Agreement and Plan of Merger, dated as of June 28, 2023, among Eli Lilly and Company, Shenandoah Acquisition Corporation and Sigilon Therapeutics, Inc
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
ELI LILLY AND COMPANY,
SHENANDOAH ACQUISITION CORPORATION
and
SIGILON THERAPEUTICS, INC.
Dated as of June 28, 2023
THIS DOCUMENT IS NOT INTENDED TO CREATE, NOR WILL IT BE DEEMED TO CREATE, A LEGALLY BINDING OR ENFORCEABLE OFFER OR AGREEMENT OF ANY TYPE OR NATURE, UNLESS AND UNTIL AGREED AND EXECUTED BY THE PARTIES HERETO. THIS DOCUMENT REMAINS SUBJECT TO PARENT’S ONGOING DILIGENCE IN ALL RESPECTS.
TABLE OF CONTENTs
| PAGE | |
| Article I THE OFFER | 6 |
| Section 1.1. The Offer | 6 |
| Section 1.2. Company Consent; Schedule 14D-9 | 9 |
| Section 1.3. Stockholder Lists | 10 |
| Article II THE MERGER | 10 |
| Section 2.1. The Merger | 10 |
| Section 2.2. Closing; Effective Time | 10 |
| Section 2.3. Effects of the Merger | 10 |
| Section 2.4. Certificate of Incorporation and Bylaws of the Surviving Corporation | 10 |
| Section 2.5. Directors and Officers | 11 |
| Section 2.6. Merger Without a Vote of Stockholders | 11 |
| Article III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS | 11 |
| Section 3.1. Conversion of Securities | 11 |
| Section 3.2. Treatment of Equity Awards | 12 |
| Section 3.3. Treatment of Company Warrants | 13 |
| Section 3.4. Dissenting Shares | 13 |
| Section 3.5. Surrender of Shares | 14 |
| Section 3.6. Section 16 Matters | 16 |
| Section 3.7. Withholding | 16 |
| Section 3.8. Transfer Taxes | 17 |
| Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 17 |
| Section 4.1. Organization and Corporate Power; Subsidiary | 17 |
| Section 4.2. Authorization; Valid and Binding Agreement | 18 |
| Section 4.3. Capital Stock | 18 |
| Section 4.4. No Breach | 20 |
| Section 4.5. Consents | 21 |
| Section 4.6. SEC Reports; Disclosure Controls and Procedures | 21 |
| Section 4.7. No Undisclosed Liabilities | 23 |
| Section 4.8. Absence of Certain Developments | 23 |
| Section 4.9. Compliance with Laws | 23 |
| Section 4.10. Title to Tangible Properties | 24 |
| Section 4.11. Tax Matters | 25 |
| Section 4.12. Contracts and Commitments | 27 |
| Section 4.13. Intellectual Property | 29 |
| Section 4.14. Litigation | 33 |
| Section 4.15. Insurance | 33 |
| Section 4.16. Employee Benefit Plans | 33 |
| Section 4.17. Environmental Compliance and Conditions | 36 |
| Section 4.18. Employment and Labor Matters | 36 |
| Section 4.19. FDA and Compliance Matters | 39 |
| Section 4.20. Brokerage | 44 |
| Section 4.21. No Rights Agreement; Anti-Takeover Provisions | 44 |
| Section 4.22. Opinion | 44 |
| Section 4.23. No Vote Required | 44 |
| Section 4.24. Affiliate Transactions | 44 |
| Section 4.25. No Other Representations and Warranties | 45 |
| Article V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER | 45 |
| Section 5.1. Organization and Corporate Power | 45 |
| Section 5.2. Authorization; Valid and Binding Agreement | 45 |
| Section 5.3. No Breach | 46 |
| Section 5.4. Consents | 46 |
| Section 5.5. Litigation | 46 |
| Section 5.6. Brokerage | 46 |
| Section 5.7. Operations of Purchaser | 46 |
| Section 5.8. Ownership of Shares | 46 |
| Section 5.9. Vote/Approval Required | 46 |
| Section 5.10. Funds | 47 |
| Section 5.11. Solvency | 47 |
| Section 5.12. Investigation by Parent and Purchaser; Disclaimer of Reliance | 47 |
| Section 5.13. Other Agreements | 48 |
| Section 5.14. No Other Representations and Warranties | 48 |
| Article VI COVENANTS | 48 |
| Section 6.1. Covenants of the Company | 48 |
| Section 6.2. Access to Information; Confidentiality | 52 |
| Section 6.3. Acquisition Proposals | 53 |
| Section 6.4. Employment and Employee Benefits Matters | 56 |
| Section 6.5. Directors’ and Officers’ Indemnification and Insurance | 57 |
| Section 6.6. Further Action; Efforts | 59 |
| Section 6.7. Public Announcements | 61 |
| Section 6.8. Approval of Compensation Actions | 61 |
| Section 6.9. No Control of the Company’s Business | 61 |
| Section 6.10. Operations of Purchaser | 62 |
| Section 6.11. Stockholder Litigation | 62 |
| Section 6.12. Regulatory Matters | 62 |
| Section 6.13. Cash Management | 62 |
| Section 6.14. Stock Exchange De-listing | 62 |
| Section 6.15. Termination of Certain Agreements | 62 |
| Section 6.16. Merger Without a Stockholders Meeting | 63 |
| Section 6.17. FIRPTA Certificate | 63 |
| Section 6.18. Certain Tax Returns | 63 |
| ARTICLE VII CONDITIONS OF MERGER | 63 |
| Section 7.1. Conditions to Obligation of Each Party to Effect the Merger | 63 |
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| ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER | 63 |
| Section 8.1. Termination by Mutual Agreement | 63 |
| Section 8.2. Termination by Either Parent or the Company | 63 |
| Section 8.3. Termination by the Company | 64 |
| Section 8.4. Termination by Parent | 64 |
| Section 8.5. Effect of Termination | 65 |
| Section 8.6. Expenses | 66 |
| Section 8.7. Amendment and Waiver | 66 |
| ARTICLE IX GENERAL PROVISIONS | 67 |
| Section 9.1. Non-Survival of Representations, Warranties, Covenants and Agreements | 67 |
| Section 9.2. Notices | 67 |
| Section 9.3. Certain Definitions | 68 |
| Section 9.4. Severability | 84 |
| Section 9.5. Assignment | 84 |
| Section 9.6. Entire Agreement; Third-Party Beneficiaries | 84 |
| Section 9.7. Governing Law | 85 |
| Section 9.8. Headings | 85 |
| Section 9.9. Counterparts | 85 |
| Section 9.10. Performance Guaranty | 85 |
| Section 9.11. Jurisdiction; Waiver of Jury Trial | 85 |
| Section 9.12. Service of Process | 86 |
| Section 9.13. Remedies | 86 |
| Section 9.14. Cooperation | 86 |
| Section 9.15. Specific Performance | 86 |
| Section 9.16 Interpretation | 87 |
Annexes
| Annex I | Conditions to the Offer |
| Annex II | Certificate of Incorporation of the Surviving Corporation |
| Annex III | Bylaws of the Surviving Corporation |
| Annex IV | Contingent Value Rights Agreement |
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 28, 2023 (this “Agreement”), among Eli Lilly and Company, an Indiana corporation (“Parent”), Shenandoah Acquisition Corporation, a Delaware corporation and wholly owned Subsidiary of Parent (“Purchaser”), and Sigilon Therapeutics, Inc., a Delaware corporation (the “Company”).
WHEREAS, the boards of directors of Purchaser and the Company each have approved the acquisition of the Company by Purchaser on the terms and subject to the conditions set forth in this Agreement and, accordingly, Purchaser has agreed to commence a tender offer (as it may be amended from time to time as permitted by this Agreement, the “Offer”) to purchase any (subject to the Minimum Tender Condition) and all of the issued and outstanding shares (each, a “Share” and, collectively, “Shares”) of common stock, par value $0.001 per Share, of the Company (“Company Common Stock”), for $14.92 per Share, net to the seller in cash, without interest (the “Closing Amount”), plus one (1) contingent value right per Share (each, a “CVR” and, collectively, the “CVRs”) which shall represent the right to receive the Milestone Payments (as such term is used in the Contingent Value Rights Agreement in the form attached hereto as Annex IV (the “CVR Agreement”) to be entered into between Parent and an agent selected by Parent and reasonably acceptable to the Company (the “Rights Agent”)), if any, at the time provided for in the CVR Agreement, net to the seller in cash, without interest (the Closing Amount plus one CVR, collectively, or any higher amount per Share paid pursuant to the Offer, the “Offer Price”);
WHEREAS, as soon as practicable following the consummation of the Offer, Purchaser will merge with and into the Company (the “Merger”) in accordance with Section 251(h) of the General Corporation Law of the State of Delaware (the “DGCL”), with the Company continuing as the Surviving Corporation, and each Share that is issued and outstanding immediately prior to the Effective Time (other than Shares described in Section 3.1(b)) will be converted into the right to receive the Merger Consideration, net to the seller in cash and without interest, upon the terms and conditions set forth herein;
WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously (i) determined that this Agreement and the Contemplated Transactions are advisable, fair to, and in the best interests of, the Company and the holders of the Shares, (ii) duly authorized and approved the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and other obligations hereunder, and the consummation of the Contemplated Transactions upon the terms and subject to the conditions set forth herein, (iii) resolved that this Agreement and the Contemplated Transactions shall be governed by and effected under Section 251(h) and other relevant provisions of the DGCL and (iv) resolved to recommend that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer;
WHEREAS, the board of directors of Purchaser has, on the terms and subject to the conditions set forth herein, adopted this Agreement and approved the Contemplated Transactions, including the Offer and the Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent’s and Purchaser’s willingness to enter into this Agreement, certain stockholders of the Company are executing and delivering a Tender and Support Agreement in favor of Parent and Purchaser (the “Tender and Support Agreements”), pursuant to which such stockholders, among other things, will agree to tender all Shares beneficially owned by them to Purchaser in the Offer; and
WHEREAS, the sole stockholder of Purchaser will approve this Agreement immediately following its execution.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Company hereby agree as follows:
Article I
THE OFFER
Section 1.1. The Offer.
(a) (i) Subject to the terms and conditions of this Agreement (and provided that this Agreement shall not have been terminated in accordance with ARTICLE VIII), on July 13, 2023, Purchaser shall, and Parent shall cause Purchaser to, commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) the Offer to purchase for cash any (subject to the Minimum Tender Condition) and all Shares at the Offer Price; provided that if, at the time Purchaser intends to commence the Offer, the Company is not prepared to file with the U.S. Securities and Exchange Commission (the “SEC”) and to disseminate to holders of Shares the Schedule 14D-9, Purchaser may, but until such time as the Company is so prepared, shall not be obligated to, commence the Offer. The obligation of Purchaser to accept for payment and to pay for any Shares validly tendered and not validly withdrawn pursuant to the Offer shall be subject only to the satisfaction or waiver (to the extent permitted hereunder) of those conditions set forth in Annex I (the “Offer Conditions”). Unless extended in accordance with Section 1.1(a)(ii), the Offer will expire at one (1) minute after 11:59 p.m. Eastern Time on the twentieth (20th) Business Day (calculated as set forth in Rule 14d-1(g)(3) under the Exchange Act) following (and including the day of) the commencement of the Offer (the “Initial Expiration Date”), or, if the Offer has been extended in accordance with Section 1.1(a)(ii), at the time and date to which the Offer has been so extended (the Initial Expiration Date, or such later time and date to which the Offer has been extended in accordance with Section 1.1(a)(ii), the “Expiration Date”). Purchaser expressly reserves the right at any time or from time to time, in its sole discretion, to waive any Offer Condition or modify or amend the terms of the Offer, in whole or in part, including the Offer Price, except that, without the prior written consent of the Company, Purchaser may not (A) decrease the Closing Amount or amend the terms of the CVRs or the CVR Agreement except as required or permitted by Section 1.1(e), (B) change the form of the consideration payable in the Offer, (C) decrease the maximum number of Shares sought pursuant to the Offer, (D) amend or waive the Minimum Tender Condition, (E) add to the conditions set forth on Annex I, (F) modify the conditions set forth on Annex I in a manner adverse to the holders of Shares, (G) extend the Expiration Date of the Offer except as required or permitted by Section 1.1(a)(ii) or (H) make any other change in the terms or conditions of the Offer that is adverse to any holders of Shares.
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(ii) Subject to the terms and conditions of this Agreement and to the satisfaction or waiver (to the extent permitted hereunder) by Purchaser of the Offer Conditions as of any scheduled Expiration Date, Purchaser shall accept for purchase any and all Shares validly tendered and not validly withdrawn pursuant to the Offer as promptly as practicable after such scheduled Expiration Date (the date and time of acceptance for payment, the “Acceptance Time”). The Purchaser shall promptly (and in any event within three (3) Business Days (calculated as set forth in Rule 14d-1(g)(3) under the Exchange Act)) after the Acceptance Time pay, or cause the Paying Agent to pay, for all Shares validly tendered and not validly withdrawn pursuant to the Offer.
Purchaser shall not permit holders of Shares to tender Shares pursuant to the Offer pursuant to guaranteed delivery procedures that have not been “received” (as defined by Section 251(h)(6) of the DGCL). Purchaser shall (A) extend the Offer for one (1) or more periods of time of up to ten (10) Business Days per extension if at any scheduled Expiration Date any Offer Condition (other than the Minimum Tender Condition) is not satisfied and has not been waived (to the extent permitted hereunder) and (B) extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC, the staff thereof, or the Nasdaq Global Select Market (“Nasdaq”) applicable to the Offer; provided that Purchaser is not required to extend the Offer beyond the Outside Date. In addition, if at the otherwise scheduled Expiration Date, each Offer Condition (other than the Minimum Tender Condition) shall have been satisfied or waived and the Minimum Tender Condition shall not have been satisfied, Purchaser may elect to (and if so requested by the Company, Purchaser shall) extend the Offer for one (1) or more consecutive increments of such duration as requested by the Company (or if not so requested by the Company, as determined by Purchaser), but not more than ten (10) Business Days each (or for such longer period as may be agreed to by Parent and the Company); provided that the Company shall not request Purchaser to, and Purchaser shall not be required to, extend the Offer pursuant to this sentence on more than two (2) occasions in consecutive periods of ten (10) Business Days each (or such longer or shorter period as the Company and Purchaser may agree in writing); provided, further, that Purchaser shall not without the prior written consent of the Company, and shall not be required to, extend the Offer beyond the Outside Date. The Company shall register (and shall instruct its transfer agent to register) the transfer of the Shares accepted for payment by Purchaser effective immediately after the Acceptance Time.
(b) On the date of commencement of the Offer, Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer Statement on Schedule TO (collectively with all amendments and supplements thereto, the “Schedule TO”) with respect to the Offer that includes as exhibits the offer to purchase and related letter of transmittal and summary advertisement and other ancillary documents and instruments pursuant to which the Offer will be made (collectively with any supplements or amendments thereto, the “Offer Documents”) and shall disseminate the Offer Documents to holders of Shares, in each case, as and to the extent required by applicable federal securities Laws. The Company shall furnish promptly to Parent and Purchaser all information reasonably requested by Parent and Purchaser concerning the Company and required by applicable federal securities Laws to be set forth in the Offer Documents. Except from and after a Change of Board Recommendation, Parent and Purchaser shall (i) afford the Company a reasonable opportunity to review and comment on the Offer Documents prior to their filing with the SEC, (ii) promptly provide the Company and its counsel with a copy of any written comments (and a description of any oral comments) received by Parent, Purchaser or their counsel from the SEC or its staff with respect to the Offer Documents, (iii) consult with the Company regarding any such comments prior to responding thereto and (iv) promptly provide the Company with copies of any written responses to any such comments. Parent and Purchaser shall cause the Offer Documents filed by either Parent or Purchaser with the SEC to comply in all material respects with the requirements of applicable Law and, on the date first filed with the SEC and on the date first published, sent or given to the holders of Shares, not to contain any untrue statement of a material fact or omit to state any 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, except that no covenant is made by Parent or Purchaser with respect to information supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in the Offer Documents. Each of Parent, Purchaser and the Company shall promptly correct any information provided by it for use in the Offer Documents as well as any material omissions from the Offer Documents if and to the extent that it has become aware that such information has become false or misleading in any material respect. Parent and Purchaser shall take all steps necessary to cause the Offer Documents as so corrected to be promptly filed with the SEC and disseminated to holders of Shares, in each case, as and to the extent required by applicable federal securities Laws.
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(c) Parent shall provide or cause to be provided to Purchaser on a timely basis the funds necessary to purchase any Shares that Purchaser becomes obligated to purchase pursuant to the Offer.
(d) Purchaser shall not terminate the Offer prior to any scheduled Expiration Date without the prior written consent of the Company, except if this Agreement is terminated pursuant to ARTICLE VIII. If this Agreement is terminated pursuant to ARTICLE VIII, Purchaser shall terminate the Offer promptly (and in any event within one (1) Business Day of such termination of this Agreement pursuant to ARTICLE VIII), and Purchaser shall not acquire any Shares pursuant to the Offer. If the Offer is terminated by Purchaser, or if this Agreement is terminated pursuant to ARTICLE VIII prior to the acquisition of Shares in the Offer, Purchaser shall promptly (and in any event within two (2) Business Days of such termination) return, and shall cause any depositary or other agent acting on behalf of Purchaser to return, in accordance with applicable Law, all Shares tendered into the Offer to the registered holders thereof.
(e) The (i) Offer Price and (ii) Merger Consideration will be adjusted appropriately to reflect any reclassification, recapitalization, division or subdivision of shares, consolidation of shares, stock split (including a reverse stock split), or combination, exchange, or readjustment of shares, or any stock dividend or stock distribution occurring (or for which a record date is established) or other similar transaction after the date of this Agreement and prior to (A) the payment by Purchaser for Shares validly tendered and not validly withdrawn in connection with the Offer (with respect to the Offer Price) or (B) the Effective Time (with respect to the Merger Consideration).
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(f) Parent shall, and shall cause the Rights Agent to, at or prior to the Acceptance Time, duly authorize, execute and deliver the CVR Agreement.
Section 1.2. Company Consent; Schedule 14D-9. On the date of the filing of the Offer Documents, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the “Schedule 14D-9”) containing, subject to the conditions set forth herein, the Company Board Recommendation. The Company shall include in the Schedule 14D-9 (x) the information required by Section 262(d)(2) of the DGCL such that the Schedule 14D-9 constitutes a notice of appraisal rights under Section 262(d)(2) of the DGCL and (y) the fairness opinion delivered by Lazard Frères & Co. LLC (together with a description of such firm’s related analyses). The Company shall establish the Stockholder List Date as the record date for the purpose of receiving the notice required by Section 262(d)(2) of the DGCL; provided that, such record date will not be more than ten (10) calendar days prior to the date that the Schedule 14D-9 is first mailed. The Company hereby consents to the inclusion of the Company Board Recommendation in the Offer Documents and, absent a Change of Board Recommendation, to the inclusion of a copy of the Schedule 14D-9 with the Offer Documents mailed or furnished to the holders of Shares. Parent and Purchaser shall, absent a Change of Board Recommendation, disseminate a copy of the Schedule 14D-9 with the Offer Documents mailed or furnished to the holders of Shares. Parent and Purchaser shall furnish promptly to the Company all information concerning Parent and Purchaser reasonably requested by the Company or required by applicable federal securities Laws to be set forth in the Schedule 14D-9. Except with respect to any amendments filed in connection with an Acquisition Proposal or a Change of Board Recommendation, Parent and Purchaser shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its filing with the SEC. The Company shall (i) promptly provide Parent, Purchaser and their counsel with a copy of any written comments (or a description of any oral comments) received by the Company or its counsel from the SEC or its staff with respect to the Schedule 14D-9, (ii) consult with Parent and Purchaser regarding any such comments prior to responding thereto and (iii) promptly provide Parent and Purchaser with copies of any responses to any such comments, in each case, except with respect to comments related to an Acquisition Proposal or in connection with a Change of Board Recommendation. The Company shall cause the Schedule 14D-9 to comply in all material respects with the requirements of applicable Law and, on the date first filed with the SEC and on the date first published, sent or given to the holders of Shares of Company Common Stock, not to contain any untrue statement of a material fact or omit to state any 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, except that no covenant is made by the Company with respect to information supplied by or on behalf of Parent or Purchaser specifically for inclusion or incorporation by reference in the Schedule 14D-9. Each of the Company, Parent and Purchaser shall promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it has become aware that such information has become false or misleading in any material respect. The Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to holders of Shares, in each case, as and to the extent required by applicable federal securities Laws.
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Section 1.3. Stockholder Lists. In connection with the Offer, the Company shall cause its transfer agent to promptly furnish Parent and Purchaser with mailing labels, security position listings and computer files containing the names and addresses of the record holders of the Shares as of a recent practicable date (such date, the “Stockholder List Date”), and the Company shall furnish or cause to be furnished to Parent and Purchaser such information and assistance (including periodic updates of such information) as Parent or Purchaser or their agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of the Shares. Except for such actions as are reasonably necessary to disseminate the Offer Documents, each of Parent and Purchaser shall hold and use all information and documents provided to it under this Section 1.3 in accordance with the letter agreement regarding confidentiality, by and between Parent and the Company, dated May 12, 2023 (as amended or waived, the “Confidentiality Agreement”).
Article II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the conditions of this Agreement and in accordance with Section 251(h) of the DGCL, at the Effective Time, Purchaser will be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser will cease, and the Company will continue as the surviving corporation of the Merger (the “Surviving Corporation”).
Section 2.2. Closing; Effective Time. Subject to the provisions of this Agreement and pursuant to the DGCL (including Section 251 of the DGCL), the closing of the Merger (the “Closing”) will take place remotely by exchange of documents and signatures (or their electronic counterparts), as soon as practicable following consummation of the Offer, but in no event later than the first (1st) Business Day, after the satisfaction or (to the extent permitted by Law) waiver of the conditions set forth in ARTICLE VII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or (to the extent permitted by Law) waiver of such conditions at the Closing), or at such other place or on such other date as Parent and the Company may mutually agree (such date, the “Closing Date”). At the Closing, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later time as is specified in the Certificate of Merger and agreed to by Purchaser and the Company, being hereinafter referred to as the “Effective Time”) and shall make all other filings, recordings or publications required under the DGCL in connection with the Merger.
Section 2.3. Effects of the Merger. The Merger will have the effects set forth herein, in the Certificate of Merger and as set forth in the applicable provisions, including Section 259 of the DGCL.
Section 2.4. Certificate of Incorporation and Bylaws of the Surviving Corporation.
(a) At the Effective Time, the certificate of incorporation of the Company will, by virtue of the Merger, be amended and restated in its entirety to read in the form of Annex II, and as so amended, will be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by applicable Law.
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(b) At the Effective Time, and without any further action on the part of the Company or Purchaser, the bylaws of the Company will be amended and restated in their entirety so as to read in the form of Annex III, and, as so amended, will be the bylaws of the Surviving Corporation until thereafter amended in accordance with their terms, in accordance with the certificate of incorporation of the Surviving Corporation and as provided by applicable Law.
Section 2.5. Directors and Officers. The directors of Purchaser immediately prior to the Effective Time will be the initial directors of the Surviving Corporation, and the officers of Purchaser immediately prior to the Effective Time will be the initial officers of the Surviving Corporation, in each case, until the earlier of his or her death, resignation, or removal, or until his or her successor is duly elected and qualified. The Company shall request that each director of the Company immediately prior to the Effective Time to execute and deliver a letter effectuating his or her resignation as a member of the Company Board, to be effective as of the Effective Time.
Section 2.6. Merger Without a Vote of Stockholders. The Merger will be governed by and effected under Section 251(h) of the DGCL. The parties hereto shall take all necessary and appropriate action to cause the Merger to become effective as soon as practicable following the consummation of the Offer, without a vote of the holders of the Shares in accordance with Section 251(h) of the DGCL.
Article III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
Section 3.1. Conversion of Securities. At the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Purchaser, the Company or the holders of any of the following securities, the following will occur:
(a) each Share issued and outstanding immediately prior to the Effective Time (other than any Shares described in Section 3.1(b) and any Dissenting Shares) will be converted into the right to receive the Offer Price, without interest (the “Merger Consideration”), less any applicable tax withholding pursuant to Section 3.7. As of the Effective Time, all such Shares shall no longer be outstanding and shall cease to exist, and each holder of any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration in accordance with Section 3.5, without interest, less any applicable tax withholding pursuant to Section 3.7;
(b) each Share held in the treasury of the Company or owned by the Company and each Share owned by Parent, Purchaser or any direct or indirect wholly owned Subsidiary of Parent or Purchaser immediately prior to the Effective Time will be cancelled and retired without any conversion thereof and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor;
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(c) each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time will be converted into one (1) fully paid and non-assessable share of common stock of the Surviving Corporation, which shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation; and
(d) each Dissenting Share immediately prior to the Effective Time will be cancelled and shall cease to exist, and Dissenting Shares will thereafter only represent the right to receive payment pursuant to Section 262 of the DGCL and as described in Section 3.4.
Section 3.2. Treatment of Equity Awards.
(a) The Company Board (or, if appropriate, the committee administering a Company equity incentive plan, inducement award program or other similar plan, program or arrangement under which equity incentive awards are outstanding, including the Company’s 2016 Equity Incentive Plan and the Company’s 2020 Equity Incentive Plan, but excluding the Company’s 2020 Employee Stock Purchase Plan (the “Company ESPP”) (each, a “Company Equity Plan” and, collectively, the “Company Equity Plans”)) has adopted, or, as soon as practicable following the date of this Agreement (and, in any event, prior to the Effective Time), shall adopt, resolutions providing that, and has taken or shall take other necessary action providing that:
(i) at the Acceptance Time, each option to purchase Shares granted under a Company Equity Plan (excluding, for the avoidance of doubt, the Company ESPP) (each such option, a “Company Stock Option”) that is outstanding immediately prior to the Acceptance Time, whether or not vested, will be cancelled, and, in exchange therefor, the holder of such cancelled Company Stock Option will be entitled to receive (without interest), in consideration of the cancellation of such Company Stock Option, (x) an amount in cash (less applicable tax withholdings pursuant to Section 3.7) equal to the product of (A) the total number of Shares subject to such Company Stock Option immediately prior to the Acceptance Time multiplied by (B) the excess, if any, of the Closing Amount over the applicable exercise price per Share under such Company Stock Option and (y) one (1) CVR for each Share subject to such Company Stock Option immediately prior to the Acceptance Time (without regard to vesting); provided that any Company Stock Option that has an exercise price that equals or exceeds the Closing Amount shall be cancelled for no consideration;
(ii) at the Acceptance Time, each Restricted Stock Unit (each such unit, a “Company Restricted Stock Unit”) granted under a Company Equity Plan that is outstanding immediately prior to the Acceptance Time, whether or not vested, will be cancelled, and, in exchange therefor, the holder of such cancelled Company Restricted Stock Unit will be entitled to receive (without interest) in consideration of such cancellation of such Company Restricted Stock Unit (x) an amount in cash (less applicable tax withholdings pursuant to Section 3.7) equal to the product of (A) the total number of Shares issuable in settlement of such Company Restricted Stock Unit immediately prior to the Acceptance Time, multiplied by (B) the Closing Amount and (y) one (1) CVR for each Share subject to such Company Restricted Stock Unit immediately prior to the Acceptance Time;
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(iii) subject to Section 3.7, Parent shall cause the Surviving Corporation to make all payments to former holders of Company Stock Options and the Company Restricted Stock Units required under this Section 3.2(a) as promptly as practicable after the Acceptance Time or the Milestone Payment Date (as defined in the CVR Agreement), as applicable, and, in any event, no later than the next regularly scheduled payroll date that follows (x) with respect to the Closing Amount, the Acceptance Time and (y) with respect to cash consideration payable upon satisfaction of a Milestone (as defined in the CVR Agreement) pursuant to the CVR Agreement, such time as the Rights Agent pays the aggregate Milestone Payment Amount (as defined in the CVR Agreement) in accordance with Section 2.4(b) of the CVR Agreement; and
(iv) each Company Equity Plan shall be terminated effective as of the Acceptance Time.
