Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of February
14, 2006 is made and entered into by and among Cyberkinetics Neurotechnology
Systems, Inc., a Delaware corporation ("Cyberkinetics"), Andara Acquisition
Corp., a Delaware corporation and a direct, wholly-owned subsidiary of
Cyberkinetics ("Acquisition Sub") and Andara Life Science, Inc., an Indiana
corporation (the "Company").
Accordingly, the parties hereto, in consideration of the mutual covenants,
representations and warranties contained herein, agree as follows:
ARTICLE 1 CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the respective
meanings set forth below:
"Affiliate" shall have the meaning set forth in Section 4.12.
"Articles of Merger" shall have the meaning set forth in Section 2.2.
"Balance Sheet" means the Company's balance sheet dated December 31, 2005
contained in the Financial Statements, and any accompanying notes and schedules
thereto.
"Balance Sheet Date" means December 31, 2005.
"Basket" shall have the meaning set forth in Section 7.8.
"Business" means the business of the Company including, without limitation,
its business of research, development and commercialization of certain
therapeutic devices and drugs for use in the treatment of central nervous system
injury and disease, as the same may be operated before and after the Closing by
the Company or any successor, except that for purposes of Article 4, "Business"
means the business of the Company including, without limitation, its business of
research, development and commercialization of certain therapeutic devices and
drugs for use in the treatment of central nervous system injury and disease, as
operated before the Closing by the Company.
"Business Day" means any day other than Saturday, Sunday or any day in
which banks in the State of Delaware are authorized by Law to be closed.
"Certificate of Merger" shall have the meaning set forth in Section 2.2.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended to date and the
rules and regulations promulgated thereunder from time to time.
"Commission" means the Securities and Exchange Commission.
"Company Licenses" shall have the meaning set forth in Section 4.11.
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"Company's Knowledge" means actual knowledge after reasonable inquiry of
Xxxx X. Xxxxxx, the sole officer and director of the Company.
"Contract" means any agreement, lease, plan, instrument or other document,
commitment, arrangement, undertaking or authorization, whether written or oral.
"Court Order" means any writ, judgment, decree, injunction, determination
or any other order, charge or ruling of any Governmental Authority; and any
order, decree, charge, ruling or arbitration award binding upon any Person.
"Cyberkinetics Common Stock" means the shares of common stock, $0.001 par
value per share, of Cyberkinetics.
"Cyberkinetics Restricted Stock" means the shares of Cyberkinetics Common
Stock issued at the Closing pursuant to the Restricted Stock Agreement.
"Cyberkinetics SEC Filings" shall have the meaning set forth in Section
5.5.
"Damages" means any loss, Liability, claim, damage and expense (including,
but not limited to, costs of investigation and defense and reasonable
attorneys', accountants', consultants' and experts' fees and other expenses that
would not have been expended but for the claimed breach) whether or not
involving a third party claim; provided, however, that Damages shall be
determined net of (a) the sum of any amounts received under insurance policies
with respect to such Damages and (b) Tax benefits.
"Default" means (a) a breach of or default under any Contract, (b) the
occurrence of an event that with the passage of time or the giving of notice or
both would constitute a breach of or default under any Contract, or (c) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"DGCL" means the Delaware General Corporation Law, as amended.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule 3.
"Effective Time" means the date and time that the Certificate of Merger is
filed with the Secretary of State of Delaware (in accordance with Section 252 of
the DGCL) and the Articles of Merger is filed with the Secretary of State of the
State of Indiana (in accordance with Section 23-1-40-5 of the IBCL), unless
Acquisition Sub and the Company agree that another time shall be the Effective
Time, in which case such time shall be specified in the Certificate of Merger
and the Articles of Merger.
"Employees" shall have the meaning set forth in Section 4.19.
"Employment Agreement" means that certain Employment Agreement, dated of
even date herewith, by and between Cyberkinetics and Xxxx X. Xxxxxx, a copy of
which is attached hereto and incorporated herein as Exhibit A.
"Environmental Laws" shall have the meaning set forth in Section 4.22.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and rules and regulations promulgated thereunder.
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"Escrow Amount" means that number of shares of Cyberkinetics Common Stock
equal to One Hundred Sixty-Seven Thousand Dollars ($167,000), based upon the per
share value of Cyberkinetics Common Stock determined in Section 2.9, to be held
by Cyberkinetics in accordance with the terms and conditions of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder from time to time.
"Financial Statements" means the unaudited financial statements of the
Company, consisting of the balance sheet as of December 31, 2005 and the
statements of operations and retained earnings for the year ended December 31,
2005, together with any accountant's review report, if any, each as attached
hereto as Schedule 4.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with prior periods as promulgated by the American Institute of
Certified Public Accountants from time to time.
"Governmental Authority" means any federal, state, local, foreign,
national, or provincial governmental agency, body, authority, district, board,
commission, court, tribunal, political subdivision or other governmental
instrumentality or any self-regulatory organization and any agency, branch,
division or department thereof.
"Hazardous Material" shall have the meaning set forth in Section 4.22.
"IBCL" means the Indiana Business Corporation Law, as amended.
"Indemnified Party" shall have the meaning set forth in Section 7.4.
"Investment Representation Letter" or "Investment Representation Letters"
shall have the meaning set forth in Section 2.7(a).
"Law" means any foreign or domestic Court Order and any foreign or domestic
statute, law (including common law), ordinance, regulation, decision or rule of
any Governmental Authority.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, deficiency or guaranty of or by any Person of any
type, whether accrued, absolute, contingent, matured, unmatured or other.
"License" means any license, franchise, permit, easement, right,
authorization, approval, consent, waiver or certification.
"Lien" means any mortgage, lien, security interest, pledge, encumbrance,
restriction on transferability, defect in title, charge or claim of any nature
whatsoever on any property or property interest, other than statutory liens for
Taxes not yet due and payable.
"Material Adverse Effect" shall have the meaning set forth in Section
4.9(c).
"Merger Consideration" shall have the meaning set forth in Section 2.6(c).
"Ordinary Course of Business" means the ordinary course of business of the
Company consistent
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with past customs and practices.
"Person" means a natural person, corporation, trust, partnership, limited
liability company, Governmental Authority, joint stock company, joint venture,
an unincorporated organization or any other legal entity.
"Proceeding" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry
or examination or audit involving the Company or by which it or any of its
assets may be bound.
"Proprietary Property" shall have the meaning set forth in Section 4.11.
"Restricted Stock Agreement" means that certain Restricted Stock Agreement,
dated of even date herewith, by and among Cyberkinetics and the Stockholders, a
copy of which is attached hereto and incorporated herein as Exhibit B.
"Scientific Advisors" shall have the meaning set forth in Section
3.1(a)(xi).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder from time to time.
"Share" means a common share of the Company, without par value, and
"Shares" means all of such shares.
"Stockholders" means the holders of the issued and outstanding common
shares, without par value, of the Company.
"Surviving Corporation" means the Company, the corporation that will
survive the Merger.
"Taxes" means any federal, state, local, foreign or other tax, fee, levy,
assessment or other governmental charge, including, without limitation, any
income, franchise, gross receipts, property, sales, use, services, value added,
withholding, social security, estimated, accumulated earnings, alternative or
add-on minimum, transfer, license, privilege, payroll, profits, capital stock,
employment, unemployment, excise, severance, stamp, occupancy, customs or
occupation tax, and any interest, additions to tax and penalties in connection
therewith.
"Tax Returns" means all returns, amended returns, declarations, reports,
estimates, information returns and statements regarding Taxes which are or were
filed or required to be filed under applicable Law, whether on a consolidated,
combined, unitary or individual basis.
"Trade Payable Amount" means the aggregate sum of all of the outstanding
trade payables and fees for professional services of the Company immediately
prior to the Effective Time, which amount shall not exceed $425,000.00.
Cyberkinetics shall, immediately following the Effective Time, loan or
contribute to the Surviving Corporation cash in an amount sufficient to enable
the Surviving Corporation to discharge in full the Trade Payable Amount.
ARTICLE 2 THE MERGER
2.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, Acquisition Sub shall be merged with and into the Company in
accordance with the DGCL and the IBCL. Following the Merger, the Company shall
continue as the Surviving
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Corporation and a wholly-owned subsidiary of Cyberkinetics, and the separate
corporate existence of Acquisition Sub shall cease. It is intended that the
Merger shall constitute a reorganization within the meaning of Section
368(a)(1)(A) and Section 368(a)(2)(E) of the Code and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code.
2.2 Effective Time. Immediately following the Closing, the parties (a)
shall cause a certificate of merger (the "Certificate of Merger") with respect
to the Merger to be filed and recorded in accordance with Section 252 of the
DGCL, (b) shall cause articles of merger (the "Articles of Merger") to be filed
in accordance with Section 20-1-40-5 of the IBCL and (c) shall take all such
further actions as may be required by Law to make the Merger effective. The
Merger shall be effective at the Effective Time. Before the filing of the
Certificate of Merger and the Articles of Merger, the Closing will be held at
the offices of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP, 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx (or such other place as the parties may agree) for the
purpose of confirming all the foregoing.
2.3 Effects of the Merger. The Merger shall have the effects set forth in
Sections 259, 260 and 261 of the DGCL and in Section 23-1-40-6 of the IBCL.
2.4 Articles of Incorporation and Bylaws. The Articles of Incorporation and
the Bylaws of the Company, in each case as in effect at the Effective Time,
shall be the Articles of Incorporation and Bylaws of the Surviving Corporation.
