We have
audited the accompanying consolidated balance sheets of Acer Therapeutics Inc. (the Company) as of December 31, 2016 and 2015 and the related consolidated statements of operations, changes in shareholders equity and cash flows
for the years then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has recurring losses from operations which raises substantial doubt about the Companys ability to continue as a going
concern. Managements plans in regards to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this
matter.
See report of independent registered public accounting firm and notes to the consolidated financial statements.
See report of independent registered public accounting firm and notes to the consolidated financial statements.
See report of independent registered public accounting firm and notes to the consolidated financial statements.
See report of independent registered public accounting firm and notes to the consolidated financial statements.
Acer Therapeutics Inc. (Acer) was incorporated on December 26, 2013
as part of a reorganization whereby Acer
Therapeutics, LLC was converted into a corporation organized under the laws of the state of Delaware. On March 20, 2015, Acer acquired Anchor Therapeutics, Inc. (Anchor), with Anchor becoming a wholly-owned subsidiary of Acer. On
August 19, 2016, the pepducin business reverted back to the holders of Anchors equity immediately prior to the merger (see Note 8).
Since its inception, Acer has devoted substantially all of its efforts to business planning, research and development, recruiting management
and technical staff, acquiring operating assets and raising capital.
The consolidated financial statements include the accounts of Acer
and its wholly-owned subsidiary, Anchor, from the acquisition date through the disposition date (collectively referred to as the Company). All intercompany balances and transactions are eliminated.
The Company is subject to a number of risks similar to other companies in their industry including rapid technological change, uncertainty of
market acceptance of the product, competition from larger companies with substitute products, availability of future financing and dependence on key personnel.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses since inception. The Company has relied on raising capital to finance its operations.
The Company plans to raise capital through equity and/or debt financings. There is no assurance, however, that the Company will be able to
raise sufficient capital to fund its operations on terms that are acceptable, or that its operations will ever be profitable.
There is
substantial doubt about the Companys ability to continue as a going concern within a year after the date that the financial statements are available to be issued and these financial statements do not include any adjustments relating to the
recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty.
A summary of the significant accounting policies
followed by the Company in the preparation of the accompanying consolidated financial statements follows:
The process of preparing consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates and changes in estimates may occur.
Acer considers all highly liquid investments with maturities of three months or less at the date of purchase to
be cash equivalents.
The
Company is primarily subject to U.S. Federal and Massachusetts state income taxes. As per statute, the Companys tax returns since incorporation in 2013 are open to tax examinations by U.S. Federal and state tax authorities.
For federal and state income taxes, deferred tax assets and liabilities are recognized based upon temporary differences between the financial
statement and the tax basis of assets and liabilities. Deferred income taxes are based upon prescribed rates and enacted laws applicable to periods in which differences are expected to reverse. A valuation allowance is recorded when it is more
likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are realizable.
Tax positions taken or expected to be taken in the course of preparing the Company tax returns are required to be evaluated to determine
whether the tax positions are
more-likely-than-not
of being sustained by the applicable tax authority. Tax positions not deemed to meet a
more-likely-than-not
threshold would be recorded as a tax expense in the current year. There were no uncertain tax positions that require accrual or disclosure in the consolidated financial statements as of
December 31, 2016 and 2015. The Companys policy is to recognize interest and penalties related to income tax, if any, in income tax expense. As of December 31, 2016 and 2015, the Company has no accruals for interest or penalties
related to income tax matters.
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the related assets on a straight-line basis.
The Company records share-based payments at fair value. The measurement date for compensation expense related to employee awards is generally
the date of the grant. The measurement date for compensation expense related to nonemployee awards is generally the date that the performance of the awards is completed and, until such time, the fair value of the awards is remeasured at the end of
each reporting period. Accordingly, the ultimate expense is not fixed until such awards are vested. The fair value of awards, net of expected forfeitures, is recognized as expense in the statement of operations over the requisite service period,
which is generally the vesting period. The fair value of options is calculated using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of stock price, the
expected term of the option, and the risk-free interest rate.
The following assumptions were used to estimate the fair value of stock options granted using the
Black-Scholes option pricing model:
Due to its limited operating history and limited number of sales of its common stock, the Company estimates the
volatility of its stock in consideration of a number of factors including the volatility of comparable public companies. The expected term of a stock option is the estimated period the options are expected to be outstanding and is calculated based
upon an average of the vesting period and the contractual term of the option. The assumed dividend yield is based upon the Companys expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the
expected life of the option is based upon the U.S. Treasury yield curve in effect at the time of grant.
In determining the exercise prices
for options granted, the Companys Board of Directors has considered the fair value of the common stock as of the measurement date. The fair value of the common stock has been determined by the Board of Directors after considering a broad range
of factors, including the results of a third-party valuation, the illiquid nature of an investment in the Companys common stock, the Companys financial performance and financial position and the Companys future prospects and
opportunity for liquidity events.
Goodwill
represents the excess of cost over fair value of net assets acquired in the Anchor acquisition. The Company evaluates the recoverability of goodwill annually or more frequently, if events or changes in circumstances indicate that the carrying value
of goodwill might be impaired. The Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. This step serves as the basis for determining
whether it is necessary to perform the
two-step
goodwill impairment test. If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying value, then it
will perform the
two-step
test. The
two-step
test first compares the fair value of the reporting unit to its carrying value. If the fair value exceeds the carrying
value, no impairment exists, and the second step is not performed. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded as part of the second step of the test, to the extent that the implied fair
value of the reporting unit goodwill is less than the carrying value.
In-process
research and development and goodwill will not be amortized but will be tested at least annually for impairment.
The Company reviews intangible assets annually to determine if any adverse conditions exist or a change in circumstances has occurred that
would indicate impairment. If the carrying value of an asset exceeds its undiscounted cash flows, the Company writes down the carrying value of the intangible asset to its fair value in the period identified.
As of December 31, 2016 and 2015, the Company performed a qualitative analysis of goodwill
and IPRD, in which management concluded that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount and the fair value of IPRD exceeds its carrying amount. No impairment charges were recorded in 2016
or 2015.
In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business, in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with
evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments of this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal
years. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements.
There was no provision for income taxes for the periods presented due to
the Companys operating losses and a full valuation allowance on deferred tax assets.
Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Companys deferred tax assets and liabilities are as follows:
A significant portion of the decrease in deferred tax assets in 2016 is a result of the disposal of Anchor (see
Note 8). The Company has provided a full valuation allowance against the deferred tax assets due to its limited history of incurring only operating losses. Management currently believes that it is more likely than not that the deferred tax assets
relating to the loss carryforwards and other temporary differences will not be realized in the future.
Through December 31, 2016, for
income tax reporting purposes, the Company had U.S. Federal and state net operating loss carryforwards of approximately $2,600,000 (corresponding to $537,000 on a tax effected basis in the table above) that can be carried forward and offset against
taxable income. Federal and Massachusetts net operating losses can be carried forward for 20 years and begin to expire in 2033.
Utilization of net operating losses may be subject to substantial annual limitations due to the change in ownership provisions of
the Internal Revenue Code of 1986, and similar state provisions. The annual limitations may result in the expiration of net operating losses before utilization.
In 2014 and 2015, the Company issued promissory notes to two investors
in the aggregate principal amounts of $47,200 and $3,500, respectively. The promissory notes accrued interest at the rate of 4.5% per annum.
The proceeds of the promissory notes were used for paying the initial $20,000 of the $40,000 fee under the BCM license agreement (see Note 9)
and various operating expenditures.
The interest expense incurred on the promissory notes in 2015 was $843. During 2015, the Company
repaid all of the outstanding principal and related accrued interest of $1,913 of the promissory notes.
On March 23, 2015, the Company issued convertible notes
payable (the 2015 Notes) to two of Anchors existing investors in the aggregate principal amount of $2,100,000. The 2015 Notes accrue interest at 10% per annum and mature on the earlier of (i) December 23, 2015 (the
maturity date) or (ii) upon a change of control of the Company, as defined.
The 2015 Notes are convertible upon a Qualified Financing or an optional conversion.
On July 17, 2015, the 2015 Notes and accrued interest of $66,164 were converted into 331,939 shares of Series A Convertible Redeemable
Preferred stock (see Note 10). The 2015 Notes were converted at a rate of $6.52576 which represented 70% of the price per share of Series A Convertible Redeemable Preferred stock. The Company recorded a beneficial conversion feature in the amount of
$927,522 as
non-cash
interest expense and additional
paid-in
capital upon conversion of the 2015 Notes.
On March 20, 2015, Acer acquired of
all of the outstanding stock of Anchor and the Company gained exclusive rights to three pepducin drug targets, providing the Company with an early stage discovery pipeline. In exchange, Acer issued 75,000 shares of the Companys common stock
valued at $2.55 per share, plus certain assumed liabilities for Anchors operations prior to the acquisition and legal fees related to the transaction. Holders of Anchors equity immediately prior to the merger were also entitled to
receive all proceeds from a sale of the pepducin business within 12 months of the merger, provided that the Company retains the exclusive rights to two pepducin drug targets and ownership of the third.
Goodwill represents Anchors existing investor relationships. The Company does not expect the goodwill to
be deductible for tax purposes. No value was assigned to the pepducin business, except to the extent of the Companys rights to the three pepducin drug targets. Costs related to the acquisition totaled $104,007 and are included in general and
administrative expenses in the Statement of Operations for the year ended December 31, 2015.
Under the merger agreement, if the
pepducin business was not sold within 12 months of the merger date, the pepducin business reverted to the holders of Anchors equity immediately prior to the merger. The sale did not occur within this period. The reversion was accomplished
through a Pepducin Transfer Agreement, entered into on August 19, 2016, pursuant to which Acer transferred all the outstanding stock of Anchor to Teserx, Inc., a new entity designated by the Shareholders Representative for the benefit of
holders of Anchors equity immediately prior to the merger. Acer retained the exclusive rights to the two pepducin drug targets and obtained ownership to the third. No gain or loss was recorded by Acer when the pepducin business reverted back
to the prior holders of Anchors equity and Acer has no continuing involvement in the pepducin business or with Teserx, Inc.
In August 2016, Acer signed an agreement with the Greater Paris University Hospitals
AP-HP
(via its
Department of Clinical Research and Development) granting the Company exclusive worldwide rights to access and use data from a randomized controlled clinical study of celiprolol. The Company will use this pivotal clinical data to support a New Drug
Application (NDA) regulatory filing for its lead product, celiprolol, for the treatment of vascular Ehlers-Danlos Syndrome (vEDS). The agreement requires the
In April 2014, Acer obtained exclusive rights to intellectual property
relating to
ACER-001
and preclinical and clinical data, through an exclusive license agreement with Baylor College of Medicine (BCM). Under the terms of the agreement, as amended, the Company has
worldwide exclusive rights to develop, manufacture, use, sell and import Licensed Products as defined in the agreement. The license agreement requires the Company to make certain upfront and annual payments to BCM, as well as reimburse certain legal
costs, and make payments upon achievement of defined milestones and payment of royalties on net sales of any developed product over the royalty term.
On July 17, 2015, the Company amended its certificate of incorporation to authorize
the issuance of 714,986 shares of Series A Convertible Redeemable Preferred stock (Series A). On July 17, 2015, the Company entered into the Series A Stock Purchase Agreement (the Series A Agreement). In accordance
with the Series A Agreement, the Company issued 331,939 shares of Series A to two institutional investors upon conversion of the Companys 2015 Notes and related accrued interest (see Note 7). In addition to the 2015 Notes that were converted,
the Company sold 306,477 shares of Series A to a third investor for $2,000,000 in gross proceeds.
The third investor has the right to
designate one observer to attend all meetings of the Companys Board of Directors in a
non-voting
capacity, and receive all information made available to members of the Board of Directors as long as the
third investor owns not less than 10% of the total number of shares of Series A purchased under the Series A Agreement.
In connection with
the closing of the sale of the shares of the Series A, certain founders of the Company granted the Company and the purchasers of Series A a right of first refusal with respect to any shares of Company capital stock proposed to be transferred by such
founders.
On April 20, 2016, the Company amended its certificate of incorporation, changing the number of authorized Series A shares
to 638,416.
On April 20, 2016, the Company amended its certificate of incorporation to authorize the issuance of 970,238 shares of Series B
Convertible Redeemable Preferred stock (Series B). On April 20, 2016, the Company entered into the Series B Stock Purchase Agreement (the Series B Agreement). In accordance with the Series B Agreement, the Company
issued 970,238 shares of Series B to four institutional investors and two individuals. The purchase price of the Series B was $8.40 per share, which resulted in total gross proceeds to the Company of $8,149,999.
In connection with the closing of the sale of the shares of the Series B, certain founders and common shareholders of the Company granted the
Company and the purchasers of the Series B the right of first refusal with respect to any shares of Company capital stock proposed to be transferred by such individuals.
The rights and privileges of Series A and Series B (collectively Preferred Stock) as of December 31, 2016 are as follows:
The holders of Preferred Stock are entitled to vote on all matters on which the holders of common stock are entitled to vote. The number of
votes to which each holder of Preferred Stock is entitled is equal to the number of shares of common stock that would be issued to such holder if the Preferred Stock had been converted to common stock.
The holders of the Series A and the holders of the Series B each have a right as a separate class to elect one director to the Companys
Board of Directors. The remaining directors are elected by the holders of the common stock and Preferred Stock voting together as a class. The Company is prohibited from taking certain actions without the approval of the holders of more than 50% of
the Preferred Stock, the holders of more than 50% of the Series A and/or the holders of more than 50% of the Series B. The Company is prohibited from taking certain actions without the approval of the Board of Directors, including the affirmative
vote of the director elected by the holders of the Series B.
The holders of Preferred Stock are entitled to receive dividends at a rate of 10% per annum, calculated based on the Original Issue Price, as
defined. The Series A Original Issue Price is $6.52576 per share and the Series B Original Issue Price is $8.40 per share. Dividends are payable when, as, and if declared by the Companys Board of Directors. Dividends accrue from day to
day, whether or not declared, are cumulative and compound annually on the anniversary date of the issuance of the share of the applicable series of Preferred Stock. Dividends are payable only when, as and if declared by the Board of Directors or as
otherwise provided in the Companys certificate of incorporation. No dividends have been declared or paid by the Company since inception.
Each
share of Preferred Stock is convertible into such number of shares of common stock as is determined by dividing the applicable Original Issue Price by the applicable Conversion Price in effect at the time of the conversion. The Conversion Price of
the Series A is initially set at $6.52576 per share and the Conversion Price of the Series B is initially set at $8.40 per share of Series A and Series B, respectively. The Conversion Prices (and thus the conversion ratios) are subject to adjustment
upon the occurrence of certain events, including certain dilutive instances.
In the event that the Company issues additional securities at
a price less than the applicable Original Issue Price, the applicable Conversion Price will be adjusted pursuant to a weighted average formula, subject to certain exceptions, including for dividends, stock splits and shares of common stock and
options for the purchase of shares of common stock issued pursuant to a plan, agreement or arrangement approved by the Board of Directors.
In
the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or any Deemed Liquidation Event as defined in the Companys certificate of incorporation (each a
Liquidity Event), the assets of the Company available for distribution to its shareholders shall be distributed to them in the following order and preference:
First, the holders of the Series B shall be entitled to receive an amount per share equal to the greater of (i) $8.40 plus any dividends
declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series B been converted into common stock immediately prior to such Liquidity Event; provided, however, that if the amount to be paid per
share of Series B in the Liquidity Event equals or exceeds $25.20 plus any dividends declared but unpaid thereon, each share of Series B shall automatically be converted into shares of the Companys common stock at the Series B Conversion Price
then in effect.
Second, the holders of the Series A shall be entitled to receive an amount per share equal to the greater of (i) $6.52576
plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had all shares of Series A been converted into common stock immediately prior to such Liquidity Event;
Next, any remaining assets available for to the Companys shareholders shall be distributed to the holders of common stock and Series B
pro rata on an
as-converted
basis.
The Series B shall be redeemed in three annual installments if requested by the holders of more than 50% of the outstanding Series B at any
time on or after July 17, 2020. The Series A shall be redeemed in three annual installments if requested by the holders of more than 50% of the outstanding Series A at any time after the holders of Series B have requested redemption of the
Series B. The Series B redemption price per share is $8.40 plus any dividends declared but unpaid thereon, and the Series A redemption price per share is $$6.52576 plus any dividends declared but unpaid thereon.
Stock Incentive Plan
The Companys 2013 Stock Incentive Plan (the Plan), as amended, provides for the granting of up to 165,000 shares of common
stock as incentive
non-qualified
stock options and/or restricted common stock to the Companys employees, officers, directors, consultants and advisers. Option awards are generally granted with an
exercise price equal to the fair value of the common stock at the date of grant and have contractual terms of 10 years. A summary of option activity under the Plan for the years ended December 31, 2016 and 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Options outstanding at December 31, 2015
|
|
|
62,000
|
|
|
$
|
2.55
|
|
|
|
9.65
|
|
Granted
|
|
|
60,000
|
|
|
|
2.55
|
|
|
|
|
|
Cancelled/forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at December 31, 2016
|
|
|
122,000
|
|
|
$
|
2.55
|
|
|
|
8.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at December 31, 2016
|
|
|
77,500
|
|
|
$
|
2.55
|
|
|
|
8.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant date fair value of options granted during the year ended December 31, 2016 was
$1.33 per share. At December 31, 2016, there was approximately $59,000 of unrecognized compensation expense related to the share-based compensation arrangements granted under the Plan and the remaining vesting period is one year.
See report of
independent registered public accounting firm.
F-42
Basic net loss per share is computed by dividing the net loss by the
weighted-average number of common shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted net loss share is the same as basic net loss per common share, since the effects of potentially dilutive securities are
antidilutive.
For the years ended December 31, 2016 and 2015, net loss per share was as follows:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Net loss per share, basic and diluted
|
|
$
|
(2.73
|
)
|
|
$
|
(1.51
|
)
|
Shares used in computing net loss per share, basic and diluted
|
|
|
2,450,000
|
|
|
|
2,433,973
|
|
As of December 31, 2016 and 2015, the following number of shares have been excluded from diluted net loss per
share since such inclusion would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Convertible redeemable preferred stock
|
|
|
1,608,654
|
|
|
|
638,416
|
|
Options to purchase common stock
|
|
|
122,000
|
|
|
|
62,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,730,654
|
|
|
|
700,416
|
|
|
|
|
|
|
|
|
|
|
Management has evaluated subsequent events through March 22,
2017, which is the date the consolidated financial statements were available to be issued. Other than as discussed below, there were no subsequent events that require adjustment to or disclosure in the financial statements.
On March 22, 2017, the Company issued senior secured convertible notes payable (the 2017 Notes) to existing investors and a
vendor in the aggregate principal amount of $3,125,000. The 2017 Notes accrue interest at 10% per annum and mature on the earlier of (i) March 22, 2018 (the maturity date) or (ii) upon a Change in Control of the Company,
as defined. The 2017 Notes are convertible upon a Qualified Financing, Change in Control, or an Optional Conversion, as defined in the 2017 Notes.
See report of independent registered public accounting firm.
F-43
ACER THERAPEUTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,823,115
|
|
|
$
|
1,834,018
|
|
Prepaid expenses
|
|
|
212,560
|
|
|
|
540,053
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
3,035,675
|
|
|
|
2,374,071
|
|
Property and equipment, net
|
|
|
5,312
|
|
|
|
6,217
|
|
|
|
|
Other assets:
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
272,315
|
|
|
|
272,315
|
|
In-process
research and development
|
|
|
118,600
|
|
|
|
118,600
|
|
Deferred financing costs
|
|
|
|
|
|
|
1,901
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,431,902
|
|
|
$
|
2,773,104
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Redeemable Preferred Stock and Stockholders Deficit
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
847,494
|
|
|
$
|
383,411
|
|
Accrued expenses
|
|
|
929,213
|
|
|
|
438,028
|
|
Convertible notes payable, net
|
|
|
3,067,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
4,844,059
|
|
|
|
821,439
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
Series B Convertible Redeemable Preferred stock, $0.0001 par value; 970,238 shares authorized,
issued and outstanding (preference in liquidation of $8,149,999 at March 31, 2017)
|
|
|
8,031,346
|
|
|
|
8,022,219
|
|
Series A Convertible Redeemable Preferred stock, $0.0001 par value; 638,416 shares authorized,
issued and outstanding (preference in liquidation of $4,166,150 at March 31, 2017)
|
|
|
4,117,931
|
|
|
|
4,114,221
|
|
Stockholders deficit:
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; authorized 10,000,000 shares; 2,450,000 shares issued and
outstanding
|
|
|
246
|
|
|
|
246
|
|
Additional
paid-in
capital
|
|
|
1,175,239
|
|
|
|
1,172,200
|
|
Accumulated deficit
|
|
|
(14,736,919
|
)
|
|
|
(11,357,221
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders deficit
|
|
|
(13,561,434
|
)
|
|
|
(10,184,775
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities, redeemable preferred stock and stockholders deficit
|
|
$
|
3,431,902
|
|
|
$
|
2,773,104
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements.
F-44
ACER THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
2017
|
|
|
Three months ended
March 31,
2016
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
3,033,539
|
|
|
$
|
636,681
|
|
General and administrative
|
|
|
333,529
|
|
|
|
256,174
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
3,367,068
|
|
|
|
892,855
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(3,367,068
|
)
|
|
|
(892,855
|
)
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
401
|
|
|
|
|
|
Interest expense
|
|
|
(13,031
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (expense), net
|
|
|
(12,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,379,698
|
)
|
|
$
|
(892,855
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(1.38
|
)
|
|
$
|
(0.36
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing net loss per share, basic and diluted
|
|
|
2,450,000
|
|
|
|
2,450,000
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements.
F-45
ACER THERAPEUTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
2017
|
|
|
Three months
ended March 31,
2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,379,698
|
)
|
|
$
|
(892,855
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Non-cash
interest expense
|
|
|
13,031
|
|
|
|
|
|
Share-based compensation
|
|
|
15,876
|
|
|
|
6,218
|
|
Depreciation
|
|
|
905
|
|
|
|
816
|
|
Write-off
of deferred financing costs
|
|
|
1,901
|
|
|
|
18,685
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
327,493
|
|
|
|
56,241
|
|
Accounts payable
|
|
|
464,083
|
|
|
|
273,381
|
|
Accrued expenses
|
|
|
483,480
|
|
|
|
17,627
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(2,072,929
|
)
|
|
|
(519,887
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
|
|
|
(1,582
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(1,582
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable
|
|
|
3,125,000
|
|
|
|
|
|
Deferred financing costs
|
|
|
(62,974
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
3,062,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
989,097
|
|
|
|
(521,469
|
)
|
Cash and cash equivalents, beginning of year
|
|
|
1,834,018
|
|
|
|
798,545
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
2,823,115
|
|
|
$
|
277,076
|
|
|
|
|
|
|
|
|
|
|
Supplemental
non-cash
financing transactions:
|
|
|
|
|
|
|
|
|
Accretion of issuance costs on Series A Convertible Redeemable Preferred stock
|
|
$
|
3,710
|
|
|
$
|
3,710
|
|
|
|
|
|
|
|
|
|
|
Accretion of issuance costs on Series B Convertible Redeemable Preferred stock
|
|
$
|
9,127
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited condensed consolidated financial statements.
F-46
ACER THERAPEUTICS INC.
Notes to Unaudited Interim Condensed Consolidated Financial Statements
1.
|
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
|
Business
Acer Therapeutics Inc. (Acer) was incorporated on December 26, 2013
as part of a reorganization whereby Acer
Therapeutics, LLC was converted into a corporation organized under the laws of the state of Delaware. On March 20, 2015, Acer acquired Anchor Therapeutics, Inc. (Anchor), with Anchor becoming a wholly-owned subsidiary of Acer. On
August 19, 2016, the pepducin business reverted back to the holders of Anchors equity immediately prior to the merger.
Acer is
developing therapies with established clinical
proof-of-concept
for the treatment of serious, ultra-rare diseases with critical unmet medical need. Acers
late-stage clinical pipeline includes two candidates for severe genetic disorders for which there are currently no
FDA-approved
treatments: celiprolol for vascular Ehlers-Danlos Syndrome (vEDS) and
ACER-001
for Maple Syrup Urine Disease (MSUD). Acer is also advancing
ACER-001
for the treatment of Urea Cycle Disorders (UCD).
Since its inception, Acer has devoted substantially all of its efforts to business planning, research and development, recruiting management
and technical staff, acquiring operating assets and raising capital.
The consolidated financial statements include the accounts of Acer
and its wholly-owned subsidiary, Anchor, from the acquisition date through the disposition date (collectively referred to as the Company). All intercompany balances and transactions are eliminated.
The Company is subject to a number of risks similar to other companies in their industry including rapid technological change, uncertainty of
market acceptance of the product, competition from larger companies with substitute products, availability of future financing and dependence on key personnel.
Unaudited Interim Condensed Consolidated Financial Statements
The interim condensed consolidated balance sheet as of March 31, 2017 and the condensed consolidated statements of operations and cash
flows for the three months ended March 31, 2017 and 2016 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and reflect, in the
opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Companys financial position as of March 31, 2017 and results of operations and cash flows for the three months
ended March 31, 2017 and 2016. The results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other future annual or
interim period. The condensed consolidated balance sheet as of December 31, 2016 included herein was derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should
be read in conjunction with the Companys audited consolidated financial statements included elsewhere in this prospectus. The Companys management performed an evaluation of its activities through the date of filing of these financial
statements and concluded that there are no subsequent events, other than as disclosed.
Going Concern Uncertainty
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses since inception. The Company has relied on raising capital to finance its operations.
F-47
The Company plans to raise capital through equity and/or debt financings. There is no assurance,
however, that the Company will be able to raise sufficient capital to fund its operations on terms that are acceptable, or that its operations will ever be profitable.
There is substantial doubt about the Companys ability to continue as a going concern within a year after the date that the financial
statements are available to be issued and these financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty.
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
A summary of the significant accounting policies
followed by the Company in the preparation of the accompanying condensed consolidated financial statements follows. The Companys other significant accounting policies are described in Note 2 to its audited financial statements for
the year ended December 31, 2016, included elsewhere in this prospectus.
Share-Based Compensation
The Company records share-based payments at fair value. The measurement date for compensation expense related to employee awards is generally
the date of the grant. The measurement date for compensation expense related to nonemployee awards is generally the date that the performance of the awards is completed and, until such time, the fair value of the awards is remeasured at the end of
each reporting period. Accordingly, the ultimate expense is not fixed until such awards are vested. The fair value of awards, net of expected forfeitures, is recognized as expense in the statement of operations over the requisite service period,
which is generally the vesting period. The fair value of options is calculated using the Black-Scholes option pricing model. This option valuation model requires input of assumptions including, among others, the volatility of stock price, the
expected term of the option, and the risk-free interest rate.
There were no grants of stock options in either of the three months ended
March 31, 2017 or 2016.
Use of Estimates
The Companys accounting principles require management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for
acquisitions, stock-based compensation, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share
Basic and diluted net loss per common share is computed by dividing net loss in each period by the weighted average number of shares of common
stock outstanding during such period. For the periods presented, common stock equivalents, consisting of options and convertible notes payable, were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU
No. 2016-09,
Improvements to Employee Share-Based Payment
Accounting
, or ASU
No. 2016-09,
which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either
equity or liabilities and classification of cash flows. Acer adopted ASU
No. 2016-09
as of January 1, 2017. Under the new standard, all excess tax benefits and tax deficiencies are recognized as
income tax expense or benefit in the income statement. The tax effects of exercised or vested awards are treated as discrete items in the
F-48
reporting period in which they occur. We applied the modified retrospective adoption approach upon adoption of the standard, and prior periods have not been adjusted. We elected to recognize
forfeitures related to employee share-based payments as they occur. There was no material impact on our financial statements as a result of the adoption of this guidance.
3.
|
PROPERTY AND EQUIPMENT
|
Property and equipment consisted of the following at
March 31, 2017 and December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Computer hardware and software
|
|
$
|
10,861
|
|
|
$
|
10,861
|
|
Less accumulated depreciation
|
|
|
(5,549
|
)
|
|
|
(4,644
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,312
|
|
|
$
|
6,217
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses consisted of the following at March 31, 2017 and
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Accrued wages
|
|
$
|
1,534
|
|
|
$
|
|
|
Accrued legal
|
|
|
36,528
|
|
|
|
21,477
|
|
Accrued consulting
|
|
|
22,005
|
|
|
|
13,105
|
|
Accrued audit and tax
|
|
|
27,329
|
|
|
|
39,820
|
|
Accrued interest
|
|
|
7,705
|
|
|
|
|
|
Accrued license fees
|
|
|
823,842
|
|
|
|
205,444
|
|
Accrued contract manufacturing
|
|
|
|
|
|
|
126,700
|
|
Accrued contract research
|
|
|
|
|
|
|
16,800
|
|
Accrued miscellaneous expenses
|
|
|
10,270
|
|
|
|
14,682
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
929,213
|
|
|
$
|
438,028
|
|
|
|
|
|
|
|
|
|
|
5.
|
CONVERTIBLE NOTES PAYABLE
|
On March 22, 2017, the Company issued senior secured
convertible notes payable (the 2017 Notes) to existing investors and a vendor in the aggregate principal amount of $3,125,000. The 2017 Notes accrue interest at 10% per annum and mature on the earlier of (i) March 22, 2018 (the
Maturity Date) or (ii) upon a Change in Control of the Company, as defined.
The 2017 Notes are convertible into common
stock upon a Qualified Financing, Change in Control, or an Optional Conversion. Conversion upon a Qualified Financing is at a price per share equal to the price per share paid for the shares sold in the Qualified Financing less a discount of: (i)
0%, if a Qualified Financing occurs on or before June 30, 2017; (ii) 10%, if a Qualified Financing occurs after June 30, 2017 but on or before September 1, 2017; or (iii) 20%, if a Qualified Financing occurs after September 1,
2017. Conversion upon a Change in Control is at the discretion of the holder such that the Company will pay each holder the outstanding balance on their respective note or the note is converted at a price per share equal to the lesser of $16.57 and
the price per share of common stock paid to the holders of the common stock in such Change in Control. Conversion under an Optional Conversion is at a price per share of $16.57 based on the outstanding balance of the note.
The Company evaluated all terms of the 2017 Notes, including the Change in Control provision, to identify any embedded features that required
bifurcation and recording as derivative instruments. The Company determined that there were no such features requiring separate accounting.
F-49
In connection with the 2017 Notes, the Company incurred debt issuance costs of $62,974 and
recorded them as a debt discount. During the three months ended March 31, 2017, the Company recognized $13,031 of interest expense, including $5,326 in amortization of debt discount and $7,705 of accrued interest on the 2017 Notes.
License Agreements
In August 2016, Acer signed an agreement with the Greater Paris University Hospitals
AP-HP
(via its
Department of Clinical Research and Development) granting the Company exclusive worldwide rights to access and use data from a randomized controlled clinical study of celiprolol. The Company will use this pivotal clinical data to support a New Drug
Application (NDA) regulatory filing for its lead product, celiprolol, for the treatment of vascular Ehlers-Danlos Syndrome (vEDS). The agreement requires the Company to make certain upfront payments to
AP-HP,
as well as reimburse certain costs, and make payments upon achievement of defined milestones and payment of royalties on net sales of celiprolol over the royalty term.
In April 2014, Acer obtained exclusive rights to intellectual property relating to
ACER-001
and
preclinical and clinical data, through an exclusive license agreement with Baylor College of Medicine (BCM). Under the terms of the agreement, as amended, the Company has worldwide exclusive rights to develop, manufacture, use, sell and
import Licensed Products as defined in the agreement. The license agreement requires the Company to make certain upfront and annual payments to BCM, as well as reimburse certain legal costs, and make payments upon achievement of defined milestones
and payment of royalties on net sales of any developed product over the royalty term.
The Companys 2013 Stock Incentive Plan (the
Plan), as amended, provides for the granting of up to 165,000 shares of common stock as incentive
non-qualified
stock options and/or restricted common stock to the Companys employees,
officers, directors, consultants and advisers. Option awards are generally granted with an exercise price equal to the fair value of the common stock at the date of grant and have contractual terms of 10 years. A summary of option activity under the
Plan for the three months ended March 31, 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term (Years)
|
|
Options outstanding at December 31, 2016
|
|
|
122,000
|
|
|
$
|
2.55
|
|
|
|
8.80
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled/forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at March 31, 2017
|
|
|
122,000
|
|
|
$
|
2.55
|
|
|
|
8.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2017
|
|
|
82,125
|
|
|
$
|
2.55
|
|
|
|
8.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2017, there was approximately $43,000 of unrecognized compensation expense related to the
share-based compensation arrangements granted under the Plan and the remaining vesting period is one year.
Basic net loss per share is computed by dividing the net loss by the
weighted-average number of common shares outstanding. Diluted net loss per share is computed similarly to basic net loss per share except that
F-50
the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares
were dilutive. Diluted net loss share is the same as basic net loss per common share, since the effects of potentially dilutive securities are antidilutive.
As of March 31, 2017 and 2016, the following number of shares have been excluded from diluted net loss per share since such inclusion
would be anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Convertible redeemable preferred stock
|
|
|
1,608,654
|
|
|
|
638,416
|
|
Convertible promissory notes
|
|
|
188,593
|
|
|
|
|
|
Options to purchase common stock
|
|
|
122,000
|
|
|
|
62,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,919,247
|
|
|
|
700,416
|
|
|
|
|
|
|
|
|
|
|
Merger Agreement
Opexa Therapeutics, Inc. (Opexa) and Acer have entered into an Agreement and Plan of Merger and Reorganization, dated June 30,
2017 (the Merger Agreement). The Merger Agreement contains the terms and conditions of the proposed business combination of Opexa and Acer. Under the Merger Agreement, Opexa Merger Sub, Inc., a wholly-owned subsidiary of Opexa will merge
with and into Acer, with Acer surviving as a wholly-owned subsidiary of Opexa. After the completion of the Merger, Opexa will change its corporate name to Acer Therapeutics Inc. as required by the Merger Agreement.
Subscription Agreement
On June 30, 2017, Acer entered into a subscription agreement with certain current shareholders of Acer and certain new investors pursuant
to which the purchasers agreed to purchase an aggregate of 1,655,162 shares of Acers common stock at a price per share of $9.47 for an aggregate consideration of approximately $15.7 million immediately prior to the consummation of the
Merger, subject to specified conditions in the subscription agreement.
Convertible Notes Payable
On May 31, 2017, the Company issued senior secured convertible notes payable (the May 2017 Notes) to existing investors in the
aggregate principal amount of $2,375,000. The May 2017 Notes accrue interest at 10% per annum and mature on the earlier of (i) March 22, 2018 (the maturity date) or (ii) upon a Change in Control of the Company, as defined.
The terms are similar to the 2017 Notes. See Note 5.
F-51
INDEX TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
F-52
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following information does not give effect to the proposed reverse stock split described in Opexa Proposal No. 5, beginning on page 160 in this
proxy statement/prospectus/information statement.
The following unaudited pro forma condensed financial statements give effect to the merger between
Opexa and Acer (the Merger) and were prepared in accordance with the regulations of the Securities and Exchange Commission (SEC). For accounting purposes, Acer is considered to be acquiring Opexa in the Merger. Acer was
determined to be the accounting acquirer based upon the terms of the Merger and other factors including: (i) Acers security holders will own approximately 88.8% of the combined company immediately following the closing of the Merger,
(ii) Acer directors will hold all board seats in the combined company, and (iii) Acer management will hold all key positions in the management of the combined company. The transaction will be accounted for under the acquisition method of
accounting under generally accepted accounting principles (GAAP). Under the acquisition method of accounting for the purpose of these unaudited pro forma condensed financial statements, management of Opexa and Acer have determined a
preliminary estimated purchase price, calculated as described in Note 2 to these unaudited pro forma condensed financial statements. The net tangible and intangible assets acquired and liabilities assumed in connection with the transaction are
recorded at their estimated acquisition date fair values. A final determination of these estimated fair values will be based on the actual net tangible and intangible assets of Opexa that exist as of the date of completion of the transaction.
The unaudited pro forma condensed balance sheet as of March 31, 2017 assumes that the Merger took place on March 31, 2017 and combines the
historical balance sheets of Opexa and Acer as of March 31, 2017. The unaudited pro forma condensed statement of operations for the three months ended March 31, 2017 and for the year ended December 31, 2016 assumes that the Merger
took place as of January 1, 2016, and combines the historical results of Opexa and Acer for the three months ended March 31, 2017 and for the year ended December 31, 2016, respectively. The historical financial statements of Opexa and
Acer, which are provided elsewhere in this proxy statement/prospectus/information statement, have been adjusted to give pro forma effect to events that are (i) directly attributable to the Merger, (ii) factually supportable, and
(iii) with respect to the statements of operations, expected to have a continuing impact on the combined results.
The unaudited pro forma condensed
financial statements are based on the assumptions and adjustments that are described in the accompanying notes. The unaudited pro forma condensed financial statements and pro forma adjustments have been prepared based on preliminary estimates of
fair value of assets acquired and liabilities assumed. Differences between these preliminary estimates and the final acquisition accounting will occur and these differences could have a material impact on the accompanying unaudited pro forma
condensed financial statements and the combined companys future results of operations and financial position. The actual amounts recorded as of the completion of the Merger may differ materially from the information presented in these
unaudited pro forma financial statements as a result of the amount, if any, of capital raised by Acer between entering the Merger Agreement and closing of the Merger; the amount of cash used by Opexas operations between the signing of the
Merger Agreement and the closing of the Merger; the timing of closing of the Merger; and other changes in the Opexa assets and liabilities that occur prior to the completion of the Merger.
The unaudited pro forma condensed financial statements do not give effect to the potential impact of current financial conditions, regulatory matters,
operating efficiencies or other savings or expenses that may be associated with the acquisition. The unaudited pro forma condensed financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the
financial position or results of operations in future periods or the results that actually would have been realized had Opexa and Acer been a combined company during the specified period. The unaudited pro forma condensed financial statements,
including the notes thereto, should be read in conjunction with the Opexa and Acer historical audited financial statements for the year ended December 31, 2016 and the unaudited condensed financial statements for the three months ended
March 31, 2017 included elsewhere in this proxy statement/prospectus/information statement.
