AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this
“Agreement”), dated as of January 15, 2021 is entered
into among PHPrecisionMed Inc.,
a Delaware corporation (the
“Company”), Tenax Therapeutics, Inc., a Delaware corporation (“Buyer”), Life Newco II, Inc., a
Delaware corporation and a
wholly-owned subsidiary of the Buyer (“Merger Sub”), and Dr. Stuart Rich as the Stockholder Representative (as defined
below).
RECITALS
WHEREAS, the parties intend that
Merger Sub be merged with and into
the Company, with the
Company surviving that
merger on the terms and subject to the
conditions set forth herein;
WHEREAS, the Board of Directors of the Company (the “Company
Board”) has unanimously:
(a) determined that it is in the best interests of the
Company and the holders of
shares of the Company's common stock (the
“Company Common
Stock”), and declared it
advisable, to enter into this Agreement with Buyer and Merger Sub; (b) approved the execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger; and (c) resolved, subject to the terms and
conditions set forth in this Agreement, to recommend adoption of this
Agreement by the Stockholders; in each case, in accordance with
the Delaware General
Corporation Law (the
“DGCL”);
WHEREAS, the respective Boards of Directors of Buyer (the “Buyer Board”) and Merger Sub (the “Merger Sub
Board”) have each
unanimously: (a) determined that it is in the best interests
of Buyer or Merger Sub, as applicable, and their
respective stockholders, and
declared it advisable, to enter into this Agreement; and (b) approved the execution,
delivery, and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger; in each case, in accordance with
the DGCL;
WHEREAS, the Buyer Board has approved the issuance of
shares of capital stock of the
Buyer in connection with the
Merger on the terms and subject to the
conditions set forth in this Agreement (the "Buyer Stock
Issuance");
WHEREAS, for U.S. federal income Tax purposes, the parties intend that the
Merger qualify as a "reorganization"
within the meaning of Section
368(a) of the Code, and that
this Agreement be, and is
hereby, adopted as a plan of reorganization within the meaning
of Section 368(a) of the
Code; and
WHEREAS, the parties desire to make certain
representations, warranties, covenants, and agreements in connection with the
Merger and the other transactions
contemplated by this Agreement
and also to prescribe certain terms and conditions to the
Merger.
NOW, THEREFORE, in consideration of the foregoing
and of the representations, warranties, covenants, and
agreements contained in this
Agreement, the parties, intending to
be legally bound, agree as follows:
ARTICLE
I
DEFINITIONS
The capitalized terms used but not otherwise
defined in this Agreement have
the meanings specified or referred to in this 1I:
“Accredited
Investor” means an
“accredited investor” as defined and determined
pursuant to Rule 501(a) of
the Securities
Act.
“Action” means any claim, action, cause of action,
demand, lawsuit, arbitration, inquiry, audit, notice of violation,
proceeding, litigation, citation, summons, subpoena or
investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common
control with, such Person. The
term “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 and policies of a
Person, whether through the ownership
of voting securities, by contract or otherwise.
“Ancillary
Documents” means
the Employment
Agreement, Restrictive Covenant Agreements, and the
Certificate of
Designation.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks
located in North Carolina are
authorized or required by Law
to be closed for business.
“Buyer’s
Accountants” means
Cherry Bekaert
LLP.
“CERCLA” means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the
Superfund Amendments and
Reauthorization Act of 1986, 42
U.S.C. §§ 9601 et seq.
“Certificate of
Designation” means that
certain Certificate of
Designation of Preferences, Rights and Limitations of Series B Convertible
Preferred Stock, dated as of the date hereof.
“Closing Indebtedness
Certificate” means
a certificate executed by
the President of the
Company certifying on behalf of
the Company an itemized list of
all outstanding Indebtedness as
of the open of business on the Closing Date and the Person to whom such outstanding
Indebtedness is owed and an aggregate
total of such outstanding Indebtedness.
“Closing Transaction Expenses
Certificate” means
a certificate executed by
the President of the
Company, certifying the amount
of Transaction Expenses
remaining unpaid as of the open of business on the
Closing Date (including an itemized
list of each such unpaid Transaction Expense with a description of the
nature of such expense and the Person to whom such expense is
owed).
“Closing Working
Capital” means: (a)
the Current Assets of
the Company, less (b)
the Current Liabilities of
the Company, determined as of
the open of business on the Closing Date.
“Code” means the Internal Revenue Code of 1986, as
amended.
“Company Intellectual
Property” means
all Intellectual Property that
is owned by the Company.
“Company IP
Agreements” means all
licenses, sublicenses, consent to use agreements, settlements, coexistence
agreements, covenants not to sue,
waivers, releases, permissions
and other Contracts, whether
written or oral, relating to Intellectual Property to which the
Company is a party, beneficiary or
otherwise bound.
“Company IP
Registrations” means
all Company Intellectual
Property that is subject to any issuance, registration or
application by or with any Governmental Authority or authorized private
registrar in any jurisdiction, including issued Patents, registered Trademarks, domain names and Copyrights, and pending applications for any of
the foregoing.
“Company IT
Systems” means all
software, computer hardware, servers, networks, platforms,
peripherals, and similar or related items of automated,
computerized, or other information technology (IT) networks and
systems (including telecommunications networks and systems for
voice, data and video) owned, leased, licensed, or used (including
through cloud-based or other third-party service providers) by
the Company.
“Contracts” means all contracts, leases, deeds,
mortgages, licenses, instruments, notes, commitments, undertakings,
indentures, joint ventures and all other agreements, commitments and legally binding
arrangements, whether written or oral.
“Current
Assets” means cash and
cash equivalents, accounts receivable, inventory and prepaid
expenses, but excluding (a) the portion of any prepaid expense of
which Buyer will not receive
the benefit following the Closing, (b) deferred Tax assets, and (c) receivables from any of
the Company’s
Affiliates, directors, employees,
officers or Stockholders and
any of their respective Affiliates, determined in accordance with
GAAP applied using the same accounting
methods, practices, principles, policies and procedures, with
consistent classifications, judgments and valuation and estimation
methodologies that were used in the preparation of the
Annual Financial Statements for the
most recent fiscal year end as
if such accounts were being prepared and audited as of a
fiscal year end.
“Current
Liabilities” means
accounts payable, accrued Taxes
and accrued expenses, but excluding payables to any of the
Company’s Affiliates, directors, employees, officers
or Stockholders and any of
their respective Affiliates,
deferred Tax
liabilities, Transaction Expenses and the current portion of
any Indebtedness of the
Company, determined in accordance
with GAAP applied using the
same accounting methods, practices, principles, policies and
procedures, with consistent classifications, judgments and
valuation and estimation methodologies that were used in the
preparation of the Annual
Financial Statements for the most recent fiscal year end as if such accounts were being
prepared and audited as of a fiscal year end.
“Disclosure
Schedules” means
the Disclosure Schedules
delivered by the Company
and Buyer concurrently with the
execution and delivery of this Agreement.
“Dollars or $” means the lawful currency of the
United States.
“Employment
Agreement” means that
certain Executive
Employment Agreement dated as of the
date hereof between Buyer
and Dr. Stuart
Rich.
“Encumbrance” means any charge, claim, community
property interest, pledge, condition, equitable interest, lien
(statutory or other), option, security interest, mortgage,
easement, encroachment, right of way, right of first refusal, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of
ownership.
“Environmental
Claim” means any
Action, Governmental Order, lien, fine, penalty, or, as to
each, any settlement or judgment arising therefrom, by or from
any Person alleging
liability of whatever kind or nature
(including liability or
responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or
remediation, natural resources damages, property damages, personal
injuries, medical monitoring, penalties, contribution,
indemnification and injunctive relief) arising out of, based on or
resulting from: (a) the presence, Release of, or exposure to, any
Hazardous Materials; or (b) any actual
or alleged non-compliance with any Environmental Law or term or condition of
any Environmental
Permit.
“Environmental
Law” means any
applicable Law, and any
Governmental Order or binding
agreement with any Governmental Authority: (a) relating to pollution
(or the cleanup thereof) or the protection of natural resources,
endangered or threatened species, human health or safety, or the
environment (including ambient air, soil, surface water or
groundwater, or subsurface strata); or (b) concerning the presence
of, exposure to, or the management, manufacture, use, containment,
storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or
remediation of any Hazardous
Materials. The term “Environmental Law” includes, without
limitation, the following (including their implementing regulations
and any state analogs): the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the
Superfund Amendments and
Reauthorization Act of 1986, 42
U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act
of 1976, as amended by the Hazardous and Solid Waste Amendments of
1984, 42 U.S.C. §§
6901 et seq.; the Federal Water
Pollution Control Act of 1972, as amended by the
Clean Water Act of 1977,
33 U.S.C. §§ 1251 et seq.;
the Toxic Substances Control
Act of 1976, as amended, 15
U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act
of 1986, 42 U.S.C. §§
11001 et seq.; the Clean Air
Act of 1966, as amended by the Clean Air Act Amendments of 1990,
42 U.S.C. §§ 7401 et seq.;
and the Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. §§ 651 et
seq.
“Environmental
Notice” means any written
directive, notice of violation or infraction, or notice respecting
any Environmental Claim
relating to actual or alleged non-compliance with any
Environmental Law or any term or
condition of any Environmental
Permit.
“Environmental
Permit” means any
Permit, letter, clearance, consent,
waiver, closure, exemption, decision or other action required under or issued, granted, given,
authorized by or made pursuant to Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated
thereunder.
“ERISA
Affiliate” means all
employers (whether or not incorporated) that would be treated
together with the Company or
any of its Affiliates as a
“single employer” within the meaning of
Section 414 of the Code or Section 4001 of ERISA.
“Exchange Act” means the Securities and Exchange Act of 1934, as
amended.
“GAAP” means United States generally accepted accounting
principles in effect from time to time.
“Governmental
Authority” means
any federal, state, local or
foreign government or political subdivision thereof, or any agency
or instrumentality of such government or political subdivision, or
any self-regulated organization or other non-governmental
regulatory authority or quasi-governmental authority (to the extent
that the rules, regulations or orders of such organization or
authority have the force of Law), or any arbitrator, court or tribunal of
competent jurisdiction.
“Governmental
Order” means any order,
writ, judgment, injunction, decree, stipulation, determination or
award entered by or with any Governmental Authority.
“Hazardous
Materials” means: (a) any
material, substance, chemical, waste, product, derivative,
compound, mixture, solid, liquid, mineral or gas, in each case,
whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect
under Environmental Laws; and
(b) any petroleum or petroleum-derived products, radon, radioactive
materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation, and polychlorinated
biphenyls.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
“Indebtedness” means, without duplication and with
respect to the Company,
all (a) indebtedness for
borrowed money; (b) obligations for the deferred
purchase price of property or services
(other than Current Liabilities
taken into account in the calculation of Closing Working Capital), (c) long or short-term
obligations evidenced by notes, bonds, debentures or other similar
instruments; (d) obligations under any interest rate, currency swap
or other hedging agreement or
arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of
credit, banker’s acceptance or similar credit
transactions; (g) guarantees
made by the Company on behalf
of any third party in respect of obligations of the kind referred
to in the foregoing clauses (a)
through (f); and (h) any unpaid
interest, prepayment penalties, premiums, costs and fees that would
arise or become due as a result of the prepayment of any of the
obligations referred to in the foregoing clauses (a) through (g).
“Intellectual
Property” means any and
all rights in, arising out of, or associated with any of the
following in any jurisdiction throughout the world: (a) issued
patents and patent applications (whether provisional or
non-provisional), including divisionals, continuations,
continuations-in-part, substitutions, reissues, reexaminations,
extensions, or restorations of any of the foregoing, and
other Governmental
Authority-issued indicia of invention ownership (including
certificates of invention, petty
patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands,
certification marks, logos, trade dress, trade names, and other
similar indicia of source or origin, together with the goodwill
connected with the use of and symbolized by, and all registrations,
applications for registration, and renewals of, any of the
foregoing (“Trademarks”); (c) copyrights and works of authorship,
whether or not copyrightable, and all registrations, applications
for registration, and renewals of any of the foregoing
(“Copyrights”); (d) internet domain names, whether or not
Trademarks, all associated
web addresses, URLs, websites and web pages, and all content and data thereon or
relating thereto, whether or not Copyrights; (e) industrial designs, and all
Patents, registrations, applications
for registration, and renewals thereof; (f) trade secrets,
know-how, inventions (whether or not patentable), discoveries,
improvements, technology, business and technical information,
databases, data compilations and collections, tools, methods,
processes, techniques, and other confidential and proprietary
information and all rights therein (“Trade
Secrets”); (g) computer
programs, operating systems, applications, firmware, and
other code, including all
source code, object
code, application programming
interfaces, data files, databases, protocols, specifications, and
other documentation thereof; and (h) all other intellectual or
industrial property and proprietary rights.
“Joint
Confirmation” means a
written certificate, executed
and delivered by each of Buyer
and the Stockholder
Representative under the Certificate of Designation.
“Knowledge of Company or
Company’s Knowledge” or any other similar knowledge
qualification, means the actual or constructive knowledge of
the Company or any director or
officer of the Company, after
due inquiry.
“Law” means any statute, law, ordinance,
regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other
requirement or rule of law of any Governmental Authority.
“Licensed Intellectual
Property” means
all Intellectual Property in
which the Company holds any
rights or interests granted by other Persons, including Stockholders.
“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties,
fines, costs or expenses of whatever kind, including reasonable
attorneys’ fees and the cost of enforcing any right to
indemnification hereunder and the cost of pursuing any insurance
providers; provided, however,
that “Losses” shall not include punitive damages, except
to the extent actually awarded to a Governmental Authority or other third
party.
“Material Adverse
Effect” means any event,
occurrence, fact, condition or change that is, or could reasonably
be expected to become, individually or in the aggregate, materially
adverse to (a) the business, results of operations, condition
(financial or otherwise) or assets of the Company, or (b) the ability of the
Company to consummate the transactions
contemplated hereby on a timely basis; provided, however,
that “Material Adverse Effect” shall not include
any event, occurrence, fact, condition or change, directly or
indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii)
conditions generally affecting the industries in which the
Company operates; (iii) any changes in
financial or securities markets in general; (iv) acts of war (whether or not declared), armed
hostilities or terrorism, or the escalation or worsening thereof;
(v) any action required or
permitted by this Agreement,
except pursuant to Section 3.04
and 15.08;
(vi) any changes in applicable Laws or accounting rules, including
GAAP; or (vii) the public
announcement, pendency or completion of the transactions
contemplated by this Agreement; provided further,
however, that any event,
occurrence, fact, condition or change referred to in
clauses (i) through
(iv) immediately above shall be taken
into account in determining whether a Material Adverse Effect has occurred or could
reasonably be expected to occur to the extent that such event,
occurrence, fact, condition or change has a disproportionate effect
on the Company compared to
other participants in the industries in which the
Company conducts its
businesses.
“Permits” means all permits, licenses, franchises,
approvals, authorizations, registrations, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Authorities.
“Person” means an individual, corporation,
partnership, joint venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association or other
entity.
“Post-Closing Tax
Period” means any taxable
period beginning after the Closing Date and, with respect to any taxable
period beginning before and ending after the Closing Date, the portion of such taxable period
beginning after the Closing
Date.
“Post-Closing
Taxes” means
Taxes of the Company for any Post-Closing Tax Period.
“Pre-Closing Tax
Period” means any taxable
period ending on or before the Closing Date and, with respect to any taxable
period beginning before and ending after the Closing Date, the portion of such taxable period
ending on and including the Closing Date.
“Pre-Closing
Taxes” means
Taxes of the Company for any Pre-Closing Tax Period.
“Real
Property” means the real
property owned, leased or subleased by the Company, together with all buildings, structures
and facilities located thereon.
“Release” means any actual or threatened release,
spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, abandonment,
disposing or allowing to escape or migrate into or through the
environment (including, without limitation, ambient air (indoor or
outdoor), surface water, groundwater, land surface or subsurface
strata or within any building, structure, facility or
fixture).
“Representative”
means, with respect to any Person, any and all directors, officers,
employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.
“SEC” means the Securities and Exchange
Commission.
“Stockholders” means the holders of Company Common Stock as of immediately prior to
the Closing.
“Stockholders’
Accountants” means
Warady & Davis LLP.
“Tax Return” means any return, declaration, report,
claim for refund, information return or statement or other document
relating to Taxes, including
any schedule or attachment thereto, and including any amendment
thereof.
“Taxes” means all federal, state, local, foreign and other income,
gross receipts, sales, use, production, ad valorem, transfer,
franchise, registration, profits, license, lease, service, service
use, withholding, payroll, employment, unemployment, estimated,
excise, severance, environmental, stamp, occupation, premium,
property (real or personal), real property gains, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or
penalties.
“TENX Common
Stock” means
Buyer’s common stock, par value $0.0001 per share.
“TENX Preferred
Stock” means
Buyer’s Series B Convertible Preferred Stock, par
value $0.0001 per
share.
“TENX Stock
Consideration” means,
collectively, all the shares
of TENX Common Stock and
TENX Preferred Stock comprising
the Purchase
Price.
“Transaction
Expenses” means all fees
and expenses incurred by the Company at or prior to the Closing in connection with the preparation,
negotiation and execution of this Agreement and the Ancillary Documents, and the performance and
consummation of the transactions contemplated hereby and
thereby.
“WARN Act” means the federal Worker
Adjustment and Retraining Notification Act of 1988, and similar
state, local and foreign Laws
related to plant closings,
relocations, mass layoffs and employment losses.
ARTICLE II
THE MERGER
Section 2.01 The Merger. On the terms and subject to the conditions set
forth in this Agreement, and in
accordance with the DGCL, at
the Effective Time: (a)
Merger Sub will merge with and into
the Company (the
“Merger”); (b) the separate corporate existence
of Merger Sub will cease; and
(c) the Company will continue
its corporate existence under the DGCL as the surviving corporation in the
Merger and as a subsidiary of
Buyer following the
Merger (sometimes referred to herein
as the “Surviving
Corporation”).
Section 2.02 Closing. Upon the terms and subject to the conditions set
forth herein, the closing of the Merger (the “Closing”) will take place at 10:00 a.m.,
New York City time, as soon as
practicable (and, in any event, within three Business
Days after the satisfaction or, to the extent permitted hereunder,
waiver of all conditions to the Merger set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the
Closing, but subject to the
satisfaction or, to the extent permitted hereunder, waiver of all
such conditions)), unless this Agreement has been terminated pursuant to its
terms or unless another time or date is agreed to in writing by the
parties hereto. The Closing
shall take place remotely by exchange of documents and signatures
(or their electronic counterparts), unless another place is agreed
to in writing by the parties hereto. The actual date of the
Closing is hereinafter referred to as
the “Closing Date.”
