STOCK PURCHASE AGREEMENT BY AND AMONG ROSETTA GENOMICS LTD., ROSETTA GENOMICS INC., PARKWAY CLINICAL LABORATORIES, INC. AND DR. RAZA BOKHARI Dated as of July 22, 2008
BY
AND AMONG
ROSETTA
GENOMICS INC.,
PARKWAY
CLINICAL LABORATORIES, INC.
AND
▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇
Dated
as of July 22, 2008
TABLE
OF CONTENTS
|
ARTICLE
I PURCHASE AND SALE OF COMPANY SHARES
|
1
|
|
|
1.1
|
Purchase
and Sale of Company Shares
|
1
|
|
1.2
|
Closing.
|
1
|
|
1.3
|
Withholding
Rights
|
2
|
|
1.4
|
Transfer
Taxes
|
2
|
|
ARTICLE
II PURCHASE PRICE; EARN-OUT
|
2
|
|
|
2.1
|
Purchase
Price; Payment.
|
2
|
|
2.2
|
Earn-Out
Payment.
|
2
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHODLER
|
4
|
|
|
3.1
|
Organization,
Good Standing and Qualification; Organizational Documents
|
4
|
|
3.2
|
Subsidiaries;
Investments
|
4
|
|
3.3
|
Capitalization.
|
4
|
|
3.4
|
Authorization;
Binding Obligation
|
5
|
|
3.5
|
Consents
and Approvals
|
5
|
|
3.6
|
No
Violation
|
6
|
|
3.7
|
Approvals
and Orders; Permits
|
6
|
|
3.8
|
Title
to and Condition of Properties; Sufficiency of Assets.
|
6
|
|
3.9
|
Financial
Statements.
|
7
|
|
3.10
|
No
Undisclosed Liability
|
7
|
|
3.11
|
Absence
of Certain Events
|
7
|
|
3.12
|
Real
Property.
|
8
|
|
3.13
|
Personal
Property Leases
|
9
|
|
3.14
|
Environmental
Matters.
|
9
|
|
3.15
|
Legal
Proceedings
|
10
|
|
3.16
|
Compliance
with Laws.
|
10
|
|
3.17
|
Employment
Matters.
|
12
|
|
3.18
|
Employee
Benefit Plans.
|
13
|
|
3.19
|
No
Brokers
|
15
|
|
3.20
|
Taxes.
|
15
|
|
3.21
|
Contracts.
|
16
|
|
3.22
|
Transactions
With Affiliates
|
18
|
|
3.23
|
Insurance
|
18
|
|
3.24
|
Intellectual
Property.
|
19
|
|
3.25
|
Payment
Programs
|
21
|
|
3.26
|
Customers
|
21
|
|
3.27
|
Accounts
Receivable and Accounts Payable.
|
21
|
|
3.28
|
Books
and Records
|
22
|
|
3.29
|
Internal
Controls
|
22
|
|
3.30
|
Bank
Accounts; Powers of Attorney
|
22
|
|
3.31
|
Investment
Representations
|
22
|
|
3.32
|
Disclosure
|
23
|
|
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE BUYER
|
23
|
|
|
4.1
|
Organization,
Good Standing and Qualification
|
24
|
|
4.2
|
Ownership
of the Buyer; No Prior Activities
|
24
|
|
4.3
|
Authorization;
Binding Obligation
|
24
|
|
4.4
|
Valid
Issuance of Parent Ordinary Shares
|
24
|
|
4.5
|
Consents
and Approvals
|
24
|
|
4.6
|
Litigation
|
25
|
|
4.7
|
Parent
Reports
|
25
|
|
4.8
|
No
Brokers
|
25
|
|
ARTICLE
V COVENANTS
|
25
|
|
|
5.1
|
Conduct
of Business Pending Closing
|
25
|
|
5.2
|
Exclusivity
|
27
|
|
5.3
|
Non-Trading
|
27
|
|
5.4
|
Cooperation;
Approvals, Filings and Consents.
|
28
|
|
5.5
|
Access
to Information
|
28
|
|
5.6
|
Notice
of Certain Events
|
29
|
|
5.7
|
Public
Announcements
|
29
|
|
5.8
|
Restriction
on Transfer of Shares.
|
29
|
|
5.9
|
Tax
Matters.
|
31
|
|
5.10
|
Mutual
Cooperation
|
32
|
|
5.11
|
Registration.
|
33
|
|
5.12
|
Non-competition;
Non-Solicitation; Confidentiality; Reasonableness.
|
34
|
|
5.13
|
Repayment
of Debt Payoff Amount
|
35
|
|
ARTICLE
VI CONDITIONS PRECEDENT TO CLOSING
|
36
|
|
|
6.1
|
Conditions
to Obligation of Each Party
|
36
|
|
6.2
|
Additional
Conditions to Obligations of Parent and the Buyer
|
36
|
|
6.3
|
Additional
Conditions to Obligations of the Company
|
38
|
|
ARTICLE
VII INDEMNIFICATION
|
39
|
|
|
7.1
|
Indemnification.
|
39
|
|
7.2
|
Indemnification
Process.
|
40
|
|
7.3
|
Survival
of Representations, Warranties and Covenants
|
43
|
|
7.4
|
Fraud
and Related Claims; Characterization of Payments
|
43
|
|
ARTICLE
VIII TERMINATION, AMENDMENT, WAIVER AND EXPENSES
|
43
|
|
|
8.1
|
Termination
|
43
|
|
8.2
|
Effect
of Termination
|
44
|
|
8.3
|
Expenses
|
45
|
|
ARTICLE
IX MISCELLANEOUS
|
45
|
|
|
9.1
|
Entire
Agreement
|
45
|
|
9.2
|
Amendment
and Waiver
|
45
|
|
9.3
|
Assignment
|
45
|
|
9.4
|
Waivers
|
45
|
|
9.5
|
Governing
Law; Venue; Waiver of Jury Trial
|
46
|
|
9.6
|
Specific
Performance
|
46
|
|
9.7
|
Interpretation
|
46
|
|
9.8
|
Severability
|
46
|
ii
|
9.9
|
Notices
|
47
|
|
9.10
|
Representation
by Counsel
|
48
|
|
9.11
|
Construction
|
48
|
|
9.12
|
Waivers
|
48
|
iii
EXHIBITS
AND SCHEDULES
EXHIBITS:
|
Exhibit
A
|
Form
of Employment Agreement
|
|
Exhibit
B
|
Form
of Lock-up Agreemnet
|
|
Exhibit
C
|
Form
of Payoff Letter
|
|
Exhibit
D
|
Form
of Release and Waiver
|
|
Exhibit
E
|
Form
of Legal Opinion of Company Counsel
|
SCHEDULES:
|
Schedule
I
|
Index
of Defined Terms; Table of
Definitions
|
Company
Disclosure Schedule
iv
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”),
dated
as of July 22, 2008, is made by and among Rosetta Genomics Ltd., a company
organized under the laws of the State of Israel (“Parent”),
Rosetta Genomics Inc., a Delaware corporation (the “Buyer”),
Parkway Clinical Laboratories, Inc., a Pennsylvania corporation (the
“Company”),
and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, the sole stockholder of the Company (the “Stockholder”).
WHEREAS, the
Stockholder owns all of the issued and outstanding shares of capital stock
of
the Company, which consists solely of 800 shares (the “Company
Shares”)
of
common stock, $0.01 par value per share, of the Company (the “Common
Stock”);
and
WHEREAS,
subject to the terms and conditions set forth herein, the Stockholder desires
to
sell to the Buyer, and the Buyer desires to purchase from the Stockholder,
all
of the Company Shares.
NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, each of Parent, the Buyer, the Company and the Stockholder
hereby agrees as follows:
ARTICLE
I
PURCHASE
AND SALE OF COMPANY SHARES
1.1 Purchase
and Sale of Company Shares.
At the
Closing, on the terms and subject to the conditions set forth in this Agreement,
the Stockholder shall sell, assign, transfer and deliver to the Buyer, and
the
Buyer shall purchase, acquire and accept from the Stockholder, all of the
Company Shares free and clear of all Liens.
1.2 Closing.
(a) Subject
to the terms and conditions hereof, the closing of the transactions contemplated
by this Agreement (the “Closing”)
will
take place remotely via the exchange of executed documents and other closing
deliverables at the earliest time (and in any event no later than the third
Business Day) following the date on which all of the conditions set forth in
Article VI have been satisfied (other than delivery of items to be delivered
at
the Closing and other than satisfaction of those conditions that by their nature
are to be satisfied at the Closing, it being understood that the occurrence
of
the Closing shall remain subject to the delivery of such items and the
satisfaction or waiver of such conditions at the Closing) or, if permissible,
waived, unless another date is agreed to in writing by Parent and the Company.
The date on which the Closing actually occurs is herein referred to as the
“Closing
Date.”
(b) At
the
Closing, the Stockholder shall deliver to the Buyer a certificate or
certificates representing all of the Company Shares held by the Stockholder,
duly endorsed in blank for transfer or together with stock powers duly executed
in blank. The Stockholder hereby agrees, at his own cost, to execute and deliver
or procure to be done and executed and delivered such other instruments and
documents and to do all such further acts and things as may be necessary for
effecting completely the transfer of the legal and beneficial ownership of
the
Company Shares to the Buyer free from all Liens.
1.3 Withholding
Rights.
The
Buyer shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement such amounts as are required to be deducted
and withheld with respect to the making of such payments under the provisions
of
any applicable Tax laws. Any such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Stockholder in respect
of
which such deduction and withholding was made.
1.4 Transfer
Taxes.
Any
sales, transfer or similar Taxes in connection with the transactions
contemplated hereby shall be borne and paid by the Stockholder.
ARTICLE
II
PURCHASE
PRICE; EARN-OUT
2.1 Purchase
Price; Payment.
(a) The
purchase price (the “Purchase
Price”)
for
the Company Shares shall be an amount equal to (A) the Base Purchase Price
minus
the Debt
Payoff Amount (the “Closing
Payment”)
plus
(B) the
right to receive the Earn-Out Payment to the extent earned in accordance with
Section 2.2. One Million Dollars ($1,000,000) of the Closing Payment (the
“Closing
Stock Payment”)
shall
be paid by the delivery of such number of ordinary shares of Parent, nominal
value NIS 0.01 per share (the “Parent
Ordinary Shares”),
as is
determined by dividing the Closing Stock Payment by the Closing Share Price.
The
balance of the Closing Payment, if any, shall be payable in cash (the
“Closing
Cash Payment”).
(b) At
least
three (3) Business Days prior to the Closing, the Stockholder shall deliver
to
the Buyer the Payoff Letters evidencing the Debt Payoff Amount. At the Closing,
the Buyer shall (i) pay or cause to be paid to the Stockholder the Closing
Cash
Payment, if any, and (ii) deliver or cause to be delivered to the Stockholder
a
certificate representing the shares of Parent Ordinary Shares for the Closing
Stock Payment.
2.2 Earn-Out
Payment.
(a) As
additional consideration for the Company Shares, the Stockholder shall be
entitled to receive in accordance with this Section 2.2 the amount of Three
Hundred Thousand Dollars ($300,000) (the “Earn-Out
Payment”)
subject to the achievement of either of the following milestones (each, a
“Milestone”)
on or
prior to the twelve (12) month anniversary of the Closing Date (the
“Milestone
Date”):
(i) Parent’s
Market Value equals
or
exceeds One Hundred Million Dollars ($100,000,000) for thirty (30) consecutive
trading days at any time during the period from the Closing Date through the
Milestone Date; or
2
(ii) The
consolidated revenues of Parent, the Buyer and the Company for the twelve (12)
months period commencing on August 1, 2008 (the “Consolidated
Revenues”)
equal
or exceed Eight Million Dollars ($8,000,000) which revenues shall be calculated
based on the principles set forth in Exhibit
2.2(a) attached
hereto.
(b) If
the
Earn-Out Payment is earned pursuant to this Section 2.2(a), One Hundred Thousand
Dollars ($100,000) of the Earn-Out Payment (the “Earn-Out
Stock Payment”)
shall
be paid by the delivery of such number of Parent Ordinary Shares as is
determined by dividing the Earn-Out Stock Payment by the Earn-Out Share Price
and the balance of the Earn-Out Payment shall be payable in cash (the
“Earn-Out
Cash Payment”).
(c) If
the
Buyer determines that the Earn-Out Payment has not been earned as of the
Milestone Date as a result of the Milestone set forth in Section 2.2(a)(ii)
not
having been satisfied, within sixty (60) days following the Milestone Date,
the
Buyer shall deliver to the Stockholder a written notice setting forth its
calculation of the Consolidated Revenues (the “Milestone
Notice”).
The
Stockholder shall have the right to review the calculation of the Consolidated
Revenues for a period of twenty (20) days following the delivery of the
Milestone Notice by the Buyer (the “Milestone
Review Period”).
The
Buyer shall make the books and records used in preparing the calculation of
the
Consolidated Revenues available to the Stockholder at reasonable times and
upon
reasonable notice following the delivery of the Milestone Notice by the Buyer
to
the Stockholder hereunder. Notwithstanding the foregoing, the Buyer shall not
be
required to grant access or furnish information to the Stockholder or any of
its
representatives to the extent that such information is appropriately subject
to
an attorney/client or attorney work product privilege. The Stockholder shall
have the right to object to the calculation of the Consolidated Revenues by
notifying the Buyer in writing (the “Milestone
Disagreement Notice”)
of
such objection (and the details thereof) and the Stockholder’s calculation of
the Consolidated Revenues, prior to the expiration of the Milestone Review
Period. If the Stockholder does not make any such objection prior to the
expiration of the Milestone Review Period, the calculation of the Consolidated
Revenues set forth in the Milestone Notice shall be determinative for purposes
of this Section 2.2 and shall be final and binding on all parties.
(d) If
the
Stockholder delivers a Milestone Disagreement Notice to the Buyer prior to
the
expiration of the Milestone Review Period, the Stockholder and the Buyer shall,
during the thirty (30) day period following the delivery of the
Stockholder’s objection, attempt in good faith to resolve the matters to which
the Stockholder objected. In the event the Stockholder and the Buyer cannot
resolve all of such matters by the end of such thirty (30) day period, such
parties shall promptly engage an independent public accounting firm (the
“Independent
Accountants”)
to
resolve any items not resolved by the Stockholder and the Buyer. The parties
shall require the Independent Accountants, within thirty (30) days thereafter,
to resolve only the matters objected to by the Stockholder and not resolved
by
the Stockholder and the Buyer with respect to the determination of the
calculation of the Consolidated Revenues, and such determination by the
Independent Accountants shall be determinative for purposes of this Section
2.2
and shall be final and binding, absent manifest error. The costs of the
Independent Accountant shall be borne by the Buyer if the Consolidated Revenues
are determined by the Independent Accountants to equal to or exceed Eight
Million Dollars ($8,000,000); otherwise, the costs shall be borne by the
Stockholder.
3
(e) The
Earn-Out Payment, if earned, shall be paid not later than ten (10) Business
Days
following the date that it is finally determined that the Earn-Out Payment
is
payable in accordance with the provisions of this Section 2.2. At the time
of
such payment, Parent and the Buyer shall (i) pay or cause to be paid to the
Stockholder the Earn-Out Cash Payment and (ii) deliver or cause to be delivered
to the Stockholder a certificate representing the shares of Parent Ordinary
Shares for the Earn-Out Stock Payment.
2.3 Offset.
Any
payment to which the Stockholder becomes entitled to receive pursuant to this
Agreement shall be subject to offset with respect to any amounts payable by
the
Stockholder pursuant to any provision of this Agreement or any other Related
Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDER
Except
as
disclosed in the disclosure schedule, dated as of the date of this Agreement
and
delivered by the Company and the Stockholder to Parent and the Buyer (the
“Company
Disclosure Schedule”),
the
Company and the Stockholder, jointly and severally, hereby represent and warrant
to Parent and the Buyer as follows:
3.1 Organization,
Good Standing and Qualification; Organizational Documents.
The
Company is duly incorporated and validly existing and in good standing under
the
Laws of its jurisdiction of incorporation. The Company is duly qualified or
licensed as a foreign corporation or other entity to do business and is in
good
standing under the Laws of each jurisdiction where the character of its assets
and properties or the nature of its business makes such qualification or
licensing necessary, all of which are listed in Section 3.1 of the Company
Disclosure Schedule. The Company has all requisite power and authority, and
is
in possession of all Approvals necessary, to own, lease and operate its assets
and properties and to carry on its business as it is now being
conducted. The
Company has delivered to the Buyer complete and accurate copies of the
Organizational Documents of the Company, as amended (if applicable) and in
effect as of the date hereof. Such
Organizational Documents are in full force and effect.
3.2 Subsidiaries;
Investments.
The
Company does not have and has not, at any time since April 1, 2003 or, to the
knowledge of the Company, at any time prior thereto, had any subsidiaries,
nor
does it own or has it, at any time since April 1, 2003 or, to the knowledge
of
the Company, at any time prior thereto, owned any capital stock or other
proprietary interest, directly or indirectly, in any other Person.
3.3 Capitalization.
(a) The
Stockholder has good and valid title to the Company Shares free and clear of
all
Liens and will deliver the Company Shares to the Buyer at the Closing free
and
clear of any Liens. The authorized capital stock of the Company consists of
10,000 shares of Common Stock, 800 of which (constituting all of the Company
Shares) are issued and are outstanding. All outstanding shares of Common Stock
of the Company are owned solely by the Stockholder and no other Person has
at
any time held any shares of capital stock of the Company since April 1, 2003,
and to the knowledge of the Company, at any time prior to April 1, 2003.
4
(b) All
of
the Company Shares (i) have been duly authorized and validly issued,
(ii) are fully paid and non-assessable, and (iii) have been issued in
full compliance with all applicable Laws. The Company has delivered to the
Buyer
accurate and complete copies of the stock certificates evidencing the Company
Shares.
(c) There
are
no outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, calls, commitments, preemptive
or
other rights or agreements of any kind (contingent or otherwise) that obligate
the Company to issue, deliver or sell, or cause to be issued, delivered or
sold,
any shares of capital stock or other securities of the Company.
(d) The
Company has not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities since April 1, 2003, and to the knowledge
of
the Company, at any time prior to April 1, 2003.
3.4 Authorization;
Binding Obligation.
The
Company has all necessary corporate power and authority, and the Stockholder
has
all necessary personal power and authority, to execute and deliver this
Agreement, each Related Agreement to which the Company or the Stockholder is
a
party and each other instrument or document required to be executed and
delivered by it or him pursuant to this Agreement or any such Related Agreement,
and to perform its or his respective obligations hereunder and thereunder and
to
consummate the transactions contemplated hereby and thereby. The execution
and
delivery by the Company of this Agreement and each Related Agreement to which
it
is a party, the performance of its obligations hereunder and thereunder, and
the
consummation of the transactions contemplated hereby and thereby, have been
duly
and validly authorized by all necessary action on the part of the Company and
no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or any Related Agreement to which the Company is a
party or to consummate the transactions so contemplated herein and therein.