F-53
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opexa
|
|
|
Acer
|
|
|
Pro Forma
Merger
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,822,677
|
|
|
$
|
2,823,115
|
|
|
$
|
10,000,000
|
|
|
|
C
|
|
|
$
|
18,020,792
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,375,000
|
|
|
|
F
|
|
|
|
|
|
Other current assets
|
|
|
237,331
|
|
|
|
212,560
|
|
|
|
|
|
|
|
|
|
|
|
449,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
3,060,008
|
|
|
|
3,035,675
|
|
|
|
12,375,000
|
|
|
|
|
|
|
|
18,470,683
|
|
Property and equipment, net
|
|
|
|
|
|
|
5,312
|
|
|
|
|
|
|
|
|
|
|
|
5,312
|
|
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
272,315
|
|
|
|
|
|
|
|
|
|
|
|
272,315
|
|
In-process
research and development
|
|
|
|
|
|
|
118,600
|
|
|
|
|
|
|
|
|
|
|
|
118,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,060,008
|
|
|
$
|
3,431,902
|
|
|
$
|
12,375,000
|
|
|
|
|
|
|
$
|
18,866,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, preferred stock and stockholders equity (deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
298,050
|
|
|
$
|
847,494
|
|
|
|
|
|
|
|
|
|
|
$
|
1,145,544
|
|
Accrued expenses
|
|
|
428,394
|
|
|
|
929,213
|
|
|
$
|
864,114
|
|
|
|
E
|
|
|
|
3,848,909
|
|
|
|
|
|
|
|
|
|
|
|
|
49,452
|
|
|
|
F
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,188
|
|
|
|
G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(174,452
|
)
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,635,000
|
|
|
|
D
|
|
|
|
|
|
Notes payableinsurance
|
|
|
91,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,871
|
|
Convertible notes payable
|
|
|
|
|
|
|
3,067,352
|
|
|
|
2,375,000
|
|
|
|
F
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,442,352
|
)
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
818,315
|
|
|
|
4,844,059
|
|
|
|
(576,050
|
)
|
|
|
|
|
|
|
5,086,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
818,315
|
|
|
|
4,844,059
|
|
|
|
(576,050
|
)
|
|
|
|
|
|
|
5,086,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Convertible Redeemable Preferred stock
|
|
|
|
|
|
|
8,031,346
|
|
|
|
(8,031,346
|
)
|
|
|
B
|
|
|
|
|
|
Series A Convertible Redeemable Preferred stock
|
|
|
|
|
|
|
4,117,931
|
|
|
|
(4,117,931
|
)
|
|
|
B
|
|
|
|
|
|
Stockholders equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
76,573
|
|
|
|
246
|
|
|
|
161
|
|
|
|
B
|
|
|
|
77,146
|
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106
|
|
|
|
C
|
|
|
|
|
|
Additional
paid-in
capital
|
|
|
164,410,992
|
|
|
|
1,175,239
|
|
|
|
(162,245,872
|
)
|
|
|
A
|
|
|
|
29,114,647
|
|
|
|
|
|
|
|
|
|
|
|
|
12,149,116
|
|
|
|
B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(864,114
|
)
|
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,674,392
|
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,999,894
|
|
|
|
C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,185,000
|
)
|
|
|
D
|
|
|
|
|
|
Accumulated deficit
|
|
|
(162,245,872
|
)
|
|
|
(14,736,919
|
)
|
|
|
162,245,872
|
|
|
|
A
|
|
|
|
(15,411,207
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(450,000
|
)
|
|
|
D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,452
|
)
|
|
|
F
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(117,188
|
)
|
|
|
G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(57,648
|
)
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity (deficit)
|
|
|
2,241,693
|
|
|
|
(13,561,434
|
)
|
|
|
25,100,327
|
|
|
|
|
|
|
|
13,780,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities, preferred stock and stockholders equity (deficit)
|
|
$
|
3,060,008
|
|
|
$
|
3,431,902
|
|
|
$
|
12,375,000
|
|
|
|
|
|
|
$
|
18,866,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited pro forma condensed financial statements.
F-54
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THREE MONTHS ENDED MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opexa
|
|
|
Acer
|
|
|
Pro Forma
Merger
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
206,024
|
|
|
$
|
3,033,539
|
|
|
|
|
|
|
|
|
|
|
$
|
3,239,563
|
|
General and administrative
|
|
|
719,869
|
|
|
|
333,529
|
|
|
$
|
864,114
|
|
|
|
E
|
|
|
|
2,367,512
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
925,893
|
|
|
|
3,367,068
|
|
|
|
1,314,114
|
|
|
|
|
|
|
|
5,607,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(925,893
|
)
|
|
|
(3,367,068
|
)
|
|
|
(1,314,114
|
)
|
|
|
|
|
|
|
(5,607,075
|
)
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
(846
|
)
|
|
|
(12,630
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,476
|
)
|
Other income (expense), net
|
|
|
467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(926,272
|
)
|
|
$
|
(3,379,698
|
)
|
|
$
|
(1,314,114
|
)
|
|
|
|
|
|
$
|
(5,620,084
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(0.12
|
)
|
|
$
|
(1.38
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstandingbasic and diluted
|
|
|
7,597,769
|
|
|
|
2,450,000
|
|
|
|
56,741,026
|
|
|
|
I
|
|
|
|
66,788,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited pro forma condensed financial statements.
F-55
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opexa
|
|
|
Acer
|
|
|
Pro Forma
Merger
Adjustments
|
|
|
|
|
|
Pro Forma
Combined
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option revenue
|
|
$
|
2,905,165
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,905,165
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
6,497,531
|
|
|
|
5,305,130
|
|
|
|
|
|
|
|
|
|
|
|
11,802,661
|
|
General and administrative
|
|
|
3,122,337
|
|
|
|
1,391,182
|
|
|
$
|
864,114
|
|
|
|
E
|
|
|
|
5,827,633
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
D
|
|
|
|
|
|
Depreciation and amortization
|
|
|
238,127
|
|
|
|
3,532
|
|
|
|
|
|
|
|
|
|
|
|
241,659
|
|
Impairment loss
|
|
|
1,036,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,036,467
|
|
Loss on disposal of fixed assets
|
|
|
2,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
10,896,782
|
|
|
|
6,699,844
|
|
|
|
1,314,114
|
|
|
|
|
|
|
|
18,910,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(7,991,617
|
)
|
|
|
(6,699,844
|
)
|
|
|
(1,314,114
|
)
|
|
|
|
|
|
|
(16,005,575
|
)
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
874
|
|
|
|
282
|
|
|
|
|
|
|
|
|
|
|
|
1,156
|
|
Other income (expense), net
|
|
|
10,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,980,114
|
)
|
|
$
|
(6,699,562
|
)
|
|
$
|
(1,314,114
|
)
|
|
|
|
|
|
$
|
(15,993,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
|
|
$
|
(1.13
|
)
|
|
$
|
(2.73
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstandingbasic and diluted
|
|
|
7,048,661
|
|
|
|
2,450,000
|
|
|
|
56,741,026
|
|
|
|
I
|
|
|
|
66,239,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the unaudited pro forma condensed combined financial statements.
F-56
NOTES TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
1. Description of Transaction and Basis of Presentation
Description of Transaction
On June 30, 2017,
Opexa entered into an Agreement and Plan of Merger and Reorganization (the Merger Agreement) with
pre-Merger
Acer Therapeutics (Private Acer), with Private Acer becoming a wholly-owned
subsidiary of Opexa and the surviving corporation following completion of the merger (the Merger) in accordance with the Merger Agreement.
Immediately after the Merger, Acer securityholders will own approximately 88.8% of the common stock of the combined company, with Opexa securityholders owning
approximately 11.2% of the common stock of the combined company, each assuming that Acer closes its concurrent financing immediately prior to the effective time of the Merger. If the concurrent financing does not close and the Merger is consummated,
then Acers securityholders would own approximately 85.1% of the common stock of the combined company and Opexas securityholders would own approximately 14.9% of the common stock of the combined company. These estimates are based on the
anticipated
pre-split
Exchange Ratio and post-split Exchange Ratios and are subject to adjustment.
Concurrent
with Private Acers entry into the Merger Agreement, certain third parties, including Private Acers existing shareholders entered into an agreement to purchase shares of Private Acers common stock in a private financing prior to
consummation of the Merger for an aggregate purchase price of approximately $15.7 million.
Basis of Presentation
The unaudited pro forma condensed combined financial statements were prepared in accordance with the regulations of the Securities and Exchange Commission
(SEC). The unaudited pro forma condensed balance sheet as of March 31, 2017 is presented as if the Merger had been completed on March 31, 2017. The unaudited pro forma condensed statement of operations for the three months
ended March 31, 2017 and for the year ended December 31, 2016 assumes that the Merger took place as of January 1, 2016, and combines the historical results of Opexa and Acer for the three months ended March 31, 2017, and for the
year ended December 31, 2016, respectively. Based on the terms of the Merger, Private Acer is deemed to be the acquiring company for accounting purposes and the transaction will be accounted for as an asset acquisition in accordance with
accounting principles generally accepted in the United States (U.S. GAAP). Accordingly, the assets and liabilities of Private Acer will be recorded as of the Merger closing date at their respective carrying value and the acquired net
assets of Opexa will be recorded as of the Merger closing date at their fair value. For the purpose of these unaudited condensed pro forma financial statements, management of Private Acer and Opexa have determined a preliminary estimated purchase
price for the asset acquisition, and such amount has been calculated as described in Note 2 to these unaudited pro forma condensed financial statements. The net assets acquired in connection with the transaction are at their estimated fair values. A
final determination of these estimated fair values will be based on the actual net acquired assets of Opexa as of the Merger closing date.
2.
Preliminary Purchase Price
The estimated fair value of the net assets of Opexa, on a pro forma basis, on March 31, 2017, was $2.2 million.
As Opexas net assets are predominantly comprised of cash offset by current liabilities, the pro forma carrying value of Opexas net assets is considered to be the best indicator of the fair value and, therefore, the preliminary estimated
purchase price as of March 31, 2017. The estimated preliminary purchase price at the Merger closing date will change due to the amount of cash used by Opexas operations after March 31, 2017 to the closing of the Merger and other
changes in the Opexa assets and liabilities that occur through the completion of the Merger as well as by the number and value of Acer shares issued upon the closing of the Merger.
F-57
The preliminary acquired net assets of Opexa based on their pro forma estimated fair values as of March 31,
2017 are as follows:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,822,677
|
|
Prepaid and other current assets
|
|
|
237,331
|
|
Current liabilities
|
|
|
(818,315
|
)
|
|
|
|
|
|
Net acquired tangible assets
|
|
$
|
2,241,693
|
|
|
|
|
|
|
The allocation of the estimated purchase price is preliminary because the proposed Merger has not yet been completed. The
purchase price allocation will remain preliminary until Acer determines the fair values of assets acquired and liabilities assumed. The final determination of the purchase price allocation is anticipated to be completed as soon as practicable after
completion of the Merger and will be based on the fair values of the assets acquired and liabilities assumed as of the Merger closing date. Acer does not expect to acquire or assign any value to intangible assets. The final amounts allocated to
assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.
3. Pro Forma Adjustments
The unaudited pro forma
condensed combined financial statements include pro forma adjustments to give effect to certain significant transactions of Acer as a direct result of the Merger, or for accounting purposes, the acquisition of Opexas net assets by Acer. The
pro forma adjustments reflecting the completion of the Merger are based upon the accounting analysis conclusion that the Merger should be accounted for as an asset acquisition and upon the assumptions set forth below.
|
A.
|
To reflect the elimination of Opexas historical shareholders equity balances and accumulated deficit, including the impact of the pro forma adjustments below.
|
|
B.
|
To reflect the conversion of Acers redeemable convertible preferred stock to Opexas common stock in connection with the Merger.
|
|
C.
|
To reflect the $10 million capital to be raised by Acer prior to the Merger and the issuance of Acers common stock in connection with the consummation of the concurrent financing.
|
|
D.
|
To record estimated transaction costs, such as advisor fees, legal and accounting expenses, on the $10 million capital to be raised by Acer prior to the Merger and transaction costs associated with the Merger.
|
|
E.
|
To record estimated severance and termination charges to be incurred by Opexa in connection with the Merger.
|
|
F.
|
To reflect May 2017 convertible notes issued by Acer and accrued interest.
|
|
G.
|
To accrue interest on Acer convertible notes to the closing of the Merger.
|
|
H.
|
To reflect conversion of Acer convertible notes to common stock in connection with the concurrent financing.
|
|
I.
|
To reflect additional shares issued as a result of the Merger, conversion of Acers convertible notes payable and accrued interest, and conversion of Acers Series A and Series B Redeemable Convertible
Preferred stock.
|
F-58
Annex A
AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
among
OPEXA
THERAPEUTICS, INC.,
OPEXA MERGER SUB, INC., and
ACER THERAPEUTICS INC.
Dated as of June 30, 2017
Table of Contents
|
|
|
|
|
|
|
ARTICLE 1 DESCRIPTION OF TRANSACTION
|
|
|
A-2
|
|
|
|
|
1.1
|
|
Structure of the Merger
|
|
|
A-2
|
|
1.2
|
|
Effects of the Merger
|
|
|
A-2
|
|
1.3
|
|
Closing; Effective Time
|
|
|
A-2
|
|
1.4
|
|
Certificate of Incorporation and Bylaws; Directors and Officers
|
|
|
A-2
|
|
1.5
|
|
Conversion of Shares and Assumption of Options
|
|
|
A-3
|
|
1.6
|
|
Calculation of Net Cash
|
|
|
A-4
|
|
1.7
|
|
Closing of Acers Transfer Books
|
|
|
A-5
|
|
1.8
|
|
Surrender of Certificates
|
|
|
A-5
|
|
1.9
|
|
Appraisal Rights
|
|
|
A-6
|
|
1.10
|
|
Further Action
|
|
|
A-7
|
|
1.11
|
|
Tax Consequences
|
|
|
A-7
|
|
1.12
|
|
Certificates
|
|
|
A-7
|
|
|
|
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF ACER
|
|
|
A-7
|
|
|
|
|
2.1
|
|
Subsidiaries; Due Organization; Organizational Documents
|
|
|
A-8
|
|
2.2
|
|
Authority; Vote Required
|
|
|
A-8
|
|
2.3
|
|
Non-Contravention;
Consents
|
|
|
A-9
|
|
2.4
|
|
Capitalization
|
|
|
A-9
|
|
2.5
|
|
Financial Statements
|
|
|
A-10
|
|
2.6
|
|
Absence of Changes
|
|
|
A-10
|
|
2.7
|
|
Title to Assets
|
|
|
A-11
|
|
2.8
|
|
Real Property; Leaseholds
|
|
|
A-11
|
|
2.9
|
|
Intellectual Property
|
|
|
A-11
|
|
2.10
|
|
Material Contracts
|
|
|
A-13
|
|
2.11
|
|
Undisclosed Liabilities
|
|
|
A-14
|
|
2.12
|
|
Compliance; Permits; Restrictions
|
|
|
A-14
|
|
2.13
|
|
Tax Matters
|
|
|
A-16
|
|
2.14
|
|
Employee and Labor Matters; Benefit Plans
|
|
|
A-17
|
|
2.15
|
|
Environmental Matters
|
|
|
A-20
|
|
2.16
|
|
Insurance
|
|
|
A-21
|
|
2.17
|
|
Legal Proceedings; Orders
|
|
|
A-21
|
|
2.18
|
|
Inapplicability of Anti-Takeover Statutes
|
|
|
A-21
|
|
2.19
|
|
No Financial Advisor
|
|
|
A-21
|
|
2.20
|
|
Subscription Agreement
|
|
|
A-22
|
|
2.21
|
|
Disclosure
|
|
|
A-22
|
|
2.22
|
|
Exclusivity of Representations; Reliance
|
|
|
A-22
|
|
|
|
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF OPEXA AND MERGER SUB
|
|
|
A-22
|
|
|
|
|
3.1
|
|
Subsidiaries; Due Organization; Organizational Documents
|
|
|
A-23
|
|
3.2
|
|
Authority; Vote Required
|
|
|
A-23
|
|
3.3
|
|
Non-Contravention;
Consents
|
|
|
A-24
|
|
3.4
|
|
Capitalization
|
|
|
A-24
|
|
3.5
|
|
SEC Filings; Financial Statements
|
|
|
A-26
|
|
3.6
|
|
Absence of Changes
|
|
|
A-27
|
|
3.7
|
|
Title to Assets
|
|
|
A-27
|
|
3.8
|
|
Real Property; Leaseholds
|
|
|
A-28
|
|
3.9
|
|
Intellectual Property
|
|
|
A-28
|
|
3.10
|
|
Material Contracts
|
|
|
A-30
|
|
A-i
|
|
|
|
|
|
|
3.11
|
|
Undisclosed Liabilities
|
|
|
A-31
|
|
3.12
|
|
Compliance; Permits; Restrictions
|
|
|
A-31
|
|
3.13
|
|
Tax Matters
|
|
|
A-32
|
|
3.14
|
|
Employee and Labor Matters; Benefit Plans
|
|
|
A-34
|
|
3.15
|
|
Environmental Matters
|
|
|
A-38
|
|
3.16
|
|
Insurance
|
|
|
A-38
|
|
3.17
|
|
Legal Proceedings; Orders
|
|
|
A-39
|
|
3.18
|
|
Inapplicability of Anti-Takeover Statutes
|
|
|
A-39
|
|
3.19
|
|
No Financial Advisor
|
|
|
A-39
|
|
3.20
|
|
Disclosure
|
|
|
A-39
|
|
3.21
|
|
Bank Accounts; Deposits
|
|
|
A-39
|
|
3.22
|
|
Transactions with Affiliates
|
|
|
A-40
|
|
3.23
|
|
Valid Issuance
|
|
|
A-40
|
|
3.24
|
|
Code of Ethics
|
|
|
A-40
|
|
3.25
|
|
Shell Company Status
|
|
|
A-40
|
|
3.26
|
|
Anti-Corruption Matters
|
|
|
A-40
|
|
3.27
|
|
Exclusivity of Representations; Reliance
|
|
|
A-40
|
|
|
|
ARTICLE 4 CERTAIN COVENANTS OF THE PARTIES
|
|
|
A-41
|
|
|
|
|
4.1
|
|
Access and Investigation
|
|
|
A-41
|
|
4.2
|
|
Operation of Opexas Business
|
|
|
A-42
|
|
4.3
|
|
Operation of Acers Business
|
|
|
A-43
|
|
4.4
|
|
Notification of Certain Matters
|
|
|
A-44
|
|
4.5
|
|
No Solicitation
|
|
|
A-45
|
|
|
|
ARTICLE 5 ADDITIONAL AGREEMENTS OF THE PARTIES
|
|
|
A-47
|
|
|
|
|
5.1
|
|
Registration Statement; Proxy Statement / Prospectus / Information Statement
|
|
|
A-47
|
|
5.2
|
|
Acer Stockholder Written Consent
|
|
|
A-48
|
|
5.3
|
|
Opexa Shareholders Meeting
|
|
|
A-49
|
|
5.4
|
|
Regulatory Approvals
|
|
|
A-51
|
|
5.5
|
|
Acer Options
|
|
|
A-52
|
|
5.6
|
|
Opexa Employee and Benefits Matters; Opexa Options
|
|
|
A-52
|
|
5.7
|
|
Indemnification of Officers and Directors
|
|
|
A-53
|
|
5.8
|
|
Additional Agreements
|
|
|
A-54
|
|
5.9
|
|
Disclosure
|
|
|
A-55
|
|
5.10
|
|
Listing
|
|
|
A-55
|
|
5.11
|
|
Tax Matters
|
|
|
A-55
|
|
5.12
|
|
Legends
|
|
|
A-55
|
|
5.13
|
|
Directors and Officers
|
|
|
A-56
|
|
5.14
|
|
Section 16 Matters
|
|
|
A-56
|
|
5.15
|
|
Takeover Statutes
|
|
|
A-56
|
|
5.16
|
|
Preferred Stock
|
|
|
A-56
|
|
5.17
|
|
Termination of Certain Agreements and Rights
|
|
|
A-56
|
|
5.18
|
|
Net Cash
|
|
|
A-56
|
|
|
|
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
|
|
|
A-56
|
|
|
|
|
6.1
|
|
Effectiveness of Registration Statement
|
|
|
A-56
|
|
6.2
|
|
No Restraints
|
|
|
A-56
|
|
6.3
|
|
Stockholder Approval
|
|
|
A-57
|
|
6.4
|
|
Regulatory Matters
|
|
|
A-57
|
|
6.5
|
|
Listing
|
|
|
A-57
|
|
6.6
|
|
Net Cash Calculation
|
|
|
A-57
|
|
A-ii
|
|
|
|
|
|
|
|
|
ARTICLE 7 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF OPEXA AND MERGER
SUB
|
|
|
A-57
|
|
|
|
|
7.1
|
|
Accuracy of Representations
|
|
|
A-57
|
|
7.2
|
|
Performance of Covenants
|
|
|
A-58
|
|
7.3
|
|
No Acer Material Adverse Effect
|
|
|
A-58
|
|
7.4
|
|
Preferred Stock Conversion
|
|
|
A-58
|
|
7.5
|
|
Termination of Investor Agreements
|
|
|
A-58
|
|
7.6
|
|
Acer Debt Conversion
|
|
|
A-58
|
|
7.7
|
|
Acer
Pre-Closing
Financing
|
|
|
A-58
|
|
7.8
|
|
Documents
|
|
|
A-58
|
|
|
|
ARTICLE 8 ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF ACER
|
|
|
A-58
|
|
|
|
|
8.1
|
|
Accuracy of Representations
|
|
|
A-58
|
|
8.2
|
|
Performance of Covenants
|
|
|
A-59
|
|
8.3
|
|
No Opexa Material Adverse Effect
|
|
|
A-59
|
|
8.4
|
|
Termination of Contracts
|
|
|
A-59
|
|
8.5
|
|
Board of Directors and Officers
|
|
|
A-59
|
|
8.6
|
|
Sarbanes-Oxley Certifications
|
|
|
A-59
|
|
8.7
|
|
Net Cash Threshold
|
|
|
A-59
|
|
8.8
|
|
Shell Company Status
|
|
|
A-59
|
|
8.9
|
|
Satisfaction of Liabilities
|
|
|
A-59
|
|
8.10
|
|
Amendment to Certificate of Formation
|
|
|
A-59
|
|
8.11
|
|
Bylaws
|
|
|
A-59
|
|
8.12
|
|
Documents
|
|
|
A-60
|
|
|
|
ARTICLE 9 TERMINATION
|
|
|
A-60
|
|
|
|
|
9.1
|
|
Termination
|
|
|
A-60
|
|
9.2
|
|
Effect of Termination
|
|
|
A-62
|
|
9.3
|
|
Expenses; Termination Fees
|
|
|
A-62
|
|
|
|
ARTICLE 10 MISCELLANEOUS PROVISIONS
|
|
|
A-64
|
|
|
|
|
10.1
|
|
Non-Survival
of Representations and Warranties
|
|
|
A-64
|
|
10.2
|
|
Amendment
|
|
|
A-64
|
|
10.3
|
|
Waiver
|
|
|
A-64
|
|
10.4
|
|
Entire Agreement; Counterparts; Exchanges by Facsimile
|
|
|
A-65
|
|
10.5
|
|
Applicable Law; Jurisdiction
|
|
|
A-65
|
|
10.6
|
|
Attorneys Fees
|
|
|
A-65
|
|
10.7
|
|
Assignability; No Third Party Beneficiaries
|
|
|
A-65
|
|
10.8
|
|
Notices
|
|
|
A-65
|
|
10.9
|
|
Severability
|
|
|
A-66
|
|
10.10
|
|
Other Remedies; Specific Performance
|
|
|
A-66
|
|
10.11
|
|
Construction
|
|
|
A-67
|
|
|
|
|
Schedules:
|
|
Opexa Disclosure Schedule
|
Acer Disclosure Schedule
|
|
|
|
Schedule A
|
|
Persons Executing Acer Stockholder Support Agreements
|
Schedule B
|
|
Persons Executing Opexa Shareholder Support Agreements
|
Schedule 5.6(a)(ii)
|
|
Terminated Opexa Associate Payments
|
A-iii
|
|
|
Schedule 5.6(c)
|
|
Opexa Benefit Plans
|
Schedule 5.13
|
|
Opexa Officers and Directors at the Effective Time
|
Schedule 5.17
|
|
Investor Agreements
|
Schedule 8.4
|
|
Terminated Contracts
|
|
|
Exhibits:
|
|
|
|
|
Exhibit A
|
|
Definitions
|
Exhibit B
|
|
Form of Acer Stockholder Support Agreement
|
Exhibit C
|
|
Form of Opexa Shareholder Support Agreement
|
Exhibit D
|
|
Subscription Agreement
|
Exhibit E
|
|
Surviving Corporation Certificate of Incorporation
|
A-iv
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS
AGREEMENT
AND
PLAN
OF
MERGER
AND
REORGANIZATION
(this
Agreement
) is made and entered into as of June 30, 2017, by and among
Opexa
Therapeutics,
Inc.,
a Texas corporation (
Opexa
),
Opexa
Merger
Sub,
Inc.
, a Delaware corporation (
Merger
Sub
), and
Acer
Therapeutics
Inc.
, a Delaware corporation (
Acer
). Certain capitalized terms used in this Agreement are
defined in
Exhibit A
.
RECITALS
A. Opexa and Acer intend to effect a merger of Merger Sub into Acer (the
Merger
) in accordance with this Agreement
and the DGCL. Upon consummation of the Merger, Merger Sub will cease to exist, and Acer will become a wholly-owned subsidiary of Opexa.
B. The Parties intend, by approving resolutions authorizing this Agreement, to adopt this Agreement as a plan of reorganization within the
meaning of Section 368(a) of the Code, and to cause the Merger to qualify as a reorganization under the provisions of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder.
C. The Opexa Board of Directors (i) has determined that the Merger is fair to, and in the best interests of, Opexa and the Opexa
Shareholders, (ii) has deemed advisable and approved this Agreement, the Merger, the Opexa Shareholder Matters, and other actions contemplated by this Agreement; and (iii) has determined to recommend that the Opexa Shareholders vote to
approve the Opexa Shareholder Matters.
D. The Board of Directors of Merger Sub (i) has determined that the Merger is fair to, and in
the best interests of, Merger Sub and its sole stockholder, (ii) has deemed advisable and approved this Agreement, the Merger, and the applicable Contemplated Transactions, and (iii) has determined to recommend that the stockholder of
Merger Sub vote to adopt this Agreement and thereby approve the Merger and the applicable Contemplated Transactions.
E. The Acer Board of
Directors (i) has determined that the Merger is advisable and fair to, and in the best interests of, Acer and the Acer Stockholders, (ii) has deemed advisable and approved the Acer Stockholder Matters and other actions contemplated by this
Agreement, and (iii) has determined to recommend that the Acer Stockholders vote to approve the Acer Stockholder Matters.
F. In
order to induce Opexa to enter into this Agreement and to cause the Merger to be consummated, the officers and directors of Acer and the Acer Stockholders, in each case, listed on
Schedule A
hereto are executing concurrently with the
execution and delivery of this Agreement support agreements in favor of Opexa in the form substantially attached hereto as
Exhibit B
(the
Acer
Stockholder
Support
Agreements
).
G. In order to induce Acer to enter into this Agreement and to cause the Merger to be consummated, the
officers and directors of Opexa and such persons respective Affiliates, in each case, listed on
Schedule B
hereto are executing support agreements in favor of Acer concurrently with the execution and delivery of this Agreement in the
form substantially attached hereto as
Exhibit C
(the
Opexa
Shareholder
Support
Agreements
).
H. It is expected that within five (5) Business Days after the Form
S-4
Registration Statement is
declared effective by the SEC under the Securities Act, Acer will deliver the Acer Stockholder Written Consent.
I. Immediately prior to
the execution and delivery of this Agreement, certain investors have executed a Subscription Agreement substantially in the form attached hereto as
Exhibit D
among Acer and the Persons named therein, pursuant to which such Persons have agreed
to purchase the number of shares of Acer Capital Stock set forth therein prior to the Closing in connection with the Acer
Pre-Closing
Financing (the
Subscription
Agreement
).
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J. Acer may enter into the Subscription Agreement after the date hereof with additional investors
in connection with the Acer
Pre-Closing
Financing, provided that such additional Purchasers shall be limited to one or a few accredited investors (and their accredited Affiliates) with which Acer was in
substantive discussions prior to the date hereof.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
ARTICLE 1
DESCRIPTION OF TRANSACTION
1.1 Structure of the Merger
. Upon the terms and subject to the conditions set forth in this Agreement
and in accordance with the DGCL, at the Effective Time, (a) Merger Sub shall be merged with and into Acer, and (b) the separate existence of Merger Sub shall cease and Acer will continue its corporate existence under the DGCL as the
surviving corporation in the Merger (the
Surviving
Corporation
).
1.2 Effects of the Merger
. The Merger shall have the effects set forth in this Agreement and in the
applicable provisions of the DGCL. As a result of the Merger, Acer will become a wholly-owned subsidiary of Opexa.
1.3 Closing; Effective Time
. Unless this Agreement is earlier terminated pursuant to the provisions of
Section
9.1
, and subject to the satisfaction or waiver of the conditions set forth in
Article 6
,
Article 7
and
Article 8
, the closing of the Merger (the
Closing
) shall take place at the offices of Foley Hoag LLP, 155 Seaport Boulevard, Boston, Massachusetts 02210, as promptly as practicable (but in
no event later than the second (2
nd
) Business Day following the satisfaction or waiver of the last to be satisfied or waived of the conditions set forth in
Article 6
,
Article 7
and
Article 8
, other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of each of such conditions), or at such other time, date and place as Opexa and Acer may mutually agree
in writing;
provided,
however
, that if Acer is not prepared to close the Acer
Pre-Closing
Financing at such time, Acer has the right, in its sole discretion to delay the Closing for up to ten
(10) Business Days. The date on which the Closing actually takes place is referred to as the
Closing
Date
.
At the Closing, the Parties hereto shall cause a certificate of merger (the
Certificate
of
Merger
) to be executed, acknowledged and filed with the Secretary of State of the State of Delaware in accordance with the applicable requirements of the DGCL and shall make all
other filings or recordings required under the DGCL. The Merger will become effective at such time as the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later time as may be specified in
such Certificate of Merger with the consent of Opexa and Acer (the time as of which the Merger becomes effective being referred to as the
Effective
Time
).
1.4 Certificate of Incorporation and Bylaws; Directors and Officers
. At the Effective Time:
(a)
the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as set forth in
Exhibit E
until thereafter amended as provided by the DGCL and such certificate of incorporation;
(b)
the certificate of
formation of Opexa shall be the certificate of formation of Opexa immediately prior to the Effective Time, until thereafter amended as provided by the TBOC and such certificate of formation;
provided
,
however
, that at the Effective
Time, Opexa shall file one or more amendments to its certificate of formation, to the extent approved by the holders of Opexa Common Stock as contemplated by
Section
5.3
, to (i) change the name of Opexa to Acer
Therapeutics Inc., and (ii) effect the NASDAQ Reverse Split, to the extent requested by Acer prior to the filing with the SEC of the Proxy Statement / Prospectus / Information Statement;
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(c)
the bylaws of the Surviving Corporation shall be amended and restated in their
entirety to read identically to the bylaws of Merger Sub as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the terms of such bylaws, the certificate of incorporation of the Surviving Corporation and
the DGCL;
(d)
the bylaws of Opexa shall be the bylaws of Opexa immediately prior to the Effective Time;
provided,
however
, that effective at the Effective Time, Opexa shall amend its bylaws, to replace all references to Opexas name with Acer Therapeutics Inc.;
(e)
the directors and officers of Opexa, each to hold office in accordance with the certificate of formation and bylaws of Opexa, shall
be as set forth in
Section
5.13
; and
(f)
the directors and officers of the Surviving Corporation, each
to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, shall be the directors and officers of Opexa as set forth in
Section
5.13
, after giving effect to the provisions of
Section
5.13
.
1.5 Conversion of Shares and Assumption of Options.
(a)
At the Effective Time, by virtue of the Merger and without any further action on the part of Opexa, Merger Sub, Acer or any Acer
Stockholder:
(i)
each share of Acer Common Stock or Acer Preferred Stock held as treasury stock or held or owned by Acer, Opexa,
or Merger Sub, immediately prior to the Effective Time shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor; and
(ii)
subject to
Section
1.5(c)
, each share of Acer Common Stock (including any shares of Acer Common Stock
issued pursuant to the Acer
Pre-Closing
Financing) outstanding immediately prior to the Effective Time (excluding shares to be canceled pursuant to
Section
1.5(a)(i)
and Dissenting
Shares, and after giving effect to the Preferred Stock Conversion) shall be converted solely into the right to receive a number of shares of Opexa Common Stock equal to the Exchange Ratio (the aggregate number of shares of Opexa Common Stock thus
issued, the
Merger
Consideration
).
(b)
If any shares of Acer Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a repurchase option or the risk of forfeiture under any applicable restricted stock purchase agreement or other agreement with Acer, then the shares of Opexa Common Stock issued
in exchange for such shares of Acer Common Stock will to the same extent be unvested and subject to the same repurchase option or risk of forfeiture, and the book entry shares of Opexa Common Stock shall accordingly be marked with appropriate
legends. Acer shall take all actions that may be necessary to ensure that, from and after the Effective Time, Opexa is entitled to exercise any such repurchase option or other right set forth in any such restricted stock purchase agreement or other
agreement.
(c)
No fractional shares of Opexa Common Stock shall be issued in connection with the Merger, and no certificates or
scrip for any such fractional shares shall be issued. Any holder of Acer Common Stock who would otherwise be entitled to receive a fraction of a share of Opexa Common Stock (after aggregating all fractional shares of Opexa Common Stock issuable to
such holder) shall, in lieu of such fraction of a share and upon surrender by such holder of a letter of transmittal in accordance with
Section
1.8
and accompanying documents as required therein, be paid in cash the dollar
amount (rounded to the nearest whole cent), without interest, determined by multiplying such fraction by the closing price of a share of Opexa Common Stock on The NASDAQ Capital Market (or such other NASDAQ market on which the Opexa Common Stock
then trades) on the date the Merger becomes effective.
(d)
All Acer Options outstanding immediately prior to the Effective Time
under the 2013 Plan shall be assumed by Opexa and converted into options to purchase Opexa Common Stock, in accordance with
Section
5.5
.
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(e)
Each share of Common Stock, $0.0001 par value per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of Common Stock, $0.0001 par value per share, of the Surviving Corporation. Each stock certificate
of Merger Sub evidencing ownership of any such shares shall, as of the Effective Time, evidence ownership of such shares of Common Stock of the Surviving Corporation.
(f)
If, between the time of calculating the Exchange Ratio and the Effective Time, the outstanding shares of Acer Capital Stock or
Opexa Common Stock have been changed into, or exchanged for, a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split (including the NASDAQ Reverse Split to the extent
such split has not previously been taken into account in calculating the Exchange Ratio), combination or exchange of shares, the Exchange Ratio shall be correspondingly adjusted to provide the holders of Acer Common Stock and Acer Options the same
economic effect as contemplated by this Agreement prior to such event.
1.6 Calculation of Net
Cash.
(a)
For the purposes of this Agreement, the
Determination
Date
shall be the date
that is ten (10) calendar days prior to the anticipated date for Closing (the
Anticipated
Closing
Date
), as agreed upon by Opexa and Acer at least ten (10) calendar days prior to the
Opexa Shareholders Meeting. On or prior to the Determination Date, Opexa shall provide Acer with a list of all Liabilities of Opexa as of the Determination Date that are individually in excess of $10,000 or in excess of $25,000 in the
aggregate, which had not previously been disclosed to Acer in the Opexa Disclosure Schedule. Within five (5) calendar days following the Determination Date, Opexa shall deliver to Acer a schedule (the
Net
Cash
Schedule
) setting forth, in reasonable detail, Opexas good faith, estimated calculation of Net Cash (the
Net
Cash
Calculation
) as of the Anticipated Closing Date
prepared and certified by Opexas Chief Financial Officer (or if there is no Chief Financial Officer, the principal accounting officer for Opexa). Opexa shall make the work papers and
back-up
materials
used or useful in preparing the Net Cash Schedule, as reasonably requested by Acer, available to Acer and, if requested by Acer, its accountants and counsel at reasonable times and upon reasonable notice. Either Party may request a redetermination
of Net Cash if it is determined that the actual Closing Date is to occur after the Anticipated Closing Date and such Party reasonably believes a material change to the calculation of Net Cash will thus occur (provided that either Party may request a
redetermination of Net Cash if the actual Closing Date is to occur more than five (5) Business Days after the Anticipated Closing Date).
(b)
Within five (5) calendar days after Opexa delivers the Net Cash Schedule (the
Response
Date
), Acer will have the right to dispute any part of such Net Cash Schedule by delivering a written notice to that effect to Opexa (a
Dispute
Notice
). Any Dispute Notice shall identify in
reasonable detail the nature of any proposed revisions to the Net Cash Calculation.
(c)
If on or prior to the Response Date,
(i) Acer notifies Opexa in writing that it has no objections to the Net Cash Calculation or (ii) Acer fails to deliver a Dispute Notice as provided in
Section
1.6(b)
, then the Net Cash Calculation as set forth in
the Net Cash Schedule shall be deemed to have been finally determined for purposes of this Agreement and to represent the Net Cash at the Anticipated Closing Date for purposes of this Agreement.
(d)
If Acer delivers a Dispute Notice on or prior to the Response Date, then Representatives of Opexa and Acer shall promptly meet and
attempt in good faith to resolve the disputed item(s) and negotiate an agreed-upon determination of Net Cash, which agreed upon Net Cash amount shall be deemed to have been finally determined for purposes of this Agreement and to represent the Net
Cash at the Anticipated Closing Date for purposes of this Agreement.
(e)
If Representatives of Opexa and Acer are unable to
negotiate an agreed-upon determination of Net Cash at the Anticipated Closing Date pursuant to
Section
1.6(d)
within three (3) calendar days after delivery of
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the Dispute Notice (or such other period as Opexa and Acer may mutually agree upon), then Opexa and Acer shall jointly select an independent auditor of recognized national standing (the
Accounting
Firm
) to resolve any remaining disagreements as to the Net Cash Calculation. Opexa shall promptly deliver to the Accounting Firm the work papers and
back-up
materials used in preparing the Net Cash Schedule, and Opexa and Acer shall use commercially reasonable efforts to cause the Accounting Firm to make its determination within ten (10) calendar days of accepting its selection. Acer and Opexa
shall be afforded the opportunity to present to the Accounting Firm any material related to the unresolved disputes and to discuss the issues with the Accounting Firm;
provided,
however
, that no such presentation or discussion shall
occur without the presence of a Representative of each of Acer and Opexa. The determination of the Accounting Firm shall be limited to the disagreements submitted to the Accounting Firm. The determination of the amount of Net Cash made by the
Accounting Firm shall be deemed to have been finally determined for purposes of this Agreement and to represent the Net Cash at the Anticipated Closing Date for purposes of this Agreement, and the Parties shall delay the Closing until the resolution
of the matters described in this
Section
1.6(e)
. The fees and expenses of the Accounting Firm shall be allocated between Opexa and Acer in the same proportion that the disputed amount of the Net Cash that was unsuccessfully
disputed by such Party (as finally determined by the Accounting Firm) bears to the total disputed amount of the Net Cash amount (and for the avoidance of doubt the fees and expenses to be paid by Opexa shall reduce the Net Cash). If this
Section
1.6(e)
applies as to the determination of the Net Cash at the Anticipated Closing Date described in
Section
1.6(a)
, upon resolution of the matter in accordance with this
Section
1.6(e)
, the Parties shall not be required to determine Net Cash again even though the Closing Date may occur later than the Anticipated Closing Date, except that either Party may request a redetermination of Net
Cash if such Party reasonably believes a material change to the calculation of Net Cash has occurred, or if the Closing Date is more than five (5) Business Days after the Anticipated Closing Date.
(f)
Once Net Cash is finally determined pursuant to this
Section
1.6
, assuming such determination has been
made in advance of the Opexa Stockholders Meeting it will be publicly disclosed by Opexa in advance thereof.
1.7 Closing of Acers Transfer Books
. At the Effective Time: (a) all shares of Acer Common Stock outstanding immediately prior to the Effective Time (after giving effect to the Preferred Stock Conversion) shall be treated in
accordance with
Section
1.5(a)
, and all holders of certificates representing shares of Acer Capital Stock that were outstanding immediately prior to the Effective Time shall cease to have any rights as Acer Stockholders;
and (b) the stock transfer books of Acer shall be closed with respect to all shares of Acer Capital Stock outstanding immediately prior to the Effective Time. No further transfer of any such shares of Acer Capital Stock shall be made on such
stock transfer books after the Effective Time. If, after the Effective Time, a valid certificate previously representing any shares of Acer Capital Stock, including any valid certificate representing any shares of Acer Preferred Stock previously
converted into shares of Acer Common Stock in connection with the Preferred Stock Conversion, outstanding immediately prior to the Effective Time (an
Acer
Stock
Certificate
) is presented to the
Exchange Agent or to the Surviving Corporation, such Acer Stock Certificate shall be canceled and shall be exchanged as provided in
Section
1.5
and
Section
1.8
.