2.5 Directors and Officers of Surviving Corporation. The duly qualified and
acting directors and officers of Acquisition Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
to hold office as provided in the Bylaws of the Surviving Corporation.
2.6 Conversion of Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of the Stockholders, Cyberkinetics, Acquisition
Sub or the Company:
(a) Each issued and outstanding share of common stock of Acquisition
Sub outstanding immediately prior to the Effective Time shall be converted into
and become one (1) common share, without par value, of the Surviving Corporation
and thereafter will constitute all of the issued and outstanding shares of the
capital stock of the Surviving Corporation.
(b) All of the Shares held by the Company as treasury stock, if any,
immediately prior to the Effective Time shall be canceled and no payment of any
consideration shall be made with respect thereto.
(c) All of the Shares which are outstanding immediately prior to the
Effective Time shall be automatically converted without any action on the part
of the holder thereof into and be exchangeable for fully-paid and nonassessable
shares of the Cyberkinetics Common Stock and the Cyberkinetics Restricted Stock
listed opposite each Stockholder's name on Schedule 1 hereto (the "Merger
Consideration"), which shall equal, in the aggregate, the following:
(i) The number of shares of Cyberkinetics Common Stock, determined in
accordance with Section 2.9; and
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(ii) That number of shares of Cyberkinetics Restricted Stock,
determined in accordance with Section 2.10, which shall be held by
Cyberkinetics and subject to forfeiture pursuant to the terms and
conditions of the Restricted Stock Agreement.
The parties hereto acknowledge and agree that the aggregate amount of
the Merger Consideration is equal to $4,575,000 and none of the parties
hereto shall adopt a position or prepare, submit or file any report or
other document with a Governmental Authority that is inconsistent
therewith, other than to reflect a reduction thereof due to a forfeiture or
set-off against the Cyberkinetics Restricted Common Stock or a set-off
against the Escrow Amount.
2.7 Exchange of and Payment for Shares.
(a) On or promptly following the Effective Time (but in no event
before surrender to Cyberkinetics of any certificate(s) which prior to the
Effective Time shall have represented Shares and delivery of an Investment
Representation Letter in the form of Exhibit C hereto (each, an "Investment
Representation Letter" and collectively, the "Investment Representation
Letters"), subject to the provisions of subsection (c) below, Cyberkinetics
shall cause to be distributed to the Person in whose name such certificate(s)
shall have been registered, the Merger Consideration set forth on Schedule 1 to
this Agreement listed opposite such Stockholder's name. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately prior
to the Effective Time shall have represented any Shares shall be deemed at and
after the Effective Time to represent only the right to receive upon such
surrender, subject to the provisions of subsection (c) below, the Merger
Consideration contemplated by the preceding sentence.
(b) No dividends or other distributions declared after the Effective
Time with respect to Cyberkinetics Common Stock shall be paid to the holder of
any unsurrendered certificate representing Shares until the holder thereof shall
surrender such certificate in accordance with this Section 2.7. After the
surrender of such certificate in accordance with this Section 2.7, the record
holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which on and after the Effective
Time and prior to surrender had become payable with respect to shares of
Cyberkinetics Common Stock represented by such certificate.
(c) If any certificate representing shares of Cyberkinetics Common
Stock or Cyberkinetics Restricted Common Stock is to be paid to or issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of the payment or issuance thereof that
the certificate so surrendered be properly endorsed and otherwise in proper form
for transfer and that the Person requesting such exchange shall pay to
Cyberkinetics any transfer or other Taxes required by reason of the issuance of
a certificate representing shares of Cyberkinetics Common Stock in any name
other than that of the registered holder of the certificate surrendered, or
otherwise required, or shall establish to the satisfaction of Cyberkinetics that
such Tax has been paid or is not payable.
(d) All rights to receive Cyberkinetics Common Stock and Cyberkinetics
Restricted Common Stock as described above shall be deemed, when paid or issued
hereunder, to have been paid or issued, as the case may be, in full satisfaction
of all rights pertaining to the Shares.
(e) After the Effective Time, there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing such Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for Cyberkinetics
Common Stock into which they were converted as provided herein.
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(f) In the event any certificate representing Shares shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by a
Stockholder claiming such certificate to be lost, stolen or destroyed and, if
required by Cyberkinetics or its stock transfer agent, the posting by such
Stockholder of a bond in such amount as Cyberkinetics or its stock transfer
agent may reasonably direct as indemnity against any claim that may be made
against it with respect to such certificate, Cyberkinetics will issue in
exchange for such lost, stolen or destroyed certificate the Cyberkinetics Common
Stock and Cyberkinetics Restricted Common Stock deliverable pursuant to this
Agreement in respect thereof.
2.8 Restrictive Legends; Other Restrictions. The certificates representing
shares of Cyberkinetics Common Stock and Cyberkinetics Restricted Stock to be
issued hereunder will not be registered under the Securities Act and will bear
restrictive legends requiring compliance with the contractual prohibitions on
transfer contained in this Agreement or the Restricted Stock Agreement and the
legal prohibitions imposed by the Securities Act in connection with any resale
of such shares.
2.9 Shares of Cyberkinetics Common Stock. The number of shares of
Cyberkinetics Common Stock payable as a portion of the Merger Consideration in
connection with Section 2.6(c)(i) shall be that number of shares with an
aggregate value of $3,075,000. The per share value of the Cyberkinetics Common
Stock shall be the average closing price of Cyberkinetics Common Stock over the
thirty (30) trading days ending on February 8, 2006; provided however, that such
calculated per share price shall not be less than $1.25 or exceed $1.75.
2.10 Shares of Cyberkinetics Restricted Stock. The number of shares of
Cyberkinetics Restricted Stock payable as a portion of the Merger Consideration
in connection with Section 2.6(c)(ii) shall be that number of shares of
Cyberkinetics Common Stock with an aggregate value of $1,500,000.00 calculated
using the per share price as determined in Section 2.9. Such shares shall be
restricted and subject to forfeiture in accordance with the terms and conditions
of the Restricted Stock Agreement.
2.11 Escrow Fund. At the Effective Time, Cyberkinetics shall retain
Cyberkinetics Common Stock equal to the Escrow Amount out of the Merger
Consideration provided for in Section 2.6(c)(i) for the benefit of the
Stockholders, such amount to be held and disposed of by Cyberkinetics as
provided in Exhibit 2.11 of this Agreement.
ARTICLE 3 CLOSING; CONDITIONS TO CLOSING
3.1 The Closing. The Closing shall take place on the date of this
Agreement, or such other date agreed to by the parties hereto, and be deemed to
have occurred at the offices of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP, 00
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (or such other place as the parties
may agree). The date on which the Closing is to occur is referred to herein as
the "Closing Date." The parties hereto acknowledge and agree that all
proceedings at the Closing shall be deemed to be taken and all documents to be
executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously, and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
(a) The Company's Deliveries. At the Closing, as a condition of
Cyberkinetics' and Acquisition Sub's obligations to consummate the transactions
contemplated by this Agreement, the
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Company has delivered or has caused to be delivered to Cyberkinetics and
Acquisition Sub the following (or has received Cyberkinetics' and Acquisition
Sub's written waiver with respect thereto):
(i) A counterpart to this Agreement, duly executed by the Company;
(ii) A counterpart to the Restricted Stock Agreement, duly executed by
the Stockholders;
(iii) A counterpart to the Employment Agreement, duly executed by Xxxx
X. Xxxxxx;
(iv) Copies of the Investment Representation Letters, duly executed by
each of the Stockholders;
(v) Copies of the resolutions of the Board of Directors and
Stockholders of the Company, each certified by its Secretary as being true,
complete and correct as of the Closing Date, authorizing and approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby and the acts of its officers in carrying out the terms
and provisions hereof, and a copy its Bylaws and a list of officers and
directors currently holding offices, each certified by its Secretary as
being complete and correct as of the Closing;
(vi) An opinion of Ice Xxxxxx, counsel to the Company, dated as of the
Closing Date, in form and substance reasonably satisfactory to
Cyberkinetics and Acquisition Sub and their counsel, a copy of which is
attached hereto and incorporated herein as Exhibit D;
(vii) A copy of the Company's articles of incorporation, certified as
of a recent date by the Indiana Secretary of State;
(viii) A Certificate of Existence, issued by the Indiana Secretary of
State, dated within five (5) Business Days of the Closing;
(ix) Consents reasonably satisfactory in form and substance to
Cyberkinetics and Acquisition Sub to the transactions contemplated by this
Agreement where such consents are required;
(x) An executed copy of the debt conversion agreements evidencing the
conversion of all amounts owed by the Company to Xxxx X. Xxxxxx and the
Purdue Research Foundation to Shares prior to the Closing;
(xi) An executed copy of each of those certain Amendments to
Consulting Agreements, dated of even date herewith, between the Company and
each of Drs. Xxxxxxx, Shi, Byrn, Irazoqui and Xxxxx (collectively, the
"Scientific Advisors");
(xii) An executed copy of those certain Amendments No. 1 to Restricted
Stock Grants, by and between the Company and each of Xxxx X. Xxxxxx and
Drs. Borgens, Shi, Xxxx and Xxxxx;
(xiii) An executed copy of Amendment No. 1 to License Agreement with
Purdue Research Foundation;
(xiv) The share ledger and corporate minute book of the Company; and
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(xv) Executed copies of pay-off letters from the Company's creditors
confirming the total outstanding amounts owed by the Company and
acknowledging that upon payment by the Company of such amounts no further
amounts will be due.