Section 2.03 Effective Time.
Subject to the provisions of
this Agreement, at the
Closing, the Company, Buyer, and Merger Sub will cause a certificate of merger (the “Certificate of
Merger”) to be executed,
acknowledged, and filed with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger will become effective at such time as
the Certificate of Merger has
been duly filed with the Secretary of State of the State of Delaware or at
such later date or time as may be agreed by the Company and Buyer in writing and specified in the
Certificate of Merger in accordance
with the DGCL (the effective
time of the Merger being
hereinafter referred to as the “Effective
Time”).
Section 2.04 Effects of the
Merger.
The Merger shall have the effects set forth in
this Agreement and in the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, from and after the
Effective Time, all property, rights,
privileges, immunities, powers, franchises, licenses, and authority
of the Company and
Merger Sub shall vest in the
Surviving Corporation, and all
debts, liabilities,
obligations, restrictions, and duties of each of the
Company and Merger Sub shall become the debts,
liabilities, obligations,
restrictions, and duties of the Surviving Corporation.
Section 2.05 Certificate of Incorporation;
By-Laws. At the Effective Time: (a) the certificate of incorporation of the
Surviving Corporation shall be amended
and restated so as to read in its entirety as set forth in
Exhibit
A, and, as so amended and
restated, shall be the certificate of incorporation of the
Surviving Corporation until thereafter
amended in accordance with the terms thereof or as provided by
applicable Law; and (b) the
by-laws of Merger Sub as in effect immediately prior to
the Effective Time shall be the
by-laws of the
Surviving Corporation, except that
references to Merger
Sub’s name shall be replaced with references to the
Surviving Corporation's name, until
thereafter amended in accordance with the terms thereof, the
certificate of incorporation of
the Surviving Corporation, or
as provided by applicable Law.
Section 2.06 Directors and
Officers.
The directors and officers of
Merger Sub, in each case, immediately
prior to the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving
Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation,
or removal in accordance with the certificate of incorporation and
by-laws of the
Surviving
Corporation.
Section 2.07 Effect of the
Merger on Capital
Stock. At the
Effective Time, as a result of
the Merger and without
any action on the part
of Buyer, Merger Sub, or the Company or the holder of any capital stock
of Buyer, Merger Sub, or the Company:
(a) Cancellation
of Certain Company Common
Stock. Each share of
Company Common Stock that is owned by
the Company (as treasury stock
or otherwise) or any of its direct or indirect wholly-owned
subsidiaries as of immediately prior to the Effective Time (the “Cancelled
Shares”) will
automatically be cancelled and retired and will cease to exist, and
no consideration will be delivered in exchange
therefor.
(b) Conversion
of Certain Company Common
Stock. Each share of
Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than Cancelled Shares) will be converted into the right
to receive: (i) its pro rata
portion of One Million, Eight Hundred Ninety-Two Thousand, Nine
Hundred Five (1,892,905) shares
of TENX Common Stock,
(ii) its pro rata portion of Ten
Thousand, Two Hundred Thirty-Two (10,232) shares of TENX
Preferred Stock (clause (i)
and (ii) together, the
“Merger
Consideration” and
all Merger Consideration issued
in the Merger, the
“Purchase
Price”), and (iii) any
cash in lieu of fractional shares of TENX
Stock Consideration payable pursuant to Section 2.07(e). The issuance and sale of
the TENX Stock Consideration
shall not be registered under the Securities Act of 1933, as amended (the
“Securities
Act”), or any state
securities laws, and shall instead be issued pursuant to private
placement exemptions thereunder. All TENX Stock Consideration will be subject to
restrictions on transfer as further described herein, and will be
notated with appropriate restrictive legends. The payment of
any TENX Stock Consideration to
any Stockholder hereunder shall
be expressly conditioned upon such Stockholder providing written evidence reasonably
satisfactory to Buyer that
such Stockholder is an
Accredited Investor (including by
delivery of an Accredited
Investor Questionnaire in the form attached hereto as
Exhibit B
(each, an “Accredited Investor
Questionnaire”) completed
in a manner satisfactory to Buyer).
(c) Cancellation
of Shares. At the
Effective Time, all
shares of Company Common Stock will no longer be outstanding
and all shares of
Company Common Stock will be cancelled
and retired and will cease to exist, and each holder of: (i) a
certificate formerly representing any shares of Company Common Stock (a “Certificate”) will cease to have any rights with
respect thereto, except the right to receive (A) the
Merger Consideration and (B) any cash
in lieu of fractional shares
of TENX Stock Consideration
payable pursuant to Section
2.07(e).
(d) Conversion
of Merger Sub Capital Stock.
Each share of
common stock of Merger Sub issued and outstanding immediately
prior to the Effective Time
shall be converted into and become one newly issued, fully paid,
and non-assessable share
of common stock, par
value $0.001 per
share, of the Surviving Corporation with the same rights,
powers, and privileges as the shares so converted and shall constitute the only
outstanding shares of capital
stock of the Surviving
Corporation. From and after the Effective Time, all certificates representing shares of Merger Sub Common Stock shall be deemed for all
purposes to represent the number of shares of common stock of the Surviving Corporation into which they were
converted in accordance with the immediately preceding
sentence.
(e) Fractional
Shares. No certificates or scrip representing
fractional shares of
TENX Stock Consideration shall be
issued upon the conversion
of Company Common Stock
pursuant to Section 2.07(b).
Notwithstanding any other provision of this Agreement, each holder of shares of Company Common Stock converted pursuant to
the Merger who would otherwise
have been entitled to receive a fraction of a share of TENX
Stock Consideration (after taking into account all
shares of Company Common Stock exchanged by such holder)
shall in lieu thereof receive a whole number of shares of TENX
Stock Consideration that is rounded to the nearest whole share of
the applicable class of TENX Stock Consideration;
provided,
however,
that such a holder who would otherwise be entitled to receive a
fraction equal to exactly 0.5 shares of TENX Stock Consideration
shall in lieu thereof receive a whole number of shares of TENX
Stock Consideration that is rounded down to the nearest whole share
of the applicable class of TENX Stock
Consideration.
Section 2.08 Exchange
Procedures. Prior to the
Effective Time, all
Certificates evidencing all
outstanding shares of
Company Common Stock, as set forth
on Exhibit
C, shall have been deposited
with Buyer together with a
letter of transmittal specifying that the delivery of such
Certificates shall be effected, and
risk of loss and title shall
pass, automatically at the Effective Time. Upon payment of the
Merger Consideration pursuant to the
provisions of this Article II,
each Certificate so delivered
shall immediately be cancelled. All Merger Consideration paid upon the delivery
of Certificates in accordance
with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by
such Certificate, and from and
after the Effective Time, there
shall be no further registration of transfers of
shares of Company Common Stock on the stock transfer books
of the Surviving
Corporation.
Section 2.09 Withholding Rights. Each of the
Buyer, Merger Sub, and the Surviving Corporation shall be entitled to deduct
and withhold from the consideration otherwise payable to any
Person pursuant to this
Article II such amounts as may be
required to be deducted and withheld with respect to the making of
such payment under any Tax
Laws. To the extent that amounts are so deducted and withheld by
the Buyer, Merger Sub, or the Surviving Corporation, as the case may be, such
amounts shall be treated for all purposes of this
Agreement as having been paid to
the Person in respect of which
the Buyer, Merger Sub, or the Surviving Corporation, as the case may be, made
such deduction and withholding.
Section 2.10 Tax Treatment.
For U.S. federal income Tax purposes, it is intended that the
Merger qualify as a
“reorganization” within the meaning of
Section 368(a) of the
Code, and the regulations promulgated
thereunder, that this Agreement
will constitute a “plan of reorganization” for purposes
of Sections 354 and 361 of
the Code.
Section 2.11 Purchase Price
Adjustment.
(a) Closing
Working Capital Estimate.
(i) At
least three Business Days
before the Closing,
Buyer and the Company shall have mutually agreed upon in good
faith a targeted amount of Closing Working Capital (the
“Target Closing Working
Capital”), which
statement shall contain an estimated balance sheet of the Company as of the Closing Date (without giving effect to the
transactions contemplated herein) and a calculation of
Target Closing Working Capital (the
“Target Closing Working Capital
Statement”).
(b) Post-Closing
Adjustment.
(i) Within
30 days after the Closing Date, Buyer shall prepare and deliver to the
Stockholder Representative a statement
setting forth its calculation of Closing Working Capital, which statement shall
contain an audited balance
sheet of the Company as of
the Closing Date (without
giving effect to the transactions contemplated herein), and a
calculation of Closing Working
Capital (the “Closing Working Capital
Statement”).
(ii) The
post-closing adjustment shall
equal the amount, if any, by which the Target Closing Working Capital exceeds the
Closing Working Capital (the
“Post-Closing
Adjustment”). For the
avoidance of doubt, there shall be no Post-Closing Adjustment in the event that
Closing Working Capital equals or
exceeds the Target Closing
Working Capital.
(c) Examination
and Review.
(i) Examination.
After receipt of the Closing
Working Capital Statement, the Stockholder Representative shall have
15 days (the
“Review
Period”) to review
the Closing Working Capital
Statement. During the Review
Period, the Stockholder
Representative and the Stockholders’ Accountants shall have full
access to the books and records of the Surviving Corporation, the personnel of, and work
papers prepared by, Buyer
and/or Buyer’s
Accountants to the extent that they relate to the
Closing Working Capital Statement and
to such historical financial information (to the extent in
Buyer’s possession) relating to
the Closing Working Capital
Statement as the Stockholder
Representative may reasonably request for the purpose of reviewing
the Closing Working Capital
Statement and to prepare a Statement of Objections (defined below),
provided,
that such access shall be in a
manner that does not interfere with the normal business operations
of Buyer or the
Company.
(ii) Objection.
On or prior to the last day of
the Review Period, the
Stockholder Representative may object
to the Closing Working Capital
Statement by delivering to Buyer a written statement setting forth its
objections in reasonable detail, indicating each disputed item or
amount and the basis for its disagreement therewith (the
“Statement of
Objections”). If
the Stockholder Representative
fails to deliver the Statement
of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the
Post-Closing Adjustment, as the case
may be, reflected in the Closing Working Capital Statement shall be deemed
to have been accepted by the Stockholder Representative. If the
Stockholder Representative delivers
the Statement of Objections
before the expiration of the Review Period, Buyer and the Stockholder Representative shall negotiate in good
faith to resolve such objections within 15 days after the delivery of the
Statement of Objections (the
“Resolution
Period”), and, if the
same are so resolved within the Resolution Period, the Post-Closing Adjustment and the
Closing Working Capital Statement with
such changes as may have been previously agreed in writing
by Buyer and the
Stockholder Representative, shall be
final and binding.
(iii) Resolution
of Disputes. If the Stockholder
Representative and Buyer fail
to reach an agreement with
respect to all of the matters set forth in the Statement of Objections before expiration of
the Resolution Period, then any
amounts remaining in dispute (“Disputed
Amounts” and any amounts
not so disputed, the “Undisputed
Amounts”) shall be
submitted for resolution to a mutually agreed office of an
impartial nationally recognized firm of independent certified
public accountants other than Stockholders’ Accountants or
Buyer’s Accountants (the
“Independent
Accountant”) who, acting
as experts and not arbitrators, shall resolve the
Disputed Amounts only and make any
adjustments to the Post-Closing
Adjustment, as the case may be, and the Closing Working Capital Statement. The parties
hereto agree that all adjustments shall be made without regard to
materiality. The Independent
Accountant shall only decide the specific items under dispute by
the parties and their decision for each Disputed Amount must be within the range of values
assigned to each such item in the Closing Working Capital Statement and the
Statement of Objections,
respectively.
(iv) Fees
of the Independent Accountant.
The fees and expenses of the Independent Accountant shall be paid by the
Stockholder Representative, on the one
hand, and by Buyer, on the
other hand, based upon the percentage that the amount actually
contested but not awarded to the Stockholder Representative or Buyer, respectively, bears to the aggregate amount
actually contested by the Stockholder Representative and Buyer.
(v) Determination
by Independent Accountant.
The Independent Accountant
shall make a determination as soon as practicable within
30 days (or such other time as the
parties hereto shall agree in writing) after their engagement, and
their resolution of the Disputed Amounts and their adjustments to
the Closing Working Capital
Statement and/or the Post-Closing Adjustment shall be conclusive and
binding upon the parties hereto.
(d) Payments
of Post-Closing Adjustment.
Except as otherwise provided herein, any payment of the
Post-Closing Adjustment shall be made
by delivering a Joint
Confirmation as defined and described in the Certificate of Designation with respect to the
amount of such Post-Closing
Adjustment (x) within five Business
Days of acceptance of the applicable Closing Working Capital Statement or (y) if there
are Disputed Amounts, then
within five Business Days of the resolution described
in clause (v)
above.
(e) Adjustments
for Tax Purposes. Any payments
made pursuant to Section 2.11
shall be treated as an adjustment to the Purchase Price by the parties for
Tax purposes, unless otherwise
required by Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the correspondingly
numbered Section of the
Disclosure Schedules, the
Company hereby represents and warrants
to Merger Sub and
Buyer that the statements contained in
this 1III are true and correct as of the date
hereof.
Section 3.01 Organization, Authority and
Qualification of the Company. The Company is
a corporation duly organized, validly existing and in good standing
under the Laws of the
state of Delaware and has full
corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to
carry on its business as it has been and is currently
conducted. Section 3.01 of
the Disclosure Schedules sets
forth each jurisdiction in which the Company is licensed or qualified to do business,
and the Company is duly
licensed or qualified to do business and is in good standing in
each jurisdiction in which the properties owned or leased by it or
the operation of its business as currently conducted makes such
licensing or qualification necessary except where the lack of such
licensing or qualification would not have a Material Adverse Effect. All corporate
actions taken by the
Company in connection with this
Agreement and the Ancillary Documents will be duly authorized on or
prior to the Closing.
Section 3.02 Capitalization.
(a) The
authorized capital stock of the Company consists of 5,000 shares of common stock, $0.001 par value per share
(“Common Stock”), of which 3,000 shares are issued and outstanding and
constitute the “Shares”. Each Stockholder owns the number of Shares set forth opposite such Stockholder’s name on Exhibit C. All of the Shares have been duly authorized, are validly
issued, fully paid and non-assessable, and are owned of record and
beneficially by the Stockholders as set forth on Exhibit C, free and clear of all Encumbrances.
(b) All
of the Shares were issued in
compliance with applicable Laws. None of the Shares were issued in violation of any
agreement, arrangement or commitment
to which the Company is a party
or is subject to or in violation of any preemptive or similar
rights of any Person.
(c) There
are no outstanding or authorized options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of the Company or obligating the Company to issue or sell any shares of capital stock of, or any other interest
in, the Company. The
Company does not have outstanding or
authorized any stock appreciation, phantom stock, profit
participation or similar rights. There are no voting trusts,
stockholder agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of any of the Shares.
Section 3.03 No Subsidiaries.
The Company does not own, or have any interest in
any shares or have an ownership
interest in any other Person.
Section 3.04 No Conflicts; Consents.
The execution, delivery and
performance by the Company of
this Agreement and the
Ancillary Documents to which it is a
party, and the consummation of the transactions contemplated hereby
and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of
the certificate of
incorporation, by-laws or other
organizational documents of the Company; (b) conflict with or result in a
violation or breach of any provision of any Law or Governmental Order applicable to the
Company; (c) require the consent,
notice or other action by
any Person under, conflict
with, result in a violation or breach of, constitute a default or
an event that, with or without notice or lapse of time or both,
would constitute a default under, result in the acceleration of or
create in any party the right to accelerate, terminate, modify or
cancel any Contract to which
the Company is a party or by
which the Company is bound or
to which any of their respective properties and assets are subject
(including any Material
Contract) or any Permit
affecting the properties, assets or business of the
Company; or (d) result in the creation
or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets
of the Company. No consent,
approval, Permit,
Governmental Order, declaration or
filing with, or notice to, any Governmental Authority is required by or with
respect to the Company in
connection with the execution and delivery of this
Agreement and the Ancillary Document and the consummation of the
transactions contemplated hereby and thereby, except for such
filings as may be required under the HSR Act.
Section 3.05 Financial Statements.
Complete copies of the
Company’s unaudited financial
statements consisting of the balance sheet of the Company as at December 31 of the year ended 2020 and the related
statements of income and retained earnings, stockholders’ equity and cash flow for the
years then ended (the “Annual Financial
Statements”), and
unaudited financial statements consisting of the
balance sheet of the
Company as at September 30, 2020 and the related statements of
income and retained earnings, stockholders’ equity and cash flow for the
nine-month period then ended (the “Interim Financial
Statements” and together
with the Annual Financial
Statements, the “Financial
Statements”) have been
delivered to Buyer.
The Financial Statements have been prepared in
accordance with GAAP applied on
a consistent basis throughout the period involved, subject, in the
case of the Interim Financial
Statements, to normal and recurring year-end adjustments (the
effect of which will not be materially adverse) and the absence of
notes (that, if presented, would not differ materially from those
presented in the Annual
Financial Statements). The Financial
Statements are based on the books and records of the
Company, and fairly present the
financial condition of the Company as of the respective dates they were
prepared and the results of the operations of the
Company for the periods indicated. The
balance sheet of the Company as
of December 31, 2020 is referred to herein as the
“Balance
Sheet” and the date
thereof as the “Balance Sheet
Date.” The
Company maintains a standard system of
accounting established and administered in accordance with
GAAP.
Section 3.06 Undisclosed Liabilities.
The Company has no liabilities, obligations or
commitments of any nature whatsoever, asserted or unasserted, known
or unknown, absolute or contingent, accrued or unaccrued, matured
or unmatured or otherwise (“Liabilities”), except (a) those which are adequately
reflected or reserved against in the Balance Sheet as of the Balance Sheet Date, and (b) those which have been
incurred in the ordinary course of business consistent with past
practice since the Balance
Sheet Date and which are not, individually or in the aggregate,
material in amount.
