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AGREEMENT AND PLAN OF MERGER
AMONG
ALPHA-BETA TECHNOLOGY, INC.,
SMITHFIELDAB CORP.,
MYCOTOX, INC.
AND
CLAUDE P. SELITRENNIKOFF
THE PRINCIPAL STOCKHOLDER OF
MYCOTOX, INC.
Dated as of May 30, 1997
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AGREEMENT AND PLAN OF MERGER
INDEX
Page
SECTION 1. THE MERGER................................................1
1.1 The Merger................................................1
1.2 Effective Time............................................2
1.3 Effect of the Merger......................................2
1.4 Conversion of Securities..................................2
1.5 Stock Options.............................................3
1.6 Initial Payment...........................................3
1.7 Additional Payments.......................................4
1.8 Vesting Payment...........................................5
1.9 Further Assurances........................................6
1.10 Principal Stockholder Approval and Waiver.................6
1.11 Withholding Taxes.........................................6
1.12 Death or Disability.......................................6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDER...................................6
2.1 Making of Representations and Warranties..................6
2.2 Organization and Qualifications of the Company............7
2.3 Capital Stock of the Company; Beneficial Ownership........7
2.4 Subsidiaries..............................................8
2.5 Authority of the Company and the Principal Stockholder....8
2.6 Real and Personal Property...............................10
2.7 Financial Statements.....................................11
2.8 Taxes....................................................11
2.9 Absence of Certain Changes...............................12
2.10 Ordinary Course..........................................14
2.11 Banking Relations........................................14
2.12 Intellectual Property....................................14
2.13 Contracts................................................16
2.14 Litigation...............................................17
2.15 Compliance with Laws.....................................18
2.16 Insurance................................................18
2.17 Powers of Attorney.......................................18
2.18 Finder's Fee.............................................18
2.19 Permits; Burdensome Agreements...........................18
2.20 Corporate Records; Copies of Documents...................18
2.21 Transactions with Interested Persons.....................19
2.22 Employee Benefit Programs................................19
2.23 Environmental Matters....................................19
(i)
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2.24 List of Directors and Officers...........................20
2.25 Employees; Labor Matters.................................20
2.26 Stock Repurchase.........................................21
2.27 Disclosure...............................................21
2.28 Continuity of Shareholder Interest.......................21
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE
PRINCIPAL STOCKHOLDER..................................22
SECTION 4. COVENANTS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDER............................................22
4.1 Making of Covenants and Agreements.......................22
4.2 Notice of Default........................................23
4.3 Consummation of Agreement................................23
4.4 Cooperation of the Company and
Principal Stockholder....................................23
4.5 No Solicitation of Other Offers..........................23
4.6 Confidentiality..........................................23
4.7 Continuity of Stockholder Interest.......................24
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF AB AND
ACQUISITION CORP.......................................24
5.1 Making of Representations and Warranties.................24
5.2 Organization.............................................24
5.3 Capital Stock of AB......................................24
5.4 Authority................................................25
5.5 Finder's Fee.............................................25
5.6 Confidentiality..........................................25
SECTION 6. CONDITIONS...............................................26
6.1 Conditions to the Obligations of AB and the
Acquisition Corp.......................................26
6.2 Conditions to Obligations of the Company and the
Principal Stockholder..................................28
SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED..............29
7.1 Termination..............................................29
7.2 Effect of Termination....................................30
7.3 Right to Proceed.........................................30
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.............30
SECTION 9. INDEMNIFICATION..........................................31
9.1 Indemnification by the Principal Stockholder.............31
9.2 Limitations on Indemnification by the Stockholder........32
9.3 Notice; Defense of Claims................................32
9.4 Satisfaction of Stockholder Indemnification Obligations..33
(ii)
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SECTION 10. MISCELLANEOUS.................................................33
10.1 Fees and Expenses........................................33
10.2 Governing Law............................................34
10.3 Notices..................................................34
10.4 Entire Agreement.........................................36
10.5 Assignability; Binding Effect............................36
10.6 Captions and Gender......................................36
10.7 Execution in Counterparts................................36
10.8 Amendments...............................................36
10.9 Publicity and Disclosures................................36
10.10 Consent to Jurisdiction..................................36
10.11 Specific Performance.....................................36
10.12 Arbitration..............................................37
EXHIBITS
Exhibit A - List of Security Holders
Exhibit B - Form of Opinion of Counsel to the Company
Exhibit C - Form of Employment Agreement
Exhibit D - Form of Confidential and Proprietary Information Agreement
Exhibit E - Form of General Release
Exhibit F - Form of Registration Rights Agreement
Exhibit G - Form of Opinion of Counsel to AB and the Acquisition Corp
SCHEDULES
Schedule 1.7(b)(ii) - Screening Contract Values
Schedule 2.3(a) - Stock Options
Schedule 2.5(a) - Violation of Corporate Documents, Agreements, etc.
Schedule 2.5(c) - Principal Stockholder Agreements
Schedule 2.6(a) - Leased Real Property
Schedule 2.6(b) - Personal Property
Schedule 2.7 - Financial Statements
Schedule 2.8 - Taxes
Schedule 2.9 - Absence of Certain Changes
Schedule 2.11 - Banking Relations
Schedule 2.12 - Intellectual Property
Schedule 2.13 - Contracts
Schedule 2.16 - Insurance
Schedule 2.18 - Finder's Fee
Schedule 2.19 - Permits; Burdensome Agreements
Schedule 2.21 - Transactions with Interested Persons
(iii)
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Schedule 2.23 - Environmental Matters
Schedule 2.24 - List of Directors and Officers
Schedule 2.25 - Employees; Severance Payments
(iv)
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of May 30, 1997 (the "Agreement"),
by and among ALPHA-BETA TECHNOLOGY, INC., a Massachusetts corporation ("AB"),
SMITHFIELDAB CORP., a Massachusetts corporation (the "Acquisition Corp"),
MYCOTOX, INC., a Colorado corporation (the "Company"), and CLAUDE P.
SELITRENNIKOFF, the holder of 100% of the outstanding capital stock of the
Company on an as converted, fully diluted basis (the "Principal Stockholder").
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the Colorado Business Corporation Act ("Colorado Law") and
the Business Corporation Law of The Commonwealth of Massachusetts
("Massachusetts Law"), AB, the Acquisition Corp and the Company desire to enter
into a business combination transaction pursuant to which the Company will merge
with and into the Acquisition Corp (the "Merger");
WHEREAS, the Board of Directors of the Company has adopted a resolution
approving this Agreement pursuant to Section 7-111-101 et. seq. of Colorado Law;
WHEREAS, the Board of Directors of the Acquisition Corp has adopted a
resolution approving this Agreement;
WHEREAS, the Principal Stockholder, holder of 100% of the capital stock of
the Company on an as converted, fully diluted basis, has adopted this Agreement
as sole stockholder of the Company in accordance with Section 7-111-101 et. seq.
of Colorado Law;
WHEREAS, AB, the sole stockholder of the Acquisition Corp, has adopted this
Agreement in accordance with Section 78 of Massachusetts Law.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, AB,
the Acquisition Corp, the Company and the Principal Stockholder hereby agree as
follows:
SECTION 1. THE MERGER.
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1.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the relevant provisions of Colorado Law
and Massachusetts Law, at the Effective Time (as defined in Section 1.2), the
Company shall be merged with and into the Acquisition Corp. As a result of the
Merger, the separate corporate existence of the Company shall cease and the
Acquisition Corp shall continue as the surviving corporation of the Merger (the
"Surviving Corporation") as a corporation organized under Massachusetts Law.
1.2 EFFECTIVE TIME. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, a closing
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(the "Closing") will be held on June 9, 1997 at a mutually agreed upon location
(or such other date as the parties may agree) or, if all of the conditions to
the obligations of the parties hereto have not been satisfied or waived by such
date, on such mutually agreeable later date as soon as practicable after the
satisfaction or waiver of all conditions to the obligations of the parties
hereto. As of the Closing, the parties hereto shall cause the Merger to be
consummated by filing articles of merger with the Secretary of State for the
State of Colorado (the "Colorado Articles of Merger") in such form as required
by, and executed in accordance with the relevant provisions of, Colorado Law and
articles of merger with the Secretary of The Commonwealth of Massachusetts (the
"Massachusetts Articles of Merger") in such form as required by, and executed in
accordance with the relevant provisions of, Massachusetts Law (the date and time
of such filings being the "Effective Time").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in Section 80 of Massachusetts Law. Without limiting the
generality of the foregoing and subject to Section 80 of Massachusetts Law, at
the Effective Time, except as otherwise provided herein, all of the property,
rights, privileges, powers and franchises of the Company and the Acquisition
Corp shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and the Acquisition Corp shall become the debts,
liabilities and duties of the Surviving Corporation. At the Effective Time, the
Articles of Organization of the Acquisition Corp as in effect immediately prior
to the Effective Time shall become the Articles of Organization of the Surviving
Corporation and the By-Laws of the Acquisition Corp as in effect immediately
prior to the Effective Time shall become the By-Laws of the Surviving
Corporation, PROVIDED, HOWEVER, that the name of the Surviving Corporation shall
be changed to "MycoTox, Inc." and the purposes of the Surviving Corporation
shall be changed to be as set forth below. At the Effective Time, the initial
directors of the Surviving Corporation shall be Spiros Jamas, D. Davidson
Easson, Jr. and Claude Selitrennikoff. The initial officers of the Surviving
Corporation shall be as specified in a resolution of the Board of Directors
adopted after the Effective Time. The purposes of the Surviving Corporation
shall be to develop, commercialize and market biotechnology products and
processes, and to carry on any other business or activity which may be lawfully
carried on by a corporation organized under Chapter 156B of the Massachusetts
General Laws, whether or not referred to in the preceding portion of this
sentence.
1.4 CONVERSION OF SECURITIES. At the Effective Time and without any action
on the part of AB, the Acquisition Corp, the Company, the Principal Stockholder
or any other holders of any of the securities of any of AB, the Company or the
Acquisition Corp:
(a) each share of the Company's common stock, no par value per share
(the "Common Stock"), issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive the following consideration
without interest thereon and only upon the surrender of the certificate formerly
representing such share of Common Stock free and clear of all liens, claims and
encumbrances: (i) at the Effective Time, the Per Share Initial Stock Payment (as
defined in Section 1.6(a) below) and the Per Share Cash Payment (as defined in
Section 1.6(b) below); (ii) upon the occurrence of an Additional Payment Event
(as
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determined in accordance with Section 1.7 below), a Per Share Additional Payment
(as defined in Section 1.7(a) below); and (iii) upon the occurrence of the
Vesting Event (as defined in Section 1.8(b) below), a Per Share Vesting Payment
(as defined in Section 1.8(a) below);
(b) each share of Common Stock held in the treasury of the Company
immediately prior to the Effective Time shall automatically be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto;
(c) the stock transfer books of the Company shall be closed, and there
shall be no further registration or transfers of shares of Common Stock
thereafter on the records of the Company.