(b) Cyberkinetics' and Acquisition Sub's Deliveries. At the Closing,
as a condition of the obligation of the Company to consummate the transactions
contemplated by this Agreement, Cyberkinetics and Acquisition Sub have delivered
or caused to be delivered to the Company the following (or have received the
written waiver of the Company with respect thereto):
(i) A counterpart to this Agreement, duly executed by Cyberkinetics
and Acquisition Sub;
(ii) A counterpart to the Restricted Stock Agreement, duly executed by
Cyberkinetics;
(iii) A counterpart to the Employment Agreement, duly executed by
Cyberkinetics;
(iv) A copy of the resolutions of the Board of Directors of
Cyberkinetics certified by its Secretary or Assistant Secretary as being
true, complete and correct as of the Closing Date, authorizing and
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereby and the acts of the officers of
Cyberkinetics in carrying out the terms and provisions hereof, and a copy
of Cyberkinetics' Certificate of Incorporation and Bylaws certified by its
Secretary or Assistant Secretary as being true, complete and correct as of
the Closing;
(v) A copy of the resolutions of the Board of Directors of Acquisition
Sub certified by its Secretary or Assistant Secretary as being true,
complete and correct as of the Closing Date, authorizing and approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby and the acts of the officers of Acquisition Sub in
carrying out the terms and provisions hereof, and a copy of Acquisition
Sub's Certificate of Incorporation and Bylaws certified by its Secretary or
Assistant Secretary as being true, complete and correct as of the Closing;
(vi) An opinion of Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP,
counsel to Cyberkinetics and Acquisition Sub, dated as of the Closing Date,
in form and substance reasonably satisfactory to the Company and its
counsel, a copy of which is attached hereto and incorporated herein as
Exhibit E;
(vii) A copy of Cyberkinetics' Certificate of Incorporation, certified
as of a recent date by the Secretary of State of Delaware;
(viii) A Certificate of Good Standing for Cyberkinetics, issued by the
Secretary of State of Delaware;
(ix) A copy of Acquisition Sub's Certificate of Incorporation,
certified as of a recent date by the Secretary of State of Delaware;
(x) A Certificate of Good Standing for Acquisition Sub, issued by the
Secretary of State of Delaware; and certificates of foreign qualification
with respect to all other states in which Acquisition Sub is qualified to
do business; and
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(xi) The Merger Consideration payable pursuant to Section 2.6 herein.
3.2 Effective Closing Date. Notwithstanding the foregoing, the consummation
of the transactions contemplated by this Agreement for financial reporting
purposes shall be deemed to have taken place at 12:01 a.m. Eastern Standard Time
on February 15, 2006.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Cyberkinetics and Acquisition Sub
that, except as expressly provided in the Disclosure Schedule by specific
reference to a subsection of this Article 4:
4.1 Organization and Authority. The Company is a corporation duly
incorporated and validly existing under the Laws of the State of Indiana, and
has full corporate power and authority to conduct its business and own its
property as now conducted and owned. The Company is qualified or licensed as a
foreign corporation in those states listed in Section 4.1 of the Disclosure
Schedule, which are the only jurisdictions in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in each case where the failure to
be so qualified or licensed as a foreign corporation would not have a Material
Adverse Effect on the Company. The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by a unanimous vote of the Board of Directors and the
Stockholders, and no other corporate proceedings on the part of the Company, and
no other actions on the part of the Stockholders, are necessary to authorize
this Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms. No Stockholder of the Company has the right to assert
or claim any appraisal or dissenter's rights with respect to the Merger.
4.2 Capitalization of the Company; No Subsidiaries; Title. The authorized
capital and number of issued and outstanding shares of capital stock of the
Company, together with the name, mailing address and social security number of
each holder of outstanding stock, are as set forth in Section 4.2 of the
Disclosure Schedule. Except as set forth in Section 4.2 of the Disclosure
Schedule, no shares of capital stock are held in the Company's treasury. All of
the issued and outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable and are owned
of record and beneficially by the Stockholders as listed in Section 4.2 of the
Disclosure Schedule. The authorized capital stock of the Company consists of
15,000,000 common shares, no par value, and 5,000,000 preferred shares, no par
value. No preferred shares are issued, outstanding or designated. The Company
neither owns nor has owned any shares of capital stock or other securities of,
or any other interest in, and the Company neither controls nor has controlled,
directly or indirectly, any other corporation, association, joint venture,
partnership or other business organization. The securities of the Company
offered and sold to date have been issued and sold in compliance in all material
respects with all applicable federal and state securities Laws.
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4.3 No Rights to Purchase or Register Stock. No Person has any written or
oral agreement, option, warrant, call, understanding, commitment, or any right
or privilege capable of becoming a binding agreement for the acquisition of
shares of any capital stock of the Company (other than this Agreement), and the
Company has not otherwise agreed to issue or sell any shares of its capital
stock or obligated itself to register any shares of capital stock under the
Securities Act. The Company is not obligated directly, indirectly or
contingently to purchase any shares of its capital stock, and the Company has
not, directly or indirectly, repurchased any shares of its capital stock.
4.4 Name. The Company does not conduct or operate its business under any
name other than "Andara Life Science, Inc."; provided, however, the Company was
previously known as "NPLS, Inc." until February 11, 2005, when the Company filed
an amendment to its articles of incorporation with the Secretary of the State of
Indiana, and February 23, 2005, when Articles of Correction were filed with the
Secretary of the State of Indiana to correctly show the name change as "Andara
Life Science, Inc."
4.5 Validity of Contemplated Transactions. Neither the execution and
delivery of this Agreement, nor the execution and delivery of the documents and
instruments contemplated herein by the Company, nor the consummation of the
transactions contemplated hereby or thereby, will directly or indirectly:
(a) Contravene, conflict with or result (with or without notice or
lapse of time) in violation of (i) any of the provisions of the articles of
incorporation or Bylaws of the Company or (ii) any resolution adopted by the
Board of Directors or the Stockholders of the Company that is in effect on the
date hereof,
(b) Contravene, conflict with or result (with or without notice or
lapse of time) in a violation in any material respect of any Laws or Court Order
to which the Company may be subject;
(c) Contravene, conflict with or result (with or without notice or
lapse of time) in a material violation or material breach of any of the terms or
requirements of, or give any Governmental Authority the right (with or without
notice or lapse of time) to revoke, withdraw, suspend, cancel, terminate or
modify, any License that is held by the Company or that otherwise relates to the
Business;
(d) Contravene, conflict with or result (with or without notice or
lapse of time) in a material violation or material breach of any of the
provisions of, or give any person the right (with or without notice or lapse of
time) to declare a Default or exercise any right or remedy under, or to
accelerate the maturity or performance of or cancel, terminate or modify, any
Contract to which the Company is a party or under which the Company has any
rights, or by which the Company, or any of the assets owned or used by the
Company, may be bound; or
(e) Result (with or without notice or lapse of time) in the imposition
or creation of any Lien upon or with respect to any of the Company's assets or
the Company.
4.6 No Consents or Approvals of Governmental Authorities. No consent or
approval of, or filing and expiration of a waiting period or a period for
disapproval by, any Governmental Authority is required for the Company to
consummate the transactions contemplated by this Agreement, except for filing
and acceptance of the Certificate of Merger pursuant to the DGCL and the
Articles of Merger pursuant to the IBCL.
11
4.7 Financial Statements. The Financial Statements fairly present in all
material respects the financial position and results of operations of the
Company as of and for their respective dates, in accordance with the accounting
principles that have been utilized by the Company on a consistent basis. The
Financial Statements were created from the books and records of the Company,
which books and records are complete and correct. No material modifications
would be required to be made to the Financial Statements for their presentation
to be in conformity with GAAP, except as set forth in Section 4.7 of the
Disclosure Schedule.
4.8 Absence of Undisclosed Liabilities. Except as set forth, or reserved
against, in the Balance Sheet, the Company (a) as of the Balance Sheet Date did
not have any Liability, including, without limitation, Liabilities that may
become known or arise after the date thereof and which relate to transactions
entered into or any state of facts existing on or before the Balance Sheet Date,
which would be required under the accounting practices utilized by the Company,
consistently applied, to be shown in such Balance Sheet, and (b) since the
Balance Sheet Date has incurred neither any material Liability nor any Liability
that is not in the Ordinary Course of Business other than expenses incurred in
connection with this Agreement.
