment of CTP's board of
directors, after obtaining the advice of the Financial Advisor, the
Potential Acquirer is reasonably able to finance the transaction,
whether such transaction is subject
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to any material contingency to which the other party has not
demonstrated its ability to overcome and whether such transaction is
reasonably capable of being completed, and any proposed changes to this
Agreement that may be proposed by Neurologix in response to the
Competing Transaction).
5.12.1.4 During the period from the date of this
Agreement through the Effective Time, CTP shall not terminate, amend,
modify or waive any provision of any confidentiality or standstill
agreement (other than any entered into in the ordinary course of
business not in connection with any possible Competing Transaction) to
which it or Subcorp is a party.
5.12.2 Neurologix agrees that, during the term of this
Agreement, it shall not, and it shall cause its directors, officers,
employees, agents or representatives, not to, directly or indirectly,
solicit, initiate, encourage or facilitate, or furnish or disclose
non-public information in furtherance of, any inquiries or the making
of any Competing Transaction involving Neurologix with respect to, or
negotiate, explore or otherwise engage in discussions with any Person
(other than CTP and its directors, officers, employees, agents and
representatives) with respect to any such Competing Transaction or
enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement. Neurologix will immediately
cease all existing activities, discussions and negotiations with any
parties conducted heretofore with respect to any proposal for a
Competing Transaction. Notwithstanding the foregoing, Neurologix shall
have the right, in its sole discretion, to raise up to $1.0 million of
additional equity between the date hereof and the Closing Date.
5.13 REORGANIZATION TREATMENT. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code. Each of the Parties
shall use its best efforts to cause the Merger to qualify as a "reorganization"
under Section 368(a) of the Code. No Party shall knowingly take any action
inconsistent with the treatment of the Merger as a "reorganization" under
Section 368(a) of the Code.
5.14 DIRECTORS' AND OFFICERS' INSURANCE. For a period of six years
after the Closing, CTP shall maintain in effect a policy of directors' and
officers' liability insurance covering all individuals who were directors and
officers of Neurologix immediately prior to the Closing, with coverage limits no
less favorable than those currently in effect. All rights to indemnification now
existing in favor of any such director or officer as provided in the certificate
of incorporation and bylaws of Neurologix in effect on the date of this
Agreement shall survive the Merger and shall continue in full force and effect
for a period of not less than six years after the Closing.
5.15 STOCK OPTION PLAN. CTP may establish a new incentive stock
option plan (the "New Stock Option Plan") after Closing, provided that all
options under the plan, if fully exercised, would represent no more than 5% of
the total number of shares of CTP Common Stock outstanding immediately after
adoption. Such New Stock Option Plan shall not be amended or replaced for a
period ending 18 months after the Effective Date.
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5.16 NEUROLOGIX LOAN. On the date hereof, simultaneously with the
execution of this Agreement, CTP shall loan to Neurologix the principal amount
of $750,000 secured by all of the assets of Neurologix. Interest on the unpaid
principal shall accrue at the rate of 4% per year. The outstanding principal
under the Loan and the accrued interest thereon shall be due and payable on
demand at any time after April 30, 2004. In the event that the Merger is
consummated pursuant to this Agreement, the principal amount and accrued
interest on such Loan shall be included in the calculation of CTP's Net Cash
Assets.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations
of Neurologix, CTP and Subcorp to consummate the Merger shall be subject to the
satisfaction of the following conditions:
6.1.1 No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect, which
would prohibit consummation of the Merger and the transactions
contemplated by this Agreement.
6.1.2 There shall not be pending any legal proceeding by any
Governmental Entity or other third party (i) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement, (ii) seeking to prohibit
or limit the ownership or operation by Neurologix, CTP or Subcorp of,
or to compel Neurologix, CTP or Subcorp to dispose of or hold separate,
any material portion of the business or assets of Neurologix, CTP or
any Subsidiary of CTP, as a result of the Merger or any of the other
transactions contemplated by this Agreement, or (iii) seeking to impose
limitations on the ability of CTP to acquire or hold, or exercise full
rights of ownership of, any shares of capital stock of the Surviving
Corporation, including the right to vote such capital stock on all
matters properly presented to the stockholders of the Surviving
Corporation.