(b) As soon as practicable after the date hereof, the Company Board (or, if appropriate, the committee administering the Company ESPP) shall pass such resolutions and shall take all actions with respect to the Company ESPP that are necessary to provide that: (i) with respect to the Option Period (as defined in the Company ESPP) in effect as of the date hereof, if any, no individual who was not a participant in the Company ESPP as of the date hereof may enroll in the Company ESPP with respect to such Option Period and no participant may increase the percentage amount of his or her payroll deduction election from that in effect on the date hereof for such Option Period; (ii) no Option Period shall commence following the date hereof unless and until this Agreement is terminated; (iii) if the applicable Exercise Date (as defined in the Company ESPP) with respect to the Option Period would otherwise occur on or after the Effective Time, then the Option Period will be shortened and the applicable purchase date with respect to the Option Period will occur at least two (2) Business Days preceding the date on which the Effective Time occurs; and (iv) the Company ESPP shall terminate as of or prior to the Effective Time.
Section 3.3. Treatment of Company Warrants. Prior to the Effective Time, the Company shall satisfy all notification requirements under the terms of any outstanding warrants to purchase Shares (the “Company Warrants”). Each Company Warrant that is outstanding immediately prior to the Effective Time will be cancelled as of the Effective Time in exchange for the right to receive (a) cash in an amount equal to the product of (i) the total number of Shares subject to such Company Warrant immediately prior to the Effective Time, multiplied by (ii) the excess of (A) the Closing Amount over (B) the exercise price payable per Share under such Company Warrant, and (b) one (1) CVR for each Share subject to such Company Warrant immediately prior to the Effective Time; provided that, any Company Warrant that has an exercise price that equals or exceeds the Closing Amount shall be cancelled for no consideration.
Section 3.4. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and properly demands appraisal for such Shares in accordance with Section 262 of the DGCL (the “Dissenting Shares”) will not be converted into a right to receive the Merger Consideration unless such holder fails to perfect or effectively withdraws or otherwise loses his, her, or its right to appraisal. Instead, at the Effective Time, the Dissenting Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and from and after the Effective Time, a holder of Shares who has properly exercised appraisal rights will not have any rights of a stockholder of the Company or the Surviving Corporation with respect to such Shares, except those provided under Section 262 of the DGCL. A holder of Dissenting Shares will be entitled only to receive payment of the appraised value of such Shares in accordance with Section 262 of the DGCL, unless, after the Effective Time, such holder effectively withdraws or loses his, her, or its right to appraisal in accordance with Section 262 of the DGCL, in which case such Dissenting Shares will be treated as if such Shares had been converted as of the Effective Time into the right to receive the Merger Consideration, without interest thereon and less any applicable tax withholding pursuant to Section 3.7, upon surrender of the Certificate or Certificates, pursuant to Section 3.1.
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(b) The Company shall provide Parent with prompt written notice of any demands for appraisal (including copies of any written demands), withdrawals of such demands, and any other instruments received by the Company from holders of Shares relating to rights of appraisal, and Parent will have the opportunity and right to direct the conduct of all negotiations and proceedings with respect to demands for appraisal. Except with the prior written consent of Parent, the Company shall not voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demands for appraisal, or agree to do any of the foregoing.
Section 3.5. Surrender of Shares.
(a) At or immediately after the Acceptance Time, Parent shall deposit or cause to be deposited with a bank or trust company reasonably acceptable to the Company (the “Paying Agent”) cash in an amount sufficient to pay the aggregate Closing Amount (calculated for the purposes of this Section 3.5(a) assuming that all outstanding Shares (other than Dissenting Shares) are tendered into the Offer), and Parent shall cause the Paying Agent to timely make all payments contemplated in Section 3.5(b). Such cash may be invested by the Paying Agent as directed by Parent; provided (i) that such investments must be in short-term obligations of the United States of America with maturities of no more than thirty (30) days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, (ii) no such investment will relieve Parent, Purchaser, or the Paying Agent from making the payments required by this Article III and (iii) no such investment will have maturities that could prevent or delay payments to be made pursuant to this Agreement. Any interest or income produced by such investments will be payable to the Surviving Corporation or Parent, as Parent directs. No loss incurred with respect to such investments will decrease the amounts payable pursuant to this Agreement. In the event that the amount of cash held by the Paying Agent is insufficient to pay the aggregate Closing Amount, Parent shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount which is equal to the deficiency in the amount required to make all such payment pursuant to Section 3.5(b). The aggregate Closing Amount as so deposited with the Paying Agent will not be used for any purpose other than to fund payments pursuant to Section 3.5(b), except as expressly provided for in this Agreement. Any portion of the cash made available to the Paying Agent in respect of any Dissenting Shares will be returned to Parent, upon demand. Parent shall not be required to deposit any funds related to any CVR with the Rights Agent, unless and until such deposit is required pursuant to the terms of the CVR Agreement.
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(b) As promptly as practicable after the Effective Time (and in any event within three (3) Business Days thereafter), Parent shall cause the Paying Agent to mail to each holder of record of a certificate (a “Certificate”), which immediately prior to the Effective Time represented outstanding Shares that were converted pursuant to Section 3.1 into the right to receive the Merger Consideration, (i) a letter of transmittal in customary form (which will (x) specify that delivery will be effected, and risk of loss and title to the Certificate will pass, only upon delivery of such Certificate to the Paying Agent and (y) contain such other provisions as are customary and reasonably acceptable to Parent and the Company) and (ii) instructions for effecting the surrender of the Certificate in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed and properly completed, the holder of such Certificate will be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate, and the Certificate so surrendered will be cancelled. Until surrendered as contemplated by this Section 3.5(b), each Certificate will be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration and will not evidence any interest in, or any right to exercise the rights of a stockholder or other equity holder of, the Company or the Surviving Corporation. No interest shall be paid or accrue on the cash payable upon surrender of any Certificate.
(c) No holder of record of a book-entry share (“Book-Entry Share”), which immediately prior to the Effective Time represented outstanding Shares that were converted pursuant to Section 3.1 into the right to receive the Merger Consideration, shall be required to deliver a Certificate or an executed letter of transmittal to the Paying Agent to receive the Merger Consideration in respect of such Book-Entry Shares. In lieu thereof, such holder of record shall, upon receipt by the Paying Agent of an “agent’s message” in customary form (or such other evidence, if any, as the Paying Agent may reasonably request), be entitled to receive in exchange therefor, the Merger Consideration for each Share formerly represented by such Book-Entry Share, and such Book-Entry Share will be canceled. Payment of the Merger Consideration with respect to Book-Entry Shares shall only be made to the Person in whose name such Book-Entry Shares are registered. Until such “agent’s message” (or such other evidence) is received, each Book-Entry Share will be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration and will not evidence any interest in, or any right to exercise the rights of a stockholder or other equity holder of, the Company or the Surviving Corporation. No interest shall be paid or accrue on the cash payable in respect of a Book-Entry Share.
(d) At any time following the date that is six (6) months after the Effective Time, Parent may require the Paying Agent to deliver to Parent or its designated Affiliate any funds (including any interest received with respect thereto) that have been made available to the Paying Agent and that have not been disbursed to holders of Certificates and Book-Entry Shares, and thereafter such holders will be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) with respect to the Merger Consideration payable to the holder of a Certificate or Book-Entry Share. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of Shares for the Merger Consideration. None of Parent, Purchaser, the Company, the Surviving Corporation or the Paying Agent shall be liable to any Person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate has not been surrendered, or the applicable “agent’s message” or other evidence is not received in respect of a Book-Entry Share, immediately prior to the date on which the Merger Consideration in respect of such Certificate or Book-Entry Share would otherwise escheat to or become the property of any Governmental Body, any Merger Consideration in respect of such Certificate or Book-Entry Share will, to the extent permitted by applicable Law, immediately prior to such time become the property of the Surviving Corporation, free and clear of all claims or interest of any individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, other entity or group (as defined in Section 13(d)(3) of the Exchange Act) previously entitled thereto.
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(e) From and after the Effective Time, the stock transfer books of the Company will be closed, and no subsequent transfers of Shares that were issued prior to the Effective Time will be registered. After the Effective Time, any Certificate or Book-Entry Share presented to the Surviving Corporation for transfer will be cancelled and exchanged for the consideration provided for, and in accordance with the procedures set forth in, this Article III.
(f) In the event that any Certificate has been lost, stolen or destroyed, upon the holder’s delivery of an affidavit of loss to the Paying Agent (and, if required by Parent or the Paying Agent, the posting by such holder of a bond in customary amount and upon such terms as may be reasonably required by Parent or the Paying Agent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate), Parent shall cause the Paying Agent to deliver as consideration for the lost, stolen or destroyed Certificate the applicable Merger Consideration payable in respect of the Shares represented by such Certificate, without interest and less any applicable tax withholding pursuant to Section 3.7.
Section 3.6. Section 16 Matters. Prior to the Acceptance Time, the Company Board shall take all necessary and appropriate action to approve, for purposes of Section 16(b) of the Exchange Act and the related rules and regulations thereunder, the disposition by Company directors and officers of Shares, Company Stock Options and Company Restricted Stock Units in the Contemplated Transactions.
Section 3.7. Withholding. The parties hereto and the Paying Agent are entitled to deduct and withhold from any amounts payable or otherwise deliverable pursuant to this Agreement such amounts as are required to be deducted and withheld therefrom under the United States Internal Revenue Code of 1986, as amended (the “Code”), or the Treasury Regulations thereunder (the “Treasury Regulations”), or any other applicable Tax Law. Any compensatory amounts payable pursuant to or as contemplated by this Agreement, including pursuant to Section 3.2, will be remitted to the applicable payor for payment to the applicable Person through regular payroll procedures, as applicable. To the extent that any amounts are so deducted and withheld and timely paid over to the appropriate Governmental Body, such amounts will be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.
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Section 3.8. Transfer Taxes. If any payment pursuant to the Offer or the Merger is to be made to a Person other than the Person in whose name the surrendered Certificate or Book-Entry Share is registered, it will be a condition to such payment that (a) such Certificate so surrendered or Book-Entry Share must be properly endorsed or must otherwise be in proper form and (b) the Person presenting such Certificate or Book-Entry Share to the Paying Agent for payment must pay to the Paying Agent any Transfer Taxes or other Taxes required as a result of such payment to a Person other than the registered holder of such Certificate or Book-Entry Share or must establish to the satisfaction of the Paying Agent and Parent that such Tax has been paid or is not required to be paid.
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed in (a) Company SEC Documents publicly available at least two (2) Business Days prior to the date of this Agreement (excluding any disclosures in “risk factors” or otherwise relating to “forward-looking statements” to the extent that they are cautionary, predictive or forward-looking in nature) (provided that nothing disclosed in the Company SEC Documents shall be deemed a qualification of, or modification to, the representations and warranties set forth in Section 4.1(a) (Organization and Corporate Power), Section 4.2 (Authorization; Valid and Binding Agreement), Section 4.3 (Capital Stock), Section 4.4 (No Breach), Section 4.8(a) (Absence of Certain Developments), Section 4.11 (Tax Matters), Section 4.21 (No Rights Agreement; Anti-Takeover Provisions) and Section 4.23 (No Vote Required)) or (b) the confidential disclosure letter delivered by the Company to Parent and Purchaser prior to the execution and delivery of this Agreement (which shall be arranged and in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article IV, and the disclosure in any section shall be deemed to qualify or apply to other sections in this Article IV to the extent that it is reasonably apparent on its face that such disclosure also qualifies or applies to such other sections) (the “Company Disclosure Letter”), the Company represents and warrants to Parent and Purchaser as follows:
Section 4.1. Organization and Corporate Power; Subsidiary.
(a) The Company is a corporation validly existing and in good standing under the Laws of the State of Delaware, with full corporate power and authority to enter into this Agreement and perform its obligations hereunder. The Company has all requisite corporate power and authority and all Permits necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (and all such Permits are in full force and effect), except where the failure to hold such Permits would not have a Company Material Adverse Effect. The Company is duly qualified or authorized to do business and is in good standing in every jurisdiction (to the extent such concept exists in such jurisdiction) in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified, authorized or in good standing would not have a Company Material Adverse Effect.
(b) The Subsidiary of the Company is duly organized, validly existing and in good standing under the Laws of Massachusetts and has all requisite corporate power and authority and all Permits necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (and all such Permits are in full force and effect), except where the failure to hold such Permits would not have a Company Material Adverse Effect. The Subsidiary of the Company is duly qualified or authorized to do business and is in good standing in every jurisdiction (to the extent such concept exists in such jurisdiction) in which its ownership of property or the conduct of business as now conducted requires it to qualify, except where the failure to be so qualified, authorized or in good standing would not have a Company Material Adverse Effect.
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(c) True and complete copies of the certificate of incorporation and bylaws of the Company and its Subsidiary (the “Company Organizational Documents”), as in effect as of the date of this Agreement, have been heretofore made available to Parent and Purchaser, and neither the Company nor its Subsidiary is in violation of any provisions of the Company Organizational Documents.
Section 4.2. Authorization; Valid and Binding Agreement. Assuming the Contemplated Transactions are consummated and the Merger becomes effective in accordance with Section 251(h) of the DGCL, the Company has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Offer and the Merger. The Company Board, at a meeting duly called and held, duly and unanimously adopted resolutions, that (a) determined that this Agreement and the Contemplated Transactions are advisable, fair to and in the best interests of, the Company and the holders of the Shares, (b) duly authorized and approved the execution and delivery of this Agreement by the Company, the performance by the Company of its covenants and other obligations hereunder, and the consummation of the Contemplated Transactions upon the terms and subject to the conditions set forth herein, (c) resolved that this Agreement and the Contemplated Transactions shall be governed by and effected under Section 251(h) and other relevant provisions of the DGCL and (d) resolved to recommend that the holders of the Shares accept the Offer and tender their Shares pursuant to the Offer (the “Company Board Recommendation”), which actions have not, as of the date of this Agreement, been rescinded, modified or withdrawn. No other corporate action pursuant to the Laws of the State of Delaware, on the part of the Company, is necessary to authorize this Agreement. The Company has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by Purchaser and Parent, this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforcement may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by general principles of equity.
Section 4.3. Capital Stock.
(a) The authorized capital stock of the Company consists of 175,000,000 Shares and 25,000,000 shares of preferred stock, $0.001 par value per share, of which, as of June 23, 2023 (the “Measurement Date”), 2,501,896 Shares of Company Common Stock were issued and outstanding and no shares of undesignated preferred stock were issued and outstanding.
(b) Section 4.3(b) of the Company Disclosure Letter sets forth a true and complete list as of the Measurement Date of the outstanding Company Stock Options, including: (i) the number of vested and unvested Shares subject thereto; (ii) the holders thereof; (iii) the exercise price; (iv) the date of grant; and (v) the expiration date applicable thereto. Section 4.3(b) of the Company Disclosure Letter sets forth a true and complete list as of the Measurement Date of the Company Restricted Stock Units, including: (A) the number of unvested Company Restricted Stock Units subject thereto; (B) the number of vested Company Restricted Stock Units which have not been settled as of the Measurement Date; (C) the holders thereof; (D) the date of grant; and (E) the vesting schedule. Section 4.3(b) of the Company Disclosure Letter sets forth a true and complete list as of the Measurement Date of the Shares outstanding under the Company ESPP, including (1) the Option Period that includes the Measurement Date, including the first day of the Option Period and the last day of the Option Period, (2) the employees participating in such Option Period, (3) contribution rate for each employee, (4) closing price of a Share on the first day of the Option Period, (5) purchase price of a Share if the purchase price is based on the first day of the Option Period, (6) annual salary for each employee, and (7) total withholdings. As of the Measurement Date, other than the Company Stock Options, Company Restricted Stock Units and Shares pursuant to the Company ESPP for the current Option Period, there were no other equity or equity-based awards outstanding, and the Company has granted no other such awards between the Measurement Date and the date of this Agreement.
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(c) All Company Stock Options and Company Restricted Stock Units have been granted and administered in compliance with the terms of the applicable Company Equity Plan and award agreement governing the terms of such award. At all times, the Company ESPP has qualified as an “employee stock purchase plan” under Section 423 of the Code, and all options to purchase Shares under the Company ESPP (now outstanding or previously exercised or forfeited) have satisfied the requirements of Section 423 of the Code.
(d) Sigilon Securities Corporation, a Massachusetts corporation, is the only Subsidiary of the Company. The Subsidiary of the Company is wholly owned by the Company, free and clear of any Liens (other than Permitted Liens), and its outstanding capital stock is set forth on Section 4.3(d) of the Company Disclosure Letter. The Company does not own, directly or indirectly, any capital stock or restricted stock of, or other equity interest or voting security in, or any interest convertible into or exchangeable or exercisable for any capital stock or restricted stock of, or other equity interest or voting security in, any Person other than the Subsidiary.
(e) Except as disclosed in this Section 4.3 or set forth in Section 4.3(b) of the Company Disclosure Letter and for changes since the Measurement Date resulting from the exercise of Company Stock Options or settlement of Company Restricted Stock Units outstanding on such date, neither the Company nor its Subsidiary has any outstanding (i) shares of capital stock, restricted stock or other equity interests or voting securities, (ii) securities convertible, exchangeable or exercisable, directly or indirectly, into or for capital stock, restricted stock or other equity interests or voting securities of the Company or its Subsidiary (as applicable), (iii) options, warrants, purchase rights, subscription rights, preemptive rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other contracts that require the Company or its Subsidiary (as applicable) to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem capital stock, restricted stock or other equity interests or voting securities of the Company or its Subsidiary (as applicable), or securities convertible, exchangeable or exercisable, directly or indirectly, into or for capital stock, restricted stock or other equity interests or voting securities of the Company or its Subsidiary (as applicable), (iv) obligation to grant, extend or enter into any options, warrants, purchase rights, subscription rights, preemptive rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other contracts that require the Company or its Subsidiary (as applicable) to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem capital stock, restricted stock or other equity interests or voting securities of the Company or its Subsidiary (as applicable), or securities convertible, exchangeable or exercisable, directly or indirectly, into or for capital stock, restricted stock or other equity interests or voting securities of the Company or its Subsidiary (as applicable), (v) stock appreciation, phantom stock, restricted stock units, profit participation or similar rights with respect to the Company or its Subsidiary (as applicable), (vi) bonds, debentures, notes or other indebtedness of the Company or its Subsidiary (as applicable) having the right to vote on any matters on which the Company’s or its Subsidiary’s (as applicable) stockholders may vote, and (vii) obligations by the Company or its Subsidiary to make any payments based on the price or value of any of the foregoing securities covered in clauses (i) - (vii) above (collectively, the “Company Securities”).
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(f) There are no outstanding agreements of any kind which obligate the Company or its Subsidiary to repurchase, redeem or otherwise acquire any Company Securities other than the cashless exercise of Company Stock Options or the forfeiture or withholding of taxes with respect to Company Stock Options or Company Restricted Stock Units, or obligate the Company to grant, extend or enter into any such agreements relating to any Company Securities, including any agreements granting any preemptive rights, subscription rights, anti-dilutive rights, call or rights of first refusal or similar rights with respect to any Company Securities. No Subsidiary of the Company owns any Company Securities. Neither the Company nor its Subsidiary is party to any stockholders’ agreement, voting trust agreement, registration rights agreement or other similar agreement or understanding relating to any Company Securities or any other agreement relating to the disposition, voting or dividends with respect to any Company Securities. All outstanding Shares are, and all Shares to be purchased pursuant to the Company ESPP and all Shares issued upon exercise of Company Stock Options and delivery of Shares following the vesting of Company Restricted Stock Units will be, when issued, duly authorized and validly issued, and are, or will be, as applicable, fully paid, non-assessable and free of preemptive rights. Neither the Company nor its Subsidiary has any Contract pursuant to which it is obligated to make any investment (in the form of a loan, capital contribution or otherwise) in any Person (other than the Company with respect to its wholly owned Subsidiary).
Section 4.4. No Breach. The execution, delivery and performance of this Agreement by the Company and the consummation of the Offer and the Merger do not (a) conflict with or violate the Company Organizational Documents, (b) assuming all consents, approvals, authorizations and other actions described in Section 4.5 have been obtained, and all filings and obligations described in Section 4.5 have been made, conflict with or violate any Law, order, judgment or decree to which the Company or any of its properties or assets is subject, except any conflicts or violations which would not have a Company Material Adverse Effect, or (c) conflict with or result in any material breach of, constitute a default under (with or without notice or lapse of time), result in a violation of, give rise to a right of termination, cancellation or acceleration or result in the creation of a Lien (other than a Permitted Lien) upon any of the properties or assets of the Company or its Subsidiary under, any Company Material Contract, except any conflicts, breaches, defaults, violations, terminations, cancellations or accelerations that would not have a Company Material Adverse Effect.
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Section 4.5. Consents. Except for (a) applicable requirements of the Exchange Act, (b) any filings required by Nasdaq, (c) the filing of the Certificate of Merger and (d) any filings with the relevant authorities of states in which the Company or its Subsidiary is qualified to do business, in each case, neither the Company nor its Subsidiary is required to submit any notice, report or other filing with any Governmental Body in connection with the execution, delivery or performance by it of this Agreement or the consummation of the Contemplated Transactions. Other than as stated above, no consent, approval or authorization of any Governmental Body or any other party or Person is required to be obtained by the Company or its Subsidiary in connection with its execution, delivery and performance of this Agreement or the consummation of the Contemplated Transactions, except for those filings, consents, approvals and authorizations the failure of which to obtain would not have a Company Material Adverse Effect.
Section 4.6. SEC Reports; Disclosure Controls and Procedures.
(a) The Company has timely filed and furnished all reports, forms, statements and other documents (including exhibits and schedules thereto and all other information incorporated by reference therein) required to be filed or furnished by the Company with the SEC since January 1, 2022 (such reports, schedules, forms, statements and other documents, the “Company SEC Documents”). As of their respective filing dates (or, if amended, supplemented or superseded by a filing, then on the date of such amendment, supplement or superseding filing) (and, in the case of registration statements on the dates of effectiveness): (i) each of the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act of 1933 as amended (the “Securities Act”), the Exchange Act or Sarbanes-Oxley, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents, as in effect on the date of effectiveness (in the case registration statements) or, as of their respective SEC filing dates or, if amended, supplemented or superseded prior to the date hereof, the date of the filing of such amendment, supplement or superseding filing with respect to the portions that are amended, supplemented or superseded (in the case of all other Company SEC Documents) so filed, and (ii) none of the Company SEC Documents when filed or furnished contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date hereof, there are no outstanding or unresolved comments in any comment letters of the staff of the SEC relating to the Company SEC Documents and none of the Company SEC Documents is, to the Knowledge of the Company, the subject of ongoing SEC review. The Subsidiary of the Company is not required to file or furnish any forms, reports, schedules, statements or other documents with the SEC.
(b) The consolidated financial statements (including any notes and schedules thereto) contained or incorporated by reference in the Company SEC Documents (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto, (ii) were prepared in accordance with GAAP, applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and (iii) fairly presented in all material respects the consolidated financial position of the Company and its Subsidiary as of the respective dates thereof and the consolidated results of operations and cash flows of the Company and its Subsidiary for the periods covered thereby (subject, in the case of unaudited statements, to the absence of footnote disclosure and to normal and recurring year-end audit adjustments not material in amount).
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(c) The Company has designed and maintains, and at all times since January 1, 2021 has maintained, a system of internal control over financial reporting (as defined in Rules 13a–15(f) and 15d–15(f) of the Exchange Act) sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; and (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company that could have a material effect on the financial statements. Since January 1, 2021, neither the Company nor, to the Knowledge of the Company, the Company’s independent registered accountant has identified or been made aware of: (A) any “significant deficiency” or “material weakness” in the design or operation of internal control over financial reporting utilized by the Company; (B) any illegal act or fraud, whether or not material, that involves the management or other employees of the Company; or (C) any claim or allegation regarding any of the foregoing.
(d) The Company (i) has designed and maintains, and at all times since January 1, 2021 has maintained, disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) of the Exchange Act) to provide reasonable assurance that all information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (ii) has disclosed, based on its most recent evaluation of its disclosure controls and procedures and internal control over financial reporting prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Company Board (A) any significant deficiencies and material weaknesses in the design or operation of its internal control over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Since January 1, 2021, any material change in internal control over financial reporting required to be disclosed in any Company SEC Document has been so disclosed.
(e) Since January 1, 2021, none of the Company, its Subsidiary or, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or Representative of the Company, has received a material complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of the Company, or its internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or its Subsidiary has engaged in questionable accounting or auditing practices, or any related material allegation regarding management or other employees who have a significant role in the Company’s internal control over financial reporting. Neither the Company nor its principal executive officer or principal financial officer has received notice from any Governmental Body challenging or questioning the Company’s accounting practices, methodologies or methods or the accuracy, completeness, form or manner of filing of any certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of Sarbanes-Oxley.
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(f) Neither the Company nor its Subsidiary has effected, entered into or created any securitization transaction or “off-balance sheet arrangement” (as defined in Item 303(c) or Regulation S-K under the Exchange Act).
Section 4.7. No Undisclosed Liabilities. Except (a) as and to the extent disclosed or reserved against on the consolidated unaudited balance sheet of the Company and its Subsidiary as of the Company Balance Sheet Date, that is included in the Company SEC Documents, (b) as incurred after the date thereof in the ordinary course of business, (c) incurred in connection with this Agreement or the Contemplated Transactions or (d) as set forth in Section 4.7 of the Company Disclosure Letter, the Company does not have any material liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, in each case required by GAAP to be reflected or reserved against in the balance sheet of the Company (or disclosed in the notes to such balance sheet).
Section 4.8. Absence of Certain Developments.
(a) From the Company Balance Sheet Date to the date of this Agreement, the Company and its Subsidiary have not experienced a Company Material Adverse Effect.