4.9 Conduct of Business since the Balance Sheet Date. Since the Balance
Sheet Date, the Company has not:
(a) issued or repurchased, or entered into any agreement to issue or
repurchase, any shares of capital stock or stock options, rights, warrants or
other securities convertible into capital stock of the Company, except in
connection with the conversions set forth in Section 4.9(a) of the Disclosure
Schedule;
(b) entered into or agreed to enter into any transaction, agreement or
commitment other than in the Ordinary Course of Business, except as contemplated
by this Agreement, including the expenses incurred in connection with the
transactions contemplated by this Agreement;
(c) entered into or agreed to enter into any transaction, agreement or
commitment, suffered the occurrence of any event or events, or experienced any
material change in financial condition, business, results of operations or
business prospects, that (i) has interfered or is reasonably likely to
interfere, with the normal and usual operations of the Business, or (ii) singly
or in the aggregate has resulted in or, to the Company's Knowledge, is
reasonably likely to have, a material adverse effect on the business, assets,
financial position, results of operations of the Company (a "Material Adverse
Effect");
(d) except as set forth in Section 4.9(d) of the Disclosure Schedule,
incurred any indebtedness for borrowed money, or assumed, guaranteed, endorsed,
or otherwise become responsible for the obligations of any other Person (except
to endorse checks for collection for deposit in the Ordinary Course of
Business), or made any loan or advance to any Person;
(e) made any investment of a capital nature or entered into a
commitment for such investment either by purchase of stock or securities,
contributions to capital, property transfer or otherwise, or by the purchase or
lease of any property or assets of any other Person, other than capital
expenditures in the Ordinary Course of Business;
(f) mortgaged, pledged or otherwise encumbered, or, other than in the
Ordinary Course of Business, sold, transferred, or otherwise disposed of, any of
the properties or assets of the Company, including any canceled, released,
hypothecated, or assigned indebtedness owed to the Company or any claims held by
the Company;
12
(g) declared, set aside or paid any extraordinary dividend or other
extraordinary distribution (whether in cash, stock or property or any
combination thereof) in respect of the capital stock of the Company that would,
if treated as additional cash consideration in the Merger, cause the Merger not
to meet the requirements of Section 368(a) of the Code, or otherwise acquired,
directly or indirectly, any shares of capital stock of the Company;
(h) paid any bonus compensation or fee to any officer, director,
Stockholder, employee or consultant of the Company or otherwise increased the
compensation paid or payable to any of the foregoing;
(i) sold, assigned or transferred any Proprietary Property;
(j) contracted with or committed to any third party (i) to sell any
capital stock of the Company, (ii) to sell any assets of the Company other than
in the Ordinary Course of Business, or (iii) to effect any merger,
consolidation, or other reorganization of the Company;
(k) paid any long-term Liability, otherwise than in accordance with
its terms;
(l) changed its accounting methods, practices or principles;
(m) terminated or waived any rights of material value to the Business;
(n) modified any material Contract; or
(o) made or entered into any agreement or understanding to do any of
the foregoing (except as provided for herein).
4.10 Title to Assets. Section 4.10 of the Disclosure Schedule contains a
list of all material tangible personal property owned by the Company. The
Company does not own any real property and leases its current office space,
which is the only lease of real property to which the Company is or has been a
party. The Company has good and sufficient title to all tangible personal
property owned by it, including, without limitation, all property reflected on
the Balance Sheet, other than property disposed of in the Ordinary Course of
Business subsequent to the Balance Sheet Date (none of such dispositions being
materially adverse), free and clear of any Lien, except (a) the lien of Taxes
not yet due or payable or being contested in good faith by appropriate
proceedings and (b) such imperfections of title and encumbrances, if any, as do
not materially detract from the value or interfere with the use of the
properties subject thereto or affected thereby or otherwise materially impair
the Company's business operations.
4.11 Proprietary Property. As used in this Agreement, "Proprietary
Property" means all of the Company's (i) patents, patent applications, patent
disclosures and improvements thereto; (ii) trademarks, service marks, logos,
trade names, and corporate names and registrations and applications for
registration thereof; (iii) copyrights and registrations and applications for
registration thereof; (iv) computer software, data and documentation; (v) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial, marketing and business
data, pricing and cost information, business and marketing plans, and customer
and supplier lists and
13
information); (vi) other proprietary rights owned by the Company or used in the
Business; and (vii) copies and tangible embodiments thereof (in whatever form or
medium). The Disclosure Schedule contains (x) a complete and correct list and,
where appropriate, a summary description of all Proprietary Property described
in (i), (ii), (iii), (iv) and (vi) of the preceding sentence and (y) a true,
correct and complete list of all licenses or similar agreements or arrangements
to which the Company is a party, either as licensee or licensor or sublicensee
or sublicensor, with respect to the Proprietary Property (collectively, the
"Company Licenses").
Except as disclosed in Section 4.11 of the Disclosure Schedule:
(a) the Company is either the sole and exclusive owner of or holds an
exclusive, perpetual (subject to statutory renewal requirements), fully-paid or
royalty free, fully-transferable license (with right to sublicense) to, all
right, title and interest in and to the Proprietary Property, free and clear of
all Liens;
(b) the Company has the sole and the exclusive right and authority to
use the Proprietary Property in connection with the conduct of Business in the
manner presently conducted, and to the Company's Knowledge, such use does not
conflict with, infringe upon, contribute to or induce the infringement of, or
violate any rights of any other Person;
(c) the Company has not received notice of, and to the Company's
Knowledge there is no reasonable basis for, a pleading or threatened claim,
interference action or other judicial or adversarial proceeding against the
Company that any of the present operations, activities, products, services or
publications of the Company infringe or will infringe any patent, trademark,
service xxxx, trade name, copyright, trade secret or other proprietary right of
a third party, or that it is illegally or otherwise using the trade secrets,
formulae or proprietary rights of others;
(d) there is no existing or, to the Company's Knowledge, threatened
infringement, misuse or misappropriation of the Proprietary Property by others,
and, to the Company's Knowledge, there is no reasonable basis for any such
claim;
(e) there is no existing or threatened claim by the Company against
others for infringement, misuse or misappropriation of the Proprietary Property,
and, to the Company's Knowledge, there is no reasonable basis for any such
claim;
(f) there are no existing or, to the Company's Knowledge, threatened
disputes or other disagreements with respect to any Company License, and, to the
Company's Knowledge, there is no reasonable basis for any such dispute or
disagreement, and the Company is not in Default, nor has it received any written
notice of any claims of Default, with respect to any Company License;
(g) the Proprietary Property owned or licensed by the Company is
sufficient to conduct and, to the Company's Knowledge, continue conducting the
Business in the same manner as has been conducted to date;
(h) the Company has taken all steps reasonably necessary to protect
and preserve (i) the security, confidentiality and value of the Company's trade
secrets and other confidential information, (ii) the Company's continuing right,
title and interest in and to the Proprietary Property and (iii) the Company's
continued use of the Proprietary Property;
14
(i) except as set forth in the Company Licenses, the Company has no
obligation outstanding to compensate other Persons for the use of any
Proprietary Property or for the sale of any service or product comprising or
derived from Proprietary Property;
(j) to the Company's Knowledge, no university, Governmental Authority
(whether federal or state) or other organization which sponsors or sponsored
research and development conducted by the Company has any claim of right to or
ownership of or other encumbrance upon the Proprietary Property;
(k) to the Company's Knowledge, no Stockholder, employee or consultant
of the Company has used any trade secrets or other confidential information of
any other Person in the course of his or her involvement with or work for the
Company; to the Company's Knowledge, the Company is not making unlawful use of
any confidential information or trade secrets belonging to any past or present
employees or consultants of the Company, and to the Company's Knowledge, the
activities of the Company's Stockholders, employees and consultants on behalf of
the Company do not violate in any material respect any other agreements or
arrangements known to the Company which any such employees, Stockholders or
consultants have with former employers or any other Person to whom such
employees, Stockholders or consultants may have rendered services;
(l) to the Company's Knowledge, no Person other than the Company, its
employees and agents has or has had or is authorized, by written agreement or
otherwise, to have access to the source code versions of the Proprietary
Property, if any, or was or is otherwise in a position to duplicate or make any
unauthorized use of the source code versions of the Proprietary Property, if
any;
(m) all of the Proprietary Property was either (i) developed by
employees of the Company within the scope of their employment or (ii) developed
by independent contractors who have either (A) been a party to a written "work
for hire" agreement with the Company, in accordance with applicable federal,
state and foreign Laws, that has accorded the Company full, exclusive and
original ownership of all tangible and intangible property thereby arising or
(B) executed appropriate instruments of assignment in favor or the Company as
assignee that have conveyed to the Company full, effective and exclusive
ownership of all tangible and intangible property thereby arising;
(n) the cancellation or expiration of any Company License would not
have a Material Adverse Effect; and
(o) each Company License is a legal, valid and binding agreement of
(i) the Company and (ii) to the Company's Knowledge, the other parties thereto,
and the Company does not have any written notice of any termination or change
to, or receipt of proposal with respect to, any Company License as a result of
the closing of the transactions contemplated by this Agreement or otherwise.
4.12 Obligations to or from Affiliates. Section 4.12 of the Disclosure
Schedule contains a true and complete list of each transaction conducted or
completed, in whole or in part, since January 1, 2005, or currently proposed,
between the Company (on the one hand) and (on the other hand) any Stockholder,
any officer or director of the Company, or any Affiliate (as defined below) of
any such Person, other than employment or consulting arrangements between any
such Stockholder, officer or director disclosed on the Disclosure Schedule. Each
transaction heretofore between the Company and any Stockholder, officer or
director or any Affiliate of such Stockholder, officer or director has been
conducted on an arm's-length basis on terms no different than would be obtained
if the transaction had been between the Company and an unrelated party. Except
for debts or other outstanding obligations reflected on the Balance Sheet, there
are no
15
debts or other obligations of the Company to, or to the Company from, any
Stockholder, officer or director, or any Affiliate of such Stockholder, officer
or director. As used herein, an "Affiliate" of a Stockholder or an officer or
director means any member of the immediate family of such person or any entity
in which such person or any such family member is an officer or director or
owner of more than ten percent (10%) of beneficial interest in the entity's
outstanding equity securities.