1.8 Surrender of Certificates.
(a)
On or prior to the Closing Date, Opexa and Acer shall agree upon and select a reputable bank, transfer agent or trust company to
act as exchange agent in the Merger (the
Exchange
Agent
). At the Effective Time, Opexa shall deposit with the Exchange Agent: (i) the aggregate number of book entry shares to be issued to Acer
Stockholders as the Merger Consideration pursuant to
Section
1.5(a)
and (ii) cash sufficient to make payments in lieu of fractional shares in accordance with
Section
1.5(c)
. The book entry
shares of Opexa Common Stock and cash amounts so deposited with the Exchange Agent, together with any dividends or distributions received by the Exchange Agent with respect to such shares, are referred to collectively as the
Exchange
Fund
.
(b)
Promptly after the Effective Time, the Parties shall cause the Exchange
Agent to mail to the Persons who were record holders of Acer Stock Certificates immediately prior to the Effective Time, as set forth
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on the Allocation Certificate: (i) a letter of transmittal in customary form; and (ii) instructions for effecting the surrender of Acer Stock Certificates in exchange for book entry
shares of Opexa Common Stock. Upon surrender of an Acer Stock Certificate to the Exchange Agent for exchange, together with a duly executed letter of transmittal and such other documents as may be reasonably required by the Exchange Agent:
(A) the holder of such Acer Stock Certificate shall be entitled to receive in exchange therefor one or more book entry shares representing the portion of the Merger Consideration (in a number of whole shares of Opexa Common Stock) that such
holder has the right to receive pursuant to the provisions of
Section
1.5(a)
(and cash in lieu of any fractional share of Opexa Common Stock pursuant to the provisions of
Section
1.5(c)
); and
(B) upon delivery of such consideration to the applicable holder in accordance with
Section
1.5
, the Acer Stock Certificate so surrendered shall be canceled. Until surrendered as contemplated by this
Section
1.8(b)
, each Acer Stock Certificate shall be deemed, from and after the Effective Time, to represent only the right to receive shares of Opexa Common Stock (and cash in lieu of any fractional share of Opexa Common
Stock). If any Acer Stock Certificate has been lost, stolen or destroyed, Opexa may, in its reasonable discretion and as a condition precedent to the delivery of any shares of Opexa Common Stock, require the owner of such lost, stolen or destroyed
Acer Stock Certificate to provide an applicable affidavit with respect to such Acer Stock Certificate and post a bond indemnifying Opexa against any claim suffered by Opexa related to the lost, stolen or destroyed Acer Stock Certificate or any Opexa
Common Stock issued in exchange therefor as Opexa may reasonably request.
(c)
No dividends or other distributions declared or made
with respect to Opexa Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Acer Stock Certificate with respect to the shares of Opexa Common Stock that such holder has the right to receive in the
Merger until such holder surrenders such Acer Stock Certificate or an affidavit of loss or destruction in lieu thereof in accordance with this
Section
1.8
(at which time such holder shall be entitled, subject to the effect
of applicable abandoned property, escheat or similar laws, to receive all such dividends and distributions, without interest).
(d)
Any portion of the Exchange Fund that remains undistributed to holders of Acer Stock Certificates six (6) months after the Closing Date shall be delivered to Opexa upon demand, and any holders of Acer Stock Certificates who have not theretofore
surrendered their Acer Stock Certificates in accordance with this
Section
1.8
shall thereafter look only to Opexa for satisfaction of their claims for Opexa Common Stock, cash in lieu of fractional shares of Opexa Common
Stock and any dividends or distributions with respect to shares of Opexa Common Stock.
(e)
Each of the Exchange Agent, Opexa and
the Surviving Corporation shall be entitled to deduct and withhold from any consideration deliverable pursuant to this Agreement to any holder of any Acer Stock Certificate such amounts as are required to be deducted or withheld from such
consideration under the Code or under any other applicable Legal Requirement and shall be entitled to request any reasonably appropriate Tax forms, including an IRS Form
W-9
(or the appropriate IRS Form
W-8,
as applicable), from any recipient of payments hereunder. To the extent such amounts are so deducted or withheld, and remitted to the appropriate Tax authority, such amounts shall be treated for all purposes
under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.
(f)
No party to this
Agreement shall be liable to any holder of any Acer Stock Certificate or to any other Person with respect to any shares of Opexa Common Stock (or dividends or distributions with respect thereto) or for any cash amounts delivered to any public
official pursuant to any applicable abandoned property law, escheat law or similar Legal Requirement.
1.9 Appraisal Rights.
(a)
Notwithstanding any provision of this Agreement to the contrary, shares of Acer Capital Stock that are outstanding immediately
prior to the Effective Time (other than shares canceled pursuant to
Section
1.5(a)(i)
) and are held by an Acer Stockholder who has not voted in favor of adoption of this Agreement or consented
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thereto in writing and who has properly exercised and perfected appraisal rights for such shares of Acer Common Stock in accordance with the DGCL (collectively, the
Dissenting
Shares
) shall not be converted into or represent the right to receive the portion of the Merger Consideration attributable to such Dissenting Shares, but instead shall be entitled to only such rights as are granted by
Section 262 of the DGCL;
provided,
however
, that if after the Effective Time, such stockholder fails to perfect or effectively withdraws or otherwise loses such holders appraisal rights under the DGCL or if a court of
competent jurisdiction determines that such holder is not entitled to the relief provided by Section 262 of the DGCL, such shares of Acer Common Stock shall be deemed to be converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the portion of the Merger Consideration attributable to such Dissenting Shares upon their surrender in the manner provided in
Section
1.5
, without interest thereon.
(b)
Acer shall give Opexa prompt written notice of any demands by dissenting stockholders received by Acer, withdrawals of such demands
and any other instruments served on Acer and any material correspondence received by Acer in connection with such demands.
1.10 Further Action
. If, at any time after the Effective Time, any further action is determined by the Surviving Corporation to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession of and to all rights and property of Acer, then the officers and directors of the Surviving Corporation shall be fully authorized, and shall use their commercially reasonable efforts (in the name of Acer, in the name
of Merger Sub and otherwise) to take such action.
1.11 Tax Consequences
. For federal income Tax
purposes, the Merger is intended to constitute a reorganization within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder. The parties to this Agreement adopt this Agreement as a plan of
reorganization within the meaning of Treasury Regulations
Section
1.368-2(g).
1.12 Certificates.
(a)
Opexa will prepare and deliver to Acer at least two (2) Business Days prior to the Closing Date, a certificate signed by the
Acting Chief Financial Officer of Opexa (or if there is no Acting Chief Financial Officer, the principal accounting officer for Opexa) in a form reasonably acceptable to Acer, which sets forth a true and complete list, as of immediately prior to the
Effective Time, of the number of Opexa Outstanding Shares and each component thereof (broken down by outstanding shares of Opexa Common Stock, Opexa Options, Opexa RSUs, Opexa Warrants, and other relevant securities) (
Opexa
Outstanding
Shares
Certificate
).
(b)
Acer will prepare and deliver to Opexa at
least one (1) Business Day prior to the Closing Date a certificate signed by the Chief Financial Officer of Acer in a form reasonably acceptable to Opexa, which sets forth a true and complete list, as of immediately prior to the Effective Time
(giving effect to the Preferred Stock Conversion and the closing of the Acer
Pre-Closing
Financing) of: (a) the record holders of Acer Common Stock and Acer Options; (b) the number of shares of Acer
Common Stock owned and/or underlying the Acer Options held by such holders and the per share exercise price for each such Acer Option; and (c) the portion of the Merger Consideration each such holder is entitled to receive pursuant to
Section
1.5
(the
Allocation
Certificate
).
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF ACER
Acer represents and warrants to Opexa and Merger Sub as follows, except as set forth in the written disclosure schedule delivered by Acer to
Opexa (the
Acer
Disclosure
Schedule
) (it being understood that the representations and warranties in this Article 2 are qualified by: (a) any exceptions and disclosures set forth in the
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section or subsection of the Acer Disclosure Schedule corresponding to the particular section or subsection in this
Article 2
in which such representation and warranty appears;
(b) any exceptions or disclosures explicitly cross-referenced in such section or subsection of the Acer Disclosure Schedule by reference to another section or subsection of the Acer Disclosure Schedule; and (c) any exceptions or
disclosures set forth in any other section or subsection of the Acer Disclosure Schedule to the extent it is reasonably apparent from the face of such exception or disclosure that such exception or disclosure qualifies such representation and
warranty). The inclusion of any information in the Acer Disclosure Schedule shall not be deemed to be an admission or acknowledgement, in and of itself, that such information is required by the terms hereof to be disclosed, is material, has resulted
in or would result in an Acer Material Adverse Effect, or is outside the Ordinary Course of Business.
2.1 Subsidiaries; Due Organization; Organizational Documents.
(a)
Acer does not have any Subsidiaries and does not own any capital stock of, or any equity interest of any nature in, any Entity.
Acer has neither agreed nor is obligated to make, nor is bound by any Contract under which it may become obligated to make, any future investment in or capital contribution to any other Entity. Acer has not, at any time, been a general partner of,
or otherwise been liable for any of the debts or other obligations of, any general partnership, limited partnership or other Entity.
(b)
Acer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and has all necessary power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned
and used; and (iii) to perform its obligations under all Acer Contracts.
(c)
Acer is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions where the nature of its business requires such qualification other than in jurisdictions where the failure to be so qualified would not constitute an Acer Material Adverse
Effect.
(d)
Each director and officer of Acer as of the date of this Agreement is set forth in
Section
2.1(d)
of the Acer Disclosure Schedule.
(e)
Acer has delivered or made available to Opexa
accurate and complete copies of its certificate of incorporation, bylaws and other charter and organizational documents, including all currently effective amendments thereto. Acer is not in material violation of any of the provisions of its
organizational documents.
2.2 Authority; Vote Required.
(a)
Acer has all necessary corporate power and authority to enter into and to perform its obligations under this Agreement. The Acer
Board of Directors has: (i) determined that the Merger is fair to, and in the best interests of Acer and Acer Stockholders; (ii) duly authorized and approved by all necessary corporate action, the execution, delivery and performance of
this Agreement and the Contemplated Transactions; (iii) recommended the approval of the Acer Stockholder Matters by the Acer Stockholders and directed that the Acer Stockholder Matters be submitted for consideration by Acer Stockholders in
connection with the solicitation of the Required Acer Stockholder Vote; and (iv) approved the Acer Stockholder Support Agreements and the transactions contemplated thereby. This Agreement has been duly executed and delivered by Acer and,
assuming the due authorization, execution and delivery by Opexa and Merger Sub, constitutes the legal, valid and binding obligation of Acer, enforceable against Acer in accordance with its terms, subject to: (A) laws of general application
relating to bankruptcy, insolvency and the relief of debtors; and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.
(b)
The affirmative vote of the holders of (i) a majority of the shares of Acer Preferred Stock and Common Stock, voting together
as a single class; and (ii) greater than 50% of the shares of Acer Preferred Stock, voting together as a single class and (iii) greater than 50% of the shares of Acer Series B Preferred Stock, voting
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together as a single class, in each case, as outstanding on the record date for the written consent in lieu of a meeting pursuant to Section 228 of the DGCL approving the Acer Stockholder
Matters, in a form reasonably acceptable to Opexa (each, an
Acer
Stockholder
Written
Consent
and collectively, the
Acer
Stockholder
Written
Consents
) and entitled to vote thereon (collectively, the
Required
Acer
Stockholder
Vote
), is the only vote of the holders of any class or
series of Acer Capital Stock necessary to approve the Acer Stockholder Matters. The shares of Acer Capital Stock covered by the Acer Stockholder Support Agreements are sufficient to obtain the Required Acer Stockholder Vote.
2.3
Non-Contravention;
Consents.
(a)
The execution and delivery of this Agreement by Acer does not, and the performance of this Agreement by Acer will not,
(i) conflict with or violate the certificate of incorporation or bylaws of Acer; (ii) subject to obtaining the Required Acer Stockholder Vote and compliance with the requirements set forth in
Section
2.3(b)
below,
conflict with or violate any Legal Requirement applicable to Acer or by which its properties are bound or affected, except for any such conflicts or violations that would not constitute an Acer Material Adverse Effect; or (iii) require Acer to
make any filing with or give any notice or make any payment to a Person, or obtain any Consent from a Person, or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or
impair Acers rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancelation of, or result in the creation of an Encumbrance on any of the properties or
assets of Acer pursuant to, any Acer Material Contract.
(b)
No material Consent or order of, or registration, declaration or
filing with, any Governmental Body is required by or with respect to Acer in connection with the execution and delivery of this Agreement or the consummation of the Contemplated Transactions, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (ii) any required filings under the HSR Act and any foreign antitrust Legal Requirement and (iii) such Consents, orders, registrations, declarations and
filings as may be required under applicable federal and state securities laws.
2.4
Capitalization.
(a)
The authorized capital stock of Acer as of the date of this Agreement consists of: (i) 10,000,000 shares
of common stock, par value $0.0001 per share (the
Acer
Common
Stock
), of which 2,450,000 shares are issued and outstanding as of the date of this Agreement; and (ii) 1,608,654 shares of preferred
stock, par value $0.0001 per share (the
Acer
Preferred
Stock
), of which 638,416 shares are designated as Series A Preferred Stock, all of which are issued and outstanding as of the date of this
Agreement, and of which 970,238 shares are designated as Series B Preferred Stock (the
Acer
Series
B
Preferred
Stock
), all of which are issued and outstanding as of
the date of this Agreement. Acer does not hold any of its capital stock in treasury. All of the outstanding shares of Acer Capital Stock have been duly authorized and validly issued, and are fully paid and nonassessable.
Section
2.4(a)
of the Acer Disclosure Schedule lists, as of the date of this Agreement, each record holder of issued and outstanding Acer Capital Stock and the number and type of shares of Acer Capital Stock held by such
holder. Each share of Acer Preferred Stock is convertible into one (1) share of Acer Common Stock.
(b)
Except for the Acer
2013 Stock Incentive Plan (the
2013
Plan
), Acer does not have any stock option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person. Acer has
reserved 165,000 shares of Acer Common Stock for issuance under the 2013 Plan. As of the date of this Agreement, of such reserved shares of Acer Common Stock, 116,375 shares have been granted and are currently outstanding, and 48,625 shares of Acer
Common Stock remain available for future issuance pursuant to the 2013 Plan.
Section
2.4(b)
of the Acer Disclosure Schedule sets forth the following information with respect to each Acer Option outstanding, as of the date
of this Agreement: (A) the name of the optionee; (B) the number of shares of Acer Common Stock subject to such Acer Option as of the date of this Agreement; (C) the exercise price of such Acer Option; (D) the date on which such
Acer Option was granted; and (E) the date on which such Acer Option expires. No vesting of Acer Options will accelerate as a result of the Merger.
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(c)
Except for the outstanding Acer Options set forth on
Section
2.4(b)
of the Acer Disclosure Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any shares of the capital stock or other
securities of Acer; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other securities of Acer; (iii) stockholder rights plan (or similar plan
commonly referred to as a poison pill) or Contract under which Acer is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities; or (iv) condition or circumstance that may give rise
to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of capital stock or other securities of Acer. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, restricted stock units, equity-based or other similar rights with respect to Acer.
(d)
(i)
None of the outstanding shares of Acer Capital Stock are entitled or subject to any preemptive right, right of repurchase or forfeiture, right of participation, right of maintenance or any similar right; (ii) none of the outstanding shares of
Acer Capital Stock are subject to any right of first refusal in favor of Acer; (iii) there are no outstanding bonds, debentures, notes or other indebtedness of Acer having a right to vote on any matters on which the Acer Stockholders have a
right to vote; (iv) there is no Acer Contract to which Acer is a party relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar
right with respect to), any shares of Acer Capital Stock. Acer is not under any obligation, or bound by any Contract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares of Acer Capital Stock
or other securities.
(e)
All outstanding shares of Acer Capital Stock, as well as all Acer Options, have been issued and granted,
as applicable, in material compliance with all applicable securities laws and other applicable Legal Requirements.
2.5 Financial Statements.
(a)
Section 2.5(a)
of the Acer Disclosure Schedule includes true and complete copies of
(i) Acers audited consolidated balance sheets at December 31, 2015 and December 31, 2016, (ii) the Acer Unaudited Interim Balance Sheet, (iii) Acers audited consolidated statements of operations, cash flows and
changes in stockholders equity for the years ended December 31, 2015 and December 31, 2016, and (iv) Acers unaudited statements of operations, cash flows and changes in stockholders equity for the three
(3) months ended March 31, 2017 (collectively,
the
Acer
Financials
). The Acer Financials (A) were prepared in accordance with United States generally accepted accounting
principles (
GAAP
) (except as may be indicated in the footnotes to such Acer Financials and that unaudited financial statements may not have notes thereto and other presentation items that may be required by GAAP and are
subject to normal and recurring
year-end
adjustments that are not reasonably expected to be material in amount) applied on a consistent basis unless otherwise noted therein throughout the periods indicated and
(B) fairly present the financial condition and operating results of Acer as of the dates and for the periods indicated therein.
(b)
Acer maintains a system of internal accounting controls designed to provide reasonable assurance that: (i) transactions are
executed in accordance with managements general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with managements general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. Acer maintains internal control over financial reporting that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with GAAP.
2.6 Absence of Changes
. Since March 31, 2017 through the
date of this Agreement, Acer has conducted its business in the Ordinary Course of Business and there has not been (a) any event that has had an Acer Material Adverse Effect or any event, condition, change, or effect that could reasonably be
expected to have, individually
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or in the aggregate, an Acer Material Adverse Effect or (b) any action, event or occurrence that would have required consent of Opexa pursuant to
Section
4.3(b)
of
this Agreement had such action, event or occurrence taken place after the execution and delivery of this Agreement.
2.7 Title to Assets
. Acer owns, and has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all tangible properties or assets and equipment used or held for use in its business or
operations or purported to be owned by it, in each case, free and clear of any Encumbrances, except for: (i) any lien for current Taxes not yet due and payable or for Taxes that are being contested in good faith and for which adequate reserves
have been made on the Acer Unaudited Interim Balance Sheet; (ii) minor liens that have arisen in the Ordinary Course of Business and that do not (in any case or in the aggregate) materially detract from the value of the assets subject thereto
or materially impair the operations of Acer; and (iii) liens listed in
Section
2.7
of the Acer Disclosure Schedule.
2.8 Real Property; Leaseholds
.
Acer neither currently owns, nor has it ever owned any real
property or any interest in real property, except for the leaseholds created under the real property leases (including any amendments thereto) identified in
Section
2.8
of the Acer Disclosure Schedule (the
Acer
Leases
), which are each in full force and effective, with no existing material default thereunder. Acers possession and quiet enjoyment of the leased real estate under such Acer Leases has not been
disturbed, and to the Knowledge of Acer, there are no disputes with respect to such Acer Leases. Acer has not created any Encumbrances on the real estate under the Acer Leases.
2.9 Intellectual Property.
(a)
Acer owns, or has the right to use, and has the right to bring actions for the infringement of, all Acer IP Rights, except for any
failure to own or have the right to use, or have the right to bring actions that would not constitute an Acer Material Adverse Effect.
(b)
Section 2.9(b)
of the Acer Disclosure Schedule is an accurate, true and complete listing of all Acer Registered IP.
(c)
Section 2.9(c)
of the Acer Disclosure Schedule accurately identifies (i) all Acer IP Rights licensed to Acer (other
than (A) any
non-customized
software that (1) is so licensed solely in executable or object code form pursuant to a
non-exclusive,
internal use software
license and other Intellectual Property associated with such software and (2) is not incorporated into, or material to the development, manufacturing, or distribution of, any of Acers products or services and (B) any Intellectual
Property licensed ancillary to the purchase or use of equipment, reagents or other materials); (ii) the corresponding Acer Contracts pursuant to which such Acer IP Rights are licensed to Acer; (iii) whether the license or licenses granted to
Acer are exclusive or
non-exclusive;
and (iv) whether any funding, facilities or personnel of any Governmental Body were used, directly or indirectly, to develop or create, in whole or in part, such Acer
IP Rights.
(d)
Section 2.9(d)
of the Acer Disclosure Schedule accurately identifies each Acer Contract pursuant to which
any Person (other than Acer) has been granted any license or option to obtain a license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any Acer IP Rights. Acer is not bound by, and no
Acer IP Rights are subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of Acer to use, exploit, assert or enforce any Acer IP Rights anywhere in the world, in each case as would
materially limit the business of Acer as currently conducted or planned to be conducted.
(e)
Acer solely owns all right, title,
and interest to and in Acer IP Rights (other than Acer IP Rights (i) exclusively or
non-exclusively
licensed to Acer, as identified in
Section
2.9(c)
of the Acer Disclosure
Schedule, (ii) any
non-customized
software that (A) is so licensed solely in executable or object code form pursuant to a
non-exclusive,
internal use software
license and other Intellectual Property associated with such
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software and (B) is not incorporated into, or material to the development, manufacturing, or distribution of, any of Acers products or services, and (iii) any Intellectual
Property licensed ancillary to the purchase or use of equipment, reagents or other materials) free and clear of any Encumbrances. Without limiting the generality of the foregoing:
(i)
All documents and instruments necessary to register or apply for or renew registration of all Acer Registered IP have been validly
executed, delivered and filed in a timely manner with the appropriate Governmental Body except for any such failure, individually or collectively, that would not (in any case or in the aggregate) materially detract from the value of the Acer
Registered IP subject thereto or materially impair the operations of Acer.
(ii)
Each Person who is or was an employee or
contractor of Acer and who is or was involved in the creation or development of any Acer IP Rights has signed a valid, enforceable agreement containing an assignment of such Intellectual Property to Acer and confidentiality provisions protecting
trade secrets and confidential information of Acer. To the Knowledge of Acer, no current or former stockholder, officer, director, employee or contractor of Acer has any claim, right (whether or not currently exercisable), or interest to or in any
Acer IP Rights. To the Knowledge of Acer, no employee or contractor of Acer is (a) bound by or otherwise subject to any Contract restricting him or her from performing his or her duties for Acer or (b) in breach of any Contract with any
current or former employer or other Person concerning Acer IP Rights or confidentiality provisions protecting trade secrets and confidential information comprising Acer IP Rights.
(iii)
No funding, facilities or personnel of any Governmental Body were used, directly or indirectly, to develop or create, in whole
or in part, any Acer IP Rights in which Acer has an ownership interest.
(iv)
Acer has taken reasonable steps to maintain the
confidentiality of and otherwise protect and enforce its rights in all proprietary information that Acer holds, or purports to hold, as a trade secret.
(v)
Acer has neither assigned nor otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, any Acer
IP Rights to any other Person.
(vi)
The Acer IP Rights constitute all Intellectual Property necessary for Acer to conduct its
business as currently conducted or planned to be conducted.
(f)
The manufacture, marketing, license, sale or intended use of any
product or service currently approved or sold or under preclinical or clinical development by Acer (i) does not violate or constitute a breach of any license or agreement between Acer and any third party, and, (ii) to the Knowledge of
Acer, does not infringe or misappropriate any Intellectual Property right of any other party. Acer has disclosed in correspondence to Opexa the third-party patents and patent applications found during all freedom to operate searches that were
conducted by Acer related to any product or technology currently licensed or sold or under development by Acer. To the Knowledge of Acer, no third party is infringing upon or misappropriating, or violating any license or agreement with Acer relating
to, any Acer IP Rights. There is no current or, to the Knowledge of Acer, pending challenge, claim or Legal Proceeding (including opposition, interference or other proceeding in any patent or other government office) contesting the validity,
enforceability, ownership or right to use, sell, license or dispose of any Acer IP Rights, nor has Acer received any written notice asserting that the manufacture, marketing, license, sale or intended use of any product or service currently approved
or sold or under preclinical or clinical development by Acer conflicts with or infringes or misappropriates or will conflict with or infringe or misappropriate the rights of any other Person.
(g)
Each item of Acer IP Rights that is Acer Registered IP is and at all times has been filed and maintained in compliance with all
applicable Legal Requirements and all filings, payments and other actions required to be made or taken to maintain such item of Acer Registered IP in full force and effect have been made by the applicable deadline, except for any failure to perform
any of the foregoing, individually or collectively, that would not (in any case or in the aggregate) materially detract from the value of the Acer Registered IP subject thereto or materially impair the operations of Acer.
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(h)
No trademark (whether registered or unregistered) or trade name owned, used, or
applied for by Acer conflicts or interferes with any trademark (whether registered or unregistered) or trade name owned, used, or applied for by any other Person. None of the goodwill associated with or inherent in any trademark (whether registered
or unregistered) in which Acer has or purports to have an ownership interest has been impaired as determined by Acer in accordance with GAAP.
2.10 Material Contracts.
(a)
Section 2.10(a)
of the Acer Disclosure Schedule lists the following Acer Contracts, effective as of the date of this
Agreement (each, an
Acer
Material
Contract
and collectively, the
Acer
Material
Contracts
):
(i)
each Acer Contract relating to any material bonus, deferred compensation, severance, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or arrangements;
(ii)
each Acer Contract requiring
payments by Acer after the date of this Agreement in excess of $150,000 pursuant to its express terms relating to the employment of, or the performance of employment-related services by, any Person, including any employee, consultant or independent
contractor, or entity providing employment related, consulting or independent contractor services, not terminable by Acer on ninety (90) calendar days or less notice without liability, except to the extent general principles of wrongful
termination law may limit Acers or such successors ability to terminate employees at will;
(iii)
each Acer Contract
relating to any agreement or plan, including any stock option plan, stock appreciation right plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of
any of the Contemplated Transactions (either alone or in conjunction with any other event, such as termination of employment), or the value of any of the benefits of which will be calculated on the basis of any of the Contemplated Transactions;
(iv)
each Acer Contract relating to any agreement of indemnification or guaranty not entered into in the Ordinary Course of Business;
(v)
each Acer Contract containing (A) any covenant limiting the freedom of Acer or the Surviving Corporation to engage in
any line of business or compete with any Person, (B) any most-favored pricing arrangement, (C) any exclusivity provision, or (D) any
non-solicitation
provision;
(vi)
each Acer Contract relating to capital expenditures and requiring payments after the date of this Agreement in excess of $250,000
pursuant to its express terms;
(vii)
each Acer Contract relating to the disposition or acquisition of material assets or any
ownership interest in any Entity;
(viii)
each Acer Contract relating to any mortgages, indentures, loans, notes or credit
agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit in excess of $250,000 or creating any material Encumbrances with respect to any assets of Acer or any loans or debt
obligations with officers or directors of Acer;
(ix)
each Acer Contract requiring payment by or to Acer after the date of this
Agreement in excess of $250,000 pursuant to its express terms relating to: (A) any distribution agreement (identifying any that contain exclusivity provisions); (B) any agreement involving provision of services or products with respect to any
pre-clinical
or clinical development activities of Acer; (C) any dealer, distributor, joint marketing, alliance, joint venture, cooperation, development or other agreement currently in force under which Acer
has continuing obligations to develop or market any product, technology or service, or any agreement pursuant to which Acer has continuing obligations to develop any Intellectual Property that will not be owned, in whole or in part, by
A-13
Acer; or (D) any Contract to license any third party to manufacture or produce any product, service or technology of Acer or any Contract to sell, distribute or commercialize any products or
service of Acer, in each case, except for Acer Contracts entered into in the Ordinary Course of Business;
(x)
each Acer Contract
with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services to Acer in connection with the Contemplated Transactions;
(xi)
each Acer IP Rights Agreement other than those that are immaterial;
(xii)
each Acer Lease; or
(xiii)
any other Acer Contract that is not terminable at will (with no penalty or payment) by Acer and (A) which involves payment
or receipt by Acer after the date of this Agreement under any such agreement, contract or commitment of more than $250,000 in the aggregate, or obligations after the date of this Agreement in excess of $250,000 in the aggregate, or (B) that is
material to the business or operations of Acer.
(b)
Acer has delivered or made available to Opexa accurate and complete (except
for applicable redactions thereto) copies of all Acer Material Contracts, including all amendments thereto. There are no Acer Material Contracts that are not in written form. Acer has not, nor to Acers Knowledge, as of the date of this
Agreement has any other party to an Acer Material Contract, breached, violated or defaulted under, or received notice that it has breached, violated or defaulted under, any of the terms or conditions of any Acer Material Contract in such manner as
would permit any other party to cancel or terminate any such Acer Material Contract, or would permit any other party to seek damages that would result in an Acer Material Adverse Effect. As to Acer, as of the date of this Agreement, each Acer
Material Contract is valid, binding, enforceable and in full force and effect, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
2.11
Undisclosed
Liabilities
.
As of the date of this Agreement, Acer does not have any liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any kind, whether accrued, absolute, contingent, matured, or unmatured
(whether or not required to be reflected in the financial statements in accordance with GAAP) (each a
Liability
), except for: (a) Liabilities identified as such in the liabilities column of the Acer
Unaudited Interim Balance Sheet; (b) normal and recurring current Liabilities that have been incurred by Acer since the date of the Acer Unaudited Interim Balance Sheet in the Ordinary Course of Business and that are not in excess of $250,000
in the aggregate; (c) Liabilities for performance in the Ordinary Course of Business of obligations of Acer under Acer Contracts, including the reasonably expected performance of such Acer Contracts in accordance with their terms (which would
not include, for example, any instances of breach or indemnification); (d) Liabilities incurred in connection with the Contemplated Transactions; and (f) Liabilities listed in Section 2.11 of the Acer Disclosure Schedule.
2.12 Compliance; Permits; Restrictions.
(a)
Acer is, and since January 1, 2011 has been, in material compliance with all applicable Legal Requirements. No investigation,
claim, suit, proceeding, audit or other action by any Governmental Body or authority is pending or, to the Knowledge of Acer, threatened against Acer. There is no Contract, judgment, injunction, order or decree binding upon Acer which (i) has
or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of Acer, any acquisition of material property by Acer or the conduct of business by Acer as currently conducted, (ii) would
reasonably be expected to have an adverse effect on Acers ability to comply with or perform any covenant or obligation under this Agreement, or (iii) would reasonably be expected to have the effect of preventing, delaying, making illegal
or otherwise interfering with the Merger or any of the Contemplated Transactions.
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(b)
Acer holds all required Governmental Authorizations which are material to the
operation of the business of Acer (the
Acer
Permits
) as currently conducted.
Section
2.12(b)
of the Acer Disclosure Schedule identifies each Acer Permit. As of the date of this
Agreement, Acer is in material compliance with the terms of the Acer Permits. No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending or, to the Knowledge of Acer, threatened, which seeks to revoke,
limit, suspend, or materially modify any Acer Permit. The rights and benefits of each material Acer Permit will be available to the Surviving Corporation immediately after the Effective Time on terms substantially identical to those enjoyed by Acer
immediately prior to the Effective Time.
(c)
There are no proceedings pending or, to the Knowledge of Acer, threatened with
respect to an alleged violation by Acer of the Federal Food, Drug, and Cosmetic Act (
FDCA
), Food and Drug Administration (
FDA
) regulations adopted thereunder, the Controlled Substances Act or any
other similar Legal Requirements promulgated by the FDA or other comparable Governmental Body responsible for regulation of the development, clinical testing, manufacturing, sale, marketing, distribution and importation or exportation of drug
products (
Drug
Regulatory
Agency
).
(d)
Acer holds all required Governmental
Authorizations issuable by any Drug Regulatory Agency necessary for the conduct of the business of Acer as currently conducted, and development, clinical testing, manufacturing, marketing, distribution and importation or exportation, as currently
conducted, of any of its products or product candidates (the
Acer
Product
Candidates
) (collectively, the
Acer
Regulatory
Permits
), and no
such Acer Regulatory Permit has been (i) revoked, withdrawn, suspended, canceled or terminated or (ii) modified in any adverse manner, other than immaterial adverse modifications. Acer is in compliance in all material respects with the
Acer Regulatory Permits and has not received any written notice or other written communication from any Drug Regulatory Agency regarding (A) any material violation of or failure to comply materially with any term or requirement of any Acer
Regulatory Permit or (B) any revocation, withdrawal, suspension, cancelation, termination or material modification of any Acer Regulatory Permit. Acer has made available to Opexa all information requested by Opexa in Acers possession or
control relating to the Acer Product Candidates and the development, clinical testing, manufacturing, importation and exportation of the Acer Product Candidates, including complete copies of the following (to the extent there are any): adverse event
reports; clinical study reports and material study data; inspection reports, notices of adverse findings, warning letters, filings and letters and other written correspondence to and from any Drug Regulatory Agency; and meeting minutes with any Drug
Regulatory Agency.
(e)
All clinical,
pre-clinical
and other studies and tests conducted by
or on behalf of, or sponsored by, Acer or in which Acer or its current products or product candidates, including the Acer Product Candidates, have participated were, and if still pending are being, conducted in all material respects in accordance
with standard medical and scientific research procedures and in compliance with the applicable regulations of the Drug Regulatory Agencies and other applicable Legal Requirements, including 21 C.F.R. Parts 50, 54, 56, 58 and 312. Since
January 1, 2011, Acer has not received any notices, correspondence or other communications from any Drug Regulatory Agency requiring, or to the Knowledge of Acer threatening to initiate, the termination or suspension of any clinical studies
conducted by or on behalf of, or sponsored by, Acer or in which Acer or its current products or product candidates, including the Acer Product Candidates, have participated.
(f)
Acer is not the subject of any pending, or to the Knowledge of Acer, threatened investigation in respect of its business or
products by the FDA pursuant to its Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities Final Policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto. To the Knowledge of Acer, Acer
has not committed any acts, made any statement, or failed to make any statement, in each case in respect of its business or Acer Product Candidates that would violate the FDAs Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities Final Policy, and any amendments thereto. None of Acer, or to the Knowledge of Acer, any of its officers, employees or agents has been convicted of any crime or engaged in any conduct that would reasonably be expected to
result in a debarment or exclusion (i) under 21 U.S.C. Section 335a or (ii) any similar applicable Legal Requirement. To the
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Knowledge of Acer, no debarment or exclusionary claims, actions, proceedings or investigations in respect of their business or products are pending or threatened against Acer or any of its
officers, employees or agents.
2.13 Tax Matters.
(a)
Acer has timely filed all federal income Tax Returns and other material Tax Returns that they were required to file under
applicable Legal Requirements. All such Tax Returns were correct and complete in all material respects and have been prepared in material compliance with all applicable Legal Requirements. Acer is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where Acer does not file Tax Returns that it is subject to taxation by that jurisdiction.
(b)
All material Taxes due and owing by Acer on or before the date hereof (whether or not shown on any Tax Return) have been paid. The
unpaid Taxes of Acer have been reserved for on the Acer Unaudited Interim Balance Sheet in accordance with GAAP. Since the date of the Acer Unaudited Interim Balance Sheet, Acer has not incurred any Liability for Taxes outside the Ordinary Course of
Business or otherwise inconsistent with past custom and practice.
(c)
Acer has withheld and paid all Taxes required to have been
withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party.
(d)
There are no Encumbrances for Taxes (other than Taxes not yet due and payable or Taxes that are being contested in good faith and
for which adequate reserves have been made on Acers Unaudited Interim Balance Sheet) upon any of the assets of Acer.
(e)
No
material deficiencies for Taxes with respect to Acer have been claimed, proposed or assessed by any Governmental Body in writing. There are no pending (or, based on written notice, threatened) audits, assessments or other actions for or relating to
any liability in respect of Taxes of Acer. No issues relating to Taxes of Acer were raised by the relevant Tax authority in any completed audit or examination that would reasonably be expected to result in a material amount of Taxes in a later
taxable period. Acer has delivered or made available to Opexa complete and accurate copies of all federal income Tax and all other material Tax Returns of Acer (and its predecessors) for all taxable years remaining open under the applicable statute
of limitations, and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by Acer (and its predecessors), with respect to federal income Tax and all other material Taxes. Neither Acer
nor any of its predecessors has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, nor has any request been made in writing for any such extension or waiver.
(f)
All material elections with respect to Taxes affecting Acer as of the date hereof are set forth on
Section
2.13(f)
of the Acer Disclosure Schedule. Acer has not (i) consented at any time under former Section 341(f)(1) of the Code to have the provisions of former Section 341(f)(2) of the Code apply to any
disposition of the assets of Acer; (ii) agreed, or is required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise; (iii) made an election, or is required, to treat any of
its assets as owned by another Person for Tax purposes or as a
tax-exempt
bond financed property or
tax-exempt
use property within the meaning of Section 168 of the
Code; (iv) acquired or owns any assets that directly or indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code; (v) made or will make a consent dividend election under Section 565 of the
Code; (vi) elected at any time to be treated as an S corporation within the meaning of Sections 1361 or 1362 of the Code; or (vii) made any of the foregoing elections or is required to apply any of the foregoing rules under any comparable
provision of state, local or foreign law.
(g)
Acer has not been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
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(h)
Acer is not a party to any Tax allocation, Tax sharing or similar agreement (including
indemnity arrangements), other than commercial contracts entered into in the Ordinary Course of Business with vendors, customers and landlords.
(i)
Acer has never been a member of an affiliated group filing a consolidated, combined or unitary Tax Return (other than a group the
common parent of which is Acer) for federal, state, local or foreign Tax purposes. Acer has no Liability for the Taxes of any Person (other than Acer) under Treasury Regulations
Section 1.1502-6
(or any
similar provision of state, local, or foreign law), as a transferee or successor, by Contract, or otherwise.
(j)
Acer has not
distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code.
(k)
Acer will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any period
(or any portion thereof) ending after the Closing Date as a result of any (i) installment sale or other open transaction disposition made on or prior to the Closing Date, or (ii) agreement with any Tax authority (including any closing
agreement described in Section 7121 of the Code or any similar provision of state, local or foreign law) made or entered into on or prior to the Closing Date.
(l)
Acer is not a partner for Tax purposes with respect to any joint venture, partnership, or, to the Knowledge of Acer, other
arrangement or contract which is treated as a partnership for Tax purposes.
(m)
Acer has not entered into any transaction
identified as a listed transaction for purposes of Treasury Regulations Sections
1.6011-4(b)(2)
or
301.6111-2(b)(2).
(n)
Acer has not taken any action, and to the Knowledge of Acer, there is no fact or circumstance that would reasonably be expected to
prevent the Contemplated Transactions from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
2.14 Employee and Labor Matters; Benefit Plans.
(a)
The employment of each of the Acer employees is terminable by Acer at will (or otherwise in accordance with general principles of
wrongful termination law).
(b)
Acer is not a party to or bound by, nor has a duty to bargain under, any collective bargaining
agreement or other Contract with a labor organization representing any of its employees, and there are no labor organizations representing, purporting to represent or, to the Knowledge of Acer, seeking to represent any employees of Acer.
(c)
There has never been, nor, to the Knowledge of Acer has there been any threat of, any strike, slowdown, work stoppage, lockout, job
action, union organizing activity or any similar activity or dispute, affecting Acer.
(d)
Acer is not, and has never been, engaged
in any unfair labor practice within the meaning of the National Labor Relations Act. There is no Legal Proceeding, claim, labor dispute or grievance pending or, to the Knowledge of Acer, threatened or reasonably anticipated relating to any
employment contract, privacy right, labor dispute, wages and hours, leave of absence, plant closing notification, workers compensation policy, long-term disability policy, harassment, retaliation, immigration, employment statute or regulation,
safety or discrimination matter involving any Acer Associate, including charges of unfair labor practices or discrimination complaints.