This
Agreement has been, and each of the Related Agreements to which the Company
or
the Stockholder is a party, when executed and delivered by such Person, will
be,
duly and validly executed and delivered by such Person, and this Agreement
constitutes, and each Related Agreement to which such Person is a party, when
executed and delivered by such Person and each other party hereto and thereto,
will constitute, a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other Laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by Laws relating to the availability of
specific performance, injunctive relief or other equitable remedies (the
“Enforceability
Exceptions”).
3.5 Consents
and Approvals.
The
execution and delivery by the Company and the Stockholder of this Agreement,
the
Related Agreements to which such Person is a party or any other instrument
or
document required by this Agreement or any Related Agreement to be executed
and
delivered by such Person do not, and the performance of this Agreement, the
Related Agreements to which such Person is a party and
any
other instrument or document required by this Agreement or any Related Agreement
to be executed and delivered by such Person shall not, require such Person
to
obtain any Approval of any Person or Approval of, observe any waiting period
imposed by, or make any filing with or notification to, any Governmental
Authority.
5
3.6 No
Violation.
The
execution and delivery by the Company and the Stockholder of this Agreement,
the
Related Agreements to which such Person is a party or
any
other instrument or document required by this Agreement or any Related Agreement
to be executed and delivered by such Person do not, and the performance of
this
Agreement, the Related Agreements to which such Person is a party or any other
instrument or document required by this Agreement or any Related Agreement
to be
executed and delivered by such Person, will not, (a) conflict with or violate
the Organizational Documents of the Company, (b) conflict with or violate any
Law or Order applicable to such Person, or by which any of its properties are
bound or affected, or (c) result in any breach or violation of or constitute
a
default (or an event that with notice or lapse of time or both would become
a
default) under, or give to any other party any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any
of
the properties or assets of such Person pursuant to, any Contract to which
such
Person is a party or is otherwise bound, or any Approval to which such Person
is
a party or by which such Person or any of its properties are bound or
affected.
3.7 Approvals
and Orders; Permits.
The
Company has obtained any and all Approvals and Orders that are required by
any
Law or otherwise necessary to enable the Company to (i) conduct the business
of
the Company as heretofore conducted and (ii) obtain reimbursement from any
Payment Program for its services (collectively, the “Permits”).
Section 3.7 of the Company Disclosure Schedule sets forth a true and complete
list, as of the date hereof, of all Permits. The Permits are, and after giving
effect to the consummation of the transactions contemplated hereby, will
continue to be, valid and in full force and effect and no violations exist
in
respect thereof. None of the Permits are subject to any Lien, limitation,
restriction, probation or other qualification and there is no default under
any
Permit or, to the knowledge of the Company, any basis for the assertion of
any
default thereunder. The Company has taken all commercially reasonable actions
to
maintain the Permits, and there has been no decision by the Company not to
renew
any Permits. There is no Action pending or, to the knowledge of the Company,
threatened that could result in the termination, revocation, limitation,
suspension, restriction, lapse or impairment of any Permit or the imposition
of
any fine, penalty or other sanctions for violation of any legal or regulatory
requirements relating to any Permit or, to the knowledge of the Company, any
basis therefor. The Company has, and has had at all relevant times, all
Approvals that are or were necessary in order to operate the Company. All
Permits are validly held by the Company, and the Company has complied with
the
terms and conditions of each Permit held by it. The Company has delivered to
the
Buyer true copies of all the Permits.
3.8 Title
to and Condition of Properties; Sufficiency of Assets.
(a) The
Company is the sole and exclusive legal and equitable owner of all right, title
and interest in, and has good, valid and marketable title to, or has a valid
leasehold in or a valid license to use, all of the assets and properties,
tangible or intangible, used or held by the Company, free and clear of all
Liens. All tangible assets and personal property of the Company included in
the
assets and properties of the Company have been maintained in accordance with
normal industry practice and are in good operating condition and repair, subject
to ordinary wear and tear and there has not been any interruption of the
operations of the business of the Company due to the condition of any such
assets or properties. Section 3.8 of the Company Disclosure Schedule sets forth
a list of all personal property used by the Company that is material to the
operation of the Company.
6
(b) The
assets and properties of the Company, including all assets and properties held
under the Personal Property Leases, Real Property Leases and License Agreements,
comprise all assets, properties, rights and Contracts used in operating the
Company, which are all of the assets, properties, rights and Contracts necessary
for the Buyer to operate the Company following the Closing in the manner in
which the Company is currently operated.
3.9 Financial
Statements.
(a) Section
3.9 of the Company Disclosure Schedule contains the following financial
statements (collectively, the “Financial
Statements”):
(i) the
internally-prepared balance sheet of the Company as of June 30, 2008 (the
“Interim
Balance Sheet”)
and
the related statement of income for the nine-month period then ended
(collectively, the “Interim
Financial Statements”);
and
(ii) the
internally-prepared balance sheets of the Company as of September 30, 2007
and
September 30, 2006 and the related statements of income for the twelve-month
period then ended.
(b) The
Financial Statements were prepared in accordance with the books and records
of
the Company, are complete and correct in all material respects and fairly and
accurately present the financial condition of the Company as of the dates
indicated and the results of operations of the Company for the respective
periods indicated, and have been prepared in accordance with the accounting
principles set forth in Section 3.9(b) of the Disclosure Schedule. The Working
Capital of the Company at Closing shall not be materially different than the
Working Capital calculated in accordance with the Interim Balance
Sheet.
3.10 No
Undisclosed Liability.
Except
as and to the extent the amounts are specifically accrued or disclosed in the
Interim Financial Statements or set forth in Section 3.10(i) of the Company
Disclosure Schedule, the Company does not have any Liabilities, whether or
not
required by GAAP to be reflected in the Interim Financial Statements, except
for
Liabilities of the nature that are required by GAAP to be disclosed in the
Company’s balance sheet that were incurred in the ordinary course of business
and consistent with past practice since the date of the Interim Balance
Sheet.
Except
as specifically set forth in Section 3.10(ii) of the Company Disclosure
Schedule, at the time of the Closing, the Company shall not have any
Indebtedness.
3.11 Absence
of Certain Events.
Since
January 1, 2008 through the date hereof, the Company has conducted its business
only in the ordinary course consistent with past practice and there has not
been
any change, event, loss, development, damage or circumstance which has had
or
would reasonably be expected to have a Company Material Adverse
Effect
(a
“Company
Material Adverse Change”).
7
3.12 Real
Property.
(a) The
Company does not own, nor has it owned at any time since April 1, 2003 or,
to
the knowledge of the Company, at any time prior thereto, any real property.
Section 3.12(a) of the Company Disclosure Schedule sets forth a complete and
accurate list of: (i) all real property that is leased by the Company (the
“Leased
Real Property”),
and
(ii) all leases and subleases to which the Company is a party or is otherwise
bound pursuant to which the Company leases or subleases real property to any
other Person (such leases, collectively with the leases and subleases covering
Leased Real Property, the “Real
Property Leases”).
The
Company is the owner and holder of all leasehold estates purported to be granted
by each such lease. All Real Property Leases are in full force and effect and
are the legal, valid and binding obligation of the Company and of each other
party thereto enforceable in accordance with their respective terms, and neither
the Company nor, to the knowledge of the Company, the other party or parties
thereto is or are in material default thereunder and there exists no event,
condition or occurrence which (with or without due notice or lapse of time,
or
both) would constitute such a default by the Company or, to the knowledge of
the
Company, the other party or parties thereto of any of the foregoing. No consent
of, or notice to, any third party is required under any Real Property Lease
as a
result of or in connection with, and the enforceability of any such Real
Property Lease will not be affected by, the execution, delivery and performance
of this Agreement or any Related Agreement, or the transactions contemplated
hereby or thereby. The Company has delivered to the Buyer complete and accurate
copies of all Real Property Leases, including all amendments
thereto.
(b) The
Company holds its leasehold estate to all Leased Real Property free and clear
of
all Liens, claims or rights of any third parties and the possession of the
Leased Real Property (collectively, the “Premises”)
by the
Company has not been disturbed and no claim has been asserted against the
Company adverse to its rights in such Premises. All improvements, fixtures
and
structures on the Premises and the current uses of the Premises conform in
all
material respects to all applicable Laws, including building, zoning, health,
safety and other Laws, and applicable zoning Laws permit the presently existing
improvements and the conduct and continuation of the business of the Company
as
being conducted on the Premises. All improvements, mechanical equipment,
fixtures and operating systems included in the Premises are in good operating
condition and repair (ordinary wear and tear excepted) and there does not exist
any condition which interferes with the economic value or use of such property
and improvements.
(c) The
Company has not granted any leases or licenses, nor created any tenancies,
affecting the Premises. There are no other parties in possession of any portion
of the Premises as trespassers or otherwise.
(d) The
Company is not a party to or is otherwise bound by, nor is any of the Premises
subject to, any Contract requiring it to pay any commissions or other
compensation to any brokers or agents in connection with any of the Premises,
and has had no dealings with any broker or agent with respect to the Premises
upon which any such broker or agent would be entitled to a commission or other
compensation.
8
(e) To
the
knowledge of the Company, (i) there are no Laws or Orders now in existence
or
under active consideration by any Governmental Authority which would reasonably
be expected to require the tenant of any Leased Real Property to make any
expenditure in excess of $5,000 to modify or improve such Leased Real Property
to bring it into compliance therewith, and (ii) the Company shall not be
required to expend more than $10,000 in the aggregate under all Leases to
restore the Leased Real Property at the end of the term of the Leases to the
condition required under the Leases (assuming the conditions existing in such
Leased Real Property as of the Closing Date).
3.13 Personal
Property Leases.
Section
3.13 of the Company Disclosure Schedule sets forth a complete and accurate
list
of all personal property that is leased by the Company (the “Leased
Personal Property”
and,
the leases covering the Leased Personal Property, collectively, the
“Personal
Property Leases”).
The
Company is the holder of the leasehold interests purported to be granted by
each
Personal Property Lease, and all Personal Property Leases are in full force
and
effect in accordance with the terms thereof and are the legal, valid and binding
obligation of the Company and of each other party thereto enforceable in
accordance with their respective terms (except as limited by the Enforceability
Exceptions), and neither the Company nor, to the knowledge of the Company,
the
other party or parties thereto is or are in default thereunder and there exists
no event, condition or occurrence which (with or without due notice or lapse
of
time, or both) would constitute such a default by the Company or, to the
knowledge of the Company, the other party or parties thereto of any of the
foregoing. No consent of, or notice to, any third party is required under any
Personal Property Lease as a result of or in connection with, and the
enforceability of any such Personal Property Lease will not be affected by,
the
execution, delivery and performance of this Agreement or any Related Agreement,
or the transactions contemplated hereby or thereby. The Company has delivered
to
the Buyer complete copies of all Personal Property Leases, including all
amendments thereto.
3.14 Environmental
Matters.
(a) The
Company has complied and is in compliance with all Environmental Laws, which
compliance includes the possession by the Company of all Approvals required
under Environmental Laws and compliance with the terms and conditions thereof.
Section 3.14(a) of the Company Disclosure Schedule includes a list of all of
the
Company Approvals required under Environmental Laws. There is no Action pending
or, to the knowledge of the Company, threatened or other notice of violation,
formal administrative proceeding or written information request by any
Governmental Authority, nor has the Company received notice of any investigation
by any Governmental Authority relating to any Environmental Law nor any other
notice from a Governmental Authority or any other Person alleging that the
Company is not in compliance with any Environmental Law or Approval required
under any Environmental Law or has any Liability under any Environmental Law
or
for the remediation of any Materials of Environmental Concern at any
property.
(b) There
have been no releases by the Company or any of its Affiliates of any Materials
of Environmental Concern into the environment at any real property or facility
formerly or currently owned or operated by the Company or any of its Affiliates.
The Company does not have knowledge of any release by any other Person of any
Materials of Environmental Concern into the environment at any parcel of real
property or any facility formerly or currently operated by the Company or any
of
its Affiliates.
9
(c) To
the
knowledge of the Company, there are no facts, circumstances or conditions
existing at any facilities owned or operated by the Company or any of its
Affiliates, including the release of any Materials of Environmental Concern,
that would reasonably be expected to give rise to any Liability or result in
a
claim against the Company or any of its Affiliates under any Environmental
Law.
(d) Set
forth
in Section 3.14(d) of the Company Disclosure Schedule is a complete and
accurate list of all environmental reports, investigations or audits (whether
in
hard copy or electronic form) relating to premises currently or previously
owned
or operated by the Company or any of its Affiliates (whether conducted by or
on
behalf of the Company or any of its Affiliates or a third party, and whether
done at the initiative of the Company or an Affiliate or directed by a
Governmental Authority or other third party) of which the Company has
possession. A complete and accurate copy of each such document has been provided
or made available to Parent.
3.15 Legal
Proceedings.
There is
no Action pending or, to the knowledge of the Company, threatened by or against
the Company or any of its officers or directors (in their capacities as such),
and the Company has not received any claim, complaint, incident, report, threat
or notice of any such Action. Section 3.15 of the Company Disclosure Schedule
sets forth all Actions against the Company or its officers or directors (in
their capacities as such) that have been concluded or settled during the past
five (5) years.
There
are no outstanding Orders against or involving or affecting the Company, and
the
Company is not in default with respect to any such Order.
3.16 Compliance
with Laws.
(a) The
Company is, and at all times during the preceding five (5) years has been,
in
compliance with all Laws, including (i) the Federal Ethics in Patient Referrals
Act, 42 U.S.C. § 1395nn (known as the “▇▇▇▇▇
Law”)
or any
applicable state self-referral Law, (ii) the Federal Health Care Program
▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇.▇.▇. § ▇▇▇▇▇-▇▇(▇) (known as the “Anti-Kickback
Statute”)
or any
applicable state anti-kickback Law, (iii) the Federal False Claims Act, 31
U.S.C. § 3729 or any applicable state false claim or fraud Law, (iv) applicable
privacy and security standards regarding protected health information under
the
Health Insurance Portability and Accountability Act of 1996 at 42 C.F.R. part
164 (“HIPAA”)
and
all applicable state and federal Laws regarding the privacy and security of
protected health information under HIPAA and other confidential patient
information, and (v) the Clinical Laboratory Improvement Amendments, 42 U.S.C.
§
263a. Without limiting the foregoing, neither the Company nor any current or
former director, officer, employee, or Affiliate of the Company has, during
the
past five (5) years, received or been subject to any Action by any Governmental
Authority or other Person alleging any violations of Laws and, to the knowledge
of the Company, no Action alleging any violation of any Laws by the Company
is
threatened against the Company. The Company has not, during the preceding five
(5) years, conducted any internal investigation, inquiry or review in connection
with which the Company retained outside legal counsel for the purpose of
conducting or assisting with such investigation, inquiry or review with respect
to any actual, potential or alleged violation of any Law by the Company. No
Governmental Authority has at any time since April 1, 2003, or, to the knowledge
of the Company, at any time prior thereto, challenged or questioned the legal
right of the Company to market, offer or sell its services in the present manner
or style thereof.
10
(b) The
Company has at all times since April 1, 2003 and, to the knowledge of the
Company, at all times prior thereto, complied with all applicable Laws relating
to privacy, data protection and the collection and use of personal information
and user information gathered, accessed, collected or used in the course of
the
operations of the Company, including HIPAA and all applicable state and federal
Laws regarding the privacy and security of protected health information and
other confidential patient information. The Company has the necessary agreements
with all of the Company’s “business associates” (as such term is defined by and
as such agreements are required by the Privacy Rule adopted under HIPAA). No
Action has been asserted or, to the knowledge of the Company, has been
threatened against the Company alleging a violation of any Person’s privacy,
personal information or data rights. The Company has at all times since April
1,
2003 and, to the knowledge of the Company, at all times prior thereto, complied
in all material respects with all rules, policies and procedures established
by
the Company from time to time and as applicable with respect to privacy, data
protection or collection and use of personal information and user information
gathered or accessed in the course of the operations of the Company. No Actions
have been asserted or, to the knowledge of the Company, threatened against
the
Company by any Person alleging a violation of such Person’s privacy, personal or
confidentiality rights under any such rules, policies or procedures. The
consummation of the transactions contemplated by this Agreement by the
Stockholder and the Company will not breach or otherwise cause any violation
of
any Law related to privacy, data protection or the collection and use of
personal information and user information gathered or accessed from then current
users (at the time of consummation of the transactions contemplated by this
Agreement) in the course of the operations of the Company.
(c) With
respect to all personal and user information described in Section 3.16(b),
the
Company has at all times taken all steps reasonably necessary (including
implementing and monitoring compliance with adequate measures with respect
to
technical and physical security) to ensure that such information is protected
against loss and against unauthorized access, use, modification, disclosure
or
other misuse. To the knowledge of the Company, there has been no unauthorized
access to or other misuse of such information. The Company maintains systems
and
procedures reasonably intended to respond to complaints received alleging
violation of third party content rights.
(d) (i)
No
unrecorded fund or asset of the Company has been established for any purpose,
(ii) no accumulation or use of corporate funds of the Company has been made
without being properly accounted for in the books and records of the Company,
(iii) no payment has been made by or on behalf of the Company with the
understanding that any part of such payment is to be used for any purpose other
than that described in the documents supporting such payment, and (iv) neither
the Company nor any Person associated with or acting for or on behalf of the
Company has, directly or indirectly, made any illegal contribution, gift, bribe,
rebate, payoff, influence payment, kickback or other illegal payment to any
Person, private or public, regardless of form, whether in money, property or
services, (A) to obtain favorable treatment for the Company in securing
business, (B) to pay for favorable treatment for business secured for the
Company, (C) to obtain special concessions, or for special concessions already
obtained, for or in respect of the Company, or (D) otherwise for the benefit
of
the Company in violation of any Law. The Company has not, nor has any of its
directors, officers, employees or agents, directly or indirectly, accepted
or
agreed to any unlawful contribution, payment, gift, kickback, expenditure or
other item of value.
11
(e) Each
Employee or agent of the Company required to be licensed by an applicable
Governmental Authority, professional body or medical body has such licenses,
such licenses are in full force and effect and, to the knowledge of the Company,
there are no facts or circumstances that could reasonably be expected to result
in any such licenses being suspended, revoked or otherwise to
lapse.
(f) Neither
the Company nor, to the knowledge of the Company, any of its current or former
directors, officers, employees or Affiliates has been excluded, suspended,
debarred or otherwise sanctioned by any Governmental Authority, including
without limitation the Department of Health and Human Services Office of the
Inspector General or the General Services Administration.