1.5 STOCK OPTIONS. Prior to the date hereof, the Board of Directors of the
Company has adopted such resolutions and the Company has taken such actions to
make, and has made, exercisable each outstanding option, warrant or other right
to purchase a share of Common Stock (the "Options"), whether granted under the
MycoTox Employee Stock Option Plan (the "Stock Option Plan") or otherwise
(whether or not such Option was otherwise exercisable). In connection therewith,
the Company has notified all holders of Options of each such holder's right to
exercise his or her Options and has provided such holders with a reasonable time
to exercise such Options. In addition, the Company has taken all actions
necessary to ensure that (i) all Options, to the extent not exercised as of the
date hereof, have been terminated and canceled and are of no further force or
effect, and (ii) the Stock Option Plan and any and all other outstanding option
arrangements or plans of the Company have been terminated. The Company hereby
represents that as of the date hereof, no Option holder or other participant in
the Stock Option Plan has any right to acquire any equity securities of the
Company, the Acquisition Corp, AB, the Surviving Corporation or any subsidiary
or affiliate thereof, except pursuant to this Agreement and the transactions
contemplated hereby.
1.6 INITIAL PAYMENT.
(a) The aggregate number of shares of AB's common stock, par value
$.01 per share (the "AB Common Stock"), issuable to the holders of the Common
Stock at the Effective Time (the "Initial Stock Payment") shall be 56,818;
however, in lieu of issuing any fractional shares which each Stockholder would
otherwise receive based upon a pro rata allocation, AB shall be entitled to pay
the holders of Common Stock cash in an amount equal to such fraction multiplied
by $8.80 (the "Initial Payment Market Value Price"). The aggregate Per Share
Initial Stock Payment (as described below) for each Stockholder is set forth on
EXHIBIT A next to such Stockholder's name, such aggregate Per Share Initial
Stock Payment being equal to each Stockholder's pro rata portion of the Initial
Stock Payment (on a per share basis, the "Per Share Initial Stock Payment"). The
shares of AB Common Stock issued as the Initial Stock Payment shall be subject
to registration with the Securities and Exchange Commission (the "SEC") in
accordance with the terms and conditions of the Registration Rights Agreement
substantially in the form as EXHIBIT G attached hereto (the "Registration Rights
Agreement").
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(b) The aggregate Per Share Cash Payment (as defined below) for each
Stockholder is set forth on EXHIBIT A next to such Stockholder's name. The Per
Share Cash Payment shall be the quotient obtained by dividing (i) $487,500 (such
amount being equal to $500,000 minus the $12,500 purchase price reduction
referenced in Section 10.1(b)(i)) by (ii) the Fully-Diluted Share Number.
(c) The Per Share Initial Stock Payment and the Per Share Cash Payment
shall be paid to the Stockholders at the addresses as set forth on EXHIBIT A
attached hereto.
1.7 ADDITIONAL PAYMENTS.
(a) Upon the occurrence of an Additional Payment Event (as determined
below) prior to the fourth anniversary of the date of the Closing (the
"Expiration Date"), an additional aggregate number of shares of AB Common Stock
will be issued on the corresponding Additional Payment Distribution Date (as
defined below) to the holders of Common Stock immediately prior to the Effective
Time (an "Additional Payment") equal to the quotient obtained by dividing
$500,000 (reduced by $12,500 in the case of the first, as a matter of time, to
occur of the Additional Payments Events) by the average closing price for a
share of AB Common Stock on the Nasdaq National Market for the 5 consecutive
trading days preceding the corresponding Additional Payment Determination Date
(as defined below) (such average closing price being referred to herein as a
"Additional Payment Market Value Price"). The corresponding Per Share Additional
Payment shall be the quotient obtained by dividing: (i) the total number of
shares which constitute the Additional Payment to be issued upon the occurrence
of a particular Additional Payment Event by (ii) the Fully-Diluted Share Number;
PROVIDED, HOWEVER, that in lieu of issuing any fractional shares, AB shall be
entitled to pay the holders of Common Stock immediately prior to the Effective
Time cash in an amount equal to such fraction multiplied by the Additional
Payment Market Value Price. Any Per Share Additional Payment shall be paid to
the Stockholders at the addresses set forth on EXHIBIT A hereto promptly
following the applicable Additional Payment Determination Date. Any shares of AB
Common Stock issued as an Additional Payment shall be subject to registration
with the SEC in accordance with the terms and conditions of the Registration
Rights Agreement.
(b) For purposes of this Section 1.7, a determination (as provided in
Section 1.7(c)) that the Surviving Corporation's has satisfied either of the
following performance goals shall each constitute an Additional Payment Event:
(i) the identification of an anti-fungal lead candidate from
AB's internal development program, or in-licensed from a
third party, that has demonstrated in vitro anti-fungal
activity against CANDIDA ALBICANS and ASPERGILLUS FUMIGATUS
and IN VIVO anti-fungal activity in an animal model of
systemic or topical fungemia; or
(ii) the generation of gross revenues, measured in accordance
with generally accepted accounting principles (except as
otherwise
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provided below), in excess of $1,000,000 in any twelve month
period from the MycoSelect screening business (including the
retail value of screening contracts determined in accordance
with SCHEDULE 1.7(b)(ii) when entered into in exchange for
future revenue participation and measured as of the date of
execution of such screening contracts), grants and proceeds
from license agreements.
Each Additional Payment Event listed above may be achieved on one occasion
only, so that a maximum of two Additional Payments could be earned if a
determination is made that both of the above-referenced Additional Payment
Events had been achieved and a minimum of zero Additional Payments could be
earned if a determination is made that neither of the above-referenced
Additional Payment Events has been achieved by the Expiration Date.
(c) The determination of whether either of the above performance goals
has been achieved by the Surviving Corporation shall be made by the Board of
Directors of AB in good faith (the date of any such determination being referred
to herein as an "Additional Payment Determination Date"). Any controversy or
dispute among the parties hereto arising in connection with such determination
shall be resolved in accordance with Section 10.12.
(d) Notwithstanding anything in this Agreement to the contrary, any
Additional Payment shall be subject to set-off against any indemnification
obligations arising under Section 9.1 of this Agreement.
1.8 VESTING PAYMENT.
(a) Upon the occurrence of the Vesting Event (as determined below),
113,636 additional shares of AB Common Stock (the "Vesting Payment") will be
issued to the holders of Common Stock immediately prior to the Effective Time;
however, in lieu of issuing any fractional shares which each Stockholder would
otherwise receive upon a pro rata allocation, AB shall be entitled to pay the
holders of Common Stock immediately prior to the Effective Time cash in an
amount equal to such fraction multiplied by the Initial Payment Market Value
Price. The aggregate Per Share Vesting Payment (as defined below) for each
Stockholder is set forth on EXHIBIT A next to such Stockholder's name, such
aggregate Per Share Vesting Payment being equal to each Stockholder's pro rata
portion of the Vesting Payment (on a per share basis, the "Per Share Vesting
Payment"). The Per Share Vesting Payment shall be paid to the Stockholders at
the addresses set forth on EXHIBIT A hereto promptly following the occurrence of
the Vesting Event. The shares of AB Common stock issued as the Vesting Payment
shall be subject to registration with the SEC in accordance with the terms and
conditions of the Registration Rights Agreement.
(b) For purposes of this Section 1.8, the Vesting Event shall occur on
the first anniversary of the Closing, which anniversary date will be June __,
1998. The Vesting Payment may be achieved on one occasion only. Any controversy
or dispute among the parties
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hereto arising in connection with the Vesting Payment shall be resolved in
accordance with Section 10.12.
(c) Notwithstanding anything in this Agreement to the contrary, the
Vesting Payment shall be subject to set-off against any indemnification
obligations arising under Section 9.1 of this Agreement.
1.9 FURTHER ASSURANCES. The Principal Stockholder from time to time at the
request of AB and without further consideration shall execute and deliver
further instruments of transfer and assignment and take such other action, in
each case as AB may reasonably require to more effectively transfer, assign to
and vest in AB and/or the Surviving Corporation the Common Stock and all rights
thereto and all rights of the Company in the Company's assets, business,
intellectual property and technology and to fully implement the provisions of
this Agreement in accordance with its terms.
1.10 PRINCIPAL STOCKHOLDER APPROVAL AND WAIVER. The Principal Stockholder
agrees that his execution and delivery of this Agreement shall constitute his
vote for the adoption of this Agreement in accordance with, and his written
waiver of any notice required by or appraisal rights with respect to the
transactions contemplated hereby arising under, Colorado Law.
1.11 WITHHOLDING TAXES. All payments pursuant to this Agreement will be net
of applicable withholding taxes which are required to be paid, and the parties
hereto will cooperate in ensuring that the proper amounts are withheld and paid
over to the appropriate authorities and that all applicable forms which AB
reasonably determines need to be filed are so filed with the appropriate
authorities.
1.12 DEATH OR DISABILITY. The death or disability of a Stockholder shall
not affect the right of a Stockholder to receive any payment to which such
Stockholder is otherwise entitled pursuant to the terms of this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
- --------- ---------------------------------------------------------------
STOCKHOLDER.
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2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement to
AB and the Acquisition Corp to enter into this Agreement and consummate the
transactions contemplated hereby, the Company and the Principal Stockholder
jointly and severally hereby make to AB and the Acquisition Corp the
representations and warranties contained in this Section 2; PROVIDED, HOWEVER,
that neither the Principal Stockholder nor any other security holder of the
Company immediately prior to the Effective Time shall have any right of
indemnity or contribution from the Company or the Surviving Corporation with
respect to any breach of the representations or warranties hereunder.
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2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Colorado with full corporate power and authority to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is currently conducted or
proposed to be conducted. The copies of the Company's Articles of Incorporation,
as amended to date, certified by the Secretary of State for the State of
Colorado and of the Company's By-laws, as amended to date, certified by the
Company's Secretary, and heretofore delivered to AB's counsel, are complete and
correct, and no amendments thereto are pending. The Company is not in violation
of any term of its Articles of Incorporation or By-laws. The Company is not
qualified to do business as a foreign corporation in any other jurisdiction, and
it is not required to be so qualified to conduct its business or own its
property in any other jurisdiction.
2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.
(a) The authorized capital stock of the Company consists of (i)
500,000 shares of Common Stock, of which 100,000 shares are duly and validly
issued, outstanding, fully paid and non-assessable and of which 400,000 shares
are authorized but unissued, and (ii) 500,000 shares of undesignated capital
stock, of which no shares have ever been issued. SCHEDULE 2.3(a) sets forth a
list of all of the holders of Options and the number of shares of Common Stock
each Option holder was entitled to receive upon exercise of such Options as of
the time immediately prior to the Closing. All such Options listed on SCHEDULE
2.3(a) have been exercised or terminated in accordance with Section 1.5. As of
the date hereof, there are no outstanding Options or warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
the Common Stock of the Company. There are no rights of first refusal,
preemptive rights, registration rights, restrictions on transfer or adverse
claims with respect to the Company's Common Stock. None of the Company's Common
Stock has been issued in violation of any federal or state law. There are no
voting trusts, voting agreements, proxies or other agreements, instruments or
undertakings with respect to the voting of the Common Stock of the Company to
which the Company or the Principal Stockholder is a party. None of the Company's
capital stock has been issued in violation of any federal or state law.