6.1.3 The Merger, this Agreement and the transactions
contemplated hereby, the Amendments and the election of directors
contemplated herein shall have been approved and adopted by CTP's
stockholders in the manner required by any applicable law.
6.1.4 The SEC shall have declared the Registration Statement
effective under the Securities Act, and no stop order or similar
restraining order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the SEC or any state securities
administrator.
6.1.5 All consents, approvals and action of any Governmental
Entity required to permit the consummation of the Merger and the other
transactions contemplated by this Agreement (other than the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware) shall have been obtained or made.
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6.2 CONDITIONS TO CTP'S AND SUBCORP'S OBLIGATIONS. The obligations
of CTP and Subcorp to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment prior to or at Closing of each of the
following conditions:
6.2.1 The representations and warranties of Neurologix set
forth in Article III shall be true and correct in all material respects
(other than representations and warranties which are qualified as to
materiality, which representations and warranties shall be true in all
respects) on the date hereof and on and as of the Closing Date as
though made on and as of the Closing Date (except for representations
and warranties made as of a specified date, which shall be measured
only as of such specified date).
6.2.2 Neurologix shall have performed in all material respects
each obligation and agreement and shall have complied in all material
respects with each covenant to be performed and complied with by it
under this Agreement at or prior to the Closing.
6.2.3 Since December 31, 2002, there shall not have occurred
any act, event, change, occurrence, circumstance, development or
omission resulting in a Neurologix Material Adverse Effect, nor any
loss or damage to the assets of Neurologix, whether or not insured,
which materially affects the ability of Neurologix to conduct it
businesses. CTP shall have received a certificate (executed by an
officer of Neurologix on behalf of Neurologix to its best knowledge),
dated the Closing Date, to the foregoing effect.
6.2.4 All material authorizations, consents, waivers,
approvals or other actions required in connection with the execution,
delivery and performance of this Agreement by Neurologix and the
consummation by Neurologix of the transactions contemplated hereby
shall have been obtained and shall be in full force and effect.
Neurologix shall have obtained any authorizations, consents, waivers,
approvals or other actions required to prevent a material breach or
default by Neurologix under any material contract to which Neurologix
is a party or for the continuation of any material agreement to which
Neurologix is a party.
6.2.5 The aggregate number of shares of Dissenting Stock shall
not exceed 5% of the aggregate number of shares of Neurologix Common
Stock and Neurologix Series B Preferred outstanding on the Closing
Date.
6.2.6 Prior to or at the Closing, Neurologix shall have
delivered the following closing documents, in form and substance
reasonably acceptable to CTP (which acceptance shall not be
unreasonably withheld):
6.2.6.1 a certificate of an officer of Neurologix, dated
the Closing Date, to the effect that (1) the person signing such
certificate is familiar with this Agreement and (2) to the best of each
such person's knowledge, the conditions specified in Section 6.2.1 and
6.2.2 have been satisfied;
6.2.6.2 a certificate of the Secretary or Assistant
Secretary of Neurologix, dated the Closing Date, as to the incumbency
of any officer of Neurologix executing this Agreement;
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6.2.6.3 a certified copy of the resolutions of
Neurologix's board of directors authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby
and the resolutions of the stockholders of Neurologix approving the
Merger, this Agreement and the transactions contemplated hereby;
6.2.6.4 good standing certificates with respect to
Neurologix from such jurisdictions as CTP shall reasonably designate;
and
6.2.6.5 such other closing documents as CTP shall
reasonably request.
6.3 CONDITIONS TO NEUROLOGIX'S OBLIGATIONS. The obligations of
Neurologix to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment prior to or at Closing of each of the following
conditions:
6.3.1 The representations and warranties of CTP and Subcorp
set forth in ARTICLE IV shall be true and correct in all material
respects (other than representations and warranties which are qualified
as to materiality, which representations and warranties shall be true
in all respects) on the date hereof and on and as of the Closing Date
as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which shall
be measured only as of such specified date).