(g) No
material notice, citations, suspension, revocation, limitation, warning, audit
finding, request or communication issued by a Governmental Authority has been
received by the Company or, to the knowledge of the Company, any Employee or
agent that has not been resolved to the applicable Governmental Authority’s
satisfaction, without the imposition of any fines or penalties.
3.17 Employment
Matters.
(a) Section
3.17(a) of the Company Disclosure Schedule sets forth a complete and accurate
list of all Employees as of the date hereof and each such Employee’s (i) rate of
pay or annual compensation (including actual or potential bonus payments),
(ii)
title(s), (iii) status of employment or engagement, (iv) date of hire or
engagement, (v) annual vacation, sick and other paid time off allowance, (vi)
amount of accrued vacation, sick and other paid time off, (vii) description
of
other fringe benefits, and (viii) terms of severance benefits. Section 3.17(a)
of the Company Disclosure Schedule also identifies each Employee who is not
fully available to perform his or her duties as a result of disability or other
leave and sets forth the basis of such leave and the anticipated date of return
to full service. Each Employee is a resident of the United States. There are
no
severance pay, continuation pay, termination or indemnification Contracts
between the Company and any current or former Employee of the
Company.
(b) The
Company is not delinquent in payments to any of its Employees for any wages,
salaries, commissions, bonuses, benefits or other compensation for any services
performed by them, or any amounts required to be reimbursed to any such
Employee. Upon termination of employment or engagement of any Employee, neither
the Company nor any of its Affiliates will, by reason of anything done prior
to
the Closing, be liable to any Employee for so called “severance pay” or any
other similar payments, and, to the Company’s knowledge, there are no
circumstances whereby any current or former Employee may demand payment or
compensation in connection with the termination of his or her employment. No
current Employee has informed the Company that such individual intends to
terminate his or her employment or engagement with the Company.
12
(c) Neither
the Company nor, to the knowledge of the Company, any Employee is in violation
of any term of any employment, consulting, independent contractor,
non-disclosure, non-competition, inventions assignment or any other Contract
(or
any other legal obligation such as a trade secrets statute or common law duty
of
loyalty) relating to the relationship of such Employee with the Company or
has
been notified that such Employee may be in violation of any such Contract or
other legal obligation.
(d) The
Company is not party to any collective bargaining Contracts or other Contracts
with any labor unions or other representatives of the Employees of the Company
(a “Labor
Contract”).
No
labor union, organization or other representative has been certified or
recognized as the collective bargaining representative of any Employees of
the
Company. There are no union organizing campaigns or representation proceedings
or campaigns in process or, to the Company’s knowledge, threatened with respect
to any Employees. There are no existing or threatened labor strikes, work
stoppages, organized slowdowns, unfair labor practice charges or complaints
or
labor arbitration proceedings affecting any Employee of the Company nor has
the
Company experienced any of the foregoing within the past two (2)
years.
(e) There
are
no unfair labor practice complaints or other Actions pending or, to the
knowledge of the Company, threatened against the Company before the National
Labor Relations Board, any Court or any Governmental Authority concerning any
Employee. There are no complaints or other Actions pending or, to the knowledge
of the Company, threatened by or on behalf of any Employee alleging breach
of
any express or implied Contract.
3.18 Employee
Benefit Plans.
(a) Section
3.18(a) of the Company Disclosure Schedule sets forth all Employee Benefit
Plans
under which current or former Employees of the Company (or their beneficiaries)
are eligible to participate or derive a benefit. The Company has delivered
to
the Buyer (i) correct and complete copies of all the Employee Benefit
Plans,
including all amendments thereto and all related trust documents; (ii) the
three
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Employee Benefit Plan; (iii) if any Employee Benefit Plan
is subject to the minimum funding standards of Section 302 of ERISA, the most
recent annual and periodic accounting of such Employee Benefit Plan assets;
(iv)
the most recent summary plan description together with the summaries of material
modifications thereto, if any, required under ERISA with respect to each
Employee Benefit Plan; (v) all written Contracts relating to each Employee
Benefit Plan, including administrative service agreements and group insurance
contracts; (vi) all correspondence to or from any Governmental Authority
relating to any Employee Benefit Plan; (viii) all COBRA forms and related
notices; (ix) all insurance policies in the possession of the Company pertaining
to fiduciary liability insurance covering the fiduciaries for each Employee
Benefit Plan; (x) all discrimination tests required under the Code for each
Employee Benefit Plan intended to be qualified under Section 401(a) of the
Code
for the three most recent plan years; and (xi) the most recent IRS determination
or opinion letter issued with respect to each Employee Benefit Plan intended
to
be qualified under Section 401(a) of the Code.
13
(b) The
Company has performed in all material respects the obligations required to
be
performed by it under each Employee Benefit Plan and is not in default or
violation of, and the Company has no knowledge of any default or violation
by
any other party to, the terms of any Employee Benefit Plan, and each Employee
Benefit Plan has been established and maintained substantially in accordance
with its terms and in compliance with all applicable Laws, including ERISA
and
the Code. Any Employee Benefit Plan intended to be qualified under Section
401(a) of the Code has obtained a favorable determination letter (or opinion
letter, if applicable) as to its qualified status under the Code. No “prohibited
transaction,” within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Employee Benefit Plan. There are no claims or Actions
pending, or, to the knowledge of the Company, threatened (other than routine
claims for benefits), against any Employee Benefit Plan or against the assets
of
any Employee Benefit Plan. Each Employee Benefit Plan can be amended, terminated
or otherwise discontinued after the Closing in accordance with its terms,
without liability to Parent, the Buyer or the Company (other than liability
arising under applicable Laws or liability for ordinary administration
expenses). There are no audits, inquiries or Actions pending or, to the
knowledge of the Company, threatened, with the IRS, DOL, or any other
Governmental Authority with respect to any Employee Benefit Plan. The Company
has never incurred any penalty or tax with respect to any Employee Benefit
Plan
under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. The
Company has made all contributions and other payments required by and due under
the terms of each Employee Benefit Plan.
(c) The
Company has never maintained, established, sponsored, participated in, or
contributed to any: (i) a “pension plan” (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA; or (ii) “multiemployer plan” within the meaning of
Section 3(37) of ERISA. The Company has never maintained, established,
sponsored, participated in or contributed to, any “pension plan” in which stock
of the Company is or was held as a plan asset.
(d) No
Employee Benefit Plan provides (except at no cost to the Company), or reflects
or represents any liability of the Company to provide, retiree life insurance,
retiree health benefits or other retiree employee welfare benefits to any Person
for any reason, except as may be required by COBRA or other applicable Laws.
Other than commitments made that involve no future costs to the Company, the
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other Person that such Employee(s) or other person would be provided
with
retiree life insurance, retiree health benefit or other retiree employee welfare
benefits, except to the extent required by applicable Laws.
(e) Neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any Employee Benefit Plan,
agreements with Employees, trust or loan that will (either alone or in
connection with any other circumstance or event) result in any payment (whether
of severance pay, bonus or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to
fund
benefits with respect to any Employee.
14
3.19 No
Brokers.
Neither
the Company, nor any of its Employees, officers, directors or agents, has
employed or engaged, either directly or indirectly, or incurred or will incur
any Liability to, any broker, finder, investment banker or other agent in
connection with the transactions contemplated by this Agreement.
3.20 Taxes.
(a) All
Taxes
payable by the Company, attributable to all taxable periods ending before the
Closing Date, have been timely paid; all federal, state, local and foreign
Tax
Returns required to be filed by or on behalf of the Company with respect to
any
such Taxes have been timely filed, and all such Tax Returns are complete and
correct; all Taxes that the Company is or was required by Law to have withheld
or collected have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Authority; no unpaid Tax deficiency
has been asserted against the Company and the Company has not received notice
of
any such assertion; the Company has not been informed by any jurisdiction that
such jurisdiction believes that the Company is or was required to file any
Tax
Return that was not filed.
(b) The
Company has not executed or entered into any ruling or agreement with any
Governmental Authority regarding Taxes or has agreed to make any adjustment
to
its income or deductions pursuant to a change in its method of
accounting.
(c) The
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code, and no withholding pursuant
to Section 1445 of the Code will be required in connection with this Agreement
or the transactions contemplated hereby. 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. The Company is not a party to or bound by any Tax allocation
or sharing agreement. The Company (A) has not been a member of an affiliated
group filing a consolidated federal income Tax Return or (B) has no Liability
for the Taxes of any Person (other than the Company) under regulation 1.1502-6
of the Code (or any similar provision of state, local, or foreign law), as
a
transferee or successor, by contract, or otherwise.
(d) There
are
no Liens with respect to Taxes upon any of the assets or properties of the
Company.
(e) Section
3.20(e) of the Company Disclosure Schedule lists all Tax Returns of the Company
filed for taxable periods ended on or after January 1, 2002, indicates those
Tax
Returns that have been audited, and indicates those Tax Returns that currently
are the subject to audit.
The
Company has delivered to the Buyer correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company filed or received since January 1, 2002.
15
(f) The
Company has not requested or been granted any waiver of any federal, state,
local or foreign statute of limitations with respect to, or any extension of
a
period for the assessment of, any Tax and no extension or waiver of time within
which to file any Tax Return of, or applicable to, the Company has been granted
or requested which has not since expired. No Tax Return of the Company is
currently being audited by any Governmental Authority and no examination or
audit of any such Tax Return is currently threatened by any Governmental
Authority.
(g) Since
the
date of the Interim Balance Sheet, the Company has not incurred any liability
for Taxes arising from extraordinary gains or losses, determined in accordance
with GAAP, outside the ordinary course of business of the Company.
(h) The
Company has not made any payments, is not obligated to make any payments, or
is
not a party to any Contract that under any circumstances would reasonably be
expected to obligate it to make any payments that will not be deductible under
Section 280G of the Code or would constitute compensation in excess of the
limitation set forth in Section 162(m) of the Code.
(i) The
Company will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date;
(ii)
closing agreement as described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign income Tax Law) executed on
or
prior to the Closing Date; (iii) intercompany transactions or any excess loss
account described in Treasury Regulations under Section 1502 of the Code (or
any
corresponding or similar provision of state, local or foreign income Tax Law);
(iv) installment sale or open transaction disposition made on or prior to the
Closing Date; or (v) prepaid amount received on or prior to the Closing
Date.
(j) The
Company has not distributed stock of another Person, or has had its stock
distributed by another Person, in a transaction that was purported or intended
to be governed in whole or in part by Section 355 or 361 of the
Code.
3.21 Contracts.
(a) Section
3.21 of the Company Disclosure Schedule sets forth a complete and accurate
list
of all Contracts to which the Company is a party or is otherwise bound or by
which any assets or properties of the Company is subject (and with respect
to
any oral Contract provides a complete description of the terms of such Contract)
(collectively, the “Company
Contracts”),
including, without limitation, the following Company Contracts:
(i) all
notes, loans, credit agreements, mortgages, indentures, security agreements,
operating leases, capital leases and other Contracts relating to Indebtedness
and any Contract of suretyship or guaranty;
(ii) all
employment, consulting and independent contractor Contracts, and all bonus,
commission, compensation, pension, insurance, retirement, deferred compensation
and other plans, Contracts and other arrangements for the benefit of any
employee of the Company;
16
(iii) all
Contracts involving an annual payment to or by the Company from or to any Person
in excess of $2,500 individually or $5,000 in the aggregate with respect to
all
Contracts with such Person;
(iv) any
Contract for the provision of laboratory services to the top twenty (20)
customers of the Company, measured by revenue for the period from April 1,
2007
to June 30, 2008;
(v) all
Contracts for capital expenditures;
(vi) all
joint
venture, partnership or other Contracts involving a share of profits or losses
with another Person;
(vii) all
Contracts with any Affiliate of the Company;
(viii) all
Contracts that (A) limit the ability of the Company or any Affiliate of, or
successor to, the Company, or, to the Company's knowledge, any executive officer
of the Company, to compete in any line of business or with any Person or in
any
geographic area or during any period of time, (B) require the Company or any
Affiliate of, or successor to, the Company to use any supplier or third party
for all or substantially all of any of its material requirements or needs in
any
respect, (C) limit or purports to limit the ability of the Company or any
Affiliate of, or successor to, the Company to solicit any customers or clients
of the other parties thereto, (D) require the Company or any Affiliate of,
or
successor to, the Company to provide to the other parties thereto “most favored
nations” pricing or (E) require the Company or any Affiliate of, or successor
to, the Company to market or co-market any products or services of a third
party
(other than any customer of the Company);
(ix) all
Contracts for the purchase or sale of any asset or property of the Company
in
excess of $2,500 individually for any Person or $5,000 in the aggregate for
all
Contracts with such Person;
(x) all
Contracts granting or permitting any Lien on any of the assets or properties
of
the Company;
(xi) all
Contracts with any vendors, suppliers or contractors regarding any and all
equipment of the Company; and
(xii) any
other
Contracts material to the Company.
(b) The
Company has delivered to the Buyer complete and accurate copies of the Company
Contracts. The Company is not in default in any material respect under the
terms
of any Company Contract and there exists no event, condition or occurrence
which
(with or without due notice or lapse of time, or both) would constitute a
default by the Company, nor has the Company received any notice of any default
under any Company Contract. To the knowledge of the Company, no other party
to
any Company Contract is in default under the terms thereof, and there exists
no
event, condition or occurrence which (with or without due notice or lapse of
time, or both) would constitute a default by any such party, nor has the Company
received any notice of any default by any such party.
17
(c) The
Company Contracts are in full force and effect and are valid and binding
obligations of the Company and the other parties thereto, except as limited
by
the Enforceability Exceptions. The Company has not received any notice from
any
other party to a Company Contract of the termination or threatened termination
thereof, or of any claim, dispute or controversy with respect thereto, nor
is
there any reasonable basis therefor.
(d) No
consent of, or notice to, any third party is required under any Company Contract
as a result of or in connection with, and neither the enforceability nor any
of
the terms or provisions of any Company Contract will be affected by, the
execution, delivery and performance of this Agreement or any Related Agreement,
or the transactions contemplated hereby or thereby, including without limitation
the requirement for a transfer fee or new deposit, or termination thereof.
3.22 Transactions
With Affiliates.
Section
3.22 of the Company Disclosure Schedule lists all Contracts or transactions
to
or by which the Company, on the one hand, and any of its Affiliates or officers,
directors or the Stockholder of the Company or any of its Affiliates or family
members, on the other hand, are or have been a party or otherwise bound or
affected and that (i) were entered into since January 1, 2002, (ii) are
currently pending or in effect or (iii) involve continuing Liabilities that,
individually or in the aggregate, have been or will be material to the Company
other than indemnification, compensatory or employment-related Contracts or
“employee benefit plans” (within the meaning of Section 3(3) of ERISA). Neither
the Stockholder (other than indirectly through ownership of the Company), nor
any officer, director or, to the knowledge of the Company, employee of the
Company, or, to the knowledge of the Company, any immediate family member or
Affiliate of the Stockholder or any such officer, director or employee, (i)
owns, directly or indirectly, any interest in (x) any assets or properties
of
the Company or (y) any Person that is a supplier, customer, vendor or competitor
of the Company, (ii) serves as an officer, director or employee of any Person
that is a supplier, customer, vendor or competitor of the Company or (iii)
is a
debtor or creditor of the Company.
3.23 Insurance.
The
Company is, and will through the Closing Date be, insured with responsible
insurers against risks normally insured against by similar businesses in the
industry under similar circumstances. Section 3.23 of the Company Disclosure
Schedule lists, by type, carrier, policy number, limits, premium and expiration
date, all insurance coverage carried by the Company, together with a history
of
all claims made by the Company thereunder during the past five (5) years, which
insurance will remain in full force and effect in accordance with policy terms,
with respect to all events occurring prior to the Closing Date. Section 3.23
of
the Company Disclosure Schedule also states whether each such policy is carried
on a “claims made” or “occurrence” basis. All such insurance policies are owned
by and payable solely to the Company and all premiums with respect thereto
are
currently paid and will be paid through the Closing Date. The Company has not
failed to give any notice of any material claim under any such policy or binder
in due and timely fashion, has not received notice of cancellation or
non-renewal of any such policy or binder and has knowledge of any threatened
or
proposed cancellation or non-renewal of any such policy or binder, and the
Company is otherwise in compliance with the terms of such policies. The Company
has not, during the past five (5) years, been denied or had revoked, cancelled,
non-renewed or rescinded any policy of insurance.
18
3.24 Intellectual
Property.
(a) Section
3.24(a) of the Company Disclosure Schedule sets forth a complete and accurate
list of all United States and foreign Patents, Trademarks (including Internet
domain name registrations and unregistered Trademarks) and registered Copyrights
of the Company, indicating for each, the applicable jurisdiction, registration
number (or application number) and date issued (or date filed). All registered
and applied for Trademarks, Patents and Copyrights are currently in compliance
with all legal requirements (including the timely post-registration filing
of
affidavits of use and incontestability and renewal applications with respect
to
Trademarks, and the payment of filing, examination and maintenance fees and
proof of working or use with respect to Patents), are valid and enforceable,
and
are not subject to any maintenance fees or actions falling due within one
hundred eighty (180) days after the Closing Date. No such Trademark has been
or
is now involved in any cancellation proceeding and, to the knowledge of the
Company, no such Action is threatened with respect to any of such Trademarks.
All Trademarks have been in continuous use by the Company since they were first
used by the Company. There has been no prior use of such Trademarks by any
Person which would confer upon such Person superior rights in such Trademarks;
and the registered Trademarks have been continuously used in the form appearing
in, and in connection with the goods and services listed in, their respective
registration certificates or identified in their respective pending
applications. No Patent has been or is now involved in any litigation,
infringement, interference, reissue, re-examination, opposition, invalidity
or
nullity proceeding. No Copyright registration or copyrightable work of the
Company has been or is now involved in any litigation. To the knowledge of
the
Company, there are no potentially conflicting Trademarks or potentially
interfering Patents of any third party.
(b) Section
3.24(b) of the Company Disclosure Schedule sets forth a complete and accurate
list of all license agreements granting any right to use or practice any rights
under any Intellectual Property (“Licensed
Intellectual Property”),
whether the Company is the licensee or licensor thereunder, and any assignments,
consents, forbearances to ▇▇▇, judgments, orders, settlements, indemnification
or similar obligations relating to any Licensed Intellectual Property to which
the Company is a party or otherwise bound (collectively, the “License
Agreements”),
indicating for each the title, the parties, date executed, whether or not it
is
exclusive and the Licensed Intellectual Property covered thereby. The License
Agreements are valid and binding obligations of the Company and of each other
party thereto enforceable in accordance with their respective terms, and neither
the Company nor the other party or parties thereto is or are in default
thereunder and there exists no event, condition or occurrence which (with or
without due notice or lapse of time, or both) would constitute such a default
or
alleged default by the Company or the other party or parties thereto of any
of
the foregoing. No consent of, or notice to, any Person is required under any
License Agreement as a result of or in connection with, and the terms or
enforceability of any License Agreement will not be affected in any manner
by,
the execution, delivery and performance of this Agreement or any Related
Agreement, or the transactions contemplated hereby or thereby.