(b) EXHIBIT A contains a complete and accurate list of the names,
addresses and number of shares held (on a current and as converted fully diluted
basis) by each of the holders of the outstanding shares of the Company's Common
Stock.
(c) The Principal Stockholder owns beneficially and of record the
number of shares of Common Stock set forth opposite his name on EXHIBIT A
hereto, free and clear of any liens, restrictions, encumbrances or other adverse
claims.
2.4 SUBSIDIARIES. The Company has no subsidiaries or investments in, or
loans to, any other corporation, business organization or entity.
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2.5 AUTHORITY OF THE COMPANY AND THE PRINCIPAL STOCKHOLDER.
(a) The Company has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by the Company pursuant to this Agreement (including the Colorado
Articles of Merger and the Massachusetts Articles of Merger) and to carry out
the transactions contemplated hereby. The execution, delivery and performance by
the Company of this Agreement and each such other agreement, document and
instrument to be executed and delivered by the Company have been duly authorized
by all necessary action of the Company and the Principal Stockholder and no
other action on the part of the Company or the Principal Stockholder is required
in connection therewith.
This Agreement and each agreement, document and instrument executed and
delivered by the Company pursuant to this Agreement (including the Colorado
Articles of Merger and the Massachusetts Articles of Merger) constitute, or when
executed and delivered will constitute, valid and binding obligations of the
Company enforceable in accordance with their terms. The execution, delivery and
performance by the Company of this Agreement and each such agreement, document
and instrument:
(i) do not and will not violate any provision of the Articles of
Incorporation or By-laws of the Company;
(ii) do not and will not violate any laws of the United States or
any state or other jurisdiction applicable to the Company or require the
Company to obtain any approval, consent or waiver of, or make any filing
with, any person or entity (governmental or otherwise) that has not been
obtained or made; and
(iii) do not and will not result in a breach of, constitute a
default under, require any consent under (including consents required
under any agreement with the University of Colorado or any of its
affiliates), accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Company is a party or by which the property
of the Company is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of the Company's assets or its Common Stock,
except as specifically identified on SCHEDULE 2.5(a).
(b) The Principal Stockholder has the capacity to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by or on behalf of him pursuant to or contemplated by this Agreement.
This Agreement and each agreement, document and instrument executed and
delivered by the Principal Stockholder pursuant to or contemplated by this
Agreement constitute, or when executed and delivered will constitute, valid and
binding obligations of such Principal Stockholder enforceable in accordance with
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their respective terms, except as the same may be limited by bankruptcy,
insolvency or reorganization laws, or other laws relating to or affecting the
availability of the remedy of specific performance or equitable principles of
general application. The execution, delivery and performance by the Principal
Stockholder of this Agreement and each such agreement, document and instrument:
(i) do not and will not violate any laws of the United States or
any state or other jurisdiction applicable to the Principal
Stockholder or require the Principal Stockholder to obtain any
approval, consent or waiver of, or make any filing with, any person or
entity (governmental or otherwise) that has not been obtained or made;
and
(ii) do not and will not result in a breach of, constitute a
default under, require any consent under (including consents required
under any agreement with the University of Colorado or any of its
affiliates), accelerate any obligation under or give rise to a right
of termination of any indenture or loan or credit agreement or any
other agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree,
determination or arbitration award to which the Principal Stockholder
is a party or by which the property of the Principal Stockholder is
bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Principal Stockholder's assets, including,
without limitation, the Common Stock held by the Principal
Stockholder.
(c) AGREEMENTS. There are no agreements or arrangements not contained
herein or disclosed in SCHEDULE 2.5(c) hereto, to which the Principal
Stockholder is a party relating to the business of the Company or to the
Principal Stockholder's rights and obligations as a stockholder, or the rights
and obligations of his designees as directors or officers of the Company. The
Principal Stockholder does not own, directly or indirectly, on an individual or
joint basis, any material interest in, or serve as an officer or director of,
any customer, competitor or supplier of the Company, or any organization which
has a contract or arrangement with the Company. The Principal Stockholder has
not at any time transferred any of the stock of the Company held by or for him
to any employee or consultant of the Company, which transfer constituted or
could be viewed as compensation for services rendered to the Company by said
employee or consultant. Except as provided in SCHEDULE 2.5(c), the execution,
delivery and performance of this Agreement will not violate or result in default
or acceleration of any obligation under any contract, agreement, indenture or
other instrument involving the Company to which the Principal Stockholder is a
party.
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2.6 REAL AND PERSONAL PROPERTY.
(a) REAL PROPERTY. All of the real property leased by the Company is
identified on Schedule 2.6(a) (herein referred to as the "Leased Real
Property"). The Company does not own any real property.
(i) TITLE. To the best knowledge of the Company and the Principal
Stockholder, the lessor of the Leased Real Property, the University of
Colorado, has good, clear, record and marketable title to such real
property. The Company has good, clear, record and marketable title to
enforceable leasehold interests in the Leased Real Property free and clear
of all easements, covenants, liens, assessments, encumbrances or other
matters affecting title.
(ii) STATUS OF LEASES. The lease of the Leased Real Property is
identified on Schedule 2.6(a), and a true and complete copy thereof has
been delivered to AB. Said lease has been duly authorized and executed by
the parties and are in full force and effect. The Company is not in
default under said lease, nor has any event occurred which, with notice or
the passage of time, or both, would give rise to such a default. To the
knowledge of the Company and the Principal Stockholder, the other parties
to said lease are not in default under said lease, and there is no event
which, with notice or the passage of time, or both, would give rise to
such a default.
(iii) CONSENTS. Set forth on SCHEDULE 2.6(a) is a list of all
consents or approvals required from any other party with respect to the
lease of Leased Real Property (including, without limitation, consents
required from the University of Colorado or any of its affiliates), or
from any regulatory authority, and all filings with any regulatory
authority, required in connection with the transactions contemplated by
this Agreement. The Company and the Principal Stockholder have obtained or
completed all such consents, approvals and filings as of the date hereof.
(iv) CONDITION OF LEASED REAL PROPERTY. Except as set forth in
SCHEDULE 2.6(a), there are no material defects in the physical condition
of any land, buildings or improvements constituting part of the Leased
Real Property, including, without limitation, structural elements,
mechanical systems, parking and loading areas, and all such buildings and
improvements are in good operating condition and repair, have been well
maintained and are free from infestation by rodents or insects. The
Company has not received any notice from any governmental authority of any
violation of any law, ordinance, regulation, license, permit or
authorization issued with respect to the Leased Real Property that has not
been heretofore corrected and no such violation exists which could have an
adverse affect on the operation or value of the Leased Real Property.
(b) PERSONAL PROPERTY. A complete description of the personal property
of the Company is contained in SCHEDULE 2.6(b) hereto. Except as specifically
disclosed in said
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SCHEDULE, the Company has good and marketable title to all of its personal
property. Except as specified on SCHEDULE 2.6(b), all such personal property is
in the custody and control of the Company and is located at the Company's
offices at the Leased Real Property. None of such personal property or assets is
subject to any mortgage, pledge, lien, conditional sale agreement, security
title, encumbrance or other charge except as specifically disclosed in said
SCHEDULE. The Base Balance Sheet (as hereinafter defined) reflects all personal
property of the Company and such personal property is sufficient for the Company
to continue to carry on its business as presently conducted. Except as otherwise
specified in SCHEDULE 2.6(b) hereto, all leasehold improvements, furnishings,
machinery and equipment of the Company are in good repair, have been well
maintained and substantially comply with all applicable laws, ordinances and
regulations, and such machinery and equipment is in good working order. Neither
the Company nor the Principal Stockholder knows of any pending or threatened
change of any such law, ordinance or regulation which could adversely affect the
Company or its business.
2.7 FINANCIAL STATEMENTS.
(a) The Company has delivered to AB a balance sheet (herein the "Base
Balance Sheet") of the Company for its fiscal year ending on December 31, 1996
(the "Balance Sheet Date"), a copy of which is attached hereto as SCHEDULE 2.7.
Said Base Balance Sheet has been prepared in accordance with generally accepted
accounting principles applied consistently during the period covered thereby, is
complete and correct in all material respects and presents fairly in all
material respects the financial condition of the Company at the date of said
Base Balance Sheet.
(b) As of the date of the Base Balance Sheet, the Company had no known
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted, except liabilities stated or adequately reserved against
on the Base Balance Sheet, or reflected in Schedules furnished to AB hereunder
as of the date hereof.
(c) As of the date hereof, the Company has not had and will not have
any known liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted except liabilities (i) stated or adequately
reserved against on the Base Balance Sheet or the notes thereto, (ii) reflected
in SCHEDULES furnished to AB hereunder on the date hereof, or (iii) incurred
after the date of the Base Balance Sheet in the ordinary course of business of
the Company consistent with the terms of this Agreement.
2.8 TAXES. Except as set forth in SCHEDULE 2.8, And to the best knowledge
of the Company and the Principal Stockholder, the Company and its stockholders
have timely and properly filed or received timely and proper extensions for the
filing of all returns, declarations, reports, claims for refund or information
returns or statements relating to any Taxes (as defined below), including any
schedule or attachment thereto or any amendment thereof (collectively, "Tax
Returns"), required to be filed by them, and all such Tax Returns were correct
and complete in all material respects. The Company and its stockholders have
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paid all federal, state, local and foreign income, gross receipts, capital
stock, franchise, profits, windfall profits, withholding, payroll, social
security (or similar), unemployment, disability, real property, personal
property, excise, occupation, sales, use, transfer, value added, alternative
minimum, environmental, customs, duties, estimated or other taxes relating to
the Company and its business or activities, including any interest, penalty or
addition thereto and whether disputed or not (collectively, "Taxes") owed by
them (whether or not shown on any Tax Return), except Taxes which have not yet
accrued or otherwise become due. All Taxes and other assessments and levies
which the Company was or is required to withhold or collect from customers,
vendors, resellers or employees have been withheld and collected and have been
paid over or will be paid over when due to the proper government authorities.