(b) Except in connection with the Contemplated Transactions, from the Company Balance Sheet Date to the date of this Agreement, the Company and its Subsidiary have carried on and operated its business in all material respects in the ordinary course of business, and neither the Company nor its Subsidiary have taken, committed or agreed to take any actions that would have been prohibited by Section 6.1(b) (other than Section 6.1(b)(i), (ii) and (iii)) if such covenants had been in effect as of the Company Balance Sheet Date.
Section 4.9. Compliance with Laws.
(a) Each of the Company and its Subsidiary is, and their respective Products, are and have been since January 1, 2021, in compliance, in all material respects, with all Laws applicable to it, any of its properties or other assets, or its business or operations.
(b) Since January 1, 2021, (i) neither the Company nor its Subsidiary has received any notice from any Governmental Body that alleges (A) any material violation or noncompliance (or reflects that the Company or its Subsidiary is under investigation, is the subject or target of an inquiry by any such Governmental Body for such alleged noncompliance) with any applicable Law or (B) any material fine, assessment or cease and desist order, or the suspension, revocation or limitation or restriction of any material Permit, and (ii) neither the Company nor its Subsidiary entered into any material agreement or settlement with any Governmental Body with respect to its alleged noncompliance with, or violation of, any applicable Law.
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(c) Since January 1, 2020, each of the Company and its Subsidiary has timely filed all material regulatory reports, schedules, statements, documents, filings, submissions, forms, registrations and other documents, together with any amendments required to be made with respect thereto, and has maintained all records, that each was required to file with any Governmental Body, including state health and regulatory authorities and any applicable federal regulatory authorities, or maintain and have timely paid all fees and assessments due and payable in connection therewith. All such regulatory reports, schedules, statements, documents, filings, submissions, forms, registrations, documents, and records were complete and accurate in all material respects, or were subsequently updated, changed, corrected, or modified.
(d) The Company, its Subsidiary and each of their officers and directors are in material compliance with, and have complied in all material respects with, (i) the applicable provisions of the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated under such act (“Sarbanes-Oxley”) or the Exchange Act and (ii) the applicable listing and corporate governance rules and regulations of Nasdaq.
Section 4.10. Title to Tangible Properties.
(a) The Company and its Subsidiary have good and valid title to, or holds pursuant to good, valid and enforceable leases or other comparable contract rights, all of the tangible personal property and other tangible assets necessary for the conduct of the business of the Company and its Subsidiary, as currently conducted, in each case free and clear of any Liens (other than Permitted Liens), except where the failure to do so would not have a Company Material Adverse Effect.
(b) The leased real property described in Section 4.10(b) of the Company Disclosure Letter (the “Company Real Property”) is a true and complete list of all of the Company Real Property leases (including all amendments, extensions, renewals and material waivers with respect thereto) as of the date of this Agreement and constitutes all of the real property used, occupied or leased by the Company or its Subsidiary. The Company has made available a true and correct copy of all of the Company Real Property leases, together with all amendments, extensions, renewals and material waivers or other changes thereto. There are no subleases, licenses, occupancy agreements, consents, purchase agreements, or other contracts granting to any person (other than the Company) the right to use or occupy the Company Real Property, no other Person (other than the Company and its Subsidiary) is in possession of the Company Real Property, and the Company has not collaterally assigned or granted a security interest in any Company Real Property lease. The Company Real Property leases are in full force and effect and are legal, valid and binding agreements of, and enforceable against, the Company, and, to the Knowledge of the Company, each other party thereto, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting creditors’ rights generally, and subject to general principles of equity, and the Company or its Subsidiary (as applicable) has performed all material obligations required to be performed by it to date under each such lease. The Company has not given or received written notice that it or any other party to the applicable Company Real Property lease is in violation or breach of or default under (with or without notice or lapse of time or both) any Company Real Property lease. None of the Company, its Subsidiary or, to the Knowledge of the Company, any other party to the applicable Company Real Property leases is in default in any material respect under any of such leases, and neither the Company nor its Subsidiary has given or received any written notice of termination or cancellation under any Company Real Property lease or that it intends to seek to terminate or cancel any Company Real Property lease (whether as a result of the Contemplated Transactions or otherwise). No event has occurred which, if not remedied, would result in a default by the Company or its Subsidiary in any material respect under the Company Real Property leases, and, to the Knowledge of the Company, no event has occurred which, if not remedied, would result in a default by any party other than the Company or its Subsidiary in any material respect under the Company Real Property leases. There are no outstanding options, rights of first offer or rights of first refusal in favor of any other party to purchase, lease, sublease or use or occupy the Company Real Property or any portion thereof or interest therein (except as disclosed in Section 4.10(b) of the Company Disclosure Letter).
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(c) Neither the Company nor its Subsidiary previously owned or currently owns any real property.
Section 4.11. Tax Matters.
(a) (i) Each of the Company and its Subsidiary has timely filed (taking into account any applicable extensions) all material Tax Returns required to be filed by it and such Tax Returns are true, complete and correct in all material respects, and (ii) each of the Company and its Subsidiary has timely paid all material Taxes whether or not shown as due and payable on any Tax Return.
(b) There are no material Liens for Taxes (other than Taxes not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves are established in the financial statements in accordance with GAAP) upon any of the assets of the Company or its Subsidiary.
(c) The Company and its Subsidiary have withheld and paid over all material Taxes required to have been withheld and paid over in connection with any amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party. Section 4.11(c) of the Company Disclosure Letter sets forth, as of the date of this Agreement, the amount of any unpaid Taxes that otherwise would have been required to be remitted or paid in connection with amounts paid by the Company or its Subsidiary to any employee or individual service provider but have been deferred as permitted under the Coronavirus Aid, Relief, and Economic Security Act, as it may be amended or modified (the “CARES Act”). Neither the Company nor its Subsidiary has applied for or received any loan established by the CARES Act, including any Small Business Administration Paycheck Protection Program loan.
(d) Neither the Company nor its Subsidiary has been a party to any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).
(e) No deficiency for any material Tax has been asserted or assessed by a Governmental Body in writing (or, to the Knowledge of the Company, otherwise) against the Company or its Subsidiary which deficiency has not been paid, settled or withdrawn or is not being contested in good faith in appropriate proceedings. No material U.S., federal, state, local or foreign Actions relating to Taxes are pending or being conducted with respect to the Company or its Subsidiary. Neither the Company nor its Subsidiary has received written notice of any claim made by a Governmental Body in a jurisdiction where the Company or its Subsidiary does not pay a certain Tax or file a certain type of Tax Return that the Company or its Subsidiary is subject to such taxation by that jurisdiction or required to file a certain such type of Tax Return in that jurisdiction.
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(f) There has been no waiver or extension of any applicable statute of limitations for the assessment or collection of any material Tax of the Company or its Subsidiary that is currently in force.
(g) Neither the Company nor its Subsidiary (i) is a party to or bound by any Tax allocation, sharing or similar agreement (other than any commercial agreement entered into in the ordinary course of business that does not relate primarily to Taxes), (ii) has been a member of an affiliated group filing a combined, consolidated or unitary Tax Return and (iii) has any liability for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. Law) or as a successor or transferee.
(h) Neither the Company nor its Subsidiary will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing as a result of (i) any change in the method of accounting made prior to the Closing, (ii) any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Law) executed on or prior to the Closing Date, (iii) any installment sale or open transaction disposition entered into on or prior to the Closing or (iv) any prepaid amount received or deferred revenue accrued prior to the Closing outside of the ordinary course of business. Neither the Company nor its Subsidiary has any liability pursuant to any election made pursuant to Section 965(h) of the Code.
(i) Neither the Company nor its Subsidiary (i) has been a “distributing corporation” or “controlled corporation” in a transaction intended to qualify under Section 355 of the Code within the two (2) years prior to the date hereof and (ii) has been a United States real property holding corporation within the meaning of Section 897(c) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(j) There is no material unclaimed property or escheat obligation with respect to property or other assets held or owned by the Company and its Subsidiary and the Company and its Subsidiary is in compliance in all material respects with applicable Law relating to unclaimed property or escheat obligations.
(k) The Company’s first receipt of payments for goods, services, or the use of property occurred in 2018.
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Section 4.12. Contracts and Commitments.
(a) Section 4.12 of the Company Disclosure Letter identifies each Contract that constitutes a Company Material Contract as of the date of this Agreement. For purposes of this Agreement, each of the following shall be deemed a “Company Material Contract”:
(i) “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company or its Subsidiary that was required to be, but has not been, filed with the SEC with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, or any Company SEC Documents filed after the date of filing of such Form 10-K until the date of this Agreement;
(ii) collective bargaining agreement or Contract with any labor union, trade organization, works council or other employee representative body (other than any statutorily mandated agreement in a non-U.S. jurisdiction) (“Labor Agreements”);
(iii) Contract establishing or relating to the formation, creation, operation, management or control of any joint venture, partnership, collaboration or similar arrangement (to the extent (x) any such similar arrangement is reasonably likely to result in payments in excess of $100,000 individually or (y) all such similar arrangements are reasonably likely to result in payments in excess of $300,000 in the aggregate);
(iv) Contract (A) prohibiting or materially limiting the right of the Company or any of its Affiliates (including, following the Closing, Parent or any of its Affiliates) to compete in any line of business or to conduct business with any Person or in any geographical area, (B) obligating the Company or any of its Affiliates (including, following the Closing, Parent or any of its Affiliates) to purchase or otherwise obtain any material product or service exclusively from a single party, to purchase a specified minimum amount of goods or services with a value in excess of $75,000, or to sell any material product or service exclusively to a single party, (C) under which any Person has been granted the (1) exclusive right to develop, manufacture, sell, market or distribute any product of the Company or its Subsidiary, or (2) non-exclusive right to develop, manufacture, sell, market or distribute any product of the Company or its Subsidiary (excluding, solely for subclause (C)(2), any Routine Services Contracts entered into in the ordinary course of business), (D) provides for “exclusivity” or any similar requirement in favor of any Person or group of Persons or in any geographical area or (E) requiring the Company or any of its Affiliates (including, following the Closing, Parent or any of its Affiliates) to conduct any business on a “most favored nations” basis with any Person;
(v) Contract in respect of Indebtedness of $50,000 or more;
(vi) Contract between the Company or its Subsidiary, on the one hand, and any Affiliate of the Company, on the other hand;
(vii) Contract relating to the voting or registration of any securities;
(viii) Contract containing a right of first refusal, right of first negotiation or right of first offer with respect to any equity interests or assets;
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(ix) Contract that contains any standstill or similar agreement pursuant to which the Company or its Subsidiary has agreed not to acquire assets or securities of another Person;
(x) Contract under which the Company or its Subsidiary has made or received or expects to make or receive annual payments in excess of $50,000 in any twelve (12) month period (excluding non-exclusive licenses for Off-the-Shelf Software);
(xi) Corporate integrity agreement, consent decree, deferred prosecution agreement, or other similar type of agreement with Governmental Bodies that have existing or contingent performance obligations;
(xii) Contract of the Company or its Subsidiary relating to the settlement, conciliation or similar agreement with any Governmental Body or Person that provides for payments in excess of $50,000, or that provides for any continuing material obligations on the part of the Company or its Subsidiary;
(xiii) Contract of the Company or its Subsidiary that prohibit, limit or restrict the payment of dividends or distributions in respect of the Company Securities, or otherwise prohibit, limit or restrict the pledging of Company Securities, or prohibit, limit or restrict the issuance of guarantees by the Company or its Subsidiary other than the Company Equity Plans or any Contracts evidencing awards granted under the Company Equity Plans;
(xiv) stockholders’, investors rights’, registration rights or similar Contract (excluding Contracts governing Company Stock Options);
(xv) Contract (including all amendments, extensions and renewals with respect thereto) pursuant to which the Company or its Subsidiary leases, subleases, uses or occupies any real property;
(xvi) Contract with or binding upon the Company, its Subsidiary or any of its respective properties or assets that is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act;
(xvii) IP Contract;
(xviii) Contract with any academic institution, research center or Governmental Body (excluding any Routine Services Contracts entered into in the ordinary course of business) that relates to any Owned Intellectual Property or any other material Company Intellectual Property (or the research or development of any of the foregoing or the funding for such research or development activities);
(xix) Contract that relates to commercialization, manufacturing, collaboration, co-promotion, discovery, development or profit sharing agreements or arrangements (including any such agreements or arrangements with any third-party payor or any third party contract research organization that directly conducts clinical trials and excluding any such Contracts that do not contemplate any of (A) the assignment of any Intellectual Property by the Company to any other Person, (B) royalties or other revenue or profit sharing arrangements or (C) the transfer or licensing of Company Intellectual Property other than non-exclusive licenses incidental to the performance of services under such Contract);
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(xx) Contract pursuant to which the Company or its Subsidiary has continuing guarantee, “earn-out” or similar contingent payment obligations (other than indemnification or performance guarantee obligations provided for in the ordinary course of business), including (A) milestone or similar payments, including upon the achievement of regulatory or commercial milestones or (B) payment of royalties or other amounts calculated based upon any revenues or income of the Company or its Subsidiary;
(xxi) Contract that obligates the Company or its Subsidiary to make any capital commitment or capital expenditure in an amount in excess of $50,000;
(xxii) Contract or offer letter that is for the employment of any directors, officers or employees of the Company as of the date hereof;
(xxiii) Contract with any independent contractor or consultant that results in annual payments over $50,000; and
(xxiv) Contract to enter into any of the foregoing.
(b) The Company has made available to Parent a true and correct copy of all written Company Material Contracts, together with all material amendments, waivers or other changes thereto, and a correct and complete written summary setting forth the terms and conditions of each oral Company Material Contract.
(c) (i) Neither the Company nor its Subsidiary (A) is or has received written notice that any other party to any Company Material Contract is, in violation or breach of or default (with or without notice or lapse of time or both) under and (B) has waived or failed to enforce any rights or benefits under any Company Material Contract to which it is a party or any of its properties or other assets is subject, (ii) there has occurred no event giving to others any right of termination, amendment or cancellation of (with or without notice or lapse of time or both) any such Company Material Contract (excluding expiration of any Contract in accordance with its terms) and (iii) each such Company Material Contract is in full force and effect and is a legal, valid and binding agreement of, and enforceable against, the Company or its Subsidiary, as applicable, and, to the Knowledge of the Company, each other party thereto. As of the date of this Agreement, no party to any Company Material Contract has given any written notice of termination or cancellation of any Company Material Contract or that it intends to seek to terminate or cancel any Company Material Contract (whether as a result of the Contemplated Transactions or otherwise).
Section 4.13. Intellectual Property.
(a) Section 4.13(a) of the Company Disclosure Letter sets forth, as of the date of this Agreement, a list of all Patents, Trademarks and Copyrights owned or purported to be owned by, or exclusively licensed to, the Company or its Subsidiary, in each case, that have been registered with or issued by a Governmental Body, or with respect to which the Company or its Subsidiary has filed an application for registration (collectively, “Company Registered Intellectual Property”), indicating for each such item as of the date of this Agreement, the name of the current legal owner(s), the jurisdiction of application/registration, the application/registration number and the filing/issuance date. Section 4.13(a) of the Company Disclosure Letter also sets forth, as of the date of this Agreement, a list of all internet domain names with respect to which the Company or its Subsidiary is the registrant.
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(b) All Company Registered Intellectual Property is subsisting valid and enforceable. The Company and its Subsidiary (i) has made all necessary filings and paid all necessary registration, maintenance, renewal and other fees required for maintaining the Company Registered Intellectual Property owned by the Company and, to the Knowledge of the Company, the Company Registered Intellectual Property licensed by the Company and (ii) has, with respect to the Company Registered Intellectual Property owned by the Company and, to the Knowledge of the Company, with respect to the Company Registered Intellectual Property licensed by the Company, timely filed all necessary documents and certificates in connection therewith with the relevant Patent, Trademark, Copyright, domain name or other authorities in the United States or foreign jurisdictions, as the case may be, for the purpose of maintaining such Company Registered Intellectual Property in full force and effect. The Company or its Subsidiary is the exclusive owner of all rights, title and interests in and to all Owned Intellectual Property, free and clear of all Liens (except for Permitted Liens and Liens set forth in Section 4.13(b) of the Company Disclosure Letter), and possesses legally sufficient and enforceable rights pursuant to written agreements to use all other material Company Intellectual Property as such Intellectual Property is used in the conduct of the Company’s business; provided, however, that the foregoing will not be interpreted as a representation of non-infringement of third-party Intellectual Property. Except as set forth in Section 4.13(f) of the Company Disclosure Letter, no third party has any joint ownership in any inventions claimed by any issued Patents or pending claims in any applications for Patents included in the Company Registered Intellectual Property.
(c) The Company and its Subsidiary use commercially reasonable efforts to evaluate promptly whether inventions within the Owned Intellectual Property are patentable and, if so, the Company and its Subsidiary have used commercially reasonable efforts to file applications with respect thereto, except where, in the exercise of reasonable business judgment, the Company or its Subsidiary (as applicable) have decided not to file or has decided to defer filing, a patent application on a potentially patentable invention. Except for such non-compliance that has not had a Company Material Adverse Effect, the Company and its Subsidiary have complied with all Laws regarding the duty of disclosure, candor and good faith in connection with each Patent included in the Company Registered Intellectual Property. Except as has not had a Company Material Adverse Effect, no public disclosure bar by the Company or its Subsidiary has occurred or on sale bar by the Company or its Subsidiary has arisen which has rendered or would reasonably be expected to render any Patent contained in the Company Registered Intellectual Property unenforceable or unpatentable.
(d) Since the formation of the Company, the conduct of the Company’s and its Subsidiary’s business has not misappropriated, infringed or otherwise violated and is not infringing, misappropriating or otherwise violating any Intellectual Property of any Person in any material respect. Since the formation of the Company, neither the Company nor its Subsidiary has received any written notice from any Person (i) claiming any violation, misappropriation or infringement of the Intellectual Property of such Person or (ii) contesting the use, ownership, validity or enforceability of any of the Company Intellectual Property; except, in the case of each of clause (i) and (ii), as has not had a Company Material Adverse Effect. As of the date of this Agreement, there is no action pending, or, to the Knowledge of the Company, threatened, against the Company or its Subsidiary claiming or contesting any of the foregoing (other than, for clarity, office actions initiated by the U.S. Patent and Trademark Office or any foreign equivalent in the ordinary course of prosecution). None of the material Company Intellectual Property is subject to any pending or outstanding judgment nor is there a contract or agreement the Company or its Subsidiary is party to that adversely restricts the use, transfer or registration of, or adversely affects the validity or enforceability of, any such Company Intellectual Property.
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(e) Since the formation of the Company, to the Knowledge of the Company, no Person has misappropriated, infringed or otherwise violated or is infringing, misappropriating or otherwise violating any Owned Intellectual Property or Exclusive Intellectual Property, and no such claims have been made against any other Person by the Company or its Subsidiary.
(f) The Company has made available to Parent and Purchaser true and correct copies of all IP Contracts. All amounts due and payable under the IP Contracts have been paid and no material payments are due under any IP Contract related to the Product due for at least a period of six (6) months from the date hereof; provided that, there are no payments (whether material or not) due under the MIT Agreement for at least a period of six (6) months from the date hereof. To the Knowledge of the Company, (i) each other party to any such IP Contracts has performed all material obligations required to be performed by such party as of the date of this Agreement and (ii) neither the Company nor its Subsidiary is in default of any such IP Contracts. Except as set forth on Section 4.13(f) of the Company Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the Contemplated Transactions will (A) result in the breach of, or create on behalf of any third party the right to terminate or modify any IP Contract, (B) result in or require the grant, assignment or transfer to any other Person (other than Parent, Purchaser or any of their respective Affiliates) of any license or other right or interest under, to or in any of the Company Intellectual Property or any of the Intellectual Property of Parent, Purchaser or any of their respective Affiliates or (C) cause a loss or impairment of any material Company Intellectual Property.
(g) No past or present director, officer, employee, consultant or independent contractor of the Company or its Subsidiary owns (or has any claim, or any right (whether or not currently exercisable) to any ownership interest, in or to) any material Owned Intellectual Property or, to the Knowledge of the Company, any other Company Intellectual Property. Each current and former employee, officer and director of the Company or its Subsidiary, each current and former independent contractor and consultant of the Company or its Subsidiary, and any other Person who is or has been involved in the creation or development of any Intellectual Property for or on behalf of the Company or its Subsidiary has executed a valid and enforceable written agreement (i) requiring such Person to maintain the confidentiality of all confidential information of the Company or its Subsidiary, (ii) permitting such Person to use such information only for the benefit of the Company or its Subsidiary in the scope of such Person’s employment or engagement by the Company or its Subsidiary (as the case may be) and (iii) providing for the effective assignment to the Company or its Subsidiary of all rights, title and interest in and to all Intellectual Property created or developed for the Company or its Subsidiary in the course of such Person’s employment or retention thereby. There is no material uncured breach by the Company or its Subsidiary, or, to the Knowledge of the Company, the counterparty, under any such agreement.
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(h) The Company and its Subsidiary have taken commercially reasonable steps to prevent the unauthorized disclosure or use of its material Trade Secrets (and to maintain the secrecy and value thereof). No Trade Secret that is material to the business of the Company and its Subsidiary as presently conducted has been authorized to be disclosed, or, to the Knowledge of the Company, has been disclosed to any Person, other than pursuant to a non-disclosure agreement restricting the disclosure and use of such Trade Secret.
(i) Other than as set forth on Section 4.13(i) of the Company Disclosure Letter, with respect to the Company Registered Intellectual Property owned by the Company and, to the Knowledge of the Company, with respect to the Company Registered Intellectual Property licensed by the Company, no funding, facilities or personnel of any Governmental Body or any university, college, research institute or other educational institution has been or is being used in any material respect to create, in whole or in part, any material Company Intellectual Property, except for any such funding or use of facilities or personnel that does not result in the grant of any license, ownership right or other right by the Company or its Subsidiary to any Company Intellectual Property to any such Governmental Body or educational institution or require or otherwise obligate the Company or its Subsidiary to grant or offer to any such Governmental Body or educational institution any license, ownership right, or other right to any such Company Intellectual Property (except for use rights during the term of the applicable agreement between the Company or its Subsidiary, on the one hand, and such Governmental Body or educational institution, on the other hand, solely to conduct activities within the scope of such applicable agreement). No current or former employee, consultant or independent contractor of the Company or its Subsidiary who contributed to the creation or development of any Company Intellectual Property has, to the Knowledge of the Company, performed services for a Governmental Body or any university, college, research institute or other educational institution related to the Company’s or its Subsidiary’s business as presently conducted during a period of time during which such employee, consultant or independent contractor was also performing services for the Company or its Subsidiary.
(j) Except as has not had a Company Material Adverse Effect: (i) the computer systems, including the software, firmware, hardware, networks, interfaces, platforms and related systems, owned, leased or licensed by the Company or its Subsidiary (collectively, the “Company Systems”) are sufficient for the conduct of its business as presently conducted by the Company and its Subsidiary, (ii) in the twelve (12) months prior to the date of this Agreement, there have been no failures, breakdowns, continued substandard performance or other adverse events affecting any such Company Systems that have caused or could reasonably be expected to result in the substantial disruption or interruption in or to the use of such Company Systems or the conduct of the business of the Company and its Subsidiary as presently conducted, and (iii) to the Knowledge of the Company, in the twelve (12) months prior to the date of this Agreement, there have not been any incidents of unauthorized access or other security breaches of the Company Systems.
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(k) To the Knowledge of the Company, the Company owns, or possesses licenses or other rights to use, all such Intellectual Property necessary to conduct its business as currently conducted in all material respects.
Section 4.14. Litigation. There are no, and since January 1, 2021, there have not been any, material Actions pending or threatened against or by the Company or its Subsidiary, or, to the Knowledge of the Company, against another Person for which the Company or its Subsidiary is providing indemnification or other support, at law or in equity, or before or by any Governmental Body, and neither the Company nor its Subsidiary is subject to or in violation of any outstanding material judgment, injunction, rule, order or decree of any court or Governmental Body.
Section 4.15. Insurance. Section 4.15 of the Company Disclosure Letter sets forth each material insurance policy (including policies providing casualty, liability, medical and workers’ compensation coverage) to which the Company or its Subsidiary is a party as of the date of this Agreement. As of the date of this Agreement, each insurance policy under which the Company or its Subsidiary is an insured or otherwise the principal beneficiary of coverage is in full force and effect, and (i) the Company and its Subsidiary are not in breach or default under any such insurance policy, (ii) no notice of cancellation or termination has been received with respect to any insurance policy and (iii) no event has occurred which, with notice or lapse of time, would constitute such breach or default, or permit termination, or modification, under any such insurance policy, except as would not have a Company Material Adverse Effect.
Section 4.16. Employee Benefit Plans.
(a) Section 4.16(a) of the Company Disclosure Letter lists all Company Plans, noting with respect to any Company Plan so disclosed, if such Company Plan is subject to the laws of a jurisdiction other than the United States and identifying such jurisdiction. Except as disclosed in Section 4.16(a) of the Company Disclosure Letter or that is de minimis, neither the Company, nor its Subsidiary, nor any ERISA Affiliate sponsors or has any Liability with respect to any other plan or arrangement that could constitute a Company Plan.
(b) With respect to each Company Plan, the Company has made available to Parent and Purchaser true and complete copies of the following (as applicable) prior to the date of this Agreement (i) the plan document, including all amendments thereto or, with respect to any unwritten plan, a summary of all material terms thereof, (ii) the summary plan description along with all current summaries of material modifications thereto, (iii) all related trust instruments or other funding-related documents with respect thereto, (iv) a copy of the most recent financial statements for the Company Plan, (v) the three (3) most recent annual reports on Form 5500 required to be filed with the Internal Revenue Service with respect thereto, (vi) a copy of any non-routine correspondence with any Governmental Body relating to a Company Plan received or sent within the last three (3) years, (vii) the most recent Internal Revenue Service determination or opinion letter for any Company Plan that is intended to qualify pursuant to Section 401(a) of the Code and (viii) the most recent written results of all required nondiscrimination testing.
(c) Each Company Plan that is intended to meet the requirements to be “qualified” under Section 401(a) of the Code is the subject of a favorable determination letter or is covered by a favorable opinion letter from the Internal Revenue Service to the effect that such Company Plan is so qualified, and that such Company Plan and the trust related thereto are exempt from federal income taxes under Section 401(a) and 501(a), respectively, of the Code, and no event has occurred, either by reason of any action or failure to act, that could reasonably be expected to cause the loss of any such qualification, registration or tax-exempt status.
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(d) Each Company Plan has been established, maintained, funded and administered in compliance in all material respects with its terms and complies in all material respects in form and in operation with the requirements of the Code, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and other applicable Law, and the Company’s, its Subsidiary’s, and each ERISA Affiliate’s, provision of compensation and benefits, as applicable, to any current or former employee, independent contractor or director is and at all times has been in compliance in all material respects with all applicable Laws. All forms, reports, notices or other documents required to be filed with any Governmental Body or distributed or disclosed to Company Plan participants or beneficiaries have been timely filed, distributed or disclosed, as applicable. With respect to each Company Plan or the assets thereof, there are no Actions or claims pending or, to the Knowledge of the Company, threatened, other than routine claims for benefits.