19
(c) No
royalties, honoraria or other fees are payable to any third parties for the
use
of or right to use any Intellectual Property except pursuant to the License
Agreements set forth in Section 3.24(c) of the Company Disclosure Schedule.
All
inventions, discoveries, trade secrets, ideas and works, whether or not patented
or patentable or otherwise protectable under Law, created, prepared, developed
or conceived by employees or independent contractors of the Company are the
exclusive property of the Company and were either created, prepared, developed
or conceived by (i) employees of the Company within the scope of their
employment or (ii) by independent contractors who have duly assigned their
rights to the Company pursuant to enforceable written agreements.
(d) The
Company owns exclusively all Intellectual Property purported to be owned by
the
Company, and has a valid, enforceable, freely transferable and sufficient right
to use all Intellectual Property licensed by the Company, free and clear of
all
Liens.
(e) Neither
the use of any of the Intellectual Property nor the operation of the Company
has, does or will, when conducted in substantially the same manner following
the
Closing, infringe upon, violate, misappropriate or make unlawful use of any
Intellectual Property or other rights of any other Person or constitute unfair
trade practices. The Company has not received notice of any allegation that
the
use of any Intellectual Property or the operation the Company as currently
conducted or proposed to be conducted would infringe upon, violate,
misappropriate or make unlawful use of any Intellectual Property or other rights
of any other Person, and the Company is not aware of any basis for such a claim.
To the knowledge of the Company, no Person is misappropriating, infringing,
violating or making unlawful use of any Intellectual Property. There is no
Action pending or, to the knowledge of the Company, threatened alleging that
the
conduct of the Company infringes upon, violates or constitutes the unauthorized
use of the Intellectual Property or other rights of any other Person, nor is
the
Company aware of any basis for such a claim. The Company has not threatened
to
bring and the Company has not brought any Action regarding the ownership, use,
validity or enforceability of any Intellectual Property.
(f) The
consummation of the transactions contemplated hereby will not result in the
loss
or impairment of the Company’s ownership or other rights in and to any of the
Intellectual Property or under any of the License Agreements, require the
Company to grant to any third party any right to any Intellectual Property
or
obligate the Company to pay any royalties or other amounts to any third party
in
excess of any amounts payable to such third parties prior to the Closing, nor
will the consummation of the transactions contemplated hereby require the
approval or consent of any Governmental Authority or other Person in respect
of
any Intellectual Property.
(g) The
Company has taken all reasonable steps in accordance with normal industry
practice to protect the Intellectual Property, including all rights in
confidential information and Trade Secrets included in the Intellectual
Property. Except pursuant to enforceable confidentiality obligations in favor
of
the Company, there has been no disclosure of any confidential information or
Trade Secrets included in the Intellectual Property. No current or former
employee, consultant, contractor or potential partner or investor of the Company
is in unauthorized possession of any of the Trade Secrets included in the
Intellectual Property.
20
(h) The
Intellectual Property represents all the intellectual property used and
necessary in connection with the operation of the Company as currently conducted
and proposed to be conducted.
(i) Section
3.24(i) of the Company Disclosure Schedule describes all databases used by
the
Company (the “Databases”).
Following the Closing, the Databases will have at least the same information
and
functionality as exists prior to the Closing. No Person (other than the Company)
has any right, title or interest in or to any of the information contained
in
any of the Databases and the Company has not sold, assigned, leased,
transferred, permitted the use of or otherwise disclosed to any Person any
information contained in any of the Databases, including any Personally
Identifiable Information. The Company has complied and is in compliance with
all
applicable privacy Laws, and all information contained in the Databases has
been
collected, used and maintained in accordance with all applicable privacy Laws.
The Company has the right to sell and assign all of its rights in and to the
Databases and all information contained therein, and any such sale and
assignment will not violate any privacy policy applicable to any Personally
Identifiable Information contained therein at the time it was
collected.
3.25 Payment
Programs.
Section
3.25 of the Company Disclosure Schedule sets forth all Payment Programs in
which
the Company has participated at any time during the past five (5) years (the
“Company
Payment Programs”).
The
Company is a participating provider, in good standing, in each of the Company
Payment Programs. No civil, administrative or criminal proceedings relating
to
the Company’s participation in any Payment Program, are pending or, to
the knowledge of the Company, threatened or reasonably foreseeable, nor has
any
such proceeding concluded in the past five (5) years. The Company is not subject
to, nor has the Company been subject to in the past five (5) years, any
pre-payment utilization review or other utilization review by any Payment
Program. No Payment Program is currently requesting or has requested in the
past
five (5) years or, to the knowledge of the Company, is threatening or has in
the
past five (5) years threatened any recoupment, refund, or set-off from the
Company in excess of $5,000. No Payment Program has imposed any fine, penalty
or
other sanction on the Company in the past five (5) years. The Company has not
been excluded in the past five (5) years from participation in any Payment
Program. The Company has not submitted to any Payment Program any false or
fraudulent claim for payment.
3.26 Customers.
Section
3.26 of the Company Disclosure Schedule sets forth a complete and accurate
list
of the twenty (20) largest customers of the Company (based on revenues) during
the twelve-months ended March 31, 2008, indicating the aggregate amounts paid
by
each such customer during such period and any existing Contracts with respect
to
such customers. Since April 1, 2007, none of such customers has canceled,
terminated or otherwise materially altered its relationship with the Company
or
notified the Company of any intention to do so or otherwise threatened to
cancel, terminate or materially alter its relationship with the Company. Since
April 1, 2007, there has been no material reduction in the rate or amount of
purchases or material decrease in the prices paid by such customers, taken
as a
whole.
21
3.27 Accounts
Receivable and Accounts Payable.
(a) All
accounts receivable of the Company (i) have arisen only from bona fide
transactions in the ordinary course of business consistent with past practice,
(ii) represent valid and enforceable obligations, (iii) to the knowledge of
the
Company, will be fully collected in the aggregate face amounts thereof (less
estimated contractual allowances and an allowance for bad debts, in each case,
in such amounts as are determined in a manner consistent with GAAP) when due
without resort to litigation and without offset or counterclaim, and (iv) are
owned by the Company free and clear of all Liens. No discount or allowance
from
any receivable has been made or agreed to and none represents ▇▇▇▇▇▇▇▇ prior
to
actual sale of goods or provision of services.
(b) All
accounts payable and accrued expenses to be assumed by the Buyer pursuant to
this Agreement have arisen in the ordinary course of business, and no such
account payable is, or as of the Closing Date will be, delinquent in its
payment.
3.28 Books
and Records.
The
books and records of the Company delivered or made available to Parent and
the
Buyer are complete and accurate and reflect the assets, liabilities, business,
financial condition and results of operations of the Company and have been
maintained in accordance with prudent business practices. The minute books
of
the Company delivered to the Buyer contain complete and accurate records of
all
actions taken, and summaries of all meetings held, by the Stockholder, the
Board
of Directors (or similar governing body) of the Company (and any committees
thereof) since the time of incorporation of the Company.
3.29 Internal
Controls.
The
Company maintains a system of internal control over financial reporting
sufficient to provide reasonable assurance (i) that the Company maintains
records that in reasonable detail accurately and fairly reflect their respective
transactions and dispositions of assets, (ii) that transactions are recorded
as
necessary to permit preparation of financial statements in conformity with
GAAP
and to maintain asset accountability, (iii) that transactions, receipts and
expenditures are executed only in accordance with authorizations of management
and the Board of Directors of the Company, and (iv) regarding prevention or
timely detection of the unauthorized access, acquisition, use or disposition
of
their respective assets. The Company has provided Parent and the Buyer with
true, correct and complete copies of any correspondence with outside accounting
firms relating to reviews, audits or other procedures with respect to the
Company’s financial statements and internal controls.
3.30 Bank
Accounts; Powers of Attorney.
Section
3.30 of the Company Disclosure Schedule sets forth a true and complete list
as
of the date hereof of (i) all bank accounts and safe deposit boxes of the
Company and all Persons who are signatories thereunder or who have access
thereto and (ii) the names of all Persons holding general or special powers
of
attorney from the Company and a summary of the terms thereof.
3.31 Investment
Representations.
The
Stockholder:
(a) agrees
that he shall acquire all Parent Ordinary Shares issued pursuant to this
Agreement (the “Shares)
for
investment and for the Stockholder’s own account and not as a nominee or agent
for any other Person and with no present intention of distributing or reselling
such Shares or any part thereof in any transactions that would be in violation
of the Securities Act or any state securities or “blue-sky”
Laws;
22
(b) understands
(A) that the Shares have not been registered for sale under the Securities
Act
or any state securities or “blue-sky” Laws in reliance upon exemptions
therefrom, which exemptions depend upon, among other things, the bona fide
nature of the investment intent of the Stockholder as expressed herein, (B)
that
the Shares must be held indefinitely and not sold until such shares are
registered under the Securities Act and any applicable state securities or
“blue-sky” Laws, unless an exemption from such registration is available, (C)
that, except as set forth in this Agreement (including without limitation in
Section 5.11 hereof), Parent is under no obligation to so register the Shares
and (D) that the certificates evidencing any Shares not so registered will
be
imprinted with a legend that prohibits the transfer of such Shares, except
as
provided in this Agreement or otherwise in reliance upon one or more exemptions
from registration available under the Securities Act and/or any state securities
or “blue-sky” Laws;
(c) has
had
an opportunity to ask questions of and has received satisfactory answers from
the officers of Parent or persons acting on Parent’s behalf concerning Parent
and the terms and conditions of an investment in the Shares;
(d) has
reviewed Parent Reports;
(e) has
knowledge of Parent’s business affairs and financial condition and has acquired
sufficient information about Parent to reach an informed and knowledgeable
decision to acquire the Shares;
(f) understands
that an investment in the Shares involves a substantial degree of risk and
acknowledges that no representation has been made regarding the future
performance of Parent or the future market value of the Shares;
(g) has
such
knowledge and experience in financial and business matters, knows of the high
degree of risk associated with investments generally, is capable of evaluating
the merits and risks of acquiring and holding the Shares, is able to bear the
economic risk of an investment therein in the amount contemplated and can afford
to suffer a complete loss of its investment in the Shares acquired by the
Stockholder; and
(h) is
an
“accredited investor” as such term is defined in Rule 501 under the
Securities Act.
3.32 Disclosure.
Neither
this Agreement (including the exhibits and schedules hereto) nor any other
agreement, document or certificate delivered or to be delivered to the Buyer
by
or on behalf of the Company or the Stockholder pursuant to the terms of this
Agreement, contains or will contain any untrue statement of a material fact
or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made. There is no fact within the knowledge
of the Company or the Stockholder that has not been disclosed in this Agreement
and which could have a Company Material Adverse Effect.
23
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PARENT AND THE BUYER
Parent
and the Buyer, jointly and severally, hereby represent and warrant to the
Company and the Stockholder as follows:
4.1 Organization,
Good Standing and Qualification.
Each of
Parent and the Buyer is a corporation duly incorporated, validly existing and
in
good standing under the laws of the jurisdiction of its
incorporation.
4.2 Ownership
of the Buyer; No Prior Activities.
The
Buyer is a direct, wholly-owned subsidiary of Parent.
4.3 Authorization;
Binding Obligation.
Each of
Parent and the Buyer has all necessary corporate power and authority to execute
and deliver this Agreement, each Related Agreement to which Parent or the Buyer
is a party and each other instrument or document required to be executed and
delivered by it pursuant to this Agreement or any such Related Agreement, and
to
perform its respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery
by
Parent and the Buyer of this Agreement and each Related Agreement to which
Parent or the Buyer is a party, the performance of their respective obligations
hereunder and thereunder, and the consummation by Parent and the Buyer of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all action on the part of Parent and the Buyer and no other
corporate proceedings on the part of Parent and the Buyer are necessary to
authorize this Agreement or any Related Agreement to which such Person is,
or
will become, a party or to consummate the transactions so contemplated herein
and therein. This Agreement has been duly and validly executed and delivered
by
Parent and the Buyer, and each Related Agreement to which Parent or the Buyer
is
a party, when executed and delivered by Parent or the Buyer, will be duly and
validly executed and delivered by such Person, and this Agreement constitutes,
and each Related Agreement to which Parent or the Buyer is a party, when
executed and delivered by Parent or the Buyer and each other party hereto and
thereto, will constitute, a legal, valid, and binding obligation of Parent
and
the Buyer, enforceable against such Person in accordance with their respective
terms, except as limited by the Enforceability Exceptions.
4.4 Valid
Issuance of Parent Ordinary Shares.
The
Parent Ordinary Shares issuable pursuant to this Agreement, when issued and
delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and nonassessable and will be free and clear of
restrictions on transfer (including any preemptive rights), other than
restrictions on transfer under this Agreement and under applicable securities
Laws.
4.5 Consents
and Approvals.
No
Approval of, or registration, qualification, designation, declaration or filing
with, any Governmental Authority or any other Person on the part of Parent
or
the Buyer is required in connection with the consummation of the transactions
contemplated by this Agreement, except for such filings as are required pursuant
to applicable securities Laws, which filings will be effected within the
required statutory period, and except for such Approvals which, if not obtained,
would not reasonably be likely to have a material adverse effect on Parent’s or
the Buyer’s ability to consummate the transactions contemplated
hereby.
24
4.6 Litigation.
There is
no Action pending, or to the knowledge of Parent or the Buyer, currently
threatened against Parent or the Buyer, that questions the validity of this
Agreement or any of the Related Agreements to which Parent or the Buyer is
a
party or the right of Parent or the Buyer to enter into this Agreement or any
of
the Related Agreements to which Parent or the Buyer is a party or to consummate
the transactions contemplated hereby or thereby.
4.7 Parent
Reports.
Complete and accurate copies, as amended or supplemented, of Parent’s (a) Annual
Report on Form 20-F for the fiscal year ended December 31, 2006, as filed with
the SEC, and (b) all other reports filed by Parent under the Exchange Act with
the SEC since January 1, 2008 (such reports are collectively referred to herein
as the “Parent
Reports”)
are
available on the web site maintained by the SEC at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. As of
their respective filing dates, none of the Parent Reports (as amended through
the date hereof) contained any untrue statement of a material fact or omitted
to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, and the Parent Reports complied when filed in all material
respects with the then applicable requirements of the Exchange Act, and the
rules and regulations promulgated by the SEC thereunder. The financial
statements of Parent included in the Parent Reports, complied as to form in
all
material respects with the then applicable accounting requirements as set forth
in the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP during the periods involved (except as may
have
been indicated in the notes thereto) and fairly present in all material respects
the financial position of Parent as at the dates thereof and the results of
its
operations for the periods then ended, except as otherwise noted
therein.
4.8 No
Brokers.
Neither
Parent nor the Buyer nor any of their respective employees, officers, directors
or agents has employed or engaged, either directly or indirectly, or incurred
or
will incur any Liability to, any broker, finder, investment banker or other
agent in connection with the transactions contemplated by this
Agreement.
ARTICLE
V
COVENANTS
5.1 Conduct
of Business Pending Closing. The
Company and the Stockholder covenant and agree
that,
between the date hereof and the Closing Date, or the earlier termination of
this
Agreement, except as otherwise expressly provided by this Agreement, the Company
will, and the Stockholder will cause the Company to, conduct its business only
in the ordinary course consistent with past practice and, except without prior
written consent of Parent and the Buyer or except as expressly provided for
by
this Agreement, the Company will not:
(a) declare,
set aside, make or pay any dividend or distribution, payable in cash, stock,
property or otherwise, on any share of capital stock;
(b) split,
combine or reclassify its outstanding shares of capital stock, issue or sell
any
shares of any class of its capital stock, or any securities convertible into
or
exchangeable for any shares, or issue, sell, grant or enter into any
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind, contingent or
otherwise, to purchase or otherwise acquire any such shares or any securities
convertible into or exchangeable for any such shares;
25
(c) acquire
(including, without limitation, by merger, consolidation, or acquisition of
stock, assets or Intellectual Property or any other business combination) any
corporation, partnership, other business organization or any division thereof
or
any of assets or Intellectual Property outside the ordinary course of
business;
(d) incur
any
Indebtedness, issue or sell any debt securities or prepay any debt, guarantee
or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances other than employee
travel advances made in the ordinary course of business;
(e) assign,
lease, license, mortgage, pledge or otherwise subject to any Lien any of its
assets or properties;
(f) forgive,
cancel, compromise, waive or release any debts, claims or rights;
(g) except
as
required pursuant to existing written, binding agreements in effect prior to
the
date of this Agreement which are set forth in Section 5.1(g) of the Company
Disclosure Schedule or as otherwise required by applicable Law, (i) grant or
provide any severance or termination payments or benefits to any director,
officer or employee of the Company, (ii) increase the rate of compensation
or
increase the bonus, pension, welfare, severance or other benefits of, pay any
bonus to, or make any new equity awards to any director, officer or employee
of
the Company, (iii) establish, adopt, amend or terminate any Employee Benefit
Plan, (iv) take any action to accelerate the vesting or payment or fund or
in
any other way secure the payment of compensation or benefits under any Employee
Benefit Plan, to the extent not already provided in any such Employee Benefit
Plan, (v) change any actuarial or other assumptions used to calculate
funding obligations with respect to any Employee Benefit Plan or to change
the
manner in which contributions to such plans are made or the basis on which
such
contributions are determined, except as may be required by GAAP; or
(vi) forgive any loans to directors, officers or employees of the
Company;
(h) amend
any
of its Organizational Documents;
(i) change
any of its accounting practices, policies or principles, other than as required
by GAAP;
(j) other
than trade payables in the ordinary course of business and Contracts entered
into in the ordinary course of business, incur, assume, guarantee or otherwise
become directly or indirectly liable with respect to any Liability;
(k) sell
any
assets or properties of the Company;
(l) enter
into any Contract or any amendment, modification or termination of any existing
Contract without the approval of Parent or the Buyer, or take any action or
fail
to take any action that would result in breach or violation of any Company
Contract;
26
(m) make,
authorize or commit for any capital expenditures or capital additions or
improvements;
(n) institute,
settle or agree to settle any Action;
(o) permit
any insurance policy naming it as a beneficiary or loss-payable payee to be
canceled or terminated;
(p) permit
expiration of any Permits of the Company or fail to renew any Permits that
would
otherwise expire pursuant to the terms thereof between the date of this
Agreement and the Closing;
(q) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(r) settle
any material audit, make or change any material Tax election, file any amended
Tax Return or take any other action with regard to any dispute or discussion
with a Governmental Authority relating to a material Tax liability or potential
liability;
(s) hire
any
additional officers or employees;
(t) take
any
action or omit to take any action that would cause any of the representations
and warranties set forth in Article III hereof to become untrue in any material
respect or which would result in any of the conditions set forth in Article
VI
not being satisfied; or
(u) authorize
or enter into an agreement to do any of the foregoing.