Except as set forth in SCHEDULE 2.8: (a) the Company has never received notice
of any audit or of any proposed deficiencies from the Internal Revenue Service
("IRS") or any other taxing authority (other than routine audits undertaken in
the ordinary course and which have been resolved on or prior to the date hereof
without material adverse effect on the Company or its financial condition); (b)
there are in effect no waivers of applicable statutes of limitations or
extensions of time for the assessment or payment with respect to any Taxes owed
by the Company for any year; (c) neither the IRS nor any other taxing authority
is now asserting or, to the best knowledge of the Company, threatening to assert
against the Company or any of its stockholders any deficiency or claim for
additional Taxes or interest thereon or penalties in connection therewith in
respect of the Company or any of its stockholders; and (d) the Company has never
been a member of an affiliated group of corporations filing a combined federal
income Tax Return, nor does the Company have any liability for Taxes of any
other Person under Treasury Regulation ss. 1.1502-6 (or any similar provision of
foreign, state or local law) or otherwise. No claim has ever been made by an
authority in a jurisdiction where the Company does not file reports and returns
that the Company is or may be subject to taxation by that jurisdiction. There
are no security interests on any of the assets of the Company or its capital
stock that arose in connection with any failure (or alleged failure) to pay any
Taxes. The Company has never entered into a closing agreement pursuant to
Section 7121 of the Internal Revenue Code of 1986, as amended (the "Code").
Except as set forth in SCHEDULE 2.8, no extension of time with respect to any
date on which a tax return was or is to be filed by the Company is in force and
no waiver or agreement by the Company is in force for the extension of time for
the assessment or payment of any Taxes. Neither the Company nor any of its
stockholders is a "foreign person" within the meaning of Section 1445 of the
Code or the regulations promulgated thereunder. The Company is not a party to
any Tax allocation or sharing arrangement. The Company has, at all times since
December 1, 1989, qualified and currently qualifies as an entity properly
taxable as an S corporation (as defined in Section 1361 of the Code). For
purposes of this Agreement, all references to Sections of the Code shall include
any predecessor provisions to such Sections and any similar provisions of
federal, state, local or foreign law.
2.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 2.9
attached hereto, since the Balance Sheet Date there has not been:
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(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Company, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Company;
(b) Any contingent liability incurred by the Company as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the
Company;
(c) Any mortgage, encumbrance or lien placed on any of the properties
of the Company which remains in existence on the date hereof;
(d) Any obligation or liability of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including, without limitation, liabilities for Taxes due or to become due or
contingent or potential liabilities relating to products or services provided by
the Company or the conduct of the business of the Company since the Balance
Sheet Date regardless of whether claims in respect thereof have been asserted),
incurred by the Company other than obligations and liabilities incurred in the
ordinary course of business consistent with the terms of this Agreement;
(e) Any purchase, sale, license or other disposition, or any agreement
or other arrangement for the purchase, sale, license or other disposition of any
of the properties or assets of the Company, other than in the ordinary course of
business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Company;
(g) Any declaration, setting aside or payment of any dividend by the
Company, or the making of any other distribution in respect of the capital stock
of the Company, or any direct or indirect redemption, purchase or other
acquisition by the Company of its own capital stock;
(h) Any labor trouble or claim of unfair labor practices involving the
Company; any change in the compensation payable or to become payable by the
Company to any of its officers, employees, agents or independent contractors
other than normal merit increases in accordance with its usual practices; or any
bonus payment or arrangement made to or with any of such officers, employees,
agents or independent contractors;
(i) Any change with respect to the officers or management of the
Company;
(j) Any payment or discharge of a material lien or liability of the
Company which was not shown on the Base Balance Sheet or incurred in the
ordinary course of business thereafter;
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(k) Any obligation or liability incurred by the Company to any of its
officers, directors, stockholders or employees, or any loans or advances made by
the Company to any of its officers, directors, stockholders or employees, except
normal compensation and expense allowances payable to officers or employees;
(l) Any change in accounting methods or practices, credit practices or
collection policies used by the Company;
(m) Any other transaction entered into by the Company other than
transactions in the ordinary course of business consistent with past practice;
or
(n) Any agreement or understanding, whether in writing or otherwise,
for the Company to take any of the actions specified in paragraphs (a) through
(m) above.
2.10 ORDINARY COURSE. Since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course and consistently with its
prior practices.
2.11 BANKING RELATIONS. All of the arrangements which the Company has with
any banking institution are completely and accurately described in SCHEDULE 2.11
attached hereto, indicating with respect to each of such arrangements the type
of arrangement maintained (such as checking account, borrowing arrangements,
safe deposit box, etc.) and the person or persons authorized in respect thereof.
2.12 INTELLECTUAL PROPERTY.
(a) Except as described in SCHEDULE 2.12, (i) the Company has
exclusive ownership of, or exclusive license to use, all patent, copyright,
trade secret, trademark or other proprietary rights (collectively, "Intellectual
Property") used or to be used in the business of the Company as presently
conducted or contemplated, and (ii) all of the rights of the Company in such
Intellectual Property are freely transferable. There are no claims or demands of
any other person pertaining to any of such Intellectual Property and no
proceedings have been instituted or are pending or, to the knowledge of the
Company and the Principal Stockholder, are threatened, which challenge the
rights of the Company in respect thereof. To the knowledge of the Company and
the Principal Stockholder, there is no prior statutory bar which would adversely
affect the patentability of such Intellectual Property. To the knowledge of the
Company and the Principal Stockholder, there are no existing patents or patent
applications which, in their reasonable judgment, would give rise to an
infringement claim by a third party regarding the Intellectual Property. The
Company has the right to use, free and clear of claims or rights of other
persons, all customer lists, designs, manufacturing or other processes, computer
software, systems, data compilations, research results and other information
required for or incident to its business as presently conducted or contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Company or used
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or to be used by the Company in its business as presently conducted or
contemplated and all other items of Intellectual Property which are material to
the business or operations of the Company are listed in SCHEDULE 2.12. All of
such patents, patent applications, trademark registrations, trademark
applications and registered copyrights have been duly registered in, filed in or
issued by the United States Patent and Trademark Office, the United States
Register of Copyrights or the corresponding offices of other jurisdictions as
identified on said Schedule and have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
of the United States and each such jurisdiction, and true and complete copies
thereof have been delivered to AB.
(c) All licenses or other agreements under which the Company is
granted rights in Intellectual Property are listed in SCHEDULE 2.12. All said
licenses or other agreements are in full force and effect, there is no material
default by any party thereto, and, except as set forth on SCHEDULE 2.12, all of
the rights of the Company thereunder are freely assignable. To the knowledge of
the Company and the Principal Stockholder, the licensors under said licenses and
other agreements have and had all requisite power and authority to grant the
rights purported to be conferred thereby. True and complete copies of the
Company's licenses and research agreements with the University Research
Corporation (the "University of Colorado Agreements") are attached hereto as
SCHEDULE 2.12, and true and complete copies of all other licenses or agreements
with respect to Intellectual Property, and any amendments thereto, have been
provided to AB. The Company and the Principal Stockholder are in compliance with
the conflict of interests policy and any other applicable rules of conduct of
the University of Colorado or any of its affiliates. SCHEDULE 2.12 also lists
licenses or other agreements under which the Company may be granted rights in
Intellectual Property that are under negotiation. AB has been provided access to
drafts of such licenses or other agreements.
(d) SCHEDULE 2.12 also lists the licenses or other agreements pursuant
to which the Company has granted any rights to others in Intellectual Property
owned or licensed by the Company. All of said licenses or other agreements are
in full force and effect, there is no material default by any party thereto,
and, except as set forth on SCHEDULE 2.12, all of the rights of the Company
thereunder are freely assignable. True and complete copies of all such licenses
or other agreements, and any amendments thereto, have been provided to AB.
(e) The Company has taken all steps it deemed appropriate in
accordance with its standard business practice to establish and preserve its
ownership of all Intellectual Property rights with respect to its products,
services and technology. The Company has required all of its professional and
technical employees, all other employees having access to valuable non-public
information of the Company and all consultants and independent contractors
involved in the development of any of the Intellectual Property to execute
agreements entitled "Business Confidentiality Agreement" in the form provided to
AB. The Company and the Principal Stockholder have not made any such information
available to any other person, except pursuant to written agreements requiring
the recipients to maintain the confidentiality of such information and
appropriately restricting the use thereof. The Company
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and the Principal Stockholder have no knowledge of any infringement by others of
any Intellectual Property rights of the Company.
(f) To the knowledge of the Company and the Principal Stockholder, the
present and contemplated activities, products and business of the Company do not
infringe any Intellectual Property of any other person. No proceeding charging
the Company with infringement of any Intellectual Property of any third party
has been filed or, to the knowledge of the Company or the Principal Stockholder,
is threatened to be filed. To the best knowledge of the Company and the
Principal Stockholder, there exists no unexpired patent or patent application
which includes claims that would be infringed by or otherwise adversely affect
the products, activities or business of the Company. The Company is not making
unauthorized use of any confidential information or trade secrets of any person,
including, without limitation, any former employer of any past or present
employee, consultant or independent contractor of Company. Except as set forth
in Schedule 2.12, neither the Company nor, to the knowledge of the Company and
the Principal Stockholder, any of the Company's employees, consultants or
independent contractors have any agreements or arrangements with any persons
other than the Company related to confidential information or trade secrets of
such persons or restricting any such employee's ability to engage in business
activities of any nature. The activities of the Company's employees on behalf of
the Company do not violate any such agreements or arrangements known to the
Company.
2.13 CONTRACTS. Except for contracts, commitments, plans, agreements and
licenses described in SCHEDULE 2.13 (true and complete copies of which have been
previously delivered to AB), the Company is not a party to or subject to:
(a) any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) any employment contract or contract for services which is not
terminable within 30 days by the Company without liability for any penalty or
severance payment;
(c) any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $5,000 each;
(d) any other contracts or agreements creating any obligations of the
Company of $5,000 or more with respect to any such contract;
(e) any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular item from a supplier;
(f) any contract or agreement which by its terms does not terminate or
is not terminable without penalty by the Company or its successors within one
year after the date hereof;
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(g) any contract or agreement for the development or sale of its
products not made in the ordinary course of business;
(h) any contract with any distributor of or joint venturer for
products of the Company;
(i) any contract containing covenants limiting the freedom of the
Company, any of its officers or the Principal Stockholder to compete in any line
of business or with any person or entity;
(j) any contract or agreement for the purchase of any fixed asset for
a price in excess of $5,000 whether or not such purchase is in the ordinary
course of business;
(k) any license agreement (as licensor or licensee), technology
license agreement, research funding agreement, sponsored research agreement,
material transfer agreement, corporate partnering or development agreement or
similar agreement;
(l) any indenture, mortgage, promissory note, loan agreement, guaranty
or other agreement or commitment for the borrowing of money; or
(m) any contract or agreement obligating the Company or the Principal
Stockholder to compensate any third party in connection with the sale of the
Company's business or the Principal Stockholder's interest therein;
(n) any contract or agreement with any officer, employee, director or
stockholder of the Company or with any persons or organizations controlled by or
affiliated with any of them.
All contracts, agreements, leases and instruments to which the Company is a
party or by which the Company is obligated are valid and are in full force and
effect and constitute legal, valid and binding obligations of the Company and,
to the best knowledge of the Company and the Principal Stockholder, the other
parties thereto, enforceable in accordance with their respective terms. The
Company is not in default under any such contracts, commitments, plans,
agreements or licenses described in said SCHEDULE nor has it any knowledge of
conditions or facts which with notice or passage of time, or both, would
constitute a default.