4.13 Contracts.
(a) Section 4.13 of the Disclosure Schedule lists all material
Contracts (whether written or oral) relating to the conduct of the Business and,
where applicable, all consents or approvals required under any such Contract as
a result of the Merger. The Company has delivered to Cyberkinetics true and
correct copies of each such Contract and a written description, accurate in all
material respects, of each oral arrangement so listed. Without limiting the
generality of the foregoing, the aforesaid list includes all material Contracts
of the following types to which the Company is a party:
(i) labor union Contracts, together with a list of all labor unions
representing or attempting to represent employees of the Company;
(ii) pension, retirement, deferred compensation, death benefit, profit
sharing or other employee incentive, fringe benefit, stock purchase, stock
option, hospitalization or insurance plans or arrangements (and grant
certificates or other documents issued thereunder), or vacation pay,
severance pay and other similar benefit arrangements for officers,
employees or agents, together with a list of all pensioned present or
former employees, or obligations to provide any pensions hereafter other
than pursuant to the foregoing plans;
(iii) bonus plans or arrangements maintained by the Company, together
with a list of employees eligible to participate;
(iv) employment Contracts, consulting Contracts, Contracts providing
for termination or severance benefits, non-competition Contracts,
non-disclosure Contracts, Contracts for professional services, Contracts
with persons engaged in sales or distributing activities, and advertising
Contracts;
(v) Contracts of any kind with any officer, director, employee,
Stockholder or agent of the Company;
(vi) indentures, loan agreements, notes, security agreements,
mortgages, conditional sales Contracts, leases of personal property,
Contracts for the purchase or sale of real or personal property, and
Contracts for financing;
(vii) the Company Licenses;
(viii) other license Contracts (whether the Company is licensor or
licensee);
(ix) Contracts or other arrangements to which the Company and/or any
of its Stockholders is a guarantor, surety or endorser;
(x) Contracts providing for the purchase or sale of all or
substantially all of the Company's or a customer's requirements for a
particular product or service from a single supplier or to a single
customer;
16
(xi) Contracts limiting the freedom of the Company from competing in
any line of business or with any Person;
(xii) leases of real property (regardless of whether the Company is
the lessor or lessee); and
(xiii) Contracts that have not been included in items (i) through
(xiii) above which otherwise are material to the Business or the Company.
(b) The Company has received no written or oral notice that any other
party to a material Contract intends to cancel or terminate any material
Contract or to exercise or refrain from exercising any option under any material
Contract, other than material Contracts that have been previously terminated or
material Contracts with respect to which the options have lapsed prior to the
date of this Agreement.
(c) The Company has received no written notice that any other party to
a material Contract has (i) ceased, or indicated any intention to cease, doing
business with the Company or (ii) indicated that it will not consent to or
approve the transfer or assignment of such business from the Company in
connection with the Merger (if such consent or approval is required).
(d) All of the material Contracts are in full force and effect, are
valid and binding and are enforceable in accordance with their terms against the
Company and all other parties thereto. No condition exists or event has occurred
as a result of action or inaction by the Company or, to the Company's Knowledge,
any other Person that, with notice or lapse of time or both, would constitute a
Default or a basis for force majeure or other claim of excusable delay or
non-performance under any material Contract (other than as a result of the
consummation of the transactions contemplated by this Agreement). There are no
provisions of, nor to the Company's Knowledge, developments outside of the
Company's control affecting any such Contract which would reasonably be expected
to prevent the Surviving Corporation from realizing the benefits thereof after
the completion of the Merger.
(e) There are no renegotiations of, or attempts to renegotiate, or
outstanding rights to renegotiate, any amounts paid or payable to the Company
under current or completed material Contracts with any Person having the
contractual or statutory right to demand or require such renegotiation, except
as required or contemplated by this Agreement. No such Person other than the
Company has made demand for such renegotiation.
4.14 Claims. There is no Proceeding now pending or, to the Company's
Knowledge, threatened before any court, grand jury, administrative or regulatory
body, Governmental Authority, arbitration or mediation panel or similar body to
which the Company is a party relating to the Business, and to the Company's
Knowledge, there is no reasonable basis for any such Proceeding. There is no
Court Order of any Governmental Authority or arbitrator outstanding against the
Company or otherwise affecting the Business.
4.15 Taxes.
(a) (i) All Tax Returns of, relating to or including the Company have
been filed on a timely basis with the appropriate Governmental Authorities and
all such Tax Returns are true, correct and complete in all material respects;
(ii) all Taxes required to have been paid by the Company (including amounts
collected or withheld from third parties required to have been paid over to the
appropriate Governmental Authorities) have been paid in full on a timely basis
to the appropriate Governmental
17
Authorities; and (iii) all Taxes or other amounts required to have been
collected or withheld by the Company have been timely and properly collected or
withheld.
(b) (i) No Governmental Authority or Taxing Authority has asserted in
writing to the Company any adjustment, deficiency, or assessment that could
result in additional Tax for which the Company is or may be liable; (ii) there
is no pending audit, examination, investigation, dispute, proceeding or claim
for which the Company has received written notice relating to any Tax for which
the Company is or may be liable; (iii) no statute of limitations with respect to
any Tax for which the Company is or may be liable has been waived or extended;
(iv) the due date of any Tax Return that the Company is required to file has not
been extended; and (v) the Company is not a party to any Tax sharing or Tax
allocation agreement, arrangement or understanding.
(c) There are no Liens on any of the assets of the Company which arose
in connection with any failure or asserted failure to pay any Tax.
(d) The Company is not a party to any Contract that, individually or
collectively, could give rise to any payment that would not be deductible by
reason of Section 280G or 404 of the Code.
(e) The Company has not been a member of an affiliated group filing a
consolidated federal income Tax Return, and the Company is not liable for the
Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law) as transferee or successor, by
Contract or otherwise.
(f) Copies of (i) any Tax examinations, (ii) extensions of statutory
limitations, (iii) the federal, state and local income Tax Returns and franchise
Tax Returns of the Company, and (iv) correspondence between the Company and all
Taxing authorities for its last three (3) taxable years previously have been
furnished to Cyberkinetics and such Tax Returns are true, correct and complete
in all material respects.
(g) The provision for Taxes and any reserve for Taxes, if any, shown
on the Balance Sheet are adequate to cover the aggregate Liability of the
Company arising out of facts or circumstances occurring on or prior to the
Balance Sheet Date for all Taxes.
(h) The Company has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Code.
(i) The Company is not required to include in income any adjustment
pursuant to Section 481(a) of the Code by reason of a voluntary change in
accounting method initiated by the Company, and the Company has no knowledge
that the Internal Revenue Service has proposed any such adjustment or change in
accounting method.
(j) The Merger is to be carried out for substantial business purposes.
(k) The Company, as a result of any "closing agreement" as defined in
section 7121 of the Code (or corresponding provision of any state, local or
foreign tax Law), is not required to include any item of income in, or exclude
any item of deduction from, taxable income.
(l) The Company hereby incorporate as part of this Section 4.15, the
representations set forth in Section B of Exhibit F of this Agreement.
18
4.16 Absence of Material Events. Since the Balance Sheet Date, there has
not been: (a) any material adverse change in the Business; (b) any actual or, to
the Company's Knowledge, threatened, anticipated or contemplated damage,
destruction, loss, conversion, termination, cancellation, default or taking by
eminent domain or other action by any Governmental Authority which has had or
may have a Material Adverse Effect; (c) any material and adverse pending or, to
the Company's Knowledge, threatened, anticipated or contemplated dispute of any
kind with any material customer, supplier, source of financing, employee, lessor
or licensee of the Company, or, any pending or, to the Company's Knowledge,
threatened, anticipated or contemplated occurrence or situation of any kind,
nature or description which is reasonably likely to result in any material
reduction in the amount, or any material change in the terms or conditions, of
business with any customer, lessor, supplier, or source of financing; or (d) any
pending, or, to the Company's Knowledge, threatened, anticipated or contemplated
occurrence or situation of any kind, nature or description which could have a
Material Adverse Effect.
4.17 Absence of Improper Payments. Except as set forth in Section 4.17 of
the Disclosure Schedule, since its inception, the Company: (a) has not made any
contributions, payments or gifts of its property to or for the private use of
any governmental official, employee or agent where either the payment or the
purpose of such contribution, payment or gift is illegal under the Laws of the
United States, any state thereof or any other jurisdiction (foreign or
domestic); (b) has neither established or maintained any unrecorded fund or
asset for any purpose, nor made any false or artificial entries on its books or
records for any reason; (c) has not made any payments to any Person with the
intention or understanding that any part of such payment was to be used for any
purpose other than that described in the documents supporting the payment; or
(d) has neither made any contribution, nor reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
Federal, state or local, where such contribution or reimbursement would be in
violation of applicable Law.
4.18 ERISA. The Company has not adopted any "employee benefit plan" as
defined in Section 3(3) of ERISA, which (i) is subject to any provision of ERISA
and (ii) is maintained, administered or contributed to by the Company.