(e) No Company Plan is and none of the Company, its Subsidiary or any of its ERISA Affiliates has at any time within the last six (6) years sponsored, contributed to or been required to contribute to, or had or otherwise has any Liability or obligation under or in respect of, a plan that is or was at any relevant time (i) subject to Section 302 or Title IV of ERISA or Section 412 of the Code or is otherwise a defined benefit plan (as defined in Section 3(35) of ERISA), (ii) a “multiemployer plan” within the meaning of Section 3(37) of ERISA, (iii) a “multiple employer plan” as described in Section 413(c) of the Code or Section 210 of ERISA, (iv) a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA or (v) a plan that has two or more contributing sponsors, at least two of whom are not under common control, within the meaning of Section 4063 of ERISA. Neither the Company nor its Subsidiary nor any ERISA Affiliate has any Liability by reason of at any time being considered a single employer under Section 414 of the Code with any other Person. None of the Company Plans obligates, and the Company and its Subsidiary do not otherwise have any Liability to provide a current or former owner, officer, director, employee or individual independent contractor or other service provider (or any spouse or dependent thereof) any life insurance or medical or health benefits after his or her termination of ownership or employment or service with the Company or its Subsidiary, other than as required under Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code or any other Law at the sole expense of the participant.
(f) All contributions (including all employer contributions and employee salary reduction contributions), reimbursements, premiums and benefit payments that are due under the terms of a Company Plan or pursuant to applicable Laws have been timely made and all such amounts for any period ending on or before the Closing Date that are not yet due have been made or properly accrued. Neither the Company or its Subsidiary nor any employee of the Company or its Subsidiary nor, to the Knowledge of the Company, any third party fiduciary or administrator, has engaged in any “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA or breach of fiduciary duty (as determined under ERISA) with respect to any Company Plan.
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(g) Each Company Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies with all of the applicable requirements of Section 4980B of the Code, ERISA, Healthcare Laws and other applicable Laws. With respect to any welfare benefit fund (within the meaning of Section 419 of the Code) related to a Company Plan that is a welfare plan, there is no disqualified benefit (within the meaning of Section 4976(b) of the Code) that would result in the imposition of a tax under Section 4976(a) of the Code. The Company, its Subsidiary, any ERISA Affiliate, and each Company Plan is and at all times has been in compliance with Healthcare Laws, to the extent applicable. The operation of each Company Plan has not resulted and will not result in the incurrence of any penalty or Liability to the Company or its Subsidiary or any ERISA Affiliate pursuant to applicable Healthcare Laws, including, for the avoidance of doubt, the incurrence of any Tax or other Liability (whether or not assessed) pursuant to Sections 4980B, 4980H, 6721 or 6722 of the Code. Neither the Company nor its Subsidiary nor any ERISA Affiliate sponsors, maintains, contributes to, or has any Liability with respect to, and has never sponsored, maintained, contributed to, or had any Liability with respect to, any self-insured Company Plan that is governed by ERISA and that provides benefits to any current or former employee, independent contractor or director of the Company, its Subsidiary, or any ERISA Affiliate (including any such plan pursuant to which a stop-loss policy or contract applies).
(h) Except as contemplated by this Agreement or as set forth on Section 4.16(h) of the Company Disclosure Letter, neither the execution or delivery of this Agreement, nor the consummation of the Contemplated Transactions, will, either individually or together with the occurrence of some other event (including a termination of employment or service), (i) result in any payment (including severance, bonus or other similar payment) becoming due to any current or former officer, director, employee or individual independent contractor of the Company or its Subsidiary under a Company Plan, (ii) increase or otherwise enhance any benefits or compensation otherwise payable under any Company Plan or otherwise to a current or former officer, employee or individual independent contractor of the Company or its Subsidiary, (iii) result in the acceleration of the time of payment or vesting of any payments or benefits or trigger any other obligation under any Company Plan, (iv) require the Company or its Subsidiary to set aside any assets to fund or trigger any payment or funding of any benefits under any Company Plan, (v) result in any violation of, or default under, any Company Plan, (vi) limit or restrict the right of the Company to merge, amend or terminate any Company Plan or (vii) result in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code or in the imposition of an excise Tax under Section 4999 of the Code.
(i) Neither the Company nor its Subsidiary has any obligation to pay any gross-up, reimbursement or other payment in respect of any Tax imposed under Section 4999 or Section 409A of the Code (or any corresponding provisions of state or local Law relating to Tax). The Company will provide to Parent as soon as reasonably practicable and in any event no later than fifteen (15) days following the date hereof calculations that there are no payments made or which will be made to “disqualified individuals” which will constitute “excess parachute payments”, as such terms are defined in Section 280G of the Code.
(j) Each “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) of the Company or its Subsidiary has been documented and operated in compliance with Section 409A of the Code and the applicable guidance and regulations thereunder. All Company Stock Options outstanding as of the date hereof have an exercise price that is no less than the fair market value of the underlying Shares on the date of grant, as determined in accordance with Section 409A of the Code, and are otherwise exempt from Section 409A of the Code. All awards of Company Stock Options are evidenced by written award agreements, in each case, substantially in the forms that have been made available to Parent.
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Section 4.17. Environmental Compliance and Conditions
(a) Each of the Company and its Subsidiary is, and since January 1, 2021 has been, in compliance in all material respects with all Environmental Laws;
(b) Each of the Company and its Subsidiary holds, and is and since January 1, 2021 has been in compliance in all material respects with, all Permits required under Environmental Laws to operate their business at the Company Real Property as presently conducted, or as applicable, historically operated;
(c) Since January 1, 2021, neither the Company nor its Subsidiary has received any written claim, notice or complaint, or been subject to any Action from any Governmental Body or third party regarding any actual or alleged violation of Environmental Laws or any Liabilities or potential Liabilities under Environmental Laws;
(d) Neither the Company nor its Subsidiary has Released or is subject to liability for any Releases of or the exposure of any Person to any Hazardous Substance on, at, under, to, from or about the Company Real Property or any other real property now or formerly owned, operated, leased, occupied or used by the Company or its Subsidiary in a manner that reasonably could be expected to give rise to Liability for the Company or its Subsidiary under any Environmental Laws;
(e) Neither the Company nor its Subsidiary, any predecessors of the Company or its Subsidiary, or any entity previously owned by the Company or its Subsidiary, has transported or arranged for the treatment, storage, handling, recycling, disposal, or transportation of any Hazardous Substance to any off-site location which could reasonably be expected to result in Liability to the Company or its Subsidiary;
(f) Neither the Company nor its Subsidiary has entered into or is subject to, any judgment, decree, order or other similar requirement of or agreement with any Governmental Body under any Environmental Laws; and
(g) Neither the Company nor its Subsidiary has assumed responsibility for or agreed to indemnify or hold harmless any Person for any liability or obligation, arising under or relating to Environmental Laws.
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Section 4.18. Employment and Labor Matters.
(a) Neither the Company nor its Subsidiary is a party to or bound by, or for the past two (2) years from the date of this Agreement, has been party to or bound by, any Labor Agreement, and, to the Knowledge of the Company, no employees of the Company or its Subsidiary are, or during the past two (2) years from the date of this Agreement, have been, represented by a labor union, works council or other employee representative body with respect to their employment with the Company. Except as would not be material to the Company and its Subsidiary taken as a whole, neither the Company nor its Subsidiary has experienced any actual or, to the Knowledge of the Company, threatened, labor arbitrations, picketing, strikes, slowdowns, work stoppages, lockouts, material labor grievances, claims of unfair labor practices, or other collective bargaining or labor disputes since January 1, 2021, and, to the Knowledge of the Company, has not experienced union organization attempts since such date. Since January 1, 2021, no labor union, works council, other labor organization, or group of employees of the Company or its Subsidiary has made a demand for recognition or certification with the National Labor Relations Board or any other labor relations tribunal or authority, and there are no representation or certification proceedings presently pending or, to the Knowledge of the Company, threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority. Neither the Company nor its Subsidiary has any notice or consultation obligations to any labor union, labor organization or works council in connection with the execution of this Agreement or consummation of the Contemplated Transactions.
(b) Each of the Company and its Subsidiary is and, for the past two (2) years from the date of this Agreement, has been in compliance, in all material respects, with all applicable Laws relating to labor and employment, including all such applicable Laws relating to wages and hours (including minimum wage and overtime wages), human rights, discrimination, harassment, retaliation, pay equity, employment equity, paid sick days/leave entitlements and benefits, family and medical leave and other leaves of absence (including the federal Emergency Family and Medical Leave Expansion Act), workers’ compensation, safety and health, immigration and work authorization (including the completion of Forms I-9 for all employees and the proper confirmation of employee visas), worker classification (including employee-independent contractor classification and the proper classification of employees as exempt employees and non-exempt employees), plant closures and layoffs (including the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar foreign, state, provincial or local “mass layoff” or “plant closing” Laws (“WARN”)), terms and conditions of employment, whistleblowing, disability rights or benefits, employee trainings and notices, labor relations, employee leave issues, affirmative action and unemployment insurance. Each natural person who has provided or is providing services to the Company or its Subsidiary and has been classified as an exempt employee, independent contractor, consultant, temporary or leased employee, as applicable, has been properly classified as such under the Fair Labor Standards Act, other applicable Law and the Company Plans.
(c) Except as disclosed on Section 4.18(c) of the Company Disclosure Letter, there are no Actions against the Company or its Subsidiary pending, or to the Knowledge of the Company, threatened to be brought or filed, by or before any Governmental Body Authority by or concerning any current or former applicant, employee, consultant or independent contractor of the Company or its Subsidiary, and there have been no such Actions pending, or to the Knowledge of the Company, threatened, during the last two (2) years from the date of this Agreement.
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(d) There has been no “mass layoff” or “plant closing” (as defined by WARN or any similar foreign, state, provincial or local Laws) with respect to the Company or its Subsidiary between January 1, 2021 and the date of this Agreement.
(e) No current employee with annualized compensation at or above $100,000 or group of employees has given notice of termination of employment or, to the Knowledge of the Company, otherwise intends to terminate employment with the Company or its Subsidiary within the twelve (12) months following the Closing.
(f) All employees are employed on an “at-will” basis and their employment can be terminated at any time for any reason without any material amounts being owed to such individual other than with respect to wages accrued before termination and severance under Company Plans disclosed on Section 4.18(f) of the Company Disclosure Letter or amounts required by applicable Law. The relationships with all individuals who act on their own as contractors or as other service providers can be terminated for any reason with no greater than sixty (60) days’ prior written notice, without any amounts being owed to such individuals, other than with respect to payments earned before the notice of termination. As of the date hereof, no employee is on a leave of absence, other than short-term absences of less than three weeks. Except as disclosed on Section 4.18(f) of the Company Disclosure Letter, neither the Company nor its Subsidiary sponsors any employee for, or otherwise knowingly engage any employee working pursuant to, a nonimmigrant visa.
(g) The Company has made available to Parent a true and complete list of the name of each officer and employee of the Company and its Subsidiary, (ii) each other individual who has accepted an offer of employment (excluding any offers made through a cooperative education program) made by the Company and its Subsidiary but whose employment has not yet commenced and (iii) the names of each other individual to whom an offer of employment (excluding any offers made through a cooperative education program) is outstanding by the Company and its Subsidiary, together with such individual’s title, date of hire, location, status as active or inactive, whether such individual is on a time-limited visa, base pay, exempt or non-exempt classification, full-time or part-time status, and annual bonus target.
(h) Section 4.18(h) of the Company Disclosure Letter lists all individual independent contractors to the Company or its Subsidiary who have performed services for the Company or its Subsidiary within the past twelve (12) months.
(i) The Company has made available to Parent a complete and accurate copy of each material written personnel policy and material written personnel rule or procedure generally applicable to employees of the Company and its Subsidiary.
(j) For the past two (2) years from the date of this Agreement, each of the Company and its Subsidiary has (i) not received any allegations nor claims of sexual harassment, or other discrimination, retaliation or policy violation allegations and (ii) not entered into a settlement agreement relating to allegations or claims of sexual harassment, or other discrimination, retaliation or policy violation allegations.
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Section 4.19. FDA and Compliance Matters.
(a) Each of the Company and its Subsidiary holds all material Permits, has been operated in compliance with such material Permits, and has submitted written notices to, all Governmental Bodies, including all authorizations under the Federal Food, Drug and Cosmetic Act of 1938, as amended (the “FDCA”), the Public Health Service Act of 1944, as amended (the “PHSA”), and the regulations of the U.S. Food and Drug Administration (the “FDA”) promulgated thereunder, necessary for the lawful operation of the business of the Company and its Subsidiary as currently conducted (the “FDA Permits”), and as of the date of this Agreement, all such FDA Permits are (i) in full force and effect, (ii) in compliance with all material filing and maintenance requirements and (iii) in material good standing, valid and enforceable. There has not occurred any material violation of, or default (with or without written notice or lapse of time or both) under any FDA Permit. Each of the Company and its Subsidiary has fulfilled and performed all of its material obligations with respect to such FDA Permits, and is in compliance in all material respects with the terms of all FDA Permits, including full payment of any applicable fees. Section 4.19(a) of the Company Disclosure Letter lists all current FDA Permits held by the Company and its Subsidiary. There have been no Actions that are pending or, to the Knowledge of the Company, threatened, nor has the Company or its Subsidiary received any written notification which has resulted in or would reasonably be expected to result in the material limitation, material adverse modification, revocation, withdrawal, cancellation, lapse, integrity review, suspension, or any other materially adverse action against any FDA Permit. To the Knowledge of the Company, no event has occurred which allows, or after written notice or lapse of time would allow the foregoing actions against any FDA Permit. Since January 1, 2021, neither the Company nor its Subsidiary has received written notice of any pending or threatened claim, suit, proceeding, hearing, enforcement, audit, investigation, arbitration or other action from any Governmental Body alleging that any operation or activity of the Company or its Subsidiary are in material violation of any Law that applies to an FDA Permit. The Contemplated Transactions, in and of themselves, will not cause the revocation or cancellation of any FDA Permit pursuant to the terms of any such FDA Permit.
(b) Since January 1, 2021, all of the Company’s and its Subsidiary’s Products that are subject to the jurisdiction of the FDA or other Governmental Body are being manufactured, packaged, imported, exported, processed, developed, labeled, stored, shipped, handled, warehoused, distributed, and tested by or on behalf of the Company or its Subsidiary in material compliance with all applicable requirements under any Permit or Law, including applicable statutes and implementing regulations administered or enforced by the FDA, Good Laboratory Practices, Good Manufacturing Practices, and Good Clinical Practices. None of the Company’s and its Subsidiary’s Products have been adulterated or misbranded under applicable Laws. All applications, notifications, submissions, information, claims, reports, records, and data utilized by the Company and its Subsidiary as the basis for, or submitted by the Company or its Subsidiary in connection with, any and all requests for the FDA Permits or any other material submissions to FDA or other Governmental Body relating to the Company, its Subsidiary, or their Products when submitted to the FDA or other Governmental Body were, to the Knowledge of the Company, true and correct in all material respects as of the date of submission, and any material updates, changes, corrections or modification to such applications, notifications, submissions, information, claims, reports and data required under applicable Laws have been submitted to the FDA or other Governmental Body. As of the date of this Agreement, neither the Company nor its Subsidiary has received any written notice or other written communication from any Governmental Body withdrawing or placing any studies of the Products on clinical hold or requiring the termination, material modification, or suspension or investigation of any ongoing pre-clinical studies or clinical trials of the Products. There are no investigations, suits, claims, actions or proceedings pending or threatened in writing against the Company or its Subsidiary with respect to any of the Products, or alleging any material violation by the Company, its Subsidiary or the Products of any such Law.
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(c) Neither the Company nor its Subsidiary has (i) made an untrue statement of a material fact or fraudulent statement to any Governmental Body, including the FDA, Centers for Medicare and Medicaid Services, the U.S. Department of Health and Human Services, HHS Office of Inspector General or the Center for Medicare and Medicaid Innovation, (ii) failed to disclose a material fact required to be disclosed to any Governmental Body, including the FDA, Centers for Medicare and Medicaid Services, the U.S. Department of Health and Human Services, HHS Office of Inspector General or the Center for Medicare and Medicaid Innovation or (iii) committed any act, made any statement, or failed to make any statement that would reasonably be expected to provide a basis for the FDA or any other Governmental Body to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991), and any amendments thereto, or any similar policy or any other statute or regulation regarding the communication or submission of false information to any applicable Governmental Body. Neither the Company nor its Subsidiary is the subject of any pending or, to the Knowledge of the Company, threatened investigation pursuant to the FDA Ethics Policy or other similar policy, statute, or regulation. Neither the Company nor its Subsidiary has committed or engaged in any fraud or falsification or forgery of any research or development data, report, studies or publications or of any document or statement voluntarily submitted or required to be submitted to any Governmental Body, including the FDA, Centers for Medicare and Medicaid Services, the U.S. Department of Health and Human Services, HHS Office of Inspector General or the Center for Medicare and Medicaid Innovation, nor, to the Knowledge of the Company, has the Company or its Subsidiary been investigated for healthcare program or data fraud.
(d) Neither the Company, nor its Subsidiary, nor their respective officers, directors and employees, nor, to the Knowledge of the Company, any Person or entity providing services with respect to the Products, nor their respective officers, directors, employees, agents, or contractors have been:
(i) debarred or suspended pursuant to 21 U.S.C. § 335a;
(ii) excluded, debarred, or suspended under 42 U.S.C. § 1320a-7 or any similar Law, rule or regulation of any Governmental Body;
(iii) excluded, debarred, suspended or deemed ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration;
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(iv) charged, named in a complaint, convicted, or otherwise found liable in any Proceeding that falls within the ambit of 21 U.S.C. § 331, 21 U.S.C. § 333, 21 U.S.C. § 334, 21 U.S.C. § 335a, 21 U.S.C. § 335b, 42 U.S.C. § 1320a - 7, 31 U.S.C. §§ 3729 – 3733, 42 U.S.C. § 1320a-7a, or any other applicable Law;
(v) the subject of any investigation by a Governmental Body alleging failure to comply with an applicable Healthcare Law;
(vi) served with or received any search warrant, subpoena, or civil investigative demand from any Governmental Body;
(vii) disqualified or deemed ineligible pursuant to 21 C.F.R. Parts 312, 511, or 812, or otherwise restricted, in whole or in part, or subject to an assurance;
(viii) convicted of any crime or engaged in any conduct that has resulted in, or would reasonably be expected to result in (i) - (vii) above; or
(ix) had a pending Action, or otherwise received any notice or other communication from any Governmental Body or any person or entity threatening, investigating, or pursuing (i)-(vii) above.
(e) Since January 1, 2021, none of the Company, its Subsidiary or, to the Knowledge of the Company, any person acting on its behalf has, with respect to any Product, (i) been subject to a Governmental Body shutdown, import or export prohibition, or Product seizure or (ii) received any FDA Form 483, or other Governmental Body notice of inspectional observations, “warning letters,” “untitled letters” or any similar written correspondence from any Governmental Body in respect of the Company or its Subsidiary alleging or asserting material noncompliance with any applicable Law or Permit and, to the Knowledge of the Company, no Governmental Body is considering such action. Between January 1, 2021 and the date of this Agreement, neither the Company nor its Subsidiary has either voluntarily or involuntarily, initiated, conducted or issued, or caused to be initiated, conducted or issued, any investigator notice, or other notice or action relating to an alleged lack of safety or efficacy or material regulatory compliance of any Product, including any Product recall, removal, suspension, withdrawal, field correction, or discontinuance and neither the Company nor its Subsidiary is currently contemplating any such action and have not received any request for such an action from a Governmental Body or third party.
(f) The compensation paid or to be paid by Company and its Subsidiary to any healthcare professional who is employed by or contracted with Company or the Subsidiary is fair market value for the services and items actually provided by such healthcare professional, not taking into account the value or volume of referrals or other business generated by such healthcare professional. The Company and its Subsidiary have at all times maintained a written agreement with each healthcare professional receiving compensation from the Company or the Subsidiary.
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(g) Neither the Company nor its Subsidiary has been restrained by a Governmental Body in their ability to conduct or have conducted the nonclinical testing of the Products or their other business activities.
(h) For all pre-clinical studies, animal studies, and clinical trials concerning a Product (collectively “Studies”), to the Knowledge of the Company, the study reports accurately, completely, and fairly reflect the material results from the Studies. To the Knowledge of the Company, there are no other studies, the results of which are inconsistent with, or otherwise call into question, the Study results. Except as otherwise disclose in Company SEC Documents, to the Knowledge of the Company, there are no material facts or circumstances related to the safety or efficacy of any Product that would materially and adversely affect the ability to receive or maintain an FDA Permit or approval of a Product.
(i) [Reserved]
(j) For any Study that is currently pending, initiated, or ongoing, neither the Company nor its Subsidiary has received any written notice from the FDA, any other Governmental Body, or any Institutional Review Board (“IRB”) requiring or threatening the termination, suspension, material modification, clinical hold, or restriction of any Study that is being conducted. All Studies were and, if still pending, are being conducted in all material respects in accordance with applicable Laws, Good Clinical Practices, Good Laboratory Practices, and the protocols, procedures and controls designed and approved for such Studies.
(k) Each of the Company and its Subsidiary is, and at all times between January 1, 2021 and the date of this Agreement has been, in material compliance with all applicable Healthcare Laws and, as of the date of this Agreement, there is no civil, criminal, administrative, or other action, subpoena, civil investigative demand, suit, demand, claim, hearing, proceeding, written notice or demand pending, received by or overtly threatened in writing against the Company or its Subsidiary related to such Healthcare Laws.
(l) Neither the Company nor its Subsidiary is or has been a party to any corporate integrity agreements, monitoring agreements, consent decrees, deferred prosecution agreements, settlement orders or similar agreements with or imposed by any Governmental Body or has had a civil monetary penalty assessed against it under Section 1128A of the Social Security Act of 1935, codified at Title 42, Chapter 7, of the United States Code.
(m) Neither the Company nor its Subsidiary, at any time since January 1, 2021, in any material respect, (i) violated or has been in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977 (the “FCPA”), (ii) violated or has been in violation of any applicable Law enacted in any jurisdiction in connection with or arising under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the “OECD Convention”), (iii) violated or has been in violation of any provision of the UK Bribery Act of 2010 (the “UK Bribery Act”) or the Criminal Justice (Corruption Offences) Act 2018 of Ireland, (iv) violated or has been in violation of International Travel Act of 1961, (18 U.S.C. § 1952), (v) violated any anti-bribery or anti-corruption Law in any foreign jurisdiction, (vi) made, offered to make, promised to make, or authorized the payment or giving of, directly or indirectly, any bribe, rebate, payoff, influence payment, facilitation payment, kickback or other unlawful payment or gift of money or anything of value prohibited under any applicable Law addressing matters comparable to those addressed by the FCPA, the UK Bribery Act, or the OECD Convention implementing legislation concerning such payments or gifts in any jurisdiction (any such payment, a “Prohibited Payment”), (vii) received written notice that it is subject to any investigation by any Governmental Body with regard to any Prohibited Payment or (viii) violated or been in violation of any other Laws regarding use of funds for political activity or commercial bribery. The Company and its Subsidiary have instituted and maintained policies and procedures designed to prevent such actions to the extent such Laws are applicable to the Company or its Subsidiary.
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(n) Neither of the Company or its Subsidiary, nor any of their respective shareholders, directors, officers, managers or employees, or, to the Knowledge of the Company, any of its agents, contractors or any other Person acting on behalf of the Company or its Subsidiary, is currently or has since January 1, 2021 been: (i) a Sanctioned Person; (ii) organized, located, or resident in a Sanctioned Country; (iii) operating in, conducting business with, or otherwise engaging in dealings, whether directly or indirectly (x) with or for the benefit of any Sanctioned Person, or (y) in or for the benefit of any Sanctioned Country; or (iv) otherwise in violation of any Sanctions Laws, Ex-Im Laws or U.S. anti-boycott laws (“Trade Controls”).
(o) The Company and its Subsidiary has complied in all material respects with all applicable Privacy Laws relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (technical, physical and administrative), disposal, destruction, disclosure, or transfer (including cross-border) (collectively, “Processing”) of Personal Information, including providing any notice, obtaining any consent or prior authorization, and conducting any assessment required under applicable Laws (including the Personal Information of clinical trial participants, patients, patient family members, caregivers or advocates, employees, physicians and other health care professionals, clinical trial investigators, researchers and pharmacists). Each of the Company and its Subsidiary has implemented, and requires that its service provider implement, reasonable, physical, technical, and administrative safeguards to protect the Personal Information from any loss or unauthorized access or acquisition (a “Security Incident”). Neither the Company, its Subsidiary, nor any service provider Processing Personal Information on behalf of the Company has experienced any Security Incident. The consummation of the Contemplated Transactions will not breach or otherwise cause any violation of the Privacy Laws. The Company has in place all required, and has complied in all material respects with each of its, written and published policies and procedures concerning the privacy and security of Personal Information (the “Privacy Policies”). As of the date of this Agreement, no claims have been asserted or threatened against the Company by any Person alleging a violation of Privacy Laws or Privacy Policies. The completion of this Agreement will not violate any Privacy Laws.
(p) Neither the Company nor its Subsidiary (i) has been charged with or convicted of any criminal offense relating to the delivery of an item or service under any Federal Health Care Program, (ii) has received written notice that it is the target or subject of any current or potential investigation relating to any Federal Health Care Program-related offense or (iii) has engaged in any activity that is in violation of, or is cause for civil penalties, debarment, or mandatory or permissive exclusion under federal or state Laws.
(q) The Company has made available to Parent true, complete and accurate copies of all material data and reports with respect to regulatory applications, studies and trials, and all other material information regarding the quality, efficacy and safety of the Products, including copies of all communications from Governmental Bodies relating to the Products.
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Section 4.20. Brokerage. Other than Lazard Frères & Co. LLC and Canaccord Genuity LLC, no broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s financial advisor’s or other similar fee or commission in connection with the Contemplated Transactions based on any arrangement or agreement made by or on behalf of the Company or any of its Affiliates.
Section 4.21. No Rights Agreement; Anti-Takeover Provisions. As of the date of this Agreement, the Company is not party to a stockholder rights agreement, “poison pill” or similar anti-takeover agreement or plan. The Company Board has taken all action necessary to render Section 203 of the DGCL and any other takeover, anti-takeover, moratorium, “fair price,” “control share,” or similar Law inapplicable to the Offer and the Merger. Assuming the accuracy of the representations and warranties set forth in Section 5.8, no restrictions of any other “business combination,” “control share acquisition,” “fair price,” “moratorium” or other anti-takeover Laws apply or will apply to the Company pursuant to this Agreement, the CVR Agreement or the Contemplated Transactions.