2.14 LITIGATION. There is no pending litigation or governmental or
administrative proceedings or investigations to which the Company is a party or
to which the Principal Stockholder is a party which concern the business of the
Company. There is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Company and the Principal
Stockholder, threatened against the Company or its affiliates which may have any
adverse effect on the properties, assets, prospects, financial condition or
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business of the Company or which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
2.15 COMPLIANCE WITH LAWS. To the knowledge of the Company and the
Principal Stockholder, the Company is in compliance with all applicable
statutes, ordinances, orders, judgments, decrees, rules and regulations
promulgated by any federal, state, municipal entity, agency, court or other
governmental authority which apply to the Company or to the conduct of its
business. Neither the Company nor the Principal Stockholder has received notice
of a violation or alleged violation of any such statute, ordinance, order, rule
or regulation.
2.16 INSURANCE. The physical properties and assets of the Company are
insured to the extent disclosed in SCHEDULE 2.16 attached hereto and all such
insurance policies and arrangements are disclosed in said SCHEDULE. Said
insurance policies and arrangements are in full force and effect, all premiums
with respect thereto are currently paid, and the Company is in compliance in all
material respects with the terms thereof. To the knowledge of the Company and
the Principal Stockholder, said insurance is adequate for the business engaged
in by the Company.
2.17 POWERS OF ATTORNEY. Neither the Company nor the Principal Stockholder
has any outstanding power of attorney relating to the Company.
2.18 FINDER'S FEE. Except as set forth in SCHEDULE 2.18 hereto, neither the
Company nor the Principal Stockholder has incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
2.19 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 2.19 hereto lists all
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Company to conduct its business. The Company has
obtained all such Approvals, which are valid and in full force and effect, and,
to the knowledge of the Company and the Principal Stockholder, is operating in
compliance therewith. To the knowledge of the Company and the Principal
Stockholder, the Company is not subject to or bound by any agreement, judgment,
decree or order which may materially and adversely affect its business or
prospects, its condition, financial or otherwise, or any of its assets or
properties.
2.20 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record books of
the Company accurately record all corporate action taken by its stockholders,
board of directors and committees. The copies of the corporate records of the
Company, as made available to AB for review, are true and complete copies of the
originals of such documents. The Company has made available for inspection and
copying by AB and its counsel true and correct copies of all documents referred
to in this Section or in the SCHEDULES delivered to AB pursuant to this
Agreement.
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2.21 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in SCHEDULE
2.21 hereto, none of the Company, the Principal Stockholder, or any officer,
supervisory employee or director of the Company, or any of their respective
spouses or family members, or, to the knowledge of the Company or the Principal
Stockholder, any consultant of the Company, own directly or indirectly on an
individual or joint basis any material interest in, or serve as an officer or
director or in another similar capacity of any competitor of or service provider
to the Company or any organization which has a material contract or arrangement
with the Company.
2.22 EMPLOYEE BENEFIT PROGRAMS. The Company does not maintain and has never
maintained an employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
Company has no liabilities or obligations under ERISA. Except for the Stock
Option Plan, the Company has no other stock option plans, bonus or incentive
award plans, severance pay policies or agreements, deferred compensation
agreements, supplemental income arrangements, vacation plans, or other employee
benefit plans, agreements, or arrangements. For purposes of this Section 2.22,
an entity "maintains" an employee benefit plan if such entity sponsors,
contributes to, or provides (or has promised to provide) benefits under such
employee benefit plan, or has any obligation (by agreement or under applicable
law) to contribute to or provide benefits under such employee benefit plan, or
if such employee benefit plan provides benefits to or otherwise covers employees
of such entity, or their spouses, dependents or beneficiaries.
2.23 ENVIRONMENTAL MATTERS.
(a) Except as set forth in SCHEDULE 2.23 hereto, (i) the Company has
never generated, transported, used, stored, treated, disposed of or managed any
Hazardous Waste (as defined below) except in material compliance with all
Environmental Laws; (ii) no Hazardous Material (as defined below) has ever been
or is threatened to be spilled, released or disposed of at any site presently or
formerly owned, operated, leased or used by the Company, or has ever been
located in the soil or groundwater at any such site; (iii) no Hazardous Material
has ever been transported from any site presently or formerly owned, operated,
leased or used by the Company for treatment, storage or disposal at any other
place; (iv) the Company does not presently or propose to own, operate, lease or
use, nor has it previously owned, operated, leased or used any site on which
underground storage tanks are or were located; and (v) no lien has ever been
imposed by any governmental agency on any property, facility, machinery or
equipment owned, operated, leased or used by the Company in connection with the
presence of any Hazardous Material.
(b) Except as set forth in SCHEDULE 2.23 hereto and to the best
knowledge of the Company and the Principal Stockholder, (i) the Company has no
liability under, nor has it ever violated, any Environmental Law (as defined
below); (ii) the Company, and any property presently or proposed to be owned,
operated, leased or used by it, and any facilities and operations thereon, are
presently in material compliance with all applicable Environmental Laws; (iii)
the Company has never entered into or been subject to any judgment, consent
decree, compliance order or administrative order with respect to any
environmental or health
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and safety matter or received any request for information, notice, demand
letter, administrative inquiry or formal or informal complaint or claim with
respect to any environmental or health and safety matter or the enforcement of
any Environmental Law; and (iv) the Company has no reason to believe that any of
the items enumerated in clause (iii) of this subsection will be forthcoming.
(c) No site presently or proposed to be owned, operated, leased or
used by the Company contains any asbestos or asbestos-containing material, any
polychlorinated biphenyls (PCBs) or equipment containing PCBs, or any urea
formaldehyde foam insulation.
(d) The Company has provided to AB copies of all documents, records
and information available to the Company concerning any environmental or health
and safety matters relevant to the Company, whether generated by the Company or
others, including, without limitation, environmental audits, environmental risk
assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans and reports, correspondence, permits,
licenses, approvals, consents and other authorizations related to environmental
or health and safety matters issued by any governmental agency.
(e) For purposes of this SECTION 2.23, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance or by-law at the
foreign, federal, state or local level, whether existing as of the date hereof,
previously enforced or subsequently enacted; and (iv) "Company" shall mean and
include the Company, and all other entities for whose conduct the Company is or
may be held responsible under any Environmental Law.
2.24 LIST OF DIRECTORS AND OFFICERS. SCHEDULE 2.24 hereto contains a true
and complete list of all current directors, officers, and employees of the
Company and the annual compensation they received from the Company for the
fiscal year ending as of April 30, 1997. In each case, such SCHEDULE also
includes the current job title and current aggregate annual compensation of each
such individual. The Company has no consultants and no contracts or arrangements
with any consultants.
2.25 EMPLOYEES; LABOR MATTERS. The Company employs a total of approximately
seven full-time employees and two part-time employees and generally enjoys good
employer-employee relationships. The Company is not delinquent in payments to
any of its employees for any wages, salaries, commissions, bonuses or other
direct compensation for any services performed for it to the date hereof or for
amounts required to be reimbursed to such employees. Upon termination of the
employment of any of said employees, none of the Company, the Surviving
Corporation, the Acquisition Corp or AB will, by reason of the
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transactions contemplated under this Agreement, be liable to any of said
employees for so-called "severance pay" or any other payments, except as set
forth in SCHEDULE 2.25. The Company has no policy, practice, plan or program of
paying severance pay or any form of severance compensation in connection with
the termination of employment, except as set forth in said SCHEDULE. To the
knowledge of the Company and the Principal Stockholder, the Company is in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. There are no charges of
employment discrimination or unfair labor practices, nor are there any strikes,
slowdowns, stoppages of work or any other concerted interference with normal
operations which are existing, pending or threatened against or involving the
Company. No question concerning representation exists with respect to any
employees of the Company. There are no grievances, complaints or charges that
have been filed against the Company under any dispute resolution procedure
(including, but not limited to, any proceedings under any dispute resolution
procedure under any collective bargaining agreement) that might have an adverse
effect on the Company or the conduct of its business, and there is no
arbitration or similar proceeding pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Company. The Company has not received any
information indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency.
2.26 STOCK REPURCHASE. The Company has not redeemed or repurchased any of
its capital stock.
2.27 DISCLOSURE. The representations and warranties contained in this
Agreement and in the certificates, exhibits and schedules delivered by the
Company and the Principal Stockholder pursuant to this Agreement do not contain
any untrue statement of a material fact, and, when taken together, do not omit
to state a material fact required to be stated therein or necessary in order to
make such representations or warranties not misleading in light of the
circumstances under which they were made. There are no facts now known to the
Company or the Principal Stockholder which presently or may in the future have a
material adverse affect on the business, properties, prospects, operations or
condition of the Company which have not been specifically disclosed herein, or
in a Schedule furnished herewith, other than general economic conditions
affecting the industry in which the Company operates.
2.28 CONTINUITY OF SHAREHOLDER INTEREST. The Stockholders have no present
plan, intention, or arrangement to dispose of any of the AB Common Stock
received or to be received in connection with the Merger in a manner that would
cause the Merger to violate the continuity of interest requirement set forth in
Treasury Regulation ss.1.368-1.
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SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
- --------- ----------------------------------------------------------
STOCKHOLDER.
------------
The Principal Stockholder hereby represents and warrants to AB that with
respect to the Principal Stockholder's receipt of AB Common Stock hereunder:
Such Principal Stockholder is acquiring the AB Common Stock for its own
account, for investment, and not with a view to any "distribution" thereof
within the meaning of the Securities Act. The Principal Stockholder is a
resident of the State of Colorado, and the offer and sale of the AB Common Stock
to such Principal Stockholder will take place in The Commonwealth of
Massachusetts. Such Principal Stockholder has been granted the opportunity to
investigate the affairs of AB and to ask questions of its officers and employees
and has availed itself of such opportunity either directly or through its
authorized representative.
Such Principal Stockholder understands that because the AB Common Stock has
not been registered under the Securities Act or securities or "blue sky" laws of
any jurisdiction, he cannot dispose of any or all of the shares of the AB Common
Stock unless such shares of AB Common Stock are subsequently registered under
the Securities Act or exemptions from such registration are available. The
Principal Stockholder acknowledges and understands that except for the
registration rights to be granted in the Registration Rights Agreement, he has
no independent right to require AB to register the AB Common Stock. The
Principal Stockholder understands that each certificate representing the AB
Common Stock will bear a legend in substantially the form provided below (in
addition to any legend required under applicable state securities laws).
THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED
BY THE HOLDER NAMED HEREON FOR HIS OWN ACCOUNT FOR
INVESTMENT; AND SUCH SECURITIES MAY NOT BE
PLEDGED, SOLD OR IN ANY OTHER WAY TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS IN EFFECT AT THAT TIME, OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
SECTION 4. COVENANTS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDER.