5.2 Exclusivity.
Between
the date hereof and the Closing Date, or until the earlier termination of this
Agreement, neither
the Company nor the Stockholder shall (and the Company will not permit its
Representatives to) directly or indirectly (a) solicit, initiate, cause,
facilitate or encourage (including by way of furnishing information) any
proposal or offer from any Person relating to, or enter into or consummate
any
transaction relating to, the acquisition of the Company or any capital stock
or
other voting securities, or any substantial portion of the assets or business,
of the Company, including any acquisition of the Company structured as a merger,
consolidation or share exchange or any similar transaction or (b) participate
in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner, any effort
or
attempt by any Person to do or seek any of the foregoing. The Company will
notify Parent
and the Buyer
immediately if any Person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing (whether solicited or unsolicited), and the
Company shall promptly provide to Parent
and the Buyer
copies
of all written material, including material in electronic form, received by
the
Company from the Person making such proposal, offer, inquiry or
contact.
27
5.3 Non-Trading.
Neither
the Company nor the Stockholder will, and the Company and the Stockholder will
cause their respective
Affiliates and the officers, directors, employees and agents of the Company
not
to,
without
the prior written consent of Parent (which consent may be withheld in its sole
discretion), directly or indirectly, purchase, sell, offer, contract or grant
any option to sell (including without limitation any short sale), pledge,
transfer, establish an open “put equivalent position” or liquidate or decrease a
“call equivalent position” within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of or transfer (or enter into any transaction
which is designed to, or might reasonably be expected to, result in the
disposition of) including the filing (or participation in the filing) of a
registration statement with the SEC in respect of, any ordinary shares of
Parent, or publicly announce an intention to do any of the foregoing, for a
period commencing on the date hereof and continuing through later of (i) the
Closing Date or the earlier termination of this Agreement, and (ii) the public
announcement of the transactions contemplated by this Agreement.
5.4 Cooperation;
Approvals, Filings and Consents.
(a) Upon
the
terms and subject to the conditions set forth in this Agreement, each party
hereto shall use reasonable best efforts to take, or cause to be taken, all
actions, and do, or cause to be done, and to assist and cooperate with the
other
party or parties in doing, all things necessary, proper or advisable to
consummate the transactions contemplated hereby and to satisfy or cause to
be
satisfied all of the conditions precedent that are set forth in Article VI,
as
applicable to each of them.
(b) Each
of
the
Buyer
and the
Company shall, as promptly as practicable, use reasonable best efforts to obtain
all necessary Approvals from Governmental Authorities and make all other
necessary registrations and filings under applicable Law required to be obtained
or made by it in connection with the authorization, execution and delivery
of
this Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby. Each of the
Buyer
and the
Company shall act in good faith and use reasonable best efforts to cooperate
with the other parties in connection therewith and in connection with resolving
any investigation or other inquiry with respect thereto.
(c) The
Company shall use reasonable best efforts to obtain as promptly as practicable
all other consents from third parties that are necessary or desirable for the
consummation of the transactions contemplated by this Agreement (including,
without limitation, those set forth in Sections 3.5, 3.6, 3.7, 3.12 and 3.13
of
the Company Disclosure Schedule (“Company
Third Party Consents”)).
5.5 Access
to Information. Prior
to
the Closing Date and upon reasonable notice, the Company shall give
Parent
and the Buyer
and
their Representatives reasonable access to the personnel, properties, books
and
records of the Company upon reasonable notice and during normal business hours,
furnish to Parent
and the Buyer
and
their Representatives such financial and operating data and all other
information as such Persons may reasonably request and shall instruct the
Representatives to cooperate with Parent and the
Buyer
in its
investigation of the Company; provided,
however,
that no
investigation of the Company shall affect any representation or warranty made
by
the Company or the Stockholder hereunder. Parent and the Buyer shall keep such
information confidential in accordance with the terms of the confidentiality
agreement dated March 6, 2008 (the “Confidentiality
Agreement”)
between the Company and Parent.
28
5.6 Notice
of Certain Events. During
the period from the date hereof until the Closing, the Company and the
Stockholder shall promptly notify Parent and the Buyer in writing of: (i) the
discovery by the Company or the Stockholder of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of any representation
or warranty made by the Company or the Stockholder in this Agreement; (ii)
any
event, condition, fact or circumstance that occurs, arises or exists after
the
date of this Agreement and that causes or constitutes, or would reasonably
be
expected to cause or constitute, an inaccuracy in or breach of any
representation or warranty made by the Company or the Stockholder in this
Agreement if (A) such representation or warranty had been made as of the time
of
the occurrence, existence or discovery of such event, condition, fact or
circumstance or (B) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; and (iii) any
material breach of any covenant or obligation of the Company or the Stockholder.
If any event, condition, fact or circumstance that is required to be disclosed
pursuant to this Section 5.6 requires any change in the Company Disclosure
Schedule, then the Company shall promptly deliver to Parent and the
Buyer
an
update to the Company Disclosure Schedule specifying such change;
provided that, no such update shall be deemed to supplement or amend the Company
Disclosure Schedule for the purpose of determining whether any of the conditions
set forth in Article VI have been satisfied or for the purpose of determining
the accuracy of any of the representations and warranties made by the Company
in
this Agreement, including, without limitation, for purposes of Article VII
hereof.
5.7 Public
Announcements. Neither
the Company or the Stockholder, nor any of their respective Affiliates or agents
(including accountants, lenders, counsel or investment bankers), without the
prior written consent of Parent or the Buyer, shall issue any press release
announcing the execution of this Agreement or the transactions contemplated
hereby, otherwise make any public statements regarding the transactions
contemplated hereby or otherwise disclose any of the contents of this Agreement
or the Related Agreements (each, a “Public
Announcement”).
The
Buyer or Parent may in their sole discretion issue a Public Announcement without
the consent of any other party hereto; provided,
however,
that,
subject to any public disclosure and other legal obligations of the Buyer,
Parent or any of their respective Affiliates and regulatory obligations to
which
the Buyer, Parent or any of their respective Affiliates may be subject and
without limiting the rights of the Buyer or Parent pursuant to this Section
5.7,
the Buyer shall use commercially reasonable efforts to provide the Stockholder
an opportunity to review and discuss with the Buyer and Parent any Public
Announcement proposed to be issued by the Buyer announcing the consummation
of
the transactions contemplated hereby prior to issuing any such Public
Announcement.
5.8 Restriction
on Transfer of Shares.
(a) Any
Shares issued pursuant to this Agreement and any shares of capital stock or
other securities received with respect thereto that have not been sold pursuant
to an effective registration statement under the Securities Act (collectively,
the “Restricted
Securities)
shall
not be sold, transferred, assigned, pledged, encumbered or otherwise disposed
of
(each, a “Transfer”)
except
in` compliance with the provisions of this Section 5.8, which provisions are
intended to insure compliance with the provisions of the Securities Act. Each
holder agrees to observe and comply with the Securities Act in connection with
any Transfer of Restricted Securities.
29
(b) Each
certificate representing Restricted Securities and each certificate issued
to
any transferee of any holder of any such certificate shall, subject to the
provisions of Sections 5.8(c) and 5.8(d), be stamped or otherwise imprinted
with
a legend in substantially the following form:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES OR “BLUE-SKY” LAWS. THESE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. ADDITIONALLY, THE
TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION
5.8 OF A STOCK PURCHASE AGREEMENT DATED AS OF JULY 22, 2008, AND NO TRANSFER
OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. COPIES OF SECTION 5.8 OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST
BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE ISSUER.
(c) If
a
holder desires to Transfer any Restricted Securities, it shall provide prior
written notice to Parent of the holder’s intention to effect such Transfer and
to comply in all other respects with the provisions of this Section 5.8. Any
such notice shall describe the manner and circumstances of the proposed Transfer
and shall be accompanied by an opinion of counsel of the holder, addressed
to
Parent, stating that in the opinion of such counsel (which opinion shall be
reasonably satisfactory to Parent) such proposed Transfer may be effected
without registration or qualification of such Restricted Securities under the
Securities Act or the securities or “blue-sky laws” of any other jurisdiction.
The holder thereof shall thereupon be entitled to Transfer such Restricted
Securities in accordance with the terms of the notice delivered by it to Parent.
Each certificate or other instrument evidencing the securities issued upon
the
Transfer of any such Restricted Securities (and each certificate or other
instrument evidencing the balance, if any, of such Restricted Securities not
so
transferred) shall bear the legend set forth in Section 5.8(b), and any
subsequent Transfer thereof shall be subject to compliance with the provisions
of this Section 5.8, unless, in the opinion of counsel of Parent, registration
of any future Transfer is not required by the applicable provisions of the
Securities Act.
30
(d) Notwithstanding
the foregoing provisions of this Section 5.8, the restrictions imposed by this
Section 5.8 upon the transferability of Restricted Securities shall cease and
terminate (i) with respect to any Restricted Securities sold or otherwise
disposed of pursuant to an effective registration statement under the Securities
Act or as otherwise contemplated by Section 5.8(c) and, pursuant to Section
5.8(c), the Restricted Securities so transferred are not required to bear the
legend set forth in Section 5.8(b), at such time that such Restricted Securities
are sold or disposed of, or (ii) the holder of such Restricted Securities has
met the requirements for Transfer of such Restricted Securities pursuant to
Rule
144(b)(1) under the Securities Act. Whenever the restrictions imposed by this
Section 5.8 shall terminate as herein provided, the holder of Restricted
Securities as to which such restrictions have terminated shall be entitled
to
receive from Parent, without expense, a new certificate not bearing the
restrictive legend set forth in Section 5.8(b) and not containing any other
reference to the restrictions imposed by this Section 5.8.
(e) The
holder understands and agrees that Parent, in its discretion, may cause stop
transfer orders to be placed with its transfer agent with respect to
certificates for Restricted Securities owned by the holder if Parent deems
such
proposed Transfer to be a violation or breach of this Section 5.8 or that is
or
may otherwise be in violation of applicable Law.
5.9 Tax
Matters.
(a) Following
the Closing, the Buyer shall prepare and file, or cause to be prepared and
filed, all Tax Returns required to be filed by the Company on or after the
Closing Date. To the extent permitted by applicable Law, any taxable income
with
respect to a Pre-Closing Period or Straddle Period shall be offset to the extent
of any available carryforward Tax losses. The Buyer shall provide the
Stockholder a reasonable opportunity to review and comment on any Tax Return
for
a Pre-Closing Tax Period or Straddle Period at least twenty (20) days prior
to
the filing thereof (taking into account any applicable valid extension). The
Stockholder shall have the right to review all information used to prepare
each
such Tax Return. Notwithstanding the foregoing, the Buyer shall not be required
to grant access or furnish information to the Stockholder or any of its
representatives to the extent that such information is appropriately subject
to
an attorney/client or attorney work product privilege. The Buyer and the
Stockholder agree to consult and resolve in good faith any material issue
arising as a result of the Stockholder’s review of such Tax Return and mutually
agree upon, if possible, the final Tax Return as promptly as possible. Any
dispute that cannot be resolved by the parties within ten (10) days shall be
resolved by the Independent Accountants. The fees and expenses of the
Independent Accountants pursuant to this Section 5.9 shall be borne by the
Buyer
and the Stockholder in inverse proportion as they may prevail on matters
resolved by the Independent Accountants, which proportionate allocations shall
also be determined by the Independent Accountants at the time the determination
of such firm is rendered on the hand merits of the matters submitted.
(b) Following
the Closing, the Stockholder shall provide the Company, Parent or the Buyer
with
such assistance and non-privileged information as may reasonably be requested
in
connection with the preparation of any Tax Return relating to the Company or
the
performance of any audit, examination or any other Proceeding by any taxing
authority relating to any such Tax Return, whether conducted in a judicial
or
administrative forum. The
Buyer
shall exercise exclusive control over the handling, disposition and settlement
of any inquiry, examination or proceeding by a Governmental Authority (or that
portion of any inquiry, examination or proceeding by a Governmental Authority)
relating to any Tax Returns of the Company; provided, however, that the
Stockholder shall have the right to participate in, at his own expense, any
Proceedings with respect to any Tax matters as to which the Stockholder may
have
payment or indemnification obligations under this Agreement.
31
(c) The
Stockholder shall be entitled to receive, and the Buyer shall pay to the
Stockholder, the amount of any Tax refund paid to by the Company that is
attributable to any Pre-Closing Tax Period or the portion of any Straddle Period
ending on the Closing Date.
(d) The
Stockholder shall pay to the Buyer the amount of all Taxes due with respect
to
any portion of a Pre-Closing Tax Period or a Straddle Period that constitutes
a
Pre-Closing Tax Period at least five (5) days prior to the payment thereof
by
the Buyer or, if later, following demand by the Buyer.
(e) For
purposes of determining the Stockholder’s obligation to pay
to
the Buyer the amount of all Taxes due (or to receive a refund) with respect
to
any portion of a Straddle Period
or to
indemnify the Buyer, Parent and their respective Affiliates pursuant
to Section 7.1(a)(iv), the portion of any Tax
that
is attributable to the portion of such Straddle Period ending on the Closing
Date shall be:
(i) in
the
case of income Taxes or Taxes resulting from, or imposed on, sales, receipts,
use, transfers or assignments of property, or wages, withholdings, or other
payments, the amount that would be payable for such period
determined as if the Company filed a Tax Return for the portion of the Straddle
Period ending on (and including) the Closing Date, based upon an interim closing
of the Company on the Closing Date; provided that
for
purposes of this paragraph (i),
any
item determined on an annual
or
periodic basis (including amortization and depreciation deductions and
the
effects of graduated rates) shall be allocated between the portion of the
Straddle Period ending on (and including) the Closing Date and the portion
of
the Straddle Period after the Closing Date based on the relative number of
days
in the relative portions of the Straddle Period as compared to the number of
days in the entire Straddle Period; and
(ii) in
the
case of all other Taxes, an amount equal to (1) the amount of
Taxes
for the entire Straddle Period multiplied by
(2) a
fraction (y) the numerator of which is the number of calendar days in the
portion of the Straddle Period ending on (and including) the Closing Date and
(z) the denominator of which is the number of calendar days in the entire
Straddle Period.
5.10 Mutual
Cooperation.
From
and after the Closing Date, the Stockholder and the Buyer shall use their
reasonable efforts to provide to the other party (the “requesting
party”)
such
books, records and information and make available to the requesting party such
personnel (such party providing such books, records or information or making
available such personnel to the requesting party, the “providing
party”),
in
each case as may be reasonably requested in writing by the requesting party,
for
the purpose of reasonably assisting the requesting party in responding to
Governmental Authority or professional inquiries, making required Governmental
Authority filings (including Tax filings) or defending or prosecuting any Action
relating to or arising out of the conduct of the Company prior to or after
the
Closing Date, involving any Person.
32
5.11 Registration.
(a) As
soon
as practicable and in any event within thirty (30) days after the date of
issuance of Parent Ordinary Shares to the Stockholder under this Agreement
(i.e.
with respect to the Closing Stock Payment, the Closing Date, and with respect
to
the Earn-Out Stock Payment, the date such stock is issued), Parent shall file
with the SEC, and thereafter use its commercially reasonable efforts to have
declared effective as soon as practicable, a registration statement on
Form F-3 (a “Registration
Statement”)
under
the Securities Act covering the resale by the Stockholder of such Parent
Ordinary Shares (the “Registrable
Shares”).
In
its discretion, Parent will be permitted to register any other shares for resale
by other eligible selling stockholders using any such Registration Statement;
provided that the registration of such additional shares does not materially
delay or materially adversely affect the ability of Parent to register the
Registrable Shares. Parent shall use commercially reasonable efforts to keep
any
such Registration Statement continuously effective and usable for the resale
of
the Registrable Shares covered thereby for a period commencing on the date
on
which the SEC declares the Registration Statement effective and ending on the
earlier of (i) the date upon which all of the Registrable Shares covered
thereby first become eligible for resale pursuant to Rule 145 under the
Securities Act without restriction or (ii) the first date upon which all of
the Registrable Shares covered by the Registration Statement have been sold
pursuant to such registration statement.
(b) Parent
may, by written notice to the Stockholder, (i) delay the filing or effectiveness
of a Registration Statement for up to ninety (90) days, or for such longer
period, as a result of restraints or restrictions under applicable Law, or
if in
the reasonable good faith judgment of the Board of Directors of Parent, the
filing of such Registration Statement would be materially detrimental to Parent
because such action would (A) materially interfere with a significant
acquisition, corporate reorganization, or other similar transaction involving
Parent, (B) require premature disclosure of material information that Parent
has
a bona fide business purpose for preserving as confidential, or (C) render
Parent unable to comply with requirements under the Securities Act or the
Exchange Act, or (ii) suspend a Registration Statement after effectiveness
and
require that the Stockholder immediately cease sales of shares pursuant to
such
Registration Statement (A) for a period of not more than thirty (30) consecutive
days or ninety (90) days in the aggregate during any twelve (12) consecutive
calendar months, in the event that Parent files a registration statement with
the SEC for a then pending public offering of its securities or (B) following
the effectiveness of a Registration Statement, for no longer than thirty (30)
consecutive trading days if an event has occurred or Parent has entered into
a
transaction which Parent determines in good faith must be disclosed in order
for
Parent to comply with the public disclosure requirements imposed on Parent
under
the Securities Act in connection with such Registration Statement, provided,
that in
respect of all such events or occurrences Parent shall not suspend the
effectiveness of a Registration Statement for more than ninety (90) trading
days
in the aggregate in any twelve (12) consecutive calendar months.
(c) If
Parent
delays or suspends a Registration Statement or requires the Stockholder to
cease
sales of shares pursuant to Section 5.11(b) above, Parent shall, as promptly
as
practicable (and in any event within four (4) Business Days) following the
termination of the circumstance which entitled Parent to do so, take such
actions as may be necessary to file or reinstate the effectiveness of such
Registration Statement and/or give written notice to the Stockholder authorizing
him to resume sales pursuant to such Registration Statement.
33
5.12 Non-competition;
Non-Solicitation; Confidentiality; Reasonableness.
(a) Non-competition;
Non-Solicitation.
For a
period of five (5) years following the Closing Date (the “Restricted
Period”),
without the prior written consent of the Board of Directors of Parent, the
Stockholder shall not, directly or indirectly, engage in the following
activities anywhere in the world:
(i) (A)
invest in, contribute capital to, raise capital for or directly or indirectly
participate in the business or management (as a director, officer, employee,
consultant, advisor, agent, representative or otherwise) of, any Competitive
Enterprise, or (B) act in any capacity for or provide services to any individual
or entity, as a result of which it is reasonably likely that the Stockholder
will disclose the Company’s proprietary or confidential information to any
Competitive Enterprise,
provided
that
nothing herein shall prohibit the Stockholder from being a passive owner of
not
more than five percent (5%) of the outstanding stock of any class of a
corporation that is publicly traded, so long as the Stockholder has no direct
or
indirect participation in the business of such public corporation. The
Stockholder shall not make direct or indirect investments in private companies
engaged in any Competitive Enterprise. For the purpose of this Section
5.12(a)(i), a “Competitive
Enterprise”
is
an
individual or entity that competes anywhere in the world with Parent, the
Company or any of their subsidiaries in the business of the development,
manufacture, distribution, design or sale of microRNA based products.