4.19 Labor Matters. A true and complete list of all of the Company's
officers, employees and consultants (collectively, the "Employees") and their
respective salaries, wages, other compensation, dates of employment, date and
amount of last salary increase and positions previously has been provided to
Cyberkinetics by the Company. There are no material disputes, employee
grievances or disciplinary actions pending or, to the Company's Knowledge,
threatened by or between the Company and any of the Employees. With respect to
the Employees, the Company has complied in all material respects with all
provisions of all Laws relating to the employment of labor and has no Liability
for any arrears of wages or Taxes or penalties for failure to comply with any
such Law or for any severance or termination payments of any type. No election
or Proceeding relating to the labor relations of the Company is pending or, to
the Company's Knowledge, threatened. The Company has had neither any material
union activity nor any material labor trouble of any kind, nature or description
at any time heretofore. No Employee shall have the right to receive from the
Surviving Corporation or Cyberkinetics a severance payment or other payment in
the nature thereof in the event his or her employment is terminated by the
Surviving Corporation or Cyberkinetics following the Closing, whether such right
arises as a matter of Contract, past policy or understanding, by operation of
Law, or
19
otherwise, other than as provided under the Employment Agreement. There are no
claims by any Employee against the Company now pending before any Governmental
Authority. No present or former Employee has given written or oral notice to the
Company of, and there is no claim or any basis for any claim against the Company
(whether under Law, any employment agreement or otherwise) on account of or for
(i) overtime pay, other than overtime pay for the current payroll period, (ii)
wages or salary (excluding current bonus, accruals and amounts accruing under
pension and profit-sharing plans) for any period other than the current payroll
period, (iii) vacation, time off or pay in lieu of vacation or time off, other
than that earned in respect of the current fiscal year, or (iv) any violation of
any Law relating to minimum wages or maximum hours of work. No Person
(including, but not limited to, any Governmental Authority) has any claim or
basis for any claim against the Company arising out of any Law relating to
discrimination in employment or employment practices or occupational safety and
health standards. The Company has not received any written or other notice from
any Governmental Authority alleging a violation of occupational safety or health
standards. The Company has not had any, and there are no pending, workers'
compensation claims involving the Company.
4.20 Compliance with Law.
(a) The Company is not in violation in any material respect of any
Court Order or any Law, and the assets of the Company have not been used or
operated by the Company or any other Person in violation of any Court Order or
any Law. The Company has not previously failed or is currently failing to comply
in any material respect with any applicable Laws relating to the Business or the
operation of its assets. The Company has not received any written or oral notice
regarding any existing or unresolved violation by the Company of any Law. There
are no securities, investment, safety, health, environmental, anti-competitive,
discrimination or other matters which could have an adverse effect on the
Company or the Business.
(b) The Company has delivered to Cyberkinetics copies of all reports
and other filings required to be filed by the Company with all Governmental
Authorities since its inception. All such reports and filings were at the time
of filing true and accurate in all material respects, and were prepared in
material compliance with all applicable Laws.
4.21 Licenses. The Disclosure Schedule sets forth a complete list of all
material Licenses used by the Company in the operation of the Business. The
Company owns, possesses or lawfully uses in the operation of its Business all
Licenses or permits (or exemptions therefrom) that are necessary to conduct the
Business as now conducted or to the ownership of the assets of the Company. The
Company is not in Default, nor has it received any written notice of any claims
of Default, with respect to any such License. Except as otherwise governed by
Law, all such Licenses are renewable by their terms or in the Ordinary Course of
Business without the need to comply with any special qualification procedures or
to pay any amounts other than routine filing fees, and will not be adversely
affected by the completion of the Merger.
4.22 Environmental Matters. The Company is in compliance in all material
respects with all applicable existing foreign, federal, state and local Laws,
rules, regulations and ordinances relating to protection of human health or the
environment or imposing liability or standards of conduct concerning any
Hazardous Material ("Environmental Laws"). The term "Hazardous Material" means
(a) any "hazardous substance" as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (b) any
20
"hazardous waste" as defined by the Resource Conservation and Recovery Act, as
amended, (c) any petroleum or petroleum product, (d) any polychlorinated
biphenyl and (e) any pollutant or contaminant or hazardous, dangerous, or toxic
chemical, material, waste or substance regulated under or within the meaning of
any law, rule, regulation or ordinance relating to the regulation of the same or
the protection of human health or the environment. To the Company's Knowledge,
there is no alleged or potential Liability (including, without limitation,
Liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties) of
the Company arising out of, based on or resulting from (i) the presence or
release into the environment of any Hazardous Material at any location, whether
or not owned by the Company or (ii) any violation or alleged violation of any
Environmental Law.
4.23 Corporate Records. The corporate record books of the Company are in
good order and are complete and accurate in all material respects, up to date,
contain all necessary signatures, and set forth all meetings and actions taken
by the Company's Stockholders and directors.
4.24 Brokers. Except for the services included in Trade Payable Amount, no
broker, finder, accountant, attorney, investment banker or other Person is
entitled to any brokerage, finder's, or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
4.25 Insurance. The Disclosure Schedule contains a list of the insurance
coverage applicable to the Business and the Company since inception, including
amounts and lines of coverage. All of the insurance coverage listed on the
Disclosure Schedule as remaining in effect is in full force and effect and is
valid, binding and enforceable in accordance with its terms. There is no Default
by the Company or, to the Company's Knowledge, by the relevant insurance company
under any such coverage. There are no outstanding unpaid premiums and no written
notice of cancellation or nonrenewal of any of such coverage has been received.
4.26 Certain Information. The Disclosure Schedule lists all bank accounts,
lock boxes, post office boxes and safe deposit boxes maintained in the name of
or controlled by the Company and the names of the persons having access thereto.
At the Closing, the Company is delivering to Cyberkinetics a list of all safe,
security and computer passwords, codes, logins, combinations and similar
information necessary to avail, access or use Company property.
4.27 No Other Obligations. Except as otherwise provided in this Agreement,
the Company does not have any legal or contractual obligation, absolute or
contingent, to sell or otherwise dispose of all or any part of the assets of the
Company (other than in the Ordinary Course of Business), or any equity interest
in the Company, or to effect any merger, consolidation or reorganization of the
Company or to enter into any agreement with respect thereto.
4.28 Trade Payable Amount. The Trade Payable Amount represents the
aggregate sum of all of the outstanding trade payables and fees for professional
services of the Company immediately prior to the Effective Time and there are no
other outstanding amounts due and payable to any Person for any goods or
services rendered to the Company prior to the Effective Time.
21
4.29 Disclosure of all Material Matters. No statement of fact set forth in
this Agreement (including without limitation all information in the Financial
Statements and the Schedules, Exhibits, and attachments hereto, taken as a
whole) is false or misleading in any material respect.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CYBERKINETICS AND ACQUISITION SUB
Cyberkinetics and Acquisition Sub jointly and severally represent and
warrant to the Company as follows:
5.1 Organization; Authority. Each of Cyberkinetics and Acquisition Sub is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware, has all requisite corporate power and authority
to conduct its business as now conducted and own its properties as now owned,
and is qualified to do business as a foreign corporation in each jurisdiction
where the failure to be so qualified would, in the aggregate, have a material
adverse effect on the business or financial condition of Cyberkinetics or
Acquisition Sub (as the case may be). Each of Cyberkinetics and Acquisition Sub
has full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of each of
Cyberkinetics and Acquisition Sub, and no other corporate or stockholder
proceedings on the part of either of them are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by each of Cyberkinetics and
Acquisition Sub and constitutes a valid and binding agreement of each of them,
enforceable against each in accordance with its terms. All of the issued and
outstanding shares of the Cyberkinetics Common Stock are duly authorized, fully
paid and non-assessable, and were issued in compliance with all applicable Laws
and were not issued in violation of the preemptive rights of any Person.
5.2 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by either of Cyberkinetics and Acquisition Sub nor
the consummation of the transactions contemplated hereby will (i) conflict with
or result in a breach of any provision of the Certificate of Incorporation or
Bylaws of either of them, (ii) require any consent or approval of, or filing and
expiration of a waiting period or a period for disapproval by, any Governmental
Authority (except for filing and acceptance of the Certificate of Merger
pursuant to the DGCL and the Articles of Merger pursuant to the IBCL), (iii)
result in a Default for which a waiver has not been obtained or give rise to any
right to terminate, cancel or accelerate or to any loss of benefit under any of
the terms, conditions, or provisions of any Contract filed Cyberkinetics as an
exhibit to its filings under either the Securities Act or the Exchange Act or
(iv) violate any applicable Law to which either Cyberkinetics or Acquisition Sub
or any of their assets are bound.
5.3 Litigation. There are no actions, suits or other forms of proceedings
or disputes pending against either Cyberkinetics or Acquisition Sub before any
Governmental Authority, that would, if resolved adversely to it, whether singly
or in the aggregate, have a material adverse effect on its business or financial
condition; nor has either Cyberkinetics or Acquisition Sub been subject to any
Court Order the effect of which in the aggregate would have a material adverse
effect on its business or financial condition. Neither Cyberkinetics nor
Acquisition Sub knows or
22
has grounds to know of any basis for any such action, suit or other form of
proceeding or dispute or of any governmental investigation relating to either
Cyberkinetics or Acquisition Sub.
5.4 Brokers. No broker, finder, investment banker or other Person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of either Cyberkinetics or Acquisition Sub.