Section 3.07 Absence of Certain Changes,
Events and Conditions. Since
the Balance Sheet Date, and
other than in the ordinary course of business consistent with past
practice, there has not been, with respect to the
Company, any:
(a) event,
occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a
Material Adverse
Effect;
(b) amendment
of the charter, by-laws or
other organizational documents of the Company;
(c) split,
combination or reclassification of any shares of its capital stock;
(d) issuance,
sale or other disposition of any of its capital stock, or grant of
any options, warrants or other rights to purchase or obtain
(including upon conversion,
exchange or exercise) any of its capital stock;
(e) declaration
or payment of any dividends or distributions on or in respect of
any of its capital stock or redemption, purchase or acquisition of
its capital stock;
(f) material
change in any method of accounting or accounting practice of
the Company, except as required
by GAAP or as disclosed in the
notes to the Financial
Statements;
(g) material
change in the Company’s
cash management practices and its policies, practices and
procedures with respect to collection of accounts receivable,
establishment of reserves for uncollectible accounts, accrual of
accounts receivable, inventory control, prepayment of expenses,
payment of trade accounts payable, accrual of other expenses,
deferral of revenue and acceptance of customer
deposits;
(h) entry
into any Contract that would
constitute a Material
Contract;
(i) incurrence,
assumption or guarantee of any Indebtedness for borrowed money except unsecured
current obligations and Liabilities incurred in the ordinary course of
business consistent with past practice;
(j) transfer,
assignment, sale or other disposition of any of the assets shown or
reflected in the Balance Sheet
or cancellation of any debts or entitlements;
(k) transfer
or assignment of or grant of any license or sublicense under or
with respect to any Company
Intellectual Property or Company IP Agreements;
(l) abandonment
or lapse of or failure to maintain in full force and effect
any Company IP Registration, or
failure to take or maintain reasonable measures to protect the
confidentiality of any Trade
Secrets included in the Company
Intellectual Property;
(m) material
damage, destruction or loss
(whether or not covered by insurance) to its
property;
(n) any
capital investment in, or any loan to, any other
Person;
(o) acceleration,
termination, material modification to or cancellation of any
material Contract (including, but not
limited to, any Material
Contract) to which the Company
is a party or by which it is bound;
(p) any
material capital expenditures;
(q) imposition
of any Encumbrance upon any of
the Company properties, capital
stock or assets, tangible or intangible;
(r) (i)
grant of any bonuses, whether monetary or otherwise, or increase in
any wages, salary, severance, pension or other compensation or
benefits in respect of its current or former employees, officers,
directors, independent contractors or consultants, other than as
provided for in any written agreements or required by applicable
Law, (ii) change in the terms of
employment for any employee or any termination of any employees for
which the aggregate costs and expenses exceed $25,000, or (iii) action to accelerate the vesting or payment of any
compensation or benefit for any current or former employee,
officer, director, independent contractor or
consultant;
(s) hiring
or promoting any person as or to (as the case may be) an officer or
hiring or promoting any employee below officer except to fill a
vacancy in the ordinary course of business;
(t) adoption,
modification or termination of any: (i) employment, severance,
retention or other agreement
with any current or former employee, officer, director, independent
contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or
other agreement with a
Union, in each case whether written or
oral;
(u) any
loan to (or forgiveness of any loan to), or entry into any other
transaction with, any of its Stockholders or current or former directors,
officers and employees;
(v) entry
into a new line of business or abandonment or discontinuance of
existing lines of business;
(w) adoption
of any plan of merger,
consolidation, reorganization, liquidation or dissolution or filing
of a petition in bankruptcy under any provisions of
federal or state bankruptcy
Law or consent to the filing of any
bankruptcy petition against it under any similar
Law;
(x) purchase,
lease or other acquisition of the right to own, use or lease any
property or assets for an amount in excess of $25,000, individually (in the case of a
lease, per annum) or
$50,000 in the aggregate (in the case
of a lease, for the entire term of the lease, not including any
option term), except for purchases of inventory or supplies in the
ordinary course of business consistent with past
practice;
(y) acquisition
by merger or consolidation
with, or by purchase of a substantial portion of the assets or
stock of, or by any other manner, any business or any
Person or any division
thereof;
(z) action
by the Company to make, change
or rescind any Tax election,
amend any Tax Return or take
any position on any Tax Return,
take any action, omit to take
any action or enter into any
other transaction that would have the effect of increasing
the Tax liability or reducing any Tax asset of Buyer in respect of any Post-Closing Tax Period; or
(aa) any
Contract to do any of the foregoing,
or any action or omission that
would result in any of the foregoing.
Section 3.08 Material
Contracts.
(a) Section
3.08 of the Disclosure Schedules lists each of the
following Contracts of
the Company (such
Contracts, together with all
Contracts concerning the occupancy,
management or operation of any Real Property (including without limitation,
brokerage contracts) listed or
otherwise disclosed in Section
3.09(b) of the Disclosure
Schedules and all Company IP
Agreements, being “Material
Contracts”):
(i) each
Contract of the Company involving aggregate consideration in
excess of $25,000 and which, in
each case, cannot be cancelled by the Company without penalty or without more
than 60 days’
notice;
(ii) all
Contracts that require the
Company to purchase its total
requirements of any product or service from a third party or that
contain “take or pay” provisions;
(iii) all
Contracts that provide for the
indemnification by the Company
of any Person or the assumption
of any Tax, environmental or
other Liability of any
Person;
(iv) all
Contracts that relate to the
acquisition or disposition of any business, a material amount of
stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or
otherwise);
(v) all
broker, distributor, dealer, manufacturer’s
representative, franchise, agency,
sales promotion, market research, marketing consulting and
advertising Contracts to which
the Company is a
party;
(vi) all
employment agreements and
Contracts with independent contractors
or consultants (or similar arrangements) to which the
Company is a party and which are not
cancellable without material penalty or without more than
90 days’
notice;
(vii) except
for Contracts relating to trade
receivables, all Contracts
relating to Indebtedness
(including, without limitation, guarantees) of the
Company;
(viii) all
Contracts with any Governmental Authority to which the
Company is a party
(“Government
Contracts”);
(ix) all
Contracts that limit or purport to
limit the ability 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;
(x) any
Contracts to which the
Company is a party that provide for
any joint venture, partnership or similar arrangement by the
Company;
(xi) all
Contracts between or among the
Company on the one hand and
Stockholders or any
Affiliate of Stockholders (other than the Company) on the other hand;
(xii) all
collective bargaining agreements or Contracts with any Union to which the Company is a party; and
(xiii) any
other Contract that is material
to the Company and not
previously disclosed pursuant to this 13.08.
(b) Each
Material Contract is valid and binding
on the Company in accordance
with its terms and is in full force and effect. None of the
Company or, to the Company’s Knowledge, any other party thereto is in breach of
or default under (or is alleged to be in breach of or default
under), or has provided or received any notice of any intention to
terminate, any Material
Contract. No event or circumstance has occurred that, with notice
or lapse of time or both, would constitute an event of default
under any Material Contract or
result in a termination thereof or would cause or
permit the acceleration or other
changes of any right or obligation or the loss of any benefit thereunder. Complete and
correct copies of each Material
Contract (including all modifications, amendments and supplements
thereto and waivers thereunder) have been made available to
Buyer.
Section 3.09 Title to Assets;
Real
Property.
(a) The
Company has good and valid (and, in
the case of owned Real
Property, good and marketable fee simple) title to, or a valid
leasehold interest in, all Real
Property and personal property and other assets reflected in
the Annual Financial Statements
or acquired after the Balance
Sheet Date, other than properties and assets sold or otherwise
disposed of in the ordinary course of business consistent with past
practice since the Balance
Sheet Date. All such properties and assets (including leasehold
interests) are free and clear of Encumbrances except for the following
(collectively referred to as “Permitted
Encumbrances”):
(i) liens
for Taxes not yet due and
payable;
(ii) mechanics,
carriers’, workmen’s, repairmen’s or other like
liens arising or incurred in the ordinary course of business
consistent with past practice or amounts that are not delinquent
and which are not, individually or in the aggregate, material to
the business of the Company;
(iii) easements,
rights of way, zoning ordinances and other similar
encumbrances affecting
Real Property which are not,
individually or in the aggregate, material to the business of
the Company;
or
(iv) other
than with respect to owned Real
Property, liens arising under original purchase price conditional sales
contracts and equipment leases with
third parties entered into in the ordinary course of business
consistent with past practice which are not, individually or in the
aggregate, material to the business of the Company.
(b) Section
3.09(b) of the
Disclosure Schedules lists (i) the
street address of each parcel of Real Property; (ii) if such property is leased or
subleased by the Company, the
landlord under the lease, the rental amount currently being paid,
and the expiration of the term of such lease or sublease for each
leased or subleased property; and (iii) the current use of such
property. With respect to owned Real Property, the Company has delivered or made available to
Buyer true, complete and correct
copies of the deeds and other instruments (as recorded) by which
the Company acquired
such Real Property, and copies
of all title insurance
policies, opinions, abstracts and surveys in the possession of
the Company and relating to
the Real Property. With respect
to leased Real Property,
the Company has delivered or
made available to Buyer true,
complete and correct copies of any leases affecting the
Real Property. The Company is not a sublessor or grantor under any
sublease or other instrument granting to any other
Person any right to the possession,
lease, occupancy or enjoyment of any leased Real Property. The use and operation of the
Real Property in the conduct of
the Company’s business do
not violate in any material respect any Law, covenant, condition, restriction, easement,
license, permit or
agreement. No material improvements
constituting a part of the Real
Property encroach on real
property owned or leased by a Person other than the Company. There are no Actions pending nor, to the Company’s Knowledge, threatened against or affecting
the Real Property or any
portion thereof or interest therein in the nature or in lieu of
condemnation or eminent domain proceedings.
Section 3.10 Condition and Sufficiency of
Assets. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and
other items of tangible personal property of the
Company are structurally sound, are in
good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and
other items of tangible personal property is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The buildings, plants,
structures, furniture, fixtures, machinery, equipment, vehicles and
other items of tangible personal property currently owned or leased
by the Company, together with
all other properties and assets of the Company, are sufficient for the continued conduct
of the Company’s business
after the Closing in
substantially the same manner as conducted prior to the
Closing and constitute all of the
rights, property and assets necessary to conduct the business of
the Company as currently
conducted.
Section 3.11 Intellectual
Property.
(a) Section
3.11 of the Disclosure Schedules contains a correct, current,
and complete list of: (i) all Company IP Registrations, specifying as to each,
as applicable: the title, mark, or design; the record owner and
inventor(s), if any; the jurisdiction by or in which it has been
issued, registered, or filed; the Patent, registration, or application serial
number; the issue, registration, or filing date; and the current
status and (ii) all unregistered Trademarks included in the Company Intellectual Property; and (iii) all
proprietary software of the Company; and (iv) all other Company Intellectual Property used or held for use
in the Company’s business
as currently conducted and as proposed to be
conducted.
(b) Section
3.11 of the Disclosure Schedules contains a correct, current,
and complete list of all Company IP Agreements, specifying for each the
date, title, and parties thereto, and separately identifying
the Company IP Agreements: (i)
under which the Company is a
licensor or otherwise grants to any Person any right or interest relating to
any Company Intellectual
Property; (ii) under which the Company is a licensee or otherwise granted any
right or interest relating to the Intellectual Property of any Person; and (iii) which otherwise relate to
the Company’s ownership
or use of Intellectual
Property, in each case identifying the Intellectual Property covered by such
Company IP Agreement. The
Company has provided
Buyer with true and complete copies
(or in the case of any oral agreements, a complete and correct written
description) of all Company IP
Agreements, including all modifications, amendments and supplements
thereto and waivers thereunder. Each Company IP Agreement is valid and binding on
the Company in accordance with
its terms and is in full force and effect. Neither the
Company nor any other party thereto
is, or is alleged to be, in breach of or default under, or has
provided or received any notice of breach of, default under, or
intention to terminate (including by non-renewal), any
Company IP
Agreement.
(c) The
Company is the sole and exclusive
legal and beneficial, and with respect to the Company IP Registrations, record, owner of all
right, title, and interest in and to the Company Intellectual Property, and to the
Knowledge of the Company has the valid and enforceable right to use
all other Intellectual Property
used or held for use in or necessary for the conduct of the
Company’s business as currently
conducted and as proposed to be conducted, in each case, free and
clear of Encumbrances other
than Permitted Encumbrances.
The Company has entered into
binding, valid and enforceable, written Contracts with each current and former employee
and independent contractor who is or was involved in or has
contributed to the invention, creation, or development of
any Intellectual Property
during the course of employment or engagement with the
Company whereby such employee or
independent contractor (i) acknowledges the Company’s exclusive ownership of all
Intellectual Property invented,
created, or developed by such employee or independent contractor
within the scope of his or her employment or engagement with
the Company; (ii) grants to
the Company a present,
irrevocable assignment of any ownership interest such employee or
independent contractor may have in or to such Intellectual Property, to the extent such
Intellectual Property does not
constitute a “work made for hire” under
applicable Law; and (iii)
irrevocably waives any right or interest, including any moral
rights, regarding any such Intellectual Property, to the extent permitted by
applicable Law. The
Company has provided
Buyer with true and complete copies of
all such Contracts. All
assignments and other instruments necessary to establish, record,
and perfect the Company’s
ownership interest in the Company IP Registrations have been validly
executed, delivered, and filed with the relevant
Governmental Authorities and
authorized registrars.
(d) Neither
the execution, delivery or performance of this Agreement, nor the consummation of the
transactions contemplated hereunder, will result in the
loss or impairment of, or require the
consent of any other Person in
respect of, the Company’s
right to own or use any Company
Intellectual Property or Licensed Intellectual
Property.
(e) All
of the Company Intellectual
Property and Licensed
Intellectual Property are valid and enforceable, and all
Company IP Registrations are
subsisting and in full force and effect. The Company has taken all reasonable and necessary
steps to maintain and enforce the Company Intellectual Property and
Licensed Intellectual Property and to
preserve the confidentiality of all Trade Secrets included in the Company Intellectual Property, including by
requiring all Persons having
access thereto to execute binding, written non-disclosure
agreements. All required filings and
fees related to the Company IP
Registrations have been timely submitted with and paid to the
relevant Governmental
Authorities and authorized registrars. The Company has provided Buyer with true and complete copies of all file
histories, documents, certificates, office actions, correspondence, assignments, and other
instruments relating to the Company IP Registrations.
(f) The
conduct of the Company’s
business as currently and formerly conducted and as proposed to be
conducted, including the use of the Company Intellectual Property and
Licensed Intellectual Property in
connection therewith, and the products, processes and services of
the Company have not to
the Knowledge of the
Company infringed, misappropriated or
otherwise violated, and will not to the Knowledge of the Company infringe, misappropriate or otherwise
violate, the Intellectual
Property or other rights of any Person. To the Knowledge of the Company, no Person has infringed, misappropriated or otherwise
violated any Company
Intellectual Property or Licensed Intellectual
Property.
(g) There
are no Actions (including any
opposition, cancellation, revocation, review, or other proceeding),
whether settled, pending, or threatened (including in the form of
offers to obtain a license): (i) alleging any infringement,
misappropriation, or other violation by the Company of the Intellectual Property of any Person; (ii) challenging the validity,
enforceability, registrability, patentability, or ownership of
any Company Intellectual
Property or Licensed
Intellectual Property or the Company’s right, title, or interest in or to
any Company Intellectual
Property or Licensed
Intellectual Property; or (iii) by the Company or by the owner of any Licensed Intellectual Property alleging any
infringement, misappropriation, or other violation by any
Person of the Company Intellectual Property or such
Licensed Intellectual Property.
The Company is not aware of any
facts or circumstances that could reasonably be expected to give
rise to any such Action.
The Company is not subject to
any outstanding or prospective Governmental Order (including any motion or
petition therefor) that does or could reasonably be expected to
restrict or impair the use of any Company Intellectual Property or
Licensed Intellectual
Property.
(h) All
Company IT Systems are in good working
condition and are sufficient for the operation of the
Company’s business as currently
conducted and as proposed to be conducted. In the past
five years, there has been no
malfunction, failure, continued substandard performance,
denial-of-service, or other cyber incident, including any
cyberattack, or other impairment of the Company IT Systems that has resulted or is
reasonably likely to result in disruption or damage to the business
of the Company and that has not
been remedied. The Company has
taken all commercially reasonable steps to safeguard the
confidentiality, availability, security, and integrity of
the Company IT Systems,
including implementing and maintaining appropriate backup, disaster
recovery, and software and hardware support
arrangements.
(i) The
Company has complied with all
applicable Laws and all
internal or publicly posted policies, notices, and statements
concerning the collection, use, processing, storage, transfer, and
security of personal information in the conduct of the
Company’s business. In the
past five years, the
Company has not (i) experienced any
actual, alleged, or suspected data breach or other security
incident involving personal information in its possession or
control or (ii) been subject to or received any written notice of
any audit, investigation, complaint, or other Action by any Governmental Authority or other
Person concerning the
Company’s collection, use,
processing, storage, transfer, or protection of personal
information or actual, alleged, or suspected violation of any
applicable Law concerning
privacy, data security, or data breach notification, and to
the Company’s
Knowledge, there are no facts or
circumstances that could reasonably be expected to give rise to any
such Action.
Section 3.12 Customers and
Suppliers.
(a) Section
3.12(a) of the Disclosure
Schedules sets forth (i) each customer who has paid aggregate
consideration to the Company
for goods or services rendered in an amount greater than or equal
to $25,000 for each of the two
most recent fiscal years
(collectively, the “Material
Customers”); and (ii) the
amount of consideration paid by each Material Customer during such periods. The
Company has not received any notice,
and has no reason to believe, that any of its Material Customers has ceased, or intends to cease
after the Closing, to use its
goods or services or to otherwise terminate or materially reduce
its relationship with the Company.
(b) Section
3.12(b) of the
Disclosure Schedules sets forth (i)
each supplier to whom the Company has paid consideration for goods or
services rendered in an amount greater than or equal to $25,000 for
each of the two most recent fiscal years (collectively, the
“Material
Suppliers”); and (ii) the
amount of purchases from each Material Supplier during such periods. The
Company has not received any notice,
and has no reason to believe, that any of its Material Suppliers has ceased, or intends to
cease, to supply goods or services to the Company or to otherwise terminate or materially
reduce its relationship with the Company.