- --------- ------------------------------------------------------
4.1 MAKING OF COVENANTS AND AGREEMENTS. The Company and the Principal
Stockholder hereby jointly and severally make the covenants and agreements set
forth in this Section 4 and the Principal Stockholder agrees to cause the
Company to comply with such
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agreements and covenants. Neither the Principal Stockholder nor any other
stockholder of the Company shall have any right of indemnity or contribution
from the Company or the Surviving Corporation with respect to the breach of any
covenant or agreement hereunder.
4.2 NOTICE OF DEFAULT. Promptly upon the occurrence of, or promptly upon
the Company or the Principal Stockholder becoming aware of the impending or
threatened occurrence of, any event which would cause or constitute a breach or
default, or would have caused or constituted a breach or default had such event
occurred or been known to the Company or the Principal Stockholder prior to the
date hereof, of any of the representations, warranties or covenants of the
Company or the Principal Stockholder contained in or referred to in this
Agreement or in any SCHEDULE or Exhibit referred to in this Agreement, the
Company or the Principal Stockholder shall give detailed written notice thereof
to AB, and the Company and the Principal Stockholder shall use their best
efforts to prevent or promptly remedy the same.
4.3 CONSUMMATION OF AGREEMENT. The Company and the Principal Stockholder
shall use their best efforts to perform and fulfill all conditions and
obligations on their parts to be performed and fulfilled under this Agreement
(including, without limitation, obtaining the agreements and consents with the
Company's employees, landlord and licensors which are required as conditions to
closing hereunder), to the end that the transactions contemplated by this
Agreement shall be fully carried out.
4.4 COOPERATION OF THE COMPANY AND PRINCIPAL STOCKHOLDER. The Company and
the Principal Stockholder shall cooperate with all reasonable requests of AB and
AB's counsel in connection with the consummation of the transactions
contemplated hereby.
4.5 NO SOLICITATION OF OTHER OFFERS. Until May 21, 1997, neither the
Company, the Principal Stockholder nor any of their representatives will,
directly or indirectly, solicit, encourage, assist or initiate discussions or
engage in negotiations with, provide any information to, or enter into any
discussion, negotiation, agreement or transaction with, any person or entity,
other than AB or the Acquisition Corp, relating to the possible acquisition or
transfer of the Common Stock, the Company, or any of its assets, the licensing
of any of the Company's patents, applications for patents or other intellectual
property or any of its products or any other transaction or financing that would
be inconsistent with the transactions contemplated hereby. The Company will
promptly notify AB in the event the Company or the Principal Stockholder is
contacted regarding or informed of any such potential or proposed discussions,
negotiations, agreements or transactions.
4.6 CONFIDENTIALITY. The Company and the Principal Stockholder agree that
each of them and the Company's officers, directors, agents and representatives
will hold in strict confidence, and will not use, any confidential or
proprietary data or information obtained from AB or the Acquisition Corp before
or after the date hereof except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
the biotechnology industry or which has been disclosed to the Company or
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the Principal Stockholder by third parties which have a right to do so shall not
be deemed confidential or proprietary information for purposes of this
Agreement. If the transactions contemplated by this Agreement are not
consummated, the Company and the Principal Stockholder will return to AB (or
certify that they have destroyed) all copies of such data and information,
including, without limitation, financial information, customer lists, business
and corporate records, worksheets, test reports, tax returns, lists, memoranda
and other documents prepared by or made available to the Company or the
Principal Stockholder in connection with the transactions contemplated hereby.
4.7 CONTINUITY OF STOCKHOLDER INTEREST. The Stockholders will not dispose
of any of the AB Common Stock received or to be received in connection with the
Merger in a manner that would cause the Merger to violate the continuity of
interest requirement set forth in Treasury Regulation ss.1.368-1. In connection
with any Additional Payment or Vesting Payment, such Stockholders shall, as a
condition to such Additional Payment or Vesting Payment, provide the
representation set forth in Section 2.28 as of the time of the receipt of the
Additional Payment or Vesting Payment, as the case may be.
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF AB AND ACQUISITION CORP.
- --------- ---------------------------------------------------------------------
5.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement to
the Company and the Principal Stockholder to enter into this Agreement and
consummate the transactions contemplated hereby, each of AB and the Acquisition
Corp hereby makes the representations and warranties to the Company and the
Principal Stockholder contained in this Section 5.
5.2 ORGANIZATION. Each of AB and the Acquisition Corp is a corporation duly
organized, validly existing and in good standing under the laws of the
respective jurisdiction of its incorporation with full corporate power to own or
lease its properties and to conduct its business in the manner and in the places
where such properties are owned or leased or such business is conducted by it.
5.3 CAPITAL STOCK OF AB. The authorized capital stock of AB consists of (i)
30,000,000 shares of common stock, $.01 per share, of which 16,743,308 shares
were duly and validly issued and outstanding, fully paid and non-assessable as
of April 15, 1997; and (ii) 1,000,000 shares of preferred stock, $.01 per share,
of which no shares are issued and outstanding. Except for options to purchase up
to 1,944,323 shares of AB Common Stock which were granted under AB's 1988 Stock
Option and Grant Plan and warrants to purchase 51,500 shares of AB Common Stock,
all of which remain outstanding and unexercised as of April 15, 1997, there are
no outstanding options, warrants, rights, commitments, preemptive rights or
agreements of any kind for the issuance or sale of, or outstanding securities
convertible into, any shares of AB Common Stock. AB agrees not to issue any
additional shares of AB Common Stock or preferred stock prior to the date of the
Closing except in connection with the issuance of the outstanding stock options
and warrants referenced in the
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immediately preceding sentence. None of AB's capital stock has been issued in
violation of any federal or state law.
5.4 AUTHORITY. Each of AB and the Acquisition Corp has full right,
authority and power to enter into this Agreement and each agreement, document
and instrument to be executed and delivered by it pursuant to this Agreement and
to carry out the transactions contemplated hereby. The execution, delivery and
performance by AB and the Acquisition Corp of this Agreement and each such other
agreement, document and instrument have been duly authorized by all necessary
corporate action and no other action on each such corporation's part is required
in connection therewith. This Agreement and each other agreement, document and
instrument executed and delivered by each of AB and the Acquisition Corp
pursuant to this Agreement constitute, or when executed and delivered will
constitute, valid and binding obligations enforceable in accordance with their
terms. The execution, delivery and performance by each of AB and the Acquisition
Corp of this Agreement and each such agreement, document and instrument:
(i) do not and will not violate any provision of the Certificate of
Incorporation or Articles of Organization, as applicable, or By-laws of AB
or the Acquisition Corp;
(ii) do not and will not violate any laws of the United States or any
state or other jurisdiction applicable to AB or the Acquisition Corp or
require the Company to obtain any approval, consent or waiver of, or make
any filing with, any person or entity (governmental or otherwise) that has
not been obtained or made; and
(iii) do not and will not result in a breach of, constitute a default
under, accelerate any obligation under or give rise to a right of
termination of any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which AB or the Acquisition Corp is a party or by
which the property of AB or the Acquisition Corp is bound or affected, or
result in the creation or imposition of any mortgage, pledge, lien,
security interest or other charge or encumbrance on any of their assets or
capital stock.
5.5 FINDER'S FEE. No person is entitled to the payment of any broker's
commission or finder's fee relating to or in connection with the transactions
contemplated by this Agreement as the result of any actions taken by AB or the
Acquisition Corp.
5.6 CONFIDENTIALITY. AB and the Acquisition Corp agree that, prior to the
Effective Time, each of them and their respective officers, directors, agents
and representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from the Company before
or after the date hereof except for the purpose of evaluating, negotiating and
completing the transactions contemplated hereby. Information generally known in
the biotechnology industry or which has been disclosed to AB or the
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Acquisition Corp by third parties which have a right to do so shall not be
deemed confidential or proprietary information for purposes of this Agreement.
If the transactions contemplated by this Agreement are not consummated, AB and
the Acquisition Corp will return to the Company (or certify that they have
destroyed) all copies of such data and information, including, without
limitation, financial information, customer lists, business and corporate
records, worksheets, test reports, tax returns, lists, memoranda and other
documents prepared by or made available to AB or the Acquisition Corp in
connection with the transactions contemplated hereby.
SECTION 6. CONDITIONS.
- --------- -----------
6.1 CONDITIONS TO THE OBLIGATIONS OF AB AND THE ACQUISITION CORP. The
obligations of AB and the Acquisition Corp to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment, prior to or on
the date of the Closing, of the following conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Company and the Principal Stockholder
contained in Sections 2 and 3 shall be true and correct in all material
respects; and the Company and the Principal Stockholder shall have performed all
of their obligations hereunder which by the terms hereof are to be performed on
or before the date of the Closing.
(b) NO MATERIAL CHANGE. There shall have been no material adverse
change in the financial condition, prospects, properties, assets, liabilities,
business or operations of the Company since the Balance Sheet Date.
(c) CERTIFICATE FROM OFFICERS. The Company shall have delivered to AB
a certificate of the Company's acting Chief Executive Officer and Chief
Financial Officer and the Principal Stockholder dated as of the date of the
Closing to the effect that the statements set forth in paragraph (a) and (b)
above in this Section 6.1 are true and correct and certifying as to the holders
and amounts of the Company's capital stock on the date of the Closing (the
"Fully Diluted Share Number").
(d) APPROVAL OF AB'S COUNSEL. All actions, proceedings, instruments
and documents required to carry out this Agreement and the transactions
contemplated hereby and all related legal matters contemplated by this Agreement
shall have been approved by Goodwin, Procter & Hoar LLP, counsel for AB and the
Acquisition Corp, and such counsel shall have received on behalf of AB such
other certificates, opinions and documents in form satisfactory to such counsel,
as AB may reasonably require from the Company and the Principal Stockholder to
evidence compliance with the terms and conditions hereof and the correctness as
of the date hereof of the representations and warranties of the Principal
Stockholder and the Company and the fulfillment of their respective covenants.
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(e) OPINIONS OF COUNSEL. AB shall have received from King Peterson
Brown, LLC, counsel for the Company and the Principal Stockholder, an opinion as
of the date of the Closing in the form attached hereto as and EXHIBIT B.
(f) NO LITIGATION. There shall have been no determination by AB,
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state or other governmental
authority of litigation, proceedings or other action against AB, the Acquisition
Corp, the Company or the Principal Stockholder or any material adverse change in
the laws or regulations applicable to the Company.
(g) CONSENTS. AB, the Acquisition Corp, the Company and the Principal
Stockholder shall have made all filings with and notifications of governmental
authorities, regulatory agencies and other persons and entities required to be
made by them in connection with the execution and delivery of this Agreement,
the performance of the transactions contemplated hereby and the continued
operation of the business of the Company subsequent to the date hereof; and AB,
the Acquisition Corp, the Company and the Principal Stockholder shall have
received all authorizations, waivers, consents and permits, in form and
substance reasonably satisfactory to AB, from all third parties, including,
without limitation, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties (including parties to those contracts
listed on SCHEDULE 2.5(a)) required to permit the continuation of the business
of the Company and the consummation of the transactions contemplated by this
Agreement, and to avoid a breach, default, termination, acceleration or
modification of any material indenture, loan or credit agreement or any other
material agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award as a result of, or in connection with, the execution and
performance of this Agreement.