Section 4.22. Opinion. The Company Board has received the written opinion of the Company’s financial advisor, Lazard Frères & Co. LLC, to the effect that, as of the date of such opinion and based on and subject to the matters set forth therein, including the various assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken set forth therein, the Offer Price to be paid to the holders of Shares (other than Shares that are held in the treasury of the Company or owned by the Company, Shares owned by Parent, Purchaser or any direct or indirect wholly owned Subsidiary of Parent or Purchaser and Dissenting Shares) pursuant to the Offer and the Merger is fair from a financial point of view, to such holders. The Company shall provide or make available to Parent an executed copy of such written opinion to Parent solely for informational purposes promptly after receipt thereof by the Company, it being understood and agreed that such opinion is for the benefit of the Company Board and may not be relied upon by Parent or Purchaser.
Section 4.23. No Vote Required. Assuming the Contemplated Transactions are consummated in accordance with Section 251(h) of the DGCL and assuming the accuracy of the representations and warranties set forth in Section 5.8, no stockholder votes or consents are needed to authorize this Agreement or for the consummation of the Contemplated Transactions.
Section 4.24. Affiliate Transactions. No present or former officer or director of the Company or its Subsidiary, or any Person owning five percent (5%) or more of the Company Common Stock, and no Affiliate of such Person or family member of any such natural Person, is a party to any Contract with or binding upon the Company, its Subsidiary or any of its or their properties or assets, or has any material interest in any property or asset owned, leased, licensed, sublicensed, used or occupied by the Company or its Subsidiary, or has engaged in any material transaction with or related to any of the foregoing within the twelve (12) months preceding the date of this Agreement (each, an “Affiliate Transaction”), other than (a) compensation of directors and executive officers of the Company or its Subsidiary in the ordinary course and (b) equity interests granted to directors and executive officers of the Company or its Subsidiary.
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Section 4.25. No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN Article IV OF THIS AGREEMENT (AS MODIFIED BY THE COMPANY DISCLOSURE LETTER) OR IN ANY CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH, THE COMPANY MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AND THE COMPANY HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY. IN CONNECTION WITH PARENT’S INVESTIGATION OF THE COMPANY, PARENT MAY HAVE RECEIVED FROM OR ON BEHALF OF THE COMPANY CERTAIN PROJECTIONS. THE COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER WITH RESPECT TO ESTIMATES, PROJECTIONS AND OTHER FORECASTS AND PLANS (INCLUDING THE REASONABLENESS OF THE ASSUMPTIONS UNDERLYING ESTIMATES, PROJECTIONS AND FORECASTS).
Article V
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, hereby represent and warrant to the Company as follows:
Section 5.1. Organization and Corporate Power. Each of Parent and Purchaser is validly existing and in good standing under the Laws of the jurisdiction in which it was organized. Each of Parent and Purchaser has all requisite corporate power and authority and all authorizations, licenses and Permits necessary to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to hold such authorizations, licenses and Permits would not have a Purchaser Material Adverse Effect. Parent, directly or indirectly, owns beneficially and of record all of the outstanding capital stock of Purchaser free and clear of all Liens (other than any transfer restrictions arising under applicable securities Laws).
Section 5.2. Authorization; Valid and Binding Agreement. Each of Parent and Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and the CVR Agreement, to perform the obligations thereunder and to consummate the Offer and the Merger. No other corporate action pursuant to the Laws of the jurisdictions in which Parent or Purchaser is organized, on the part of Parent and Purchaser, is necessary to authorize this Agreement or the CVR Agreement. Each of Parent and Purchaser has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery by the Company, this Agreement constitutes, and at the Acceptance Time, assuming the due authorization, execution and delivery by the Rights Agent, the CVR Agreement will constitute, its legal, valid and binding obligations, enforceable against it in accordance with their terms except as enforcement may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally and by general principles of equity.
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Section 5.3. No Breach. The execution, delivery and performance of this Agreement by Parent and Purchaser and the consummation of the Offer and the Merger do not, and the execution, delivery and performance of the CVR Agreement by Parent will not (a) conflict with or violate their respective certificates of incorporation or bylaws (or similar governing documents) and (b) assuming all consents, approvals, authorizations and other actions described in Section 5.4 have been obtained, and all filings and obligations described in Section 5.4 have been made, conflict with or violate any Law or order, judgment or decree to which Parent, Purchaser, either of their Subsidiaries or any of their properties or assets is subject, except any conflicts, breaches, defaults, violations, terminations, cancellations or accelerations that would not have a Purchaser Material Adverse Effect.
Section 5.4. Consents. Except for (a) applicable requirements of the Exchange Act, (b) any filings required by the New York Stock Exchange and (c) the filing of the Certificate of Merger, Parent and Purchaser are not required to submit any notice, report or other filing with any Governmental Body in connection with the execution, delivery or performance by it of this Agreement, the CVR Agreement or the consummation of the Contemplated Transactions. Other than as stated above, no consent, approval or authorization of any Governmental Body or any other party or Person is required to be obtained by Parent or Purchaser in connection with its execution, delivery and performance of this Agreement, the CVR Agreement or the consummation of the Contemplated Transactions.
Section 5.5. Litigation. As of the date of this Agreement, there are no proceedings pending or, to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries that seeks to enjoin the Offer, the Merger or the other Contemplated Transactions, other than any such proceedings that have not had and would not have a Purchaser Material Adverse Effect.
Section 5.6. Brokerage. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s financial advisor’s or other similar fee or commission in connection with the Contemplated Transactions based on any arrangement or agreement made by or on behalf of Parent or Purchaser.
Section 5.7. Operations of Purchaser. Purchaser has been formed solely for the purpose of engaging in the Contemplated Transactions and has engaged in no business activities and will have incurred no liabilities or obligations except as contemplated by this Agreement or incident to its formation.
Section 5.8. Ownership of Shares. As of the date of this Agreement, neither Parent nor Purchaser, nor any of their Affiliates or associates, is an “interested stockholder” of the Company under Section 203(c) of the DGCL.
Section 5.9. Vote/Approval Required. No vote or consent of the holders of any class or series of capital stock of Parent is necessary to approve the Offer or the Merger. The vote or consent of the sole stockholder of Purchaser (which will occur promptly following the execution and delivery of this Agreement) is the only vote or consent of the holders of any class or series of capital stock of Purchaser necessary to approve this Agreement, the Offer or the Merger.
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Section 5.10. Funds. Parent has sufficient cash or other liquid financial resources to, and at the Acceptance Time and at the Effective Time, Parent will have, and shall cause Purchaser to have, available the cash necessary to, consummate the Contemplated Transactions, including payment in cash of the aggregate Closing Amount at the Acceptance Time and the portion of the aggregate Merger Consideration due at the Effective Time and to pay all related fees and expenses, and to discharge all of Parent’s and Purchaser’s other liabilities as they become due. Parent and Purchaser acknowledge that their obligations under this Agreement are not contingent or conditioned in any manner on obtaining any financing.
Section 5.11. Solvency. Immediately after giving effect to the Contemplated Transactions, Parent and Purchaser will be able to pay their respective debts as they become due and will own property which has a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities). Immediately after giving effect to the Contemplated Transactions, Parent and Purchaser will not have unreasonably small capital to carry on their respective businesses. No transfer of property is being made and no obligation is being incurred in connection with the Contemplated Transactions with the intent to hinder, delay or defraud either present or future creditors of Parent or its Subsidiaries.
Section 5.12. Investigation by Parent and Purchaser; Disclaimer of Reliance.
(a) Each of Parent and Purchaser (i) is a sophisticated purchaser and has made its own inquiry and investigation into, and based thereon has formed an independent judgment concerning, the businesses, assets, condition, operations, and prospects of the Company and its Subsidiary, (ii) has been furnished with or given adequate access to such information about the Company as it has requested and (iii) in determining to proceed with the Contemplated Transactions has not relied on any statements or information other than the representations and warranties set forth in this Agreement or set forth in the certificates or other documents delivered in connection with this Agreement. Each of Parent and Purchaser acknowledges that neither the Company nor any of its Affiliates or Representatives, have made, nor will any of them be deemed to have made (and nor has Parent or Purchaser or any of their respective Affiliates or Representatives relied upon) any representation, warranty, covenant or agreement, express or implied, with respect to the Company, its Subsidiary, the businesses, assets, condition, operations and prospects of the Company and its Subsidiary, or the Contemplated Transactions, other than those expressly set forth in this Agreement or set forth in the certificates or other documents delivered in connection with this Agreement. Each of Parent and Purchaser acknowledges and agrees that, subject to Section 8.5(a), none of the Company, its Subsidiary or any other Person (including any officer, director, member or partner of the Company or any of its Affiliates) will have or be subject to any liability to Parent, Purchaser or any other Person, resulting from Parent’s or Purchaser’s use of any information, documents or material made available to Parent, Purchaser or their Representatives in any “data rooms,” management presentations, due diligence or in any other form in expectation of the Contemplated Transactions. Each of Parent and Purchaser acknowledges (A) that it is an informed and sophisticated Person, and has engaged advisors experienced in the evaluation and purchase of companies such as the Company and its Subsidiary as contemplated hereunder and (B) has had the opportunity to negotiate the terms and conditions of this Agreement and the Contemplated Transactions and that the representations and warranties in this Agreement cover all of the material topics on which it is making its decision to proceed with the consummation of the Contemplated Transactions.
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(b) In connection with Parent’s and Purchaser’s investigation of the Company, each of Parent and Purchaser may have received from the Company and its Representatives certain projections and other forecasts and certain business plan information of the Company and its Subsidiary. Each of Parent and Purchaser acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts and plans and accordingly is not relying on them, that each of Parent and Purchaser is familiar with such uncertainties, that each of Parent and Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all projections and other forecasts and plans so furnished to it, and that each of Parent, Purchaser, and their Representatives will have no claim against any Person with respect thereto, subject to Section 8.5(a). Accordingly, each of Parent and Purchaser acknowledges that, without limiting the generality of this Section 5.12(b), none of the Company, its Subsidiary or any Person acting on behalf of the Company or its Subsidiary has made any representation or warranty with respect to such projections and other forecasts and plans.
Section 5.13. Other Agreements. Parent and Purchaser have disclosed to the Company all contracts, agreements, or understandings (and, with respect to those that are written, Parent and Purchaser has furnished to the Company correct and complete copies thereof) between or among Parent, Purchaser, or any Affiliate of Parent, on the one hand, and any member of the Company Board or officers or employees of the Company or its Subsidiary, on the other hand.
Section 5.14. No Other Representations and Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN Article V OF THIS AGREEMENT OR IN ANY CERTIFICATE OR OTHER DOCUMENT DELIVERED IN CONNECTION HEREWITH, NEITHER PARENT NOR PURCHASER MAKES ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AND EACH OF PARENT AND PURCHASER HEREBY DISCLAIMS ANY SUCH REPRESENTATION OR WARRANTY.
Article VI
COVENANTS
Section 6.1. Covenants of the Company.
(a) Except (i) as set forth in Section 6.1(a) of the Company Disclosure Letter, (ii) as required by applicable Law, (iii) as expressly permitted or required by this Agreement or (iv) with the prior written consent of Parent (which consent will not be unreasonably delayed, withheld or conditioned), from the date of this Agreement until the earlier of the Acceptance Time or the date this Agreement is terminated (the “Pre-Closing Period”), the Company shall, and shall cause its Subsidiary to, use commercially reasonable efforts (A) to carry on its business in the ordinary course of business, (B) to preserve intact its current business organization and keep available the services of its current officers, employees and consultants and (C) to preserve its relationships with customers, suppliers, partners, licensors, licensees, distributors, Governmental Bodies and others having business dealings with it with the intention that its goodwill and ongoing business will not be materially impaired on the Closing Date (and provided that the foregoing clause (C) shall not apply to the Company’s relationship with Parent).
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(b) Except (i) as set forth in Section 6.1(b) of the Company Disclosure Letter, (ii) as required by applicable Law or (iii) as expressly permitted or required by this Agreement, during the Pre-Closing Period, the Company shall not, and shall cause its Subsidiary not to, without the prior written consent of Parent (which consent will not be unreasonably delayed, withheld or conditioned):
(i) (A) authorize, declare, set aside or pay any dividends on or make other distributions (whether in cash, stock or property) in respect of any Company Securities or (B) directly or indirectly redeem, repurchase, split, combine, subdivide or otherwise acquire or reclassify any Company Securities, except, in each case, (1) as a result of net share settlement of any Company Stock Option or to satisfy the exercise price or withholding Tax obligations in respect of any Company Stock Option or Company Restricted Stock Unit or (2) any forfeitures or repurchases of Company Stock Options or Company Restricted Stock Units;
(ii) issue, sell, pledge, dispose of or otherwise encumber, or authorize the issuance, sale, pledge, disposition or other encumbrance of, any Company Securities, except for issuances in respect of (A) the exercise of Company Stock Options outstanding on the date of this Agreement, (B) the vesting and/or settlement of Company Restricted Stock Units outstanding on the date of this Agreement in accordance with the terms of the applicable grant agreement as in effect on the date of this Agreement, (C) the exercise of a Company Warrant outstanding on the date of this Agreement, or (D) purchase rights under the Company ESPP (in accordance with this Agreement);
(iii) except as required by the terms of a Company Plan as in effect as of the date of this Agreement, (A) increase the wages, salary or other compensation or benefits with respect to any of the Company’s or its Subsidiary’s officers, directors, employees or other individual service providers, (B) pay or award, or commit to pay or award, any bonuses, commissions or other incentive compensation or severance or separation payments or benefits, (C) accelerate any rights or benefits, or the vesting or funding of any payments or benefits, under any Company Plan, (D) establish, adopt, enter into, modify, amend or terminate any Company Plan (or plan or arrangement that would be a Company Plan had it been in effect on the date hereof), or any Labor Agreement applicable to the Company or its Subsidiary, or (E) hire, engage, terminate (without cause), furlough or temporarily lay off the employment or engagement of any employee or individual independent contractor;
(iv) waive or release any noncompetition, nonsolicitation, noninterference, nondisparagement, or other restrictive covenant obligation of any current or former employee or independent contractor;
(v) amend, or propose to amend, any Company Organizational Document (including by merger, consolidation or otherwise) or adopt a stockholders’ rights plan, or enter into any agreement with respect to the voting of its Company Securities;
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(vi) effect a recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction or authorize the issuance of any other securities in respect of, in lieu of, or in substitution for shares of its Company Securities;
(vii) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company (other than the Merger);
(viii) subject to clause (xi), make any capital expenditures above amounts indicated in the capital expenditure budget set forth on Section 6.1(b)(viii) of the Company Disclosure Letter;
(ix) acquire or agree to acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any other Person, by purchase of stock, securities or assets, or enter into any joint venture, legal partnership, strategic alliance, limited liability company or similar arrangement with any third Person in any one transaction or series of related transactions, except for the purchase of materials from suppliers or vendors in the ordinary course of business;
(x) (A) incur, assume, become liable for, or materially modify the terms of (including by extending the maturity date thereof) any Indebtedness other than short-term Indebtedness attributable to payments made with corporate credit cards, incurred in the ordinary course of business and not exceeding $200,000 in the aggregate, renew or extend any existing credit or loan arrangements, enter into any “keep well” or other agreement to maintain any financial condition of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or its Subsidiary, or enter into any agreement or arrangement having the economic effect of any of the foregoing (B) make any loans or advances to any other Person (other than advances to employees and other service providers for business and travel expenses in the ordinary course of business), (C) make any capital contributions to, or investments in, any other Person or (D) repurchase, prepay, refinance or otherwise reduce or materially change the commitments of any Indebtedness;
(xi) sell, transfer, license, assign, mortgage, encumber, lease (as lessor), subject to any Lien (other than Permitted Liens) or otherwise abandon, withdraw or dispose of, in a single transaction or a series of related transactions, any tangible assets with a fair market value in excess of $100,000 in the aggregate;
(xii) sell, assign, license or otherwise encumber or transfer any material Company Intellectual Property, except for non-exclusive licenses or sublicenses to Intellectual Property granted in the ordinary course of business;
(xiii) abandon, cancel, fail to renew or permit to lapse any material Company Registered Intellectual Property (excluding any abandonment of any Company Registered Intellectual Property at the end of the applicable statutory term, in the ordinary course of prosecution or otherwise in the ordinary course of business);
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(xiv) disclose to any third party any Trade Secret included in the Company Intellectual Property, other than pursuant to a non-disclosure agreement restricting the disclosure and use of such Trade Secret, in a way that results in the loss of material Trade Secret protection thereon, except for any such disclosures made as a result of publication of a Patent application filed by the Company or its Subsidiary, or in connection with any required regulatory filing;
(xv) commence, pay, discharge, settle, compromise or satisfy any Action that is unrelated to the Contemplated Transactions, other than solely for monetary consideration not to exceed $50,000;
(xvi) change its fiscal year, revalue any of its material assets or change any of its material financial, actuarial, reserving or Tax accounting methods or practices in any respect, except as required by GAAP or Law;
(xvii) (A) make, change or revoke any material Tax election with respect to the Company or its Subsidiary, (B) file any material amended Tax Return, (C) enter into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. law), Tax allocation agreement or Tax sharing agreement (other than any commercial agreement entered into in the ordinary course of business that does not relate primarily to Taxes) relating to or affecting any material Tax liability of the Company or its Subsidiary, (D) extend or waive the application of any statute of limitations regarding the assessment or collection of any material Tax with respect to the Company or its Subsidiary, (E) settle or compromise any material Tax liability or Tax refund claim with respect to the Company or its Subsidiary or (F) fail to pay any Taxes when due (including any estimated Taxes), except, in each case, as required by applicable Law;
(xviii) waive, release or assign any material rights or claims under, or enter into, renew, materially amend, materially modify, exercise any material options or material rights of first offer or refusal under or terminate, any Company Material Contract or any Contract that, if existing as of the date of this Agreement, would have been a Company Material Contract, except for the entry into or renewal of Contracts in the ordinary course of business; provided that in no event shall the Company or its Subsidiary be permitted to enter into any Contract that would be a Company Material Contract under Section 4.12(a)(iii) (Joint Venture Agreements; Partnership Agreements), Section 4.12(a)(iv) (Contracts with Restrictive Covenants), Section 4.12(a)(viii) (Contracts with Rights of First Refusal or Offer), Section 4.12(a)(xiii) (Contracts Restricting Dividends), Section 4.12(a)(xvii) (IP Contracts) or Section 4.12(a)(xix) (Contracts Relating to Commercialization, Co-Promotion, Etc.);
(xix) abandon, withdraw, terminate, suspend, abrogate, amend or modify in any material respect any material Permits;
(xx) enter into a research or collaboration arrangement that contemplates payments by or to the Company or its Subsidiary;
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(xxi) amend, cancel or terminate any material insurance policy naming the Company or its Subsidiary as an insured, a beneficiary or a loss payable payee without obtaining substitute insurance coverage;
(xxii) participate in any scheduled meetings or scheduled teleconferences with, or correspond in writing, communicate or consult with the FDA or any similar Governmental Body without providing Parent (whenever feasible and to the extent permitted under applicable Law, and excluding routine administrative communications, or immaterial communications) with prior written notice and, within one (1) Business Day from the time such written notice is delivered, the opportunity to consult with the Company with respect to such correspondence, communication or consultation, in each case to the extent permitted by applicable Law;
(xxiii) enter into any new material line of business or enter into any agreement or commitment that materially limits or otherwise materially restricts the Company or its Affiliates, including, following the Closing, Parent and its Affiliates (other than in the case of Parent and its Affiliates, due to the operation of Parent’s or its Affiliates’ own Contracts), from time to time engaging or competing in any line of business or in any geographic area or otherwise enter into any agreements, arrangements or commitments imposing material restrictions on its assets, operations or business;
(xxiv) commence any clinical study of which Parent has not been informed prior to the date of this Agreement or, unless mandated by any Governmental Body, discontinue, terminate or suspend any ongoing clinical study;
(xxv) enter into an Affiliate Transaction (aside from the Contemplated Transactions); or
(xxvi) authorize, agree or commit to take any of the actions described in clauses (i) through (xxv) of this Section 6.1(b).
Section 6.2. Access to Information; Confidentiality.
(a) From and after the date of this Agreement until the earlier of the Acceptance Time and the termination of this Agreement in accordance with its terms, the Company shall, and shall cause its Subsidiary to, upon reasonable advance notice, (i) give Parent and Purchaser and their respective Representatives reasonable access during normal business hours to relevant employees and facilities and to relevant books, contracts and records of the Company and its Subsidiary, (ii) permit Parent and Purchaser to make such non-invasive inspections as they may reasonably request and (iii) cause its officers to furnish Parent and Purchaser with such financial and operating data and other information with respect to the business, properties and personnel of the Company and its Subsidiary as Parent or Purchaser may from time to time reasonably request.
(b) Subject to Section 9.6, Parent, Purchaser and the Company hereby acknowledge and agree that the Confidentiality Agreement will continue in full force and effect in accordance with its terms.
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(c) Nothing in Section 6.2(a) requires the Company to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company would (i) violate any of its or its Affiliates’ respective obligations with respect to confidentiality, (ii) result in a violation of applicable Law or (iii) result in loss of legal protection, including the attorney-client privilege and work product doctrine; provided that the Company will use its reasonable best efforts to obtain any required consents for the disclosure of such information and take such other reasonable action (including entering into a joint defense agreement or similar arrangement to avoid loss of attorney-client privilege) with respect to such information as is necessary to permit disclosure to Parent without (x) jeopardizing such attorney-client privilege or work product doctrine or (y) violating applicable Law or any of the Company’s or its Affiliates’ respective obligations with respect to confidentiality, as applicable.
Section 6.3. Acquisition Proposals.
(a) The Company shall not and shall instruct its Representatives not to: (i) directly or indirectly initiate, solicit, or knowingly encourage or knowingly facilitate (including by way of providing information) any inquiries, proposals or offers, or the making of any submission or announcement of any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to any Acquisition Proposal, (ii) directly or indirectly engage in, enter into or participate in any discussions or negotiations with any Person with respect to any Acquisition Proposal or (iii) provide any non-public information to, or afford access to the business, properties, assets, books or records of the Company and its Subsidiary to, any Person (other than Parent, Purchaser, or any designees of Parent or Purchaser) in connection with any Acquisition Proposal. The Company shall direct its Representatives to (x) immediately cease any solicitation, discussions, or negotiations with any Person (other than Parent, Purchaser, or any designees of Parent or Purchaser) with respect to any Acquisition Proposal, (y) to the extent the Company has the right to do so, request in writing the prompt return or destruction of all confidential information provided by or on behalf of the Company or its Subsidiary to any such Person and (z) terminate access to any physical or electronic data rooms relating to a possible Acquisition Proposal. Notwithstanding the foregoing, the Company and its Representatives may, solely in response to an inquiry or proposal that did not result from a material breach of this Section 6.3(a), (A) seek to clarify and understand the terms and conditions of any inquiry or proposal made by any Person solely if and to the extent necessary to determine whether such inquiry or proposal constitutes an Acquisition Proposal and (B) inform a Person that has made or, to the Knowledge of the Company, is considering making an Acquisition Proposal of the provisions of this Section 6.3.
(b) Notwithstanding Section 6.3(a) or any other provision of this Agreement, if at any time following the date of this Agreement and prior to the Acceptance Time, (i) the Company has received a written Acquisition Proposal that did not, directly or indirectly, result from a material breach of Section 6.3(a) and (ii) the Company Board or a committee thereof determines in good faith, after consultation with outside counsel and a financial advisor, that such Acquisition Proposal constitutes or is reasonably likely to lead to or result in a Superior Proposal, then the Company may (A) furnish information with respect to the Company to the Person making such Acquisition Proposal and its Representatives and (B) participate in discussions or negotiations with such Person and its Representatives regarding such Acquisition Proposal; provided that the Company may only take the actions described in clauses (A) or (B) above if the Company Board determines in good faith, after consultation with outside counsel, that the failure to take any such action would be, or would reasonably be expected to be, inconsistent with its fiduciary duties under applicable Law; provided, further, that (1) the Company shall not, and shall instruct its Representatives not to, disclose any material non-public information to such Person unless the Company has, or first enters into, a confidentiality agreement with such Person containing substantive terms that are not less favorable in any material respect to the Company than those contained in the Confidentiality Agreement, and does not prohibit the Company from providing any information to Parent in accordance with this Section 6.3 or otherwise prohibit the Company from complying with its obligations under this Section 6.3, and (2) the Company shall, concurrently therewith or as promptly as reasonably practicable thereafter, and in any event within one (1) Business Day, provide or make available to Parent any material non-public information concerning the Company provided or made available to such other Person that was not previously provided or made available to Parent and Purchaser. The Company shall not, directly or indirectly, release any Person from, or waive, amend or modify any provision of, or grant permission under or fail to enforce, any standstill provision in any agreement to which the Company is a party; provided that if the Company Board determines in good faith, after consultation with its outside counsel, that the failure to take such action would be, or would reasonably be expected to be, inconsistent with its fiduciary duties under applicable Law, the Company may waive any such standstill provision solely to the extent necessary to permit the applicable Person (if such Person has not been solicited in breach of this Section 6.3) to make, on a confidential basis to the Company Board, an Acquisition Proposal, conditioned upon such Person agreeing that the Company shall not be prohibited from providing any information to Parent (including regarding any such Acquisition Proposal) in accordance with, and otherwise complying with, this Section 6.3.
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(c) The Company shall promptly (and in any event within one (1) Business Day) notify Parent in writing (including by email) of the receipt by the Company of any Acquisition Proposal, or any inquiry, request for information or other indication by any Person that it is considering making an Acquisition Proposal. The Company shall (i) provide Parent promptly (and in any event within such one (1) Business Day period) the material terms and conditions of any such inquiry or Acquisition Proposal, together with copies of all material documents related thereto, and the identity of the Person making any such inquiry or Acquisition Proposal, and (ii) keep Parent reasonably informed of any material developments, discussions or negotiations regarding any Acquisition Proposal (including any changes to the terms thereof).
(d) The Company Board and each committee thereof shall not, subject to the terms and conditions of this Agreement, (i) approve or recommend, or propose publicly to approve or recommend, or authorize, cause or permit the Company to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, license agreement, merger agreement, joint venture agreement, partnership agreement, collaboration agreement, revenue-sharing agreement or similar definitive agreement (other than a confidentiality agreement referred to and entered into in compliance with Section 6.3(b)) relating to, or that would reasonably be expected to lead to, any Acquisition Proposal (an “Alternative Acquisition Agreement”) or (ii) make a Change of Board Recommendation.