Section 3.13 Insurance. Section
3.13 of the Disclosure
Schedules sets forth a true and complete list of all current
policies or binders of fire, liability, product liability, umbrella liability, real and personal property,
workers’ compensation, vehicular, directors’ and
officers’ liability,
fiduciary liability and other
casualty and property insurance maintained by the
Company or its Affiliates and relating to the assets, business,
operations, employees, officers and directors of the
Company (collectively, the
“Insurance
Policies”) and true and
complete copies of such Insurance Policies have been made available
to Buyer. Such
Insurance Policies are in full force
and effect and shall remain in full force and effect following the
consummation of the transactions contemplated by this
Agreement. Neither the
Company nor any of its
Affiliates has received any written
notice of cancellation of, premium increase with respect to, or
alteration of coverage under, any of such Insurance Policies. All premiums due on
such Insurance Policies have
either been paid or, if due and payable prior to
Closing, will be paid prior to
Closing in accordance with the payment
terms of each Insurance Policy.
The Insurance Policies do not
provide for any retrospective premium adjustment or other
experience-based liability on
the part of the Company. All
such Insurance Policies (a) are
valid and binding in accordance with their terms; (b) are provided
by carriers who are financially solvent; and (c) have not been
subject to any lapse in coverage. There are no claims related to
the business of the Company
pending under any such Insurance Policies as to which coverage has been
questioned, denied or disputed or in respect of which there is an
outstanding reservation of rights. None of Company or any of its Affiliates is in default under, or has otherwise
failed to comply with, in any material respect, any provision
contained in any such Insurance
Policy. The Insurance Policies
are of the type and in the amounts customarily carried by
Persons conducting a business similar
to the Company and are
sufficient for compliance with all applicable Laws and Contracts to which the Company is a party or by which it is
bound.
Section 3.14 Legal Proceedings;
Governmental
Orders.
(a) There
are no Actions pending or, to
the Company’s
Knowledge, threatened (a) against or
by the Company or any of
its Affiliates affecting any of
its properties or assets; or (b) against or by the
Company or any of its
Affiliates that challenges or seeks to
prevent, enjoin or otherwise delay the transactions contemplated by
this Agreement. No event has
occurred or circumstances exist that may give rise to, or serve as
a basis for, any such Action.
(b) There
are no outstanding Governmental
Orders and no unsatisfied judgments, penalties or awards against or
affecting the Company or any of
its properties or assets.
Section 3.15 Compliance With
Laws;
Permits.
(a) The
Company has complied, and is now
complying, with all Laws
applicable to it or its business, properties or
assets.
(b) All
Permits required for the
Company to conduct its business have
been obtained by it and are valid and in full force and effect. All
fees and charges with respect to such Permits as of the date hereof have been paid in
full. Section 3.15(b) of
the Disclosure Schedules lists
all current Permits issued to
the Company, including the
names of the Permits and their
respective dates of issuance and expiration. No event has occurred
that, with or without notice or lapse of time or both, would
reasonably be expected to result in the revocation, suspension,
lapse or limitation of any Permit set forth in Section 3.15(b) of the Disclosure Schedules.
Section 3.16 Environmental
Matters.
(a) The
Company is currently and has been in
compliance with all Environmental Laws and has not received from
any Person any: (i)
Environmental Notice or
Environmental Claim; or (ii) written
request for information pursuant to Environmental Law, which, in each case, either
remains pending or unresolved, or is the source of ongoing
obligations or requirements as of the Closing Date.
(b) The
Company has obtained and is in
material compliance with all Environmental Permits (each of which is disclosed
in Section 3.16(b) of
the Disclosure Schedules)
necessary for the ownership, lease, operation or use of the
business or assets of the Company and all such Environmental Permits are in full force and effect
and shall be maintained in full force and effect by the
Company through the
Closing Date in accordance with
Environmental Law, and the
Company is not aware of any condition,
event or circumstance that might prevent or impede, after
the Closing Date, the
ownership, lease, operation or use of the business or assets of
the Company as currently
carried out. With respect to any such Environmental Permits, the Company has undertaken, or will undertake prior to
the Closing Date, all measures
necessary to facilitate transferability of the same, and the
Company is not aware of any condition,
event or circumstance that might prevent or impede the
transferability of the same, nor have they received any
Environmental Notice or written
communication regarding any material adverse change in the status
or terms and conditions of the same.
(c) No
real property currently or formerly
owned, operated or leased by the Company is listed on, or has been proposed for
listing on, the National
Priorities List (or CERCLIS) under CERCLA, or any similar state
list.
(d) There
has been no Release of
Hazardous Materials in contravention
of Environmental Law with
respect to the business or assets of the Company or any real property currently or formerly owned,
operated or leased by the Company, and the Company has not received an Environmental Notice that any real property currently or formerly owned,
operated or leased in connection with the business of the
Company (including soils, groundwater,
surface water, buildings and other structure located on any
such real property) has been
contaminated with any Hazardous
Material which could reasonably be expected to result in an
Environmental Claim against, or a
violation of Environmental Law
or term of any Environmental
Permit by, the Company.
(e) Section
3.16(e) of the
Disclosure Schedules contains a
complete and accurate list of all active or abandoned aboveground
or underground storage tanks owned or operated by the
Company.
(f) Section
3.16(f) of the
Disclosure Schedules contains a
complete and accurate list of all off-site Hazardous Materials treatment, storage, or
disposal facilities or locations used by the Company and any predecessors as to which
the Company may retain
liability, and none of these
facilities or locations has been placed or proposed for placement
on the National Priorities List
(or CERCLIS) under CERCLA, or
any similar state list, and the Company has not received any Environmental Notice regarding potential
liabilities with respect to such
off-site Hazardous Materials
treatment, storage, or disposal facilities or locations used by
the Company.
(g) The
Company has not retained or assumed,
by contract or operation
of Law, any liabilities or obligations of third parties
under Environmental
Law.
(h) The
Company has provided or otherwise made
available to Buyer and listed
in Section 3.16(h) of
the Disclosure Schedules: (i)
any and all environmental reports, studies, audits, records,
sampling data, site assessments, risk assessments, economic models
and other similar documents with respect to the business or assets
of the Company or any currently
or formerly owned, operated or leased real property which are in the possession or
control of the Company related
to compliance with Environmental Laws, Environmental Claims or an Environmental Notice or the Release of Hazardous Materials; and (ii) any and all material
documents concerning planned or anticipated capital expenditures
required to reduce, offset, limit or otherwise control pollution
and/or emissions, manage waste or otherwise ensure compliance with
current or future Environmental
Laws (including, without limitation, costs of remediation,
pollution control equipment and operational
changes).
(i) The
Company is not aware of or reasonably
anticipates, as of the Closing
Date, any condition, event or circumstance concerning the
Release or regulation of
Hazardous Materials that might, after
the Closing Date, prevent,
impede or materially increase the costs associated with the
ownership, lease, operation, performance or use of the business or
assets of the Company as
currently carried out.
Section 3.17 Employee Benefit
Matters.
(a) Section
3.17(a) of the
Disclosure Schedules contains a true
and complete list of each pension, benefit, retirement,
compensation, employment, consulting, profit-sharing, deferred
compensation, incentive, bonus, performance award, phantom equity,
stock or stock-based, change in control, retention, severance,
vacation, paid time off (PTO), medical, vision, dental, disability,
welfare, Code Section 125
cafeteria, fringe benefit and other similar agreement, plan, policy, program or arrangement
(and any amendments thereto), in each case whether or not reduced
to writing and whether funded or unfunded, including each
“employee benefit plan” within the meaning of
Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to
ERISA, which is or has been
maintained, sponsored, contributed to, or required to be
contributed to by the Company
for the benefit of any current or former employee, officer,
director, retiree, independent contractor or consultant of
the Company or any spouse or
dependent of such individual, or under which the
Company or any of its
ERISA Affiliates has or may have
any Liability, or with respect
to which Buyer or any of
its Affiliates would reasonably
be expected to have any Liability, contingent or otherwise (as listed
on Section 3.17(a) of
the Disclosure Schedules, each,
a “Benefit Plan”).
(b) With
respect to each Benefit Plan,
the Company has made available
to Buyer accurate, current and
complete copies of each of the following: (i) where the
Benefit Plan has been reduced to
writing, the plan document together with all amendments; (ii) where
the Benefit Plan has not been
reduced to writing, a written summary of all material plan terms;
(iii) where applicable, copies of any trust agreements or other funding arrangements,
custodial agreements,
insurance policies and
contracts, administration
agreements and similar
agreements, and investment management
or investment advisory agreements, now in effect or required in the
future as a result of the transactions contemplated by this
Agreement or otherwise; (iv) copies of
any summary plan descriptions, summaries of material modifications,
summaries of benefits and coverage, COBRA communications, employee handbooks and any
other written communications (or a description of any oral
communications) relating to any Benefit Plan; (v) in the case of any
Benefit Plan that is intended to be
qualified under Section 401(a)
of the Code, a copy of the most
recent determination, opinion or advisory letter from the
Internal Revenue Service and any legal
opinions issued thereafter with respect to such Benefit Plan’s continued qualification; (vi)
in the case of any Benefit Plan
for which a Form 5500 must be
filed, a copy of the two most recently filed Forms 5500, with all corresponding schedules
and financial statements
attached; (vii) actuarial valuations and reports related to
any Benefit Plans with respect
to the two most recently completed plan years; (viii) the most
recent nondiscrimination tests performed under the
Code; and (ix) copies of material
notices, letters or other correspondence from the
Internal Revenue Service,
Department of Labor,
Department of Health and Human
Services, Pension Benefit Guaranty Corporation or other
Governmental Authority relating to
the Benefit
Plan.
(c) Each
Benefit Plan and any related trust
(other than any multiemployer plan within the meaning of
Section 3(37) of ERISA (each a “Multiemployer
Plan”)) has been
established, administered and maintained in accordance with its
terms and in compliance with all applicable Laws (including ERISA, the Code and any applicable local Laws). Each Benefit Plan that is intended to be qualified
within the meaning of Section
401(a) of the Code (a
“Qualified Benefit
Plan”) is so qualified
and received a favorable and current determination letter from
the Internal Revenue Service
with respect to the most recent five year filing cycle, or with respect to a
prototype or volume submitter plan, can rely on an opinion letter
from the Internal Revenue
Service to the prototype plan or volume submitter plan sponsor, to
the effect that such Qualified
Benefit Plan is so qualified and that the plan and the trust
related thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and
nothing has occurred that could reasonably be expected to adversely
affect the qualified status of any Qualified Benefit Plan. Nothing has occurred with
respect to any Benefit Plan
that has subjected or could reasonably be expected to subject
the Company or any of
its ERISA Affiliates or, with
respect to any period on or after the Closing Date, Buyer or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Sections 4975 or 4980H of the Code.
No pension plan (other than a Multiemployer Plan) which is subject to minimum
funding requirements, including any multiple employer plan, (each,
a “Single Employer
Plan”) in which employees
of the Company or any
ERISA Affiliate participate or have
participated has an “accumulated funding deficiency”,
whether or not waived, or is subject to a lien for unpaid
contributions under Section
303(k) of ERISA or
Section 430(k) of the
Code. No Single Employer Plan covering employees of
the Company which is a
defined benefit plan has an
“adjusted funding target attainment percentage,” as
defined in Section 436 of
the Code, less than
80%. All benefits, contributions and
premiums relating to each Benefit Plan have been timely paid in accordance
with the terms of such Benefit
Plan and all applicable Laws
and accounting principles, and all benefits accrued under any
unfunded Benefit Plan have been
paid, accrued or otherwise adequately reserved to the extent
required by, and in accordance with, GAAP.
(d) Neither
the Company nor any of
its ERISA Affiliates has (i)
incurred or reasonably expects to incur, either directly or
indirectly, any material Liability under Title I or Title IV of ERISA or related provisions of the
Code or applicable local
Law relating to employee
benefit plans; (ii) failed to timely
pay premiums to the Pension
Benefit Guaranty Corporation; (iii) withdrawn from any
Benefit Plan; (iv) engaged in any
transaction which would give rise to liability under Section 4069 or Section 4212(c) of
ERISA; (v) incurred
taxes under Section 4971 of the Code with respect to any Single Employer Plan; or (vi) participated in a
multiple employer welfare arrangements (MEWA).
(e) With
respect to each Benefit Plan
(i) no such plan is a “multiple employer plan” within
the meaning of Section 413(c)
of the Code or a
“multiple employer welfare arrangement” (as defined
in Section 3(40) of
ERISA); (ii) no Action has been initiated by the
Pension Benefit Guaranty Corporation
to terminate any such plan or to appoint a trustee for any such
plan and (iii) no “reportable event,” as defined
in Section 4043 of
ERISA, with respect to which the
reporting requirement has not been waived has occurred with respect
to any such plan.
(f) Each
Benefit Plan can be amended,
terminated or otherwise discontinued after the Closing in accordance with its terms, without
material liabilities to
Buyer, the Company or any of their Affiliates other than ordinary administrative
expenses typically incurred in a termination event. The
Company has no commitment or
obligation and has not made any representations to any employee,
officer, director, independent contractor or consultant, whether or
not legally binding, to adopt, amend, modify or terminate
any Benefit Plan or any
collective bargaining agreement, in connection with the consummation of
the transactions contemplated by this Agreement or otherwise.
(g) Other
than as required under Sections
601 to 608 of ERISA or other
applicable Law, no
Benefit Plan provides post-termination
or retiree health benefits to any individual for any reason, and
neither the Company nor any of
its ERISA Affiliates has
any Liability to provide
post-termination or retiree health benefits to any individual or
ever represented, promised or contracted to any individual that
such individual would be provided with post-termination or retiree
health benefits.
(h) There
is no pending or, to the Company’s Knowledge, threatened Action relating to a Benefit Plan (other than routine claims for
benefits), and no Benefit Plan
has within the three years
prior to the date hereof been the subject of an examination or
audit by a Governmental
Authority or the subject of an application or filing under or is a
participant in, an amnesty, voluntary compliance, self-correction
or similar program sponsored by any Governmental Authority.
(i) There
has been no amendment to, announcement by the Company or any of its Affiliates relating to, or change in employee
participation or coverage under, any Benefit Plan or collective bargaining
agreement that would increase
the annual expense of
maintaining such plan above the level of the expense incurred for
the most recently completed fiscal year (other than on a de minimis basis)
with respect to any director, officer, employee, independent
contractor or consultant, as applicable. None of the
Company nor any of its
Affiliates has any commitment or
obligation or has made any representations to any director,
officer, employee, independent contractor or consultant, whether or
not legally binding, to adopt, amend, modify or terminate
any Benefit Plan or any
collective bargaining agreement.
(j) Each
Benefit Plan that is subject to
Section 409A of the
Code has been administered in
compliance with its terms and the operational and documentary
requirements of Section 409A of
the Code and all applicable
regulatory guidance (including notices, rulings and proposed and
final regulations) thereunder. The Company does not have any obligation to gross up,
indemnify or otherwise reimburse any individual for any
excise taxes, interest or
penalties incurred pursuant to Section 409A of the Code.
(k) Each
individual who is classified by the Company as an independent contractor has been
properly classified for purposes of participation and benefit
accrual under each Benefit
Plan.
(l) Neither
the execution of this Agreement
nor any of the transactions contemplated by this
Agreement will (either alone or upon
the occurrence of any additional or subsequent events): (i) entitle
any current or former director, officer, employee, independent
contractor or consultant of the Company to severance pay or any other payment;
(ii) accelerate the time of payment, funding or vesting, or
increase the amount of compensation (including stock-based
compensation) due to any such individual; (iii) limit or restrict
the right of the Company to
merge, amend, or terminate any Benefit Plan; (iv) increase the amount payable
under or result in any other material obligation pursuant to
any Benefit Plan; (v) result in
“excess parachute payments” within the meaning
of Section 280G(b) of
the Code; or (vi) require a
“gross-up” or other payment to any “disqualified
individual” within the meaning of Section 280G(c) of the Code.
Section 3.18 Employment
Matters.
(a) Section
3.18(a) of the Disclosure Schedules contains a list of all
Persons who are employees, independent
contractors or consultants of the Company as of the date hereof, including any
employee who is on a leave of absence of any nature, paid or
unpaid, authorized or unauthorized, and sets forth for each such
individual the following: (i) name; (ii) title or position
(including whether full-time or part-time); (iii) hire or retention
date; (iv) current annual base
compensation rate or contract
fee; (v) commission, bonus or other incentive-based compensation;
and (vi) a description of the fringe benefits provided to each such
individual as of the date hereof. As of the date hereof, all
compensation, including wages, commissions, bonuses, fees and other
compensation, payable to all employees, independent contractors or
consultants of the Company for
services performed on or prior to the date hereof have been paid in
full (or accrued in full on the audited balance sheet contained in the Closing Working Capital Statement) and there are
no outstanding agreements,
understandings or commitments of the Company with respect to any compensation,
commissions, bonuses or fees.
(b) The
Company is not, and has not been for
the past five years, a party
to, bound by, or negotiating any collective bargaining
agreement or other Contract with a union, works council or labor
organization (collectively, “Union”), and there is not, and has not been for
the past five years, any
Union representing or purporting to
represent any employee of the Company, and no Union or group of employees is seeking or has
sought to organize employees for the purpose of collective
bargaining. There has never been, nor has there been any threat of,
any strike, slowdown, work stoppage, lockout, concerted refusal to
work overtime or other similar labor disruption or dispute
affecting the Company or any of
its employees. The Company has
no duty to bargain with any Union.
(c) The
Company is and has been in compliance
with all applicable Laws
pertaining to employment and employment practices, including
all Laws relating to labor
relations, equal employment opportunities, fair employment
practices, employment discrimination, harassment, retaliation,
reasonable accommodation, disability rights or benefits,
immigration, wages, hours, overtime compensation, child labor,
hiring, promotion and termination of employees, working conditions,
meal and break periods, privacy, health and safety, workers’
compensation, leaves of absence, paid sick leave and unemployment
insurance. All individuals characterized and treated by the
Company as independent contractors or
consultants are properly treated as independent contractors under
all applicable Laws. All
employees of the Company
classified as exempt under the Fair Labor Standards Act and state and local wage
and hour Laws are properly
classified. The Company is in
compliance with and has complied with all immigration
Laws, including Form I-9 requirements and any applicable
mandatory E-Verify obligations.
There are no Actions against
the Company pending, or to
the Company’s
Knowledge, threatened to be brought or
filed, by or with any Governmental Authority or arbitrator in connection
with the employment of any current or former applicant, employee,
consultant, volunteer, intern or independent contractor of
the Company, including, without
limitation, any charge, investigation or claim relating to unfair
labor practices, equal employment opportunities, fair employment
practices, employment discrimination, harassment, retaliation,
reasonable accommodation, disability rights or benefits,
immigration, wages, hours, overtime compensation, employee
classification, child labor, hiring, promotion and termination of
employees, working conditions, meal and break periods, privacy,
health and safety, workers’ compensation, leaves of absence,
paid sick leave, unemployment insurance or any other employment
related matter arising under applicable Laws.