(h) EMPLOYMENT ARRANGEMENTS AND CONFIDENTIALITY AGREEMENTS. The
Surviving Corporation shall have retained the Principal Stockholder as a
full-time employee of AB serving as Vice President-Antifungal Research/General
Manager-Denver Operations and shall have executed an employment agreement with
him in the form of EXHIBIT C hereto (the "Employment Agreement"). The Company
shall have provided written evidence to AB that all employees of the Company
shall have terminated their existing employment agreements with the Company, and
that all employees of the Company have executed AB's standard form of
Confidential and Proprietary Information Agreement in the form attached hereto
as EXHIBIT D.
(i) FIRPTA WITHHOLDING. AB shall have received from the Company and
Principal Stockholder affidavits as provided in Section 1445(b)(3) of the Code
and the applicable regulations thereunder.
(j) UNIVERSITY OF COLORADO AGREEMENTS. The Company shall have
delivered to AB agreements executed by the University Research Corporation
("UCR"), relating to the lease of the Company's facility, the assignment of
intellectual property and UCR's 12% equity
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interest in MycoTox. AB shall be satisfied with all aspects of the Company's
lease, license, research collaboration and equity arrangements with UCR and its
employees and affiliates.
(k) RELEASES. The Company shall have delivered to AB general releases
signed by the Principal Stockholder and by each officer, Director and consultant
of the Company of all claims which any of them have against the Company, AB, the
Acquisition Corp and the Surviving Corporation in the form attached hereto as
EXHIBIT E.
(l) RESIGNATIONS. The Company shall have delivered to AB the
resignations of all of the officers and Directors of the Company, such
resignations to be effective as of the date of the Closing.
(m) DISSENTING STOCKHOLDERS. In accordance with the provisions of
Colorado Law, the Company shall have notified each holder of capital stock of
the Company of such holder's dissenter's or appraisal rights, if any, arising in
connection with the transactions contemplated hereby, and the Company shall have
obtained from each such holder a waiver of any such holder's dissenter's or
appraisal rights.
(n) STOCK OPTIONS. All stock options or other rights to acquire shares
of the Company's capital stock shall have been exercised or canceled in
accordance with Section 1.5.
(o) REGISTRATION RIGHTS. The Principal Stockholder shall have executed
and delivered to AB a Registration Rights Agreement substantially in the form
attached hereto as EXHIBIT F.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDER.
The obligation of the Company and the Principal Stockholder to consummate this
Agreement and the transactions contemplated hereby is subject to the
fulfillment, prior to or on the date hereof, of the following conditions
precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of AB and Acquisition Corp contained in Section 4
shall be true and correct in all material respects; AB and Acquisition Corp
shall have performed all of their respective obligations hereunder which by the
terms hereof are to be performed on or before the date of the Closing; and AB
shall have delivered to the Company and the Principal Stockholder a certificate
of the Chief Executive Officer or the Chief Financial Officer of AB as to such
effect.
(b) APPROVAL OF THE COMPANY'S COUNSEL. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this agreement shall have been approved by King, Peterson & Brown as counsel for
the Company and the Principal Stockholder, and such counsel shall have received
on behalf of the Company and the Principal Stockholder such other certificates,
opinions and documents in form satisfactory to such
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counsel as the Company and the Principal Stockholder may reasonably require from
AB to evidence compliance with the terms and conditions hereof and the
correctness of the representations and warranties of AB and the fulfillment of
its covenants.
(c) NO LITIGATION. There shall have been no determination by the
Company, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of material litigation, proceedings or other action
against AB, the Acquisition Corp, the Company or the Principal Stockholder.
(d) OPINION OF COUNSEL. The Company and the Principal Stockholder
shall have received from Goodwin, Procter & Hoar LLP, counsel for AB and
Acquisition Corp, an opinion as of the date of the Closing in form attached
hereto as EXHIBIT G.
(e) EMPLOYMENT AGREEMENT. The Surviving Corporation shall have
retained the Principal Stockholder as a full-time employee of AB serving as Vice
President - Antifungal Research/General Manager-Denver Operations and shall have
executed an employment agreement with him in the form of EXHIBIT C hereto.
(f) REGISTRATION RIGHTS. AB shall have executed and delivered to the
Principal Stock a Registration Rights Agreement substantially in the form
attached hereto as EXHIBIT G.
SECTION 7. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
- --------- -------------------------------------------
7.1 TERMINATION. At any time prior to the Closing, this Agreement may be
terminated as follows:
(i) by mutual written consent of AB, the Company and the Principal
Stockholder;
(ii) by AB, pursuant to written notice by AB to the Company if any
of the conditions set forth in Section 6.1 of this Agreement have not
been satisfied at or prior to the Closing, or if it has become
reasonably and objectively certain that any of such conditions, other
than a condition within the control of the Company or the Principal
Stockholder, will not be satisfied at or prior to the Closing, such
written notice to set forth such conditions which have not been or will
not be so satisfied;
(iii) by the Company pursuant to written notice by the Company and
to AB, if any of the conditions set forth in Section 6.2 of this
Agreement have not been satisfied at or prior to the Closing, or if it
has become reasonably and objectively certain that any of such
conditions, other than a condition within the control of AB or
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the Acquisition Corp, will not be satisfied at or prior to the Closing,
such written notice to set forth such conditions which have not been or
will not be so satisfied; and
(iv) by either AB or the Company by written notice to
the other party if the Closing has not occurred by May 21, 1997 so long
as the failure to close is not attributable to a breach by the
terminating party or one of its affiliates of its obligations
hereunder.
7.2 EFFECT OF TERMINATION. All obligations of the parties hereunder shall
cease upon any termination pursuant to Section 7.1; PROVIDED, HOWEVER, that (a)
the provisions of this Section 7, Section 4.6 and Section 10 hereof shall
survive any termination of this Agreement; (b) nothing herein shall relieve any
party from any liability for a material error or omission in any of its
representations or warranties contained herein or a material failure to comply
with any of its covenants, conditions or agreements contained herein, if such
error, omission or failure was deliberate or willful (a "Deliberate Breach"),
but in the absence of a Deliberate Breach, the liability of the responsible
party to the other party shall be limited to out-of-pocket expenses incurred by
the other party in connection with negotiating, preparing and entering into this
Agreement and carrying out the transactions contemplated hereby and (iii) any
party may proceed as further set forth in Section 7.3 below.
7.3 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Section 6.1 hereof have
not been satisfied, AB and the Acquisition Corp shall have the right to proceed
with the transactions contemplated hereby without waiving any of its rights
hereunder; and if any of the conditions specified in Section 7.2 hereof have not
been satisfied, the Company and the Principal Stockholder shall have the right
to proceed with the transactions contemplated hereby.
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
- --------------------------------------------------------
Each of the representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or financial
statement delivered by any party to the other party incident to the transactions
contemplated hereby are material, shall be deemed to have been relied upon by
the other party and shall survive after the date hereof regardless of any
investigation and shall not merge in the performance of any obligation by either
party hereto; PROVIDED, HOWEVER, that such representations and warranties of the
Company and the Principal Stockholder shall expire on the same dates as and to
the extent that the rights to indemnification with respect thereto under Section
8 shall expire, and the representations and warranties of AB shall expire on the
first anniversary of the date hereof.
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SECTION 9. INDEMNIFICATION.
- --------- ---------------
9.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDER. The Principal Stockholder
agrees to indemnify and hold the Company, the Surviving Corporation, Acquisition
Corp and AB and their respective subsidiaries and affiliates and persons serving
as officers, directors, partners or employees thereof (individually a "Buyer
Indemnified Party" and collectively the "Buyer Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs and expenses (including, without limitation, reasonable fees of counsel)
of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement of
the foregoing) which may be sustained or suffered by any of them arising out of
or based upon any of the following matters:
(a) fraud, intentional misrepresentation or a deliberate or wilful
breach by the Company or the Principal Stockholder of any of their
representations, warranties or covenants under this Agreement or in any
certificate, schedule or exhibit delivered pursuant hereto;
(b) any other breach of any representation, warranty or covenant of
the Company or the Principal Stockholder under this Agreement or in any
certificate, schedule or exhibit delivered pursuant hereto, or by reason of any
claim, action or proceeding asserted or instituted growing out of any matter or
thing constituting a breach of such representations, warranties or covenants;
(c) any liability of the Company for Taxes arising from an event or
transaction prior to the date hereof or as a result of the transactions
contemplated hereby which have not been paid or provided for by the Company or
the Principal Stockholder, including, without limitation, any increase in Taxes
due to the unavailability of any loss or deduction claimed by the Company; or
based upon or related to a breach of any representation warranty or covenant
with respect to Taxes or tax related matters; PROVIDED, however, that the Buyer
Indemnified Parties shall not be eligible for indemnification hereunder if the
Merger is not deemed to be a tax free transaction except if the representation
in Section 2.28 or the covenants contained in Section 4.7 are breached;
(d) any liability of the Company or the Principal Stockholder with
respect to broker's commissions or finder's fees, legal fees, disbursements or
other expenses or any sales, use, transfer or other taxes incurred in connection
with the transactions contemplated hereby;
(e) any liability of the Company of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, liabilities for taxes due or accrued or to
become due, or contingent or potential liabilities relating to activities of the
Company or the conduct of its business prior to the date hereof, regardless of
whether claims in respect thereof have been asserted as of such date), except
liabilities (i)
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stated or adequately reserved against on the Base Balance Sheet or the notes
thereto, (ii) reflected in Schedules furnished to AB hereunder on the date
hereof, or (iii) incurred after the date of the Base Balance Sheet in the
ordinary course of business of the Company consistent with the terms of this
Agreement; and
(f) any liability, whether known or unknown, under any Environmental
Law or arising from any violation thereof.