Notwithstanding anything to the contrary contained in this Agreement or in
the
Employment Agreement, the Stockholder shall be permitted to invest in,
contribute capital to, raise capital for and directly or indirectly participate
in the business or management of, any private equity fund, venture capital
fund,
or similar entity that invests in or acquires one or more entities the business
of which includes, directly or indirectly, the development, manufacture,
distribution, design or sale of microRNA based products (the “Portfolio
Entities”),
so
long as the Stockholder does not serve as an officer, director, employee or
contractor of any such Portfolio Entity or otherwise participate in the
management of such Portfolio Entity;
(ii) interfere
with, or attempt to interfere with, the relations among Parent, the Buyer or
the
Company, or any of their respective Affiliates and any employee, customer,
client, patient, vendor, supplier or consultant of Parent, the Buyer or the
Company, or any of their respective Affiliates; or
(iii) make
disparaging statements regarding the Company, Parent or the Buyer, any of their
respective Affiliates or any of their respective directors, officers or
employees (or any person or entity who was in any such capacity at any time
during the one-year period preceding any such statement).
(b) Confidentiality.
The
Stockholder acknowledges and agrees that the Buyer is acquiring from the Company
certain trade secrets and other confidential and proprietary information of
the
Company (collectively, the “Confidential
Information”),
and
that the Buyer expects the Stockholder to protect the confidentiality of the
Confidential Information. Accordingly, the Stockholder covenants and agrees
that, from and after the date hereof, he shall hold, and the Stockholder shall
cause the Company to hold, the Confidential Information in the strictest
confidence and shall not use or disclose to any Person, directly or indirectly,
any Confidential Information for any purpose whatsoever; provided,
however,
that he
may disclose Confidential Information as is required by Law or as used in
connection with his employment with the Company; provided that,
prior
to making any such disclosure, he shall provide reasonable advance notice to
the
Buyer and reasonable assistance to the Buyer in attempting to obtain a
protective order or other appropriate remedy concerning such
disclosure.
34
(c) Material
Inducement; Reasonableness; Remedies.
(i) The
Stockholder acknowledges and agrees that the covenants contained in this Section
5.12 are a material and substantial part of the transaction contemplated by
this
Agreement and are entered into in connection with and as an inducement to the
acquisition by the Buyer of the Company and the other transactions contemplated
by this Agreement, without which the Buyer would be unwilling to enter into
this
Agreement or consummate the transactions contemplated hereby.
(ii) The
Stockholder acknowledges and agrees that (A) the provisions of this Section
5.12
are necessary and reasonable to protect the Confidential Information and the
goodwill being acquired by the Buyer pursuant to this Agreement; (B) the
specific time, geography and scope of the provisions set forth in this Section
5.12 are reasonable and necessary to protect the business interests of the
Buyer
as they relate to the Company; and (C) in the event of a breach of any agreement
set forth in this Section 5.12, the Buyer would suffer substantial irreparable
harm and would not have an adequate remedy at law for such breach. In
recognition of the foregoing, the Stockholder agrees that in the event of a
breach or threatened breach of any of the provisions set forth in this Section
5.12, in addition to such other remedies as the Buyer may have at Law, without
posting any bond or security or requirement for proof of actual damages, the
Buyer shall be entitled to seek and obtain equitable relief, in the form of
specific performance, or temporary, preliminary or permanent injunctive relief,
or any other equitable remedy which then may be available. The seeking of such
injunction or order shall not affect the Buyer’s right to seek and obtain
damages or other equitable relief on account of any such actual or threatened
breach.
(iii) If
any
provision of this Section 5.12 is held by a Court to be overly broad in
duration, geographical coverage, substantive scope or otherwise, that provision
will be narrowed to the broadest term permitted by applicable Law and enforced
as so narrowed, and such court is hereby given express authority by the
undersigned to modify the offending provisions hereof without the signature
or
prior consent of the Stockholder to the extent necessary to make them
enforceable to the fullest extent permitted under applicable Law. Each provision
of this Section 5.12 restricting the activities of the Stockholder in any way
is
intended to be separate from and enforceable separately from each such other
provision.
5.13 Repayment
of Debt Payoff Amount.
If the
Debt Payoff Amount would exceed One Million Nine Hundred Thousand Dollars
($1,900,000) at the Closing, the Stockholder shall repay or cause the Company
to
repay at the Closing the amount by which the Debt Payoff Amount exceeds One
Million Nine Hundred Thousand Dollars ($1,900,000). Subject to the foregoing,
on
the Closing Date, the Buyer will cause the Company to pay the Debt Payoff Amount
set forth in the Payoff Letters to the Stockholder, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ MD and
Citizens Bank, as applicable.
35
ARTICLE
VI
CONDITIONS
PRECEDENT TO CLOSING
6.1 Conditions
to Obligation of Each Party.
The
respective obligations of each party to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior to the
Closing of the following condition:
no
temporary restraining order, preliminary or permanent injunction or other Order
(whether temporary, preliminary or permanent) issued by any Court of competent
jurisdiction or other legal restraint or prohibition shall be in effect which
prevents the consummation of the transactions contemplated hereby, nor shall
any
Action brought by any Governmental Authority seeking any of the foregoing be
pending, and there shall not be any action taken, or any Law or Order enacted,
entered, enforced or deemed applicable to the transactions contemplated hereby,
which makes the consummation of the transactions contemplated herein
illegal.
6.2 Additional
Conditions to Obligations of Parent and the Buyer.
The
obligations of Parent and the Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction at or prior to the
Closing of the following additional conditions, unless waived in writing by
Parent and the Buyer:
(a) Representations
and Warranties.
Each of
the representations and warranties set forth in Article III that is qualified
by
“materiality,” “Company Material Adverse Effect” or a similar qualifier shall be
true and correct in all respects, and each of such representations and
warranties that is not so qualified shall be true and correct in all material
respects, in each case, as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except for representations
and warranties made as of a specified date, the accuracy of which will be
determined only as of the specified date).
(b) Agreements
and Covenants.
Each of
the Company and the Stockholder shall have performed or complied in all material
respects, with each obligation, agreement and covenant to be performed or
complied with by the Company or the Stockholder under this Agreement on or
prior
to the Closing Date.
(c) No
Company Material Adverse Change.
From
and including the date hereof, there shall not have been a Company Material
Adverse Change.
(d) Consents
and Approvals.
All
Third Party Consents, and all other Approvals from any Persons or Governmental
Authorities that, in the reasonable discretion of Parent and the Buyer, are
necessary for the consummation of the transactions contemplated hereby on the
terms, and conferring upon the Buyer all of the rights and benefits, as
contemplated herein, shall have been received in form and substance reasonably
satisfactory to the Buyer.
36
(e) Payment
of Closing Indebtedness.
All
Indebtedness owed to the Company from any Person shall have been repaid in
full
at the Closing.
(f) Debt
Payoff Amount.
The
Company or the Stockholder shall have delivered to the Buyer the Payoff Letters
setting forth the Debt Payoff Amount outstanding through and including the
Closing Date, and due to the Stockholder, ▇▇. ▇▇▇▇▇▇▇ and Citizens Bank and
the
aggregate Debt Payoff Amount at the Closing shall not exceed One Million Nine
Hundred Thousand Dollars ($1,900,000).
(g) Related
Agreements.
The
Company and the Stockholder, as applicable, shall have executed and delivered
to
the Buyer each of the Related Agreements to which the Company or the Stockholder
is a party and the actions required to be taken thereunder by such Person at
or
prior to the Closing thereunder shall have been taken.
(h) Resignations.
Each
director and officer of the Company shall have resigned or been removed
effective as of the Closing Date.
(i) Company
Transaction Expenses.
The
Stockholder shall pay to the Company any Company Transaction Expenses
outstanding or accrued as of the Closing Date to the extent required by Section
8.3.
(j) FIRPTA
Compliance.
The
Company shall have delivered to the Buyer a properly executed notice in a form
reasonably acceptable to the Buyer for purposes of satisfying the Buyer’s
obligations under Section 897 and 1445 of the Code, together with written
authorization for the Buyer to deliver such notice to the Internal Revenue
Service on behalf of the Company after the Closing.
(k) W-9s.
The
Stockholder and each recipient of any portion of the Debt Payoff Amount (other
than Citizens Bank) shall provide the Buyer with Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service.
(l) Officer’s
Certificate.
The
Company shall have delivered to the Buyer and the Buyer a certificate of the
President or Chief Executive Officer of the Company, dated as of the Closing
Date, in form and substance reasonably satisfactory to the Buyer, certifying
that the conditions set forth in Sections 6.2(a) through (c) have been
satisfied.
(m) Evidence
of Corporate Authority.
The
Company shall have delivered to Parent and the Buyer a certificate of the
Secretary of the Company, dated as of the Closing Date, in form and substance
reasonably satisfactory to Parent, certifying as to and attaching (if
applicable): (i) complete and accurate copies of the Organizational Documents
of
the Company, (ii) the incumbency of the officers executing this Agreement and
the Related Agreements to which the Company is a party on behalf of the Company
and (iii) complete and accurate copies of resolutions of the Board of Directors
(and, if applicable, the Stockholder) of the Company authorizing and approving
the execution, delivery and performance of this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby, and the acts
of
the officers of the Company in carrying out the terms and provisions hereof
and
thereof.
37
(n) Good
Standing Certificate.
The
Company shall have delivered to Parent and the Buyer a certificate of legal
existence and good standing from the Secretary of State of its jurisdiction
of
incorporation, which shall be dated no more than five (5) Business Days prior
to
the Closing Date.
(o) Lease
Amendment.
The
Company shall have amended the Lease in the form satisfactory to Parent and
the
Buyer to allow for extension of the term of the Lease for an additional one
(1)
year period.
(p) Legal
Opinion.
▇▇▇▇▇▇▇
& ▇▇▇, P.C., counsel to the Company, shall have delivered to Parent and the
Buyer a legal opinion in substantially the form attached hereto as Exhibit
E.
(q) Other
Documents.
The
Company shall have delivered to Parent and the Buyer such other instruments,
certificates, documents or materials as may be reasonably requested by Parent
or
the Buyer in connection with the consummation of the transactions contemplated
hereby.
6.3 Additional
Conditions to Obligations of the Company.
The
obligations of the Company to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
the
following additional conditions, unless waived in writing by the
Company:
(a) Representations
and Warranties.
Each of
the representations and warranties set forth in Article IV that is qualified
by
“materiality” or a similar qualifier shall be true and correct in all respects,
and each of such representations and warranties that is not so qualified shall
be true and correct in all material respects, in each case, as of the date
of
this Agreement and as of the Closing Date as though made as of the Closing
Date
(except for representations and warranties made as of a specified date, the
accuracy of which will be determined only as of the specified
date).
(b) Agreements
and Covenants.
Each of
Parent and the Buyer shall have performed or complied in all material respects
with each obligation, agreement and covenant to be performed or complied with
by
Parent or the Buyer under this Agreement on or prior to the Closing
Date.
(c) Related
Agreements.
Each of
Parent and the Buyer shall have executed and delivered to the Company each
of
the Related Agreements to which Parent or the Buyer is a party and the actions
required to be taken thereunder by Parent or the Buyer, at or prior to the
Closing thereunder shall have been taken.
(d) Officer’s
Certificate.
Each of
Parent and the Buyer shall have delivered to the Company a certificate of an
officer of Parent and the Buyer, respectively, dated as of the Closing Date,
certifying that the conditions set forth in Sections 6.3(a) and 6.3(b) have
been
satisfied.
38
(e) Evidence
of Corporate Authority.
The
Buyer shall have delivered to the Company a certificate of the Secretary or
an
Assistant Secretary of the Buyer, dated as of the Closing Date, certifying
as to
and attaching (if applicable): (i) complete and accurate copies of the
Organizational Documents of the Buyer, (ii) the incumbency of the officers
executing this Agreement and the Related Agreements to which the Buyer is a
party on behalf of the Buyer and (iii) complete and accurate copies of
resolutions of the Board of Directors (and, if applicable, the stockholders)
of
the Buyer authorizing and approving the execution, delivery and performance
of
this Agreement and the transactions contemplated hereby, and the acts of the
officers of the Buyer in carrying out the terms and provisions hereof.
ARTICLE
VII
INDEMNIFICATION
7.1 Indemnification.
(a) Indemnification
by the Stockholder.
From
and after the Closing, the Stockholder shall indemnify, defend and hold harmless
the Buyer, Parent and their respective Affiliates, their respective successors
and assigns, and the respective officers, directors, employees and agents of
each of the foregoing (the “Parent
Indemnified Persons”)
from
and against any and all Losses of every kind, nature or description asserted
against, or sustained, incurred or accrued directly or indirectly by, such
Parent Indemnified Person to the extent that such Losses arise out of or result
from or are a consequence of any of the following:
(i) the
breach or inaccuracy of any representation or warranty of the Company or the
Stockholder contained in this Agreement or in any Related Agreement or
certificate delivered by the Company or the Stockholder pursuant to this
Agreement, it being understood and agreed that for purposes hereof, such
representations and warranties shall be interpreted without giving effect to
any
limitations or qualifications as to “materiality” (including the word
“material”) or “Company Material Adverse Effect”;
(ii) the
breach of or non-compliance with any agreement or covenant of the Company or
the
Stockholder contained in this Agreement or in any Related Agreement;
(iii) any
Indebtedness of the Company outstanding as of the Closing Date, other than
the
Debt Payoff Amount and other than the Indebtedness set forth in Section 3.10(ii)
of the Company Disclosure Schedule;
(iv) any
Taxes
of the Company attributable to any Pre-Closing Tax Period (including any
Pre-Closing Tax Period included in a Straddle Period);
(v) any
claim
by an owner of equity or other securities of the Company, or any other Person,
seeking to assert, or based upon, ownership or rights to ownership of any shares
of stock or other securities of the Company;
(vi) the
existence or ownership of any subsidiaries or any ownership of any capital
stock
or other proprietary interest, directly or indirectly, in any other Person,
at
any time prior to the Closing, except as disclosed in Section 3.2 of the Company
Disclosure Schedule;
39
(vii) any
repurchase, redemption, or other reacquisition of any shares of capital stock
or
other securities of the Company;
(viii) the
Company’s ownership or operation of any real property at any time prior to the
Closing; or
(ix) any
violation by the Company of any Laws at any time prior to the
Closing.
(b) Indemnification
by Parent and the Buyer.
From
and after the Closing, Parent and the Buyer, jointly and severally, shall
indemnify, defend and hold harmless the Stockholder and his successors and
assigns (the “Stockholder
Indemnified Persons”)
from
and against any and all Losses of every kind, nature or description asserted
against, or sustained, incurred or accrued directly or indirectly by, the
Stockholder Indemnified Persons to the extent that such Losses arise out of
or
result from or are a consequence of any of the following:
(i) the
breach or inaccuracy of any representation or warranty of Parent or the Buyer
contained in this Agreement or in any Related Agreement or certificate delivered
by Parent or the Buyer pursuant to this Agreement;
(ii) the
breach of or non-compliance with any agreement or covenant of Parent or the
Buyer contained in this Agreement or in any Related Agreement; or
(iii) any
liability incurred by the Stockholder under the Stockholder’s personal
guarantees set forth on Schedule
7.2(b).
7.2 Limitations
on Indemnity.
Subject
to the provisions of Section 7.5:
(a) The
maximum aggregate liability of the Stockholder for Losses arising out of or
resulting from any and all claims for indemnification pursuant to Section
7.1(a)(i) of this Agreement shall not exceed the sum of One Million Nine Hundred
Thousand Dollars ($1,900,000) plus the Earn-Out Cash Payment, if earned (the
“General
Cap”);
provided,
however,
that
the maximum aggregate liability of the Stockholder for Losses arising out of
or
resulting from any and all claims for indemnification pursuant to Section
7.1(a)(i) of this Agreement with respect to any breach or inaccuracy of any
of
the representations and warranties set forth in any of Sections 3.14, 3.16,
3.18
and 3.25 shall not exceed the sum of the Base Purchase Price plus the Earn-Out
Payment, if earned; provided further,
however,
that
there shall be no cap on Losses arising out of or resulting from any and all
claims for indemnification pursuant to Section 7.1(a)(i) of this Agreement
with
respect to any breach or inaccuracy of any of the representations and warranties
set forth in any of Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.8, 3.20 and 3.22.
(b)
The
maximum aggregate liability of Parent and the Buyer for Losses arising out
of or
resulting from any and all claims for indemnification pursuant to Section
7.1(b)(i) of this Agreement shall not exceed the General Cap; provided,
however,
that
there shall be no cap on Losses arising out of or resulting from any and all
claims for indemnification pursuant to Section 7.1(b)(i) of this Agreement
with
respect to any breach or inaccuracy of any of the representations and warranties
set forth in any of Sections 4.1, 4.2, 4.3, 4.4 and 4.5.
40
(c) No
indemnification shall be payable to a Parent Indemnified Person as a result
of
any Losses arising under Section 7.1(a)(i) unless and until the aggregate amount
of all Losses incurred thereunder exceeds $15,000 (the “Deductible”),
whereupon the Parent Indemnified Persons shall be entitled to receive all Losses
in excess of the Deductible; provided,
however,
that
the foregoing shall not apply to any Losses resulting from or arising out of
any
breach or inaccuracy of any of the representations and warranties contained
in
any of Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.8, 3.14, 3.16, 3.18, 3.20, 3.22
and
3.25.
(d) No
indemnification shall be payable to a Stockholder Indemnified Person as a result
of any Losses arising under Section 7.1(b)(i) unless and until the aggregate
amount of all Losses incurred exceeds the Deductible, whereupon the Stockholder
Indemnified Persons shall be entitled to receive all Losses in excess of the
Deductible; provided,
however,
that
the foregoing shall not apply to any Losses resulting from or arising out of
any
breach or inaccuracy of any of the representations and warranties contained
in
any of Sections 4.1, 4.2, 4.3, 4.4 and 4.5.
(e) Notwithstanding
anything to the contrary contained in this Agreement, no party to this Agreement
shall be liable to another party to this Agreement for incidental or
consequential damages hereunder (it being acknowledged that incidental and
consequential damages recovered against an Indemnified Person in a third-party
claim are indemnifiable Losses).