(d) The
Company has complied with the
WARN Act, and it has no plans to
undertake any action in the
future that would trigger the WARN Act.
(e) With
respect to each Government
Contract, the Company is and
has been in compliance with Executive Order No. 11246 of 1965 (“E.O. 11246”),
Section 503 of the Rehabilitation Act
of 1973 (“Section
503”) and the Vietnam Era
Veterans’ Readjustment Assistance Act of 1974
(“VEVRAA”),
including all implementing regulations. The Company maintains and complies with
affirmative action plans in
compliance with E.O. 11246, Section 503 and VEVRAA, including all implementing regulations.
The Company is not, and has not
been for the past five years,
the subject of any audit, investigation or enforcement
action by any Governmental Authority in connection with
any Government Contract or
related compliance with E.O. 11246, Section 503 or VEVRAA. The Company has not been debarred, suspended or
otherwise made ineligible from doing business with the
United States government or any
government contractor. The Company is in compliance with and has complied
with all immigration Laws,
including any applicable mandatory E-Verify obligations.
Section 3.19 Taxes.
(a) All
Tax Returns required to be filed on or
before the Closing Date by
the Company have been, or will
be, timely filed. Such Tax
Returns are, or will be, true, complete and correct in all
respects. All Taxes due and
owing by the Company (whether
or not shown on any Tax Return)
have been, or will be, timely paid.
(b) The
Company has withheld and paid
each Tax required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, customer, shareholder
or other party, and complied with all information reporting and
backup withholding provisions of applicable Law.
(c) No
written claim has been made by any taxing authority in any
jurisdiction where the Company
does not file Tax Returns that
it is, or may be, subject to Tax by that jurisdiction.
(d) No
extensions or waivers of statutes of limitations have been given or
requested with respect to any Taxes of the Company.
(e) The
amount of the Company’s Liability for unpaid Taxes for all periods ending on or before
December 31, 2019 does not, in the
aggregate, exceed the amount of accruals for Taxes (excluding reserves for deferred
Taxes) reflected on the
Financial Statements. The amount of
the Company’s
Liability for unpaid
Taxes for all periods following the
end of the recent period covered by the Financial Statements shall not, in the aggregate,
exceed the amount of accruals for Taxes (excluding reserves for deferred
Taxes) as adjusted for the passage of
time in accordance with the past custom and practice of the
Company (and which accruals shall not
exceed comparable amounts incurred in similar periods in
prior years).
(f) Section
3.19(f) of the Disclosure Schedules sets
forth:
(i) the
taxable years of the Company as
to which the applicable statutes of limitations on the assessment
and collection of Taxes have
not expired;
(ii) those
years for which examinations by the taxing authorities have been
completed; and
(iii) those
taxable years for which examinations by taxing authorities are
presently being conducted.
(g) All
deficiencies asserted, or assessments made, against the
Company as a result of any
examinations by any taxing authority have been fully
paid.
(h) The
Company is not a party to any
Action claimed or raised by any taxing
authority in a writing received by the Company. There are no
pending or to the Company’s Knowledge threatened
Actions by any taxing
authority.
(i) The
Company has delivered to
Buyer copies of all
federal, state, local and foreign
income, franchise and similar Tax Returns, examination reports, and statements
of deficiencies assessed against, or agreed to by, the
Company for all Tax periods ending after December 31, 2019.
(j) There
are no Encumbrances for
Taxes (other than for current
Taxes not yet due and payable) upon
the assets of the Company.
(k) The
Company is not a party to, or bound
by, any Tax indemnity,
Tax sharing or Tax allocation agreement.
(l) No
private letter rulings, technical advice memoranda or
similar agreement or rulings
have been requested, entered into or issued by any taxing authority
with respect to the Company.
(m) The
Company has not been a member of an
affiliated, combined, consolidated or unitary Tax group for Tax purposes. The Company has no Liability for Taxes of any Person (other than the Company) under Treasury Regulations Section 1.1502-6 (or any
corresponding provision of state, local or foreign
Law), as transferee or successor,
by contract or
otherwise.
(n) The
Company will not be required to
include any item of income in, or exclude any item or deduction
from, taxable income for any taxable period or portion thereof
ending after the Closing Date
as a result of:
(i) any
change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local
or foreign Tax Laws), or use of
an improper method of accounting, for a taxable period ending on or
prior to the Closing
Date;
(ii) an
installment sale or open transaction occurring on or prior to
the Closing
Date;
(iii) a
prepaid amount received on or before the Closing Date;
(iv) any
closing agreement under Section 7121 of the Code, or similar provision of state, local or
foreign Law;
or
(v) any
election under Section 108(i)
of the Code.
(o) No
Stockholder is a “foreign
person” as that term is used
in Treasury Regulations Section
1.1445-2. The Company is not,
nor has it been, a United
States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(a) of
the Code.
(p) The
Company has not been a
“distributing corporation” or a “controlled
corporation” in connection with a distribution described
in Section 355 of the
Code.
(q) The
Company is not, and has not been, a
party to, or a promoter of, a “reportable transaction”
within the meaning of Section
6707A(c)(1) of the Code
and Treasury Regulations
Section 1.6011 4(b).
(r) There
is currently no limitation on the utilization of net
operating losses,
capital losses, built-in
losses, tax credits or similar items of the
Company under Sections 269, 382, 383, 384 or 1502 of the
Code and the Treasury Regulations thereunder (and comparable
provisions of state, local or foreign Law).
Section 3.20 Books and Records.
The minute books and stock record
books of the Company, all of
which have been made available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices. The minute
books of the Company contain
accurate and complete records of all meetings, and
actions taken by written consent of,
the Stockholders, the
Company Board and any committees of
the Company Board, and no
meeting, or action taken by
written consent, of any such Stockholders, the Company Board or committee has been held for which
minutes have not been prepared and are not contained in such minute
books. At the Closing, all of
those books and records will be in the possession of the
Company.
Section 3.21 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this
Agreement or any other
Ancillary Document based upon
arrangements made by or on behalf of the Company or the Stockholders.
Section 3.22 Regulation D.
The
Company has
disclosed to each of the Stockholders that the
offer and sale of shares of
TENX Stock
Consideration to the Stockholders pursuant
to the transaction contemplated by this Agreement is intended
to be exempt from registration under Regulation D
promulgated under the Securities Act
(“Regulation
D”) and
such shares may not be
re-offered or resold other than in conformity with the registration
requirements of the Securities Act and
applicable state securities Laws or pursuant to an
exemption therefrom. The certificates
representing shares of
TENX Stock
Consideration shall bear a legend to the effect described above and
shall include such additional legends as necessary to comply with
applicable federal and state
securities Laws and other
applicable restrictions. Each Stockholder is
an Accredited
Investor. The Company acknowledges
that Buyer is relying on the
foregoing and each Accredited Investor
Questionnaire to determine whether the offer and sale of
shares
of TENX Stock
Consideration to the Stockholders pursuant
to the transaction contemplated by this Agreement meets the
conditions of Regulation
D.
Section 3.23 Full Disclosure.
No representation or warranty by
the Company in this
Agreement and no statement contained
in the Disclosure Schedules to
this Agreement or any
certificate or other document
furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a
material fact, or omits to state a material fact necessary to make
the statements contained therein, in light of the circumstances in
which they are made, not misleading.
Section 3.24 No Other Representations and
Warranties. Except for the
representations and warranties contained in this
Article III (including the related
portions of the Disclosure
Schedules), none of Stockholders, the Company or any other Person has made or makes any other express or
implied representation or warranty, either written or oral, on
behalf of Stockholders or
the Company, including any
representation or warranty as to the accuracy or completeness of
any information regarding the Company furnished or made available to
Buyer and its Representatives or as to the future revenue,
profitability or success of the Company, or any representation or warranty arising
from statute or otherwise in law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER
SUB
Buyer and Merger Sub represents and warrants to the
Company that the statements contained
in this 1IV are true and correct as of the date
hereof.
Section 4.01 Organization and Authority
of Buyer. Each of Buyer
and Merger Sub is a corporation
duly organized, validly existing and in good standing under
the Laws of the
state of Delaware. Each of
Buyer and Merger Sub has full corporate power and authority
to enter into this Agreement
and the Ancillary Documents to
which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each of
Buyer and Merger Sub of this Agreement and any Ancillary Document to which it is a party, the
performance by it of its obligations hereunder and thereunder and
the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action on the part of
Buyer or Merger Sub, as applicable. This
Agreement has been duly executed and
delivered by each of Buyer
and Merger Sub, and this
Agreement constitutes a legal, valid
and binding obligation of each enforceable against each in
accordance with its terms. When each Ancillary Document to which Buyer or Merger is or will be a party has been duly
executed and delivered by Buyer
or Merger Sub, as applicable,
(assuming due authorization, execution and delivery by each other
party thereto), such Ancillary
Document will constitute a legal and binding obligation of
Buyer or Merger Sub, as applicable, enforceable against it
in accordance with its terms.
Section 4.02 No Conflicts; Consents.
The execution, delivery and
performance by Buyer of
this Agreement and the
Ancillary Documents to which it is a
party, and the consummation of the transactions contemplated hereby
and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of
the certificate of
incorporation, by-laws or other
organizational documents of Buyer; (b) conflict with or result in a violation
or breach of any provision of any Law or Governmental Order applicable to
Buyer; or (c) require the consent,
notice or other action by
any Person under any
Contract to which Buyer is a party. No consent, approval,
Permit, Governmental Order, declaration or filing with, or
notice to, any Governmental
Authority is required by or with respect to Buyer in connection with the execution and
delivery of this Agreement and
the Ancillary Documents and the
consummation of the transactions contemplated hereby and thereby,
except for such filings as may be required under the
HSR Act.
Section 4.03 Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this
Agreement or any Ancillary Document based upon arrangements made by
or on behalf of Buyer.
Section 4.04 Sufficiency of
Funds. Buyer has sufficient cash on hand or other sources
of immediately available funds to enable it to make payment of
the Purchase Price and
consummate the transactions contemplated by this
Agreement.
Section 4.05 Legal Proceedings.
There are no Actions pending or, to Buyer’s knowledge, threatened against or
by Buyer or any
Affiliate of Buyer that challenge or seek to prevent, enjoin or
otherwise delay the transactions contemplated by this
Agreement. No event has occurred or
circumstances exist that may give rise or serve as a basis for any
such Action.
Section 4.06 SEC
Filings; Financial
Statements.
(a) Since
January 1,
2018, Buyer has filed all
forms, reports and documents required to be filed by
Buyer with
the SEC and (if and to the
extent such forms, reports and documents are not available
on EDGAR) has made
available to the Company such forms,
reports and documents in the form filed by it with the
SEC (all
such required forms, reports and documents collectively, the
“Buyer
SEC Reports”). The
Buyer SEC
Reports (i) at the time they were filed complied as to form in all
material respects with the applicable requirements of the
Securities
Act or the Exchange Act, as the
case may be, and the rules and regulations of the
SEC
thereunder applicable to such Buyer SEC Reports and
(ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this
Agreement,
then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(b) The
consolidated financial statements
(including, in each case, any related notes) contained in
the Buyer SEC Reports
complied as to form in all material respects with the applicable
rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted
accounting principles in the United States, applied
on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by the
SEC) and
fairly presented the consolidated financial position of
Buyer as at
the respective dates and the consolidated results of its operations
and cash flows for the periods indicated (subject, in the case of
the unaudited financial statements,
to normal year-end recurring adjustments). The balance sheet of
Buyer
contained in the Buyer SEC Reports as
of December 31, 2019 is
hereinafter referred to as the “Buyer Balance Sheet.”
Neither Buyer nor any of its
subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet prepared
in accordance with GAAP except for
(i) liabilities reflected
on the Buyer
Balance
Sheet, (ii) liabilities incurred
since the date of the Buyer
Balance
Sheet in the ordinary course of business consistent with past
practices, (iii) liabilities incurred in
connection with this Agreement and
(iv) liabilities that would
not reasonably be expected to have a Material Adverse Effect
on Buyer.
(c) Buyer
has not been notified by its independent registered public
accounting firm or by the staff of the SEC that such firm or the staff of the
SEC, as the case may be, is of the
view that any financial
statement included in any registration statement filed by
Buyer under the Securities Act or any periodic or current report
filed by Buyer under the
Exchange Act should be restated, or
that Buyer should modify its
accounting in future periods in a manner that would be materially
adverse to Buyer.
(d) Buyer
is in compliance in all material respects with the provisions of
the Sarbanes-Oxley Act of 2002
(the “Sarbanes-Oxley
Act”) that are applicable
to Buyer, and any related rules
and regulations promulgated by the SEC. Buyer’s disclosure controls and procedures
(as defined in Rule 13a-15(e)
under the Exchange Act) and
internal control over financial reporting (as defined in
Rule 13a-15(f) under the
Exchange Act) are effective in all
material respects. Neither Buyer nor, to Buyer’s knowledge, its independent auditors
have identified (i) any significant deficiency or material weakness
in Buyer’s internal
control over financial reporting, (ii) any fraud, whether or not
material, that involves Buyer’s management or other employees who
have a role in the preparation of financial statements or Buyer’s internal control over financial
reporting or (iii) any claim or allegation regarding any of the
foregoing. Since December 31,
2019, there has not been any change in Buyer’s internal control over financial
reporting that has materially affected, or is reasonably likely to
materially affect, Buyer’s internal control over financial
reporting.
Section 4.07 Valid Issuance of
TENX Stock
Consideration. The
TENX Stock Consideration, when issued,
sold and delivered in accordance with the terms and for the
consideration set forth in this Agreement and the Certificate of Designation, will be validly
issued, fully paid and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this
Agreement, applicable state and
federal securities laws and liens
or encumbrances created by or
imposed by the Stockholders.
Assuming the accuracy of the representations of the
Stockholders in the
Accredited Investor Questionnaires,
the TENX Stock Consideration
will be issued in compliance with all applicable
federal and state securities laws.
The TENX Common Stock issuable
upon conversion of the
TENX Stock Consideration (as
applicable) has been duly reserved for issuance, and upon issuance
in accordance with the terms of the governing documents of
Buyer, will be validly issued, fully
paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement, applicable federal and state securities laws and liens
or encumbrances created by or
imposed by the Stockholders.
Section 4.08 Independent
Investigation.
Buyer has conducted its own
independent investigation, review and analysis of the business,
results of operations, prospects, condition (financial or
otherwise) or assets of the Company, and acknowledges that it has been
provided adequate access to the personnel, properties, assets,
premises, books and records, and other documents and data of
the Company for such
purpose. Buyer acknowledges and
agrees that: (a) in making its decision to enter into this
Agreement and to consummate the
transactions contemplated hereby, Buyer has relied solely upon its own investigation
and the express representations and warranties of the
Company set forth in
Article III of this
Agreement (including the related
portions of the Disclosure
Schedules); and (b) none of Stockholders, the Company or any other Person has made any representation or warranty as
to the Company or this
Agreement, except as expressly set
forth in Article III of
this Agreement (including the
related portions of the Disclosure Schedules).
ARTICLE V
COVENANTS
Section 5.01 Conduct of Business Prior to
the Closing. From the date hereof until the Closing, except as otherwise provided in
this Agreement or consented to
in writing by Buyer (which
consent shall not be unreasonably withheld or delayed), the
Company shall, (x) conduct the
business of the Company in the
ordinary course of business consistent with past practice; and (y)
use reasonable best efforts to maintain and preserve intact the
current organization, business and franchise of the
Company and to preserve the rights,
franchises, goodwill and relationships of its employees, customers,
lenders, suppliers, regulators and others having business
relationships with the Company.
Without limiting the foregoing, from the date hereof until
the Closing Date, the
Company shall:
(a) preserve
and maintain all of its Permits;
(b) pay
its debts, Taxes and other
obligations when due;
(c) maintain
the properties and assets owned, operated or used by the
Company in the same condition as they
were on the date of this Agreement, subject to reasonable wear and
tear;
(d) continue
in full force and effect without modification all
Insurance Policies, except as required
by applicable Law;
(e) defend
and protect its properties and assets from infringement or
usurpation;
(f) perform
all of its obligations under all Contracts relating to or affecting its properties,
assets or business;
(g) maintain
its books and records in accordance with past
practice;
(h) comply
in all material respects with all applicable Laws; and
(i) not
take or permit any
action that would cause any of the
changes, events or conditions described in Section 3.07 to occur.
Section 5.02 Access to Information.
From the date hereof until the
Closing, the Company shall (a) afford Buyer and its Representatives full and free access to and the
right to inspect all of the Real Property, properties, assets, premises, books
and records, Contracts and
other documents and data related to the Company; (b) furnish Buyer and its Representatives with such financial, operating and
other data and information related to the Company as Buyer or any of its Representatives may reasonably request; and (c)
instruct the Representatives of
the Company to cooperate
with Buyer in its investigation
of the Company. Any
investigation pursuant to this 15.02 shall be
conducted in such manner as not to interfere unreasonably with the
conduct of the business of the Company. No investigation by Buyer or other information received by
Buyer shall operate as a waiver or
otherwise affect any representation, warranty or
agreement given or made by the
Company in this Agreement.
Section 5.03 No Solicitation of Other
Bids.
(a) The
Company shall not authorize or
permit any of its Affiliates or any of its Representatives to, directly or indirectly, (i)
encourage, solicit, initiate, facilitate or continue inquiries
regarding an Acquisition
Proposal; (ii) enter into discussions or negotiations with, or
provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into
any agreements or other
instruments (whether or not binding) regarding an
Acquisition Proposal. The
Company shall immediately cease and
cause to be terminated, and shall cause its Affiliates (including the Stockholders) and all of its and their
Representatives to immediately cease
and cause to be terminated, all existing discussions or
negotiations with any Persons
conducted heretofore with respect to, or that could lead to,
an Acquisition Proposal. For
purposes hereof, “Acquisition
Proposal” shall mean any
inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) concerning (i) a merger, consolidation, liquidation,
recapitalization, share
exchange or other business combination transaction involving
the Company; (ii) the issuance
or acquisition of shares of
capital stock or other equity securities of the Company; or (iii) the sale, lease, exchange or
other disposition of any significant portion of the
Company’s properties or
assets.