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(e) Notwithstanding Section 6.3(d) or any other provision of this Agreement, prior to the Acceptance Time:
(i) the Company may terminate this Agreement to enter into an Alternative Acquisition Agreement if (A) the Company receives an Acquisition Proposal that did not directly or indirectly result from a material breach of Section 6.3(a) and that the Company Board or a committee thereof determines in good faith, after consultation with outside counsel, constitutes a Superior Proposal, (B) the Company has notified Parent in writing that it intends to terminate this Agreement to enter into an Alternative Acquisition Agreement and (C) no earlier than the end of the Notice Period, the Company Board or any committee thereof determines in good faith that the Acquisition Proposal that is subject of the Determination Notice continues to constitute a Superior Proposal and that the failure to terminate this Agreement would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law, after consultation with outside counsel and taking into consideration the terms of any proposed amendment or modification to this Agreement that Parent has irrevocably committed to make during the Notice Period;
(ii) the Company Board or a committee thereof may make a Change of Board Recommendation in response to an Acquisition Proposal if (A) the Company receives an Acquisition Proposal that did not, directly or indirectly, result from a material breach of Section 6.3(a), and the Company Board or a committee thereof determines in good faith, after consultation with outside counsel, that the Acquisition Proposal constitutes a Superior Proposal, (B) the Company has notified Parent in writing that it intends to effect a Change of Board Recommendation and (C) no earlier than the end of the Notice Period, the Company Board or a committee thereof determines in good faith that the failure to make a Change of Board Recommendation would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law and that the Acquisition Proposal that is subject of the Determination Notice continues to constitute a Superior Proposal, after consultation with outside counsel and taking into consideration the terms of any proposed amendment or modification to this Agreement that Parent has irrevocably committed to make during the Notice Period; and
(iii) other than in connection with an Acquisition Proposal, the Company Board or a committee thereof may make a Change of Board Recommendation in response to an Intervening Event if (A) the Company has notified Parent in writing that it intends to effect a Change of Board Recommendation and (B) no earlier than the end of the Notice Period, the Company Board or any committee thereof determines in good faith, after consultation with outside counsel and considering the terms of any proposed amendment or modification to this Agreement that Parent has irrevocably committed to make during the Notice Period, that the failure to effect a Change of Board Recommendation in response to such Intervening Event would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law.
(iv) The provisions of this Section 6.3(e) apply to any amendment to the financial or other material terms of any applicable Superior Proposal with respect to Section 6.3(e)(i) and Section 6.3(e)(ii) and require a revised Determination Notice and a new Notice Period pursuant to clause (i)(C) or (ii)(C) as the case may be. During the Notice Period, if requested by Parent, the Company shall negotiate, and shall instruct its Representatives to negotiate, in good faith with Parent regarding potential changes to this Agreement in such a manner that would eliminate the need for taking the actions set forth in Section 6.3(e)(i) and Section 6.3(e)(ii) (and in respect of a Superior Proposal, would cause such Superior Proposal to no longer constitute a Superior Proposal).
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(f) Nothing contained in this Agreement prohibits (i) the Company Board or a committee thereof from (A) taking and disclosing to the holders of Shares a position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the Exchange Act or (B) making any public statement if the Company Board or a committee thereof determines in good faith, after consultation with outside counsel, that the failure to make such statement would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law or (ii) the Company or the Company Board from making any disclosure required under the Exchange Act; provided that any such action that would otherwise constitute a Change of Board Recommendation shall be made only in compliance with Section 6.3(d) and Section 6.3(e) (it being understood that: (x) any “stop, look and listen” letter or similar communication limited to the information described in Rule 14d-9(f) under the Exchange Act and (y) any disclosure of information to the holders of Shares that only describes the Company’s receipt of an Acquisition Proposal and the operation of this Agreement with respect thereto and contains a statement that the Company Board has not effected a Change of Board Recommendation shall be deemed not to be a Change of Board Recommendation).
(g) The Company acknowledges and agrees that, for purposes of determining whether a breach of this Section 6.3 has occurred, the actions of the Company’s directors and Representatives acting in their authorized capacities on behalf of the Company shall be deemed to be the actions of the Company, and the Company shall be responsible for any breach of this Section 6.3 by its directors and Representatives acting in their authorized capacities on behalf of the Company.
Section 6.4. Employment and Employee Benefits Matters.
(a) For twelve (12) months following the Closing Date (or, if earlier, until the termination date of a Current Employee, as defined below), Parent shall, or shall cause the Surviving Corporation to maintain for each individual employed by the Company or its Subsidiary at the Effective Time (each, a “Current Employee”), to the extent they continue to be employed by Parent or the Surviving Corporation (i) base compensation and a target annual cash incentive compensation opportunity at least as favorable, in the aggregate, as that provided to the Current Employee as of immediately prior to the Effective Time, (ii) benefits that are substantially comparable in the aggregate to those benefits maintained for and provided to the Current Employees under the Company Plans that are disclosed in Section 4.16(a) of the Company Disclosure Letter (excluding cash incentive opportunities, severance, equity and equity-based awards and change in control-related payments or benefits) and in effect as of immediately prior to the Effective Time (or, to the extent a Current Employee becomes covered by an employee benefit plan or program of Parent (or one of its Affiliates other than the Surviving Corporation) during such period substantially comparable to those benefits maintained for and provided to similarly situated employees of Parent (or its relevant Affiliate)) and (iii) severance benefits that are at least as favorable as the severance benefits provided in a Company Plan disclosed in Section 4.16(a) of the Company Disclosure Letter, subject in the case of clause (iii) to such Current Employee’s execution of a general release of claims in favor of the Surviving Corporation, Parent and related Persons in a form as provided by Parent.
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(b) Parent shall, and shall cause the Surviving Corporation to, cause service rendered by each Current Employee to the Company or its Subsidiary prior to the Effective Time to be taken into account with respect to employee benefit plans of Parent and the Surviving Corporation which provide benefits for vacation, paid time-off, severance or 401(k) savings, for purposes of determining eligibility to participate, level of benefits and vesting, to the same extent and for the same purpose as such service was taken into account under the corresponding Company Plans immediately prior to the Effective Time for those purposes; provided that the foregoing will not apply to (i) the extent that its application would result in a duplication of benefits or compensation with respect to the same period of service, (ii) any benefit plan that is a frozen plan or that provides benefits to a grandfathered employee population, or (iii) to the extent such service would not be credited to similarly situated employees of Parent or its Affiliates.
(c) If requested in writing by Parent not later than five (5) days prior to the Effective Time, the Company shall, at least one (1) day prior to the Effective Time, (i) adopt written resolutions (or take other necessary and appropriate actions) to terminate each Company Plan intended to be qualified under Section 401(a) of the Code (the “401(k) Plan”), (ii) cease all contributions to the 401(k) Plan for any compensation paid after such termination date, and (iii) one hundred percent (100%) vest all participants under the 401(k) Plan, such termination, cessation of contributions and vesting to be effective no later than the day preceding the Effective Time.
(d) Without limiting the generality of Section 6.4, no provision of this Agreement (i) prohibits Parent, Purchaser or the Surviving Corporation from amending, modifying or terminating any individual Company Plan or any other benefit or compensation plan, program, contract, agreement, policy or arrangement, (ii) requires Parent, Purchaser or the Surviving Corporation to keep any Person employed or otherwise providing services for any period of time, or (iii) constitutes or shall be construed to constitute the establishment or adoption of, or amendment to, any Company Plan or other benefit or compensation plan, program, contract, agreement, policy or arrangement. This Section 6.4 shall not confer upon any Current Employee or any other Person (including any beneficiary or dependent thereof) not a party to this Agreement any third-party beneficiary or similar rights or remedies.
Section 6.5. Directors’ and Officers’ Indemnification and Insurance.
(a) To the extent permitted by applicable Law, Parent and Purchaser shall cause the Surviving Corporation’s certificate of incorporation and bylaws to contain provisions no less favorable with respect to indemnification, advancement of expenses, and exculpation from liabilities of present and former directors, officers, and employees of the Company and its Subsidiary than are currently provided in the Certificate of Incorporation and Bylaws, which provisions may not be amended, repealed, or otherwise modified in any manner that would adversely affect the rights thereunder of any such individuals until six (6) years from the Effective Time, and in the event that any Action is pending or asserted or any claim made during such period, until the disposition of any such Action or claim, unless such amendment, modification, or repeal is required by applicable Law, in which case Parent shall, and shall cause the Surviving Corporation to, make such changes to the certificate of incorporation and the bylaws as to have the least adverse effect on the rights of the individuals referenced in this Section 6.5.
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(b) Without limiting any additional rights that any Person may have under any agreement or Company Plan, from and after the Effective Time, Parent shall cause the Surviving Corporation to indemnify and hold harmless each present (as of the Effective Time) or former director or officer of the Company and its Subsidiary (each, together with such Person’s heirs, executors, administrators, or Affiliates, an “Indemnified Party”), against all obligations to pay a judgment, settlement, or penalty and reasonable expenses incurred in connection with any Action, whether civil, criminal, administrative, arbitrative, or investigative, and whether formal or informal, arising out of the fact that the Indemnified Party is or was an officer, director, employee, Affiliate, fiduciary, or agent of the Company, its Subsidiary or of another entity if such service was at the request of the Company, whether asserted or claimed prior to, at, or after the Effective Time, to the fullest extent permitted under applicable Law. In the event of any such Action, Parent shall cause the Surviving Corporation to advance to each Indemnified Party reasonable and documented out-of-pocket expenses incurred in the defense of the Action (provided that any Person to whom expenses are advanced shall have provided, to the extent required by the DGCL, an undertaking to repay such advances if it is finally determined that such Person is not entitled to indemnification). The Surviving Corporation shall reasonably cooperate with an Indemnified Party in the defense of any matter for which such Indemnified Party could seek indemnification hereunder. The Surviving Corporation’s obligations under this Section 6.5 shall continue in full force and effect for the period beginning upon the Effective Time and ending six (6) years from the Effective Time; provided that all rights to exculpation, indemnification and advancement in respect of any Action asserted or made within such period shall continue until the final disposition of such Action. Parent shall cause the Surviving Corporation to perform its obligations under this Section 6.5(b).
(c) Notwithstanding anything to the contrary in this Agreement, at or prior to the Effective Time, following good faith consultation with Parent and, if requested by Parent, utilizing Parent’s insurance broker, the Company may purchase a tail policy under the current directors’ and officers’ liability insurance policies maintained at such time by the Company, which tail policy (i) will be effective for a period from the Effective Time through and including the date six (6) years after the Effective Time with respect to claims arising from facts or events that existed or occurred prior to or at the Effective Time and (ii) will contain coverage that is at least as protective to such directors and officers as the coverage provided by such existing policies; provided that the aggregate premium for such tail policy may not be in excess of three hundred percent (300%) of the last annual premium paid prior to the Effective Time (the “Maximum Amount”). Parent shall cause such policy to be maintained in full force and effect for their full term, and cause all obligations thereunder to be honored by the Surviving Corporation; provided that neither Parent nor the Surviving Corporation shall be required to pay an aggregate premium for such insurance policies in excess of the Maximum Amount; provided, further, that if the aggregate premium of such insurance coverage exceeds such amount, the Surviving Corporation shall be obligated to obtain the maximum amount of coverage available for the Maximum Amount.
(d) Without limiting any of the rights or obligations under this Section 6.5, from and after the Effective Time, the Surviving Corporation shall keep in full force and effect, and shall comply with the terms and conditions of, any agreement in effect as of the date of this Agreement between or among the Company and any Indemnified Party providing for the indemnification of such Indemnified Party and Parent hereby guarantees the obligations of the Surviving Corporation pursuant to such agreements, each as set forth on Section 6.5(d) of the Company Disclosure Letter.
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(e) This Section 6.5 will survive the consummation of the Merger and is intended to benefit, and is enforceable by, any Person or entity referred to in this Section 6.5. The indemnification and advancement provided for in this Section 6.5 is not exclusive of any other rights to which the Indemnified Party is entitled whether pursuant to Law, Contract, or otherwise. If the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity resulting from such consolidation or merger or (ii) transfers all or a majority of its properties and assets to any Person, then, and in each such case, Parent shall make proper provisions such that the successors and assigns of the Surviving Corporation assume the applicable obligations set forth in this Section 6.5.
(f) If any Indemnified Party makes any claim for indemnification or advancement of expenses under this Section 6.5 that is denied by Parent and/or the Surviving Corporation, and a court of competent jurisdiction makes a final and non-appealable determination that the Indemnified Party is entitled to such indemnification or advancement of expenses, then Parent or the Surviving Corporation shall pay the Indemnified Party’s costs and expenses, including reasonable legal fees and expenses, incurred by the Indemnified Party in connection with pursuing his or her claims to the fullest extent permitted by law.
Section 6.6. Further Action; Efforts.
(a) Subject to the terms and conditions of this Agreement, prior to the Effective Time, each party shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate the Offer, the Merger and the other Contemplated Transactions as promptly as practicable and, in any event, by or before the Outside Date. Notwithstanding anything in this Agreement to the contrary, the parties hereto agree to supply as promptly as practicable any information and documentary material that may be requested by a Governmental Body pursuant to any Antitrust Law. The parties also shall consult and cooperate with one another, and consider in good faith the views of one another, in connection with, and provide to the other parties in advance, any analyses, appearances, presentations, memoranda, briefs, arguments, opinions, and proposals made or submitted by or on behalf of such party in connection with proceedings under or relating to any Antitrust Laws. Without limiting the foregoing, the parties hereto agree (A) to give each other reasonable advance notice of all meetings with any Governmental Body relating to any Antitrust Laws, (B) to give each other an opportunity to participate in each of such meetings, (C) to the extent practicable, to give each other reasonable advance notice of all substantive oral communications with any Governmental Body relating to any Antitrust Laws, (D) if any Governmental Body initiates a substantive oral communication regarding any Antitrust Laws, to promptly notify the other party of the substance of such communication, (E) to provide each other with a reasonable advance opportunity to review and comment upon all substantive written communications (including any analyses, presentations, memoranda, briefs, arguments, opinions and proposals) with a Governmental Body regarding any Antitrust Laws and (F) to provide each other with copies of all written communications to or from any Governmental Body relating to any Antitrust Laws. Any such disclosures or provision of copies by one party to the other may be made on an outside counsel/in-house counsel basis, if appropriate. Notwithstanding the foregoing, Parent shall have the right to direct, devise and implement the strategy for obtaining any necessary approval of, for responding to any request from, inquiry or investigation by (including directing the timing, nature and substance of all such responses), and shall have the right to lead all meetings and communications (including any negotiations) with, any Governmental Body that has authority to enforce any Antitrust Law. Each party may, as each deems advisable and necessary, reasonably designate any such disclosures or provision of copies by one party to the other party under this Agreement as “outside counsel/in-house counsel only.” Such designated materials and the information contained therein shall be given only to the outside legal counsel and in-house counsel of the recipient and shall not be disclosed by such outside counsel and in-house counsel to employees (other than in-house counsel), officers or directors of the recipient, unless express permission is obtained in advance from the source of the materials or its legal counsel; it being understood that materials provided pursuant to this Agreement may be redacted (i) as necessary to comply with contractual obligations and (ii) as necessary to protect privileged attorney-client communications or attorney work product.
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(b) Parent shall, and shall cause each of its Subsidiaries and Affiliates to, use its reasonable best efforts to obtain any consents, clearances, or approvals required under or in connection with the Antitrust Laws to enable all waiting periods under applicable Antitrust Laws to expire, and to avoid or eliminate impediments under applicable Antitrust Laws asserted by any Governmental Body, in each case, to cause the Merger to occur as promptly as practicable and, in any event, by or before the Outside Date, including promptly complying with any requests for additional information (including any second request) by any Governmental Body. Furthermore, both Parent and the Company shall not take, and shall cause each of its Subsidiaries to not take, any action or omit to take any action that would reasonably be expected to materially delay or prevent consummation of the Contemplated Transactions. Parent shall pay all filing fees incurred by the parties in connection with any filings which may be required by such party to obtain clearance under any Antitrust Law for the consummation of the Offer and the Merger. Notwithstanding anything to the contrary in this Section 6.6(b) or otherwise in this Agreement, neither Parent nor any of its Affiliates shall have any obligation to offer, negotiate, commit to, or effect, by consent decree, hold separate order, or otherwise, the sale, divestiture, license, or other disposition of any or all of the capital stock, assets, equity holdings, rights, products, or businesses, or any other restrictions on the activities of Parent or any of its Subsidiaries (including the Surviving Corporation). In addition, the Company shall not offer or commit to take any of such actions without Parent’s prior written consent, which includes taking or committing to take actions that limit Parent or any of its Subsidiaries (including the Surviving Corporation), as applicable, freedom of action with respect to, or their ability to retain, any of the businesses, employees, or assets of the Company. Parent shall not require the Company to, and the Company shall not be required to, take any action with respect to any consent decree, hold separate order or other applicable Law that binds the Company prior to the Effective Time. Neither Parent nor the Company shall enter any agreement with a Governmental Body not to consummate or to delay consummation of the Contemplated Transactions without the prior written consent of the other party.
(c) Prior to the Acceptance Time, each party shall use commercially reasonable efforts to obtain any consents, approvals, or waivers of third parties with respect to any Contracts to which it is a party as may be necessary for the consummation of the Contemplated Transactions or required by the terms of any Contract as a result of the execution, performance, or consummation of the Contemplated Transactions; provided that, in no event will the Company be required to pay, prior to the Effective Time, any fee, penalty, or other consideration or make any other accommodation to any third party to obtain any consent, approval, or waiver required with respect to any such Contract.
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Section 6.7. Public Announcements. The Company shall not, and Parent shall not, and shall cause each of its Subsidiaries to not, issue any press release or announcement concerning the Contemplated Transactions without the prior consent of the other (which consent may not be unreasonably withheld, conditioned, or delayed), except any release or announcement required by applicable Law or any rule or regulation of Nasdaq, the New York Stock Exchange or any other stock exchange to which the relevant party is subject, in which case the party required to make the release or announcement shall use commercially reasonable efforts to allow each other party reasonable time to comment on such release or announcement in advance of such issuance; it being understood that the final form and content of any such release or announcement, to the extent so required, shall be at the final discretion of the disclosing party. The parties hereto agree that the initial press release relating to this Agreement shall be a joint press release issued by the Company and Parent. The restrictions of this Section 6.7 do not apply to communications by the Company or Parent in connection with, or following, an Acquisition Proposal, Superior Proposal, Change of Board Recommendation, Intervening Event or any action taken pursuant thereto (or made or proposed to be made by Parent in response thereto), in each case, that does not violate Section 6.3.
Section 6.8. Approval of Compensation Actions. Prior to the Acceptance Time, the Compensation Committee of the Company Board shall take all such actions as may be required to approve, as an “employment compensation, severance, or other employee benefit arrangement” in accordance with Rule 14d-10(d)(2) under the Exchange Act and the instructions thereto, any and all Compensation Actions taken after January 1, 2023 and prior to the Acceptance Time that have not already been so approved and shall take all other action reasonably necessary to satisfy the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d)(2) promulgated under the Exchange Act. For the purposes of this Agreement, “Compensation Action” means any (a) granting by the Company to any present or former director or officer of any increase in compensation or benefits or of the right to receive any severance or termination compensation or benefit; (b) entry by the Company into any employment, consulting, indemnification, termination, change of control, non-competition, or severance agreement with any present or former director or officer, or any approval, amendment, or modification of any such agreement; or (c) approval of, amendment to, or adoption of any Company Plan.
Section 6.9. No Control of the Company’s Business. Nothing contained in this Agreement gives Parent or Purchaser, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions of this Agreement, and subject to the Research Collaboration and Exclusive License Agreement by and between Parent and Company, dated as of April 2, 2018 (as amended), complete control and supervision over its operations.
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Section 6.10. Operations of Purchaser. Prior to the Effective Time, Purchaser shall not engage in any other business activities and shall not incur any liabilities or obligations other than as contemplated herein.
Section 6.11. Stockholder Litigation. The Company shall promptly (and in any event within forty-eight (48) hours) notify Parent of any actions, suits, or claims instituted against the Company, its Subsidiary or any of its or their directors or officers, in each case, relating to this Agreement or the Contemplated Transactions (each such item described in this Section 6.11, “Stockholder Litigation”). Parent shall have the right to participate in the defense and settlement of any such Stockholder Litigation, the Company shall consult with Parent (which advice the Company shall consider in good faith) regarding the defense of any such Stockholder Litigation, and the Company shall not settle or compromise any Stockholder Litigation without the prior written consent of Parent, not to be unreasonably withheld, delayed or conditioned, unless (i) such settlement is fully covered by the Company’s insurance policies (other than any applicable deductible) or (ii) such settlement relates solely to the provision of additional disclosure in the Schedule 14D-9, but in each case only if such settlement would not result in the imposition of any restriction on the business or operations of the Company or its Affiliates. The Company shall notify Parent promptly of the commencement or written threat of any proceedings of which it has received notice or become aware and shall keep Parent promptly and reasonably informed regarding any such proceedings.
Section 6.12. Regulatory Matters. Between the date of this Agreement and the earlier of the Effective Time or the termination of this Agreement, the Company and its Subsidiary shall make available to Parent and its Representatives, as and to the extent requested by Parent, complete and accurate copies of (a) all clinical and preclinical data relating to each Product and (b) all written correspondence or other communications between the Company or its Subsidiary, on the one hand, and the applicable Governmental Bodies, on the other hand, relating to any Product, in the case of each of clauses (a) and (b) above, that comes into the Company’s or its Subsidiary’s possession or control during such time period promptly after the Company obtains such possession or control thereof and subject to the limitations set forth in Section 6.2. The Company shall, and shall cause its Subsidiary to, and shall direct its and their Representatives to reasonably consult and cooperate with Parent, as and to the extent requested by Parent, and consider in good faith the views of Parent in connection with any material communications from Governmental Bodies relating to clinical and preclinical trials related to the Products.
Section 6.13. Cash Management. Prior to the Effective Time, the Company shall use commercially reasonable efforts to convert all Investment Securities to Cash and Cash Equivalents.
Section 6.14. Stock Exchange De-listing. The Company shall cause the Company’s securities to be de-listed from Nasdaq and de-registered under the Exchange Act as promptly as practicable following the Effective Time.
Section 6.15. Termination of Certain Agreements. Prior to the Effective Time, the Company shall terminate, or cause to be terminated, the Contracts set forth on Section 6.15 of the Company Disclosure Letter, with such termination(s) becoming effective no later than as of the Effective Time.
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Section 6.16. Merger Without a Stockholders Meeting. As promptly as practicable following the consummation of the Offer, the parties hereto shall take all necessary and appropriate actions to cause the Merger to become effective without a meeting of the stockholders of the Company, in accordance with Section 251(h) of the DGCL.
Section 6.17. FIRPTA Certificate. Prior to the Effective Time, the Company shall deliver an affidavit to Parent stating that the Company is not and has not been a United States real property holding corporation, in the form and substance required under Treasury Regulation §1.897-2(h), as of the Effective Time.
Section 6.18. Certain Tax Returns. The Company shall, or shall cause its Subsidiary to, use commercially reasonable efforts to prepare and timely file, at or prior to the Effective Time, all Tax Returns required to be filed by the Company or its Subsidiary for each taxable period ending on or before December 31, 2022, regardless of when any such Tax Return is due and regardless of any applicable extension for filing any such Tax Return.
ARTICLE VII
CONDITIONS OF MERGER
Section 7.1. Conditions to Obligation of Each Party to Effect the Merger. The respective obligations of each party to effect the Merger are subject to the satisfaction at or prior to the Effective Time of each of the following conditions:
(a) No order, injunction or decree issued by any Governmental Body of competent jurisdiction preventing the consummation of the Merger will be in effect. No statute, rule, regulation, order, injunction, or decree will have been enacted, entered, promulgated, or enforced (and still be in effect) by any Governmental Body that prohibits or makes illegal the consummation of the Merger.
(b) Purchaser will have irrevocably accepted for purchase the Shares validly tendered (and not validly withdrawn) pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1. Termination by Mutual Agreement. This Agreement may be terminated, and the Offer and the Merger may be abandoned, at any time prior to the Acceptance Time, by mutual written consent of Parent and the Company.
Section 8.2. Termination by Either Parent or the Company. This Agreement may be terminated, and the Offer and the Merger may be abandoned, at any time prior to the Acceptance Time, by Parent or the Company if:
(a) any court of competent jurisdiction or other Governmental Body has issued a final order, decree or ruling, or taken any other final action permanently restraining, enjoining, or otherwise prohibiting the Offer or the Merger, and such order, decree, ruling or other action has become final and non-appealable; provided, however, that the terms of this Section 8.2 are not available to any party, if the issuance of such order, decree, ruling or other action is primarily attributable to the failure on the part of such party to comply with its obligations under this Agreement in any material respect, including Section 6.6; or
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(b) the Acceptance Time has not occurred on or prior to the date that is one hundred twenty (120) days after the date of this Agreement (the “Outside Date”); provided, however, that this termination right is not available to any party, if the failure of the Acceptance Time to occur prior to the Outside Date is primarily attributable to the failure on the part of such party to comply in any material respect with its obligations under this Agreement, including Section 6.6.
Section 8.3. Termination by the Company. This Agreement may be terminated, and the Offer and the Merger may be abandoned, at any time prior to the Acceptance Time, by the Company:
(a) If (i) Purchaser fails to timely commence the Offer in violation of Section 1.1 hereof (other than due to the failure of the Company to perform any covenants or obligations in this Agreement required to be performed by the Company for such commencement of the Offer), (ii) the Offer has expired or has been terminated, without Purchaser having accepted for purchase the Shares validly tendered (and not withdrawn) pursuant to the Offer (subject to the rights and obligations of Parent or Purchaser to extend the Offer pursuant to Section 1.1), (iii) Purchaser, in violation of the terms of this Agreement, fails to accept for purchase Shares validly tendered (and not withdrawn) pursuant to the Offer or (iv) there has been a breach of any covenant or agreement made by Parent or Purchaser in this Agreement, or any representation or warranty of Parent or Purchaser is inaccurate or becomes inaccurate after the date of this Agreement, and such breach or inaccuracy gives rise to a Purchaser Material Adverse Effect, and such breach or inaccuracy is not capable of being cured within thirty (30) days following receipt by Parent or Purchaser of written notice of such breach or inaccuracy or, if such breach or inaccuracy is capable of being cured within such period, it has not been cured within such period; or
(b) In order to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal in accordance with Section 6.3(e)(i); provided that, promptly following such termination, the Company enters into an Alternative Acquisition Agreement in respect of such Superior Proposal and pays the termination fee due pursuant to Section 8.5(b).
Section 8.4. Termination by Parent
. This Agreement may be terminated, and the Offer and the Merger may be abandoned, at any time prior to the Acceptance Time, by Parent if:
(a) (i) Purchaser has complied with Section 1.1 hereof and, due to the failure of an Offer Condition to be satisfied, the Offer has expired or has been terminated without Purchaser having accepted for purchase the Shares validly tendered (and not withdrawn) pursuant to the Offer or (ii) there has been a breach of any covenant or agreement made by the Company in this Agreement, or any representation or warranty of the Company is inaccurate or becomes inaccurate after the date of this Agreement, and such breach or inaccuracy would give rise to the failure of a condition set forth in paragraph 2(b) or 2(c) of Annex I, and such breach or inaccuracy is not capable of being cured within thirty (30) days following receipt by the Company of written notice of such breach or inaccuracy or, if such breach or inaccuracy is capable of being cured within such period, it has not been cured within such period; or
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(b) The Company Board or any committee thereof effects a Change of Board Recommendation.
Section 8.5. Effect of Termination.