(f) No
party
or Person shall have any claim for indemnification hereunder with respect to
(i)
any Tax liabilities arising by reason of any reduction or disallowance of
deductions from taxable income in one taxable year, to the extent such reduction
or disallowance results in a corresponding increase in allowable deductions
from
income in another taxable year, or (ii) the shifting of items of income from
one
taxable year to another.
(g) The
amount of any claim for which indemnification is provided under this Article
VII
shall be net of amounts recovered or recoverable by the Indemnified Person
by
the Person seeking indemnification under insurance policies with respect to
such
claim; provided that there shall be no obligation to seek recovery under any
insurance policy with respect to such claim. If, following the receipt by a
Person of any indemnity payment hereunder, such Person shall receive any
insurance recovery or indemnity payment from a third party in respect of the
same underlying claim, such Person shall reimburse the party from whom such
indemnity payment was received hereunder to the extent of such insurance
recovery or third party indemnity payments.
(h) The
Stockholder shall not have any right of contribution, indemnification or right
of advancement from the Company or the Parent Indemnified Persons with respect
to any Losses claimed by the Parent Indemnified Persons.
41
7.3 Indemnification
Process.
(a) Any
Parent Indemnified Person or the Stockholder Indemnified Person seeking
indemnification under this Article VII (an “Indemnified
Person”)
shall
give each party from whom indemnification is being sought (each, an
“Indemnifying
Person”)
notice
of any matter (a “Notice
of Claim”)
which
such Indemnified Person has determined has given rise to or would reasonably
be
expected to give rise to a right of indemnification under this Agreement,
stating the amount of the Loss, if known, and containing a reference to the
provisions of this Agreement in respect of which such right of indemnification
is claimed or arises as promptly as practicable after becoming aware of such
matter; provided,
however,
that
the failure so to provide such Notice of Claim will not relieve the Indemnifying
Person(s) from any Liability which they may have under this Agreement or
otherwise (unless and only to the extent that such failure results in the loss
or compromise in any material respect of any material rights or defenses of
the
Indemnifying Person(s) and the Indemnifying Person(s) was not otherwise aware
of
such Action). Notwithstanding the foregoing, no claim shall be brought under
this Article VII with respect to an event of indemnification described in
Section 7.1(a)(i) or Section 7.1(b)(i) unless an Indemnified Person, at any
time
prior to the applicable Survival Date, gives the Indemnifying Person(s) a Notice
of Claim with respect to such claim. If a Notice of Claim has been given on
or
prior to the applicable Survival Date, the relevant representations and
warranties shall survive as to such claim until the claim has been finally
resolved.
(b) Claims
for indemnification hereunder resulting from the assertion of liability by
third
parties (each, a “Third
Party Claim”)
shall
be subject to the following terms and conditions:
(i) The
Indemnified Person may defend any Third Party Claim with counsel of its own
choosing, at the Indemnifying Person’s cost, and shall act reasonably and in
accordance with its good faith business judgment in handling such Third Party
Claim. If the Indemnified Person elects not to defend such Third Party Claim,
the Indemnified Person shall promptly provide notice to the Indemnifying Person.
The Indemnifying Person shall have twenty (20) days following receipt of such
notice to advise the Indemnified Person whether the Indemnifying Person accepts
the defense of such claim, and the Indemnifying Person shall have no obligation
to the Indemnified Person for legal fees incurred by the Indemnified Person
after the date of any assumption of the defense by the Indemnifying Person.
If
the Indemnifying Person determines to accept the defense of such Third Party
Claim, it shall defend such Third Party Claim with counsel of its own choice
that is reasonably satisfactory to the Indemnified Person and at its own
expense, provided that, the Indemnified Person shall have the right to be
represented by its own counsel at its own expense. If the Indemnifying Person
fails to undertake the defense of or settle or pay any such Third Party Claim
within twenty (20) days after the Indemnified Person has given written notice
to
the Indemnifying Person of the claim, or if the Indemnifying Person, after
having given such notification to the Indemnified Person, fails within twenty
(20) days, or at any time thereafter, to defend to the reasonable satisfaction
of the Indemnified Person, settle or pay such claim, then the Indemnified Person
may take any and all necessary action to dispose of such claim at the
Indemnifying Person’s cost. The Indemnifying Person and the Indemnified Person
shall make available to each other and their counsel and accountants all books
and records and information relating to any Third Party Claims, keep each other
fully apprised as to the details and progress of all proceedings relating
thereto and render to each other such assistance as may be reasonably required
to ensure the proper and adequate defense of any and all Third Party
Claims.
42
(ii) The
party
controlling the defense of a Third Party Claim may settle such Third Party
Claim
on any terms which it may deem reasonable, provided that, an Indemnifying Person
shall not without the Indemnified Person’s prior written consent settle or
compromise such proceeding, claim or demand, or consent to the entry of any
judgment which does not include as an unconditional term thereof the delivery
by
the claimant or plaintiff to the Indemnified Person of a written release from
all liability in respect of such proceeding, claim or demand.
7.4 Survival
of Representations, Warranties and Covenants.
All
representations and warranties contained in Articles III and IV of this
Agreement or in any other agreement, exhibit, schedule, certificate, instrument
or other writing delivered by or on behalf of Parent, the Buyer, the Company
or
the Stockholder pursuant to this Agreement shall survive the Closing for a
period of two (2) years after the Closing Date; provided,
however,
that
the representations and warranties set forth in Sections 3.1, 3.2, 3.3, 3.4,
3.5, 3.8, 3.14, 3.16, 3.18, 3.20, 3.22, 3.24 and 3.25 and in Sections 4.1,
4.2,
4.3, 4.4 and 4.5 shall survive the Closing until sixty (60) days following
the
expiration of the applicable statute of limitations (including any extension
thereof). For convenience of reference, the date upon which any representation
or warranty shall terminate is referred to herein as the “Survival
Date.”
Unless
otherwise expressly set forth in this Agreement, the covenants and agreements
set forth in this Agreement shall survive the Closing and remain in effect
indefinitely.
7.5 Fraud
and Related Claims; Characterization of Payments.
Notwithstanding any provision of this Agreement to the contrary, nothing
contained in this Agreement shall in any way limit, impair, modify or otherwise
affect the rights of an Indemnified Person to bring any claim, demand, suit
or
cause of action otherwise available to such Indemnified Person based upon,
or to
seek or recover any Losses arising from or related to an allegation or
allegations that an Indemnifying Person had an intent to defraud or made a
willful or intentional misrepresentation or omission of a material fact in
connection with this Agreement or any of the Related Agreements or the
transactions contemplated hereby or thereby. The parties agree that any payment
pursuant to an indemnification obligation under this Article VII shall be
treated for Tax purposes as an adjustment to the Closing Payment.
7.6 Sole
Remedy.
Subject
to Section 7.5, the sole and exclusive remedy of the parties hereto for all
Losses arising under this Agreement shall be the indemnification provisions
set
forth in this Article VII; provided,
however,
that
this Section 7.6 shall not limit a party’s remedies under any other agreement to
which any parties hereto are parties, or limit the availability of equitable
relief (including injunctive relief and specific performance) in connection
with
this Agreement or any other agreement.
ARTICLE
VIII
TERMINATION,
AMENDMENT, WAIVER AND EXPENSES
8.1 Termination.
This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing:
43
(a) By
mutual
written consent of Parent, the Buyer, the Company and the Stockholder;
(b) By
either
Parent or the Buyer or the Company by providing written notice to the other
if
the Closing shall not have occurred on or before August 31, 2008 (the
“Outside
Date”);
provided,
however,
that
the right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party if
such
party’s failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before
such
date.
(c) By
either
Parent or the Buyer or the Company by providing written notice to the other
party, if a Court or Governmental Authority shall have issued an Order or taken
any other action, in each case, which has become final and non-appealable and
which restrains, enjoins or otherwise prohibits the transactions contemplated
by
this Agreement;
(d) By
Parent
or the Buyer by providing written notice to the Company, if neither Parent
nor
the Buyer is in material breach of any of its obligations under this Agreement,
and if the Company shall have breached in any material respect any of its
representations or warranties or failed to perform in any material respect
any
of its covenants or other agreements contained in this Agreement, which breach
or failure to perform would render unsatisfied any condition contained in
Section 6.1 or 6.2 and (i) is incapable of being cured or (ii) if capable of
being cured is not cured prior to the earlier of (A) the Business Day prior
to
the Outside Date or (B) the date that is twenty (20) days from the date that
the
Company is notified of such breach;
(e) By
the
Company by providing written notice to Parent and the Buyer, if neither the
Company nor the Stockholder are not in material breach of any of its obligations
under this Agreement, and if Parent or the Buyer shall have breached in any
material respect any of its representations or warranties or failed to perform
in any material respect any of its covenants or other agreements contained
in
this Agreement, which breach or failure to perform would render unsatisfied
any
condition contained in Section 6.1 or 6.3 and (i) is incapable of being cured
or
(ii) if capable of being cured is not cured prior to the earlier of (A) the
Business Day prior to the Outside Date or (B) the date that is twenty (20)
days
from the date that Parent is notified of such breach; or
(f) By
Parent
or the Buyer by providing written notice to the Company, if there shall have
been a Company Material Adverse Change.
8.2 Effect
of Termination.
In the
event of the termination of this Agreement pursuant to Section 8.1, this
Agreement (other than Section 7.4, this Article VIII and Article IX, which
shall
survive such termination) will forthwith become void, and there will be no
Liability on the part of Parent, the Buyer or the Company or any of their
respective officers or directors to the other and all rights and obligations
of
any party hereto will cease, except that nothing herein will relieve any party
from any Losses arising out of, resulting from or relating to any breach, prior
to termination of this Agreement in accordance with its terms, of any
representation, warranty, covenant or agreement contained in this Agreement
or
any Related Agreement.
44
8.3 Expenses.
All
fees, costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby including, without limitation, legal,
accounting and investment banking fees (collectively, “Transaction
Expenses”),
shall
be paid by the party incurring such Transaction Expenses, whether or not the
Closing occurs; provided,
however,
that
at
Closing, Buyer shall pay or cause to be paid up to a maximum of $75,000 of
Transaction Expenses incurred by the Company and outstanding as of the Closing,
and the Stockholder shall pay or cause to be paid all Transaction Expenses
in
excess of $75,000 incurred by the Company (collectively, “Company
Transaction Expenses”).
Any
Company Transaction Expenses for which the Stockholder is responsible hereunder
that are not paid at Closing shall be promptly paid by the Stockholder upon
demand.
ARTICLE
IX
MISCELLANEOUS
9.1 Entire
Agreement.
This
Agreement, together with its schedules and exhibits, the Related Agreements
and
all other ancillary agreements, documents and instruments to be delivered in
connection herewith, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements, either
oral or written; provided,
however,
that
the Confidentiality Agreement shall survive the execution of this Agreement
and
the consummation of the transactions contemplated hereby. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, orally or otherwise, have been made by any other party, or by anyone
acting on behalf of any party, that are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement or in a Related
Agreement shall be valid or binding.
9.2 Amendment
and Waiver.
This
Agreement may be amended only by an instrument in writing signed by duly
authorized Representatives of Parent, the Buyer, the Company and the
Stockholder. At any time prior to the Closing Date, any party hereto may extend
the time for the performance of any of the obligations or other acts required
hereunder (subject in any case to the rights of each party to terminate this
Agreement at any time after the Outside Date), waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid if set forth
in an
instrument in writing signed by the party or parties to be bound
thereby.
9.3 Assignment.
No
party shall assign or otherwise transfer this Agreement or any of its rights
hereunder, or delegate any of its or his respective obligations hereunder,
without the prior written consent of the other parties, except that Parent
and
the Buyer may assign this Agreement to any of their respective Affiliates.
Subject to the foregoing, this Agreement and the rights and obligations set
forth herein shall inure to the benefit of, and be binding upon the parties
hereto, and each of their respective successors, heirs and permitted
assigns.
9.4 Waivers.
No
waiver by any party, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of the party’s rights
under such provisions at any other time or a waiver of the party’s rights under
any other provision of this Agreement. No failure by any party to take any
action against any breach of this Agreement or default by another party shall
constitute a waiver of the former party’s right to enforce any provision of this
Agreement or to take action against such breach or default or any subsequent
breach or default by the other party. To be effective any waiver must be in
writing and signed by the waiving party.
45
9.5 Governing
Law; Venue; Waiver of Jury Trial.
This
Agreement shall be governed by the laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule that would
cause application of the laws of any jurisdiction other than the State of New
York. Each of the parties to this Agreement irrevocably submits to the
non-exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania,
for the purpose of any Action arising out of or relating to this Agreement.
Each
of the parties to this Agreement consents to service of process by delivery
pursuant to Section 9.9 hereof and agrees that a final judgment in any Action
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by Law. EACH
OF
THE PARTIES HERETO WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION
RELATED TO OR ARISING OUT OF THIS AGREEMENT OR RELATED AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
9.6 Specific
Performance.
The
rights and remedies of the parties hereto shall be cumulative. The transactions
contemplated by this Agreement are unique transactions and any failure on the
part of any party to complete the transactions contemplated by this Agreement
on
the terms of this Agreement will not be fully compensable in damages and the
breach or threatened breach of the provisions of this Agreement would cause
the
other parties hereto irreparable harm. Accordingly, in addition to and not
in
limitation of any other remedies available to the parties hereto for a breach
or
threatened breach of this Agreement, the parties shall be entitled to seek
specific performance of this Agreement and seek an injunction restraining any
such party from such breach or threatened breach.
9.7 Interpretation.
The
schedules and exhibits attached hereto are an integral part of this Agreement.
All schedules and exhibits attached to this Agreement are incorporated herein
by
this reference and all references herein to this “Agreement” shall mean this
Agreement together with all such schedules and exhibits. When a reference is
made in this Agreement to Sections, subsections, schedules or exhibits, such
reference shall be to a Section, subsection, schedule or exhibit to this
Agreement unless otherwise indicated. The words “include,” “includes” and
“including” when used herein shall be deemed in each case to be followed by the
words “without limitation.” The word “herein” and similar references mean,
except where a specific Section or Article reference is expressly indicated,
the
entire Agreement rather than any specific Section or Article. The table of
contents and the headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. As used herein, all pronouns shall include the masculine, feminine,
neuter, singular and plural thereof whenever the context and facts require
such
construction.
9.8 Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect.
46
9.9 Notices.
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally or sent by
nationally-recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested or by facsimile, with confirmation
as
provided above addressed as follows:
If
to Parent:
▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ POB 4059
Israel
Facsimile:
▇▇▇-▇▇-▇▇▇-▇▇▇▇
If
to Buyer:
Rosetta
Genomics Inc.
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
With
copies to
Mintz,
Levin, Cohen, Ferris, Glovsky &
Popeo
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇
Facsimile:
617-542-2241
If
to the Company:
Parkway
Clinical Laboratory
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
With
a copy to
▇▇▇▇▇▇▇
&
▇▇▇,
PC
620
Freedom Business Center, Suite
200
King
of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attn:
▇▇▇▇
▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
47
If
to the Stockholder:
▇▇▇▇
▇▇▇▇▇▇▇, M.D.
▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
With
a copy to
▇▇▇▇▇▇▇
&
▇▇▇,
PC
620
Freedom Business Center, Suite
200
King
of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attn:
▇▇▇▇
▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
or
to
such other address as the party to whom notice is to be given may have furnished
to the other party in writing in accordance herewith. All such notices or
communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next Business Day after the date when sent, (c) in
the
case of facsimile transmission, upon confirmed receipt, and (d) in the case
of
mailing, on the second Business Day following the date on which the piece of
mail containing such communication was posted.
9.10 Representation
by Counsel.
Each
party hereto acknowledges that it has been advised by legal counsel retained
by
such party in its sole discretion. Each party acknowledges that such party
has
had a full opportunity to review this Agreement and all related exhibits,
schedules and ancillary agreements and to negotiate any and all such documents
in its sole discretion, without any undue influence by any other party hereto
or
any third party.
9.11 Construction.
The
parties have participated jointly in the negotiations and drafting of this
Agreement and in the event of any ambiguity or question of intent or
interpretation, no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions
of
this Agreement.
9.12 Waivers.
No
waiver by any party, whether express or implied, of its rights under any
provision of this Agreement shall constitute a waiver of the party’s rights
under such provisions at any other time or a waiver of the party’s rights under
any other provision of this Agreement. No failure by any party to take any
action against any breach of this Agreement or default by another party shall
constitute a waiver of the former party’s right to enforce any provision of this
Agreement or to take action against such breach or default or any subsequent
breach or default by the other party. To be effective any waiver must be in
writing and signed by the waiving party.