(b) In
addition to the other obligations under this 15.03,
the Company shall promptly (and
in any event within three Business
Days after receipt thereof by the Company or its Representatives) advise Buyer orally and in writing of any
Acquisition Proposal, any request for
information with respect to any Acquisition Proposal, or any inquiry with respect
to or which could reasonably be expected to result in an
Acquisition Proposal, the material
terms and conditions of such request, Acquisition Proposal or inquiry, and the identity
of the Person making the
same.
(c) The
Company agrees that the rights and
remedies for noncompliance with this 15.03 shall
include having such provision specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that
any such breach or threatened breach shall cause irreparable injury
to Buyer and that money damages
would not provide an adequate remedy to Buyer.
Section 5.04 Notice of Certain
Events.
(a) From
the date hereof until the Closing, the Company shall promptly notify Buyer in writing of:
(i) any
fact, circumstance, event or action the existence, occurrence or taking of
which (A) has had, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or
could reasonably be expected to result in, any representation or
warranty made by the Company
hereunder not being true and correct or (C) has resulted in, or
could reasonably be expected to result in, the failure of any of
the conditions set forth in 17.02 to be
satisfied;
(ii) any
notice or other communication from any Person alleging that the consent of such
Person is or may be required in
connection with the transactions contemplated by this
Agreement;
(iii) any
notice or other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement; and
(iv) any
Actions commenced or, to the
Company’s Knowledge, threatened against, relating to or
involving or otherwise affecting the Company that, if pending on the date of
this Agreement, would have been
required to have been disclosed pursuant to 13.18 or that
relates to the consummation of the transactions contemplated by
this Agreement.
(b) Buyer’s
receipt of information pursuant to this 15.04 shall
not operate as a waiver or otherwise affect any representation,
warranty or agreement given or
made by the Company in
this Agreement
(including 18.02 and 19.01(b)) and
shall not be deemed to amend or supplement the Disclosure Schedules; provided, however, that if such information is a
description of a matter that would give Buyer the right to terminate this
Agreement and Buyer does not, within five Business
Days after receipt of such information, elect to so terminate
this Agreement, then such
information shall be deemed to amend or supplement the
Disclosure Schedules and
Buyer shall have waived its right to
indemnification under this Agreement with respect to such
matter.
Section 5.05 Resignations.
The Company shall deliver to Buyer written resignations, effective as of
the Closing Date, of the
officers and directors of the Company.
Section 5.06 Confidentiality.
From and after the Closing, the Company shall, and shall cause its
Affiliates to, hold, and shall use its
reasonable best efforts to cause its or their respective
Representatives to hold, in confidence
any and all information, whether written or oral, concerning
the Company, except to the
extent that the Company can
show that such information (a) is generally available to and known
by the public through no fault of the Company, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by
the Company, any of its
Affiliates or their respective
Representatives from and after
the Closing from sources which
are not prohibited from disclosing such information by a legal,
contractual or fiduciary obligation. If the Company or any of its Affiliates or their respective Representatives are compelled to disclose any
information by judicial or administrative process or by other
requirements of Law, the
Company shall promptly notify
Buyer in writing and shall disclose
only that portion of such information which the Company is advised by its counsel in writing is
legally required to be disclosed, provided that
the Company shall use reasonable best efforts to
obtain an appropriate protective order or other reasonable
assurance that confidential treatment will be accorded such
information.
Section 5.07 [RESERVED]
Section 5.08 Governmental Approvals and
Consents.
(a) Each
party hereto shall, as promptly as possible, (i) make, or cause or
be made, all filings and submissions (including those under
the HSR Act) required under
any Law applicable to such
party or any of its Affiliates;
and (ii) use reasonable best efforts to obtain, or cause to be
obtained, all consents, authorizations, orders and approvals from
all Governmental Authorities
that may be or become necessary for its execution and delivery of
this Agreement and the
performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate
fully with the other party and its Affiliates in promptly seeking to obtain all such
consents, authorizations, orders and approvals. The parties hereto
shall not willfully take any action that will have the effect of delaying,
impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.
(b) The
Company and Buyer shall use reasonable best efforts to give
all notices to, and obtain all consents from, all third parties
that are described in Section
3.04 of the Disclosure
Schedules.
(c) Without
limiting the generality of the parties’ undertakings pursuant
to subsections (a) and
(b) above, each of the parties hereto
shall use all reasonable best efforts to:
(i) respond
to any inquiries by any Governmental Authority regarding antitrust or
other matters with respect to the transactions contemplated by
this Agreement or any
Ancillary
Document;
(ii) avoid
the imposition of any order or the taking of any
action that would restrain, alter or
enjoin the transactions contemplated by this Agreement or any Ancillary Document; and
(iii) in
the event any Governmental
Order adversely affecting the ability of the parties to consummate
the transactions contemplated by this Agreement or any Ancillary Document has been issued, to have
such Governmental Order vacated
or lifted.
(d) If
any consent, approval or authorization necessary to preserve any
right or benefit under any Contract to which the Company is a party is not obtained prior to
the Closing, the
Stockholder Representative shall,
subsequent to the Closing,
cooperate with Buyer and
the Company in attempting to
obtain such consent, approval or authorization as promptly
thereafter as practicable. If such consent, approval or
authorization cannot be obtained, the Stockholder Representative shall use its
reasonable best efforts to provide the Company with the rights and benefits of the
affected Contract for the term
thereof, and, if the Stockholder Representative provides such rights
and benefits, the Company shall
assume all obligations and burdens thereunder.
(e) All
analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on
behalf of either party before any Governmental Authority or the staff or regulators
of any Governmental Authority,
in connection with the transactions contemplated hereunder (but,
for the avoidance of doubt, not including any interactions
between Stockholders or
the Company with
Governmental Authorities in the
ordinary course of business, any disclosure which is not permitted
by Law or any disclosure
containing confidential information) shall be disclosed to the
other party hereunder in advance of any filing, submission or
attendance, it being the intent that the parties will consult and
cooperate with one another, and consider in good faith the views of
one another, in connection with any such analyses, appearances,
meetings, discussions, presentations, memoranda, briefs, filings,
arguments, and proposals. Each party shall give notice to the other
party with respect to any meeting, discussion, appearance or
contact with any Governmental
Authority or the staff or regulators of any Governmental Authority, with such notice being
sufficient to provide the other party with the opportunity to
attend and participate in such meeting, discussion, appearance or
contact.
(f) Notwithstanding
the foregoing, nothing in this 15.08 shall
require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest,
discontinue or limit, before or after the Closing Date, any assets, businesses or interests
of Buyer, the
Company or any of their
respective Affiliates; (ii) any
conditions relating to, or changes or restrictions in, the
operations of any such assets, businesses or interests which, in
either case, could reasonably be expected to result in a
Material Adverse Effect or materially
and adversely impact the economic or business benefits to
Buyer of the transactions contemplated
by this Agreement; or (iii) any
material modification or waiver of the terms and conditions of
this Agreement.
Section 5.09 Books and
Records.
(a) In
order to facilitate the resolution of any claims made against or
incurred by the Company prior
to the Closing, or for any
other reasonable purpose, for a period of seven years after the Closing, Buyer
shall:
(i) retain
the books and records (including personnel files) of the
Company relating to periods prior to
the Closing in a manner
reasonably consistent with the prior practices of the
Company; and
(ii) upon
reasonable notice, afford the Stockholder Representative reasonable access
(including the right to make, at Stockholder’s expense, photocopies), during
normal business hours, to such books and
records;
provided,
however, that any books and
records related to Tax matters
shall be retained pursuant to the periods set forth in
1VI.
(b) In
order to facilitate the resolution of any claims made by or against
or incurred by Buyer or
the Company after the
Closing, or for any other reasonable
purpose, for a period of seven
years following the Closing,
the Stockholder Representative
shall:
(i) retain
the books and records (including personnel files) which relate to
the Company and its operations
for periods prior to the Closing; and
(ii) upon
reasonable notice, afford the Representatives of Buyer or the Company reasonable access (including the right to
make, at Buyer’s expense,
photocopies), during normal business hours, to such books and
records;
provided,
however, that any books and
records related to Tax matters
shall be retained pursuant to the periods set forth in
1VI.
(c) Neither
Buyer nor Stockholders shall be obligated to provide the
other party with access to any books or records (including
personnel files) pursuant to this 15.09 where
such access would violate any Law.
Section 5.10 Closing Conditions.
From the date hereof until the
Closing, each party hereto shall use
reasonable best efforts to take such actions as are necessary to expeditiously satisfy
the closing conditions set
forth in 1VII hereof.
Section 5.11 Public Announcements.
Unless otherwise required by
applicable Law (based upon the
reasonable advice of counsel), no party to this Agreement shall make any public announcements in
respect of this Agreement or
the transactions contemplated hereby or otherwise communicate with
any news media without the prior written consent of the other party
(which consent shall not be unreasonably withheld or delayed), and
the parties shall cooperate as to the timing and contents of any
such announcement.
Section 5.12 Buyer Stockholder
Approval. Not later than
July 31, 2021, Buyer shall take all action necessary under the Delaware General Corporation Law, the rules of the NASDAQ Stock Market and Buyer’s governing documents to call, convene
and hold a meeting of the stockholders of Buyer to vote upon the conversion of the
TENX Preferred Stock (the
“Conversion”) pursuant to the Certificate of Designation (the
“Buyer
Stockholders’ Meeting”, which for the avoidance of doubt is
anticipated to be Buyer’s 2020 annual
meeting of stockholders). In
the proxy statement or any other soliciting materials for
the Buyer Stockholders’
Meeting or any subsequent meeting of the stockholders of Buyer at which the Conversion will be voted upon, the
Buyer Board will recommend that
the stockholders of
Buyer approve the Conversion (the “Buyer Board
Recommendation”) and will
use reasonable best efforts to solicit from the stockholders of Buyer the affirmative vote of the holders
of shares representing a
majority of the shares of
capital stock of Buyer voting
in person or by proxy at
the Buyer Stockholders’
Meeting (the “Buyer Stockholder
Approval”), except that
to the extent that the Buyer
Board may change such recommendation if the Buyer Board reasonably determines in good faith,
after consultation with outside counsel, that it must take
such action in order to comply
with its fiduciary duties under applicable Law. If the Buyer does not obtain the Buyer Stockholder Approval at the
Buyer Stockholders’ Meeting,
the Buyer shall call a meeting
every 90 days thereafter to
seek the Buyer Stockholder
Approval until the earlier of the date the Buyer Stockholder Approval is obtained or
the TENX Preferred Stock is no
longer outstanding. Notwithstanding anything in this
Agreement to the contrary, this
Section 5.12 shall survive the
Closing.
Section 5.13 Board of Directors. At Buyer’s first regularly scheduled board
meeting following the Closing,
the Buyer Board shall appoint
to the Buyer Board one (1)
director designated by the Stockholder Representative. As promptly as
practicable after Buyer has
obtained the Buyer Stockholder
Approval, the Buyer Board shall
appoint to the Buyer Board two
(2) additional directors designated by the Stockholder Representative.
Section 5.14 Audited Financial Statements.
As promptly as practicable after
the Closing, but in no event
later than sixty (60) days
after the Closing Date,
the Stockholder Representative
shall deliver to Buyer
audited financial statements of
the Company sufficient to
enable Buyer to comply with its
obligations pursuant to Item
9.01(a)(4) of Form 8-K.
Section 5.15 Further Assurances.
Following the Closing, each of the parties hereto shall, and
shall cause their respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances and assurances and take such
further actions as may be
reasonably required to carry out the provisions hereof and give
effect to the transactions contemplated by this Agreement.
Section 5.16 Tax-Free
Reorganization.
Buyer has no current plan or intention
to (a) reacquire any of the TENX Stock Consideration or (b) sell of otherwise
dispose of any of the properties or assets of the
Company, except for dispositions made
in the ordinary course of business or transfers described in
section 368(a)(2)(C) of the
Code.
ARTICLE VI
TAX MATTERS
Section 6.01 Tax
Covenants.
(a) Prior
to the Closing, without the
prior written consent of Buyer,
the Company, its
Affiliates, the Stockholders and their respective
Representatives shall not, to the
extent it may affect, or relate to, the Company, make, change or rescind any
Tax election, amend any
Tax Return or take any position on
any Tax Return, take any
action, omit to take any
action or enter into any other
transaction that would have the effect of increasing the
Tax liability or reducing any Tax asset of Buyer or the Company in respect of any Post-Closing Tax Period. The Company agrees that Buyer is to have no liability for any Tax resulting from any action the Company, its Affiliates or any of their respective
Representatives, and agrees to
indemnify and hold harmless Buyer (and, after the Closing Date, the Company) against any such Tax or reduction of any Tax asset.
(b) All
transfer, documentary, sales, use, stamp, registration, value added
and other such Taxes and fees
(including any penalties and interest) incurred in connection with
this Agreement and the
Ancillary Documents (including
any real property
transfer Tax and any other
similar Tax) shall be borne and
paid in equal proportions by (i) Tenax, on the one hand, and (ii) jointly and
severally by the Stockholders,
on the other hand, when due. The Stockholder Representative shall, at its own
expense, timely file any Tax
Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as
necessary).
(c) Buyer
shall prepare, or cause to be prepared, all Tax Returns required to be filed by the
Company after the Closing Date with respect to a Pre-Closing Tax Period other than income
Tax Returns with respect to periods
for which the Company was
classified as a “partnership” for federal income tax purposes. Any such Tax Return shall be prepared in a manner
consistent with past practice (unless otherwise required by
Law) and without a change of any
election or any accounting method and shall be submitted by
Buyer to the Stockholder Representative (together with
schedules, statements and, to the extent requested by the
Stockholder Representative, supporting
documentation) at least 45 days
prior to the due date (including extensions) of such
Tax Return. If the Stockholder Representative objects to any item on
any such Tax Return, it shall,
within ten days after delivery
of such Tax Return,
notify Buyer in writing that it
so objects, specifying with particularity any such item and stating
the specific factual or legal basis for any such objection. If a
notice of objection shall be duly delivered, Buyer and the Stockholder Representative shall negotiate in good
faith and use their reasonable best efforts to resolve such items.
If Buyer and the
Stockholder Representative are unable
to reach such agreement
within ten days after receipt
by Buyer of such notice, the
disputed items shall be resolved by the Independent Accountant and any determination by
the Independent Accountant
shall be final. The Independent
Accountant shall resolve any disputed items within
twenty days of having the item
referred to it pursuant to such procedures as it may require. If
the Independent Accountant is
unable to resolve any disputed items before the due date for
such Tax Return, the
Tax Return shall be filed as prepared
by Buyer and then amended to
reflect the Independent
Accountant’s resolution. The costs, fees and expenses of
the Independent Accountant
shall be borne equally by Buyer
and the Stockholders. The
preparation and filing of any Tax Return of the Company that does not relate to a
Pre-Closing Tax Period shall be
exclusively within the control of Buyer, other than an income Tax Return with respect to any period for which
the Company was classified as a
“partnership” for federal income tax purposes.
(d) Buyer
will continue at least one significant historic business line of
the Company, or use at least a
significant portion of the Company’s historic business assets in a
business, each within the meaning of Treasury Regulation section 1.368-1(d), except
that Buyer may transfer
the Company’s historic
business assets (i) to a corporation that is a member of
Buyer’s “qualified
group,” within the meaning of Treasury Regulation section 1.368-1(d)(4)(ii), or
(ii) to a partnership if (A) one or more members of
Buyer’s “qualified
group” has active and substantial management functions as a
partner with respect to the Company’s historic business or (B) members
of Buyer’s
“qualified group” in the aggregate own an interest in
the partnership representing a significant interest in the
Company’s historic business, in
each case within the meaning of Treasury Regulation section
1.368-1(d)(4)(iii).
(e) Each
of Buyer and the
Company will include a statement that
complies with the requirements of Treasury Regulation section 1.368-3(a) with
its federal income
Tax Return for the year of the
reorganization and will retain the information required to comply
with Treasury Regulation
section 1.368-3(d).
Section 6.02 Termination of Existing
Tax Sharing
Agreements.
Any and all existing
Tax sharing agreements (whether written or not) binding upon
the Company shall be terminated
as of the Closing Date. After
such date none of the Company,
the Stockholders nor any of
their respective Affiliates and
their respective Representatives shall have any further rights
or liabilities
thereunder.
Section 6.03 Tax Indemnification.
Except to the extent treated as
a liability in the calculation
of Closing Working Capital,
the Stockholders shall, jointly
and severally, indemnify the Company, Buyer, and each Buyer Indemnitee and hold them harmless from and
against (a) any Loss
attributable to any breach of or inaccuracy in any representation
or warranty made in 13.19; (b)
any Loss attributable to any
breach or violation of, or failure to fully perform, any
covenant, agreement,
undertaking or obligation in 1VI; (c)
all Taxes of the Company or
relating to the business of the Company for all Pre-Closing Tax Periods; (d) all
Taxes of any member of an affiliated,
consolidated, combined or unitary group of which the
Company (or any predecessor of
the Company) is or was a member
on or prior to the Closing Date
by reason of a liability
under Treasury Regulation
Section 1.1502-6 or any comparable provisions of foreign, state or
local Law; and (e) any and
all Taxes of any person imposed
on the Company arising under
the principles of transferee or successor liability or by contract, relating to an event or transaction
occurring before the Closing
Date. In each of the above cases, together with any out-of-pocket
fees and expenses (including attorneys’ and
accountants’ fees) incurred in connection therewith,
the Stockholders shall
reimburse Buyer for any
Taxes of the Company that are the responsibility of the
Stockholders pursuant to this
16.03 within ten Business
Days after payment of such Taxes by Buyer
or the Company.
Section 6.04 Straddle Period.
In the case of Taxes that are payable with respect to a taxable
period that begins before and ends after the Closing Date (each such period, a
“Straddle
Period”), the portion of
any such Taxes that are treated
as Pre-Closing Taxes for
purposes of this Agreement
shall be:
(a) in
the case of Taxes (i) based
upon, or related to, income, receipts, profits, wages, capital or
net worth, (ii) imposed in connection with the sale, transfer or
assignment of property, or (iii) required to be withheld, deemed
equal to the amount which would be payable if the taxable year
ended with the Closing Date;
and
(b) in
the case of other Taxes, deemed
to be the amount of such Taxes
for the entire period multiplied by a fraction the numerator of
which is the number of days in the period ending on the
Closing Date and the denominator of
which is the number of days in the entire
period.