5.5 SEC Filings. The Cyberkinetics SEC Filings (as defined below) do not
contain any statement that, at the time of filing and in light of the
circumstances under which it was made, was false or misleading with respect to
any material fact, or that omitted to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading. The financial statements contained in the Cyberkinetics SEC Filings
were prepared in accordance with GAAP, and fairly present the consolidated
financial position and results of operations of Cyberkinetics and its
subsidiaries as of and for their respective dates, in conformity with GAAP
applied on a consistent basis, except as otherwise noted therein. There has not
been any change that is materially adverse to the business, assets, financial
condition or results of operations of Cyberkinetics, other than any such changes
set forth or described in the Cyberkinetics SEC Filings, provided that none of
the following shall be deemed by itself or by themselves, either alone or in
combination, to constitute such a material adverse change: (a) any change in the
market price or trading volume of the Cyberkinetics Common Stock; (b) any
failure by the Company to meet the revenue or earnings, predictions or
expectations of equity analysts for any period ending (or for which earnings are
released) on or after the date of this Agreement; (c) any adverse change arising
out of or resulting from actions contemplated by the parties in connection with,
or which is attributable to, the announcement of this Agreement and the
transactions contemplated by the parties in connection with, or which is
attributable to, the announcement of this Agreement and the transactions
contemplated hereby; or (d) any change arising out of conditions affecting the
industry in which the Company operates as a whole or the U.S. economy as a
whole. For purposes of this Section 5.5, "Cyberkinetics SEC Filings" means (i)
Cyberkinetics' Annual Report on Form 10-KSB for the fiscal year ended December
31, 2004; (ii) Cyberkinetics' Quarterly Reports on Form 10-QSB for the three
months ended March 31, 2005, June 30, 2005 and September 30, 2005; and (iii)
Cyberkinetics' Current Reports on Form 8-K as filed with the Commission on April
4, 2005, April 6, 2005, April 12, 2005, May 13, 2005, June 28, 2005, September
28, 2005, October 14, 2005, October 19, 2005, October 26, 2006, November 14,
2005, December 27, 2005, January 10, 2006 and January 13, 2006.
5.6 Cyberkinetics and the Acquisition Sub, jointly and severally, hereby
incorporate as part of this Article 5, the representations set forth in Section
A of Exhibit F to this Agreement.
ARTICLE 6 COVENANTS
6.1 Tax Free Reorganization. Neither Cyberkinetics nor the Surviving
Corporation shall take or suffer to be taken any action that will cause the
Merger not to constitute a reorganization within the meaning of Section 368(a)
of the Code.
6.2 Public Announcements. All public announcements, notices or other
communications regarding this Agreement and the transactions contemplated hereby
after the
23
Closing to third parties other than the parties hereto and their respective
advisors shall require the prior approval of Cyberkinetics, which approvals
shall not be unreasonably withheld or delayed.
6.3 Cyberkinetics Common Stock. Cyberkinetics agrees that all of the
Cyberkinetics Common Stock to be issued pursuant to this Agreement, when issued,
will be duly authorized, fully paid and non-assessable, issued in compliance
with all applicable Laws and not in violation of the pre-emptive rights of any
Person.
6.4 Obligation to Commercialize. Cyberkinetics shall use commercially
reasonable efforts to supply required capital and other resources, and to take
all other commercially reasonable steps and actions, to enable the Surviving
Corporation to timely achieve at least one of the milestones set forth in the
Restricted Stock Agreement. Subject to the fiduciary duty obligations of the
Cyberkinetics Board of Directors, Cyberkinetics will also develop a program with
the Scientific Advisors designed to satisfy the due diligence obligations under
the Company Licenses and shall use commercially reasonable best efforts to allow
the Surviving Corporation to accomplish that objective.
6.5 Obligation to List. In the event that Cyberkinetics elects to register
and list its Cyberkinetics Common Stock on the American Stock Exchange or any
other exchange or listing, whether domestic or international, then Cyberkinetics
shall, at its expense, register the Cyberkinetics Common Stock held by the
Stockholders (including the Restricted Cyberkinetics Common Stock which may be
issued to the Stockholders hereunder).
6.6 Board Representation. Following the Closing, Cyberkinetics shall
nominate Xxxx X. Xxxxxx for, and will use commercially reasonable efforts to
cause the election of Xxxx X. Xxxxxx to, the Board of Directors of Cyberkinetics
to serve in such capacity for so long as the milestones under the Restricted
Stock Agreement are achievable.
6.7 Payment of Trade Payables. Immediately following the Effective Time,
Cyberkinetics shall either make a loan or contribute to the Company an amount
not to exceed $425,000 to enable the Surviving Corporation to discharge (and
shall cause the Surviving Corporation to discharge) in full the Trade Payable
Amount, by making payments to the creditors of the Surviving Corporation in
accordance with Schedule 2 attached hereto and incorporated herein.
ARTICLE 7 SURVIVAL AND INDEMNIFICATION
7.1 Investigations; Survival of Warranties and Indemnification Obligations.
(a) The respective representations and warranties of the Company,
Cyberkinetics and Acquisition Sub contained herein or in any certificates or
other documents delivered at the Closing are true, accurate and correct and
shall not be deemed waived or otherwise affected by any investigation made by
any party hereto or by the occurrence of the Closing. Each and every such
representation shall be deemed to have been relied upon by the party or parties
to which made, notwithstanding investigation or inspection made by or on behalf
of such party or parties.
(b) Each and every such representation and warranty and
indemnification obligation of any party hereunder with respect to such
representation and warranty shall survive for a period of one
24
(1) year after the Closing Date; provided, however, that the representations and
warranties under Sections 4.1, 4.2, 4.15, 4.18 and 5.1 and the related
indemnification obligations shall survive the Closing until the later of the
first anniversary of the Effective Time or the date on which the Restricted
Stock is disbursed to the Stockholders under the Restricted Stock Agreement (or
is required to be disbursed by Cyberkinetics under the Restricted Stock
Agreement) or the expiration of the 36-month period set forth therein. All
covenants and obligations of a party hereto which are contemplated by the terms
of this Agreement to be performed after Closing shall survive until performance
is completed. Any claim made in accordance with this Section 7.1 must be made in
writing within 10 days following the applicable survival period, if such claim
is timely made, it shall survive until finally resolved notwithstanding
expiration of the applicable survival period.
7.2 Indemnification of Cyberkinetics and Surviving Corporation. Subject to
Sections 7.1, 7.6, 7.8, 7.9 and 7.10, inclusive, Cyberkinetics and the Surviving
Corporation shall be indemnified for any Damages for which a written claim is
timely made under Section 7.1, arising from or in connection with (a) any
material inaccuracy in any of the representations and warranties of the Company
made in this Agreement or in any document, agreement, instrument or certificate
delivered by the Company at the Closing pursuant to this Agreement, (b) any
claims arising prior to the Closing and made against the Surviving Corporation
by any security holder of the Company (other than matters for which the
Stockholders are entitled to indemnification by Cyberkinetics under Section 7.3
hereof).
7.3 Indemnification of the Stockholders. Subject to Sections 7.1, 7.9 and
7.10, inclusive, Cyberkinetics and the Surviving Corporation shall, jointly and
severally, indemnify and hold harmless the Stockholders (and each of them) and
shall reimburse them for any Damages up to the amount of the Merger
Consideration paid to or on behalf of the Stockholders for which a claim is
timely made under Section 7.1, arising from or in connection with (a) any
material inaccuracy in any of the representations and warranties of
Cyberkinetics or Acquisition Sub made in this Agreement or in any document,
agreement, instrument or certificate delivered by Cyberkinetics or Acquisition
Sub at the Closing pursuant to this Agreement or (b) any failure by
Cyberkinetics or Acquisition Sub to perform or comply with any agreement or
covenant in this Agreement or under any document, agreement, instrument, or
certificate delivered at the Closing by Cyberkinetics or Acquisition Sub
pursuant to this Agreement.
7.4 Third-Party Claims. After receipt by a party or a third party
beneficiary of notice of the commencement of any proceeding against it for which
such party or third party beneficiary is entitled or is seeking to assert a
right to indemnification under Section 7.2 or 7.3 (an "Indemnified Party"), the
Indemnified Party shall promptly give notice to a representative of the
Stockholders if the indemnification is sought under Section 7.2 or to
Cyberkinetics if indemnification is sought under Section 7.3 (the "Notice
Party") of the commencement thereof, but the failure to so notify the Notice
Party shall not relieve them or it of any liability they or it may have to any
Indemnified Party except to the extent of actual prejudice caused by such
failure. In case any such proceeding shall be brought against an Indemnified
Party and it shall give notice to the Notice Party of the commencement thereof,
the Notice Party will be entitled to participate therein and, if the Notice
Party is Cyberkinetics it may (except as provided in the next sentence), assume
the defense thereof with counsel reasonably satisfactory to such Indemnified
Party. Cyberkinetics may not assume the defense if (i) Cyberkinetics or the
Surviving Corporation is also a party to such proceeding and the Indemnified
Party determines in good faith that joint representation would be inappropriate,
(ii) the Notice Party fails to provide reasonable
25
assurance to the Indemnified Party of its financial capacity to defend such
proceedings and provide indemnification with respect thereto, (iii) equitable
relief is being sought against an Indemnified Party, (iv) the claim involves
Taxes or (v) the proceeding, if adversely determined, would materially impair
the financial condition, business or prospects of an Indemnified Party. If
entitled and after notice from Cyberkinetics to such Indemnified Party of its
election to assume the defense, Cyberkinetics shall not be liable to such
Indemnified Party for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case subsequently incurred by
such Indemnified Party in connection with the defense thereof; provided that
Cyberkinetics may only assume control of the defense of such proceeding if it
acknowledges in writing to the Indemnified Party that any damages, fines, costs
or Liabilities that may be assessed against the Indemnified Party in connection
with the proceeding constitute Damages for which the Indemnified Party shall be
indemnified pursuant to Section 7.2. If Cyberkinetics assumes the defense of
such proceeding, no compromise or settlement thereof may be effected by the
Notice Party without the Indemnified Party's prior written consent (which
consent will not unreasonably be withheld or delayed) unless the settlement
provides for a full and unconditional release of the Indemnified Party without
payment of any funds by the Indemnified Party or (A) there is no finding or
admission of any violation of Law or any violation of the rights of any Person
and no effect on any other claims that may be made against the Indemnified Party
and (B) the sole relief provided is monetary damages that are paid in full by
Cyberkinetics. If notice is given to Cyberkinetics and the Surviving Corporation
of the commencement of any proceeding and it does not, within ten days after the
Indemnified Party's notice is given, give notice to Cyberkinetics and the
Surviving Corporation of its election to assume the defense thereof, the Notice
Party shall be bound by any determination made in such action or any compromise
or settlement thereof effected by the Indemnified Party. Cyberkinetics may only
compromise or settle such legal proceeding on behalf of and for the account of
the Indemnified Party after it obtains the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the other provisions of this Section 7.4, if a third party
asserts (other than by means of a proceeding) that Cyberkinetics or the
Surviving Corporation is liable to such third party for a monetary or other
obligation which may constitute or result in Damages for which Cyberkinetics or
the Surviving Corporation may be entitled to indemnification pursuant to Section
7.2 and Cyberkinetics or the Surviving Corporation reasonably determine in good
faith that it has a valid business reason to fulfill such obligation, then (i)
Cyberkinetics and the Surviving Corporation shall be entitled to satisfy such
obligation, without prior consent from the Stockholders or their representative
or designee, (ii) Cyberkinetics or the Surviving Corporation may subsequently
make a timely claim for indemnification in accordance with the provisions of
this Article 7, and (iii) Cyberkinetics or the Surviving Corporation shall be
reimbursed, in accordance with the provisions of Article 7, for any such Damages
for which it is entitled to indemnification pursuant to Section 7.2 (subject to
the right of the Stockholders to dispute Cyberkinetics' or the Surviving
Corporation's entitlement to indemnification, or the amount for which it is
entitled to indemnification, under the terms of this Section 7.2).