(e)
Section 2.14(e)
of the Acer Disclosure Schedule lists, as of the date of this Agreement, all written and describes all
non-written
employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus, equity-
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based, retention, incentive, deferred compensation, retirement or supplemental retirement, profit sharing, severance, golden parachute, disability, life or accident insurance, paid time off,
vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, fringe or employee benefit, and all other compensation, plans, programs, agreements or arrangements, including but not limited
to any employment, consulting, independent contractor, severance or executive compensation agreements or arrangements (other than regular salary or wages), written or otherwise, which are currently in effect relating to any present or former
employee, independent contractor or director of Acer or any Acer Affiliate or which is maintained by, administered or contributed to by, or required to be contributed to by, Acer or any Acer Affiliate, or under which Acer or any Acer Affiliate has
any current or would reasonably be expected to incur liability after the date hereof (each, an
Acer
Employee
Plan
).
(f)
With respect to Acer Options granted pursuant to the 2013 Plan, to the Knowledge of Acer, (i) each Acer Option intended to
qualify as an incentive stock option under Section 422 of the Code so qualifies, (ii) each grant of an Acer Option was duly authorized no later than the date on which the grant of such Acer Option was by its terms to be
effective (the
Grant
Date
) by all necessary corporate action, including, as applicable, approval by the Acer Board of Directors (or a duly constituted and authorized committee thereof) and any required
stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (iii) each Acer Option grant was made in accordance with the
terms of the 2013 Plan and all other applicable Legal Requirements and (iv) the per share exercise price of each Acer Option was not less than the fair market value of a share of Acer Common Stock on the applicable Grant Date.
(g)
Each Acer Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable
determination or may rely on a favorable opinion letter with respect to such qualified status from the Internal Revenue Service. To the Knowledge of Acer, nothing has occurred that would reasonably be expected to adversely affect the qualified
status of any such Acer Employee Plan or the exempt status of any related trust.
(h)
Each Acer Employee Plan has been maintained
in compliance, in all material respects, with its terms and, both as to form and operation, with all applicable Legal Requirements, including the Code and ERISA. Acer and each Acer Affiliate has performed all obligations required to be performed by
it under, is not in default under or in violation of, and has no knowledge of any default or violation by any other party to, any of the Acer Employee Plans. Neither Acer nor any Acer Affiliate is subject to any Liability or penalty under Sections
4976 through 4980 of the Code or Title I of ERISA with respect to any of the Acer Employee Plans. All contributions required to be made by Acer or any Acer Affiliate to any Acer Employee Plan have been made on or before their due dates (and no
further contributions will be due or will have accrued thereunder as of the Closing Date, other than contributions accrued in the ordinary course of business consistent with past practice). No suit, administrative proceeding, action or other
litigation has been initiated against, or to the Knowledge of Acer, is threatened against or with respect to any Acer Employee Plan, including any audit or inquiry by the IRS, the United States Department of Labor or other Governmental Body.
(i)
Acer has not engaged in any transaction in violation of Sections 404 or 406 of ERISA or any prohibited transaction, as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated the provisions of Part 4 of Title I, Subtitle B of ERISA.
Acer has not knowingly participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Acer Employee Plan subject to ERISA and Acer has not been assessed any civil penalty under Section 502(l) of ERISA.
(j)
No Acer Employee Plan is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, and neither Acer nor any
Acer Affiliate has ever maintained, contributed to or partially or completely withdrawn from, or incurred any obligation or liability with respect to, any such plan. No Acer Employee Plan is a Multiemployer Plan, and neither Acer nor any Acer
Affiliate has ever contributed to or had an obligation to contribute, or incurred any liability in respect of a contribution, to any Multiemployer Plan.
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(k)
No Acer Employee Plan provides for medical or death benefits beyond termination of
service or retirement, other than (i) pursuant to COBRA or an analogous state law requirement or (ii) death or retirement benefits under an Acer Employee Plan qualified under Section 401(a) of the Code. Acer does not sponsor or
maintain any self-funded employee benefit plan. No Acer Employee Plan is subject to any Legal Requirement of a foreign jurisdiction outside of the United States.
(l)
Acer is not a party to any Contract that has resulted or would reasonably be expected to result, separately or in the aggregate, in
the payment of (i) any excess parachute payment within the meaning of section 280G of the Code as a result of the Contemplated Transactions and (ii) any amount the deduction for which would be disallowed under
Section 162(m) of the Code.
(m)
To the Knowledge of Acer, no payment pursuant to any Acer Employee Plan or other arrangement
to any service provider (as such term is defined in Section 409A of the Code and the United States Treasury Regulations and IRS guidance thereunder) from Acer, including the grant, vesting or exercise of any stock option, would
subject any Person to tax pursuant to Section 409A(1) of the Code, whether pursuant to the Contemplated Transactions or otherwise.
(n)
No Acer Option, stock appreciation rights or other equity-based awards issue or granted by Acer are subject to the requirements of
Code Section 409A. Each nonqualified deferred compensation plan (as such term is defined under Section 409A(d)(1) of the Code and guidance thereunder) maintained by or under which Acer makes, is obligated to make or promises to
make, payments (each a
Acer
409A
Plan
) complies in all material respects, in both form and operation, with the requirements of Code Section 409A and the guidance thereunder. No payment to be
made under any Acer 409A Plan is, or to the Knowledge of Acer will be, subject to the penalties of Code Section 409A(a)(1).
(o)
Acer has complied in all material respects with all state and federal laws applicable to employees, including but not limited to
COBRA, FMLA, CFRA, HIPAA, the Womens Health and Cancer Rights Act of 1998, the Newborns and Mothers Health Protection Act of 1996, and any similar provisions of state law applicable to its employees. To the extent required under
HIPAA and the regulations issued thereunder, Acer has, prior to the Closing Date, performed all obligations under the medical privacy rules of HIPAA (45 C.F.R. Parts 160 and 164), the electronic data interchange requirements of HIPAA (45 C.F.R.
Parts 160 and 162), and the security requirements of HIPAA (45 C.F.R. Part 142). Acer does not have any material unsatisfied obligations to any employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing health care
coverage or extension. Acer is in compliance in all material respects with all applicable requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and all regulations thereunder (together, the
ACA
), including all requirements relating to eligibility waiting periods and the offer of or provision of minimum essential coverage that is compliant with Section 36B(c)(2)(C) of the Code and the regulations issued
thereunder to full-time employees as defined in Section 4980H(c)(4) of the Code and the regulations issued thereunder. No excise tax or penalty under the ACA, including Sections 4980D and 4980H of the Code, is outstanding, has accrued, or has
arisen with respect to any period prior to the Closing, with respect to any Acer Employee Plan. Neither Acer nor any Acer Subsidiary has any unsatisfied obligations to any employees or qualified beneficiaries pursuant to the ACA, or any state or
local Legal Requirement governing health care coverage or benefits that would reasonably be expected to result in any material liability to Acer. Acer and each Acer Subsidiary has maintained all records necessary to demonstrate its compliance with
the ACA.
(p)
Acer is in material compliance with all applicable foreign, federal, state and local laws, rules, regulations,
orders, rulings, judgments, decrees or arbitration awards respecting employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, fair employment
practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, hours of work, labor relations, leave of absence requirements, occupational health and safety, privacy, harassment,
retaliation, immigration and wrongful discharge and in each case, with respect to employees: (i) has withheld and reported all amounts required by law
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or by agreement to be withheld and reported with respect to wages, salaries and other payments to employees, (ii) is not liable for any arrears of wages, severance pay or any Taxes or any
penalty of any material amount for failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Body, with respect to unemployment
compensation benefits, social security or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no actions, suits, claims or administrative
matters pending, or to the Knowledge of Acer, threatened or reasonably anticipated against Acer relating to any employee, employment agreement, independent contractor, independent contractor agreement or Acer Employee Plan. There are no pending or,
to the Knowledge of Acer, threatened or reasonably anticipated claims or actions against Acer or any Acer trustee under any workers compensation policy or long-term disability policy. Acer is not party to a conciliation agreement, consent
decree or other agreement or order with any federal, state or local agency or governmental authority with respect to employment practices.
(q)
No current or former independent contractor of Acer would reasonably be deemed to be a misclassified employee. Acer does not have
any material liability with respect to any misclassification of: (A) any Person as an independent contractor rather than as an employee, (B) any employee leased from another employer or (C) any employee currently or formerly
classified as exempt from overtime wages. Acer has not taken any action which would constitute a plant closing or mass layoff within the meaning of the WARN Act or similar state or local law, issued any notification of a
plant closing or mass layoff required by the WARN Act or similar state or local law, or incurred any liability or obligation under WARN or any similar state or local law that remains unsatisfied. No terminations of employees of Acer prior to the
Closing would trigger any notice or other obligations under the WARN Act or similar state or local law.
(r)
Except as set forth in
Section
2.14(r)
of the Acer Disclosure Schedule, none of the execution and delivery of this Agreement, or the consummation of the Contemplated Transactions or any termination of employment or service or any other event in
connection therewith or subsequent thereto will, individually or together or with the occurrence of some other event, (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due
to any employee, independent contractor or director of Acer, (ii) materially increase or otherwise enhance any benefits otherwise payable by Acer, (iii) result in the acceleration of the time of payment or vesting of any such benefits,
except as required under Section 411(d)(3) of the Code, (iv) increase the amount of compensation due to any Person by Acer or (v) result in the forgiveness in whole or in part of any outstanding loans made by Acer to any Person.
(s)
With respect to each Acer Employee Plan, Acer has made available to Opexa a true and complete copy of, to the extent applicable,
(i) such Acer Employee Plan, (ii) the three most recent annual reports (Form 5500) as filed with the Internal Revenue Service, (iii) each currently effective trust agreement related to such Acer Employee Plan, (iv) the most
recent summary plan description for each Acer Employee Plan for which such description is required, along with all summaries of material modifications, amendments, resolutions and all other material plan documentation related thereto in the
possession of Acer, and (v) the most recent Internal Revenue Service determination or opinion letter or analogous ruling under foreign law issued with respect to any Acer Employee Plan.
2.15 Environmental Matters
. Acer is in material compliance with all applicable Environmental Laws,
which compliance includes the possession by Acer of all permits and other Governmental Authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof other than any failure to be in compliance or
possess any such permits and authorized that is not an Acer Material Adverse Effect. Acer has not received since January 1, 2011 any written notice or other communication (in writing or otherwise), whether from a Governmental Body, citizens
group, employee or otherwise, that alleges that Acer is not in compliance with any Environmental Law, and, to the Knowledge of Acer, there are no circumstances that may prevent or interfere with Acers compliance with any Environmental Law in
the future. To the Knowledge of Acer: (i) no current or prior owner of any property leased or controlled by Acer has received since January 1,
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2011 any written notice or other communication relating to property owned or leased at any time by Acer, whether from a Governmental Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or Acer is not in compliance with or has violated any Environmental Law relating to such property and (ii) it does not have any material liability under any Environmental Law.
2.16 Insurance.
(a)
Acer has delivered or made available to Opexa accurate and complete copies of all material insurance policies and all material
self-insurance programs and arrangements relating to the business, assets, liabilities and operations of Acer, as of the date of this Agreement. Each of such insurance policies is in full force and effect and Acer is in compliance with the terms
thereof. As of the date of this Agreement, other than customary end of policy notifications from insurance carriers, since January 1, 2011, Acer has not received any notice or other communication regarding any actual or possible:
(a) cancelation or invalidation of any insurance policy; (b) refusal or denial of any coverage, reservation of rights or rejection of any material claim under any insurance policy; or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy. There is no pending workers compensation or other claim under or based upon any insurance policy of Acer. Information provided to insurance carriers (in applications and otherwise) on
behalf of Acer is accurate and complete. Acer has provided timely written notice to the appropriate insurance carrier(s) of each Legal Proceeding pending or threatened against Acer, and no such carrier has issued a denial of coverage or a
reservation of rights with respect to any such Legal Proceeding, or informed Acer of its intent to do so.
(b)
Acer has delivered
to Opexa accurate and complete copies of the existing policies (primary and excess) of directors and officers liability insurance maintained by Acer as of the date of this Agreement (the
Existing
Acer
D&O
Policies
).
Section
2.16(b)
of the Acer Disclosure Schedule accurately sets forth, as of the date of this Agreement, the most recent annual premiums paid by Acer with respect to the
Existing Acer D&O Policies. All premiums for the Existing Acer D&O Policies have been paid as of the date hereof.
2.17 Legal Proceedings; Orders.
(a)
There is no pending Legal Proceeding, and, to the Knowledge of Acer, no Person has
threatened in writing to commence any Legal Proceeding: (i) that involves Acer, or to the Knowledge of Acer, any director or officer of Acer (in his or her capacity as such) or any of the material assets owned or used by Acer; or (ii) that
challenges, or that would reasonably be expected to have the effect of preventing, delaying, making illegal or otherwise interfering with, the Contemplated Transactions. To the Knowledge of Acer, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b)
There is no order, writ, injunction, judgment or decree to which Acer, or any of the material assets owned or used by Acer, is
subject. To the Knowledge of Acer, no officer of Acer is subject to any order, writ, injunction, judgment or decree that prohibits such officer of Acer from engaging in or continuing any conduct, activity or practice relating to the business of Acer
or to any material assets owned or used by Acer.
2.18 Inapplicability of Anti-Takeover Statutes
.
The Acer Board of Directors has taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in Section 203 of the DGCL are, and will be, inapplicable to the execution, delivery and
performance of this Agreement and the Acer Stockholder Support Agreements and to the consummation of the Contemplated Transactions. No other state takeover statute or similar Legal Requirement applies or purports to apply to the Merger, this
Agreement, the Acer Stockholder Support Agreements or any of the other Contemplated Transactions, in each case due to the fact that Acer is a party to such matters.
2.19 No Financial Advisor
. No broker, finder or investment banker is entitled to any brokerage fee,
finders fee, opinion fee, success fee, transaction fee or other fee or commission in connection with the Contemplated Transactions based upon arrangements made by or on behalf of Acer.
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2.20 Subscription Agreement
. The Subscription Agreement
has not been amended or modified in any manner. Neither Acer nor, to the Knowledge of Acer, any of its Affiliates has entered into any agreement, side letter or other arrangement relating to the Acer
Pre-Closing
Financing, or the transactions contemplated by the Subscription Agreement, other than as set forth in the Subscription Agreement. The respective obligations and agreements contained in the
Subscription Agreement have not been withdrawn or rescinded in any respect. The Subscription Agreement is in full force and effect and represents a valid, binding and enforceable obligation of Acer and, to the Knowledge of Acer, of each other party
thereto, subject to the qualification that such enforceability may be limited by bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting rights of creditors. No event has occurred which, with or without
notice, lapse of time or both, would constitute a breach or default on the part of Acer or, to the Knowledge of Acer, any other party thereto, under the Subscription Agreement. To the Knowledge of Acer, no party thereto will be unable to satisfy on
a timely basis any term of the Subscription Agreement. There are no conditions precedent related to the consummation of the Acer
Pre-Closing
Financing contemplated by the Subscription Agreement, other than the
satisfaction or waiver of the conditions expressly set forth in Article 5 of the Subscription Agreement. To the Knowledge of Acer, the funds from the Acer
Pre-Closing
Financing will be made available to Acer
prior to the consummation of the Merger.
2.21 Disclosure
. The information supplied by Acer for
inclusion in the Proxy Statement / Prospectus / Information Statement (including any Acer Financials) will not, as of the date of the Proxy Statement / Prospectus / Information Statement or as of the date such information is first mailed to Opexa
Shareholders, (i) contain any untrue statement of any material fact or (ii) omit to state any material fact necessary in order to make such information, in the light of the circumstances under which such information is provided, not false
or misleading.
2.22 Exclusivity of Representations; Reliance.
(a)
Except as expressly set forth in this
Article 2
, neither Acer nor any Person on behalf of Acer has made, nor are any of them
making, any representation or warranty, written or oral, express or implied, at law or in equity, including with respect to merchantability or fitness for any particular purpose, in respect of Acer or its business in connection with the transactions
contemplated hereby, including any representations or warranties about the accuracy or completeness of any information or documents previously provided (including with respect to any financial or other projections therein), and any other such
representations and warranties are hereby expressly disclaimed.
(b)
Acer acknowledges and agrees that, except for the
representations and warranties of Opexa and Merger Sub set forth in
Article 3
, neither Acer nor its Representatives is relying on any other representation or warranty of Opexa, Merger Sub, or any other Person made outside of
Article 3
of this Agreement, including regarding the accuracy or completeness of any such other representations or warranties or the omission of any material information, whether express or implied, in each case with respect to the Contemplated Transactions.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF OPEXA AND MERGER SUB
Opexa and Merger Sub represent and warrant to Acer as follows, except as set forth in the written disclosure schedule delivered by Opexa to
Acer (the
Opexa
Disclosure
Schedule
) (it being understood that the representations and warranties in this
Article 3
are qualified by: (a) any exceptions and disclosures
set forth in the section or subsection of the Opexa Disclosure Schedule corresponding to the particular section or subsection in this
Article 3
in which such representation and warranty appears; (b) any exceptions or disclosures
explicitly cross-referenced in such section or subsection of the Opexa Disclosure Schedule by reference to another section or subsection of the Opexa Disclosure Schedule; and (c) any exceptions or disclosures set forth in any other
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section or subsection of the Opexa Disclosure Schedule to the extent it is reasonably apparent on the face of such exception or disclosure that such exception or disclosure qualifies such
representation and warranty). The inclusion of any information in the Opexa Disclosure Schedule shall not be deemed to be an admission or acknowledgement, in and of itself, that such information is required by the terms hereof to be disclosed, is
material, has resulted in or would result in an Opexa Material Adverse Effect, or is outside the Ordinary Course of Business.
3.1 Subsidiaries; Due Organization; Organizational Documents.
(a)
Other than Merger Sub or as set forth in
Section
3.1(a)
of the Opexa Disclosure Schedule (such Subsidiaries, along with Merger Sub, the
Opexa
Subsidiaries
), Opexa does not have any Subsidiaries and Opexa does not own any
capital stock of, or any equity interest of any nature in, any other Entity. Opexa has neither agreed nor is obligated to make, nor is bound by any Contract under which it may become obligated to make, any future investment in or capital
contribution to any other Entity. Opexa has not, at any time, been a general partner of, or otherwise been liable for any of the debts or other obligations of, any general partnership, limited partnership or other Entity.
(b)
Each of Opexa and the Opexa Subsidiaries is a corporation or limited liability company, as applicable, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its formation/incorporation and has all necessary power and authority: (i) to conduct its business in the manner in which its business is currently being conducted;
(ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all Opexa Contracts.
(c)
Each of Opexa and the Opexa Subsidiaries is qualified to do business as a foreign corporation, and is in good standing, under the
laws of all jurisdictions where the nature of its business requires such qualification other than in jurisdictions where the failure to be so qualified would not constitute an Opexa Material Adverse Effect.
(d)
Each director and officer of Opexa and Merger Sub as of the date of this Agreement is set forth in
Section
3.1(d)
of the Opexa Disclosure Schedule.
(e)
Merger Sub was formed solely for the purpose of
engaging in the Contemplated Transactions. Except for obligations and liabilities incurred in connection with its incorporation and the Contemplated Transactions, Merger Sub has not, and will not have, incurred, directly or indirectly, any
obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any Person.
(f)
Opexa has delivered or made available to Acer accurate and complete copies of (i) the certificate of formation/incorporation,
bylaws and other charter and organizational documents, including all currently effective amendments thereto, for Opexa and Merger Sub; and (ii) any code of conduct or similar policy adopted by Opexa or by the Opexa Board of Directors or any
committee thereof. Neither Opexa nor Merger Sub is in material violation of any of the provisions of its respective organizational documents.
3.2 Authority; Vote Required.
(a)
Each of Opexa and Merger Sub has all necessary corporate power and authority to enter into and, subject to the Required Opexa
Shareholder Vote and the Required Merger Sub Stockholder Vote, as applicable to perform its obligations under this Agreement. The Opexa Board of Directors has: (i) determined that the Merger is fair to, and in the best interests of, Opexa and
Opexa Shareholders; (ii) duly authorized and approved by all necessary corporate action, the execution, delivery and performance of this Agreement and the Contemplated Transactions; (iii) recommended the approval of the Opexa Shareholder
Matters by the Opexa Shareholders and directed that the Opexa Shareholder Matters be submitted for consideration by Opexa Shareholders in connection
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with the solicitation of the Required Opexa Shareholder Vote; and (iv) approved the Opexa Shareholder Support Agreements and the transactions contemplated thereby. The board of directors of
Merger Sub has (A) determined that the Merger is fair to, and in the best interests of, Merger Sub and its sole stockholder; (B) duly authorized and approved by all necessary corporate action, the execution, delivery and performance of
this Agreement and the Contemplated Transactions; and (C) recommended that the sole stockholder of Merger Sub adopt this Agreement and thereby approve the Merger and the applicable Contemplated Transactions. This Agreement has been duly
executed and delivered by Opexa and Merger Sub and, assuming the due authorization, execution and delivery by Acer, constitutes the legal, valid and binding obligation of Opexa and Merger Sub, enforceable against Opexa and Merger Sub in accordance
with its terms, subject to: (1) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (2) rules of law governing specific performance, injunctive relief and other equitable remedies.
(b)
(i) The affirmative vote of the holders of a majority of outstanding shares of Opexa Common Stock is the only vote of the holders
of any class or series of Opexa Capital Stock necessary to approve the Opexa Shareholder Matters (the
Required
Opexa
Shareholder
Vote
) and (ii) the affirmative vote of the sole
stockholder of Merger Sub is the only vote of the holders of any class or series of Merger Sub Capital Stock necessary to adopt this Agreement and approve the Merger and the applicable Contemplated Transactions (the
Required
Merger
Sub
Stockholder
Vote
).
3.3
Non-Contravention;
Consents.
(a)
The execution and delivery of this Agreement by Opexa does
not, and the performance of this Agreement by Opexa and Merger Sub will not, (i) conflict with or violate the certificate of formation/incorporation or bylaws of Opexa or any Opexa Subsidiaries; (ii) subject to obtaining the Required Opexa
Shareholder Vote and the Required Merger Sub Stockholder Vote and compliance with the requirements set forth in
Section
3.3(b)
below, conflict with or violate any Legal Requirement applicable to Opexa or any Opexa
Subsidiaries or by which its or any of their respective properties are bound or affected, except for any such conflicts or violations that would not constitute an Opexa Material Adverse Effect; or (iii) require Opexa or any Opexa Subsidiaries
to make any filing with or give any notice to a Person or make any payment, or obtain any Consent from a Person, or result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under,
or impair Opexas or any Opexa Subsidiarys rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancelation of, or result in the creation of an
Encumbrance on any of the properties or assets of Opexa or Merger Sub pursuant to, any Opexa Material Contract.
(b)
No material
Consent, order of, or registration, declaration or filing with any Governmental Body is required by or with respect to Opexa or Merger Sub in connection with the execution and delivery of this Agreement or the consummation of the Contemplated
Transactions, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (ii) any required filings under the HSR Act and any foreign antitrust Legal Requirement and
(iii) such Consents, orders, registrations, declarations and filings as may be required under applicable federal and state securities laws.
3.4 Capitalization.
(a)
The authorized capital stock of Opexa as of the date of this Agreement consists of: (i) 150,000,000 shares of shares of common
stock, par value $0.01 per share (the
Opexa
Common
Stock
), of which 7,657,332 shares are issued and outstanding as of the date of this Agreement, and (ii) 10,000,000 shares of preferred stock, no
par value, of which no shares are outstanding as of the date of this Agreement. All of the issued and outstanding shares of Opexa Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. As of the date of this
Agreement, there are outstanding Opexa Warrants to purchase 3,468,731 shares of Opexa Common Stock.
Section
3.4(a)
of the Opexa Disclosure Schedule lists, as of the date of this Agreement (A) each record holder of
issued and outstanding Opexa Common Stock and the number of shares of
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Opexa Common Stock held by each such record holder and (B) (1) each holder of issued and outstanding Opexa Warrants, (2) the number and type of shares subject to such Opexa Warrants,
(3) the exercise price of each such Opexa Warrant, and (4) the termination date of each such Opexa Warrant.
(b)
Except
for the Opexa Amended and Restated 2010 Stock Incentive Plan, which is the successor to and continuation of Opexas June 2004 Compensatory Stock Option Plan (collectively, the
2010
Plan
), Opexa does not
have any stock option plan or any other plan, program, agreement or arrangement providing for any equity-based compensation for any Person. Opexa has reserved 1,175,000 shares of Opexa Common Stock for issuance under the 2010 Plan. As of the date of
this Agreement, of such reserved shares of Opexa Common Stock, (i) 7,722 shares have been issued pursuant to the exercise of options and options to purchase 228,455 shares have been granted and are currently outstanding, (ii) 116,524 shares have
been issued pursuant to restricted stock awards, and (iii) 822,299 shares of Opexa Common Stock remain available for future issuance pursuant to the 2010 Plan.
Section
3.4(b)
of the Opexa Disclosure Schedule sets forth the
following information (A) with respect to each Opexa Option outstanding as of the date of this Agreement: (1) the name of the optionee, (2) the number of shares of Opexa Common Stock subject to such Opexa Option as of the date of this
Agreement, (3) the exercise price of such Opexa Option, (4) the date on which such Opexa Option was granted, (5) the date on which such Opexa Option expires, and (6) the vesting schedule applicable to such Opexa Option, including
the extent vested to date and whether by its terms the vesting of such Opexa Option would be accelerated by the Contemplated Transactions; and (B) with respect to each Opexa RSU outstanding as of the date of this Agreement: (1) the name of
the holder, (2) the vesting terms of each such Opexa RSU, (3) the date on which each such Opexa RSU was granted, (4) the date on which each such Opexa RSU expires, and (5) the vesting schedule applicable to such Opexa RSU,
including the extent vested to date and whether by its terms the vesting of such Opexa RSU would be accelerated by the Contemplated Transactions.
(c)
Except for the outstanding Opexa Warrants set forth on
Section
3.4(a)
of the Opexa Disclosure Schedule
and for the Opexa Options and Opexa RSUs set forth on
Section
3.4(b)
of the Opexa Disclosure Schedule, there is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to
acquire any shares of the capital stock or other securities of Opexa or Merger Sub; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of the capital stock or other
securities of Opexa or Merger Sub; (iii) stockholder rights plan (or similar plan commonly referred to as a poison pill) or Contract under which Opexa or Merger Sub is or may become obligated to sell or otherwise issue any shares of
its capital stock or any other securities; or (iv) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of Opexa or Merger Sub. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, restricted stock units, equity-based awards or other similar rights with respect to Opexa or
Merger Sub.
(d)
Except as set forth in
Section
3.4(d)
of the Opexa Disclosure Schedule, (i) none of
the outstanding shares of Opexa Capital Stock or Merger Sub Capital Stock are entitled or subject to any preemptive right, right of repurchase or forfeiture, right of participation, right of maintenance or any similar right; (ii) none of the
outstanding shares of Opexa Capital Stock or Merger Sub Capital Stock are subject to any right of first refusal in favor of Opexa or Merger Sub, as applicable; (iii) there are no outstanding bonds, debentures, notes or other indebtedness of
Opexa or Merger Sub having a right to vote on any matters on which the Opexa Shareholders or the sole stockholder of Merger Sub, as applicable, have a right to vote; (iv) there is no Opexa Contract to which Opexa or Merger Sub are a party
relating to the voting or registration of, or restricting any Person from purchasing, selling, pledging or otherwise disposing of (or from granting any option or similar right with respect to), any shares of Opexa Capital Stock or Merger Sub Capital
Stock. Neither Opexa nor Merger Sub is under any obligation, nor is bound by any Contract pursuant to which it may become obligated, to repurchase, redeem or otherwise acquire any outstanding shares of Opexa Capital Stock, Merger Sub Capital Stock
or other securities.
(e)
The authorized capital of Merger Sub consists of 1,000 shares of common stock, par value $0.0001 per
share (
Merger
Sub
Capital
Stock
), all of which are, and at the Effective Time will be, issued and
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outstanding and held of record by Opexa. The issued and outstanding shares of Merger Sub Capital Stock are duly authorized, validly issued, fully paid and nonassessable. Merger Sub has not at any
time granted any stock options, restricted stock, phantom stock, profit participation, restricted stock units, equity-based awards or other similar rights.
(f)
All outstanding shares of Opexa Capital Stock and Merger Sub Capital Stock, as well as all Opexa Options, all Opexa RSUs and all
Opexa Warrants, have been issued and granted, as applicable, in material compliance with all applicable securities laws and other applicable Legal Requirements.
3.5 SEC Filings; Financial Statements.
(a)
Opexa has made available to Acer accurate and complete copies of all registration statements, proxy statements, Certifications (as
defined below) and other statements, reports, schedules, forms and other documents filed by Opexa with the SEC since January 1, 2014 (the
Opexa
SEC
Documents
), other than such
documents that can be obtained on the SECs website at
www.sec.gov
. All statements, reports, schedules, forms and other documents required to have been filed by Opexa or its officers with the SEC have been so filed on a timely basis. As
of the time it was filed with the SEC (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), each of the Opexa SEC Documents complied in all material respects with the applicable requirements
of the Securities Act or the Exchange Act (as the case may be) and, as of the time they were filed, none of the Opexa SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The certifications and statements required by (A) Rule
13a-14
under the
Exchange Act and (B) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act) relating to the Opexa SEC Documents (collectively, the
Certifications
) are accurate and complete and comply as to form and
content with all applicable Legal Requirements. As used in this
Article 3
, the term file and variations thereof shall be broadly construed to include any manner in which a document or information is furnished, supplied or
otherwise made available to the SEC.
(b)
The financial statements (including any related notes) contained or incorporated by
reference in the Opexa SEC Documents: (i) complied as to form in all material respects with the published rules and regulations of the SEC applicable thereto; (ii) were prepared in accordance with GAAP (except as may be indicated in the
notes to such financial statements or, in the case of unaudited financial statements, as permitted by Form
10-Q
of the SEC, and except that the unaudited financial statements may not contain footnotes and are
subject to normal and recurring
year-end
adjustments that are not reasonably expected to be material in amount) applied on a consistent basis unless otherwise noted therein throughout the periods indicated;
and (iii) fairly present the consolidated financial position of Opexa as of the respective dates thereof and the results of operations and cash flows of Opexa for the periods covered thereby. Other than as expressly disclosed in the Opexa SEC
Documents filed prior to the date hereof, there has been no material change in Opexas accounting methods or principles that would be required to be disclosed in Opexas financial statements in accordance with GAAP. The books of account
and other financial records of Opexa are true and complete in all material respects.
(c)
Opexas auditor has at all times
since the date of enactment of the Sarbanes-Oxley Act been: (i) a registered public accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act); (ii) to the Knowledge of Opexa, independent with respect to Opexa
within the meaning of Regulation
S-X
under the Exchange Act; and (iii) to the Knowledge of Opexa, in compliance with subsections (g) through (l) of Section 10A of the Exchange Act and the rules
and regulations promulgated by the SEC and the Public Opexa Accounting Oversight Board thereunder.
(d)
Except as set forth in
Section
3.5(d)
of the Opexa Disclosure Schedule, from January 1, 2014 through the date hereof, Opexa has not received any comment letter from the SEC or the staff thereof or any correspondence from NASDAQ or the staff
thereof relating to the delisting or maintenance of listing of the Opexa Common Stock on The NASDAQ Capital Market. Opexa has not disclosed any unresolved comments in
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its SEC Documents. To the Knowledge of Opexa, none of the Opexa SEC Documents are the subject of ongoing SEC review or outstanding SEC investigation and there are no outstanding or unresolved
comments received from the SEC with respect to any of the Opexa SEC Documents.
(e)
Since January 1, 2011, there have been no
formal internal investigations regarding financial reporting or accounting policies and practices discussed with, reviewed by or initiated at the direction of the chief executive officer or chief financial officer of Opexa, the Opexa Board of
Directors or any committee thereof, other than ordinary course audits or reviews of accounting policies and practices or internal controls required by the Sarbanes-Oxley Act.
(f)
Opexa is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the applicable listing
and governance rules and regulations of The NASDAQ Capital Market.
(g)
Opexa maintains a system of internal control over financial
reporting (as defined in Rules
13a-15(f)
and
15d-15(f)
of the Exchange Act) that is sufficient to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance (i) that Opexa maintains records that in reasonable detail
accurately and fairly reflect Opexas transactions and dispositions of assets, (ii) that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, (iii) that receipts and
expenditures are made only in accordance with authorizations of management and the Opexa Board of Directors, and (iv) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of Opexas assets that could
have a material effect on Opexas financial statements. Opexa has evaluated the effectiveness of Opexas internal control over financial reporting and, to the extent required by applicable Legal Requirements, presented in any applicable
Opexa SEC Document that is a report on Form
10-K
or Form
10-Q
(or any amendment thereto) its conclusions about the effectiveness of the internal control over financial
reporting as of the end of the period covered by such report or amendment based on such evaluation. Opexa has disclosed to Opexas auditors and the Audit Committee of the Opexa Board of Directors (and made available to Acer a summary of the
significant aspects of such disclosure) (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect Opexas ability to
record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in Opexas internal control over financial reporting. Except as
disclosed in the Opexa SEC Documents filed prior to the date hereof, Opexa has not identified any material weaknesses in the design or operation of Opexas internal control over financial reporting. Since January 1, 2014, there have been
no material changes in Opexas internal control over financial reporting.
(h)
Opexas disclosure controls and
procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
of the Exchange Act) are reasonably designed to ensure that all information (both financial and
non-financial)
required to be disclosed by Opexa in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and
forms of the SEC, and that all such information is accumulated and communicated to Opexas management as appropriate to allow timely decisions regarding required disclosure and to make the Certifications.
3.6 Absence of Changes
. Except as set forth in
Section 3.6
of the Opexa Disclosure
Schedule, between March 31, 2017 and the date of this Agreement Opexa has conducted its business in the Ordinary Course of Business and there has not been (a) any event that has had an Opexa Material Adverse Effect or any event, condition,
change, or effect that could reasonably be expected to have, individually or in the aggregate, an Opexa Material Adverse Effect or (b) any action, event or occurrence that would have required consent of Acer pursuant to
Section 4.2(b)
of this Agreement had such action, event or occurrence taken place after the execution and delivery of this Agreement.
3.7 Title to Assets
. Opexa owns, and has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all tangible properties or assets and equipment used or held for use in its
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business or operations or purported to be owned by it, in each case, free and clear of any Encumbrances, except for: (i) any lien for current Taxes not yet due and payable or for Taxes that
are being contested in good faith and for which adequate reserves have been made on the Opexa Unaudited Interim Balance Sheet; (ii) minor liens that have arisen in the Ordinary Course of Business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or materially impair the operations of Opexa; and (iii) liens listed in
Section
3.7
of the Opexa Disclosure Schedule.
3.8 Real Property; Leaseholds
. Opexa does not currently own nor has it or any of its Subsidiaries ever
owned any real property or any interest in real property, except for the leaseholds created under the real property leases (including any amendments thereof) identified in
Section
3.8
of the Opexa Disclosure Schedule (the
Opexa
Leases
), which are each in full force and effective, with no existing material default thereunder. Opexas possession and quiet enjoyment of the leased real estate under such Opexa Leases has not
been disturbed, and to the Knowledge of Opexa, there are no disputes with respect to such Opexa Leases. Opexa has not created any Encumbrances on the real estate under the Opexa Leases.
3.9 Intellectual Property.
(a)
Opexa owns, or has the right to use, and has the right to bring actions for the infringement of, all Opexa IP Rights, except for
any failure to own or have the right to use, or have the right to bring actions that would not constitute an Opexa Material Adverse Effect.
(b)
Section 3.9(b)
of the Opexa Disclosure Schedule is an accurate, true and complete listing of all Opexa Registered IP.
(c)
Section 3.9(c)
of the Opexa Disclosure Schedule accurately identifies (i) all Opexa IP Rights licensed to Opexa (other
than (A) any
non-customized
software that (1) is so licensed solely in executable or object code form pursuant to a
non-exclusive,
internal use software
license and other Intellectual Property associated with such software and (2) is not incorporated into, or material to the development, manufacturing, or distribution of, any of Opexas products or services and (B) any Intellectual
Property licensed ancillary to the purchase or use of equipment, reagents or other materials); (ii) the corresponding Opexa Contracts pursuant to which such Opexa IP Rights are licensed to Opexa; (iii) whether the license or licenses granted to
Opexa are exclusive or
non-exclusive;
and (iv) whether any funding, facilities or personnel of any Governmental Body were used, directly or indirectly, to develop or create, in whole or in part, such
Opexa IP Rights.
(d)
Section 3.9(d)
of the Opexa Disclosure Schedule accurately identifies each Opexa Contract pursuant to
which any Person (other than Opexa) has been granted any license or option to obtain a license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any Opexa IP Rights. Opexa is not bound by,
and no Opexa IP Rights are subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of Opexa to use, exploit, assert or enforce any Opexa IP Rights anywhere in the world, in each case as
would materially limit the business of Opexa as currently conducted or planned to be conducted.
(e)
Opexa solely owns all right,
title, and interest to and in Opexa IP Rights (other than Opexa IP Rights (i) exclusively or
non-exclusively
licensed to Opexa, as identified in
Section
3.9(c)
of the Opexa
Disclosure Schedule, (ii) any
non-customized
software that (A) is so licensed solely in executable or object code form pursuant to a
non-exclusive,
internal
use software license and other Intellectual Property associated with such software and (B) is not incorporated into, or material to the development, manufacturing, or distribution of, any of Opexas products or services, and (iii) any
Intellectual Property licensed ancillary to the purchase or use of equipment, reagents or other materials) free and clear of any Encumbrances. Without limiting the generality of the foregoing and except as set forth in
Section
3.9(e)
of the Opexa Disclosure Schedule:
(i)
All documents and instruments necessary to register
or apply for or renew registration of all Opexa Registered IP have been validly executed, delivered and filed in a timely manner with the appropriate
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Governmental Body except for any such failure, individually or collectively, that would not (in any case or in the aggregate) materially detract from the value of the Opexa Registered IP subject
thereto or materially impair the operations of Opexa.
(ii)
Each Person who is or was an employee or contractor of Opexa and who
is or was involved in the creation or development of any Opexa IP Rights has signed a valid, enforceable agreement containing an assignment of such Intellectual Property to Opexa and confidentiality provisions protecting trade secrets and
confidential information of Opexa. To the Knowledge of Opexa, no current or former shareholder, officer, director, employee or contractor of Opexa or any of its Subsidiaries has any claim, right (whether or not currently exercisable), or interest to
or in any Opexa IP Rights. To the Knowledge of Opexa, no employee or contractor of Opexa is (a) bound by or otherwise subject to any Contract restricting him or her from performing his or her duties for Opexa or (b) in breach of any
Contract with any current or former employer or other Person concerning Opexa IP Rights or confidentiality provisions protecting trade secrets and confidential information comprising Opexa IP Rights.
(iii)
No funding, facilities or personnel of any Governmental Body were used, directly or indirectly, to develop or create, in whole
or in part, any Opexa IP Rights in which Opexa has an ownership interest.
(iv)
Opexa has taken reasonable steps to maintain the
confidentiality of and otherwise protect and enforce its rights in all proprietary information that Opexa holds, or purports to hold, as a trade secret.
(v)
Opexa has not assigned or otherwise transferred ownership of, or agreed to assign or otherwise transfer ownership of, any Opexa IP
Rights to any other Person, except for any such assignments or transfers made after the date of this Agreement pursuant to a Permitted Opexa Asset Sale.
(vi)
The Opexa IP Rights constitute all Intellectual Property necessary for Opexa to conduct its business as currently conducted or
planned to be conducted.
(f)
Opexa is not a party to any Contract that, as a result of the execution, delivery and performance of
this Agreement and the consummation of the Contemplated Transactions will cause the grant of any license or other right to any Opexa IP Rights or materially impair the right of Opexa or the Surviving Corporation and its Subsidiaries to use, sell,
license or enforce any Opexa IP Rights or portion thereof.