6.3.2 CTP and Subcorp shall have performed in all material
respects each obligation and agreement and shall have complied in all
material respects with each covenant to be performed and complied with
by CTP and Subcorp under this Agreement at or prior to the Closing.
6.3.3 Since December 31, 2002, there shall not have occurred
any act, event or omission resulting in a CTP Material Adverse Effect.
Neurologix shall have received a certificate (executed by an officer of
CTP on behalf of CTP to its best knowledge), dated the Closing Date, to
the foregoing effect.
6.3.4 Prior to or at the Closing, Neurologix shall have
received the written resignations (in form and substance reasonably
satisfactory to Neurologix) of each of the directors and officers of
CTP and Subcorp, except for the CTP Directors, effective as of the
Closing, as contemplated herein.
6.3.5 All material authorizations, consents, waivers,
approvals or other actions required in connection with the execution,
delivery and performance of this Agreement by CTP and Subcorp and the
consummation by CTP and Subcorp of the transactions contemplated hereby
shall have been obtained and shall be in full force and effect. CTP and
Subcorp shall have obtained any authorizations, consents, waivers,
approvals or other actions required to prevent a material breach or
default by CTP and Subcorp under any material contract to which CTP or
Subcorp is a party or for the continuation of any material agreement to
which CTP or Subcorp is a party.
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6.3.6 CTP's Net Cash Assets as of the Closing shall be at
least $6.5 million, and Neurologix shall have received a certificate
from CTP's chief executive officer stating the amount of CTP's Net Cash
Assets as of the Closing.
6.3.7 CTP shall have terminated any and all of its Employee
Benefit Plans.
6.3.8 Prior to or at the Closing, CTP shall have delivered the
following closing documents, in form and substance reasonably
acceptable to Neurologix (which acceptance shall not be unreasonably
withheld):
6.3.8.1 a certificate of the President or a Vice
President of CTP, dated the Closing Date, to the effect that (1) the
Person signing such certificate is familiar with this Agreement and (2)
to the best of such person's knowledge, the conditions specified in
Sections 6.3.1 and 6.3.2 have been satisfied;
6.3.8.2 a certificate of the Secretary or Assistant
Secretary of each of CTP and Subcorp, dated the Closing Date, as to the
incumbency of any officer of CTP and Subcorp executing this Agreement;
6.3.8.3 a certified copy of the resolutions of CTP's
board of directors authorizing the execution, delivery and consummation
of this Agreement and the transactions contemplated hereby and the
resolutions of the stockholders of CTP approving the Merger, this
Agreement and the transactions contemplated hereby, the Amendments and
the election of directors contemplated herein;
6.3.8.4 a certified copy of the resolutions of Subcorp's
board of directors authorizing the execution, delivery and consummation
of this Agreement and the transactions contemplated hereby; and
6.3.8.5 such other closing documents as Neurologix shall
reasonably request.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by Neurologix's or CTP's stockholders):
7.1.1 by mutual written consent of CTP and Neurologix;
7.1.2 by either CTP or Neurologix if there shall be any law or
regulation that, as supported by the written opinion of legal counsel,
makes consummation of the Merger illegal or otherwise prohibited, or if
any judgment, injunction, order or decree of a Governmental Entity
enjoining CTP or Neurologix from consummating the Merger shall have
been entered and such judgment, injunction, order or decree shall have
become final and nonappealable;
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7.1.3 by either CTP or Neurologix if the Merger shall not have
been consummated on or before December 19, 2003 (the "OUTSIDE DATE");
provided, however, that the right to terminate this Agreement under
this Section 7.1.3 shall not be available to any Party whose failure or
whose Affiliate's failure to perform any material covenant or
obligation under this Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date;
7.1.4 by CTP or Neurologix if, at or before the completion of
the Closing, it shall have discovered that any representation or
warranty made in this Agreement for its benefit, or in any certificate,
exhibit or document furnished to it pursuant to this Agreement, is
untrue in any material respect and, but only if, the failure to be true
in any material respect (i) would give rise to failure of condition set
forth in 6.2.1 or 6.3.1, and (ii) would reasonably be expected to
prevent CTP or Neurologix, respectively, from obtaining the material
portion of the benefits intended by the Parties to be derived by CTP or
Neurologix, as applicable, from this Agreement and the transactions
contemplated hereby (other than representations and warranties which
are qualified as to materiality, which representations and warranties
will give rise to a right of termination if untrue in any respect and,