7.5 Payment.
(a) Subject to Section 7.6 below, in the event that any Indemnified
Party determines that it is entitled to an indemnity payment pursuant to this
Article 7, the Indemnified Party shall deliver a written notice to the
applicable Notice Party. If the Notice Party disputes all or any portion of the
claim, the Notice Party must provide written notice of its objection (detailing
the objection) to the Indemnified
26
Party within fifteen (15) Business Days after the receipt of the notice from the
Indemnified Party. Failure by the Notice Party to give such notice shall be
deemed acknowledgment and agreement by the Notice Party that the Indemnified
Party is entitled to indemnification for that portion of the claim as to which
no objection is made.
(b) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the Indemnified Party shall be entitled to
interest on the unpaid amount of such obligation for each day from the date the
amount became due until payment in full, payable on demand, at the prime rate of
Bank of America plus two percent (2%).
7.6 Setoff/Exclusive Satisfaction. In the event of an indemnifiable event,
after the parties have followed the procedures set forth in Section 7.4 and it
has been determined that Cyberkinetics and/or the Surviving Corporation are
entitled to be indemnified for Damages under Section 7.2 (or the Notice Party
has consented in writing to indemnification of the Indemnified Party of a
specified amount), to the extent necessary to satisfy the amount of any such
Damages (a) while any of the Escrow Amount remains held pursuant to this
Agreement, Cyberkinetics shall first reduce the number of shares of
Cyberkinetics Common Stock due or to become due to the Stockholders from the
Escrow Amount pursuant to Section 2.11, and (b) next, Cyberkinetics shall reduce
the number of shares of Cyberkinetics Restricted Stock due or to become due to
any of the Stockholders pursuant to Section 2.6 and the Restricted Stock
Agreement. Any reduction or indemnification pursuant to clauses (i) or (ii) of
the first sentence of this Section 7.6 shall be made pro rata among the
Stockholders in accordance with the amount of Merger Consideration pursuant to
Schedule 1.
7.7 Contribution. The Stockholders shall not have any right of contribution
against either the Company or the Surviving Corporation with respect to any
breach by the Company of any of its representations, warranties, covenants or
agreements in this Agreement.
7.8 Basket. In no event may Cyberkinetics and/or the Surviving Corporation
make a claim for any Damages under Section 7.2 unless and until the total amount
of all valid indemnification claims in the aggregate exceed $12,500 (the
"Basket"), and then Cyberkinetics and/or Surviving Corporation may make a claim
for all Damages including the $12,500.
7.9 Lost Profits and Special Damages. Notwithstanding any other provision
of this Agreement to the contrary, no party hereto shall be required to
indemnify, hold harmless or otherwise protect any other party (or any of its
Affiliates) for damage to reputation, lost business opportunities, lost profits,
impact on purchase price calculation, mental or emotional distress, or special,
consequential or exemplary damages.
7.10 Sole and Exclusive Remedy. Except in any case involving fraud, bad
faith, or intentional misconduct or misrepresentation, the rights to
indemnification under this Article 7, subject to all of the terms and conditions
hereof, shall constitute the sole and exclusive right and remedy available to
any party hereto for any actual or threatened breach of this Agreement by any
party hereto, including a breach of any representation, warranty, covenant or
agreement contained herein.
7.11 Construction. The parties intend that each representation, warranty,
and covenant herein shall have independent significance. If any party has
breached any representation,
27
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant, as the
case may be.
ARTICLE 8 MISCELLANEOUS
8.1 Notices. All notices, requests, consents and other communications
hereunder shall be in writing, addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and either (i) delivered by hand, (ii) made by facsimile
transmission, (iii) sent by recognized overnight courier, or (iv) sent by
registered or certified mail, return receipt requested, postage prepaid.
If to Cyberkinetics:
Cyberkinetics Neurotechnology Systems, Inc.
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company, to:
Purdue Research Foundation
Attention: Xxxxx Xxxxxxx
000 Xxxx Xxxxxx, Xxxxx X0-000
Xxxx Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
with a copy to:
Ice Xxxxxx LLP
Xxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
All notices, requests, consents and other communications hereunder shall be
deemed to have been properly given (a) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above, (b)
if made by facsimile transmission, at the time that receipt thereof has been
28
acknowledged by electronic confirmation or otherwise, (c) if sent by overnight
courier, on the next Business Day following the day such notice is delivered to
the courier service, or (d) if sent by registered or certified mail, on the
fifth Business Day following the day such mailing is made.
8.2 Entire Agreement. It is agreed that all offers, statements of intent,
understandings and agreements heretofore among the parties respecting this
transaction are merged in this Agreement (including the Schedules and Exhibits
thereto), which fully and completely expresses the agreement of the parties, and
that there are no representations, warranties or agreements except as
specifically set forth or referred to in this Agreement.
8.3 Waiver; Amendment. No waiver of any breach of any provision of this
Agreement shall constitute a waiver of any other breach of that or any other
provision hereof. No supplement or modification of or amendment to this
Agreement shall be binding unless agreed to and executed in writing by
Cyberkinetics, the Surviving Corporation, the Company and a representative of
the Stockholders.
8.4 Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed by the Laws
of the State of Delaware, without giving effect to the conflict of Law
principles thereof.
8.5 Severability. In the event that any court of competent jurisdiction
shall finally determine that any provision, or any portion thereof, contained in
this Agreement shall be void or unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court determines it
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine any such provision, or portion thereof,
wholly unenforceable, the remaining provisions of this Agreement nevertheless
shall remain in full force and effect.
8.6 Descriptive Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
8.7 Counterparts; Facsimile. This Agreement may be executed in
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement, and any amendments hereto or
thereto, to the extent signed and delivered by means of a facsimile machine,
shall be treated in all respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person. At the request of any party
hereto, each other party hereto shall reexecute original forms hereof and
deliver them to all other parties. No party hereto shall raise the use of a
facsimile machine to deliver a signature or the fact that any signature or
agreement or instrument was transmitted or communicated through the use of a
facsimile machine as a defense to the formation or enforceability of a contract
and each such party forever waives any such defense.
8.8 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto. Each of the parties hereto expressly
intend that each of the Stockholders and a representative of the Stockholders
shall have the rights and benefits under this
29
Agreement. Except as set forth in the preceding sentence, nothing in this
Agreement, expressed or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
8.9 Representation By Counsel; Interpretation. Each of the parties hereto
acknowledges that he, she or it has been represented by counsel in connection
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived.
8.10 Stockholders' Designee. From time to time, the Stockholders shall be
entitled to designate a Person to serve as a representative of the Stockholders
under this Agreement by providing written notice to Cyberkinetics and the
Surviving Corporation in accordance with the provisions of this Agreement.
[SIGNATURE PAGE FOLLOWS]
30
IN WITNESS WHEREOF, the parties have duly executed this Agreement and Plan
of Merger on the date first above written.
"CYBERKINETICS"
Cyberkinetics Neurotechnology Systems,
Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx,
Chief Executive Officer
"ACQUISITION SUB"
Andara Acquisition Corp.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx,
President
"COMPANY"
Andara Life Science, Inc.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx,
President
INDEX OF SCHEDULES AND EXHIBITS
SCHEDULES:
Schedule 1 Stockholders of the Company
Schedule 2 Trade Payable Amount
Schedule 3 Disclosure Schedule
Schedule 4 Financial Statements of the Company
EXHIBITS:
Exhibit A Form of Employment Agreement - Xxxx X. Xxxxxx
Exhibit B Form of Restricted Stock Agreement
Exhibit C Form of Investment Representation Letter
Exhibit D Form of Opinion of Counsel to the Company and the Stockholders
Exhibit E Form of Opinion of Counsel to Cyberkinetics and Andara
Acquisition Corp.
Exhibit F Additional Representations