(a) In the event of termination of this Agreement pursuant to this ARTICLE VIII, this Agreement (other than Section 1.1(d), the last sentence of Section 1.3, Section 6.2(b), ARTICLE VIII and ARTICLE IX, each of which will survive any termination hereof) will become void and of no effect with no liability on the part of any party (or of any of its Representatives); provided, however, that except in a circumstance where the termination fee is paid by the Company pursuant to Section 8.5(b) below, no such termination will relieve any Person of any liability for damages resulting from material breach of this Agreement that is a consequence of an act or omission intentionally undertaken by the breaching party with the knowledge that such act or omission would result in a material breach of this Agreement (an “Intentional Breach”), including with respect to the making of a representation set forth herein, or would constitute fraud. For purposes of this Section 8.5(a), “fraud” means actual (and not constructive, including claims based on recklessness) common law fraud under Delaware law with respect to the making of an express representation or warranty contained in this Agreement. Parent shall cause the Offer to be terminated immediately after any termination of this Agreement.
(b) In the event that:
(i) this Agreement is terminated by the Company pursuant to Section 8.3(b) (Superior Proposal);
(ii) this Agreement is terminated by Parent pursuant to Section 8.4(b) (Change of Board Recommendation); or
(iii) (A) this Agreement is terminated (x) by either Parent or the Company pursuant to Section 8.2(b) (Outside Date) (but in the case of a termination by the Company, only if at such time Parent would not be prohibited from terminating this Agreement pursuant to the proviso in Section 8.2(b) (Outside Date)) or (y) by Parent pursuant to Section 8.4(a)(i) (Offer Conditions Fail) or Section 8.4(a)(ii) (Material Breach), or (z) by the Company pursuant to Section 8.3(a)(ii) (Offer Expiration or Termination), (B) any Person has publicly disclosed an Acquisition Proposal or an Acquisition Proposal shall have otherwise become publicly known (and has not been irrevocably withdrawn publicly) after the date of this Agreement and prior to such termination and (C) within twelve (12) months after such termination, the Company enters into an Alternative Acquisition Agreement with respect to an Acquisition Proposal (and the transactions contemplated by such Acquisition Proposal are subsequently consummated before or after the expiration of such twelve (12) month period) or the Acquisition Proposal is consummated (provided that, for purposes of clause (C) of this Section 8.5(b)(iii), references to “20%” in the definition of Acquisition Proposal will be substituted for “50%”);
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Then, in any such case, the Company shall pay Parent a termination fee of $1,325,000, by wire transfer of immediately available funds to the account or accounts designated by Parent. Any payment required to be made (1) pursuant to clause (i) of this Section 8.5(b) will be paid concurrently with such termination, (2) pursuant to clause (ii) of this Section 8.5(b) will be paid no later than two (2) Business Days after such termination and (3) pursuant to clause (iii) of this Section 8.5(b) will be payable to Parent upon consummation of the transaction referenced therein. The Company will not be required to pay the termination fee pursuant to this Section 8.5(b) more than once.
(c) In the event the termination fee payable pursuant to Section 8.5(b) is paid to Parent in accordance with Section 8.5(b), (i) Parent’s receipt of the termination fee shall be the sole and exclusive remedy of Parent and Purchaser in respect of any breach of, or inaccuracy contained in, the Company’s covenants, agreements, representations or warranties in this Agreement and (ii) none of the Parent, the Purchaser, any of their respective Affiliates or any other Person shall be entitled to bring or maintain any other claim, action or proceeding against the Company or any of its Affiliates or any Representative of the Company or any of its Affiliates arising out of this Agreement, any of the Contemplated Transactions or any matters forming the basis for such termination.
(d) The Company acknowledges that the agreements contained in Section 8.5(b) are an integral part of the Contemplated Transactions, and that, without these agreements, Parent and Purchaser would not have entered into this Agreement. Accordingly, if the Company fails to promptly pay the amount due pursuant to Section 8.5(b) when due and, in order to obtain such payment, Parent or Purchaser commences a suit that results in a judgment against the Company for the amount set forth in Section 8.5(b), the Company shall pay to Parent or Purchaser interest on such amount at the prime rate as published in the Wall Street Journal in effect on the date such payment was required to be made through the date of payment.
Section 8.6. Expenses. Except as otherwise specifically provided herein, each party shall bear its own expenses in connection with this Agreement and the Contemplated Transactions.
Section 8.7. Amendment and Waiver. This Agreement may not be amended except by an instrument in writing signed by the parties hereto prior to the Acceptance Time. At any time prior to the Acceptance Time, the Company, on the one hand, and Parent and Purchaser, on the other hand, may (a) extend the time for the performance of any of the obligations or other acts of the other, (b) waive any inaccuracies in the representations and warranties of the other contained herein or in any document delivered pursuant hereto and (c) subject to the requirements of applicable Law, waive compliance by the other with any of the agreements or conditions contained herein, except that the Minimum Tender Condition may only be waived by Parent or Purchaser with the prior written consent of the Company. Any such extension or waiver will be valid only if set forth in an instrument in writing signed by the party or parties to be bound thereby. The failure of any party to assert any rights or remedies will not constitute a waiver of such rights or remedies.
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ARTICLE IX
GENERAL PROVISIONS
Section 9.1. Non-Survival of Representations, Warranties, Covenants and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants and agreements, will survive the Effective Time, except for (a) those covenants and agreements contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time and (b) this ARTICLE IX.
Section 9.2. Notices. All notices, requests, claims, demands and other communications hereunder must be in writing and must be given (and will be deemed to have been duly given): (a) when delivered, if delivered in Person, (b) when delivered by email, if delivered by email, which email must state that it is being delivered pursuant to this Section 9.2 and which notice will not be effective unless either (A) a duplicate copy of such email notice is sent on the same day for next Business Day delivery, fees prepaid, via a reputable nationwide overnight courier service or (B) the receiving party delivers a written confirmation of receipt to the sender of such notice (excluding “out of office,” delivery failure or similar automated replies), (c) three (3) Business Days after sending, if sent by registered or certified mail (postage prepaid, return receipt requested) and (d) one (1) Business Day after sending, if sent by overnight courier, in each case, to the respective parties at the following addresses (or at such other address for a party as have been specified by like notice):
(i) if to Parent or Purchaser, to:
Eli Lilly & Company
Corporate Center
Indianapolis, Indiana 46285
Telephone: (317) 276-2000
Attention: Senior Vice President and Head of Corporate Business Development
Email: ***@***
with a copy (which shall not constitute notice) to:
Eli Lilly and Company
Lilly Corporate Center
Indianapolis, IN 46285
Telephone: (317) 276-2000
Attention: Senior Vice President - Transactions and Contracting
Email: ***@***
with an additional copy (which will not constitute notice) to:
Morgan Lewis Bockius LLP
101 Park Avenue
New York, New York 10178-0060
Telephone: (212) 309-6210
Attention: Russell M. Franklin
Email: ***@***
(ii) if to the Company, to:
Sigilon Therapeutics, Inc.
100 Binney Street, Suite 600
Cambridge, MA 02142
Telephone No.: (617) 336-7540
Attention: Chief Legal Officer
Email: ***@***
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with an additional copy (which will not constitute notice) to:
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
Telephone: (617) 951-7663
| (617) 951-7826 | ||
| Attention: | Zachary Blume | |
| Marc Rubenstein | ||
| Email: | ***@*** | |
| ***@*** |
Section 9.3. Certain Definitions. For purposes of this Agreement the term:
“401(k) Plan” has the meaning set forth in Section 6.4(c).
“Acceptance Time” has the meaning set forth in Section 1.1(a)(ii).
“Acquisition Proposal” means any inquiry, offer or proposal made or renewed by a Person or Group (other than Parent or Purchaser) relating to any: (a) direct or indirect issuance, exchange, purchase or other acquisition (in each case, whether in a single transaction or a series of related transactions) by any Person or Group, whether from the Company or any other Person(s), of Shares or other Company Securities representing more than twenty percent (20%) of the Company Common Stock or other voting or equity securities of the Company outstanding after giving effect to the consummation of such issuance, exchange, purchase or other acquisition, including pursuant to a tender offer or exchange offer by any Person or Group that, if consummated in accordance with its terms, would result in such Person or Group beneficially owning more than twenty percent (20%) of the Company Common Stock outstanding after giving effect to the consummation of such tender or exchange offer; (b) direct or indirect purchase, exchange, transfer or other acquisition (including by license, partnership, collaboration, distribution, disposition or revenue-sharing arrangement) (in each case, whether in a single transaction or a series of related transactions) by any Person or Group, or stockholders of any such Person or Group, of more than twenty percent (20%) of the consolidated assets (including stock in its Subsidiary) of the Company and its Subsidiary, taken as a whole (measured by the fair market value thereof as of the date of such purchase or acquisition); or (c) merger, consolidation, business combination, recapitalization, reorganization, liquidation, dissolution or other transaction (in each case, whether in a single transaction or a series of related transactions) involving the Company or its Subsidiary pursuant to which any Person or Group, or stockholders of any such Person or Group (other than the Company), would hold Shares or other Company Securities representing more than twenty percent (20%) of the Company Common Stock or other Company Securities outstanding after giving effect to the consummation of such transaction.
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“Action” means any cause of action, audit, examination, mediation, action, suit, arbitration, proceeding, investigation or other legal proceeding.
“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person. For the purposes of this definition, “controlling,” “controlled” and “control” mean the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
“Affiliate Transaction” has the meaning set forth in Section 4.24.
“Agreement” has the meaning set forth in the Preamble.
“Alternative Acquisition Agreement” has the meaning set forth in Section 6.3(d).
“Antitrust Laws” means any federal, state or foreign law, regulation, or decree designed to prohibit, restrict, or regulate actions for the purpose or effect of monopolization or restraint of trade or significant impediment of effective competition.
“Book-Entry Share” has the meaning set forth Section 3.5(c).
“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings; provided that, in the case of determining a date on which any payment is due hereunder, “Business Day” shall mean any day (other than Saturday or Sunday) on which banks are open in New York, New York.
“CARES Act” has the meaning set forth in Section 4.11(c).
“Cash and Cash Equivalents” means the Company’s and its Subsidiary’s cash and cash equivalents which are highly liquid investments with a maturity of three months or less from the date of purchase determined in accordance with GAAP, applied on a basis consistent with the Company’s application thereof in the Company’s consolidated financial statements.
“Certificate” has the meaning set forth in Section 3.5(b).
“Certificate of Merger” has the meaning set forth in Section 2.2.
“Change of Board Recommendation” means (a) the withdrawal, qualification or modification (in a manner adverse to Parent or Purchaser) of the Company Board Recommendation or the public announcement of any proposal to withdraw, qualify or modify (in a manner adverse to Parent or Purchaser) the Company Board Recommendation (or any resolution or agreement to take any such action), (b) the failure by the Company, within ten (10) Business Days of the commencement of a tender or exchange offer for Shares that constitutes an Acquisition Proposal by a Person other than Parent or any of its Affiliates, to file a Schedule 14D-9 pursuant to Rule 14e-2 and Rule 14d-9 promulgated under the Exchange Act recommending that the holders of the Shares reject such Acquisition Proposal and not tender any Shares into such tender or exchange offer, (c) the adoption, endorsement, approval or recommendation (or any public proposal with respect to the same) of any Acquisition Proposal (or any resolution or agreement to take such action), (d) the failure to include the Company Board Recommendation in the Schedule 14D-9 when disseminated to the holders of Shares pursuant to the terms herein or (e) the failure by the Company Board or a committee thereof to publicly reaffirm the Company Board Recommendation upon receiving a written request from Parent to provide such public reaffirmation following receipt by the Company of a publicly announced Acquisition Proposal by the earlier of ten (10) Business Days following such written request or two (2) Business Days prior to the then-scheduled Expiration Date; provided that Parent may deliver only one (1) such request with respect to any single Acquisition Proposal (other than with respect to material amendments, modifications or supplements thereto).
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“Closing” has the meaning set forth in Section 2.2.
“Closing Amount” has the meaning set forth in Recitals.
“Closing Date” has the meaning set forth in Section 2.2.
“Code” has the meaning set forth in Section 3.7.
“Company” has the meaning set forth in the Preamble.
“Company Balance Sheet Date” means March 31, 2023.
“Company Board” has the meaning set forth in the Recitals.
“Company Board Recommendation” has the meaning set forth in Section 4.2.
“Company Common Stock” has the meaning set forth in the Recitals.
“Company Disclosure Letter” has the meaning set forth in Article IV.
“Company Equity Plan(s)” has the meaning set forth in Section 3.2(a).
“Company ESPP” has the meaning set forth in Section 3.2(a).
“Company Intellectual Property” means all Intellectual Property used or held for use for the operation of the Company’s business.
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“Company Material Adverse Effect” means any change, effect, event, inaccuracy, occurrence, or other matter that (x) would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the business, condition (financial or otherwise), assets, liabilities, operations, or results of operations of the Company and its Subsidiary, taken as a whole, or (y) prevents the ability of the Company to consummate the Contemplated Transactions; provided that any changes, effects, events, inaccuracies, occurrences, or other matters resulting from any of the following will not be deemed to constitute a Company Material Adverse Effect and will be disregarded in determining whether a Company Material Adverse Effect has occurred: (a) matters generally affecting the U.S. or foreign economies, financial or securities markets, or political, legislative, or regulatory conditions, or the industry in which the Company and its Subsidiary, taken as a whole, operate, except to the extent such matters have a materially disproportionate adverse effect on the Company and its Subsidiary, taken as a whole, relative to the impact on other companies in the industry in which the Company and its Subsidiary, taken as a whole, operate; (b) the announcement of this Agreement or the Contemplated Transactions; (c) any change in the market price or trading volume of the Shares; provided that this exception will not preclude a determination that a matter underlying such change has resulted in or contributed to a Company Material Adverse Effect unless excluded under another clause; (d) acts of war or terrorism (including cyberattacks and computer hacking), national emergencies, natural disasters, force majeure events, weather or environmental events or health emergencies, including pandemics (including COVID-19) or epidemics (or the escalation of any of the foregoing), except to the extent such matters have a materially disproportionate adverse effect on the Company and its Subsidiary, taken as a whole, relative to the impact on other companies in the industry in which the Company and its Subsidiary, taken as a whole, operate; (e) changes in Laws or regulations, or the authoritative interpretations thereof, except to the extent such changes have a materially disproportionate adverse effect on the Company and its Subsidiary, taken as a whole, relative to the impact on other companies in the industry in which the Company and its Subsidiary, taken as a whole, operate; (f) the performance of this Agreement and the Contemplated Transactions, including compliance with covenants set forth herein (excluding the requirement that the Company and its Subsidiary operate in the ordinary course of business), or any action taken or omitted to be taken by the Company or its Subsidiary at the express request or with the prior written consent of Parent or Purchaser; (g) the initiation or settlement of any legal proceedings commenced by or involving any holder of Shares (on their own or on behalf of the Company or its Subsidiary) arising out of or related to this Agreement or the Contemplated Transactions; or (h) any failure by the Company or its Subsidiary to meet any internal or analyst projections or forecasts or estimates of revenues, earnings, or other financial metrics for any period; provided that this exception will not preclude a determination that a matter underlying such failure has resulted in or contributed to a Company Material Adverse Effect unless expressly excluded under another clause. Without limiting the generality of the foregoing, any change, effect, event, inaccuracy, occurrence, or other matter (whether or not previously disclosed in any document filed with, or furnished to, the SEC, the Company Disclosure Letter or otherwise) that, individually or in the aggregate, results in an issuance by the FDA of a clinical hold on the investigation of any Product, the result of which would reasonably be expected to result in the termination of, or a delay of six (6) months or more in dosing patients in, such Product, shall be deemed to constitute a Company Material Adverse Effect.
“Company Material Contract” has the meaning set forth in Section 4.12(a).
“Company Organizational Documents” has the meaning set forth in Section 4.1(c).
“Company Plan” means a Plan that the Company or its Subsidiary or an ERISA Affiliate sponsors, maintains, contributes to or is obligated to contribute to, in each case, for the benefit of any current or former officer, director, employee or individual independent contractor or other service provider (who is a natural person) of the Company or its Subsidiary or an ERISA Affiliate, or under or with respect to which the Company or its Subsidiary has any Liability, other than any Plans sponsored or maintained by a Governmental Body. For clarity, “Company Plans” includes “Company Equity Plans” and the “Company ESPP.”
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“Company Real Property” has the meaning set forth in Section 4.10(b).
“Company Registered Intellectual Property” has the meaning set forth in Section 4.13(a).
“Company Restricted Stock Unit” has meaning set forth in Section 3.2(a)(ii).
“Company SEC Documents” has the meaning set forth in Section 4.6(a).
“Company Securities” has the meaning set forth in Section 4.3(e).
“Company Stock Option” has the meaning set forth in Section 3.2(a)(i).
“Company Systems” has the meaning set forth in Section 4.13(j).
“Company Warrants” has the meaning set forth in Section 3.3.
“Compensation Action” has the meaning set forth in Section 6.8.
“Confidentiality Agreement” has the meaning set forth in Section 1.3.
“Contemplated Transactions” means each of the transactions contemplated by this Agreement.
“Contract” means any written or oral agreement, contract, subcontract, lease, sub-lease, occupancy agreement, binding understanding, obligation, promise, instrument, indenture, mortgage, note, option, warranty, purchase order, license, sublicense, commitment or undertaking of any nature, which, in each case, is legally binding upon a party or on any of its Affiliates.
“Copyrights” means all works of authorship (whether or not copyrightable, including all software, whether in source code or object code format) and all copyrights (whether or not registered), including all registrations thereof and applications therefor, and all renewals, extensions, restorations and reversions of the foregoing.
“COVID-19” means the novel coronavirus, SARS-CoV-2 or COVID-19 (and all related strains and sequences), including any intensification, resurgence or any evolutions or mutations thereof, or related or associated epidemics, pandemics, disease outbreaks or public health emergencies.
“Current Employee” has the meaning set forth in Section 6.4(a).
“CVR Agreement” has the meaning set forth in the Recitals.
“CVRs” has the meaning set forth in the Recitals.
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“Determination Notice” means any notice delivered by the Company to Parent pursuant to Section 6.3(e)(i)(B), Section 6.3(e)(ii)(B) or Section 6.3(e)(iii)(B), which (a) in respect of a Superior Proposal, shall specify the identity of the Person who made such Superior Proposal and the material terms and conditions of such Superior Proposal and attach the most current version of the relevant transaction agreement and (b) in respect of an Intervening Event, shall include a reasonably detailed description of the underlying facts giving rise to such action.
“DGCL” has the meaning set forth in the Recitals.
“Dissenting Shares” has the meaning set forth in Section 3.4(a).
“Effective Time” has the meaning set forth in Section 2.2.
“Encapsulation Technology” means the Company’s polymer chemistry platform comprising (a) small molecules which are covalently bonded with (b) biomaterials such as alginate or alginate derivatives to create microspheres for encapsulating therapeutic cells derived from an engineered cell line, for administration to humans or animals, including any improvements or enhancements.
“Environmental Laws” means any Law, relating to (a) the protection, investigation, remediation or restoration of the environment, human health and safety, or natural resources or (b) the handling, use, storage, treatment, transport, disposal, Release or threatened Release of or exposure to any Hazardous Substance.
“ERISA” has the meaning set forth in Section 4.16(d).
“ERISA Affiliate” means any trade or business (whether or not incorporated) which is, or has at any relevant time been, under common control, or treated as a single employer, with the Company or its Subsidiary under Sections 414(b), (c), (m) or (o) of the Code.
“Ex-Im Laws” means all U.S. and non-U.S. Laws relating to export, reexport, transfer, and import controls, including the Export Administration Regulations, the International Traffic in Arms Regulations, the customs and import Laws administered by U.S. Customs and Border Protection, and the EU Dual Use Regulation.
“Exercise Date” has the meaning set forth in Section 3.2(b).
“Exchange Act” has the meaning set forth in Section 1.1(a)(i).
“Exclusive Intellectual Property” means all Intellectual Property that is or has been exclusively licensed to the Company or its Subsidiary.
“Expiration Date” has the meaning set for in Section 1.1(a)(i).
“FCPA” has the meaning set forth in Section 4.19(m).
“FDA” has the meaning set forth in Section 4.19(a).
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“FDA Permits” has the meaning set forth in Section 4.19(a).
“FDCA” has the meaning set forth in Section 4.19(a).
“Federal Health Care Program” has the meaning set forth in 42 U.S.C. 1320a-7b(f).
“Finance Leases” means all obligations for finance leases (determined in accordance with GAAP).
“GAAP” means U.S. generally accepted accounting principles as in effect on the date of this Agreement.
“Good Clinical Practices” means all applicable current Good Clinical Practice requirements for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of Clinical Trials, including, as applicable, (a) as set forth in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use E6, as amended, and any other guidelines for good clinical practice for trials on medicinal products in the Territory, (b) the Declaration of Helsinki (2004) as last amended at the 52nd World Medical Association in October 2000 and any further amendments or clarifications thereto, (c) U.S. Code of Federal Regulations Title 21, Parts 50, 54, 56, 312 and 314, as may be amended from time to time, and (d) the equivalent applicable Laws in any relevant country, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical data and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects.
“Good Laboratory Practices” means the then-current requirements for laboratory activities for pharmaceuticals, as set forth in the FDA’s Good Laboratory Practice regulations as defined in 21 C.F.R. Part 58, and such standards of good laboratory practice as are required by the European Union and other organizations and governmental agencies in countries in which a Product is intended to be sold, to the extent such standards are not less stringent than United States Good Laboratory Practice.
“Good Manufacturing Practices” means all applicable current Good Manufacturing Practices requirements including, as applicable, (a) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 210, 211 and the 600 series, and (b) the equivalent applicable Laws in any relevant country, each as may be amended and applicable from time to time.
“Governmental Body” means any federal, state, provincial, local, municipal, foreign or other governmental or quasi-governmental authority, including, any arbitrator or arbitral body (whether public or private), mediator and applicable securities exchanges, or any department, minister, agency, commission, commissioner, board, subdivision, bureau, agency, instrumentality, court or other tribunal of any of the foregoing.
“Group” has the meaning as used in Section 13 of the Exchange Act.
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“Hazardous Substance” means (a) any petroleum products or byproducts, radioactive materials, asbestos, gasoline, diesel fuel, pesticides, radon, urea formaldehyde, mold, lead or lead-containing materials, polychlorinated biphenyls, per- and polyfluoroalkyl substances, including PFOA, PFOS and GenX or other similarly hazardous substances or (b) any waste, material or substance defined or regulated as a “hazardous substance,” “hazardous material,” “hazardous waste,” “pollutant,” “contaminant,” or terms of similar import under any Environmental Law.
“Healthcare Laws” means, to the extent related to the conduct of Parent’s business or the Company’s or its Subsidiary’s business, as applicable, as of the date of this Agreement, (a) all federal and state fraud and abuse Laws, including, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the federal Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the federal Exclusion Laws (42 U.S.C. § 1320a 7), the Federal Health Care Fraud Law (18 U.S.C. § 1347), Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code, the federal Controlled Substances Act (21 U.S.C. § 801 et. seq.), the International Travel Act of 1961, (18 U.S.C. § 1952), the Foreign Corrupt Practices Act of 1977, state law equivalents to such statutes and the regulations promulgated pursuant to such statutes, (b) the administrative simplification provisions of the Health Insurance Portability and Accountability Act of 1996 (18 U.S.C. §§669, 1035, 1347 and 1518; 42 U.S.C. §1320d et seq.) and the regulations promulgated thereunder, (c) Titles XVIII (42 U.S.C. §1395 et seq.) and XIX (42 U.S.C. §1396 et seq.) of the Social Security Act and the regulations promulgated thereunder, (d) the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (42 U.S.C. §1395w-101 et seq.) and the regulations promulgated thereunder, (e) the so-called federal “Sunshine Law” or Open Payments (42 U.S.C. § 1320a-7h) and state or local Laws regulating or requiring reporting of interactions between pharmaceutical manufacturers and members of the healthcare industry and regulations promulgated thereunder, (f) Laws governing government pricing or price reporting programs and regulations promulgated thereunder, including the Medicaid Drug Rebate Program (42 U.S.C. § 1396r-8) and any state supplemental rebate program, the Public Health Service Act (42 U.S.C. § 256b), the VA Federal Supply Schedule (38 U.S.C. § 8126) or any state pharmaceutical assistance program or U.S. Department of Veterans Affairs agreement, and any successor government programs (g) Title XXII of the Public Health Service Act (42 U.S.C. § 300bb-1 et seq.), (h) the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 et seq.) and the regulations thereunder, (i) the Patient Protection and Affordable Care Act and its companion bill, the Health Care and Education Reconciliation Act of 2010 (42 U.S.C. § 18001 et seq.) and (j) any and all other health care Laws and regulations applicable to Parent, Parent’s Subsidiaries or the Company or the Company’s Subsidiary, or affecting their respective businesses.
“HIPAA” means collectively: (a) the Health Insurance Portability and Accountability Act of 1996 (Pub. L. No. 104-191), including but not limited to its implementing rules and regulations with respect to privacy, security of health information, and transactions and code sets; (b) the Health Information Technology for Economic and Clinical Health Act (Title XIII of the American Recovery and Reinvestment Act of 2009); (c) the Omnibus Rule effective March 26, 2013 (78 Fed. Reg. 5566), and other implementing rules regulations at 45 CFR Parts 160 and 164 and related binding guidance from the United States Department of Health and Human Services and (d) any federal, state and local laws regulating the privacy or security of individually identifiable information, in each case, as the same may be amended, modified or supplemented from time to time.
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“Indebtedness” means, with respect to any Person, without duplication: (a) the principal, accreted value, accrued and unpaid interest, fees and prepayment premiums or penalties, unpaid fees or expenses and other monetary obligations in respect of (i) indebtedness of such Person for borrowed money and (ii) indebtedness evidenced by notes, debentures, bonds, or other similar instruments for the payment of which such Person is liable, (b) all obligations of such Person issued or assumed as the deferred purchase price of property (other than trade payables or accruals incurred in the ordinary course of business), (c) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, (d) all obligations of such Person under Finance Leases; (e) any unpaid payroll Tax liabilities deferred pursuant to Section 2302 of the CARES Act, (f) all obligations of the type referred to in clauses (a) through (e) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations (but solely to the extent of such responsibility or liability), and (g) all obligations of the type referred to in clauses (a) through (f) of other Persons secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person); provided that, if such Person has not assumed such obligations, then the amount of Indebtedness of such Person for purposes of this clause (f) will be equal to the lesser of the amount of the obligations of the holder of such obligations and the fair market value of the assets of such Person which secure such obligations.
“Indemnified Party” has the meaning set forth in Section 6.5(b).
“Initial Expiration Date” has the meaning set forth in Section 1.1(a)(i).
“Intellectual Property” means all rights, title and interest in, or arising out of or associated with intellectual property or other proprietary rights, in each case, whether protected, created or arising under the Laws of the United States or any other jurisdiction worldwide and whether registered or unregistered, including all rights in, arising out of, or associated therewith, including: (a) Trademarks; (b) Patents; (c) Trade Secrets; (d) Copyrights; and (e) internet domain names.
“Intentional Breach” has the meaning set forth in Section 8.5(a).