but only if, the failure to be true in any respect would reasonably be
expected to prevent CTP or Neurologix, respectively, from obtaining the
material portion of the benefits intended by the Parties to be derived
by CTP or Neurologix, as applicable, from this Agreement and the
transactions contemplated hereby); provided, however, that in order to
terminate this Agreement under this Section 7.1.4, the terminating
Party shall, upon discovery of such a breach or default, give written
notice thereof to the breaching or defaulting Party and the latter
shall fail to cure the breach or default by the earlier of thirty (30)
calendar days after receipt of such notice or the day immediately prior
to the Outside Date;
7.1.5 by CTP if (i) Neurologix shall have defaulted in the
performance of any material obligation under this Agreement, but only
if, the default would reasonably be expected to prevent CTP from
obtaining the material portion of the benefits intended by the Parties
to be derived by CTP from this Agreement and the transactions
contemplated hereby or (ii) any party (other than CTP or Subcorp) shall
have defaulted in the performance of any material obligation under the
Voting Agreement such that Neurologix cannot represent that it has
requisite shareholder approval for the Merger; provided, however, that
in order to terminate this Agreement under this Section 7.1.5, CTP
shall, upon discovery of such a breach or default, give written notice
thereof to Neurologix and Neurologix shall fail to cure the breach or
default by the earlier of thirty (30) calendar days after receipt of
such notice or the day immediately prior to the Outside Date;
7.1.6 by Neurologix if CTP shall have defaulted in the
performance of any material obligation under this Agreement and, but
only if, the default would reasonably be expected to prevent Neurologix
from obtaining the material portion of the benefits intended by the
Parties to be derived by Neurologix from this Agreement and the
transactions contemplated hereby; provided, however, that in order to
terminate this Agreement under this Section 7.1.6, Neurologix shall,
upon discovery of such a breach or default, give written notice thereof
to CTP and CTP shall fail to cure the breach or default
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by the earlier of thirty (30) calendar days after receipt of such
notice or the day immediately prior to the Outside Date;
7.1.7 by CTP if any authorization, consent, waiver or approval
required for the consummation of the transactions contemplated hereby
shall require the divestiture or cessation of any of the present
material business or operations conducted by Neurologix or shall impose
any other condition or requirement, which divestiture, cessation,
condition or requirement would constitute a Neurologix Material Adverse
Effect upon consummation of the transactions contemplated by this
Agreement;
7.1.8 by CTP, in the event that any of the conditions to its
obligations set forth in Article VI have not been satisfied or waived
by the Outside Date or in the event that any such condition cannot
possibly be satisfied prior to the Outside Date;
7.1.9 by Neurologix, in the event that any of the conditions
to its obligations set forth in Article VI have not been satisfied or
waived by the Outside Date or in the event that any such condition
cannot possibly be satisfied prior to the Outside Date; or
7.1.10 by CTP or Neurologix if (i) at the CTP Meeting
(including any adjournment or postponement thereof) the requisite vote
of CTP's stockholders to approve the Merger, this Agreement and the
transactions contemplated hereby, the Amendments and the election of
directors contemplated herein shall not have been obtained or (ii)
CTP's board of directors withdraws its recommendation to its
stockholders to approve the Merger, this Agreement and the transactions
contemplated hereby.
7.2 EFFECT OF TERMINATION.
7.2.1 In the event of the termination of this Agreement
pursuant to Section 7.1, this Agreement, except for any provisions
relating to the confidentiality obligations of the Parties to each
other and the provisions of this Section 7.2 and Section 8.10, shall
become void and have no effect without any liability on the part of any
Party or its directors, officers or stockholders. Notwithstanding the
foregoing, nothing in this Section 7.2 shall relieve any Party to this
Agreement of liability for a material breach of any provision of this
Agreement and provided, further, however, that if it shall be
judicially determined that termination of this Agreement was caused by
an intentional breach of this Agreement, then, in addition to other
remedies at law or equity for breach of this Agreement, the Party so
found to have intentionally breached this Agreement shall indemnify and
hold harmless the other Parties for their respective fees and expenses
of their counsel, accountants, financial advisors and other expenses
incident to the negotiation, preparation and execution of this
Agreement and the preparation, filing and mailing of the Registration
Statement and Prospectus/Proxy Statement ("COSTS").