(g)
The manufacture, marketing, license, sale or intended use of any
product or service currently approved or sold or under preclinical or clinical development by Opexa (i) does not violate or constitute a breach of any license or agreement between Opexa and any third party, and, (ii) to the Knowledge of
Opexa, does not infringe or misappropriate any Intellectual Property right of any other party. Opexa has disclosed in correspondence to Acer the third-party patents and patent applications found during all freedom to operate searches that were
conducted by Opexa related to any product or technology currently approved or sold or under preclinical or clinical development by Opexa. To the Knowledge of Opexa, no third party is infringing upon or misappropriating, or violating any license or
agreement with Opexa relating to, any Opexa IP Rights. There is no current or pending challenge, claim or Legal Proceeding (including opposition, interference or other proceeding in any patent or other government office) contesting the validity,
enforceability, ownership or right to use, sell, license or dispose of any Opexa IP Rights, nor has Opexa received any written notice asserting that the manufacture, marketing, license, sale or intended use of any product or service currently
approved or sold or under preclinical or clinical development by Opexa conflicts with or infringes or misappropriates or will conflict with or infringe or misappropriate the rights of any other Person.
(h)
Each item of Opexa IP Rights that is Opexa Registered IP is and at all times has been filed and maintained in compliance with all
applicable Legal Requirements and all filings, payments and other actions required to be made or taken to maintain such item of Opexa Registered IP in full force and effect have been
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made by the applicable deadline, except for any failure to perform any of the foregoing, individually or collectively, that would not (in any case or in the aggregate) materially detract from the
value of the Opexa Registered IP subject thereto or materially impair the operations of Opexa.
(i)
No trademark (whether
registered or unregistered) or trade name owned, used, or applied for by Opexa conflicts or interferes with any trademark (whether registered or unregistered) or trade name owned, used, or applied for by any other Person. None of the goodwill
associated with or inherent in any trademark (whether registered or unregistered) in which Opexa has or purports to have an ownership interest has been impaired as determined by Opexa in accordance with GAAP.
(j)
(i) Opexa is not bound by any Contract to indemnify, defend, hold harmless, or reimburse any other Person with respect to any
Intellectual Property infringement, misappropriation, or similar claim, and (ii) neither Opexa nor any of its Subsidiaries has ever assumed, or agreed to discharge or otherwise take responsibility for, any existing or potential liability of
another Person for infringement, misappropriation, or violation of any Intellectual Property right, which assumption, agreement or responsibility remains in force as of the date of this Agreement.
3.10 Material Contracts.
(a)
Section 3.10
of the Opexa Disclosure Schedule lists the following Opexa Contracts, effective as of the date of this
Agreement (each, a
Opexa
Material
Contract
and collectively, the
Opexa
Material
Contracts
):
(i)
each Opexa Contract relating to any material bonus, deferred compensation, severance, incentive compensation, pension,
profit-sharing or retirement plans, or any other employee benefit plans or arrangements;
(ii)
each Opexa Contract relating to the
employment of, or the performance of employment-related services by, any Person, including any employee, consultant or independent contractor, or entity providing employment related, consulting or independent contractor services, not terminable by
Opexa on ninety (90) calendar days or less notice without liability, except to the extent general principles of wrongful termination law may limit Opexas or its successors ability to terminate employees at will;
(iii)
each Opexa Contract relating to any agreement or plan, including any stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the Contemplated Transactions (either alone or in conjunction with any other event, such as
termination of employment) or the value of any of the benefits of which will be calculated on the basis of any of the Contemplated Transactions;
(iv)
each Opexa Contract relating to any agreement of indemnification or guaranty not entered into in the Ordinary Course of Business;
(v)
each Opexa Contract containing (A) any covenant limiting the freedom of Opexa or the Surviving Corporation to engage in
any line of business or compete with any Person, (B) any most-favored pricing arrangement, (C) any exclusivity provision, or (D) any
non-solicitation
provision;
(vi)
each Opexa Contract relating to capital expenditures and involving obligations after the date of this Agreement in excess of
$25,000;
(vii)
each Opexa Contract relating to the disposition or acquisition of material assets or any ownership interest in any
Entity;
(viii)
each Opexa Contract relating to any mortgages, indentures, loans, notes or credit agreements, security agreements
or other agreements or instruments relating to the borrowing of money or
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extension of credit in excess of $25,000 or creating any material Encumbrances with respect to any assets of Opexa or any loans or debt obligations with officers or directors of Opexa;
(ix)
each Opexa Contract relating to: (A) any distribution agreement (identifying any that contain exclusivity provisions); (B)
any agreement involving provision of services or products with respect to any
pre-clinical
or clinical development activities of Opexa; (C) any dealer, distributor, joint marketing, alliance, joint
venture, cooperation, development or other agreement currently in force under which Opexa has continuing obligations to develop or market any product, technology or service, or any agreement pursuant to which Opexa has continuing obligations to
develop any Intellectual Property that will not be owned, in whole or in part, by Opexa; or (D) any Contract to license any third party to manufacture or produce any product, service or technology of Opexa or any Contract to sell, distribute or
commercialize any products or service of Opexa, except agreements in the Ordinary Course of Business;
(x)
each Opexa Contract
with any Person, including any financial advisor, broker, finder, investment banker or other Person, providing advisory services to Opexa in connection with the Contemplated Transactions;
(xi)
each Opexa IP Right Agreement;
(xii)
any material contract (as such term is defined in Item 601(b)(10) of Regulation
S-K
of the Securities Act), whether or not filed by Opexa with the SEC;
(xiii)
each Opexa
Lease; or
(xiv)
any other Opexa Contract that is not terminable at will (with no penalty or payment) by Opexa and (i) which
involves payment or receipt by Opexa after the date of this Agreement under any such agreement, contract or commitment of more than $25,000 in the aggregate, or obligations after the date of this Agreement in excess of $25,000 in the aggregate, or
(ii) that is material to the business or operations of Opexa.
(b)
Opexa has delivered or made available to Acer accurate and
complete copies of all Opexa Material Contracts, including all amendments thereto. There are no Opexa Material Contracts that are not in written form. Opexa has not, nor to Opexas Knowledge, as of the date of this Agreement has any other party
to an Opexa Material Contract (as defined below) breached, violated or defaulted under, or received notice that it has breached, violated or defaulted under, any of the terms or conditions of any Opexa Material Contract in such manner as would
permit any other party to cancel or terminate any such Opexa Material Contract, or would permit any other party to seek damages that would result in an Opexa Material Adverse Effect. As of the date of this Agreement, each Opexa Material Contract is
valid, binding, enforceable and in full force and effect, subject to: (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies.
3.11 Undisclosed Liabilities
. As of the date of this Agreement, neither
Opexa nor its Subsidiaries have any Liabilities, except for: (a) Liabilities identified as such in the Opexa Unaudited Interim Balance Sheet; (b) normal and recurring current Liabilities that have been incurred by Opexa since the date of
the Opexa Unaudited Interim Balance Sheet in the Ordinary Course of Business and that are not in excess of $25,000 in the aggregate; (c) Liabilities for performance in the Ordinary Course of Business of obligations of Opexa under Opexa
Contracts, including the reasonably expected performance of such Opexa Contracts in accordance with their terms (which would not include, for example, any instances of breach or indemnification); (d) Liabilities described in
Section
3.11
of the Opexa Disclosure Schedule; and (e) Liabilities incurred in connection with the Contemplated Transactions.
3.12 Compliance; Permits; Restrictions.
(a)
Opexa is, and since January 1, 2011, each of Opexa and its Subsidiaries has been in material compliance with all applicable
Legal Requirements. No investigation, claim, suit, proceeding, audit or other
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action by any Governmental Body or authority is pending or, to the Knowledge of Opexa, threatened against Opexa. There is no Contract, judgment, injunction, order or decree binding upon Opexa
which (i) has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of Opexa, any acquisition of material property by Opexa or the conduct of business by Opexa as currently conducted,
(ii) would reasonably be expected to have an adverse effect on Opexas ability to comply with or perform any covenant or obligation under this Agreement or (iii) would reasonably be expected to have the effect of preventing, delaying,
making illegal or otherwise interfering with the Merger or any of the Contemplated Transactions.
(b)
Opexa holds all Governmental
Authorizations that are material to the operation of its business (collectively, the
Opexa
Permits
) as currently conducted.
Section
3.12(b)
of the Opexa Disclosure Schedule identifies
each Opexa Permit. As of the date of this Agreement, Opexa is in material compliance with the terms of the Opexa Permits. No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending or, to the Knowledge of
Opexa, threatened, which seeks to revoke, limit, suspend, or materially modify any Opexa Permit. The rights and benefits of each material Opexa Permit will be available to the Surviving Corporation immediately after the Effective Time on terms
substantially identical to those enjoyed by Opexa as of the date of this Agreement and immediately prior to the Effective Time.
(c)
There are no proceedings pending or, to the Knowledge of Opexa, threatened with respect to an alleged violation by Opexa of the
FDCA, FDA regulations adopted thereunder, the Controlled Substances Act or any other similar Legal Requirements promulgated by the FDA or other Drug Regulatory Agency.
(d)
Opexa holds all required Governmental Authorizations issuable by any Governmental Body necessary for the conduct of its business as
currently conducted (the
Opexa
Regulatory
Permits
) and no such Opexa Regulatory Permit has been (i) revoked, withdrawn, suspended, canceled or terminated or (ii) modified in any
materially adverse manner. Opexa has not received any written notice or other written communication from any Governmental Body regarding any revocation, withdrawal, suspension, cancelation, termination or material modification of any Opexa
Regulatory Permit. Opexa has made available to Acer all information in its possession or control relating to the following (to the extent there are any): (A) adverse event reports; clinical study reports and material study data; and inspection
reports, notices of adverse findings, warning letters, filings and letters and other written correspondence to and from any Governmental Body; and meeting minutes with any Governmental Body; and (B) similar reports, material study data,
notices, letters, filings, correspondence and meeting minutes with any other Governmental Body.
(e)
All clinical,
pre-clinical
and other studies and tests conducted by or on behalf of, or sponsored by, Opexa or in which Opexa or its products or services have participated were conducted in all material respects in accordance
with standard medical and scientific research procedures and in compliance with applicable Legal Requirements.
(f)
To the
Knowledge of Opexa, no material debarment or exclusionary claims, actions, proceedings or investigations in respect of their business or products are pending or threatened against Opexa or its officers, employees or agents.
3.13 Tax Matters.
(a)
Each of Opexa and its Subsidiaries has timely filed all federal income Tax Returns and other material Tax Returns that they were
required to file under applicable Legal Requirements. All such Tax Returns were correct and complete in all material respects and have been prepared in material compliance with all applicable Legal Requirements. Except as set forth in
Section
3.13(a)
of the Opexa Disclosure Schedule, Opexa is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where
Opexa or its Subsidiaries do not file Tax Returns that such company is subject to taxation by that jurisdiction.
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(b)
All material Taxes due and owing by Opexa or any of its Subsidiaries on or before the
date hereof (whether or not shown on any Tax Return) have been paid. The unpaid Taxes of Opexa and its Subsidiaries have been reserved for on the Opexa Unaudited Interim Balance Sheet in accordance with GAAP. Since the date of the Opexa Unaudited
Interim Balance Sheet, Opexa has not incurred any Liability for Taxes outside the Ordinary Course of Business or otherwise inconsistent with past custom and practice.
(c)
Opexa has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party.
(d)
There are no Encumbrances for Taxes (other than
Taxes not yet due and payable or Taxes that are being contested in good faith and for which adequate reserves have been made on Opexas Unaudited Interim Balance Sheet) upon any of the assets of Opexa.
(e)
No material deficiencies for Taxes with respect to Opexa have been claimed, proposed or assessed by any Governmental Body in
writing. There are no pending (or, based on written notice, threatened) audits, assessments or other actions for or relating to any liability in respect of Taxes of Opexa. No issues relating to Taxes of Opexa were raised by the relevant Tax
authority in any completed audit or examination that would reasonably be expected to result in a material amount of Taxes in a later taxable period. Opexa has delivered or made available to Acer complete and accurate copies of all federal income Tax
and all other material Tax Returns of Opexa (and the predecessors of each) for all taxable years remaining open under the applicable statute of limitations, and complete and accurate copies of all examination reports and statements of deficiencies
assessed against or agreed to by Opexa with respect to federal income Tax and all other material Taxes. Opexa has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency, nor has any request been made in writing for any such extension or waiver.
(f)
All material elections with respect to
Taxes affecting Opexa as of the date hereof are set forth on
Section
3.13(f)
of the Opexa Disclosure Schedule. Opexa has not (i) consented at any time under former Section 341(f)(1) of the Code to have the
provisions of former Section 341(f)(2) of the Code apply to any disposition of the assets of Opexa; (ii) agreed, or is required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or
otherwise; (iii) made an election, or is required, to treat any of its assets as owned by another Person for Tax purposes or as a
tax-exempt
bond financed property or
tax-exempt
use property within the meaning of Section 168 of the Code; (iv) acquired or owns any assets that directly or indirectly secure any debt the interest on which is tax exempt under
Section 103(a) of the Code; (v) made or will make a consent dividend election under Section 565 of the Code; (vi) elected at any time to be treated as an S corporation within the meaning of Sections 1361 or 1362 of the Code; or
(vii) made any of the foregoing elections or is required to apply any of the foregoing rules under any comparable provision of state, local or foreign law.
(g)
Opexa has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(h)
Opexa is not a party to any Tax
allocation, Tax sharing or similar agreement (including indemnity arrangements), other than commercial contracts entered into in the Ordinary Course of Business with vendors, customers and landlords.
(i)
Neither Opexa nor any of its Subsidiaries has ever been a member of an affiliated group filing a consolidated, combined or unitary
Tax Return (other than a group the common parent of which is Opexa) for federal, state, local or foreign Tax purposes. Opexa has no Liability for the Taxes of any Person (other than Opexa) under Treasury Regulations
Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a transferee or successor, by Contract or otherwise.
(j)
Opexa has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was
purported or intended to be governed in whole or in part by Section 355 of the Code or Section 361 of the Code.
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(k)
Opexa is not a partner for Tax purposes with respect to any joint venture,
partnership, or, to the Knowledge of Opexa, other arrangement or contract which is treated as a partnership for Tax purposes.
(l)
Opexa will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing Date as a result of any (i) installment sale or other open
transaction disposition made on or prior to the Closing Date, or (ii) agreement with any Tax authority (including any closing agreement described in Section 7121 of the Code or any similar provision of state, local or foreign law) made or
entered into on or prior to the Closing Date.
(m)
Opexa has not entered into any transaction identified as a listed
transaction for purposes of Treasury Regulations Sections
1.6011-4(b)(2)
or
301.6111-2(b)(2).
(n)
Opexa has not taken any action, nor has any knowledge of any fact or circumstance, that would reasonably be expected to prevent the
Contemplated Transactions from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
3.14 Employee and Labor Matters; Benefit Plans.
(a)
The employment of each of the Opexa employees is terminable by Opexa at will (or otherwise in accordance with general principles of
wrongful termination law). Opexa has made available to Acer accurate and complete copies of all employee manuals and handbooks, disclosure materials, policy statements and other materials relating to the employment of Opexa Associates to the extent
currently effective and material.
(b)
Opexa is not, and neither Opexa or any of its Subsidiaries has been, a party to, bound by,
or has, or had, a duty to bargain under, any collective bargaining agreement or other Contract with a labor organization, trade or labor union, employees association or similar organization representing any of its employees, and there are no
labor organizations, trade or labor unions, employees associations or similar organizations representing, purporting to represent or, to the Knowledge of Opexa, seeking to represent any employees of Opexa.
(c)
Section 3.14(c)
of the Opexa Disclosure Schedule lists, as of the date of this Agreement, all written and describes all
non-written
employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus, equity-based, retention, incentive, deferred compensation, retirement or supplemental retirement, profit sharing,
severance, golden parachute, disability, life or accident insurance, paid time off, vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, fringe or employee benefit, and all other
compensation, plans, programs, agreements or arrangements, including but not limited to any employment, consulting, independent contractor, severance or executive compensation agreements or arrangements (other than regular salary or wages), written
or otherwise, which are currently in effect relating to any present or former employee, independent contractor or director of Opexa or any Opexa Affiliate, or which is maintained by, administered or contributed to by, or required to be contributed
to by, Opexa, any of Opexas Subsidiaries or any Opexa Affiliate, or under which Opexa, any of Opexas Subsidiaries or any Opexa Affiliate has incurred or may incur any liability (each, an
Opexa
Employee
Plan
).
(d)
With respect to each Opexa Employee Plan, Opexa has made available to Acer a true and complete copy
of, to the extent applicable, (i) such Opexa Employee Plan, (ii) the three most recent annual reports (Form 5500) as filed with the Internal Revenue Service, (iii) each currently effective trust agreement related to such Opexa
Employee Plan, (iv) the most recent summary plan description for each Opexa Employee Plan for which such description is required, along with all summaries of material modifications, amendments, resolutions and all other material plan
documentation related thereto in the possession of Opexa, (v) the most recent Internal Revenue Service determination or opinion letter or analogous ruling under foreign law issued with respect to any Opexa Employee Plan, (vi) all material
notices, letters or other correspondence to or from any Governmental Body or agency thereof within the last three years; (vii) all
non-discrimination
tests for the most recent three plan years;
(viii) all material written agreements and Contracts currently in effect, including (without limitation)
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administrative service agreements, group annuity contracts, and group insurance contracts; (ix) all material written employee communications within the past three years, and (x) all
registration statements and prospectuses prepared in connection with each Opexa Employee Plan.
(e)
Each Opexa Employee Plan that
is intended to be qualified under Section 401(a) of the Code has received a favorable determination or may rely on a favorable opinion letter with respect to such qualified status from the Internal Revenue Service. To the Knowledge of Opexa,
nothing has occurred that would reasonably be expected to adversely affect the qualified status of any such Opexa Employee Plan or the exempt status of any related trust. Each Opexa Employee Plan has been maintained in compliance in all material
respects, with its terms and, both as to form and operations, with all applicable Legal Requirements, including the Code and ERISA. Except as set forth in
Section
3.14(e)(i)
of the Opexa Disclosure Schedule, each Opexa
Employee Plan can be amended, terminated or otherwise discontinued in accordance with its terms, without material Liability to Opexa, the Surviving Corporation, Acer or any of their Affiliates (other than ordinary administrative expenses typically
incurred in a termination event). Except as set forth in
Section
3.14(e)(ii)
of the Opexa Disclosure Schedule, neither Opexa nor any Opexa Affiliate has announced its intention to modify or amend any Opexa Employee Plan or
adopt any arrangement or program which, once established, would come within the definition of an Opexa Employee Plan, and to the Knowledge of Opexa, each asset held under such Opexa Employee Plan may be liquidated or terminated without the
imposition of any material redemption fee, surrender charge or comparable Liability. Opexa, each of its Subsidiaries and each Opexa Affiliate has performed all obligations required to be performed by it under, is not in default under or in violation
of, and has no knowledge of any default or violation by any other party to, any of the Opexa Employee Plans. Neither Opexa, any of its Subsidiaries, nor any Opexa Affiliate is subject to any Liability or penalty under Sections 4976 through 4980 of
the Code or Title I of ERISA with respect to any of the Opexa Employee Plans. All contributions required to be made by Opexa, any of its Subsidiaries or any Opexa Affiliate to any Opexa Employee Plan have been made on or before their due dates (and
no further contributions will be due or will have accrued thereunder as of the Closing Date, other than contributions accrued in the ordinary course of business consistent with past practice). No suit, administrative proceeding, action or other
litigation has been initiated against, or to the Knowledge of Opexa, is threatened, against or with respect to any Opexa Employee Plan, including any audit or inquiry by the IRS, United States Department of Labor or other Governmental Body.
(f)
Neither Opexa, nor any of its Subsidiaries or any Opexa Affiliate has engaged in any transaction in violation of Sections 404 or
406 of ERISA or any prohibited transaction, as defined in Section 4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise violated
the provisions of Part 4 of Title I, Subtitle B of ERISA. Neither Opexa, nor any of its Subsidiaries or any Opexa Affiliate has knowingly participated in a violation of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary of any Opexa
Employee Plan subject to ERISA and neither Opexa, nor any of its Subsidiaries or any Opexa Affiliate has been assessed any civil penalty under Section 502(l) of ERISA.
(g)
No Opexa Employee Plan is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, and neither Opexa, nor
any of its Subsidiaries or any Opexa Affiliate has ever maintained, contributed to or partially or completely withdrawn from, or incurred any obligation or liability with respect to, any such plan. No Opexa Employee Plan is a Multiemployer Plan, and
neither Opexa, nor any of its Subsidiaries or any Opexa Affiliate has ever contributed to or had an obligation to contribute, or incurred any liability in respect of a contribution, to any Multiemployer Plan. No Opexa Employee Plan is a Multiple
Employer Plan.
(h)
Except as set forth on Section 3.14(h) of the Opexa Disclosure Schedule, no Opexa Employee Plan provides
for medical or death benefits beyond termination of service or retirement, other than (i) pursuant to COBRA or an analogous state law requirement or (ii) death or retirement benefits under an Opexa Employee Plan qualified under
Section 401(a) of the Code. Neither Opexa nor any Opexa Affiliate sponsors or maintains any self-funded employee benefit plan. No Opexa Employee Plan is subject to any Legal Requirement of any foreign jurisdiction outside of the United States.
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(i)
To the Knowledge of Opexa, no payment pursuant to any Opexa Employee Plan or other
arrangement to any service provider (as such term is defined in Section 409A of the Code and the United States Treasury Regulations and IRS guidance thereunder) from Opexa or any of its Subsidiaries, including the grant, vesting or
exercise of any stock option, would subject any Person to tax pursuant to Section 409A(1) of the Code, whether pursuant to the Contemplated Transactions or otherwise.
(j)
With respect to Opexa Options granted pursuant to the 2010 Plan, (i) each Opexa Option intended to qualify as an
incentive stock option under Section 422 of the Code so qualifies, (ii) each grant of an Opexa Option was duly authorized no later than the date on which the grant of such Opexa Option was by its terms to be effective by all
necessary corporate action, including, as applicable, approval by the Opexa Board of Directors (or a duly constituted and authorized committee thereof) and any required shareholder approval by the necessary number of votes or written consents, and
the award agreement governing such grant (if any) was duly executed and delivered by each party thereto, (iii) each Opexa Option grant was made in accordance with the terms of the 2010 Plan, the Exchange Act and all other applicable Legal
Requirements, including the rules of NASDAQ and any other exchange on which Opexa securities are traded, (iv) the per share exercise price of each Opexa Option was not less than the fair market value of a share of Opexa Common Stock on the
applicable Grant Date and (v) each such Opexa Option grant was properly accounted for in accordance with GAAP in the financial statements (including the related notes) of Opexa and disclosed in Opexa filings with the Securities and Exchange
Commission in accordance with the Exchange Act and all other applicable Legal Requirements. Opexa has not knowingly granted, and there is no and has been no policy or practice of Opexa of granting, Opexa Options prior to, or otherwise coordinating
the grant of Opexa Options with, the release or other public announcement of material information regarding Opexa or its results of operations or prospects.
(k)
No Opexa Options, stock appreciation rights or other equity-based awards issued or granted by Opexa are subject to the requirements
of Code Section 409A. Each nonqualified deferred compensation plan (as such term is defined under Section 409A(d)(1) of the Code and the guidance thereunder) maintained by or under which Opexa or any of its Subsidiaries makes,
is obligated to make or promises to make, payments (each, a
Opexa
409A
Plan
) complies in all material respects, in both form and operation, with the requirements of Code Section 409A and the
guidance thereunder. No payment to be made under any Opexa 409A Plan is, or to the Knowledge of Opexa will be, subject to the penalties of Code Section 409A(a)(1).
(l)
Opexa is in compliance with all of its bonus, commission and other compensation plans and has paid any and all amounts required to
be paid under such plans, including any and all bonuses and commissions (or pro rata portion thereof) that may have accrued or been earned through the calendar quarter preceding the Effective Time, and is not liable for any payments, taxes or
penalties for failure to comply with any of the terms or conditions of such plans or the laws governing such plans.
(m)
Each of
Opexa and its Subsidiaries has complied in all material respects with all state and federal laws applicable to employees, including but not limited to COBRA, FMLA, CFRA, HIPAA, the Womens Health and Cancer Rights Act of 1998, the
Newborns and Mothers Health Protection Act of 1996, and any similar provisions of state law applicable to its employees. To the extent required under HIPAA and the regulations issued thereunder, Opexa and each of its Subsidiaries has,
prior to the Closing Date, performed all obligations under the medical privacy rules of HIPAA (45 C.F.R. Parts 160 and 164), the electronic data interchange requirements of HIPAA (45 C.F.R. Parts 160 and 162), and the security requirements of HIPAA
(45 C.F.R. Part 142). Neither Opexa nor any of its Subsidiaries has any material unsatisfied obligations to any of its employees or qualified beneficiaries pursuant to COBRA, HIPAA or any state law governing health care coverage or extension. Opexa
and each Opexa Affiliate is in compliance in all material respects with all applicable requirements of the ACA, including all requirements relating to eligibility waiting periods and the offer of or provision of minimum essential coverage that is
compliant with Section 36B(c)(2)(C) of the Code and the regulations issued thereunder to full-time employees as defined in Section 4980H(c)(4) of the Code and the regulations issued thereunder. No excise tax or penalty under the ACA,
including Sections 4980D and 4980H of the Code, is outstanding, has accrued, or has arisen with respect to any period prior to the Closing, with respect to
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any Opexa Employee Plan. Neither Opexa nor any Opexa Affiliate has any unsatisfied obligations to any employees or qualified beneficiaries pursuant to the ACA, or any state or local Legal
Requirement governing health care coverage or benefits that would reasonably be expected to result in any material liability to Opexa. Each of Opexa and its Opexa Affiliates has maintained all records necessary to demonstrate its compliance with the
ACA.
(n)
Opexa and its Subsidiaries are in material compliance with all applicable foreign, federal, state and local laws, rules,
regulations, orders, rulings, judgments, decrees or arbitration awards respecting employment, employment practices, terms and conditions of employment, worker classification, tax withholding, prohibited discrimination, equal employment, fair
employment practices, meal and rest periods, immigration status, employee safety and health, wages (including overtime wages), compensation, hours of work, labor relations, leave of absence requirements, occupational health and safety, privacy,
harassment, retaliation, immigration and wrongful discharge and in each case, with respect to employees: (i) has withheld and reported all amounts required by law or by agreement to be withheld and reported with respect to wages, salaries and
other payments to employees, (ii) except as set forth in
Section
3.14(n)
of the Opexa Disclosure Schedule, is not liable for any arrears of wages, severance pay or any Taxes or any penalty of any material amount for
failure to comply with any of the foregoing, and (iii) is not liable for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Body, with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no actions, suits, claims or administrative matters pending, or to the
Knowledge of Opexa, threatened or reasonably anticipated against Opexa relating to any employee, employment agreement, independent contractor, independent contractor agreement or Opexa Employee Plan. There are no pending or, to the Knowledge of
Opexa, threatened or reasonably anticipated claims or actions against Opexa or any trustee of Opexa under any workers compensation policy or long-term disability policy. Opexa is not a party to a conciliation agreement, consent decree or other
agreement or order with any federal, state, or local agency or Governmental Body with respect to employment practices.
(o)
No
current or former independent contractor of Opexa or any of its Subsidiaries would reasonably be deemed to be a misclassified employee. Except as set forth on
Section
3.14(o)
of the Opexa Disclosure Schedule, no independent
contractor is eligible to participate in any Opexa Employee Plan. Neither Opexa nor any of its Subsidiaries has material liability with respect to any misclassification of: (A) any Person as an independent contractor rather than as an employee,
(B) any employee leased from another employer, or (C) any employee currently or formerly classified as exempt from overtime wages. Neither Opexa nor any of its Subsidiaries has taken any action which would constitute a plant
closing or mass layoff within the meaning of the WARN Act or similar state or local law, issued any notification of a plant closing or mass layoff required by the WARN Act or similar state or local law, or incurred any liability or
obligation under WARN or any similar state or local law that remains unsatisfied. No terminations of employees of Opexa prior to the Closing would trigger any notice or other obligations under the WARN Act or similar state or local law.
(p)
There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, job action, union organizing
activity, or any similar activity or dispute, affecting Opexa or any of its Subsidiaries. No event has occurred, and no condition or circumstance exists, that might directly or indirectly be likely to give rise to or provide a basis for the
commencement of any such strike, slowdown, work stoppage, lockout, job action, union organizing activity, question concerning representation or any similar activity or dispute.
(q)
Opexa is not, and neither Opexa nor any of its Subsidiaries, has been, engaged in any unfair labor practice within the meaning of
the National Labor Relations Act. There is no Legal Proceeding, claim, labor dispute or grievance pending or, to the Knowledge of Opexa, threatened or reasonably anticipated relating to any employment contract, privacy right, labor dispute, wages
and hours, leave of absence, plant closing notification, workers compensation policy, long-term disability policy, harassment, retaliation, immigration, employment statute or regulation, safety or discrimination matter involving any Opexa
Associate, including charges of unfair
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labor practices or discrimination complaints that individually or in the aggregate would result in material Liability to Opexa.
(r)
There is no Contract or arrangement to which Opexa or any Opexa Affiliate is a party or by which it is bound to compensate any of
its current or former employees, independent contractors or directors for additional income or excise taxes paid pursuant to Sections 409A or 4999 of the Code.
(s)
Neither Opexa nor any Opexa Affiliate is a party to any Contract that has resulted or would reasonably be expected to result,
separately or in the aggregate, in the payment of (i) any excess parachute payment within the meaning of Section 280G of the Code and (ii) any amount the deduction for which would be disallowed under Section 162(m) of
the Code.
(t)
Except as set forth in
Section
3.14(t)
of the Opexa Disclosure Schedule, none of the
execution and delivery of this Agreement, or the consummation of the Contemplated Transactions or any termination of employment or service or any other event in connection therewith or subsequent thereto will, individually or together or with the
occurrence of some other event, (i) result in any payment (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any employee, independent contractor or director of Opexa, (ii) materially
increase or otherwise enhance any benefits otherwise payable by Opexa, (iii) result in the acceleration of the time of payment or vesting of any such benefits, except as required under Section 411(d)(3) of the Code, (iv) increase the
amount of compensation due to any Person by Opexa or (v) result in the forgiveness in whole or in part of any outstanding loans made by Opexa to any Person.
3.15 Environmental Matters
. Opexa is in material compliance with all applicable Environmental Laws,
which compliance includes the possession by Opexa of all permits and other Governmental Authorizations required under applicable Environmental Laws and compliance with the terms and conditions thereof other than any failure to be in compliance or
possess any such permits and authorized that is not an Opexa Material Adverse Effect. Neither Opexa nor any of its Subsidiaries has received since January 1, 2011 any written notice or other communication (in writing or otherwise), whether from
a Governmental Body, citizens group, employee or otherwise, that alleges that Opexa is not in compliance with any Environmental Law, and, to the Knowledge of Opexa, there are no circumstances that may prevent or interfere with Opexas
compliance with any Environmental Law in the future. To the Knowledge of Opexa: (i) no current or prior owner of any property leased or controlled by Opexa or any of its Subsidiaries has received since January 1, 2011, any written notice
or other communication relating to property owned or leased at any time by Opexa, whether from a Governmental Body, citizens group, employee or otherwise, that alleges that such current or prior owner or Opexa or any of its Subsidiaries is not in
compliance with or has violated any Environmental Law relating to such property and (ii) neither Opexa nor any of its Subsidiaries has any material liability under any Environmental Law.
3.16 Insurance.
(a)
Opexa made available to Acer accurate and complete copies of all material insurance policies and all material self-insurance
programs and arrangements relating to the business, assets, liabilities and operations of Opexa, as of the date of this Agreement. Each of such insurance policies is in full force and effect and Opexa is in compliance with the terms thereof. As of
the date of this Agreement, other than customary end of policy notifications from insurance carriers, since January 1, 2011, Opexa has not received any notice or other communication regarding any actual or possible: (a) cancelation or
invalidation of any insurance policy; (b) refusal or denial of any coverage, reservation of rights or rejection of any material claim under any insurance policy; or (c) material adjustment in the amount of the premiums payable with respect
to any insurance policy. There is no pending workers compensation or other claim under or based upon any insurance policy of Opexa. All information provided to insurance carriers (in applications and otherwise) on behalf of Opexa is accurate
and complete. Opexa has provided timely written notice to the appropriate insurance carrier(s) of each Legal Proceeding pending or threatened in writing against Opexa, and no such carrier has issued a denial of coverage or a reservation of rights
with respect to any such Legal Proceeding, or informed Opexa of its intent to do so.
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(b)
Opexa has delivered to Acer accurate and complete copies of the existing policies
(primary and excess) of directors and officers liability insurance maintained by Opexa and each Opexa Subsidiary as of the date of this Agreement (the
Existing
Opexa
D&O
Policies
).
Section
3.16(b)
of the Opexa Disclosure Schedule accurately sets forth, as of the date of this Agreement, the most recent annual premiums paid by Opexa and each Opexa Subsidiary with respect
to the Existing Opexa D&O Policies. All premiums for the Existing Opexa D&O Policies have been paid.
3.17 Legal Proceedings; Orders.
(a)
There is no pending Legal Proceeding, and, to the Knowledge of Opexa, no Person has
threatened in writing to commence any Legal Proceeding: (i) that involves Opexa, or to the Knowledge of Opexa, any director or officer of Opexa (in his or her capacity as such) or any of the material assets owned or used by Opexa; or
(ii) that challenges, or that would reasonably be expected to have the effect of preventing, delaying, making illegal or otherwise interfering with, the Contemplated Transactions. To the Knowledge of Opexa, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b)
There is no order, writ, injunction, judgment or decree to which Opexa or any of the material assets owned or used by Opexa, is
subject. To the Knowledge of Opexa, no officer of Opexa is subject to any order, writ, injunction, judgment or decree that prohibits such officer from engaging in or continuing any conduct, activity or practice relating to the business of Opexa or
to any material assets owned or used by Opexa.
3.18 Inapplicability of Anti-Takeover Statutes
.
The Opexa Board of Directors and the board of directors of Merger Sub have taken and will take all actions necessary to ensure that the restrictions applicable to business combinations contained in Subchapter M of Chapter 21 of the TBOC, or
Section 203 of the DGCL, as applicable, are, and will be, inapplicable to the execution, delivery and performance of this Agreement and the Opexa Shareholder Support Agreements and to the consummation of Contemplated Transactions. No other
state takeover statute or similar Legal Requirement applies or purports to apply to the Merger, this Agreement, the Opexa Shareholder Support Agreements or any of the other Contemplated Transactions, in each case due to the fact that either Opexa or
Merger Sub is a party to such matters.
3.19 No Financial Advisor
. Except as set forth on
Section
3.19
of the Opexa Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage fee, finders fee, opinion fee, success fee, transaction fee or other fee or commission in connection
with the Contemplated Transactions based upon arrangements made by or on behalf of Opexa or Merger Sub.
3.20 Disclosure
. The information supplied by Opexa for inclusion in the Proxy Statement / Prospectus /
Information Statement will not, as of the date of the Proxy Statement / Prospectus / Information Statement or as of the date such information is first mailed to Opexa Shareholders, (i) contain any untrue statement of any material fact or
(ii) omit to state any material fact necessary in order to make such information, in the light of the circumstances under which such information is provided, not false or misleading.
3.21 Bank Accounts; Deposits.
(a)
Section 3.21(a)
of the Opexa Disclosure Schedule provides accurate information with respect to each account maintained by or
for the benefit of Opexa at any bank or other financial institution, including the name of the bank or financial institution, the account number, the balance as of May 31, 2017 and the names of all individuals authorized to draw on or make
withdrawals from such accounts.
(b)
All existing accounts receivable of Opexa (including those accounts receivable reflected on
the Opexa Unaudited Interim Balance Sheet that have not yet been collected and those accounts receivable that have arisen since the date of the Opexa Unaudited Interim Balance Sheet and have not yet been collected) (i) represent
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valid obligations of customers of Opexa arising from bona fide transactions entered into in the Ordinary Course of Business, and (ii) are current and collectible in full when due, without
any counterclaim or set off, net of applicable reserves for bad debts on the Opexa Unaudited Interim Balance Sheet. All deposits of Opexa (including those set forth on the Opexa Unaudited Interim Balance Sheet) which are individually more than
$10,000 or more than $25,000 in the aggregate are fully refundable to Opexa.
3.22 Transactions with
Affiliates
. Except as set forth in the Opexa SEC Documents filed prior to the date of this Agreement, since the date of Opexas last proxy statement filed with the SEC, no event has occurred that would be required to be reported by Opexa
pursuant to Item 404 of Regulation
S-K
promulgated by the SEC.
Section
3.22
of the Opexa Disclosure Schedule identifies each Person who is (or who may be deemed to be) an Affiliate of
Opexa as of the date of this Agreement.
3.23 Valid Issuance
. The Opexa Common Stock to be issued
in the Merger will, when issued in accordance with the provisions of this Agreement be validly issued, fully paid and nonassessable.
3.24 Code of Ethics
. Opexa has adopted a code of ethics, as defined by Item 406(b) of Regulation
S-K
of the SEC, for senior financial officers, applicable to its principal executive officer, principal
financial officer, controller or principal accounting officer, or persons performing similar functions. Opexa has promptly disclosed any change in or waiver of Opexas code of ethics with respect to any such persons, as required by
Section 406(b) of the Sarbanes-Oxley Act. To the Knowledge of Opexa, there have been no violations of provisions of Opexas code of ethics by any such persons.
3.25 Shell Company Status
. Opexa is not, and has not been for at least the past ten (10) years,
an issuer identified in Rule 144(i)(1)(i) of the Securities Act or a shell company as defined in Rule
12b-2
of the Exchange Act.
3.26 Anti-Corruption Matters
.
Since January 1, 2011, none of Opexa, or any of its
directors, officers or, to the Knowledge of Opexa, employees or agents has: (i) used any funds for unlawful contributions, gifts, entertainment, or other unlawful payments relating to an act by any Governmental Body; (ii) made any unlawful
payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iii) made any other
unlawful payment under any applicable Legal Requirement relating to anti-corruption, bribery, or similar matters. Since January 1, 2011, Opexa has not disclosed to any Governmental Body that it violated or may have violated any Legal
Requirement relating to anti-corruption, bribery, or similar matters. To the Knowledge of Opexa, no Governmental Body is investigating, examining, or reviewing Opexas compliance with any applicable provisions of any Legal Requirement relating
to anti-corruption, bribery, or similar matters.
3.27 Exclusivity of Representations;
Reliance
.
(a)
Except as expressly set forth in this
Article 3
, neither Opexa, Merger Sub, nor any Person on
behalf of Opexa or Merger Sub has made, nor are any of them making, any representation or warranty, written or oral, express or implied, at law or in equity, including with respect to merchantability or fitness for any particular purpose, in respect
of Opexa or its business in connection with the transactions contemplated hereby, including any representations or warranties about the accuracy or completeness of any information or documents previously provided (including with respect to any
financial or other projections therein), and any other such representations and warranties are hereby expressly disclaimed.
(b)
Opexa and Merger Sub acknowledge and agree that, except for the representations and warranties of Acer set forth in
Article 2
, none of Opexa, Merger Sub or any of their respective Representatives is relying on any other representation or
warranty of Acer or any other Person made outside of
Article 2
of this Agreement, including regarding the accuracy or completeness of any such other representations or warranties or the omission of any material information, whether express or
implied, in each case with respect to the Contemplated Transactions.