Section .05 Contests. Buyer
agrees to give prompt written notice to the Stockholder Representative of the receipt of any
written notice by the Company, Buyer
or any of Buyer’s
Affiliates which involves the
assertion of any claim, or the commencement of any
Action, in respect of which an
indemnity may be sought by Buyer pursuant to this 1VI (a
“Tax
Claim”);
provided,
that failure to comply with
this provision shall not affect Buyer’s right to indemnification
hereunder. Buyer shall control
the contest or resolution of any Tax Claim; provided,
however, that
Buyer shall obtain the prior written
consent of the Stockholder
Representative (which consent shall not be unreasonably withheld or
delayed) before entering into any settlement of a claim or ceasing
to defend such claim; and, provided
further, that
Stockholders shall be entitled to
participate in the defense of such claim and to employ counsel of
their choice for such purpose, the fees and expenses of which
separate counsel shall be borne solely by Stockholders.
Section 6.06 Cooperation and Exchange of
Information. The
Stockholders and Buyer shall provide each other with such
cooperation and information as either of them reasonably may
request of the other in filing any Tax Return pursuant to this 1VI or in
connection with any audit or other proceeding in respect of
Taxes of the Company. Such cooperation and information shall
include providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating
to rulings or other determinations by tax authorities. Each of the Stockholder Representative and Buyer shall retain all Tax Returns, schedules and work papers, records
and other documents in its possession relating to
Tax matters of the Company for any taxable period beginning before
the Closing Date until the
expiration of the statute of limitations of the taxable periods to
which such Tax Returns and
other documents relate, without regard to extensions except to the
extent notified by the other party in writing of such extensions
for the respective Tax periods.
Prior to transferring, destroying or discarding any
Tax Returns, schedules and work
papers, records and other documents in its possession relating
to Tax matters of the
Company for any taxable period
beginning before the Closing
Date, the Stockholder
Representative or Buyer (as the
case may be) shall provide the other party with reasonable written
notice and offer the other party the opportunity to take custody of
such materials.
Section 6.07 Tax Treatment of
Indemnification Payments. Any
indemnification payments pursuant to this 1VI shall be
treated as an adjustment to the Purchase Price by the parties for
Tax purposes, unless otherwise
required by Law.
Section 6.08 Payments to Buyer. Within five
Business Days after the determination that an amount is payable
to Buyer pursuant to
this Article VI, the parties
shall execute and deliver a Joint Confirmation pursuant to Section 7 of the Certificate of Designation with respect to such
amount. Any amounts payable to Buyer pursuant to this Article VI shall be satisfied: (i) first by the
adjustment mechanism set forth in Section 7 of the Certificate of Designation with
the Certificate of Designation; and (ii) to the extent such amounts
exceed the available adjustments pursuant to Section 7 of the Certificate of Designation, from the
Stockholders.
Section 6.09 Amended Returns and Retroactive
Elections. Buyer
shall not, and shall not cause or permit the Company to, (i) amend any Tax Returns filed with respect to any
tax year ending on or before
the Closing Date or with
respect to any Straddle Period
or (ii) make any Tax election
that has retroactive effect to any such year or to any
Straddle Period, in each such case
without the prior written consent of the Stockholder Representative. For the avoidance of
doubt, nothing in this Section 6.09 shall prevent Buyer from filing
the necessary Tax Returns for the Company for the period ending
December 31, 2020 to the extent required by Section
6.01(c).
Section 6.10 Survival. Notwithstanding anything in this
Agreement to the contrary, the
provisions of Section 3.19 and
this 1VI shall survive for the full period of all
applicable statutes of limitations (giving effect to any waiver,
mitigation or extension thereof) plus 60 days.
Section 6.11 Overlap. To the extent that any obligation or
responsibility pursuant to 1VIII may
overlap with an obligation or responsibility pursuant to
this 1VI, the provisions of this 1VI shall
govern.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01 Conditions to Obligations of
All Parties. The obligations of
each party to consummate the transactions contemplated by
this Agreement shall be subject
to the fulfillment, at or prior to the Closing, of each of the following
conditions:
(a) The
filings of Buyer and the
Company pursuant to the
HSR Act, if any, shall have been made
and the applicable waiting period and any extensions thereof shall
have expired or been terminated.
(b) No
Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any
Governmental Order which is in effect
and has the effect of making the transactions contemplated by
this Agreement illegal,
otherwise restraining or prohibiting consummation of such
transactions or causing any of the transactions contemplated
hereunder to be rescinded following completion
thereof.
Section 7.02 Conditions to Obligations
of Buyer. The obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be
subject to the fulfillment or Buyer’s waiver, at or prior to the
Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of the Company contained in Section 3.01, Section 3.02, Section 3.05, Section 3.21 and Section 3.22, the representations and warranties
of the Company contained in
this Agreement, the
Ancillary Documents and any
certificate or other writing delivered
pursuant hereto shall be true and correct in all respects (in the
case of any representation or warranty qualified by materiality
or Material Adverse Effect) or
in all material respects (in the case of any representation or
warranty not qualified by materiality or Material Adverse Effect) on and as of the date
hereof and on and as of the Closing Date with the same effect as though made
at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all
respects). The representations and warranties of the
Company contained in
Section 3.01, Section 3.02, Section 3.03, Section 3.05, Section 3.21 and Section 3.22 shall be true and correct in all
respects on and as of the date hereof and on and as of the
Closing Date with the same effect as
though made at and as of such date (except those representations
and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date
in all respects).
(b) The
Company shall have duly performed and
complied in all material respects with all agreements, covenants and conditions required by
this Agreement and each of
the Ancillary Documents to be
performed or complied with by it prior to or on the
Closing Date; provided,
that, with respect to
agreements, covenants and conditions
that are qualified by materiality, the Company shall have performed such
agreements, covenants and conditions,
as so qualified, in all respects.
(c) No
Action shall have been commenced
against Buyer,
Merger Sub or the Company, which would prevent the
Closing. No injunction or restraining
order shall have been issued by any Governmental Authority, and be in effect, which
restrains or prohibits any transaction contemplated
hereby.
(d) All
approvals, consents and waivers that are listed on
Section 3.04 of the
Disclosure Schedules shall have been
received, and executed counterparts thereof shall have been
delivered to Buyer at or prior
to the Closing.
(e) From
the date of this Agreement,
there shall not have occurred any Material Adverse Effect, nor shall any event or
events have occurred that, individually or in the aggregate, with
or without the lapse of time, could reasonably be expected to
result in a Material Adverse
Effect.
(f) The
Ancillary Documents shall have been
executed and delivered by the parties thereto and true and complete
copies thereof shall have been delivered to Buyer.
(g) Buyer
shall have received resignations of the directors and officers of
the Company pursuant to
15.05.
(h) Each
of the Stockholders other than
Vanderbilt University shall have duly executed and delivered
a Restrictive Covenant
Agreement (collectively, the “Restrictive Covenant
Agreements”) in the form
attached as Exhibit D.
(i) At
least three Business Days
before Closing, the
Company shall have delivered to
Buyer the Closing Indebtedness Certificate and the
Closing Transaction Expenses
Certificate.
(j) The
Company and Buyer shall have agreed on the Target Closing Working Capital Statement
contemplated in 12.11(a)(i).
(k) The
Company shall have delivered to
Buyer a good standing
certificate (or its equivalent) for
the Company from the secretary
of state or similar Governmental Authority of the jurisdiction under
the Laws in which the
Company is
organized.
(l) Buyer
shall have received duly completed and executed Accredited Investor Questionnaires from all
Stockholders.
(m) The
Certificates shall have deposited with
the Buyer pursuant to
Section 2.08.
(n) Buyer
shall have received a certificate, dated the Closing Date and signed by a duly authorized
officer of the Company, that
each of the conditions set forth in 17.02(a)
and 17.02(b) have been satisfied.
(o) The
Company shall have delivered to
Buyer such other documents or
instruments as Buyer reasonably
requests and are reasonably necessary to consummate the
transactions contemplated by this Agreement.
Section 7.03 Conditions to Obligations of
the Company. The obligations of the Company to consummate the transactions
contemplated by this Agreement
shall be subject to the fulfillment or the Company’s waiver, at or prior to the
Closing, of each of the following
conditions:
(a) Other
than the representations and warranties of Buyer and the Merger Sub contained in 14.01
and 14.04, the representations and warranties of
Buyer and the Merger Sub contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant
hereto shall be true and correct in all respects (in the case of
any representation or warranty qualified by materiality or
Material Adverse Effect) or in all
material respects (in the case of any representation or warranty
not qualified by materiality or Material Adverse Effect) on and as of the date
hereof and on and as of the Closing Date with the same effect as though made
at and as of such date (except those representations and warranties
that address matters only as of a specified date, the accuracy of
which shall be determined as of that specified date in all
respects). The representations and warranties of
Buyer and the Merger Sub contained in 14.01
and 14.04 shall be true and correct in all respects on
and as of the date hereof and on and as of the Closing Date with the same effect as though made
at and as of such date.
(b) Buyer
and the Merger Sub shall have
duly performed and complied in all material respects with
all agreements, covenants and
conditions required by this Agreement and each of the Ancillary Documents to be performed or complied
with by it prior to or on the Closing Date; provided,
that, with respect to
agreements, covenants and conditions
that are qualified by materiality, Buyer shall have performed such
agreements, covenants and conditions,
as so qualified, in all respects.
(c) No
injunction or restraining order shall have been issued by
any Governmental Authority, and
be in effect, which restrains or prohibits any material transaction
contemplated hereby.
(d) The
Ancillary Documents shall have been
executed and delivered by the parties thereto and true and complete
copies thereof shall have been delivered to the Stockholder Representative.
(e) Buyer
shall have delivered to third parties by wire transfer of
immediately available fund that amount of money due and owing from
the Company to such third
parties as Transaction Expenses
as set forth on the Closing
Transaction Expenses Certificate.
(f) Buyer
shall have delivered to holders of outstanding Indebtedness, if any, by wire transfer of
immediately available funds that amount of money due and owing from
the Company to such holder of
outstanding Indebtedness as set
forth on the Closing
Indebtedness Certificate.
(g) The
Company shall have received a
certificate, dated the
Closing Date and signed by a duly
authorized officer of Buyer
and Merger Sub, that each of
the conditions set forth in 17.03(a)
and 17.03(b) have been satisfied.
(h) Buyer
shall have submitted a Listing
of Additional Shares Notification form to the Nasdaq Stock Market, LLC
(“NASDAQ”) with
respect to the transactions contemplated by this
Agreement in the time and manner
required by applicable NASDAQ
rules, and shall have received written notification from
NASDAQ that it has completed its
review of such form.
(i) Buyer
shall have delivered to the Company and/or the Stockholder Representative such other documents or
instruments as they may reasonably request and are reasonably
necessary to consummate the transactions contemplated by
this Agreement.
ARTICLE
VIII
INDEMNIFICATION
Section 8.01 Survival. Subject to the limitations and other provisions of
this Agreement, the
representations and warranties contained herein (other than any
representations or warranties contained in Section 3.19 which are subject to
1VI) shall survive the Closing and shall remain in full force and effect
until the date that is two
years from the Closing
Date; provided, that
the representations and warranties in
(a) Section 3.02,
Section 3.21, Section 3.22, 14.01,
14.04 and Section 4.07 shall survive indefinitely,
(b) Section 3.18 shall survive
for a period of five years
after the Closing, and
(c) Section 3.19 shall survive
for the full period of all applicable statutes of limitations
(giving effect to any waiver, mitigation or extension thereof)
plus 60 days. All covenants
and agreements of the parties
contained herein (other than any covenants or agreements contained in 1VI which are
subject to 1VI) shall survive the Closing indefinitely or for the period explicitly
specified therein. Notwithstanding the foregoing, any claims
asserted in good faith with reasonable specificity (to the extent
known at such time) and in writing by notice from the non-breaching
party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the
expiration of the relevant representation or warranty and such
claims shall survive until finally resolved.
Section 8.02 Indemnification By
Stockholders.
Subject to the other terms and
conditions of this 1VIII,
Stockholders shall, jointly and
severally, indemnify and defend each of Buyer and its Affiliates (including the Company) and their respective Representatives (collectively, the
“Buyer
Indemnitees”) against,
and shall hold each of them harmless from and against, and shall
pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon,
the Buyer Indemnitees based
upon, arising out of, with respect to or by reason
of:
(a) any
inaccuracy in or breach of any of the representations or warranties
of the Company contained in
this Agreement or in any
certificate or instrument delivered by
or on behalf of the Company
pursuant to this Agreement
(other than in respect of Section 3.19, it being understood that the sole
remedy for any such inaccuracy in or breach thereof shall be
pursuant to 1VI), as of
the date such representation or warranty was made or as if such
representation or warranty was made on and as of the
Closing Date (except for
representations and warranties that expressly relate to a specified
date, the inaccuracy in or breach of which will be determined with
reference to such specified date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation to be performed by
the Company pursuant to
this Agreement (other than any
breach or violation of, or failure to fully perform, any
covenant, agreement,
undertaking or obligation in 1VI, it being
understood that the sole remedy for any such breach, violation or
failure shall be pursuant to 1VI);
or
(c) any
Transaction Expenses or
Indebtedness of the
Company outstanding as of the
Closing to the extent not deducted
from the Purchase Price in the
determination of the Post-Closing Adjustment pursuant to Section
2.11(d).
Section 8.03 Certain Limitations.
The indemnification provided for
in 18.02 shall be subject to the following
limitations:
(a) The
Stockholders shall not be liable to
the Buyer Indemnitees for
indemnification under 18.02(a) until
the aggregate amount of all Losses in respect of indemnification under
18.02(a) exceeds $50,000 (the “Basket”), in which event the Stockholders shall be required to pay or be liable
for all such Losses from the
first dollar. Any
Losses payable to a
Buyer Indemnitee pursuant to
this 1VIII shall be satisfied solely by the adjustment
mechanism set forth in Section
7 of the Certificate of
Designation, regardless of whether the amount of
Losses exceeds the available
adjustments pursuant to Section
7 of the Certificate of
Designation.
(b) Notwithstanding
the foregoing, the limitations set forth in 18.04(a) shall
not apply to Losses based upon,
arising out of, with respect to or by reason of any inaccuracy in
or breach of any representation or warranty in Section 3.01, Section 3.02, Section
3.18, Section 3.19, Section 3.21 or Section 3.22.
(c) For
purposes of this 1VIII, any
inaccuracy in or breach of any representation or warranty shall be
determined without regard to any materiality, Material Adverse Effect or other similar
qualification contained in or otherwise applicable to such
representation or warranty.
Section 8.04 Indemnification
Procedures. The party making a
claim under this 1VIII is
referred to as the “Indemnified
Party”, and the party
against whom such claims are asserted under this
1VIII is referred to as the
“Indemnifying
Party”.
(a) Third
Party Claims. If any
Indemnified Party receives notice of
the assertion or commencement of any Action made or brought by any Person who is not a party to this
Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a
“Third
Party Claim”) against
such Indemnified Party with
respect to which the Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnified Party shall give the
Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than
30 calendar days after receipt of such
notice of such Third Party
Claim. The failure to give such prompt written notice shall not,
however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the
Indemnifying Party forfeits rights or
defenses by reason of such failure. Such notice by the
Indemnified Party shall describe
the Third Party Claim in
reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by
the Indemnified Party.
The Indemnifying Party shall
have the right to participate in, or by giving written notice to
the Indemnified Party, to
assume the defense of any Third
Party Claim at the Indemnifying
Party’s expense and by the Indemnifying Party’s own counsel, and
the Indemnified Party shall
cooperate in good faith in such defense; provided, that
if the Indemnifying Party is a Stockholder, such Indemnifying Party shall not have the right to
defend or direct the defense of any such Third Party Claim that (x) is asserted directly by
or on behalf of a Person that
is a supplier or customer of the Company, or (y) seeks an injunction or other
equitable relief against the Indemnified Party. In the event that the
Indemnifying Party assumes the defense
of any Third Party Claim,
subject to 18.05(b), it shall have the right to take
such action as it deems
necessary to avoid, dispute, defend, appeal or make counterclaims
pertaining to any such Third
Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to
participate in the defense of any Third Party Claim with counsel selected by it
subject to the Indemnifying
Party’s right to control the defense thereof. The fees and
disbursements of such counsel shall be at the expense of the
Indemnified Party, provided, that
if in the reasonable opinion of
counsel to the Indemnified
Party, (A) there are legal defenses available to an
Indemnified Party that are different
from or additional to those available to the Indemnifying Party; or (B) there exists a conflict
of interest between the Indemnifying Party and the Indemnified Party that cannot be waived,
the Indemnifying Party shall be
liable for the reasonable fees and expenses of counsel to
the Indemnified Party in each
jurisdiction for which the Indemnified Party determines counsel is required.
If the Indemnifying Party
elects not to compromise or defend such Third Party Claim, fails to promptly notify
the Indemnified Party in
writing of its election to defend as provided in this
Agreement, or fails to diligently
prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to
18.05(b), pay, compromise, defend such
Third Party Claim and seek
indemnification for any and all Losses based upon, arising from or relating to
such Third Party Claim.
The Stockholders and
Buyer shall cooperate with each other
in all reasonable respects in connection with the defense of
any Third Party Claim,
including making available (subject to the provisions of
15.06) records relating to such Third Party Claim and furnishing, without expense
(other than reimbursement of actual out-of-pocket expenses) to the
defending party, management employees of the non-defending party as
may be reasonably necessary for the preparation of the defense of
such Third Party
Claim.
(b) Settlement
of Third
Party Claims. Notwithstanding
any other provision of this Agreement, the Indemnifying Party shall not enter into settlement
of any Third Party Claim
without the prior written consent of the Indemnified Party, except as provided in
this 18.05(b). If a firm offer is made to settle
a Third Party Claim without
leading to liability or the
creation of a financial or other obligation on the part of
the Indemnified Party and
provides, in customary form, for the unconditional
release of each Indemnified Party from all liabilities and obligations in connection with
such Third Party Claim and
the Indemnifying Party desires
to accept and agree to such offer, the Indemnifying Party shall give written notice to
that effect to the Indemnified
Party. If the Indemnified Party
fails to consent to such firm offer within ten days after its receipt of such notice,
the Indemnified Party may
continue to contest or defend such Third Party Claim and in such event, the
maximum liability of the
Indemnifying Party as to such
Third Party Claim shall not exceed the
amount of such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the
Third Party Claim upon the terms set
forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant
to 18.05(a), it shall not agree to any settlement
without the written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed).