7.2.2 CTP agrees as follows:
7.2.2.1 If Neurologix or CTP terminates this Agreement
pursuant to Section 7.1.10(i), then upon such termination CTP will pay
to Neurologix $225,000 in cash by wire transfer in immediately
available funds to an account designated by
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Neurologix. Notwithstanding the foregoing sentence, if within 120 days
after such termination, CTP acquires or offers, makes a proposal or
agrees to acquire in any manner, whether directly or indirectly, any
business or company (including, but not limited to, the assets, capital
stock or ownership interests thereof) then Neurologix shall be entitled
to the amount set forth in 7.2.2.2 in lieu of the payment that
Neurologix would otherwise be entitled to receive pursuant to the
preceding sentence.
7.2.2.2 If Neurologix or CTP terminates this Agreement
pursuant to Section 5.12.1 or pursuant to Section 7.1.10(ii) upon CTP's
board of director's withdrawal of its recommendation, then upon such
termination or withdrawal of its recommendation, CTP will pay to
Neurologix an amount equal to $750,000 in cash by wire transfer in
immediately available funds to an account designated by Neurologix. CTP
shall be entitled to offset against such payment the aggregate amount
of the unpaid principal of the Loan.
7.2.3 Notwithstanding anything in this Agreement to the
contrary, in the event that this Agreement is terminated such that
Neurologix would be entitled to receive from CTP either or both of the
payments provided for in Section 7.2.2.1 and Section 7.2.2.2,
Neurologix shall be entitled to receive from CTP only the payment
provided for in Section 7.2.2.2.
7.3 AMENDMENT. This Agreement may be amended by the Parties, by
action taken or authorized by their respective boards of directors, at any time
prior to the Effective Time, so long as no amendment which by law requires
stockholder approval shall be made without such further approval.
Notwithstanding the foregoing, this Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
CTP (with respect to Neurologix) and Neurologix (with respect to CTP and
Subcorp) by action taken or authorized by their respective boards of directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of such Party, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a Party to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such Party.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
telecopy, by overnight courier or sent by certified or registered mail, postage
prepaid, and shall be deemed given when so delivered personally, or when so
received by facsimile or courier, or if mailed, three calendar days after the
date of mailing, as follows (or at such other address for a Party as shall be
specified by like notice):
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if to CTP or Subcorp:
Change Technology Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
203.661.6942
203.661.1331 (facsimile)
Attention: Xxxxxxx Xxxxxxx, Chairman and Chief Executive Officer
with a copy (which shall not constitute notice) to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
212.373.3000
212.757.3990 (facsimile)
Attention: Xxxxx X. Xxxxxx, Esq.
if to Neurologix:
Neurologix, Inc.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, XX 00000
201.585.7733 x 11
201.585.9798 (facsimile)
Attention: Xxxx Xxxxxxx, Secretary
with a copy (which shall not constitute notice) to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
973.597.2500
973.597.2400 (facsimile)
Attention: Xxxx Xxxxxxxxxx, Esq.
8.2 INTERPRETATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Any statute, regulation, or other law defined or referred to herein (or in any
agreement or instrument that is referred to herein) means such statute,
regulation or other law as, from time to time, may be amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes. References to a person also refer to its predecessors and
permitted successors and assigns. When a reference is made in this Agreement to
an Article or
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Section, such reference shall be to an Article or Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The representations and warranties provided
for in this Agreement shall not survive the Closing.
8.3 COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in counterparts, which together shall constitute one and the same
Agreement. The Parties may execute more than one copy of the Agreement, each of
which shall constitute an original. A signed signature page telecopied by one
Party to another Party shall be deemed to constitute an original.