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ARTICLE 4
CERTAIN COVENANTS OF THE PARTIES
4.1 Access and Investigation
. Subject to the terms of the Confidentiality Agreement which the Parties
agree will continue in full force following the date of this Agreement, during the period commencing on the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with the terms hereto and the
Effective Time (the
Pre-Closing
Period
), upon reasonable notice each Party shall, and shall use commercially reasonable efforts to cause such Partys
Representatives to:
(a)
provide the other Party and such other Partys Representatives with reasonable access during normal
business hours to such Partys Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to such Party and its Subsidiaries;
(b)
provide the other Party and such other Partys Representatives with such copies of the existing books, records, Tax Returns,
work papers, product data, and other documents and information relating to such Party and its Subsidiaries, and with such additional financial, operating and other data and information regarding such Party and its Subsidiaries as the other Party may
reasonably request; and
(c)
permit the other Partys officers and other employees to meet, upon reasonable notice and during
normal business hours, with the chief financial officer and other officers and managers of such Party responsible for such Partys financial statements and the internal controls of such Party to discuss such matters as the other Party may deem
necessary or appropriate in order to enable the other Party to satisfy its obligations under the Sarbanes-Oxley Act and the rules and regulations relating thereto. Without limiting the generality of any of the foregoing, during the
Pre-Closing
Period, each Party, as applicable, shall promptly make available to the other Party copies of:
(i)
the unaudited monthly consolidated balance sheets of such Party as of the end of each calendar month and the related unaudited
monthly consolidated statements of operations, statements of shareholders/stockholders equity and statements of cash flows for such calendar month, which shall be delivered within 30 calendar days after the end of such calendar month, or such
longer periods as the Parties may agree to in writing;
(ii)
any written materials or communications sent by or on behalf of a
Party to its shareholders/stockholders;
(iii)
any material notice, document or other communication sent by or on behalf of a
Party to any party to any Opexa Material Contract or Acer Material Contract, as applicable, or sent to a Party by any party to any Opexa Material Contract or Acer Material Contract, as applicable (other than any communication that relates solely to
routine commercial transactions between such Party and the other party to any such Opexa Material Contract or Acer Material Contract, as applicable, and that is of the type sent in the Ordinary Course of Business and consistent with past practices);
(iv)
any notice, report or other document filed with or otherwise furnished, submitted or sent to any Governmental Body on behalf
of a Party in connection with the Merger or any of the Contemplated Transactions;
(v)
any
non-privileged
notice, document or other communication sent by or on behalf of, or sent to, a Party relating to any pending or threatened Legal Proceeding involving or affecting such Party; and
(vi)
any material notice, report or other document received by a Party from any Governmental Body.
(d)
Notwithstanding the foregoing, (i) any Party may restrict the foregoing access to the extent that any Legal Requirement
applicable to such Party requires such Party to restrict or prohibit access to any of such
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Partys properties or information and (ii) neither Party nor its respective Representatives or Subsidiaries shall be required to provide access to or disclose information where such
access or disclosure would jeopardize the protection of attorney-client privilege (it being agreed that the Parties shall use their reasonable best efforts to cause such access or information to be provided in a manner that would not result in such
jeopardy or contravention).
4.2 Operation of Opexas Business.
(a)
Except as set forth on
Section
4.2(a)
of the Opexa Disclosure Schedule, as expressly required or
permitted by this Agreement, or as required by applicable Legal Requirements, during the
Pre-Closing
Period, Opexa shall: (i) conduct its business and operations in the Ordinary Course of Business;
(ii) continue to pay outstanding accounts payable and other current Liabilities (including payroll) when due and payable; and (iii) conduct its business and operations in compliance with all applicable Legal Requirements and the
requirements of all Opexa Contracts.
(b)
Without limiting the generality of the foregoing, during the
Pre-Closing
Period, except as set forth on
Section
4.2(b)
of the Opexa Disclosure Schedule, as expressly required or permitted by this Agreement, or as required by applicable Legal
Requirements, Opexa shall not, without the prior written consent of Acer (which consent shall not be unreasonably withheld or delayed):
(i)
(A) declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of Opexa Capital Stock
or (B) repurchase, redeem or otherwise reacquire any shares of its capital stock or other securities;
(ii)
sell, issue or
grant, encumber, or authorize the issuance of: (A) any capital stock or other security (except for shares of Opexa Common Stock issued upon the valid exercise of Opexa Options or Opexa Warrants outstanding as of the date of this Agreement), (B)
any option, warrant or right to acquire any capital stock or any other security, (C) any equity-based award or instrument convertible into or exchangeable for any capital stock or other security, or (D) any debt securities or any rights to
acquire any debt securities;
(iii)
amend the certificate of formation/incorporation, bylaws or other charter or organizational
documents of Opexa or Merger Sub, or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
(iv)
form any Subsidiary or acquire any equity interest or other interest in any other Entity;
(v)
(A) lend money to any Person, or (B) make any capital expenditure or commitment;
(vi)
(A) adopt, establish or enter into any Opexa Employee Plan, (B) cause or permit any Opexa Employee Plan to be amended other
than as required by law, including in order to make amendments for the purposes of Section 409A of the Code, subject to prior review and approval (with such approval not to be unreasonably withheld, conditioned or delayed) by Acer,
(C) hire any additional employees or independent contractors or enter into or amend the term of any employment or consulting agreement with any employee or independent contractor other than as reasonably necessary for the completion of the
Contemplated Transactions, subject to prior review and approval (with such approval not to be unreasonably withheld, conditioned or delayed) by Acer, (D) enter into any Contract with a labor union or collective bargaining agreement,
(E) except as provided in the Opexa Disclosure Schedule, pay any bonus or make any profit-sharing or similar payment to (other than in the Ordinary Course of Business), or increase the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors or employees, (F) except as provided in the Opexa Disclosure Schedule, accelerate the vesting of or entitlement to any payment, award, compensation or benefit with respect
to any Opexa Associate, (G) except as provided in the Opexa Disclosure Schedule, pay or increase the severance or change of control benefits offered to any Opexa Associate, or (H) provide or make any
Tax-related
gross-up
payment;
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(vii)
except as otherwise permitted under
Section
4.2(b)(viii)
,
enter into any material transaction outside the Ordinary Course of Business;
(viii)
acquire any material asset nor sell, lease,
or otherwise irrevocably dispose of any of its assets or properties, or grant any Encumbrance with respect to such assets or properties;
provided
,
however
, that the foregoing shall not prohibit Opexa and its Subsidiaries from
transferring, selling, leasing, disposing of or licensing any assets (a
Permitted
Opexa
Asset
Sale
) so long as (A) any required shareholder approval is obtained no later than
concurrently with the obtaining of the Required Opexa Shareholder Vote, (B) Opexa does not agree to terms that are not reasonable and customary for transactions of similar size, type and scope, (C) the proposed transaction, if consummated
prior to the Effective Time, does not cause Opexa to become a shell company as defined in Rule
12b-2
of the Exchange Act, and (D) Acer is provided with a reasonable amount of time to review any binding or
definitive agreement related thereto in advance of such agreements execution;
(ix)
(A) make, change or revoke any material
Tax election, (B) file any material amendment to any Tax Return, (C) adopt or change any accounting method in respect of Taxes, (D) change any annual Tax accounting period, (E) enter into any Tax allocation agreement, Tax sharing
agreement or Tax indemnity agreement, other than commercial contracts entered into in the Ordinary Course of Business with vendors, customers or landlords, (F) enter into any closing agreement with respect to any Tax, (G) settle or
compromise any claim, notice, audit report or assessment in respect of material Taxes, (H) apply for or enter into any ruling from any Tax authority with respect to Taxes, (I) surrender any right to claim a material Tax refund, or
(J) consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment;
(x)
except as otherwise permitted under
Section
4.2(a)(viii)
, enter into, amend or terminate any Opexa
Contract;
(xi)
initiate or settle any Legal Proceeding;
(xii)
after the Net Cash Calculation is finalized pursuant to
Section
1.6
, incur any Liabilities or
otherwise take any actions other than in the Ordinary Course of Business so as to cause the final Net Cash Calculation to differ materially from the actual Net Cash as of the Closing (other than, subject to
Section
4.2(b)(viii)
and the definition of Net Cash, pursuant to a Permitted Opexa Asset Sale);
(xiii)
other than as otherwise expressly contemplated or permitted by this Agreement, take any action that is intended or that would
reasonably be expected to, individually or in the aggregate, prevent, materially delay, or materially impede the consummation of the Merger, or the other transactions contemplated by this Agreement; or
(xiv)
agree, resolve or commit to do any of the foregoing.
4.3 Operation of Acers Business.
(a)
Except as set forth on
Section
4.3(a)
of the Acer Disclosure Schedule, as expressly required or permitted
by this Agreement, or as required by applicable Legal Requirements, during the
Pre-Closing
Period, Acer shall and shall cause its Subsidiaries to conduct its business and operations: (i) in the Ordinary
Course of Business; and (ii) in material compliance with all applicable Legal Requirements and the requirements of all Acer Contracts that constitute Acer Material Contracts.
(b)
Without limiting the generality of the foregoing, during the
Pre-Closing
Period, except as
set forth on
Section
4.3(b)
of the Acer Disclosure Schedule, as expressly permitted by this Agreement, or as required by applicable Legal Requirements, Acer shall not, nor shall it permit any of its Subsidiaries to, without
the prior written consent of Opexa (which consent shall not be unreasonably withheld or delayed):
(i)
(A) declare, accrue, set
aside or pay any dividend or made any other distribution in respect of any shares of Acer Common Stock or (B) repurchase, redeem or otherwise reacquire any shares of its capital stock or other securities except pursuant to Acer Contracts
existing as of the date of this Agreement;
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(ii)
sell, issue or grant, or authorize the issuance of: (A) any capital stock or
other security (except in connection with the Acer
Pre-Closing
Financing and for shares of Acer Common Stock issued upon the valid exercise of Acer Options outstanding as of the date of this Agreement), (B)
any option, warrant or right to acquire any capital stock or any other security, or (C) any equity-based award or instrument convertible into or exchangeable for any capital stock or other security;
(iii)
amend the certificate of incorporation, bylaws or other charter or organizational documents of Acer (other than in connection
with the Acer
Pre-Closing
Financing), or effect or be a party to any merger, consolidation, share exchange, business combination, recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(iv)
form any Subsidiary or acquire any equity interest or other interest in any other Entity;
(v)
(A) lend money to any Person, (B) incur or guarantee any indebtedness for borrowed money, other than the incurrence or
guarantee of indebtedness that is paid off prior to or at the Closing, or (C) guarantee any debt securities of others, or (D) make any capital expenditure or commitment in excess of $25,000;
(vi)
enter into any Contract with a labor union or collective bargaining agreement;
(vii)
acquire any material asset nor sell, lease, or otherwise irrevocably dispose of any of its assets or properties, or grant any
Encumbrance with respect to such assets or properties, in each case, other than in the Ordinary Course of Business;
(viii)
(A)
make, change or revoke any material Tax election, (B) file any material amendment to any Tax Return, (C) adopt or change any accounting method in respect of Taxes, (D) change any annual Tax accounting period, (E) enter into any
Tax allocation agreement, Tax sharing agreement or Tax indemnity agreement, other than commercial contracts entered into in the Ordinary Course of Business with vendors, customers or landlords, (F) enter into any closing agreement with respect
to any Tax, (G) settle or compromise any claim, notice, audit report or assessment in respect of material Taxes, (H) apply for or enter into any ruling from any Tax authority with respect to Taxes, (I) surrender any right to claim a
material Tax refund, or (J) consent to any extension or waiver of the statute of limitations period applicable to any material Tax claim or assessment; or
(ix)
agree, resolve or commit to do any of the foregoing.
4.4 Notification of Certain Matters.
(a)
During the
Pre-Closing
Period, Opexa shall:
(i)
promptly notify Acer of: (A) any notice or other communication from any Person alleging that the Consent of such Person is or
may be required in connection with any of the Contemplated Transactions; (B) any Legal Proceeding against, relating to, involving or otherwise affecting Opexa, or to the Knowledge of Opexa, any director or officer of Opexa, that is commenced or
asserted against, or, to the Knowledge of Opexa, threatened against, Opexa or any director or officer of Opexa; and (C) any notice or other communication from any Person alleging that any payment or other obligation is or will be owed to such
Person at any time before or after the date of this Agreement, except for invoices or other communications related to agreements or dealings in the Ordinary Course of Business or payments or obligations identified in this Agreement, including the
Opexa Disclosure Schedule; and
(ii)
promptly notify Acer in writing of: (A) the discovery by Opexa of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes an inaccuracy in any representation or warranty made by Opexa in this Agreement in a manner that causes the
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condition set forth in
Section
8.1
not to be satisfied; (B) any event, condition, fact or circumstance that occurs, arises or exists after the date of this
Agreement and that would cause or constitute an inaccuracy in any representation or warranty made by Opexa in this Agreement in a manner that causes the condition set forth in
Section
8.1
not to be satisfied if:
(1) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance; or (2) such event, condition, fact or circumstance had occurred, arisen or existed
on or prior to the date of this Agreement; (C) any breach of any covenant or obligation of Opexa in a manner that causes the condition set forth in
Section
8.2
not to be satisfied; and (D) any event, condition,
fact or circumstance that would reasonably be expected to make the timely satisfaction of any of the conditions set forth in
Article 6
,
Article 7
, or
Article 8
impossible or materially less likely. No notification given to Acer
pursuant to this
Section
4.4(a)
shall change, limit or otherwise affect any of the representations, warranties, covenants or obligations of Opexa contained in this Agreement or the Opexa Disclosure Schedule.
(b)
During the
Pre-Closing
Period, Acer shall:
(i)
promptly notify Opexa of: (A) any notice or other communication from any Person alleging that the Consent of such Person is or
may be required in connection with any of the Contemplated Transactions; (B) any Legal Proceeding against, relating to, involving or otherwise affecting Acer, or to the Knowledge of Acer, any director or officer of Acer, that is commenced or
asserted against, or, to the Knowledge of Acer, threatened against, Acer, any of its Subsidiaries, or any director or officer of Acer; and (C) any notice or other communication from any Person alleging that any payment or other obligation is or
will be owed to such Person at any time before or after the date of this Agreement, except for invoices or other communications related to agreements or dealings in the Ordinary Course of Business or payments or obligations identified in this
Agreement; and
(ii)
promptly notify Opexa in writing, of: (A) the discovery by Acer of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes an inaccuracy in any representation or warranty made by Acer in this Agreement in a manner that causes the condition set forth in
Section
7.1
not to be satisfied; (B) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute an inaccuracy in any representation or
warranty made by Acer in this Agreement in a manner that causes the condition set forth in
Section
7.1
not to be satisfied if: (1) such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance; or (2) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (C) any breach of any covenant or
obligation of Acer in a manner that causes the condition set forth in
Section
7.2
not to be satisfied; and (D) any event, condition, fact or circumstance that would reasonably be expected to make the timely
satisfaction of any of the conditions set forth in
Article 6
,
Article 7
, or
Article 8
impossible or materially less likely. No notification given to Opexa pursuant to this
Section
4.4(b)
shall change,
limit or otherwise affect any of the representations, warranties, covenants or obligations of Acer contained in this Agreement or the Acer Disclosure Schedule.
4.5 No Solicitation.
(a)
Each Party agrees that neither it nor any of its Subsidiaries shall, nor shall it nor any of its Subsidiaries authorize or permit
any of the Representatives retained by it or any of its Subsidiaries to directly or indirectly: (i) solicit, initiate, respond to or take any action to facilitate or encourage any inquiries or the communication, making, submission or
announcement of any Acquisition Proposal or Acquisition Inquiry or take any action that could reasonably be expected to lead to an Acquisition Proposal or Acquisition Inquiry; (ii) enter into or participate in any discussions or negotiations
with any Person with respect to any Acquisition Proposal or Acquisition Inquiry; (iii) furnish any information regarding such Party to any Person in connection with, in response to, relating to or for the purpose of assisting with or
facilitating an Acquisition Proposal or Acquisition Inquiry; (iv) approve, endorse or recommend any Acquisition Proposal (subject to
Sections 5.2
and
5.3
); (v)
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execute or enter into any letter of intent or similar document or any Contract contemplating or otherwise relating to any Acquisition Transaction (an
Acquisition
Agreement
); or (vi) grant any waiver or release under any confidentiality, standstill or similar agreement (other than to the other Party)
.
(b)
Notwithstanding anything contained in
Section
4.5(a)
, prior to receipt of the Required Acer Stockholder
Vote, in the case of Acer, or the Required Opexa Shareholder Vote, in the case of Opexa, (i) such Party may enter into discussions or negotiations with, any Person that has made (and not withdrawn) a bona fide, unsolicited, Acquisition
Proposal, which such Partys Board of Directors determines in good faith, after consultation with its independent financial advisor, if any, and its outside legal counsel, constitutes, or would reasonably be expected to result in, a Superior
Offer, and (ii) thereafter furnish to such Person
non-public
information regarding such Party pursuant to an executed confidentiality agreement containing provisions (including nondisclosure provisions,
use restrictions,
non-solicitation
provisions, no hire provisions and standstill provisions) at least as favorable to such Party as those contained in the Confidentiality Agreement, but in each
case of the foregoing clauses (i) and (ii), only if: (A) neither such Party nor any Representative of such Party has breached this
Section
4.5
; (B) the Board of Directors of such Party determines in good faith
based on the advice of outside legal counsel, that the failure to take such action would reasonably be expected to result in a breach of the fiduciary duties of the Board of Directors of such Party under applicable Legal Requirements; (C) at
least five (5) Business Days prior to furnishing any such
non-public
information to, or entering into discussions with, such Person, such Party gives the other Party written notice of the identity of such
Person and of such Partys intention to furnish nonpublic information to, or enter into discussions with, such Person; and (D) at least five (5) Business Days prior to furnishing any such
non-public
information to such Person, such Party furnishes such
non-public
information to Acer or Opexa, as applicable (to the extent such
non-public
information has not been previously furnished by such Party to Acer or Opexa, as applicable). Without limiting the generality of the foregoing, each Party acknowledges and agrees that, in the event any
Representative of such Party (whether or not such Representative is purporting to act on behalf of such Party) takes any action that, if taken by such Party, would constitute a breach of this
Section
4.5
by such Party, the
taking of such action by such Representative shall be deemed to constitute a breach of this
Section
4.5
by such Party for purposes of this Agreement.
(c)
If any Party or any Representative of such Party receives an Acquisition Proposal or Acquisition Inquiry at any time during the
Pre-Closing
Period, then such Party shall promptly (and in no event later than two (2) Business Days after such Party becomes aware of such Acquisition Proposal or Acquisition Inquiry) advise the other Party in
writing of such Acquisition Proposal or Acquisition Inquiry (including the identity of the Person making or submitting such Acquisition Proposal or Acquisition Inquiry, and the terms thereof). Such Party shall keep the other Party fully informed, on
a current basis, in all material respects with respect to the status and terms of any such Acquisition Proposal or Acquisition Inquiry and any modification or proposed modification thereto. In addition to the foregoing, each Party shall provide the
other Party with at least five (5) Business Days written notice of a meeting of its board of directors (or any committee thereof) at which its board of directors (or any committee thereof) is reasonably expected to consider an Acquisition
Proposal or Acquisition Inquiry it has received.
(d)
Each Party shall and shall cause its respective Representatives to, cease
immediately and cause to be terminated, and shall not authorize or knowingly permit any of its or their Representatives to continue, any and all existing activities, discussions or negotiations, if any, with any third party conducted prior to the
date hereof with respect to any Acquisition Proposal and shall use its reasonable best efforts to cause any such third party (or its Representatives) in possession of
non-public
information in respect of such
Party or its Subsidiaries that was furnished by or on behalf of such Party or its Subsidiaries to return or destroy (and confirm destruction of) all such information.
A-46
ARTICLE 5
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1 Registration Statement; Proxy Statement / Prospectus / Information Statement.
(a)
As promptly as practicable after the date of this Agreement, the Parties shall prepare and cause to be filed with the SEC the Proxy
Statement / Prospectus / Information Statement and Opexa shall prepare and cause to be filed with the SEC the Form
S-4
Registration Statement, in which the Proxy Statement / Prospectus / Information Statement
will be included as a prospectus.
(b)
Opexa covenants and agrees that the Proxy Statement / Prospectus / Information Statement,
including any pro forma financial statements included therein (and the letter to shareholders, notice of meeting and form of proxy included therewith), will not, at the time that the Proxy Statement / Prospectus / Information Statement or any
amendment or supplement thereto is filed with the SEC or is first mailed to the Opexa Shareholders, at the time of the Opexa Shareholders Meeting and at the Effective Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, Opexa makes no covenant, representation
or warranty with respect to statements made in the Proxy Statement / Prospectus / Information Statement (and the letter to shareholders, notice of meeting and form of proxy included therewith), if any, based on information furnished in writing by
Acer specifically for inclusion therein. Each of the Parties shall use commercially reasonable efforts to cause the Form
S-4
Registration Statement and the Proxy Statement / Prospectus / Information Statement
to comply with the applicable rules and regulations promulgated by the SEC in all material respects.
(c)
Opexa shall notify Acer
promptly of the receipt of any comments from the SEC or the staff of the SEC and of any request by the SEC or the staff of the SEC for amendments or supplements to the Proxy Statement / Prospectus / Information Statement or the Form
S-4
Registration Statement or for additional information and shall supply Acer with copies of (i) all correspondence between Opexa or any of its Representatives, on the one hand, and the SEC or the staff of the
SEC, on the other hand, with respect to the Proxy Statement / Prospectus / Information Statement, the Form
S-4
Registration Statement or the Contemplated Transactions and (ii) all orders of the SEC
relating to the Form
S-4
Registration Statement. Opexa shall use its commercially reasonable efforts to respond as promptly as reasonably practicable to any comments of the SEC or the staff of the SEC with
respect to the Proxy Statement / Prospectus / Information Statement and Form
S-4
Registration Statement, and Acer and its counsel a reasonable opportunity to participate in the formulation of any response to
any such comments of the SEC or its staff. Prior to the Form
S-4
Registration Statement being declared effective, (1) Acer shall use its commercially reasonable efforts to execute and deliver to Foley
Hoag LLP (
Foley
) and to Pillsbury Winthrop Shaw Pittman LLP (
Pillsbury
) the applicable Tax Representation Letter referenced in
Section
5.11(c)
; and
(2) Opexa shall use its commercially reasonable efforts to execute and deliver to Pillsbury and to Foley the applicable Tax Representation Letter referenced in
Section
5.11(c)
. Following the delivery of the
Tax Representation Letters pursuant to the preceding sentence, (A) Acer shall use its commercially reasonable efforts to cause Foley to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation
S-K
under the Securities Act; and (B) Opexa shall use its commercially reasonable efforts to cause Pillsbury to deliver to it a tax opinion satisfying the requirements of Item 601 of Regulation
S-K
under the Securities Act. In rendering such opinions, each of such counsel shall be entitled to rely on the Tax Representation Letters referred to in this
Section
5.1(c)
and
Section
5.11(c)
. Opexa shall use its commercially reasonable efforts to have the Form
S-4
Registration Statement declared effective by the SEC under the Securities Act as promptly as
practicable after it is filed with the SEC. No filing of, or amendment or supplement to, the Form
S-4
Registration Statement will be made by Opexa, and no filing of, or amendment or supplement to, the Proxy
Statement / Prospectus / Information Statement will be made by Opexa, in each case, without providing Acer a reasonable opportunity to review and comment thereon. Each Party shall promptly furnish to the other Party all information concerning such
Party and such Partys Subsidiaries and such Partys
A-47
shareholders/stockholders that may be required or reasonably requested in connection with any action contemplated by this
Section
5.1
. If any event relating to Acer
occurs, or if Acer becomes aware of any information, that should be disclosed in an amendment or supplement to the Form
S-4
Registration Statement or the Proxy Statement / Prospectus / Information Statement,
then Acer shall promptly inform Opexa thereof and shall cooperate fully with Opexa in filing such amendment or supplement with the SEC and, if appropriate, in mailing such amendment or supplement to Opexas shareholders.
(d)
Prior to the Effective Time, Opexa shall use commercially reasonable efforts to obtain all regulatory approvals needed to ensure
that the Opexa Common Stock to be issued in the Merger shall be registered or qualified or exempt from registration or qualification under the securities law of every jurisdiction of the United States in which any registered holder of Acer Capital
Stock has an address of record on the record date for determining the stockholders entitled to notice of and to vote pursuant to the Acer Stockholder Written Consent.
(e)
Acer shall reasonably cooperate with Opexa and provide, and require its Representatives to provide, Opexa and its Representatives
with all true, correct and complete information regarding Acer that is required by applicable Legal Requirements to be included in the Form
S-4
Registration Statement or reasonably requested from Acer to be
included in the Form
S-4
Registration Statement.
5.2 Acer
Stockholder Written Consent.
(a)
Promptly after the
S-4
Registration Statement has
been declared effective by the SEC under the Securities Act, and in any event no later than five (5) Business Days thereafter, Acer shall obtain the Acer Stockholder Written Consent for purposes of (i) adopting this Agreement, and
approving the Merger, the Preferred Stock Conversion, the Acer
Pre-Closing
Financing, and the other actions contemplated by this Agreement (the
Acer
Stockholder
Matters
); (ii) acknowledging that the approval given thereby is irrevocable and that such stockholder is aware of its rights to demand appraisal for its shares pursuant to Section 262 of the DGCL, a copy of which was attached
thereto, and that such stockholder has received and read a copy of Section 262 of the DGCL; and (iii) acknowledging that by its approval of the Merger it is not entitled to appraisal rights with respect to its shares in connection with the
Merger and thereby waives any rights to receive payment of the fair value of its capital stock under the DGCL.
(b)
Acer agrees
that, subject to
Section
5.2(c)
: (i) the Acer Board of Directors shall recommend that Acer Stockholders vote to approve the Acer Stockholder Matters (the
Acer
Board
Recommendation
) and shall use commercially reasonable efforts to solicit such approval within the time set forth in
Section
5.2(a)
; and (ii) (A) the Acer Board Recommendation shall not be withdrawn
or modified in a manner adverse to Opexa, and no resolution by the Acer Board of Directors or any committee thereof to withdraw or modify the Acer Board Recommendation in a manner adverse to Opexa shall be adopted or proposed and (B) the Acer
Board of Directors shall not recommend any Acquisition Transaction (collectively an
Acer
Board
Adverse
Recommendation
Change
).
(c)
Notwithstanding the foregoing, at any time prior to the receipt of the Required Acer Stockholder Vote, the Acer Board of Directors
may make an Acer Board Adverse Recommendation Change, if: (i) the Acer Board of Directors has received an Acquisition Proposal that the Acer Board of Directors has determined in its reasonable, good faith judgment, after consultation with
Acers outside legal counsel, constitutes a Superior Offer or (ii) as a result of a material development or change in circumstances (other than an Acquisition Proposal) that affects the business, assets or operations of Acer that occurs or
arises after the date of this Agreement that was neither known to Acer or the Acer Board of Directors nor reasonably foreseeable as of the date of this Agreement (an
Acer
Intervening
Event
), the
Acer Board of Directors determines in its reasonable, good faith judgment, after consultation with Acers outside legal counsel, that an Acer Board Adverse Recommendation Change is required in order for the Acer Board of Directors to comply
with its fiduciary obligations to the Acer Stockholders under applicable Legal Requirements;
provided,
however
, that prior to Acer
A-48
taking any action permitted under this
Section
5.2(c)
, (A) in the case of a Superior Offer, (1) Acer must promptly notify Opexa, in writing, at least five
(5) Business Days (the
Notice
Period
) before making an Acer Board Adverse Recommendation Change, of its intention to take such action with respect to a Superior Offer, which notice shall state expressly
that Acer has received an Acquisition Proposal that the Acer Board of Directors intends to declare a Superior Offer and that the Acer Board of Directors intends to make an Acer Board Adverse Recommendation Change, (2) Acer attaches to such
notice the most current version of the proposed agreement (which version shall be updated on a prompt basis) and the identity of the third party making such Superior Offer, and (3) Acer negotiates with Opexa in good faith to make such
adjustments in the terms and conditions of this Agreement so that such Acquisition Proposal ceases to constitute a Superior Offer, if Opexa, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after
commencement of the Notice Period, there is any material revision to the terms of a Superior Offer, the Notice Period shall be extended, if applicable, to ensure that at least three (3) Business Days remains in the Notice Period subsequent to
the time Acer notifies Opexa of any such material revision (it being understood that there may be multiple extensions); or (B) in the case of an Acer Intervening Event, (1) Acer promptly notifies Opexa, in writing, within the Notice Period
before making an Acer Board Adverse Recommendation Change, which notice shall state expressly the material facts and circumstances related to the applicable Acer Intervening Event and that the Acer Board of Directors intends to make an Acer Board
Adverse Recommendation Change and (2) Acer negotiates with Opexa in good faith to make such adjustments in the terms and conditions of this Agreement so that such Acer Intervening Event ceases to necessitate an Acer Board Adverse Recommendation
Change with respect to Acers fiduciary duties, if Opexa, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after commencement of the Notice Period, there is any material development in an Acer
Intervening Event, the Notice Period shall be extended, if applicable, to ensure that at least three (3) Business Days remains in the Notice Period subsequent to the time Acer notifies Opexa of any such material development (it being understood
that there may be multiple extensions).
(d)
Unless the Acer Board of Directors has effected an Acer Board Adverse Recommendation
Change in accordance with
Section
5.2(c)
, Acers obligation to solicit the consent of its stockholders to sign the Acer Stockholder Written Consent in accordance with
Section
5.2(a)
shall not
be limited or otherwise affected by the commencement, disclosure, announcement or submission of any Superior Offer or other Acquisition Proposal, or by any withdrawal or modification of the Acer Board Recommendation.
5.3 Opexa Shareholders Meeting.
(a)
Promptly after the Form
S-4
Registration Statement has been declared effective by the SEC
under the Securities Act, Opexa shall (i) take all action necessary under applicable Legal Requirements to call, give notice of and hold a meeting of the holders of Opexa Common Stock for the purpose of seeking approval of (A) the issuance
of shares of Opexa Common Stock to the Acer Stockholders pursuant to the terms of this Agreement, (B) the change of control of Opexa resulting from the Merger, (C) if requested by Acer prior to the filing with the SEC of the Proxy
Statement / Prospectus / Information Statement, the amendment of Opexas certificate of formation to effect the NASDAQ Reverse Split, (D) the amendment of Opexas certificate of formation to effect the name change of Opexa,
(E) the amendment of the 2010 Plan to increase the number of shares reserved thereunder to an amount to be recommended by the Acer Board of Directors or a committee thereof, (F) any Permitted Opexa Asset Sale, to the extent required and
not previously approved by the Opexa Shareholders and (G) in accordance with Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, seeking advisory approval of a proposal to the Opexa Shareholders for a
non-binding,
advisory vote to approve certain compensation that may become payable to Opexas named executed officer in connection with the completion of the Merger, if applicable (the matters contemplated by
the foregoing clauses (A) (G), collectively, the
Opexa
Shareholder
Matters
); and (ii) mail to the Opexa Shareholders as of the record date established for shareholders meeting
of Opexa, the Proxy Statement / Prospectus / Information Statement;
provided,
however,
that in no event shall such meeting take place more than sixty (60) calendar days after the date the
S-4
Registration Statement is declared effective by the SEC (such meeting, the
Opexa
Shareholders
Meeting
).
A-49
(b)
Opexa agrees that, subject to
Section
5.3(c)
: (i) the Opexa
Board of Directors shall recommend that the holders of Opexa Common Stock vote to approve the Opexa Shareholder Matters; (ii) the Proxy Statement / Prospectus / Information Statement shall include a statement to the effect that the Opexa Board
of Directors recommends that Opexa Shareholder vote to approve the Opexa Shareholder Matters (the
Opexa
Board
Recommendation
); (iii) the Opexa Board of Directors shall use commercially reasonable
efforts to solicit such approval within the timeframe set forth in
Section
5.3(a)
above; and (iv) (A) the Opexa Board Recommendation shall not be withdrawn or modified in a manner adverse to Acer, and no resolution by
the Opexa Board of Director or any committee thereof to withdraw or modify the Opexa Board Recommendation in a manner adverse to Acer shall be adopted or proposed and (B) the Opexa Board of Directors shall not recommend any Acquisition
Transaction (collectively a
Opexa
Board
Adverse
Recommendation
Change
).
(c)
Notwithstanding the foregoing, at any time prior to the receipt of the Required Opexa Shareholder Vote, the Opexa Board of
Directors may make an Opexa Board Adverse Recommendation Change, if: (i) the Opexa Board of Directors has received an Acquisition Proposal that the Opexa Board of Directors has determined in its reasonable, good faith judgment, after
consultation with Opexas outside legal counsel, constitutes a Superior Offer or (ii) as a result of a material development or change in circumstances (other than an Acquisition Proposal) that affects the business, assets or operations of
Opexa that occurs or arises after the date of this Agreement that was neither known to Opexa or the Opexa Board of Directors nor reasonably foreseeable as of the date of this Agreement (a
Opexa
Intervening
Event
), the Opexa Board of Directors determines in its reasonable, good faith judgment, after consultation with Opexas outside legal counsel, that an Opexa Board Adverse Recommendation Change is required in order for the
Opexa Board of Directors to comply with its fiduciary obligations to the Opexa Shareholders under applicable Legal Requirements;
provided,
however
, that prior to Opexa taking any action permitted under this
Section
5.3(c)
, (A) in the case of a Superior Offer, (1) Opexa must promptly notify Acer, in writing, within the Notice Period before making an Opexa Board Adverse Recommendation Change, of its intention to take such
action with respect to a Superior Offer, which notice shall state expressly that Opexa has received an Acquisition Proposal that the Opexa Board of Directors intends to declare a Superior Offer and that the Opexa Board of Directors intends to make
an Opexa Board Adverse Recommendation Change, (2) Opexa attaches to such notice the most current version of the proposed agreement (which version shall be updated on a prompt basis) and the identity of the third party making such Superior
Offer, and (3) Opexa negotiates with Acer in good faith to make such adjustments in the terms and conditions of this Agreement so that such Acquisition Proposal ceases to constitute a Superior Offer, if Acer, in its discretion, proposes to make
such adjustments (it being agreed that in the event that, after commencement of the Notice Period, there is any material revision to the terms of a Superior Offer, the Notice Period shall be extended, if applicable, to ensure that at least three
(3) Business Days remains in the Notice Period subsequent to the time Opexa notifies Acer of any such material revision (it being understood that there may be multiple extensions); or (B) in the case of an Opexa Intervening Event,
(1) Opexa promptly notifies Acer, in writing, within the Notice Period before making an Opexa Board Adverse Recommendation Change, which notice shall state expressly the material facts and circumstances related to the applicable Opexa
Intervening Event and that the Opexa Board of Directors intends to make an Opexa Adverse Recommendation Change, and (2) Opexa negotiates with Acer in good faith to make such adjustments in the terms and conditions of this Agreement so that such
Opexa Intervening Event ceases to necessitate an Opexa Board Adverse Recommendation Change with respect to Opexas fiduciary duties, if Acer, in its discretion, proposes to make such adjustments (it being agreed that in the event that, after
commencement of the Notice Period, there is any material development in an Opexa Intervening Event, the Notice Period shall be extended, if applicable, to ensure that at least three (3) Business Days remains in the Notice Period subsequent to
the time Opexa notifies Acer of any such material development (it being understood that there may be multiple extensions).
(d)
Unless the Opexa Board of Directors has effected an Opexa Board Adverse Recommendation Change in accordance with
Section
5.3(c)
, Opexas obligation to call, give notice of and hold the Opexa Shareholders Meeting
in accordance with
Section
5.3(a)
shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission of any Superior Offer or Acquisition Proposal, or by any withdrawal or modification of
the Opexa Board Recommendation.
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(e)
Nothing contained in this Agreement shall prohibit Opexa or its Board of Directors
from (i) taking and disclosing to the Opexa Shareholders a position as contemplated by Rule
14e-2(a)
under the Exchange Act or complying with the provisions of Rule
14d-9
under the Exchange Act (other than Rule
14d-9(f)
under the Exchange Act), (ii) making any disclosure to the Opexa Shareholders if the Opexa Board of Directors
determines in good faith, after consultation with its outside legal counsel, that the failure to make such disclosure would be inconsistent with its fiduciary duties to the Opexa Shareholders under applicable Legal Requirements, and
(iii) making a stop, look and listen communication to the Opexa Shareholders pursuant to Rule
14d-9(f)
under the Exchange Act,
provided,
however,
that (A) in the case of
each of the foregoing clauses (i) and (ii), any such disclosure or public statement shall be deemed to be an Opexa Board Adverse Recommendation Change subject to the terms and conditions of this Agreement unless the Opexa
Board of Directors reaffirms the Opexa Board Recommendation in such disclosure or public statement or within five Business Days of such disclosure or public statement; (B) in the case of clause (iii), any such disclosure or public
statement shall be deemed to be an Opexa Board Adverse Recommendation Change subject to the terms and conditions of this Agreement unless the Opexa Board of Directors reaffirms the Opexa Board Recommendation in such disclosure or public statement or
within ten (10) Business Days of such disclosure or public statement; and (C) Opexa shall not effect an Opexa Board Adverse Recommendation Change unless specifically permitted pursuant to the terms of
Section
5.3(c)
.
5.4 Regulatory Approvals.
(a)
Each Party shall use commercially reasonable efforts to take, or cause to be taken, all actions necessary to comply promptly with
all Legal Requirements that may be imposed on such Party with respect to the Contemplated Transactions and, subject to the conditions set forth in
Article 6
hereof, to consummate the Contemplated Transactions, as promptly as practicable. In
furtherance and not in limitation of the foregoing, each Party hereto agrees to file or otherwise submit, as soon as practicable after the date of this Agreement, but in any event no later than ten (10) Business Days after the date hereof, all
applications, notices, reports and other documents reasonably required to be filed by such Party with or otherwise submitted by such Party to any Governmental Body with respect to the Contemplated Transactions, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the generality of the foregoing, the Parties shall prepare and file, if and as required, (a) the Notification and Report Forms pursuant to the HSR Act and (b) any
notification or other document to be filed in connection with the Merger under any applicable foreign Legal Requirement relating to antitrust or competition matters. Acer and Opexa shall respond as promptly as is practicable to respond in compliance
with: (i) any inquiries or requests received from the Federal Trade Commission or the Department of Justice for additional information or documentation; and (ii) any inquiries or requests received from any state attorney general, foreign
antitrust or competition authority or other Governmental Body in connection with antitrust or competition matters.
(b)
Each of the
Parties shall use its commercially reasonable efforts to (i) cooperate in all respects with each other in connection with timely making all required filings and submissions and timely obtaining all related consents, permits, authorizations or
approvals pursuant to
Section
5.4(a)
; and (ii) keep Acer or Opexa, as applicable, informed in all material respects and on a reasonably timely basis of any communication received by such Party from, or given by such
Party to, the Federal Trade Commission, the Department of Justice or any other Governmental Body relating to the Contemplated Transactions. Subject to applicable Legal Requirements relating to the exchange of information, each Party shall, to the
extent practicable, give the other party reasonable advance notice of all material communications with any Governmental Body relating to the Contemplated Transactions and each Party shall have the right to attend or participate in material
conferences, meetings and telephone or other communications between the other Parties and regulators concerning the Contemplated Transactions.
(c)
Notwithstanding
Sections 5.4(a)
through
5.4(b)
or any other provision of this Agreement to the contrary, in no event
shall either Party be required to agree to (i) divest, license, hold separate or otherwise dispose of, encumber or allow a third party to utilize, any portion of its or their respective businesses, assets or contracts or (ii) take any
other action that may be required or requested by any Governmental Body in connection
A-51
with obtaining the consents, authorizations, orders or approvals contemplated by this
Section
5.4
that, would have an adverse impact, in any material respect, on any of
the Parties.