9.2 LIMITATIONS ON INDEMNIFICATION BY THE STOCKHOLDER. Notwithstanding the
foregoing, the right of Buyer Indemnified Parties to indemnification under
Section 9.1 shall be subject to the following provisions:
(a) No indemnification shall be payable pursuant to Section 9.1(b)
(exclusive of any claims related to ownership of the Common Stock), 9.1(e) or
9.1(f) to any Buyer Indemnified Party unless the total of all claims for
indemnification pursuant to Section 9.1 shall exceed $200,000 in the aggregate,
whereupon the full amount of such claims shall be recoverable in accordance with
the terms hereof;
(b) No indemnification shall be payable to a Buyer Indemnified Party
with respect to claims asserted pursuant to Section 9.1(b) (exclusive of any
claims related to ownership of the Company's Common Stock or any of the matters
set forth in Section 2.23) or 9.1(e) after the third anniversary of the date
hereof and claims asserted pursuant to 9.1(c) after all of the applicable
statutes of limitations for such claims have expired;
(c) No indemnification shall be payable pursuant to Section 9.1 after
the cumulative amount of any claims paid by the Principal Stockholder to or on
behalf of the Buyer Indemnified Parties exceeds $2,000,000; PROVIDED, HOWEVER,
that the foregoing limitation shall not apply to any claims paid relating to
ownership of the Company's Common Stock or any of the matters set forth in
Section 2.23 or any of the matters set forth in Sections 9.1(a), 9.1(d) or
9.1(f); and
(d) The right of the Buyer Indemnified Parties to indemnification with
respect to any matters set forth in Sections 9.1(a), 9.1(d), 9.1(e) or 9.1(f)
shall not be limited by the foregoing provisions of this Section 9.2
notwithstanding that such matters might also constitute a breach for which
indemnification is available under Section 9.1(b) hereof.
9.3 NOTICE; DEFENSE OF CLAIMS. A Buyer Indemnified Party may make claims
for indemnification hereunder by giving written notice thereof to the Principal
Stockholder within the period in which indemnification claims can be made
hereunder. If indemnification is sought for a claim or liability asserted by a
third party, the Buyer Indemnified Party shall also give written notice thereof
to the Principal Stockholder promptly after it receives notice of the claim or
liability being asserted, but the failure to do so shall not relieve the
Principal Stockholder from any liability except to the extent that it is
prejudiced by the failure or delay in giving such notice. Such notice shall
summarize the bases for the claim for indemnification
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and any claim or liability being asserted by a third party. Within 20 days after
receiving such notice, the Principal Stockholder shall give written notice to
the Buyer Indemnified Party stating whether it disputes the claim for
indemnification and whether it will defend against any third party claim or
liability at its own cost and expense. If the Principal Stockholder fails to
give notice that it disputes an indemnification claim within 20 days after
receipt of notice thereof, it shall be deemed to have accepted and agreed to the
claim, which shall become immediately due and payable. The Principal Stockholder
shall be entitled to direct the defense against a third party claim or liability
with counsel selected by it (subject to the consent of the Buyer Indemnified
Party, which consent shall not be unreasonably withheld) as long as the
Principal Stockholder is conducting a good faith and diligent defense. The Buyer
Indemnified Party shall at all times have the right to fully participate in the
defense of a third party claim or liability at its own expense directly or
through counsel; PROVIDED, HOWEVER, that if the named parties to the action or
proceeding include both the Principal Stockholder and the Buyer Indemnified
Party and the Buyer Indemnified Party is advised that representation of both
parties by the same counsel would be inappropriate under applicable standards of
professional conduct, the Buyer Indemnified Party may engage separate counsel at
the expense of the Principal Stockholder. If no such notice of intent to dispute
and defend a third party claim or liability is given by the Principal
Stockholder, or if such good faith and diligent defense is not being or ceases
to be conducted by the Principal Stockholder, the Buyer Indemnified Party shall
have the right, at the expense of the Principal Stockholder, to undertake the
defense of such claim or liability (with counsel selected by the Buyer
Indemnified Party) and to compromise or settle it, exercising reasonable
business judgment. If the third party claim or liability is one that by its
nature cannot be defended solely by the Principal Stockholder, then the Buyer
Indemnified Party shall make available such information and assistance as the
Principal Stockholder may reasonably request and shall cooperate with the
Principal Stockholder in such defense, at the expense of the Principal
Stockholder.
9.4 SATISFACTION OF STOCKHOLDER INDEMNIFICATION OBLIGATIONS. In order to
satisfy the indemnification obligations set forth in Section 9.1 above, a Buyer
Indemnified Party shall have the right (in addition to collecting directly from
the Principal Stockholder) to set off its indemnification claims against any
Additional Payments or the Vesting Payment to be issued or paid to the
Stockholders. For purposes of determining the number of shares of AB Common
Stock to be offset, the value of the shares constituting an Additional Payment
shall be the Additional Payment Market Value Price as determined in accordance
with Section 1.7 and the value of the shares constituting the Vesting Payment
shall be $8.80.
SECTION 10. MISCELLANEOUS.
10.1 FEES AND EXPENSES. (a) Except as provided in Sections 7.2(b) and
10.1(b), each of the parties will bear its own expenses in connection with the
negotiation and the consummation of the transactions contemplated by this
Agreement, and no expenses of the Company or the Principal Stockholder relating
in any way to the purchase and sale of the Common Stock hereunder and the
transactions contemplated hereby, including, without
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limitation, investment banking, brokerage, legal, accounting or other
professional expenses of the Company or the Principal Stockholder, shall be
charged to or paid by the Company, the Surviving Corporation, Acquisition Corp
or AB.
(b) The parties acknowledge that AB has advanced $25,000 (the
"Advance") to the Company to be used solely for the Company's expenses incurred
in connection with the negotiation and consummation of the transactions
contemplated by this Agreement. In the event such transactions are consummated,
(i) the aggregate cash payment to be made to the Stockholders at the Closing
will be reduced by $12,500 as provided in Section 1.6(b), and (ii) the value of
the first, as a matter of time, to be made of the Additional Payments will be
reduced by $12,500 as provided in Section 1.7(a). In the event this Agreement is
terminated, the Advance shall be credited against fees for contract screening
services provided by the Company for AB, and absent such recoupment of the
Advance in full by the first anniversary of the date of such termination, shall
be repaid to AB within 30 days after such first anniversary. In the event the
Merger is consummated but no Additional Payment Date has occurred prior to the
Expiration Date, the Stockholders shall be jointly and severally liable for the
repayment to AB within 30 days after the Expiration Date of the $12,500 of the
Advance which has not been recouped by AB.
10.2 GOVERNING LAW. This Agreement shall be construed under and governed by
the internal laws of The Commonwealth of Massachusetts without regard to its
conflict of laws provisions, except for such portion of this Agreement which
specifically reference statutory provisions of the State of Colorado, to which
Colorado law shall apply.
10.3 NOTICES. Any notice, request, demand or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three days after deposit in United States post
office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
TO AB, THE ACQUISITION
- ----------------------
CORP OR THE SURVIVING
- ---------------------
CORPORATION: ALPHA-BETA TECHNOLOGY, INC.
- ------------ ---------------------------
One Innovation Drive
Worcester, MA 01605
Tel: (508) 798-6900
Fax: (508) 754-3075
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With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention: John J. Egan III, Esq.
Tel: (617) 570-1514
Fax: (617) 523-1231
TO THE COMPANY: MYCOTOX, INCORPORATED
- --------------- Box B-111
4200 E. 9th. Ave.
Denver, CO 80262
Tel: (303) 270-8647
Fax: (303) 270-4024
With a copy to: King Peterson Brown, LLC
Suite 1040
The Edward Building
8400 East Prentice Ave.
Englewood, CO 80111-2922
Attention: Richard Peterson, Esq.
Tel: (303) 793-3400
Fax: (303) 793-3678
TO THE PRINCIPAL
- ----------------
STOCKHOLDER: Dr. Claude P. Selitrennikoff
- ------------ Box B-111
4200 E. 9th. Ave.
Denver, CO 80262
Tel: (303) 270-8647
Fax: (303) 270-4024
With a copy to: King Peterson Brown, LLC
Suite 1040
The Edward Building
8400 East Prentice Ave.
Englewood, CO 80111-2922
Attention: Richard Peterson, Esq.
Tel: (303) 793-3400
Fax: (303) 793-3678
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
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10.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and Exhibits
referred to herein and the other writings specifically identified herein or
contemplated hereby, is complete, reflects the entire agreement of the parties
with respect to its subject matter and supersedes all previous written or oral
negotiations, commitments and writings, including, without limitation, the
letter agreement between AB and the Company dated April 8, 1997.
10.5 ASSIGNABILITY; BINDING EFFECT. Neither this Agreement nor any rights
to receive a portion of any Aggregate Additional Consideration may be assigned
by the Principal Stockholder, the Company or any of the other holders of Common
Stock without the prior written consent of AB. This Agreement shall be binding
upon, enforceable by and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
10.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
10.7 EXECUTION IN COUNTERPARTS. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
10.8 AMENDMENTS. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by AB and the Principal Stockholder.
10.9 PUBLICITY AND DISCLOSURES. Except as required by law, no press
releases or public disclosure, either written or oral, of the transactions
contemplated by this Agreement shall be made by a party to this Agreement
without, in the case of releases and disclosures by the Company or the Principal
Stockholder, the prior written consent of AB and, in the case of releases and
disclosures by AB or the Acquisition Corp. in the six month period following the
date of the Closing, the prior written consent of the Principal Stockholder.
10.10 CONSENT TO JURISDICTION. Each of the parties hereby consents to
personal jurisdiction, service of process and venue in the federal or state
courts of Massachusetts for any claim, suit or proceeding arising under this
Agreement, or in the case of a third party claim subject to indemnification
hereunder, in the court where such claim is brought.
10.11 SPECIFIC PERFORMANCE. The parties agree that it would be difficult to
measure damages which might result from a breach of this Agreement by the
Company or the Principal Stockholder and that money damages would be an
inadequate remedy for such a breach. Accordingly, if there is a breach or
proposed breach of any provision of this Agreement by the
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Company or the Principal Stockholder, AB shall be entitled, in addition to any
other remedies which it may have, to an injunction or other appropriate
equitable relief to restrain such breach without having to show or prove actual
damage to AB.
10.12 ARBITRATION. The parties hereto have agreed that they shall attempt
in good faith to resolve any controversy or claim arising out of or relating to
this Agreement, or any alleged breach hereof, among themselves for a thirty (30)
day period commencing upon the receipt of notice of such claim or controversy by
all parties. Thereafter, if the parties are unable to resolve such claim or
controversy, then the matter shall be submitted to arbitration to be held in
Boston, Massachusetts on an expedited basis in accordance with the rules of
J.A.M.S./Endispute then in effect. Any arbitration award shall be final and
conclusive and shall be binding on all parties and a judgment may be entered in
the highest federal or state court of Massachusetts having jurisdiction.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as a document under seal as of the date set forth above.
ALPHA-BETA TECHNOLOGY, INC.
By: /s/ Spiros Jamas
----------------------------------
[SEAL] Name: Spiros Jamas
Title: President
SMITHFIELDAB CORP.
By: /s/ Spiros Jamas
----------------------------------
[SEAL] Name: Spiros Jamas
Title: President
SMITHFIELDAB CORP.
By: /s/ D. Davidson Easson, Jr.
----------------------------------
Name: D. Davidson Easson, Jr.
Title: Treasurer
MYCOTOX, INC.
[SEAL]
By: /s/ Claude P. Selitrennikoff
----------------------------------
Name: Claude P. Selitrennikoff
Title: President
PRINCIPAL STOCKHOLDER
/s/ Claude P. Selitrennikoff
----------------------------------
Claude P. Selitrennikoff
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