(c) Direct
Claims. Any Action by an Indemnified Party on account of a
Loss which does not result from
a Third Party Claim (a
“Direct Claim”) shall be asserted by the
Indemnified Party giving the
Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than
30 days after the Indemnified Party becomes aware of such
Direct Claim. The failure to give such
prompt written notice shall not, however, relieve the
Indemnifying Party of its
indemnification obligations, except and only to the extent that
the Indemnifying Party forfeits
rights or defenses by reason of such failure. Such notice by
the Indemnified Party shall
describe the Direct Claim in
reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if
reasonably practicable, of the Loss that has been or may be sustained by
the Indemnified Party.
The Indemnifying Party shall
have 30 days after its receipt
of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the
Indemnifying Party and its
professional advisors to investigate the matter or circumstance
alleged to give rise to the Direct Claim, and whether and to what extent any
amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the
Indemnifying Party’s
investigation by giving such information and assistance (including
access to the Company’s
premises and personnel and the right to examine and copy any
accounts, documents or records) as the Indemnifying Party or any of its professional
advisors may reasonably request. If the Indemnifying Party does not so respond within
such 30 day period, the
Indemnifying Party shall be deemed to
have rejected such claim, in which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms and subject to the
provisions of this Agreement.
(d) Tax
Claims. Notwithstanding any
other provision of this Agreement, the control of any claim, assertion,
event or proceeding in respect of Taxes of the Company (including, but not limited to, any such
claim in respect of a breach of the representations and warranties
in 13.19 hereof or any breach or violation of or
failure to fully perform any covenant, agreement, undertaking or obligation in
1VI) shall be governed exclusively by
1VI hereof.
Section 8.05 Payments. Once
a Loss is agreed to by
the Indemnifying Party or
finally adjudicated to be payable pursuant to this
1VIII, the Indemnifying Party shall satisfy its obligations
within five Business Days of such final, non-appealable
adjudication by executing and delivering a Joint Confirmation with respect to the amount of
such Loss in accordance with
the Certificate of Designation.
To the extent that a Loss is
not subject to the limitations set forth in Section 8.04(a) and the amount of such
Loss exceeds the available adjustments
pursuant to Section 7 of
the Certificate of Designation,
the amount of excess shall be paid by the Stockholders.
Section 8.06 Tax Treatment of
Indemnification Payments. All
indemnification payments made under this Agreement shall be treated by the parties as an
adjustment to the Purchase
Price for Tax purposes, unless
otherwise required by Law.
Section 8.07 Effect of Investigation.
The representations, warranties and
covenants of the Indemnifying
Party, and the Indemnified
Party’s right to indemnification with respect thereto, shall
not be affected or deemed waived by reason of any investigation
made by or on behalf of the Indemnified Party (including by any of its
Representatives) or by reason of the
fact that the Indemnified Party
or any of its Representatives
knew or should have known that any such representation or warranty
is, was or might be inaccurate or by reason of the
Indemnified Party’s waiver of
any condition set forth in 17.02
or 17.03, as the case may be.
Section 8.08 Exclusive Remedies.
Subject to 12.11(c)
and 110.11, the parties acknowledge and agree that
their sole and exclusive remedy with respect to any and all claims
(other than claims arising from fraud, criminal activity or willful
misconduct on the part of a party hereto in connection with the
transactions contemplated by this Agreement) for any breach of any representation,
warranty, covenant, agreement
or obligation set forth herein or otherwise relating to the subject
matter of this Agreement, shall
be pursuant to the indemnification provisions set forth in
1VI and this 1VIII. In
furtherance of the foregoing, each party hereby waives, to the
fullest extent permitted under Law, any and all rights, claims and causes
of action for any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or
otherwise relating to the subject matter of this
Agreement it may have against the
other parties hereto and their Affiliates and each of their respective
Representatives arising under or based
upon any Law, except pursuant
to the indemnification provisions set forth in 1VI and
this 1VIII. Nothing in this 18 shall limit
any Person’s right to
seek and obtain any equitable relief to which any
Person shall be entitled or to seek
any remedy on account of any party’s fraudulent, criminal or
intentional misconduct.
Section 8.09 Stockholder Representative;
Power of Attorney.
(a) Appointment.
By virtue of the adoption of this Agreement and the approval of the
Merger by the Stockholders, each Stockholder (regardless of whether or not
such Stockholder votes in favor
of the adoption of this Agreement and the approval of the
Merger, whether at a meeting or by
written consent in lieu thereof) hereby initially appoints, as of
the Agreement Date,
Stuart Rich (together with his
permitted successors, the “Stockholder
Representative”), as his,
her or its true and lawful agent and attorney-in-fact to enter into
the transactions contemplated hereby and any other
agreements in connection with such
transactions, and to: (i) give and receive notices and
communications to or from Buyer
(on behalf of itself or any other Buyer Indemnitee) relating to this
Agreement or any of the transactions
and other matters contemplated hereby or thereby; (ii) execute and
deliver Joint Confirmations;
(iii) object to any claims by Buyer or any other Buyer Indemnitee; (iv) consent or agree to,
negotiate, enter into settlements and compromises of, and agree to
arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims; (v) assert, negotiate,
enter into settlements and compromises of, and agree to arbitration
and comply with orders of courts and awards of arbitrators with
respect to, any other claim by any Buyer Indemnitee against any such
Stockholder or by any such
Stockholder against any
Buyer Indemnitee or any dispute
between any Buyer Indemnitee
and any such Stockholder, in
each case relating to this Agreement or the transactions contemplated hereby;
(vi) amend this Agreement;
(vii) take any and all actions
and do any and all things that this Agreement specifies that the Stockholder Representative can or shall do; and
(viii) take all actions
necessary or appropriate in the judgment of the Stockholder Representative for the accomplishment
of the foregoing, in each case without having to seek or obtain the
consent of any Person under any
circumstance.
(b) Acceptance.
Stuart Rich hereby accepts his
appointment as Stockholder
Representative.
(c) Replacement.
The Person serving as
the Holder Representative may
be replaced from time to time by the holders of Stockholders that (immediately before the
Closing) held a majority of the
Shares upon not less than
ten (10) days’ prior written
notice to Buyer. No bond shall
be required of the Stockholder
Representative, and the Stockholder Representative shall receive no
compensation for his services.
(d) No
Liability.
The Stockholder Representative
shall not be liable to any Stockholder for any act done or omitted under
this Agreement as the
Stockholder Representative while
acting in good faith and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith.
Each Stockholder, severally and
not jointly in accordance with his, her or its pro rata ownership
(as of immediately before the Closing) of Shares, shall indemnify the Stockholder Representative and hold him harmless
against any loss, liability or
expense incurred without gross negligence or bad faith on the part
of the Stockholder
Representative and arising out of or in connection with the
acceptance or administration of her duties
hereunder.
(e) Notice.
Any notice or communication given or received by, and any
decision, action, failure to
act within a designated period of time, agreement, consent, settlement, resolution or
instruction of, the Stockholder
Representative shall constitute a notice or communication to or by,
or a decision, action, failure
to act within a designated period of time, agreement, consent, settlement, resolution or
instruction of all the Stockholders and shall be final, binding and
conclusive upon each such Stockholder; and each Buyer Indemnitee shall be entitled to rely upon
any such notice, communication, decision, action, failure to act within a designated period
of time, agreement, consent,
settlement, resolution or instruction as being a notice or
communication to or by, or a decision, action, failure to act within a designated period
of time, agreement, consent,
settlement, resolution or instruction of, each and every
such Stockholder.
Section 8.10 Limitation of Vanderbilt
Liability. Notwithstanding
anything in this Agreement to the contrary, any indemnification
obligations of Vanderbilt University pursuant to this Agreement
(including but not limited to any payment obligations under Article
VI and/or Article VIII) shall be satisfied solely by the adjustment
mechanism set forth in Section 7 of the Certificate of Designation,
regardless of whether (i) the amount of such obligations exceeds
the available adjustments pursuant to Section 7 of the Certificate
of Designation and/or (ii) such obligations arise from fraud,
criminal activity or willful misconduct of any
party.
ARTICLE IX
TERMINATION
Section 9.01 Termination.
This Agreement may be terminated at any time prior to
the Closing:
(a) by
the mutual written consent of the Company and Buyer;
(b) by
Buyer by written notice to the
Company if:
(i) Buyer
and Merger Sub is not then in
material breach of any provision of this Agreement and there has been a breach, inaccuracy
in or failure to perform any representation, warranty, covenant
or agreement made by the
Company pursuant to this
Agreement that would give rise to the
failure of any of the conditions specified in 1VII and such
breach, inaccuracy or failure has not been cured by the
Company within ten days of the Company receipt of written notice of such breach
from Buyer;
or
(ii) any
of the conditions set forth in 17.01
or 17.02 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by
January 31, 2021, unless such failure shall be due to the failure
of Buyer or Merger Sub to perform or comply with any of the
covenants, agreements or
conditions hereof to be performed or complied with by it prior to
the Closing;
(c) by
the Company by written notice
to Buyer
if:
(i) the
Company is not then in material breach
of any provision of this Agreement and there has been a breach, inaccuracy
in or failure to perform any representation, warranty, covenant
or agreement made by
Buyer or Merger Sub pursuant to this Agreement that would give rise to the failure of
any of the conditions specified in 1VII and such
breach, inaccuracy or failure has not been cured by
Buyer or Merger Sub, as applicable, within
ten days of Buyer’s or Merger Sub’s, as applicable, receipt of
written notice of such breach from the Company; or
(ii) any
of the conditions set forth in 17.01
or 17.03 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by
January 31, 2021, unless such failure shall be due to the failure
of the Company to perform or
comply with any of the covenants, agreements or conditions hereof to be performed or
complied with by it prior to the Closing; or
(d) by
Buyer, Merger Sub or the Company in the event that (i) there shall be
any Law that makes consummation
of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii)
any Governmental Authority
shall have issued a Governmental Order restraining or enjoining the
transactions contemplated by this Agreement, and such Governmental Order shall have become final and
non-appealable.
Section 9.02 Effect of Termination.
In the event of the termination of
this Agreement in accordance
with this Article, this Agreement shall forthwith become void and there
shall be no liability on the
part of any party hereto except:
(a) as
set forth in this 1IX and
15.06 and 1X hereof;
and
(b) that
nothing herein shall relieve any party hereto from
liability for any willful breach of
any provision hereof.
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses. Except as otherwise expressly provided herein, all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses,
whether or not the Closing
shall have occurred.
Section 10.02 Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and
shall be deemed to have been given (a) when delivered by hand (with
written confirmation of receipt); (b) when received by the
addressee if sent by a nationally recognized overnight courier
(receipt requested); (c) on the date sent by e-mail of a
PDF document (with confirmation of
transmission) if sent during normal business hours of the
recipient, and on the next Business
Day if sent after normal business hours of the recipient or (d) on
the third day after the date
mailed, by certified or registered mail, return receipt requested,
postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with
this 110.02):
|
If to the Company:
|
3621 Grove Street
Skokie, IL 60076
E-mail: stuart.rich@phpremed.com
Attention: Stuart Rich,
President
|
|
with a copy to:
|
GTC Law Group PC &
Affiliates
One University Ave. Suite 302B
Westwood, MA 02090
E-mail: themnes@gtclawgroup.com
Attention: Thomas
Hemnes
|
|
If to Buyer:
|
Tenax Therapeutics, Inc.
One Copley Parkway, Suite 490
Morrisville, NC 27560
E-mail: m.jebsen@tenaxthera.com
Attention: Michael Jebsen
|
|
with a copy to:
|
K&L Gates LLP
4350 Lassiter at North Hills Avenue, Suite 300
Raleigh, NC 27609
E-mail: Margaret.Rosenfeld@klgates.com and
Mikal.Shaikh@klgates.com
Attention: Margaret Rosenfeld
and Mikal Shaikh
|
Section 10.03 Interpretation.
For purposes of this
Agreement, (a) the words
“include,” “includes” and
“including” shall be deemed to be followed by the words
“without limitation”; (b) the word “or” is
not exclusive; and (c) the words “herein,”
“hereof,” “hereby,” “hereto”
and “hereunder” refer to this Agreement as a whole. Unless the context otherwise
requires, references herein: (x) to Articles, Sections, Disclosure Schedules and
Exhibits mean the Articles and
Sections of, and Disclosure
Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means
such agreement, instrument or
other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and (z) to a
statute means such statute as amended from time to time and
includes any successor legislation thereto and any regulations
promulgated thereunder. This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation
against the party drafting an instrument or causing any instrument
to be drafted. The
Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part
of, this Agreement to the same
extent as if they were set forth verbatim
herein.
Section 10.04 Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.
Section 10.05 Severability.
If any term or provision of
this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or
provision of this Agreement or
invalidate or render unenforceable such term or provision in any
other jurisdiction. Upon such determination that any term or other
provision is invalid, illegal or unenforceable, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner
in order that the transactions contemplated hereby be consummated
as originally contemplated to the greatest extent
possible.
Section 10.06 Entire Agreement. This Agreement
and the Ancillary Documents
constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject
matter contained herein and therein, and supersede all prior and
contemporaneous understandings and agreements, both written and oral, with respect to
such subject matter. In the event of any inconsistency between the
statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception
expressly set forth as such in the Disclosure Schedules), the statements in the body
of this Agreement will
control.
Section 10.07 Successors and Assigns.
This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors
and permitted assigns. Neither party may assign its rights or
obligations hereunder without the prior written consent of the
other party, which consent shall not be unreasonably withheld or
delayed. No assignment shall relieve the assigning party of any of
its obligations hereunder.
Section 10.08 No Third-party
Beneficiaries. Except as
provided in 16.03
and 1VIII, this Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and
nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity
any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 10.09 Amendment and Modification;
Waiver. This
Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each of
Buyer, Merger Sub, the Stockholder Representative and, at any time prior
to the Effective Time,
the Company. No waiver by any
party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and signed by the party so waiving.
No waiver by any party shall operate or be construed as a waiver in
respect of any failure, breach or default not expressly identified
by such written waiver, whether of a similar or different
character, and whether occurring before or after that waiver. No
failure to exercise, or delay in exercising, any right, remedy,
power or privilege arising from this Agreement shall operate or be construed as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
Section 10.10 Governing Law; Submission to
Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without giving effect to any
choice or conflict of law
provision or rule (whether of the State of Delaware or any other
jurisdiction).
(b) ANY
LEGAL SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE
FEDERAL COURTS OF THE
UNITED STATES OF AMERICA OR THE COURTS
OF THE STATE OF DELAWARE, AND
EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS,
NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS
SET FORTH HEREIN SHALL BE
EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH
COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND
IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR
THE ANCILLARY DOCUMENTS IS
LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL
ACTION ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE
ANCILLARY DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO
THIS AGREEMENT CERTIFIES AND
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL
ACTION, (B) SUCH PARTY HAS CONSIDERED
THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.10(c).
Section 10.11 Specific Performance.
The parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in accordance with
the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to
which they are entitled at law
or in equity.
Section 10.12 Conflict Waiver;
Attorney-Client Privilege.
(a) Conflict
of Interest. If the Stockholder Representative so desires, acting
on behalf of the Stockholders and without the need for any consent
or waiver by the Company or Buyer, GTC Law Group PC and Affiliates
and Foley Hong LLP (each, a “Seller Counsel
Firm”) shall be permitted
to represent Stockholders and the Stockholder Representative after
the Closing in connection with any matter, including without
limitation, anything related to the Merger, any other agreements
referenced herein or any disagreement or dispute relating thereto.
Without limiting the generality of the foregoing, after the
Closing, each Seller Counsel Firm shall be permitted to represent
the Stockholders, any of their agents and Affiliates, or any one or
more of them, in connection with any negotiation, transaction or
dispute (including any litigation, arbitration or other adversary
proceeding) with Buyer, the Surviving Corporation or any of their
agents or Affiliates under or relating to this Agreement, the
Merger, and any related matter, such as claims or disputes arising
under other agreements entered into in connection with this
Agreement, including with respect to any indemnification claims.
Upon and after the Closing, the Company shall cease to have any
attorney-client relationship with each Seller Counsel Firm, unless
and to the extent such Seller Counsel Firm is specifically engaged
in writing by the Company to represent the Company after the
Closing and either such engagement involves no conflict of interest
with respect to the Stockholders or the Stockholder Representative
consents in writing at the time to such engagement. Any such
representation of the Company by a Seller Counsel Firm after the
Closing shall not affect the foregoing provisions
hereof.
(b) Attorney-Client
Privilege. Buyer and the Company agree that any attorney-client
privilege, attorney work-product protection, and the expectation of
client confidence attaching as a result of counsel’s (whether
external or internal) representation of the Company in connection
with the Merger and all information and documents covered by such
privilege or protection (the “Covered
Materials”), shall belong
to and be controlled by the Stockholder Representative, and not by
the Surviving Corporation, following the Closing, and may be waived
only by the Stockholder Representative, and not the Surviving
Corporation, and shall not pass to or be claimed or used by Buyer
or the Surviving Corporation. Absent the consent of the Stockholder
Representative (such consent not to be unreasonably withheld,
conditioned or delayed), neither Buyer nor the Surviving
Corporation shall have a right to access the Covered Materials
following the Closing and, in the event Buyer or the Surviving
Corporation accesses Covered Materials in violation of this
sentence, such access will not waive or otherwise affect the rights
of the Stockholder Representative with respect to the related
privilege or protection. Notwithstanding the foregoing, if a
dispute arises between Buyer or the Surviving Corporation, on the
one hand, and a third party other than (and unaffiliated with) the
Stockholders and the Stockholder Representative, on the other hand,
after the Closing, then the Surviving Corporation may assert such
attorney-client privilege to prevent disclosure of any such Covered
Materials; provided, further, that Buyer and the Surviving
Corporation may not waive such privilege without the prior written
consent of the Stockholder Representative
Section 10.13 Counterparts.
This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile,
e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy
of this Agreement.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed
as of the date first written above by their respective officers
thereunto duly authorized.
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COMPANY:
PHPrecisionMed Inc.
By: /s/ Stuart
Rich_____________
Name: Stuart Rich
Title: President
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BUYER:
Tenax Therapeutics, Inc.
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By: /s/ Anthony
DiTonno_______
Name: Anthony DiTonno
Title: Chief Executive Officer
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MERGER SUB:
Life Newco II, Inc.
By: /s/ Michael
Jebsen__________________
Name: Michael Jebsen
Title: President
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STOCKHOLDER REPRESENTATIVE:
__/s/ Stuart
Rich__________________
Dr. Stuart Rich
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