5.5 Acer Options.
(a)
At the Effective Time, each Acer Option that is outstanding and unexercised immediately prior to the Effective Time under the 2013
Plan, whether or not vested, shall be assumed by Opexa and converted into an option to purchase Opexa Common Stock, and Opexa shall assume the 2013 Plan and each such Acer Option in accordance with the terms (as in effect as of the date of this
Agreement) of the 2013 Plan and the terms of the stock option agreement by which such Acer Option is evidenced. All rights with respect to Acer Common Stock under Acer Options assumed by Opexa shall thereupon be converted into rights with respect to
Opexa Common Stock. Accordingly, from and after the Effective Time: (i) each Acer Option assumed by Opexa may be exercised solely for shares of Opexa Common Stock; (ii) the number of shares of Opexa Common Stock subject to each Acer Option
assumed by Opexa shall be determined by multiplying (A) the number of shares of Acer Common Stock that were subject to such Acer Option, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio and rounding the
resulting number down to the nearest whole number of shares of Opexa Common Stock; (iii) the per share exercise price for the Opexa Common Stock issuable upon exercise of each Acer Option assumed by Opexa shall be determined by dividing
(A) the per share exercise price of Acer Common Stock subject to such Acer Option, as in effect immediately prior to the Effective Time, by (B) the Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent; and
(iv) any restriction on the exercise of any Acer Option assumed by Opexa shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Acer Option shall otherwise remain unchanged;
provided,
however
, that: (A) to the extent provided under the terms of an Acer Option, such Acer Option assumed by Opexa in accordance with this
Section
5.5(a)
shall, in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction with respect to
Opexa Common Stock subsequent to the Effective Time; and (B) the Opexa Board of Directors or a committee thereof shall succeed to the authority and responsibility of the Acer Board of Directors or any committee thereof with respect to each Acer
Option assumed by Opexa. Notwithstanding anything to the contrary in this
Section
5.5(a)
, the conversion of each Acer Option (regardless of whether such option qualifies as an incentive stock option within the
meaning of Section 422 of the Code) into an option to purchase shares of Opexa Common Stock shall be made in a manner consistent with Treasury Regulation
Section 1.424-1,
such that the conversion of
an Acer Option shall not constitute a modification of such Acer Option for purposes of Section 409A or Section 424 of the Code.
(b)
Opexa shall file with the SEC, no later than thirty (30) calendar days after the Effective Time, a registration statement on
Form
S-8,
if available for use by Opexa, relating to the shares of Opexa Common Stock issuable with respect to Acer Options assumed by Opexa in accordance with
Section
5.5(a)
.
5.6 Opexa Employee and Benefits Matters; Opexa Options.
(a)
Unless otherwise agreed in writing by Acer pursuant to written notice provided to Opexa no later than three (3) calendar days
prior to the Closing Date, effective no later than the Business Day immediately prior to the Closing Date, Opexa shall, and shall cause any of its Subsidiaries to, terminate the employment and service of each Opexa Associate (the
Terminated
Opexa
Associates
) such that neither Opexa nor any Opexa Subsidiary shall have any Opexa Associate in its employ or service as of the Effective Time. As a condition to payment of any
Terminated Opexa Associate Payment to a Terminated Opexa Associate and prior to the Closing Date, Opexa will use commercially reasonable efforts to obtain from each Terminated Opexa Associate an effective release of claims in a form approved by
Acer, which approval shall not be unreasonably withheld, conditioned or delayed. Prior to the Closing, Opexa shall use commercially reasonable efforts to comply, in all material respects, with all of the requirements of the WARN Act and any
applicable state Legal Requirement equivalent with respect to the Terminated Opexa Associates.
Schedule 5.6(a)(ii)
sets forth, with respect to each
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Terminated Opexa Associate, Opexas good faith estimate of the amount of all change of control payments, severance payments, termination or similar payments, retention payments, bonuses and
other payments and benefits (including any COBRA costs), owed to or to be paid or provided to each Terminated Opexa Associate, and the amount by which any of such Terminated Opexa Associates compensation or benefits may be accelerated or
increased, in each case, whether under any Opexa Employee Plan or otherwise, as a result of (i) the execution of this Agreement, (ii) the consummation of the Contemplated Transactions, or (iii) the termination of employment or service
of such Terminated Opexa Associate (together, the
Terminated
Opexa
Associate
Payments
).
(b)
Each Opexa Option that is outstanding and unexercised immediately prior to the Effective Time, whether under the 2010 Plan or
otherwise and whether or not vested or exercisable, and each Opexa RSU that is outstanding and has not been settled as of the Effective Time, whether under the 2010 Plan or otherwise, shall be (i) fully exercisable immediately prior to the
Effective Time (i.e., 100% acceleration of vesting) and (ii) otherwise canceled and extinguished at the Effective Time without the right to receive any consideration. Prior to the Effective Time, the Opexa Board of Directors will adopt
appropriate resolutions (if required inasmuch as the Opexa Board of Directors will have approved this Agreement, including this
Section
5.6(b)
), which draft resolutions (if applicable) shall be provided to Acer for
reasonable review and approval by Acer prior to adoption by the Opexa Board of Directors and no later than five calendar days prior to the Closing Date, and will have taken all other actions necessary and appropriate (under the 2010 Plan, the Opexa
Options, the Opexa RSUs and otherwise) to effectuate the provisions of this
Section
5.6(b)
and to ensure that, from and after the Effective Time, holders of Opexa Options and Opexa RSUs have no rights with respect thereto.
(c)
Effective no later than the day immediately preceding the Closing Date, Opexa shall terminate (i) all Opexa Employee
Plans that are employee benefit plans within the meaning of ERISA, including but not limited to any Opexa Employee Plans intended to include a Code Section 401(k) arrangement (each, a
Opexa
401(k)
Plan
), and (ii) each other Opexa Employee Plan set forth on
Schedule 5.6(c)
attached hereto unless written notice is provided by Acer to Opexa no later than three (3) calendar days prior to the Closing Date,
instructing Opexa not to terminate any such Opexa Employee Plan. Opexa shall provide Acer with evidence that such Opexa Employee Plan(s) have been terminated (effective no later than the day immediately preceding the Closing Date) pursuant to
resolutions of the Opexa Board of Directors. The form and substance of such resolutions shall be subject to review and approval of Acer. Opexa also shall take such other actions in furtherance of terminating such Opexa Employee Plan(s) as Acer may
reasonably require. In the event that termination of the Opexa 401(k) Plans would reasonably be anticipated to trigger liquidation charges, surrender charges or other fees then Opexa shall take such actions as are necessary to reasonably estimate
the amount of such charges and/or fees and provide such estimate in writing to Acer no later than fourteen (14) calendar days prior to the Closing Date.
(d)
This
Section
5.6
shall be binding upon and inure solely to the benefit of each of the parties to this
Agreement. Nothing in this
Section
5.6
, express or implied, will (i) constitute or be treated as an amendment of any Opexa Employee Plan or Acer Employee Plan (or an undertaking to amend any such plan), (ii) prohibit
Opexa, any Opexa Affiliate, Acer, or any Acer Affiliate from amending, modifying or terminating any Opexa Employee Plan or Acer Employee Plan pursuant to, and in accordance with, the terms thereof, or (iii) confer any rights or benefits on any
Person other than Opexa and Acer.
5.7 Indemnification of Officers and Directors.
(a)
From the Effective Time through the sixth (6
th
) anniversary of the date on
which the Effective Time occurs, each of Opexa and the Surviving Corporation shall, jointly and severally, indemnify and hold harmless each person who is now, or has been at any time prior to the date hereof, or who becomes prior to the Effective
Time, a director or officer of Opexa or Acer (the
D&O
Indemnified
Parties
), against all claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses,
including attorneys fees and disbursements (collectively,
Costs
), incurred in connection with any claim, action, suit, proceeding or
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investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the fact that the D&O Indemnified Party is or was a director or officer of Opexa or
Acer, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under the DGCL or TBOC for directors or officers of Delaware corporations or Texas corporations, as applicable. Each D&O Indemnified
Party will be entitled to advancement of expenses incurred in the defense of any such claim, action, suit, proceeding or investigation from each of Opexa and the Surviving Corporation, jointly and severally, upon receipt by Opexa or the Surviving
Corporation from the D&O Indemnified Party of a request therefor;
provided,
that any person to whom expenses are advanced provides an undertaking, as applicable, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification.
(b)
The certificate of formation/incorporation and bylaws of each of Opexa and the Surviving
Corporation shall contain, and Opexa shall cause the certificate of incorporation and bylaws of the Surviving Corporation to so contain, provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present
and former directors and officers of each of Opexa and Acer than are presently set forth in the certificate of formation/incorporation and bylaws of Opexa and Acer, as applicable, which provisions shall not be amended, modified or repealed for a
period of six (6) years time from the Effective Time in a manner that would adversely affect the rights thereunder of individuals who, at or prior to the Effective Time, were officers or directors of Opexa or Acer.
(c)
Prior to the Effective Time, Opexa shall purchase (and for the avoidance of doubt, the fees and expenses to be paid by Opexa shall
reduce the Net Cash) a tail insurance policy with an effective date as of the Closing Date, which shall remain effective for six (6) years following the Closing Date, at least the same coverage and amounts and containing the same
terms and conditions that are not less favorable to the D&O Indemnified Parties.
(d)
Opexa shall pay all reasonable expenses,
including reasonable attorneys fees, that may be incurred by the persons referred to in this
Section
5.7
in connection with their enforcement of their rights provided in this
Section
5.7
.
(e)
The provisions of this
Section
5.7
are intended to be in addition to the rights otherwise available
to the D&O Indemnified Parties by law, charter, statute, bylaw or agreement. The obligations of Opexa under this
Section
5.7
shall survive the consummation of the Merger and shall not be terminated or modified in such a
manner as to adversely affect any Indemnified Party to whom this
Section
5.7
applies without the consent of such affected D&O Indemnified Party (it being expressly agreed that the D&O Indemnified Parties to whom
this
Section
5.7
applies, as well as their heirs and representatives, shall be third-party beneficiaries of this
Section
5.7
, each of whom may enforce the provisions of this
Section
5.7
).
(f)
In the event Opexa or the Surviving Corporation or any of their respective successors
or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to
any person, then, and in each such case, proper provision shall be made so that the successors and assigns of Opexa or the Surviving Corporation, as the case may be, shall succeed to the obligations set forth in this
Section
5.7
. Opexa shall cause the Surviving Corporation to perform all of the obligations of the Surviving Corporation under this
Section
5.7
.
5.8 Additional Agreements
. The Parties shall (a) use commercially reasonable efforts to cause to
be taken all actions necessary to consummate the Contemplated Transactions and (b) reasonably cooperate with the other Parties and provide the other Parties with such assistance as may be reasonably requested for the purpose of facilitating the
performance by each Party of its respective obligations under this Agreement and to enable the Surviving Corporation to continue to meet its obligations under this Agreement following the Closing. Without limiting the generality of the foregoing,
each Party to this Agreement: (i) shall make all filings and other submissions (if any) and give all notices (if any) required to be made and given by such Party in connection with
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the Contemplated Transactions; (ii) shall use commercially reasonable efforts to lift any injunction prohibiting, or any other legal bar to, the Contemplated Transactions; and
(iii)
shall use commercially reasonable efforts to satisfy the conditions precedent to the consummation of this Agreement.
5.9 Disclosure
. Without limiting Acers or Opexas obligations under the Confidentiality Agreement, each Party shall not, and shall not permit any of its Subsidiaries or any Representative of such Party to, issue any press release
or make any disclosure (to any customers or employees of such Party (other than employees that have a bona fide need to know) to the public or otherwise) regarding the Contemplated Transactions unless: (a) the other Party has approved such
press release or disclosure in writing; or (b) such Party has determined in good faith, upon the advice of outside legal counsel, that such disclosure is required by applicable Legal Requirements and, to the extent practicable, before such
press release or disclosure is issued or made, such Party advises the other Party of, and consults with the other Party regarding, the text of such press release or disclosure.
5.10 Listing
. Opexa shall use its commercially reasonable efforts: (a) to maintain its existing
listing on the NASDAQ Capital Market and to obtain approval of the listing of the combined company on the NASDAQ Capital Market; (b) to effect the NASDAQ Reverse Split, (c) without derogating from the generality of the requirements of
clause (a) and to the extent required by the rules and regulations of NASDAQ, to (i) prepare and submit to NASDAQ a notification form for the listing of the shares of Opexa Common Stock to be issued in the Merger, and (ii) to
cause such shares to be approved for listing (subject to notice of issuance); and (d) to the extent required by NASDAQ Marketplace Rule 5110, to file an initial listing for the Opexa Common Stock on NASDAQ Capital Market (the
NASDAQ
Listing
Application
) and to cause such NASDAQ Listing Application to be approved for listing (subject to official notice of issuance). Acer will cooperate with Opexa as reasonably
requested by Opexa with respect to the NASDAQ Listing Application and promptly furnish to Opexa all information concerning Acer and Acer Stockholders that may be required or reasonably requested in connection with any action contemplated by this
Section
5.10
.
5.11 Tax Matters.
(a)
Opexa, Merger Sub and Acer shall use their respective commercially reasonable efforts to cause the Merger to qualify, and agree not
to, and not to permit or cause any affiliate or any Subsidiary to, take any actions or cause any action to be taken which would reasonably be expected to prevent or impede the Merger from qualifying, as a reorganization under
Section 368(a) of the Code.
(b)
This Agreement is intended to constitute, and the Parties hereby adopt this Agreement as, a
plan of reorganization within the meaning of Treasury Regulations
Section 1.368-2(g).
The Parties shall treat and shall not take any tax reporting position inconsistent with the treatment of
the Merger as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal, state and other relevant Tax purposes, unless otherwise required pursuant to a determination within the meaning of
Section 1313(a) of the Code.
(c)
Acer shall use its commercially reasonable efforts to deliver to Foley and Pillsbury a
Tax Representation Letter, dated as of the date of the tax opinions referenced in
Section
5.1(c)
and signed by an officer of Acer, containing representations of Acer, and Opexa shall use its commercially
reasonable efforts to deliver to Foley and Pillsbury a Tax Representation Letter, dated as of the date of the tax opinions referenced in
Section
5.1(c)
and signed by an officer of Opexa, containing
representations of Opexa, in each case as shall be reasonably necessary or appropriate to enable Foley and Pillsbury to render the applicable opinions described in
Section
5.1(c)
of this Agreement.
5.12 Legends
. Opexa shall be entitled to place appropriate legends on the book entries and/or
certificates evidencing any shares of Opexa Common Stock to be received in the Merger by equityholders of Acer who may be considered affiliates of Opexa for purposes of Rules 144 and 145 under the Securities Act reflecting the
restrictions set forth in Rules 144 and 145 and to issue appropriate stop transfer instructions to the transfer agent for Opexa Common Stock.
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5.13 Directors and Officers
. Prior to the Effective Time,
but to be effective at the Effective Time, the Opexa Board of Directors shall (i) set the size of the Opexa Board of Directors at seven (7) members and elect seven (7) designees selected by Acer (with such designees, in the aggregate,
expected to satisfy the requisite independence requirements for the Opexa Board of Directors, as well as the sophistication and independence requirements for the required committees of the Opexa Board of Directors, pursuant to NASDAQs listing
standards), each to serve as a member of the Opexa Board of Directors, (ii) take all necessary action to appoint each of the individuals set forth on
Schedule 5.13
as officers of Opexa to hold the offices set forth opposite his or her
name, and (iii) appoint each of the directors set forth on
Schedule 5.13
to the committees of the Opexa Board of Directors set forth opposite his or her name (with such directors, in the aggregate, expected to satisfy the sophistication
and independence requirements for the required committees of the Opexa Board of Directors pursuant to NASDAQs listing standards).
5.14 Section 16 Matters
. Prior to the Effective Time, Opexa shall take all such steps as may be
required to cause any acquisitions of Opexa Common Stock and any options to purchase Opexa Common Stock resulting from the Contemplated Transactions, by each individual who is reasonably expected to become subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Opexa, to be exempt under Rule
16b-3
promulgated under the Exchange Act.
5.15 Takeover Statutes
. If any control share acquisition, fair price,
moratorium or other anti-takeover Legal Requirement becomes or is deemed to be applicable to Opexa, Acer, Merger Sub, or the Contemplated Transactions, then each of Opexa, Acer, Merger Sub, and their respective board of directors shall
grant such approvals and take such actions as are necessary so that the Contemplated Transactions may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such anti-takeover Legal Requirement
inapplicable to the foregoing.
5.16 Preferred Stock
.
Acer shall take all action necessary
to effect the conversion of Acer Preferred Stock into Acer Common Stock prior to the Effective Time (the
Preferred
Stock
Conversion
).
5.17 Termination of Certain Agreements and Rights
.
Acer shall use commercially reasonable
efforts to terminate, at or prior to the Effective Time, those agreements set forth on
Schedule 5.17
(collectively, the
Investor
Agreements
).
5.18 Net Cash
. Opexa shall use commercially reasonable efforts to ensure that Net Cash (as determined
pursuant to
Section
1.6
) is greater than or equal to negative One Million and Two Hundred and Fifty Thousand Dollars (-$1,250,000) as of the Effective Time.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH PARTY
The obligations of each Party to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to
the satisfaction or, to the extent permitted by applicable Legal Requirements, the written waiver by each of the Parties, at or prior to the Closing, of each of the following conditions:
6.1 Effectiveness of Registration Statement
. The Form
S-4
Registration Statement has been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of the Form
S-4
Registration Statement has been issued by the SEC and no
proceedings for that purpose and no similar proceeding has been initiated or, to the Knowledge of Opexa, threatened by the SEC.
6.2 No Restraints
. (a) No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Merger has been issued by any court of competent jurisdiction or other
A-56
Governmental Body of competent jurisdiction and remain in effect, and there shall not be any Legal Requirement which has the effect of making the consummation of the Merger or any of the
Contemplated Transactions illegal; and (b) there shall be no Legal Proceeding pending, or overtly threatened in writing, by an official of a Governmental Body in which such Governmental Body indicates that it intends to conduct any Legal
Proceeding or take any other action challenging or seeking to restrain or prohibit the consummation of the Merger or any of the Contemplated Transactions.
6.3 Stockholder Approval
. (a) Acer has obtained the Required Acer Stockholder Vote, (b) Opexa has
obtained the Required Opexa Shareholder Vote, and (c) Acer has received evidence, in form and substance satisfactory to it, that Merger Sub has obtained the Required Merger Sub Stockholder Vote.
6.4 Regulatory Matters
. Any waiting period applicable to the consummation of the Merger under the HSR
Act or applicable to foreign Legal Requirements relating to antitrust or competition matters has expired or been terminated, and there shall not be in effect any voluntary agreement between Opexa, Merger Sub and/or Acer, on the one hand, and the
Federal Trade Commission, the Department of Justice or any foreign Governmental Body, on the other hand, pursuant to which such Party has agreed not to consummate the Merger for any period of time;
provided
, that neither Acer, on the one
hand, nor Opexa or Merger Sub, on the other hand, shall enter into any such voluntary agreement without the written consent of all Parties.
6.5 Listing
.
(a) The existing shares of Opexa Common Stock have been continually listed on The
NASDAQ Capital Market as of and from the date of this Agreement through the Closing Date, (b) the shares of Opexa Common Stock to be issued in the Merger shall be approved for listing (subject to official notice of issuance) on The NASDAQ
Capital Market as of the Effective Time, and (c) to the extent required by NASDAQ Marketplace Rule 5110, the NASDAQ Listing Application has been approved for listing (subject to official notice of issuance).
6.6 Net Cash Calculation
. Opexa and Acer have agreed in writing upon the Net Cash Calculation, or the
Accounting Firm has delivered its determination with respect to the Net Cash Calculation, in each case pursuant to
Section
1.6
.
ARTICLE 7
ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF OPEXA AND MERGER SUB
The obligations of Opexa and Merger Sub to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are
subject to the satisfaction or the written waiver by Opexa, at or prior to the Closing, of each of the following conditions:
7.1 Accuracy of Representations
. (a) The representations and warranties of Acer in
Section
2.1
(Subsidiaries; Due Organization; Organizational Documents),
Section
2.2
(Authority; Vote
Required),
Section
2.4(a)
,
Section
2.4(b)
, and
Section
2.4(c)
(Capitalization), are true and correct in all but de minimis respects as of the date of this Agreement and
are true and correct in all but de minimis respects on and as of the Closing Date with the same force and effect as if made on the Closing Date, except for those representations and warranties which address matters only as of a particular date
(which representations were so true and correct as of such particular date); and (b) all other representations and warranties of Acer in
Article 2
of this Agreement are true and correct as of the date of this Agreement and are true and
correct on and as of the Closing Date with the same force and effect as if made on the Closing Date except (with respect solely to this clause (b)) (i) in each case, or in the aggregate, where the failure to be true and correct would not have an
Acer Material Adverse Effect (provided that all Acer Material Adverse Effect qualifications and other materiality qualifications limiting the scope of the representations and warranties of Acer in
Article 2
of this Agreement will
be disregarded), or (ii) for
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those representations and warranties which address matters only as of a particular date (which representations were so true and correct, subject to the qualifications as set forth in the
preceding clause (i), as of such particular date).
7.2 Performance of Covenants
. Each of the
covenants and obligations in this Agreement that Acer is required to comply with or to perform at or prior to the Closing have been complied with and performed by Acer in all material respects.
7.3 No Acer Material Adverse Effect
. Since the date of this Agreement, there has not occurred any
Acer Material Adverse Effect that is continuing.
7.4 Preferred Stock Conversion
. Acer has
effected the Preferred Stock Conversion.
7.5 Termination of Investor Agreements
.
The
Investor Agreements have been terminated.
7.6 Acer Debt Conversion
;
No
Debt.
Acer has effected a conversion of all outstanding convertible debt into shares of Acer Common Stock, and at the Closing Acer shall have no indebtedness for borrowed money outstanding.
7.7 Acer
Pre-Closing
Financing
.
The Acer
Pre-Closing
Financing shall have been consummated and Acer shall have received the proceeds of the Acer
Pre-Closing
Financing on the terms and conditions set forth in the
Subscription Agreement.
7.8 Documents
.
Opexa has received the following documents, each
of which shall be in full force and effect as of the Closing Date:
(a)
a
certificate executed by the Chief Executive Officer and Chief Financial Officer of Acer confirming that the conditions set forth in
Sections 7.1
,
7.2
,
7.3
,
7.4,
7.5
,
7.6
and
7.7
have been duly
satisfied;
(b)
(i) certificates of good standing of Acer in its jurisdiction of organization and the various foreign jurisdictions
in which it is qualified to do business, (ii) certified copies of the certificate of incorporation and bylaws of Acer, and (iii) a certificate as to the incumbency of the Chief Executive Officer and Chief Financial Officer of Acer and as
to the adoption of resolutions of the Acer Board of Directors authorizing the execution of this Agreement and the consummation of the Contemplated Transactions to be performed by Acer hereunder;
(c)
a form of notice to the Internal Revenue Service in accordance with the requirements of Treasury Regulation
Section 1.897-2(h)
and in form and substance reasonably acceptable to Opexa along with written authorization for Opexa to deliver such notice form to the Internal Revenue Service on behalf of Acer upon the
Closing; and
(d)
the Allocation Certificate.
ARTICLE 8
ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF ACER
The obligations of Acer to effect the Merger and otherwise consummate the transactions to be consummated at the Closing are subject to the
satisfaction or the written wavier by Acer, at or prior to the Closing, of each of the following conditions:
8.1 Accuracy of Representations
. (a) The representations and warranties of Opexa and Merger Sub in
Section
3.1
(Subsidiaries; Due Organization; Organizational Documents),
Section
3.2
(Authority; Vote
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Required),
Section
3.4(a)
,
Section
3.4(b)
,
Section
3.4(c)
,
Section
3.4(e)
(Capitalization),
are true and correct in all but de minimis respects as of the date of this Agreement and are true and correct in all but de minimis respects on and as of the Closing Date with the same force and effect as if made on the Closing Date, except for
those representations and warranties which address matters only as of a particular date (which representations were so true and correct as of such particular date); and (b) all other representations and warranties of Opexa and Merger Sub in
Article 3
of this Agreement are true and correct as of the date of this Agreement and are true and correct on and as of the Closing Date with the same force and effect as if made on the Closing Date except (with respect solely to this clause
(b)) (i) in each case, or in the aggregate, where the failure to be true and correct would not have an Opexa Material Adverse Effect (provided that all Opexa Material Adverse Effect qualifications and other materiality qualifications
limiting the scope of the representations and warranties of Opexa in
Article 3
of this Agreement will be disregarded), or (ii) for those representations and warranties which address matters only as of a particular date (which
representations were so true and correct, subject to the qualifications as set forth in the preceding clause (i), as of such particular date).
8.2 Performance of Covenants
. (a) Opexa and Merger Sub will have complied with the covenants and
obligations set forth in
Section
4.2(b)(ii)
,
Section
4.2(b)(xii)
, and
Section
5.6
in all respects and (b) all of the other covenants and obligations in this Agreement
that either Opexa or Merger Sub is required to comply with or to perform at or prior to the Closing have been complied with and performed in all material respects.
8.3 No Opexa Material Adverse Effect
. Since the date of this Agreement, there has not occurred any
Opexa Material Adverse Effect that is continuing.
8.4 Termination of Contracts
. Acer has
received evidence, in form and substance satisfactory to it, that all Opexa Contracts (other than the Opexa Contracts listed on
Schedule 8.4
) have been (a) terminated, assigned, or fully performed by Opexa and (b) all obligations of
Opexa thereunder have been fully satisfied, waived or otherwise discharged.
8.5 Board of Directors
and Officers
. Opexa has caused the Opexa Board of Directors and the officers of Opexa, to be constituted as set forth in
Section
5.13
of this Agreement effective as of the Effective Time.
8.6 Sarbanes-Oxley Certifications
. Neither the principal executive officer nor the principal
financial officer of Opexa has failed to provide, with respect to any Opexa SEC Document filed (or required to be filed) with the SEC on or after the date of this Agreement, any necessary certification in the form required under Rule
13a-14
under the Exchange Act and 18 U.S.C. §1350.
8.7 Net
Cash Threshold
. Net Cash is greater than or equal to negative One Million and Two Hundred and Fifty Thousand Dollars (-$1,250,000).
8.8 Shell Company Status
. Opexa is not an issuer identified in Rule 144(i)(1)(i) of the Securities
Act or a shell company as defined in Rule
12b-2
of the Exchange Act.
8.9 Satisfaction of Liabilities
. Opexa has satisfied all of its Liabilities with respect to indebtedness as to borrowed money as of the Closing Date and Acer has received payoff letters or other proof of payment evidencing the satisfaction
of such Liabilities and release of any Encumbrances related to such Liabilities, in form and substance satisfactory, to Acer.
8.10 Amendment to Certificate of Formation
. If requested by Acer, Opexa has provided file-stamped copies of the amendment to Opexas certificate of formation evidencing the NASDAQ Reverse Split.
8.11 Bylaws
. The Opexa Board of Directors has approved an amendment to the bylaws of Opexa to change
the name of Opexa to Acer Therapeutics Inc..
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8.12 Documents
. Acer has received the following
documents, each of which shall be in full force and effect as of the Closing Date:
(a)
a certificate executed by the Chief
Executive Officer and Acting Chief Financial Officer of Opexa confirming that the conditions set forth in
Sections 8.1
,
8.2
,
8.3
,
8.5
,
8.6
,
8.7
,
8.8
,
8.9
,
8.10
and
8.11
have been
duly satisfied;
(b)
(i) certificates of good standing of each of Opexa and Merger Sub in its jurisdiction of organization and the
various foreign jurisdictions in which each is qualified to do business, (ii) certified copies of the certificate of formation/incorporation and bylaws of Opexa and Merger Sub, and (iii) a certificate as to the incumbency of the officers
of Opexa and Merger Sub and as to the adoption of resolutions of the Opexa Board of Directors and the board of directors of Merger Sub authorizing the execution of this Agreement and the consummation of the Contemplated Transactions to be performed
by Opexa and Merger Sub hereunder;
(c)
written resignations in forms satisfactory to Acer, dated as of the Closing Date and
effective as of the Closing executed by all officers and directors of Opexa (and, if applicable, removal of such persons as authorized parties to draw on or make withdrawals from Opexas accounts); and
(d)
the Opexa Outstanding Shares Certificate.
ARTICLE 9
TERMINATION
9.1 Termination
. This Agreement may be terminated prior to the Effective Time (whether before or after obtaining the Required Acer Stockholder Vote or Required Opexa Shareholder Vote, as applicable, unless otherwise specified below):
(a)
by mutual written consent duly authorized by the Boards of Directors of Opexa and Acer;
(b)
by either Opexa or Acer if the Merger shall not have been consummated by December 30, 2017 (the
Outside
Date
);
provided
,
however
, that the right to terminate this Agreement under this
Section
9.1(b)
shall not be available to Acer, on the one hand, or to Opexa, on the other hand, if such
Partys (or, in the case of Opexa, Merger Subs) action or failure to act has been a principal cause of the failure of the Merger to occur on or before the Outside Date and such action or failure to act constitutes a breach of this
Agreement;
provided
,
further
, that, in the event that the SEC has not declared effective under the Securities Act the Form
S-4
Registration Statement by the date which is sixty (60) calendar
days prior to the Outside Date, then either Acer or Opexa shall be entitled, by notice delivered to the other Party, to extend the Outside Date for an additional sixty (60) calendar days;
(c)
by either Opexa or Acer if a court of competent jurisdiction or other Governmental Body has issued a final and nonappealable order,
decree or ruling, or has taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger;
provided
,
however
, that the right to terminate this Agreement under this
Section
9.1(c)
shall not be available to Acer, on the one hand, or to Opexa, on the other hand, if such Partys (or, in the case of Opexa, Merger Subs) action or failure to act has been a principal cause of such
issuance or action by a Governmental Body, and such action or failure to act constitutes a breach of this Agreement;
(d)
by Opexa
if the Required Acer Stockholder Vote shall not have been obtained within five (5) Business Days of the
Form S-4
Registration Statement being declared effective by the SEC;
provided
,
however
, that once the Required Acer Stockholder Vote has been obtained, Opexa may not terminate this Agreement pursuant to this
Section
9.1(d)
;
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(e)
by either Opexa or Acer if (i) the Opexa Shareholders Meeting (including
any adjournments and postponements thereof) has been held and completed and the Opexa Shareholders have taken a final vote on the Opexa Shareholder Matters and (ii) the Opexa Shareholder Matters have not been approved at the Opexa
Shareholders Meeting (or any adjournment or postponement thereof) by the Required Opexa Shareholder Vote;
provided
,
however
, that the right to terminate this Agreement under this
Section
9.1(e)
shall not
be available to Opexa where the failure to obtain the Required Opexa Shareholder Vote has been caused by the action or failure to act of Opexa or Merger Sub and such action or failure to act constitutes a material breach by Opexa or Merger Sub of
this Agreement;
(f)
by Acer (at any time prior to obtaining the Required Opexa Shareholder Vote) if any of the following events
have occurred: (i) Opexa failed to include the Opexa Board Recommendation in the Proxy Statement / Prospectus / Information Statement; (ii) the Opexa Board of Directors has approved, endorsed or recommended any Acquisition Proposal;
(iii) Opexa has failed to hold the Opexa Shareholders Meeting within sixty (60) calendar days after the Form
S-4
Registration Statement being declared effective by the SEC under the Securities
Act (other than to the extent that the Form
S-4
Registration Statement is subject to any stop order or proceeding (or threatened proceeding by the SEC) seeking a stop order with respect to the Form
S-4
Registration Statement, in which case such sixty (60)-calendar day period shall be tolled for the earlier of sixty (60) calendar days or so long as such stop order remains in effect or such proceeding or
threatened proceeding remains pending); (iv) Opexa has entered into any Acquisition Agreement (other than a confidentiality agreement permitted pursuant to
Section
4.5)
; or (v) Opexa or any of its Representatives has
willfully and intentionally breached the provisions set forth in
Section
4.5
;
(g)
by Opexa (at any time
prior to the approval of the Merger by the Required Acer Stockholder Vote) if any of the following events have occurred: (i) the Acer Board of Directors failed to include the Acer Board Recommendation in the Proxy Statement / Prospectus /
Information Statement; (ii) the Acer Board of Directors has approved, endorsed or recommended any Acquisition Proposal; (iii) Acer has entered into any Acquisition Agreement (other than a confidentiality agreement permitted pursuant to
Section
4.5
); or (iv) Acer or any of its Representatives has willfully and intentionally breached the provisions set forth in
Section
4.5
of the Agreement;
(h)
by Acer, upon a breach of any representation, warranty, covenant or agreement on the part of Opexa or Merger Sub set forth in this
Agreement, or if any representation or warranty of Opexa or Merger Sub has become inaccurate, in either case such that the conditions set forth in
Section
8.1
or
Section
8.2
would not be satisfied;
provided,
however
, that if such inaccuracy in Opexas or Merger Subs representations and warranties or breach by Opexa or Merger Sub is curable by Opexa or Merger Sub, then this Agreement shall not terminate pursuant to this
Section
9.1(h)
as a result of such particular breach or inaccuracy unless such breach remains uncured fifteen (15) calendar days following the date of written notice from Acer to Opexa of such breach or inaccuracy and
its intention to terminate pursuant to this
Section
9.1(h)
;
provided
further,
however
, that no termination may be made pursuant to this
Section
9.1(h)
solely as a result of the
failure to obtain the Required Opexa Shareholder Vote if the Opexa Shareholders Meeting has been held and completed (in which case, termination must be made pursuant to
Section
9.1(e)
);
(i)
by Opexa, upon a breach of any representation, warranty, covenant or agreement on the part of Acer set forth in this Agreement, or
if any representation or warranty of Acer has become inaccurate, in either case such that the conditions set forth in
Section
7.1
or
Section
7.2
would not be satisfied;
provided,
however
, that if such inaccuracy in Acers representations and warranties or breach by Acer is curable by Acer, then this Agreement shall not terminate pursuant to this
Section
9.1(i)
as a result of such
particular breach or inaccuracy unless such breach remains uncured fifteen (15) calendar days following the date of written notice from Opexa to Acer of such breach or inaccuracy and its intention to terminate pursuant to this
Section 9.1(i)
;
provided
further,
however
, that no termination may be made pursuant to this
Section
9.1(i)
solely as a result of the failure to obtain the Required Acer Stockholder Vote (in
which case, termination must be made pursuant to
Section
9.1(d)
);
(j)
by Opexa, at any time, if
(i) all conditions in
Sections 6
and
8
have been satisfied (other than those conditions that by their nature are to be satisfied by actions taken at the Closing), and remain so satisfied and
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(ii) Opexa irrevocably confirms by written notice to Acer that (A) each of the conditions in
Section
7
(other than the condition set forth in
Section
7.7
(Acer
Pre-Closing
Financing) and those conditions that by their nature are to be satisfied by actions taken at the Closing) has been satisfied or that Opexa is willing to
waive any such conditions that have not been satisfied (other than the condition set forth in
Section
7.7
) and (B) it is prepared to consummate the Closing upon satisfaction of the condition set forth in
Section
7.7
(i.e., consummation of the Acer
Pre-Closing
Financing);
provided
, that Opexa shall not terminate this Agreement pursuant to this
Section
9.1(j)
(x) unless the condition set forth in
Section
7.7
has not been satisfied within five (5) calendar days after delivery of the written notice from Opexa to Acer pursuant to
clause (ii) of this
Section
9.1(j)
and (y) to the extent that Acer is actively disputing through a Legal Proceeding the underlying reason(s) for the failure of the consummation of the Acer
Pre-Closing
Financing with one or more Purchasers (as defined in the Subscription Agreement) party to the Subscription Agreement and such Purchasers, together with all other Purchasers which remain committed to
proceed with the Acer
Pre-Closing
Financing pursuant to the Subscription Agreement, represent at least the requisite participation to satisfy the minimum amount contemplated by the Acer
Pre-Closing
Financing; or
(k)
by Acer if any of the following events have occurred: (i) the
existing shares of Opexa Common Stock cease to be listed on The NASDAQ Capital Market, (ii) NASDAQ informs Opexa that it will not approve the shares of Opexa Common Stock to be issued in the Merger for listing on The NASDAQ Capital Market as of
the Effective Time (whether or not such decision is subject to appeal), or (iii) NASDAQ informs Opexa that the NASDAQ Listing Application is not, or will not be, approved for listing (whether or not such decision is subject to appeal), only to
the extent that such NASDAQ Listing Application is required by NASDAQ Marketplace Rule 5110;
provided
,
however
, that the foregoing clauses (ii) and (iii) are subject to a cure period of ten (10) Business Days if requested by
Opexa.
9.2 Effect of Termination
. The Party desiring to terminate this Agreement pursuant to
Section
9.1
(other than pursuant to
Section
9.1(a)
) shall give a written notice of such termination to the other Party specifying the provisions hereof pursuant to which such termination is made
and the basis therefor described in reasonable detail. In the event of the termination of this Agreement as provided in
Section
9.1
, this Agreement shall be of no further force or effect;
provided
,
however
,
that (i)
Section
5.9
, this
Section
9.2
,
Section
9.3
, and
Article 10
shall survive the termination of this Agreement and shall remain in full force and effect,
and (ii) the termination of this Agreement shall not relieve any Party for its fraud or from any liability for any willful and material breach of any representation, warranty, covenant, obligation or other provision contained in this Agreement.
9.3 Expenses; Termination Fees.
(a)
Except as set forth in this
Section
9.3
, all fees and expenses incurred in connection with this Agreement
and the Contemplated Transactions shall be paid by the Party incurring such expenses, whether or not the Merger is consummated;
provided
,
however
, that Opexa and Acer shall share equally all fees and expenses, other than
attorneys and accountants fees and expenses, incurred in relation to the filings by the Parties under any filing requirement under the HSR Act and any foreign antitrust Legal Requirement applicable to this Agreement and the Contemplated
Transactions;
provided
,
further,
that Opexa and Acer shall also share equally all fees and expenses (i) incurred in relation to the filing of the NASDAQ Listing Application with NASDAQ, (ii) by engagement of the Exchange
Agent and (iii) in relation to the printing (
e.g.
, paid to a financial printer) and filing with the SEC of the Form
S-4
Registration Statement (including any financial statements and exhibits) and
any amendments or supplements thereto.
(b)
(i)
If (A) this Agreement is terminated by Opexa or Acer pursuant to
Section
9.1(e)
or by Acer pursuant to
Section
9.1(f)
, (B) at any time before the date of termination an Acquisition Proposal with respect to Opexa has been publicly announced or disclosed or
otherwise communicated by the Opexa Board of Directors to the Opexa Shareholders, and (C) in the event this Agreement is terminated pursuant to
Section
9.1(e)
, within twelve (12) months after the date of such
termination, Opexa enters into a definitive agreement with respect to a Subsequent Transaction or consummates a Subsequent Transaction, then Opexa shall pay to Acer, within ten
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(10) Business Days after termination (or, if applicable, upon the earlier of such entry into a definitive agreement with respect to a Subsequent Transaction or consummation of a Subsequent
Transaction), a nonrefundable fee in an amount equal to $250,000 (the
Acer
Termination
Fee
), in addition to any amount payable to Acer pursuant to
Section
9.3(e)
.
(ii)
If (A) this Agreement is terminated by Opexa pursuant to
Section
9.1(d)
or
Section
9.1(g)
, (B) at any time before obtaining the Required Acer Stockholder Vote an Acquisition Proposal with respect to Acer has been publicly announced, disclosed or otherwise communicated by the Acer Board of
Directors to the Acer Stockholders, and (C) in the event this Agreement is terminated pursuant
Section
9.1(d)
, within twelve (12) months after the date of such termination, Acer enters into a definitive agreement
with respect to a Subsequent Transaction or consummates a Subsequent Transaction, then Acer shall pay to Opexa, within ten (10) Business Days after termination (or, if applicable, upon the earlier of such entry into a definitive agreement with
respect to a Subsequent Transaction or consummation of a Subsequent Transaction), a nonrefundable fee in an amount equal to $1,000,000 (the
Opexa
Termination
Fee
), in addition to any amount
payable to Opexa pursuant to
Section
9.3(e)
.