[Remainder
of Page Intentionally Left Blank]
48
NOW
THEREFORE, the parties hereto have executed, or caused this Stock Purchase
Agreement to be executed by their duly authorized representatives, as of the
date first written above.
|
PARENT:
|
|
| ROSETTA GENOMICS LTD. | |
|
By:
|
/s
▇▇▇▇▇ ▇▇▇▇▇
|
|
Name:
|
▇▇▇▇▇
▇▇▇▇▇
|
|
Title:
|
Chief
Financial Officer
|
|
BUYER:
|
|
|
ROSETTA
GENOMICS INC.
|
|
|
By:
|
/s/
▇▇▇▇ ▇▇▇▇▇▇
|
|
Name:
|
▇▇▇▇
▇▇▇▇▇▇
|
|
Title:
|
President
and Chief Executive Officer
|
|
COMPANY:
|
|
|
PARKWAY
CLINICAL LABORATORIES, INC.
|
|
|
By:
|
/s/
▇▇▇▇ ▇▇▇▇▇▇▇, MD
|
|
Name:
|
▇▇▇▇
▇▇▇▇▇▇▇, MD
|
|
Title:
|
President
and Chief Executive Officer
|
|
STOCKHOLDER:
|
|
|
/s/
▇▇▇▇ ▇▇▇▇▇▇▇, MD
|
|
|
▇▇▇▇
▇▇▇▇▇▇▇, MD
|
|
I-1
Schedule
I
INDEX
OF DEFINED TERMS
|
Action
|
Schedule
I
|
|
Affiliate
|
Schedule
I
|
|
Agreement
|
Preamble
|
|
Anti-Kickback
Statute
|
3.16
|
|
Approval
|
Schedule
I
|
|
Base
Purchase Price
|
Schedule
I
|
|
Business
Credit Line
|
Schedule
I
|
|
Business
Day
|
Schedule
I
|
|
Buyer
|
Preamble
|
|
CERCLA
|
Schedule
I
|
|
Closing
|
1.2(a)
|
|
Closing
Date
|
1.2(a)
|
|
Closing
Cash Payment
|
2.1(a)
|
|
Closing
Payment
|
2.1(a)
|
|
Closing
Share Price
|
Schedule
I
|
|
Closing
Stock Payment
|
2.1(a)
|
|
COBRA
Coverage
|
Schedule
I
|
|
Code
|
Schedule
I
|
|
Common
Stock
|
Preamble
|
|
Company
|
Preamble
|
|
Company
Contracts
|
3.21(a)
|
|
Company
Disclosure Schedule
|
Article
III
|
|
Company
Material Adverse Change
|
3.11
|
|
Company
Material Adverse Effect
|
Schedule
I
|
|
Company
Payment Programs
|
3.25
|
|
Company
Shares
|
Preamble
|
|
Company
Third Party Consents
|
5.4(c)
|
|
Company
Transaction Expenses
|
8.3
|
|
Confidentiality
Agreement
|
5.5
|
|
Contract
|
Schedule
I
|
|
Copyrights
|
Schedule
I
|
|
Court
|
Schedule
I
|
|
Customers
|
3.26
|
|
Databases
|
3.24(i)
|
|
Deductible
|
7.2(c)
|
|
Earn-Out
Cash Payment
|
2.2(b)
|
|
Earn-Out
Payment
|
2.2(a)
|
|
Earn-Out
Share Price
|
Schedule
I
|
|
Earn-Out
Stock Payment
|
2.2(b)
|
|
Employee
|
Schedule
I
|
|
Employee
Benefit Plans
|
Schedule
I
|
I-2
|
Employment
Agreement
|
Schedule
I
|
|
Enforceability
Exceptions
|
3.4
|
|
Environmental
Law
|
Schedule
I
|
|
ERISA
|
Schedule
I
|
|
ERISA
Affiliate
|
Schedule
I
|
|
Exchange
Act
|
Schedule
I
|
|
Financial
Statements
|
3.9(a)
|
|
GAAP
|
Schedule
I
|
|
General
Cap
|
7.2(a)
|
|
Governmental
Authority
|
Schedule
I
|
|
HIPAA
|
3.16
|
|
Indebtedness
|
Schedule
I
|
|
Indemnified
Person
|
7.3(a)
|
|
Indemnifying
Person
|
7.3(a)
|
|
Independent
Accountants
|
2.2
|
|
Intellectual
Property
|
Schedule
I
|
|
Interim
Balance Sheet
|
3.9(a)(i)
|
|
Interim
Financial Statements
|
3.9(a)(i)
|
|
IRS
|
Schedule
I
|
|
knowledge
|
Schedule
I
|
|
Labor
Contract
|
3.17(d)
|
|
Laws
|
Schedule
I
|
|
Lease
|
Schedule
I
|
|
Leased
Personal Property
|
3.13
|
|
Leased
Real Property
|
3.12(a)
|
|
Liabilities
|
Schedule
I
|
|
License
Agreements
|
3.25(b)
|
|
Licensed
Intellectual Property
|
3.25(b)
|
|
Lien
|
Schedule
I
|
|
Lockup
Agreement
|
Schedule
I
|
|
Losses
|
Schedule
I
|
|
Market
Value
|
Schedule
I
|
|
Materials
of Environmental Concern
|
Schedule
I
|
|
Milestone
|
2.2(a)
|
|
Milestone
Date
|
2.2(a)
|
|
Milestone
Disagreement Notice
|
2.2(c)
|
|
Milestone
Notice
|
2.2(c)
|
|
Milestone
Review Period
|
2.2(c)
|
|
Notice
of Claim
|
7.3(a)
|
|
Order
|
Schedule
I
|
|
Organizational
Documents
|
Schedule
I
|
|
Outside
Date
|
8.1(b)
|
|
Parent
|
Preamble
|
|
Parent
Indemnified Persons
|
7.1(a)
|
|
Parent
Ordinary Shares
|
2.1(a)
|
|
Parent
Reports
|
4.7
|
I-3
|
Schedule
I
|
|
|
Payment
Programs
|
Schedule
I
|
|
Payoff
Letters
|
Schedule
I
|
|
Person
|
Schedule
I
|
|
Permits
|
3.7
|
|
Personally
Identifiable Information
|
Schedule
I
|
|
Personal
Property Leases
|
3.13
|
|
Pre-Closing
Tax Period
|
Schedule
I
|
|
Premises
|
3.12(b)
|
|
providing
party
|
5.10
|
|
Purchase
Price
|
2.1(a)
|
|
Real
Property Leases
|
3.12(a)
|
|
Registrable
Shares
|
5.11(a)
|
|
Registration
Statement
|
5.11(a)
|
|
Regulation
|
Schedule
I
|
|
Related
Agreements
|
Schedule
I
|
|
Release
|
Schedule
I
|
|
Representatives
|
Schedule
I
|
|
Restricted
Period
|
5.12
|
|
Restricted
Securities
|
5.8(a)
|
|
requesting
party
|
5.10
|
|
SEC
|
Schedule
I
|
|
Securities
Act
|
Schedule
I
|
|
Shares
|
3.31(a)
|
|
▇▇▇▇▇
Law
|
3.16
|
|
Stockholder
|
Preamble
|
|
Stockholder
Indemnified Persons
|
7.1(b)
|
|
Straddle
Period
|
Schedule
I
|
|
Subsidiary
|
Schedule
I
|
|
Tax
Returns
|
Schedule
I
|
|
Taxes
|
Schedule
I
|
|
Third
Party Claim
|
7.3(b)
|
|
Trade
Secrets
|
Schedule
I
|
|
Trademarks
|
Schedule
I
|
|
Transaction
Expenses
|
8.3
|
|
5.8(a)
|
|
|
Working
Capital
|
Schedule
I
|
I-4
TABLE
OF DEFINITIONS
“Action”
means
any suit, action, arbitration, cause of action, claim, complaint, criminal
prosecution, investigation, governmental or other administrative proceeding,
whether at law or at equity, before or by any Court or Governmental Authority,
before any arbitrator or other tribunal.
“Affiliate”
means,
with respect to any Person, any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person; including, without limitation,
any partnership or joint venture in which the Company (either alone, or through
or together with any other Subsidiary) has, directly or indirectly, an interest
of 20% or more; and “control”
(including the terms “controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of stock or other securities, as trustee or executor, by contract
or
credit arrangement or otherwise.
“Approval”
means
any license, permit, consent, approval, authorization, registration, filing,
waiver, qualification or certification, including all pending applications
therefor or renewals thereof.
“Base
Purchase Price”
means
Two Million Nine Hundred Thousand Dollars ($2,900,000).
“Business
Credit Line”
means
a
line of credit of the Company with the Citizens Bank with a maximum principal
amount of $75,000.
“Business
Day”
means
any day other than a Saturday, Sunday or day on which banks are permitted to
close in the State of New York.
“CERCLA”
means
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.
“Closing
Share Price”
means
$4.354241.
“COBRA
Coverage”
means
the group health plan continuation coverage requirements of Section 4980B of
the
Code and Sections 601 through 608 of ERISA.
“Code”
means
the Internal Revenue Code of 1986, as amended, and all Regulations promulgated
thereunder.
“Common
Stock”
has
the
meaning
set
forth in the Preamble.
“Company
Material Adverse Effect”
means
a
material adverse effect on the condition (financial or otherwise), assets,
properties, operations or results of operations of the Company or the Company
or
the Stockholder’s ability to perform its obligations as contemplated in this
Agreement
or any
Related Agreement.
I-5
“Contract”
means
any written or oral contract, agreement, license, lease, arrangement,
understanding, commitment or other instrument, and all amendments, modifications
and supplements thereto.
“Court”
means
any court or arbitration tribunal of any country or territory, or any state,
province or other subdivision thereof.
“Debt
Payoff Amount”
means
the total Indebtedness (including accrued but unpaid interest thereon) owed
by
the Company as of the Closing Date to (i) the Stockholder, (ii) ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, MD and (iii) Citizens Bank under the Business Credit Line.
“Earn-Out
Share Price”
means
the weighted-average closing price of a Parent Ordinary Share on the NASDAQ
Global Market or such other national securities exchange on which the Parent
Ordinary Shares are then quoted for the ten (10) consecutive trading days ending
on or prior to the earliest date that either Milestone is achieved.
“Employee”
means
any individual, employee, advisor, independent contractor or consultant who
is
employed or engaged by the Company.
“Employee
Benefit Plans”
means
each written or oral employee benefit plan, scheme, program, policy, arrangement
and contract (including, but not limited to, any “employee benefit plan,” as
defined in Section 3(3) of ERISA, whether or not subject to ERISA, and any
bonus, deferred compensation, stock bonuses, stock purchase, restricted stock,
stock option or other equity-based arrangement, and any employment, termination,
retention, bonus, change in control or severance plan, program, policy
arrangement or contract) for the benefit of any current or former officer,
employee or director of the Company, without regard to whether the same are
domestic or foreign, that is maintained or contributed to by the Company s
or
Affiliates, or with respect to which any of them would reasonably be expected
to
incur material liability under the Code or ERISA or any similar non-U.S.
Law.
“Employment
Agreement”
means
an employment agreement by and between the Stockholder and the Company in
substantially the form of Exhibit
A
hereto.
“Environmental
Law”
means
any Law or Order relating to the environment or occupational health and safety,
including without limitation, any Law or Order pertaining to (i) treatment,
storage, disposal, generation and transportation of Materials of Environmental
Concern; (ii) air, water and noise pollution; (iii) the protection of
groundwater, surface water or soil; (iv) the release or threatened release
into the environment of Materials of Environmental Concern, including without
limitation emissions, discharges, injections, spills, escapes or dumping;
(v) storage tanks, vessels, containers, abandoned or discarded barrels, and
other closed receptacles used for Materials of Environmental Concern; or (vi)
occupational health and safety. As used above, the terms “release”
and
“environment”
shall
have the meaning set forth in CERCLA.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and all
Regulations promulgated thereunder.
“ERISA
Affiliate”
means
any person, trade, business or other entity treated as a single employer with
the Company under Section 414 of the Code or Section 4001(a)(14) of
ERISA.
I-6
“Exchange
Act”
means
the Securities and Exchange Act of 1934, as amended, and all Regulations
promulgated thereunder.
“GAAP”
means
generally accepted accounting principles in the United States
“Governmental
Authority”
means
any governmental agency, authority, department, commission, board, bureau,
Court
or instrumentality of any country or territory, and any state, province,
subdivision or agency thereof, and includes any authority having governmental
or
quasi-governmental powers, including any administrative agency or
commission.
“Indebtedness”
means
Liabilities
(including Liability for principal, accrued interest, penalties, fees and
premiums) (i) for borrowed money, or with respect to deposits or advances of
any
kind (other than deposits, advances or excess payments accepted in connection
with the sale of products or services in the ordinary course of business),
(ii) evidenced by bonds, debentures, notes or similar instruments, (iii)
upon which interest charges are customarily paid (other than obligations
accepted in connection with the purchase of products or services in the ordinary
course of business), (iv) under conditional sale or other title retention
agreements, (v) issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers incurred in
the
ordinary course of business and paid when due), (vi) of others secured by
(or for which the holder of such Liabilities has an existing right, contingent
or otherwise, to be secured by) any Lien or security interest on property
owned or acquired by the Person in question whether or not the obligations
secured thereby have been assumed, and (vii) under leases required to be
accounted for as capital leases under GAAP.
“Intellectual
Property”
means
worldwide trademarks, service marks, trade names, Uniform Resource Locators
(URLs) and Internet domain names and applications therefor (and all interest
therein), designs, logos, slogans and general intangibles of like nature,
together with all goodwill related to the foregoing (including any registrations
and applications for any of the foregoing) (collectively, “Trademarks”);
patents (including any pending applications, any registrations, patents based
on
applications that are continuations, continuations-in-part, divisional,
reexamination, reissues, renewals of any of the foregoing and applications
and
patents granted on applications that claim the benefit of priority to any of
the
foregoing) (collectively, “Patents”);
copyrights (including any registrations, applications and renewals for any
of
the foregoing) and other rights of authorship (collectively, “Copyrights”);
trade
secrets and other confidential information, know-how, proprietary technology,
processes, formulae, algorithms, models, user interfaces, customer, supplier
and
user lists, databases, pricing and marketing information, inventions, marketing
materials, inventions and trade dress (collectively, “Trade
Secrets”);
computer programs and other Software, macros, scripts, source code, object
code,
binary code, methodologies, architecture, structure, display screens, layouts,
development tools, instructions and templates; published and unpublished works
of authorship, including audiovisual works, databases and literary works; rights
in, or associated with a person’s name, voice, signature, photograph or
likeness, including rights of personality, privacy and publicity; rights of
attribution and integrity and other moral rights; domain names, URLs, IP
addresses, key word associations and related rights; all other proprietary,
intellectual property and other rights relating to any or all of the foregoing;
all copies and tangible embodiments of any or all of the foregoing (in whatever
form or medium, including electronic media; and all rights to ▇▇▇ for and any
and all remedies for past, present and future infringements of any or all of
the
foregoing and rights of priority and protection of interests therein under
the
Laws of any jurisdiction).
I-7
“IRS”
means
the United States Internal Revenue Service and, to the extent relevant, the
United States Department of Treasury.
“knowledge”
(and
similar terms and phrases) means, (i) with respect to the Company and the
Stockholder, the actual knowledge of the Stockholder, ▇▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
and
Mats ▇▇▇▇▇▇, M.D., FACP, and (ii) with respect to Parent or the Buyer, the
actual knowledge of any executive officer of Parent or the Buyer.
“Laws”
means
all laws, statutes, codes, written policies, licensing requirements, ordinances
and Regulations of any Governmental Authority including all Orders having the
effect of law in each such jurisdiction.
“Lease”
means
the Lease
Agreement by and between the Company and RREEF USA Fund - III, a California
Group Trust, RREEF Management Company, a California Corporation, dated as of
October 1, 1992.
“Liabilities”
means
any liability, obligation or commitment of any kind or nature, whether primary
or secondary, direct or indirect, absolute or contingent, known or unknown,
accrued or not accrued, or otherwise.
“Lien”
means
any mortgage, pledge, security interest, attachment, easement, restriction,
encumbrance, lien (statutory or otherwise), option, conditional sale agreement,
right of first refusal or right of first offer (including any agreement to
give
any of the foregoing).
“Lockup
Agreement”
means
the lockup agreement entered into by and between Parent and the Stockholder
substantially in the form of Exhibit
B
hereto.
“Losses”
means
losses, damages, liabilities, demands, taxes, sanctions, deficiencies,
assessments, judgments, costs, interest, penalties and expenses (including,
without limitation, reasonable attorneys’ fees, which shall include a reasonable
estimate of the allocable costs of in-house legal counsel and
staff).
“Market
Value”
means,
as of a trading day, the total dollar market value of all outstanding Parent
Ordinary Shares determined by multiplying (i) the number of the outstanding
Parent Ordinary Shares as of such trading day by (ii) the price per Parent
Ordinary Share on the close of trading on such trading day as quoted on the
Nasdaq Global Market or such other national securities exchange on which the
Parent Ordinary Shares are then quoted. For purposes of this definition, “Parent
Ordinary Shares” shall include any class of shares issued as a stock dividend
with respect to, or otherwise issued in connection with ownership of,
then-outstanding Parent Ordinary Shares.
“Materials
of Environmental Concern”
means
any substances, chemicals, compounds, solids, liquids, gases, materials,
pollutants or contaminants, hazardous substances (including as such term is
defined under CERCLA), solid wastes and hazardous wastes (including as such
terms are defined under the Resource Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products, asbestos or substances
containing asbestos, polychlorinated biphenyls or any other material subject
to
regulation under any Environmental Law.
I-8
“Order”
means
any judgment, order, writ, injunction, ruling, decision or decree of, or any
settlement under the jurisdiction of any Court or Governmental
Authority.
“Organizational
Documents”
means,
with respect to any corporation, those instruments that at the time constitute
its corporate charter as filed or recorded under the Laws of the jurisdiction
of
its incorporation, including the articles or certificate of incorporation,
organization or association, and its by-laws or memorandum of association,
in
each case including all amendments thereto, as the same may have been restated
and, with respect to any other entity, the equivalent organizational or
governing documents of such entity.
“Payment
Programs”
means
Medicare, TRICARE, Medicaid, Worker’s Compensation, Blue Cross/Blue Shield
programs, and all other health maintenance organizations, preferred provider
organizations, health benefit plans, health insurance plans, and other third
party reimbursement and payment programs.
“Payoff
Letters”
means
the payoff letters delivered by each of (i) the Stockholder, (ii) ▇▇. ▇▇▇▇▇▇▇
and (iii) Citizens Bank to the Buyer, each substantially in the form of
Exhibit
C
hereto,
evidencing the Debt Payoff Amount.
“Person”
means
an individual, corporation, partnership, association, trust, unincorporated
organization, limited liability company or other legal entity.
“Personally
Identifiable Information”
means
information that can be used to identify or contact Persons, which may include
their first and last name, physical address, e-mail address and telephone
number.
“Pre-Closing
Tax Period”
means
any taxable period or portion thereof ending on or prior to the Closing
Date.
“Regulation”
means
any rule or regulation of any Governmental Authority.
“Related
Agreements”
means
the Employment Agreement, the Lockup Agreement, the Release and any other
agreements entered into or certificates delivered pursuant to this Agreement.
“Release
and Waiver”
means
a
release and waiver entered into by and between the Company and the Stockholder
substantially in the form of Exhibit
D
hereto.
“Representatives”
means,
with respect to any Person, such Person’s Affiliates, directors, officers,
employees, agents, consultants, advisors and other representatives, including
legal counsel, accountants and financial advisors.
“SEC”
means
the Securities and Exchange Commission.
I-9
“Securities
Act”
means
the Securities Act of 1933, as amended, and all Regulations promulgated
thereunder.
“Straddle
Period”
means
any Tax year or period beginning on or before the Closing Date and ending after
the Closing Date.
“Subsidiary”
means,
with respect to any Person, any corporation, partnership, joint venture, limited
liability company, trust or other legal entity of which such Person (either
alone or through or together with any other Subsidiary) owns, directly or
indirectly, at least fifty percent (50%) of the stock or other equity interests
in such entity.
“Tax
Returns”
means
any and all returns, declarations, reports, claims for refunds and information
returns or statements relating to Taxes, including all schedules or attachments
thereto and including any amendment thereof, required to be filed with any
Governmental Authority, including consolidated, combined and unitary tax
returns.
“Taxes”
means
all taxes and governmental impositions of any kind in the nature of (or similar
to) taxes, payable to any Governmental Authority, including but not limited
to
those on or measured by or referred to as income, franchise, profits, gross
receipts, capital, ad
valorem, custom
duties, alternative or add-on minimum taxes, estimated, environmental,
disability, registration, value added, sales, use, service, real or personal
property, capital stock, license, payroll, withholding, employment, social
security, workers’ compensation, unemployment compensation, health insurance,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and interest, penalties and additions to
tax
imposed with respect thereto.
“Working
Capital”
means
the difference whether positive or negative between (a) the current assets
of
the Company minus (b) the current liabilities of the Company.
I-10