“Intervening Event” means a change, effect, event, circumstance, occurrence, or other matter material to the Company that was not known or reasonably foreseeable to the Company Board or any committee thereof on the date of this Agreement (or if known, the consequences of which were not known or reasonably foreseeable to the Company Board or any committee thereof as of the date of this Agreement), which change, effect, event, circumstance, occurrence, or other matter, or any consequence thereof, becomes known to or reasonably foreseeable by the Company Board or any committee thereof prior to the Acceptance Time; provided, however, that in no event will any Acquisition Proposal or any inquiry, offer, or proposal that constitutes or would reasonably be expected to lead to an Acquisition Proposal constitute an Intervening Event; provided, further, that in no event shall any of the following constitute or contribute to an Intervening Event: (i) changes in the financial or securities markets or general economic or political conditions in the United States, (ii) changes (including changes of applicable Law) or conditions generally affecting the industry in which the Company and its Subsidiary operate or (iii) the Company’s meeting or exceeding any internal or published budgets, projections, forecasts or predictions of financial performance for any period.
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“Investment Securities” means the Company’s and its Subsidiary’s investment securities, including available for sale marketable debt securities, determined in accordance with GAAP, applied on a basis consistent with the Company’s application thereof in the Company’s consolidated financial statements.
“IP Contracts” means all: (a) Contracts pursuant to which any Person grants to the Company or its Subsidiary any license, sublicense, consent, waiver, covenant not to sue or other right with respect to any Intellectual Property material to the business of the Company and its Subsidiary as of the date of this Agreement, including all Exclusive Intellectual Property (excluding non-exclusive licenses for Off-the-Shelf Software); (b) Contracts pursuant to which the Company or its Subsidiary grants any Person any license, sublicense, consent, waiver, covenant not to sue or other right with respect to any Intellectual Property material to the business of the Company and its Subsidiary as of the date of this Agreement, other than non-exclusive licenses granted to the Company’s customers in the ordinary course of business; (c) co-existence agreements and settlement agreements relating to any Owned Intellectual Property or Exclusive Intellectual Property; (d) Contracts that provide for the invention, creation, conception or development of any Intellectual Property (i) by the Company or its Subsidiary for any Person or (ii) by any other Person for the Company or its Subsidiary; (e) Contracts that provide for the assignment or other transfer of any Intellectual Property (i) to the Company or its Subsidiary by any Person (excluding consulting agreements or employee agreements that contain assignments of Intellectual Property to the Company or its Subsidiary substantially on a form made available to Parent) or (ii) by the Company or its Subsidiary to any Person; and (f) Contracts pursuant to which the Company or its Subsidiary is restricted from using or practicing any Intellectual Property that is material to the continued operation of the business of the Company and its Subsidiary as of the date of this Agreement (excluding customary confidentiality obligations); excluding, in each case ((a),(b), (d), (e) and (f)), Routine Services Contracts entered into in the ordinary course of business.
“IRB” has the meaning set forth in Section 4.19(j).
“Knowledge” of Parent or the Company, as applicable means the actual knowledge, after reasonable inquiry of the chief executive officer and the members of the executive leadership team.
“Labor Agreement” has the meaning set forth in Section 4.12(a)(ii).
“Law” means any foreign or U.S. federal, state or local law (including common law), treaty, act, statute, code, order, ordinance, Permit, rule, regulation, judgment, injunction, decree, writ, constitution, treaty, convention, ruling or other requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body, and, for the sake of clarity, includes, but is not limited to, Healthcare Laws and Environmental Laws.
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“Liability” means, with respect to any Person, any debt, liability, claim, demand, expense, commitment or obligation of that Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, asserted or unasserted, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, primary or secondary, matured or unmatured, billed or unbilled, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of that Person in accordance with GAAP.
“Liens” means any lien, mortgage, security interest, pledge, encumbrance, deed of trust, security interest, claim, lease, charge, option, preemptive right, subscription right, easement, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, encumbrance or restriction.
“Maximum Amount” has the meaning set forth in Section 6.5(c).
“Measurement Date” has the meaning set forth in Section 4.3(a).
“Merger” has the meaning set forth in the Recitals.
“Merger Consideration” has the meaning set forth in Section 3.1(a).
“Minimum Tender Condition” has the meaning set forth in Annex I(a).
“MIT Agreement” means the Exclusive Patent License Agreement, dated as of February 8, 2016, by and between the Massachusetts Institute of Technology and the Company, as amended, modified or otherwise supplemented.
“Nasdaq” has the meaning set forth in Section 1.1(a)(ii).
“Notice Period” means the period beginning at 5:00 p.m. Eastern Time on the day of delivery by the Company to Parent of a Determination Notice (even if such Determination Notice is delivered after 5:00 p.m. Eastern Time) and ending on the fourth (4th) Business Day thereafter at 5:00 p.m. Eastern Time; provided that, with respect to any material change in the terms of any Superior Proposal, the Notice Period will extend until 5:00 p.m. Eastern Time on the second (2nd) Business Day after delivery of such revised Determination Notice.
“OECD Convention” has the meaning set forth in Section 4.19(m).
“Off-the-Shelf Software” means software, other than open source software, obtained from a third party (a) on general, non-negotiated commercial terms and that continues to be widely available on such commercial terms, (b) that is not distributed with or incorporated in any product or services of the Company or its Subsidiary, (c) that is used for business infrastructure or other internal purposes and (d) was licensed for fixed payments of less than $200,000 in the aggregate or annual payments of less than $100,000 per year.
“Offer” has the meaning set forth in the Recitals.
“Offer Conditions” has the meaning set forth in Section 1.1(a)(i).
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“Offer Documents” has the meaning set forth in Section 1.1(b).
“Offer Price” has the meaning set forth in Recitals.
“Option Period” has the meaning set forth in Section 3.2(b).
“Outside Date” has the meaning set forth in Section 8.2(b).
“Owned Intellectual Property” means all Intellectual Property that is owned or purported to be owned by the Company or its Subsidiary.
“Parent” has the meaning set forth in the Preamble.
“Patents” means all patents, issued patents (including issued utility and design patents), and any pending applications for the same, including any divisionals, provisionals, revisions, supplementary protection certificates, continuations, continuations-in-part, reissues, re-examinations, substitutions, extensions and renewals thereof.
“Paying Agent” has the meaning set forth in Section 3.5(a).
“Permits” means all approvals, authorizations, certificates, registrations, exemptions, consents, licenses, orders and permits and other similar authorizations of all Governmental Bodies and all other Persons.
“Permitted Liens” means (a) statutory Liens for current Taxes or other governmental charges not yet due and payable or the amount or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves are established in the financial statements in accordance with GAAP, (b) mechanics’, carriers’, workers’, repairers’, contractors’, subcontractors’, suppliers’ and similar statutory Liens arising or incurred in the ordinary course of business in respect of the construction, maintenance, repair or operation of assets for amounts that are not delinquent, that are not, individually or in the aggregate, significant, and which do not and will not violate or constitute a breach of or default under any Company Real Property lease (with or without notice or lapse of time or both), (c) zoning, entitlement, building and other land use regulations imposed by governmental agencies having jurisdiction over the leased Company Real Property which are not violated by the current use and operation of the leased Company Real Property, (d) covenants, conditions, restrictions, easements and other similar matters of record affecting title to the leased Company Real Property that do not materially impair the occupancy, marketability or use of such leased real property for the purposes for which it is currently used or proposed to be used in connection with the Company’s or its Subsidiary’s business, (e) Liens arising under workers’ compensation, unemployment insurance and social security, (f) purchase money liens for personal property and liens securing rental payments under Finance Leases for personal property, (g) non-exclusive licenses to Intellectual Property entered into in the ordinary course of business, and (h) those matters identified in the Permitted Liens Section of the Company Disclosure Letter, as applicable.
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“Person” means an individual, a partnership, a corporation, a limited liability company, an unlimited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other entity, a governmental entity or any department, agency or political subdivision thereof.
“Personal Information” means data and information concerning an identified or identifiable natural person and any definition for any similar term (e.g., “personal data” or “personally identifiable information” or “PII”) provided by applicable Laws, or by any party hereto in any of its own privacy policies, notices or contracts, all information that identifies, could be used to identify or is otherwise associated with an individual person, whether or not such information is associated with an identified individual person.
“PHSA” has the meaning set forth in Section 4.19(a).
“Plan” means an “employee benefit plan” within the meaning of Section 3(3) of ERISA and any other compensation or benefit plan, policy, program, arrangement or agreement, whether written or unwritten, funded or unfunded, subject to ERISA or not, and covering one or more natural Persons, including any stock purchase, stock option, stock appreciation right, restricted stock, restricted stock unit, performance stock unit, other equity-based, phantom equity, severance, separation, termination, retention, employment, individual consulting, change in control, bonus, incentive, deferred compensation, pension, profit sharing, retirement, supplemental retirement, employee loan, hospital, medical, health, welfare, 401(k), dental, vision, workers’ compensation, disability, life insurance, death benefit, vacation, paid time off, leave of absence, employee assistance, tuition assistance or other fringe benefit plan, policy, program, arrangement or agreement.
“Pre-Closing Period” has the meaning set forth in Section 6.1(a).
“Privacy Laws” mean all foreign or domestic Laws (including HIPAA and the General Data Protection Regulation, as adopted in the European Union or the United Kingdom), legal requirements and self-regulatory guidelines relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (both technical and physical), disposal, destruction, disclosure or transfer (including cross-border) of Personal Information.
“Privacy Policies” has the meaning set forth in Section 4.19(o).
“Processing” has meaning set forth in Section 4.19(o).
“Products” means a product comprising Islet Cells which (a) serve as an (but not necessarily the only) active agent and (b) are encapsulated or otherwise formulated for delivery using a formulation incorporating, or produced by, or otherwise using the Encapsulation Technology.
“Prohibited Payment” has the meaning set forth in Section 4.19(m).
“Purchaser” has the meaning set forth in the Preamble.
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“Purchaser Material Adverse Effect” means any change, effect, event, inaccuracy, occurrence, or other matter that would reasonably be expected to have, individually or in the aggregate, a material adverse effect on the ability of Parent or Purchaser to timely perform its obligations under this Agreement or to timely consummate the Contemplated Transactions.
“Release” means any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal, leaching, migration, or other movement or presence in, into or through the indoor or outdoor environment (including ambient air, surface water, groundwater and surface or subsurface strata) or at or from any property.
“Representative” means the officers, directors, managers, members, employees, accountants, consultants, legal counsel, financial advisors and agents and other agents and representatives of a party.
“Rights Agent” has the meaning set forth in the Recitals.
“Routine Services Contracts” means (a) materials transfer agreements, manufacturing services agreements, clinical contract services agreements, clinical scale agreements, master services agreements or clinical trial agreements, in each case, that grant non-exclusive rights to use Company Intellectual Property solely to conduct research, manufacturing, clinical trial activities, or other services within the scope of the applicable agreement and that do not otherwise involve a grant of rights to use any Company Intellectual Property for the research, supply, manufacturing, development or commercialization of Products or (b) Contracts pursuant to which the Company or its Subsidiary is granted non-exclusive rights to use the Company Systems or any research tools and that do not otherwise involve any assignment, transfer or grant of rights with respect to any Company Intellectual Property (except, with respect to research tools, non-exclusive licenses to use modified versions of the research tools granted back to the provider of such research tools).
“Sanctioned Country” means a country or territory, or the government thereof, which is currently or has in the last five (5) years been the subject or target of any Sanctions (at the time of this Agreement, the Crimea region and so-called Donetsk and Luhansk People’s Republics of Ukraine, Cuba, Iran, North Korea, Venezuela, Sudan and Syria).
“Sanctioned Person” means a Person: (i) listed on any Sanctions or Ex-Im Laws-related list of designated Persons maintained by a Governmental Body, including OFAC’s Specially Designated Nationals and Blocked Persons List, OFAC’s Foreign Sanctions Evaders List, OFAC’s Sectoral Sanctions Identification List, the U.S. Department of Commerce’s Entity, Denied Persons, or Unverified Lists, the U.S. Department of State’s Debarred List, the EU Consolidated List, the UN Security Council Consolidated List, or Her Majesty’s Treasury’s Consolidated List of Financial Targets, (ii) fifty percent (50%) or greater owned or controlled by, or otherwise acting on behalf of, one or more Persons described in clause (i) above, or (iii) located, organized, or resident in, or a national of, or the government, or any agency or instrumentality of the government of, a Sanctioned Country.
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“Sanctions” means any U.S. or non-U.S. laws related to economic or trade sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), the U.S. Department of State, the European Union, any European Union Member State, the United Nations, and Her Majesty’s Treasury of the United Kingdom.
“Sarbanes-Oxley” has the meaning set forth in Section 4.9(d).
“Schedule 14D-9” has the meaning set forth in Section 1.2
“Schedule TO” has the meaning set forth in Section 1.1(b).
“SEC” has the meaning set forth in Section 1.1(a)(i).
“Securities Act” has the meaning set forth in Section 4.6(a).
“Security Incident” has the meaning set forth in Section 4.19(o).
“Share” has the meaning set forth in the Recitals.
“Shares” has the meaning set forth in the Recitals.
“Stockholder List Date” has the meaning set forth in Section 1.3.
“Stockholder Litigation” has the meaning set forth in Section 6.11.
“Studies” has the meaning set forth in Section 4.19(h).
“Subsidiary” means, with respect to any Person, any corporation, partnership, association, limited liability company, unlimited liability company or other business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (b) if a partnership, association, limited liability company, or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association, limited liability company or other business entity if such Person or Persons are allocated a majority of partnership, association, limited liability company or other business entity gains or losses or otherwise control the managing director, managing member, general partner or other managing Person of such partnership, association, limited liability company or other business entity.
“Superior Proposal” means any written bona fide (as reasonably determined by the Company Board in good faith) Acquisition Proposal received after the date of this Agreement that did not, directly or indirectly, result from a material breach of Section 6.3(a) (except the references in the definition thereof (x) to “twenty percent (20%)” will be replaced by “fifty percent (50%)” any (y) to “license”, “partnership”, “collaboration” and “revenue-sharing arrangement” shall be disregarded and deemed deleted) that the Company Board or a committee thereof has determined in good faith, after consultation with outside counsel and its independent financial advisor, is superior to the Acquisition Proposal reflected in this Agreement, and is reasonably likely to be consummated in accordance with its terms, taking into account all of the terms and conditions (including all of the financial, regulatory, financing, conditionality, legal and other terms, as well as certainty of closing) and all other aspects of such Acquisition Proposal (including any changes to the terms of this Agreement proposed by Parent).
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“Surviving Corporation” has the meaning set forth in Section 2.1.
“Tax” or “Taxes” means any and all federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar, including FICA), unemployment, disability, real property, personal property, sales, use, transfer, registration, value-added, alternative or add-on minimum, or other tax of any kind or any charge of any kind in the nature of (or similar to) taxes whatsoever, including any interest, penalty, or addition thereto.
“Tax Returns” means any return, report, election, designation, information return or other document (including schedules or attachments thereto and any amendments thereof) filed or required to be filed with any Governmental Body in connection with the administration, determination, assessment or collection of any Tax.
“Tender and Support Agreement” has the meaning set forth in the Recitals.
“Trade Controls” has the meaning set forth in Section 4.19(n).
“Trade Secrets” means any and all proprietary or confidential information, including trade secrets, know-how, customer, distributor, consumer and supplier lists and data, clinical and technical data, operational data, engineering information, biological, chemical, biochemical, toxicological, pharmacological and metabolic material and information and data relating thereto, formulation, clinical, analytical and stability information and data, inventions (including conceptions or reductions to practice), invention and technical reports, pricing information, research and development information, technology, techniques, procedures, processes, formulae, methods, formulations, discoveries, specifications, designs, drawings, algorithms, plans, improvements, models, techniques and methodologies.
“Trademarks” means trademarks, service marks, corporate names, trade names, brand names, product names, logos, slogans, trade dress and other indicia of source or origin, any applications and registrations for any of the foregoing and all renewals and extensions thereof, and all goodwill associated therewith and symbolized thereby.
“Transfer Taxes” means sales, transfer, stamp, stock transfer, documentary, registration, value added, use, real property transfer and any similar Taxes and fees.
“Treasury Regulations” has the meaning set forth in Section 3.7.
“UK Bribery Act” has the meaning set forth in Section 4.19(m).
“WARN” has the meaning set forth in Section 4.18(b).
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Section 9.4. Severability. If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or incapable of being enforced by any rule, law or public policy, the remaining provisions of this Agreement will be enforced so as to conform to the original intent of the parties as closely as possible in an acceptable manner so that the Contemplated Transactions are fulfilled to the fullest extent possible.
Section 9.5. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties; provided that Purchaser may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to Parent or to any direct or indirect wholly-owned Subsidiary of Parent, but no such assignment shall relieve Purchaser of any of its obligations under this Agreement; provided, further, that any such assignment shall not take place after the commencement of the Offer and shall not otherwise materially impede or delay the consummation of the Contemplated Transactions or otherwise materially impede the rights of the stockholders of the Company under this Agreement. Any purported assignment without such consent shall be void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 9.6. Entire Agreement; Third-Party Beneficiaries. This Agreement (including the Company Disclosure Letter and the exhibits, annexes, and instruments referred to herein) and the Tender and Support Agreements constitute the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; provided, however, that the Confidentiality Agreement will survive the execution or termination of this Agreement and remains in full force and effect until the expiration thereunder; provided, further, that, if the Effective Time occurs, the Confidentiality Agreement shall automatically terminate and be of no further force and effect. Except for (a) the rights of the holders of Shares to receive the Offer Price and the Merger Consideration, the holders of Company Stock Options and Company Restricted Stock Units to receive the consideration described in Section 3.2, and the holders of Company Warrants to receive the consideration described in Section 3.3, (b) the right of the Company, on behalf of the holders of Shares and the holders of Company Stock Options, Company Restricted Stock Units and Company Warrants (each of which are third party beneficiaries hereunder only to the extent required for this clause (b) to be enforceable), to pursue specific performance as set forth in Section 9.15 or, if specific performance is not sought or granted as a remedy, damages (which damages the parties agree may, if ordered by a court of competent jurisdiction, be based upon a decrease in share value or lost premium) in the event of Parent’s or Purchaser’s breach of this Agreement, and (c) as provided in Section 6.5 (which is intended for the benefit of each Indemnified Party, all of whom will be third-party beneficiaries of these provisions), this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies.
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Section 9.7. Governing Law. This Agreement will be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof.
Section 9.8. Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Agreement.
Section 9.9. Counterparts. This Agreement may be executed and delivered (including by email transmission of executed signatures in electronic format (including “pdf”) and other electronic signatures (including DocuSign and AdobeSign)) in two (2) or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement.
Section 9.10. Performance Guaranty. Parent hereby guarantees the due, prompt and faithful performance and discharge by, and compliance with, all of the obligations, covenants, terms, conditions and undertakings of Purchaser under this Agreement in accordance with the terms hereof, including any such obligations, covenants, terms, conditions and undertakings that are required to be performed discharged or complied with following the Effective Time.
Section 9.11. Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereto hereby (i) expressly and irrevocably submits to the exclusive personal jurisdiction of the Court of Chancery of the State of Delaware or if such Court of Chancery lacks subject matter jurisdiction, the United States District Court for the District of Delaware, in the event any dispute arises out of this Agreement, the Offer, the Merger, or the Contemplated Transactions, (ii) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it shall not bring any action relating to this Agreement, the Offer, the Merger, or the Contemplated Transactions in any court other than the Court of Chancery of the State of Delaware or if such Court of Chancery lacks subject matter jurisdiction, the United States District Court for the District of Delaware; provided that each of the parties has the right to bring any action or proceeding for enforcement of a judgment entered by such court in any other court or jurisdiction.
(b) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATION OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (IV) EACH OTHER PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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Section 9.12. Service of Process. Each party irrevocably consents to the service of process outside the territorial jurisdiction of the courts referred to in Section 9.11(a) in any such action or proceeding by mailing copies thereof by registered United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 9.2. However, the foregoing will not limit the right of a party to effect service of process on the other party by any other legally available method.
Section 9.13. Remedies. Except as otherwise provided in this Agreement, the rights and remedies provided in this Agreement shall be cumulative and not exclusive of any rights or remedies provided by applicable Law, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.
Section 9.14. Cooperation. Except from and after a Change of Board Recommendation, the parties agree to provide reasonable cooperation with each other and to execute and deliver such further documents, certificates, agreements and instruments and to take such actions as may be reasonably requested by the other parties to evidence or effect the Contemplated Transactions and to carry out the intent and purpose of this Agreement (including providing Parent with information reasonably requested to support calculations under Section 280G of the Code).
Section 9.15. Specific Performance.
(a) The parties hereto acknowledge and agree that, in the event of any breach of this Agreement, irreparable harm would occur that monetary damages could not make whole. It is accordingly agreed that (i) each party hereto will be entitled, in addition to any other remedy to which it may be entitled at law or in equity, to compel specific performance to prevent or restrain breaches or threatened breaches of this Agreement in any action without the posting of a bond or undertaking and (ii) the parties hereto will, and hereby do, waive, in any action for specific performance, the defense of adequacy of a remedy at law and any other objections to specific performance of this Agreement.
(b) Notwithstanding the parties’ rights to specific performance pursuant to Section 9.15(a), each party may pursue any other remedy available to it at law or in equity, including monetary damages.
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Section 9.16. Interpretation. When reference is made in this Agreement to an Article, Section or Exhibit, such reference will refer to Articles and Sections of, and Exhibits to, this Agreement unless otherwise indicated. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” All references to “dollars” or “$” shall refer to the lawful currency of the United States. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby,” “hereto,” and “hereunder” and words of similar import when used in this Agreement will refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “or” will not be exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” Whenever used in this Agreement, any noun or pronoun will be deemed to include the plural as well as the singular and to cover all genders. Any reference to any Person shall be construed to include such Person’s successors and assigns. The words “made available” and words of similar import refer to documents posted to the virtual data room hosted by Datasite titled “Skywalker Shenandoah,” or otherwise delivered via e-mail by or on behalf of the Company to Parent or Purchaser at least two (2) Business Days prior to the date hereof. The words “ordinary course of business” shall mean the ordinary course of business consistent with past practice. This Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption of burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of this Agreement.
[Remainder of Page Left Blank Intentionally]
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IN WITNESS WHEREOF, each of Parent, Purchaser and the Company has caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| ELI LILLY AND COMPANY | |
| By: | /s/ David A. Ricks |
| Name: | David A. Ricks |
| Title: | Chair and Chief Executive Officer |
[Signature Page to Agreement and Plan of Merger]
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company has caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| SHENANDOAH ACQUISITION CORPORATION | |
| By: | /s/ Philip L. Johnson |
| Name: | Philip L. Johnson |
| Title: | President |
[Signature Page to Agreement and Plan of Merger]
IN WITNESS WHEREOF, each of Parent, Purchaser and the Company has caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
| SIGILON THERAPEUTICS, INC. | |
| By: | /s/ Rogerio Vivaldi Coelho, M.D. |
| Name: | Rogerio Vivaldi Coelho, M.D. |
| Title: | President and Chief Executive Officer |
[Signature Page to Agreement and Plan of Merger]
Annex I
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex I and not otherwise defined herein have the meanings assigned to them in the Agreement.
1. Purchaser is not required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares validly tendered and not validly withdrawn in connection with the Offer, unless, immediately prior to the then applicable Expiration Date:
(a) there have been validly tendered in the Offer and “received” by the “depositary” (as such terms are defined in Section 251(h) of the DGCL), and not validly withdrawn prior to the Expiration Date that number of Shares that, together with the number of Shares, if any, then owned beneficially by Parent and Purchaser (together with their wholly owned Subsidiaries), represents a majority of the Shares outstanding as of the consummation of the Offer (such condition in this Paragraph 1(a) being, the “Minimum Tender Condition”); and
2. Additionally, Purchaser is not required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Purchaser’s obligation to pay for or return tendered Shares promptly after the termination or withdrawal of the Offer), to pay for any Shares validly tendered and not validly withdrawn in connection with the Offer if, immediately prior to the then applicable Expiration Date, any of the following conditions exist:
(a) (i) any court of competent jurisdiction or other Governmental Body has issued an order, decree, or ruling or taken any other action restraining, enjoining, or otherwise prohibiting the Offer or the Merger or (ii) any Law applicable to the Offer or the Merger restraining, enjoining, or otherwise prohibiting the Offer or the Merger shall be in effect;
(b) (i) the Company has breached or failed to comply in any material respect with any of its agreements or covenants to be performed or complied with by it under the Agreement on or before the Acceptance Time, (ii) the representations and warranties of the Company contained in the Agreement (other than the representations and warranties set forth in Section 4.1 (Organization and Corporate Power), Section 4.2 (Authorization; Valid and Binding Agreement), Section 4.3 (Capital Stock), Section 4.8(a) (Absence of Certain Developments); Section 4.20 (Brokerage), Section 4.22 (Opinion) and Section 4.23 (No Vote Required)) and that (x) are not made as of a specific date are not true and correct as of the Expiration Date, as though made on and as of the Expiration Date and (y) are made as of a specific date are not true as of such date, in each case, except where the failure of such representations and warranties to be true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect”) has not had a Company Material Adverse Effect, (iii) the representation set forth in Section 4.8(a) (Absence of Certain Developments) is not true in all respects, as of the date of this Agreement and the Expiration Date as though made on and as of such date and time, (iv) the representations and warranties set forth in Section 4.1 (Organization and Corporate Power), Section 4.2 (Authorization; Valid and Binding Agreement), Section 4.3 (other than Section 4.3(a), (b) or (e)) (Capital Stock), Section 4.20 (Brokerage), Section 4.22 (Opinion) and Section 4.23 (No Vote Required) are not true and correct in all respects, except for immaterial inaccuracies, as of the Expiration Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty is not true and correct, except for immaterial inaccuracies, as of such earlier date) or (v) the representations and warranties set forth in Section 4.3(a), (b) and (e) (Capital Stock) are not true and correct in all respects, except for any de minimis inaccuracies, as of the Expiration Date as though made on and as of such date and time;
(c) the Company has not delivered to Parent a certificate dated as of the Expiration Date signed on behalf of the Company by a senior executive officer of the Company to the effect that the conditions set forth in Paragraphs 2(b) and 2(d) have been satisfied as of the Expiration Date;
(d) since the date of the Agreement, there has occurred any change, event, occurrence or effect that has had a Company Material Adverse Effect; or
(e) the Agreement has been terminated pursuant to its terms.
The conditions set forth in Paragraph 2 of this Annex I are for the benefit of Parent and Purchaser and (except for the conditions set forth in clauses 1(a) and 2(e)) may be waived by Parent or Purchaser in whole or in part at any time or from time to time prior to the Expiration Date, in each case, subject to the terms and conditions of the Agreement and the applicable rules and regulations of the SEC.
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Annex II
CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION
Annex III
BYLAWS OF THE SURVIVING CORPORATION
Annex IV
CONTINGENT VALUE RIGHTS AGREEMENT