8.4 ENTIRE AGREEMENT. This Agreement (including the appendices,
documents and other instruments referred to herein) constitutes the entire
agreement among the Parties and supersedes all prior agreements and
understandings, arrangements or representations by or among the Parties, written
and oral, with respect to the subject matter hereof and thereof.
8.5 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended or shall be construed to create any third party
beneficiaries other than the directors and officers of Neurologix prior to the
Closing with respect to Section 5.15 of this Agreement.
8.6 GOVERNING LAW. Except to the extent that the laws of the
jurisdiction of organization of any Party, or any other jurisdiction, are
mandatorily applicable to the Merger or to matters arising under or in
connection with this Agreement, this Agreement shall be governed by the laws of
the State of Delaware without regard to conflicts of laws principles. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any state or federal court sitting in the State of
Delaware.
8.7 CONSENT TO JURISDICTION; VENUE; NO TRIAL BY JURY. Each of the
Parties irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in the State of Delaware, for the purpose of any action
or proceeding arising out of or relating to this Agreement, and each of the
Parties irrevocably agrees that all claims in respect to such action or
proceeding shall be heard and determined exclusively in any Delaware state or
federal court. Each of Parties agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Each of the Parties
irrevocably consents to the service of any summons and complaint and any other
process in any action or proceeding relating to the Merger, on behalf of itself
or its property, by the delivery of copies of such process to such Party in the
same manner as notice is to be provided pursuant to Section 8.1. Nothing in this
Section 8.7 shall affect the right of any Party hereto to serve legal process in
any other manner permitted by law. Each Party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each Party hereby irrevocably
and unconditionally waives any right such Party may have to a trial by jury in
respect to any litigation directly or indirectly arising out of or relating to
this Agreement or the transactions contemplated by this Agreement. Each Party
certifies and acknowledges that (i) no representative, agent or attorney of any
other Party has represented, expressly or otherwise, that such other Party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each
such
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Party understands and has considered the implications of this waiver, (iii)
each such Party makes this waiver voluntarily, and (iv) each such Party has been
induced to enter into this Agreement by, among other things, the waivers and
certifications in this Section 8.7.
8.8 SPECIFIC PERFORMANCE. The Parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that, in addition to any other remedy to
which they are entitled at law or in equity, the Parties will be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof.
8.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the Parties
(whether by operation of law or otherwise) without the prior written consent of
the other Parties. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and assigns.
8.10 EXPENSES. Upon consummation of the Merger, CTP shall pay all
transaction expenses (including legal and accounting fees and disbursements)
incurred by CTP, Subcorp and Neurologix relating to the Merger, this Agreement
and the transactions contemplated hereby. In the event the Merger is not
consummated, subject to the provisions of Section 7.2, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such expenses, except that those
reasonable out-of-pocket expenses incurred in connection with the preparation,
filing, printing and mailing of the Registration Statement and the
Prospectus/Proxy Statement (including all filing fees related thereto) shall be
paid by CTP.
8.11 SEVERABILITY. The invalidity of any portion hereof shall not
affect the validity, force or effect of the remaining portions hereof. If it is
ever held that any restriction hereunder is too broad to permit enforcement of
such restriction to its fullest extent, such restriction shall be enforced to
the maximum extent permitted by law.
8.12 NO STRICT CONSTRUCTION. Each of CTP, Subcorp and Neurologix
acknowledges that this Agreement has been prepared jointly by the Parties and
that there shall not be a presumption that ambiguities shall be construed
against any Party.
8.13 KNOWLEDGE. Any representation made herein which is qualified
by the knowledge of, or notice given to, Neurologix shall refer to the actual
knowledge of, or notice actually given to, any of the executive officers of
Neurologix, after reasonable inquiry by such executive officers. Any
representation made herein which is qualified by the knowledge of, or notice
given to, CTP shall refer to the actual knowledge of, or notice actually given
to, any of the executive officers of CTP, after reasonable inquiry by such
executive officers.
(Signature Page Follows)
IN WITNESS WHEREOF, CTP, Subcorp and Neurologix have signed this
Agreement and Plan of Merger as of the date first written above.
CHANGE TECHNOLOGY PARTNERS, INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
CTP/N MERGER CORP.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
NEUROLOGIX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President