(iii)
If this Agreement is terminated by Opexa pursuant to
Section
9.1(j)
, then, within two (2) Business Days after such termination, Acer shall pay to Opexa the Opexa Termination Fee, in addition to any amount payable to Opexa pursuant to
Section
9.3(e)
.
(c)
(i) If this Agreement is terminated by Acer pursuant to
Section
9.1(h)
or (ii) in the event of a failure of Acer to consummate the transactions to be consummated at the Closing solely as a result of an Opexa Material Adverse Effect as set forth in
Section
8.3
(
provided
, that, with respect to this clause (ii) only, at such time all of the other conditions precedent to Opexas obligation to close set forth in
Article 6
and
Article 7
of
this Agreement have been satisfied by Acer, are capable of being satisfied by Acer or have been waived by Opexa), then Opexa shall reimburse Acer for all reasonable fees and expenses incurred by Acer in connection with this Agreement and the
transactions contemplated hereby, including (A) all fees and expenses incurred in connection with the preparation, printing and filing, as applicable, of the Form
S-4
Registration Statement (including any
preliminary materials related thereto and all amendments and supplements thereto, as well as any financial statements and schedules thereto) and (B) all fees and expenses incurred in connection with the preparation and filing under any filing
requirement of any Governmental Body applicable to this Agreement and the transactions contemplated hereby (such expenses, including (A) and (B) above, collectively, the
Third-Party
Expenses
), up to a
maximum of $200,000, by wire transfer of
same-day
funds within ten (10) Business Days following the date on which Acer submits to Opexa true and correct copies of reasonable documentation supporting such
Third-Party Expenses;
provided
,
however
, that such Third-Party Expenses shall not include any amounts for a financial advisor to Acer except for reasonably documented
out-of-pocket
expenses otherwise reimbursable by Acer to such financial advisor pursuant to the terms of Acers engagement letter or similar arrangement with
financial advisor.
(d)
(i) If this Agreement is terminated by Opexa pursuant to
Section
9.1(i)
or
(ii) in the event of a failure of Opexa to consummate the transactions to be consummated at the Closing solely as a result of an Acer Material Adverse Effect as set forth in
Section
7.3
(
provided
, that, with
respect to this clause (ii) only, at such time all of the other conditions precedent to Acers obligation to close set forth in
Article 6
and
Article 8
of this Agreement have been satisfied by Opexa, are capable of being
satisfied by Opexa or have been waived by Acer), then Acer shall reimburse Opexa for all Third-Party Expenses incurred by Opexa up to a maximum of $200,000, by wire transfer of
same-day
funds within ten
(10) Business Days following the date on which Opexa submits to Acer true and correct copies of reasonable documentation supporting such Third-Party Expenses;
provided
,
however
, that such Third-Party Expenses shall not include any
amounts for a financial advisor to Opexa except for reasonably documented
out-of-pocket
expenses otherwise reimbursable by Opexa to such financial advisor pursuant to
the terms of Opexas engagement letter or similar arrangement with financial advisor.
(e)
If either Party fails to pay when
due any amount payable by such Party under
Section
9.3(b)
,
Section
9.3(c)
, or
Section
9.3(d)
, then (i) such Party shall reimburse the other Party for reasonable costs
and
A-63
expenses (including reasonable fees and disbursements of counsel) incurred in connection with the collection of such overdue amount and the enforcement by the other Party of its rights under this
Section
9.3
, and (ii) such Party shall pay to the other Party interest on such overdue amount (for the period commencing as of the date such overdue amount was originally required to be paid and ending on the date such
overdue amount is actually paid to the other Party in full) at a rate per annum equal to the prime rate (as announced by Bank of America or any successor thereto) in effect on the date such overdue amount was originally required to be
paid.
The Parties agree that the payment of the fees and expenses set forth in this
Section
9.3
, subject to
Section
9.2
, shall be the sole and exclusive remedy of each Party following a termination of this Agreement under the circumstances described in this
Section
9.3
, it being understood that in no
event shall either Opexa or Acer be required to pay fees or damages payable pursuant to this
Section
9.3
on more than one occasion. Subject to
Section
9.2
, the payment of the fees and expenses set
forth in this
Section
9.3
, and the provisions of
Section
10.10
, each of the Parties and their respective Affiliates will not have any liability, will not be entitled to bring or maintain any other claim,
action or proceeding against the other, shall be precluded from any other remedy against the other, at law or in equity or otherwise, and shall not seek to obtain any recovery, judgment or damages of any kind against the other (or any partner,
member, shareholder, stockholder, director, officer, employee, Subsidiary, affiliate, agent or other representative of such Party) in connection with or arising out of the termination of this Agreement, any breach by any Party giving rise to such
termination or the failure of the Contemplated Transactions to be consummated. Each of the Parties acknowledges that (i) the agreements contained in this
Section
9.3
, are an integral part of the Contemplated
Transactions, (ii) without these agreements, the Parties would not enter into this Agreement and (iii) any amount payable pursuant to this
Section
9.3
, is not a penalty, but rather is liquidated damages in a
reasonable amount that will compensate the Parties in the circumstances in which such amount is payable.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1
Non-Survival
of Representations and Warranties
. The
representations and warranties of Acer, Merger Sub and Opexa contained in this Agreement or any certificate or instrument delivered pursuant to this Agreement shall terminate at the Effective Time, and only the covenants that by their terms survive
the Effective Time and this
Section 10.1
shall survive the Effective Time.
10.2
Amendment
. This Agreement may be amended with the approval of the respective Boards of Directors of Acer, Merger Sub and Opexa at any time (whether before or after obtaining the Required Opexa Shareholder Vote or the Required Acer Stockholder
Vote);
provided
,
however
, that after any such adoption and approval of this Agreement by a Partys shareholders/stockholders, no amendment shall be made, which by applicable Legal Requirement requires further approval of the
shareholders/stockholders of such Party, without the further approval of such shareholders/stockholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of Acer, Merger Sub and Opexa.
10.3 Waiver.
(a)
No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the
part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right, privilege or remedy.
(b)
No Party shall be deemed to
have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
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10.4 Entire Agreement; Counterparts; Exchanges by
Facsimile
. This Agreement and the other agreements referred to in this Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among or between any of the Parties with respect to
the subject matter hereof and thereof;
provided
,
however
, that the Confidentiality Agreement shall not be superseded and shall remain in full force and effect in accordance with its terms. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by all Parties by facsimile or electronic transmission
in .PDF format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.
10.5 Applicable Law; Jurisdiction
. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws. In any action or suit between any of the Parties arising out of or relating to this Agreement or any of the
Contemplated Transactions: (a) each of the Parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the state and federal courts located in the State of Delaware; and (b) each of the Parties
irrevocably waives the right to trial by jury.
10.6 Attorneys Fees
. In any action at law
or suit in equity to enforce this Agreement or the rights of any of the parties under this Agreement, the prevailing Party in such action or suit shall be entitled to receive a reasonable sum for its attorneys fees and all other reasonable
costs and expenses incurred in such action or suit.
10.7 Assignability; No Third Party
Beneficiaries
. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties hereto and their respective successors and assigns;
provided
,
however
, that neither this Agreement nor
any of a Partys rights or obligations hereunder may be assigned or delegated by such Party without the prior written consent of each other Party, and any attempted assignment or delegation of this Agreement or any of such rights or obligations
by such Party without each other Partys prior written consent shall be void and of no effect. Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto and the D&O
Indemnified Parties to the extent of their respective rights pursuant to
Section
5.7
) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
10.8 Notices
. Any notice or other communication required or permitted to be delivered to any Party
under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered by hand, by registered mail, by courier or express delivery service, electronic mail, or by facsimile to the address, electronic mail
address, or facsimile telephone number set forth beneath the name of such Party below (or to such other address, electronic mail address, or facsimile telephone number as such Party has specified in a written notice given to the other parties
hereto):
if to Opexa or Merger Sub:
Opexa Therapeutics, Inc.
2635
Technology Forest Blvd.
The Woodlands, TX 77381
Telephone No.: (281)
719-3437
Facsimile No.: (281)
872-8585
Attention: Neil K. Warma
E-mail:
nwarma@opexatherapeutics.com
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with a copy to:
Pillsbury Winthrop Shaw Pittman LLP
12255 El Camino Real, Suite 300
San Diego, California 92130
Telephone: (858)
509-4000
Fax: (858)
509-4010
Attention: Mike Hird
E-mail:
mike.hird@pillsburylaw.com
if to Acer:
Acer Therapeutics Inc.
222 Third
Street
Suite #2240
Cambridge, MA 02142
Telephone
No.: (844)
902-6100
Facsimile No.: (617)
225-7780
Attention: Harry Palmin
E-mail:
hpalmin@acertx.com
with a copy to:
Foley Hoag LLP
155 Seaport
Boulevard
Boston, MA 02210
Telephone No.: (617)
832-1209
Facsimile No.: (617)
832-7000
Attention: David R. Pierson, Esq. and William R. Kolb, Esq.
E-Mail:
DPierson@Foleyhoag.com and WRK@foleyhoag.com
10.9 Severability
. Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other
jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement is invalid or unenforceable, the Parties hereto agree that the court making such determination will have the power to limit
such term or provision, to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the Parties hereto agree to replace such invalid or unenforceable term or provision
with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.
10.10 Other Remedies; Specific Performance
. Except as otherwise provided herein, any and all remedies
herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any
other remedy. The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that
the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity, and each of the Parties hereto waives any bond, surety or other security that might be required of any other Party with respect thereto.
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10.11
Construction
.
(a)
For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders.
(b)
The Parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party
shall not be applied in the construction or interpretation of this Agreement.
(c)
As used in this Agreement, the words
include and including, and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words without limitation. The word or when used in this
Agreement shall be deemed to be used in the inclusive sense of and/or, the word any when used in this Agreement shall be deemed to be used in the sense of any and all, and the words to the extent when
used in this Agreement shall mean the degree to which a subject or other item extends and shall not simply mean if. As used in this Agreement, the words hereof, herein, hereby, hereto, and
hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(d)
Except as otherwise indicated, all references in this Agreement to any legislation or to any provision of any legislation shall
include any amendment thereto, and any modification or
re-enactment
thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.
(e)
When calculating the period of time before which, within which or following which, any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a
non-Business
Day, the period in question shall end on the next
succeeding Business Day.
(f)
Except as otherwise indicated, all references in this Agreement to Sections,
Articles, Exhibits and Schedules are intended to refer to Sections or Articles of this Agreement and Exhibits and Schedules to this Agreement, respectively.
(g)
The bold-faced headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.
[
Remainder
of
page
intentionally
left
blank
]
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IN
WITNESS
WHEREOF,
the parties have caused this Agreement to be executed as
of the date first above written.
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OPEXA THERAPEUTICS, INC.
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By:
|
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/s/ Neil K. Warma
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Name:
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Neil K. Warma
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Title:
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President, Chief Executive Officer and Acting Chief Financial Officer
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OPEXA MERGER SUB, INC.
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By:
|
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/s/ Neil K. Warma
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Name:
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Neil K. Warma
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Title:
|
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President, Chief Executive Officer and Chief Financial Officer
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[Signature Page to Agreement and Plan of Merger and Reorganization]
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ACER THERAPEUTICS INC.
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By:
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/s/ Chris Schelling
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Name:
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Chris Schelling
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Title:
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President and CEO
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[Signature Page to Agreement and Plan of Merger and Reorganization]
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the
Agreement (including this
Exhibit A
):
2010
Plan
has the meaning set forth in
Section
3.4(b)
.
2013
Plan
has the meaning set forth in
Section
2.4(b)
.
ACA
has the meaning set forth in
Section
2.14(o)
.
Accounting
Firm
has the meaning set forth in
Section
1.6(e)
.
Acer
has the meaning set forth in the Preamble.
Acer
409A
Plan
has the meaning set forth in
Section
2.14(n)
.
Acer
Affiliate
means any Person that is (or at any relevant time was) under common control with
Acer within the meaning of Sections 414(b), (c), (m) and (o) of the Code, and the regulations issued thereunder.
Acer
Associate
means any current employee, independent contractor, officer or director of Acer or any
Acer Affiliate.
Acer
Board
Adverse
Recommendation
Change
has the meaning set forth in
Section
5.2(b)
.
Acer
Board
of
Directors
means the board of directors of Acer.
Acer
Board
Recommendation
has the meaning set forth in
Section
5.2(b)
.
Acer
Capital
Stock
means the Acer Common Stock and the Acer Preferred Stock.
Acer
Common
Stock
has the meaning set forth in
Section
2.4(a)
.
Acer
Contract
means any Contract: (a) to which Acer is a Party; or (b) by which Acer or
any Acer IP Rights or any other asset of Acer is bound or under which Acer has any obligation.
Acer
Disclosure
Schedule
has the meaning set forth in
Article 2
.
Acer
Employee
Plan
has the meaning set forth in
Section
2.14(e)
.
Acer
Financials
has the meaning set forth in
Section
2.5(a)
.
Acer
IP
Rights
means all Intellectual Property owned, licensed or controlled by Acer
that is necessary or used in the business of Acer as presently conducted or as presently proposed to be conducted.
Acer
IP
Rights
Agreement
means any instrument or agreement governing,
related or pertaining to any Acer IP Rights.
Acer
Intervening
Event
has the meaning
set forth in
Section
5.2(c)
.
Acer
Leases
has the meaning set forth in
Section
2.8
.
A-A-1
Acer
Material
Adverse
Effect
means any Effect that, considered together with all other Effects that have occurred prior to the date of determination of the occurrence of the Acer Material Adverse Effect, is or would reasonably be expected to be materially adverse to, or has or
would reasonably be expected to have or result in a material adverse effect on: (a) the business, condition (financial or otherwise), capitalization, assets, operations or financial performance of Acer; or (b) the ability of Acer to
consummate the Contemplated Transactions or to perform any of its covenants or obligations under the Agreement in all material respects;
provided
,
however
, that Effects from the following shall not be deemed to constitute (nor shall
Effects from any of the following be taken into account in determining whether there has occurred) an Acer Material Adverse Effect: (i) any rejection by a Governmental Body of a registration or filing by Acer relating to the Acer IP Rights;
(ii) any change in the cash position of Acer which results from operations in the Ordinary Course of Business; (iii) conditions generally affecting the industries in which Acer participates or the United States or global economy or capital
markets as a whole, to the extent that such conditions do not have a disproportionate impact on Acer; (iv) any failure by Acer to meet internal projections or forecasts on or after the date of this Agreement (it being understood, however, that
any Effect causing or contributing to any such failure to meet projections or forecasts may constitute a Acer Material Adverse Effect and may be taken into account in determining whether a Acer Material Adverse Effect has occurred); (v) the
execution, delivery, announcement or performance of the obligations under this Agreement or the announcement, pendency or anticipated consummation of the Merger or the Acer
Pre-Closing
Financing; (vi) any
natural disaster or any acts of terrorism, sabotage, military action or war or any escalation or worsening thereof; or (vii) any changes (after the date of this Agreement) in GAAP or applicable Legal Requirements.
Acer
Material
Contract
has the meaning set forth in
Section
2.10(a)
.
Acer
Options
means options to purchase shares of Acer
Common Stock issued or granted by Acer.
Acer
Permits
has the meaning set forth in
Section
2.12(b)
.
Acer
Pre-Closing
Financing
means the issuance and sale of Acer Common Stock in exchange for gross proceeds of at least $15,500,000, which may consist of conversion of up to $5,500,000 in principal amount of senior secured convertible promissory
notes issued by Acer under that certain Note Purchase Agreement dated March 22, 2017 but with the balance of the gross proceeds to be in cash (
i.e.
, for a minimum of $10,000,000 in cash), to be consummated prior to the Closing pursuant
to the Subscription Agreement.
Acer
Preferred
Stock
has the meaning set forth in
Section
2.4(a)
.
Acer
Product
Candidates
has the meaning
set forth in
Section
2.12(d)
.
Acer
Registered
IP
means
all Acer IP Rights that are registered, filed or issued under the authority of, with or by any Governmental Body, including all patents, registered copyrights and registered trademarks and all applications for any of the foregoing.
Acer
Regulatory
Permits
has the meaning set forth in
Section
2.12(d)
.
Acer
Series
B
Preferred
Stock
has the meaning set forth in
Section
2.4(a)
.
Acer
Stock
Certificate
has the meaning set forth in
Section
1.7
.
Acer
Stockholder
means each holder of Acer Capital Stock, and
Acer
Stockholders
means all Acer Stockholders.
Acer
Stockholder
Matters
has the meaning set forth in
Section
5.2(a)
.
Acer
Stockholder
Support
Agreements
has the meaning set forth in the Recitals.
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Acer
Stockholder
Written
Consent
has the meaning set forth in
Section
2.2(b)
.
Acer
Termination
Fee
has the meaning set forth in
Section
9.3(b)
.
Acer
Unaudited
Interim
Balance
Sheet
means the unaudited
consolidated balance sheet of Acer for the three (3) month period ending March 31, 2017.
Acquisition
Agreement
has the meaning set forth in
Section
4.5(a)
.
Acquisition
Inquiry
means, with respect to a Party, an inquiry, indication of interest or
request for information (other than an inquiry, indication of interest or request for information made or submitted by Acer, on the one hand, or Opexa, on the other hand, to the other Party) that would reasonably be expected to lead to an
Acquisition Proposal with such Party.
Acquisition
Proposal
means, with respect to a Party, any
offer or proposal, whether written or oral (other than an offer or proposal made or submitted by or on behalf of Acer or any of its Affiliates, on the one hand, or by or on behalf of Opexa or any of its Affiliates, on the other hand, to the other
Party) made by a third party contemplating or otherwise relating to any Acquisition Transaction with such Party.
Acquisition
Transaction
means any transaction or series of transactions involving: (a) any direct
or indirect sale, lease, exchange, transfer, license, acquisition or disposition of any business or assets of a Party or any of its Subsidiaries (including any outstanding equity securities of a Subsidiary) equal to 10% or more of the fair market
value of such Partys consolidated assets or to which 10% or more of such Partys net revenues or net income on a consolidated basis are attributable;
provided
,
however
, that any acquisition or licensing of assets of Opexa is
excluded from the transactions described in this clause (a) so long as such acquisition or licensing (i) does not include terms that are not reasonable and customary for transactions of similar size, type and scope, (ii) would not
prevent or delay Opexa from entering into or consummating the Merger and the Contemplated Transaction, (iii) Acer is provided with the opportunity to review in advance any binding or definitive agreement and (iv) the proposed acquisition
or licensing, if consummated prior to the Effective Time, does not cause Opexa to become a shell company as defined in Rule
12b-2
of the Exchange Act; (b) any direct or indirect acquisition of 10% or more
of the outstanding equity securities of a Party;
provided
,
however
, that the Acer
Pre-Closing
Financing is excluded from the transactions described in this clause (b); (c) any tender offer or
exchange offer that, if consummated, would result in any Person or group of Persons beneficially owning 10% or more of the outstanding equity securities of a Party; (d) any financing transaction that is unrelated to the Acer
Pre-Closing
Financing in which Acer seeks to raise capital through the issuance of either equity or debt securities, or any instrument convertible into or exchangeable for such equity or debt securities, whether
from existing investors or potential new investors;
provided
,
however
, that Acers issuance of senior secured convertible promissory notes under that certain Note Purchase Agreement dated March 22, 2017 at the Additional
Closing (as defined therein) is excluded from the transactions described in this clause (d); or (e) a merger, reverse merger, consolidation, other business combination or similar transaction involving a party hereto or any of its subsidiaries;
provided
,
however
, that the Merger and Contemplated Transactions and any potential
in-licensing
transactions by Acer or transactions involving the acquisition of pipeline products by Acer, in
each case, where such transactions are complimentary to the Contemplated Transactions is excluded from the transactions described in this clause (e).
Affiliates
has the meaning for such term as used in Rule 145 under the Securities Act.
Agreement
has the meaning set forth in the Preamble.
Allocation
Certificate
has the meaning set forth in
Section
1.12(b)
.
Anticipated
Closing
Date
has the meaning set forth in
Section
1.6(a)
.
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Business
Day
means any day other than a day on which
banks in the State of New York are authorized or obligated to be closed.
Certificate
of
Merger
has the meaning set forth in
Section
1.3
.
Certifications
has the meaning set forth in
Section
3.5(a)
.
Closing
has the meaning set forth in
Section
1.3
.
Closing
Date
has the meaning set forth in
Section
1.3
.
COBRA
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, as set forth in
Section 4980B of the Code and Part 6 of Title I of ERISA.
Code
means the Internal Revenue Code of 1986, as
amended.
Confidentiality
Agreement
means the Mutual Confidential Disclosure Agreement by and
between Acer and Opexa, dated as of January 10, 2017, as amended.
Consent
means any approval, consent,
ratification, permission, waiver or authorization (including any Governmental Authorization).
Contemplated
Transactions
means the Merger, the Preferred Stock Conversion, the NASDAQ Reverse Split, the Acer
Pre-Closing
Financing, and the other transactions and actions contemplated by the
Agreement.
Contract
shall, with respect to any Person, mean any written agreement, contract, subcontract, lease
(whether real or personal property), mortgage, understanding, arrangement, instrument, note, option, warranty, purchase order, license, sublicense, insurance policy, benefit plan or legally binding commitment or undertaking of any nature to which
such Person is a party or by which such Person or any of its assets are bound or affected under applicable law.
Costs
has the meaning set forth in
Section
5.7(a)
.
D&O
Indemnified
Parties
has the meaning set forth in
Section
5.7(a)
.
Determination
Date
has the meaning set forth in
Section
1.6(a)
.
DGCL
means the General Corporation Law of the State of Delaware.
Dispute
Notice
has the meaning set forth in
Section
1.6(b)
.
Dissenting
Shares
has the meaning set forth in
Section
1.9(a)
.
Drug
Regulatory
Agency
has the meaning set forth in
Section
2.12(c)
.
Effect
means any effect, change, event, circumstance, or
development.
Effective
Time
has the meaning set forth in
Section
1.3
.
Encumbrance
means any lien, pledge, hypothecation, charge, mortgage,
security interest, encumbrance, claim, infringement, interference, option, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction
on the transfer of
A-A-4
any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
Entity
means any corporation (including any
non-profit
corporation), partnership (including any general partnership, limited partnership or limited liability partnership), joint venture, estate, trust, company (including any company limited by shares, limited
liability company or joint stock company), firm, society or other enterprise, association, organization or entity, and each of its successors.
Environmental
Law
means any federal, state, local or foreign Legal Requirement relating to pollution
or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Hazardous
Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
Exchange
Act
means the Securities Exchange Act of 1934, as amended.
Exchange
Agent
has the meaning set forth in
Section
1.8(a)
.
Exchange
Fund
has the meaning set forth in
Section
1.8(a)
.
Exchange
Ratio
means, subject to
Section
1.5(f)
, the following ratio (with
such ratio being calculated to the nearest 1/10,000 of a share): the quotient obtained by
dividing
(a) the Acer Merger Shares
by
(b) the Acer Outstanding Shares, in which:
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Acer
Allocation
Percentage
means 1.00 minus the Opexa Allocation Percentage.
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Acer
Merger
Shares
means the product determined by
multiplying
(a) the Post-Closing Opexa Shares
by
(b) the Acer Allocation Percentage.
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Acer
Outstanding
Shares
means the total number of shares of Acer Common Stock outstanding immediately prior to the Effective Time expressed on a fully-diluted and
as-converted
to Acer Common Stock basis and assuming, without limitation or duplication, (a) the exercise of all Acer Options outstanding as of immediately prior to the Effective Time, (b) the
effectiveness of the Preferred Stock Conversion, (c) the consummation of the Acer
Pre-Closing
Financing (including conversion of all senior secured convertible promissory notes issued by Acer under that
certain Note Purchase Agreement dated March 22, 2017), (d) the conversion of all of Acers outstanding convertible indebtedness into shares of Acer Common Stock and (e) the issuance of shares of Acer Common Stock in respect of all
other options, warrants or rights to receive such shares that will be outstanding immediately prior to the Effective Time.
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Opexa
Allocation
Percentage
means the quotient determined by
dividing
(i) the sum of Seven Million Dollars ($7,000,000),
plus
or
minus
One Dollar ($1) for each One Dollar ($1) that Net Cash determined pursuant to
Section
1.6
is greater than or less than negative Five Hundred Thousand Dollars (-$500,000),
by
(ii) the sum of
(A) the product of the Acer Outstanding Shares
multiplied
by
the price per share of Acer Common Stock for cash investors in the
Pre-Closing
Acer Financing,
plus
(B) the amount
determined pursuant to the foregoing clause (i),
minus
(C) the aggregate amount of any indebtedness for borrowed money of Acer outstanding at the Closing. For example, the Opexa Allocation Percentage would be 0.11147 if the Net Cash
determined pursuant to
Section
1.6
is negative Six Hundred Thousand Dollars (-$600,000), the
product
of the Acer Outstanding Shares
multiplied
by
the price per share of Acer Common Stock for cash
investors in the
Pre-Closing
Acer Financing is Fifty-Five Million Dollars ($55,000,000), and Acer has no indebtedness for borrowed money outstanding at the Closing.
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A-A-5
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Opexa
Outstanding
Shares
means, subject to
Section
1.5(f)
, the total number of shares of Opexa Common Stock outstanding immediately prior
to the Effective Time expressed on a fully-diluted and
as-converted
to Opexa Common Stock basis, and assuming, without limitation or duplication, (a) the exercise of each Opexa Option outstanding as of
the Effective Time, solely to the extent such Opexa Option will not be canceled pursuant to
Section
5.6(b)
at the Effective Time or exercised prior thereto, (b) the settlement in shares of Opexa Common Stock of each
Opexa RSU outstanding as of the Effective Time, solely to the extent such Opexa RSU will not be canceled pursuant to
Section
5.6(b)
at the Effective Time or settled prior thereto, (c) the conversion of all of
Opexas outstanding convertible indebtedness into shares of Opexa Common Stock, and (d) the issuance of shares of Opexa Common Stock in respect of all other options, warrants or rights to receive such shares that will be outstanding
immediately prior to the Effective Time;
provided
,
however
, that notwithstanding any element of the foregoing, all shares of Opexa Common Stock underlying the Opexa Warrants shall be excluded from the calculation of the Opexa
Outstanding Shares.
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Post-Closing
Opexa
Shares
mean the quotient determined by
dividing
(a) the Opexa Outstanding Shares
by
(b) the Opexa Allocation Percentage.
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Existing
Acer
D&O
Policies
has the meaning set
forth in
Section
2.16(b)
.
Existing
Opexa
D&O
Policies
has the meaning set forth in
Section
3.16(b)
.
FDA
has
the meaning set forth in
Section
2.12(c)
.
FDCA
has the meaning set forth in
Section
2.12(c)
.
Foley
has the meaning set forth in
Section
5.1(c)
.
Form
S-4
Registration
Statement
means the registration statement on Form
S-4
to be filed with the SEC by Opexa registering the public offering and sale of Opexa Common Stock to all
Acer Stockholders in the Merger, including all shares of Opexa Common Stock to be issued in exchange for all shares of Acer Common Stock in the Merger, as said registration statement may be amended prior to the time it is declared effective by the
SEC.
GAAP
has the meaning set forth in
Section
2.5(a)
.
Governmental
Authorization
means any: (a) permit, license, certificate, franchise, permission,
variance, exceptions, orders, clearance, registration, qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
Governmental
Body
means any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental body of any nature (including
any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and for the avoidance of doubt, any Tax authority); or
(d) self-regulatory organization (including NASDAQ and the Financial Industry Regulatory Authority).
Grant
Date
has the meaning set forth in
Section
2.14(f)
.
Hazardous
Materials
means any pollutant, chemical, substance and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or flammable chemical, or chemical compound, or hazardous substance, material or waste, whether solid,
liquid or gas, that is subject to regulation, control or remediation under any Environmental Law, including crude oil or any fraction thereof, and petroleum products or
by-products.
A-A-6
HSR
Act
means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Intellectual
Property
means (a) United States, foreign
and international patents, patent applications, including provisional applications, statutory invention registrations, invention disclosures and inventions, (b) trademarks, service marks, trade names, domain names, URLs, trade dress, logos and
other source identifiers, including registrations and applications for registration thereof, (c) copyrights, including registrations and applications for registration thereof, and (d) software, formulae, customer lists, trade secrets,
know-how,
confidential information and other proprietary rights and intellectual property, whether patentable or not.
Investor
Agreements
shall have the meaning set forth in
Section
5.17
.
IRS
means the United States Internal Revenue Service.
Knowledge
means, (a) with respect to Opexa, the actual knowledge of Neil K. Warma, after due inquiry; and
(b) with respect to Acer, the actual knowledge of Chris Schelling or Harry Palmin, in each case, after due inquiry.
Legal
Proceeding
means any action, suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal
Requirement
means any federal, state, foreign, material
local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by
or under the authority of any Governmental Body.
Liability
has the meaning set forth in
Section
2.11
.
Merger
has the meaning set forth in the recitals.
Merger
Consideration
has the meaning set forth in
Section
1.5(a)(ii)
.
Merger
Sub
has the meaning set forth in the Preamble.
Merger
Sub
Capital
Stock
has the meaning set forth in
Section
3.4(e)
.
Multiemployer
Plan
means (a) a multiemployer
plan, as defined in Section 3(37) or 4001(a)(3) of ERISA, or (b) a plan which if maintained or administered in or otherwise subject to the laws of the United States would be described in paragraph (a).
Multiple
Employer
Plan
means (a) a multiple employer plan within the
meaning of Section 413(c) of the Code or Section 3(40) of ERISA, or (b) a plan which if maintained or administered in or otherwise subject to the laws of the United States would be described in paragraph (a).
NASDAQ
means The NASDAQ Stock Market.
NASDAQ
Listing
Application
has the meaning set forth in
Section
5.10
.
NASDAQ
Reverse
Split
means a reverse stock
split of all outstanding shares of Opexa Common Stock at a reverse stock split ratio in the range mutually agreed to by Opexa and Acer that is effected by Opexa for the purpose of maintaining compliance with NASDAQ listing standards.
A-A-7
Net
Cash
means, as of the Closing Date unless otherwise
specified, (a) the sum of Opexas cash and cash equivalents, determined in a manner consistent with the manner in which such items were historically determined and in accordance with the Opexa Audited Financial Statements and the Opexa
Unaudited Interim Balance Sheet,
plus
(b) any receivables of Opexa as determined in a manner consistent with the manner in which such items were historically determined and in accordance with the Opexa Audited Financial Statements
and the Opexa Unaudited Interim Balance Sheet, and also including for this purpose, and without limitation, any future payments (including with respect to any Permitted Opexa Asset Sale) that would be reflected in financial statements of Opexa in
accordance with GAAP,
minus
(c) the sum of Opexas accounts payable and accrued expenses (without duplication of any expenses accounted for below), in each case as determined in a manner consistent with the manner in which
such items were historically determined and in accordance with the Opexa Audited Financial Statements and the Opexa Unaudited Interim Balance Sheet,
minus
(d) the cash cost of any unpaid change of control payments or severance,
termination or similar payments that are or become due as a result of the Contemplated Transactions to any current or former employee, director or independent contractor of Opexa, or any other third party
minus
(e) the cash cost
of any accrued and unpaid retention payments or other bonuses due to any current or former employee, director or independent contractor of Opexa,
minus
(f) any remaining unpaid fees and expenses (including any attorneys,
accountants, financial advisors or finders fees) as of such date for which Opexa is liable incurred by Opexa in connection with this Agreement and the Contemplated Transactions or otherwise,
plus
or
minus
(as applicable)
(g) the net amount of any transaction expense reimbursement owed to, or transaction expense payment owed by, Opexa pursuant to
Section
9.3(a)
,
minus
(h) any
and all other Liabilities of Opexa that would be required to be set forth in a balance sheet prepared in accordance with GAAP.
Net
Cash
Calculation
has the meaning set forth in
Section
1.6(a)
.
Net
Cash
Schedule
has the meaning set
forth in
Section
1.6(a)
.
Notice
Period
has the meaning set forth in
Section
5.2(c)
.
Opexa
401(k)
Plan
has the meaning set
forth in
Section
5.6(c)
.
Opexa
409A
Plan
has the meaning
set forth in
Section
3.14(k)
.
Opexa
has the meaning set forth in the Preamble.
Opexa
Affiliate
means any Person that is (or at any relevant time was) under common control with Opexa
within the meaning of Sections 414(b), (c), (m) and (o) of the Code, and the regulations issued thereunder.
Opexa
Associate
means any current or former employee, independent contractor, officer or director of
Opexa, any of its Subsidiaries or any Opexa Affiliate.
Opexa
Audited
Financial
Statements
means the audited consolidated financial statements included in Opexas Report on
Form 10-K
filed with the SEC on March 28, 2017 for the period ended
December 31, 2016.
Opexa
Board
Adverse
Recommendation
Change
has the meaning set forth in
Section
5.3(b)
.
Opexa
Board
of
Directors
means the board of directors of Opexa.
Opexa
Board
Recommendation
has the meaning set forth in
Section
5.3(b)
.
Opexa
Capital
Stock
means Opexa Common Stock and Opexa preferred stock.
Opexa
Common
Stock
has the meaning set forth in
Section
3.4(a)
.
A-A-8
Opexa
Contract
means any Contract: (a) to which
Opexa or an Opexa Subsidiary is a Party; or (b) by which Opexa, an Opexa Subsidiary or any Opexa IP Rights or any other asset of Opexa or an Opexa Subsidiary is bound or under which Opexa or an Opexa Subsidiary has any obligation.
Opexa
Disclosure
Schedule
has the meaning set forth in
Article 3
.
Opexa
Employee
Plan
has the meaning set forth in
Section
3.14(c)
.
Opexa
IP
Rights
means all Intellectual
Property owned, licensed or controlled by Opexa or a Opexa Subsidiary that is necessary or used in the business of Opexa or its Subsidiaries as presently conducted or as presently proposed to be conducted.
Opexa
IP
Rights
Agreement
means any instrument or agreement governing,
related or pertaining to any Opexa IP Rights.
Opexa
Intervening
Event
has the
meaning set forth in
Section
5.3(c)
.
Opexa
Leases
has the meaning set
forth in
Section
3.8
.
Opexa
Material
Adverse
Effect
means any Effect that, considered together with all other Effects that have occurred prior to the date of determination of the occurrence of the Opexa Material Adverse Effect, is or would reasonably be expected to be or to
become materially adverse to, or has or would reasonably be expected to have or result in a material adverse effect on: (a) the business, condition (financial or otherwise), capitalization, assets, operations or financial performance of Opexa;
or (b) the ability of Opexa to consummate the Contemplated Transactions or to perform any of its covenants or obligations under the Agreement in all material respects;
provided
,
however
, that Effects from the following shall not
be deemed to constitute (nor shall Effects from any of the following be taken into account in determining whether there has occurred) an Opexa Material Adverse Effect: (i) any rejection by a Governmental Body of a registration or filing by
Opexa relating to the Opexa IP Rights; (ii) any change in the cash position of Opexa which results from operations in the Ordinary Course of Business; (iii) conditions generally affecting the industries in which Opexa participates or the
United States or global economy or capital markets as a whole, to the extent that such conditions do not have a disproportionate impact on Opexa; (iv) any failure of Opexa to meet internal projections or forecast or third-party revenue or
earnings predictions for any period ending (or for which revenues or earnings are released) on or after the date of this Agreement or any change in the price or trading volume of Opexa Common Stock (it being understood, however, that any Effect
causing or contributing to any such failure to meet projections or predictions or any change in stock price or trading volume may constitute an Opexa Material Adverse Effect and may be taken into account in determining whether an Opexa Material
Adverse Effect has occurred); (v) the consummation of a Permitted Opexa Asset Sale, (vi) the execution, delivery, announcement or performance of the obligations under this Agreement or the announcement, pendency or anticipated consummation of
the Merger or the Acer
Pre-Closing
Financing; (vii) any natural disaster or any acts of terrorism, sabotage, military action or war or any escalation or worsening thereof; or (viii) any changes
(after the date of this Agreement) in GAAP or applicable Legal Requirements.
Opexa
Material
Contract
has the meaning set forth in
Section
3.10
.
Opexa
Options
means options to purchase shares of Opexa Common Stock issued or granted by Opexa.
Opexa
Outstanding
Shares
Certificate
has the meaning set forth in
Section
1.12(a)
.
Opexa
Permits
has the meaning set forth in
Section
3.12(b)
.
Opexa
Registered
IP
means all Opexa IP Rights that are registered, filed or issued under
the authority of, with or by any Governmental Body, including all patents, registered copyrights and registered trademarks and all applications for any of the foregoing.
A-A-9
Opexa
Regulatory
Permits
has the
meaning set forth in
Section
3.12(d)
.
Opexa
RSUs
means a restricted
stock unit covering shares of Opexa Capital Stock issued or granted by Opexa.
Opexa
Shareholder
means each holder of Opexa Capital Stock, and
Opexa
Shareholder
means all Opexa Shareholders.
Opexa
Shareholder
Matters
has the meaning set forth in
Section
5.3(a)
.
Opexa
Shareholders
Meeting
has the
meaning set forth in
Section
5.3(a)
.
Opexa
Shareholder
Support
Agreements
has the meaning set forth in the Recitals.
Opexa
Subsidiaries
has
the meaning set forth in
Section
3.1(a)
.
Opexa
Termination
Fee
has the meaning set forth in
Section
9.3(b)
.
Opexa
Unaudited
Interim
Balance
Sheet
means the unaudited consolidated balance sheet of Opexa included in Opexas Report on Form
10-Q
filed with the
SEC for the period ended March 31, 2017.
Opexa
Warrants
means the outstanding warrants to
purchase Opexa Capital Stock set forth in
Section
3.4(a)
of the Opexa Disclosure Schedule.
Ordinary
Course
of
Business
means, in the case of each of Acer and Opexa
and for all periods, such actions taken in the ordinary course of its normal operations and consistent with its past practices;
provided,
however,
that during the
Pre-Closing
Period, (a) the
Ordinary Course of Business of each Party shall also include any actions expressly required or permitted by this Agreement, including the Contemplated Transactions, and (b) the Ordinary Course of Business for Acer shall also include actions
undertaken in connection with preparing to become a SEC reporting company listed on the NASDAQ Capital Market and.
Outside
Date
has the meaning set forth in
Section
9.1(b)
.
Party
or
Parties
means Acer, Merger Sub and Opexa.
Permitted
Alternative
Agreement
means an Acquisition Agreement that constitutes a
Superior Offer.
Permitted
Opexa
Asset
Sale
has the meaning set forth
in
Section
4.2(b)(viii)
.
Person
means any individual, Entity or Governmental Body.
Pillsbury
has the meaning set forth in
Section
5.1(c)
.
Pre-Closing
Period
has the meaning set forth in
Section
4.1
.
Preferred
Stock
Conversion
has the meaning
set forth in
Section
5.16
.
Proxy
Statement
/
Prospectus
/
Information
Statement
means the proxy statement/prospectus/information statement to be sent to Acers stockholders in connection with the approval of this Agreement and
the Merger (by signing the Acer Stockholder Written Consent) and to Opexas shareholders in connection with the Opexa Shareholders Meeting.
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Representatives
means directors, officers, other employees, agents,
attorneys, accountants, investment bankers, advisors and representatives.
Required
Acer
Stockholder
Vote
has the meaning set forth in
Section
2.2(b)
.
Required
Merger
Sub
Stockholder
Vote
has the meaning set
forth in
Section
3.2(b)
.
Required
Opexa
Shareholder
Vote
has the meaning set forth in
Section
3.2(b)
.
Response
Date
has the meaning set forth in
Section
1.6(b)
.
Sarbanes-Oxley
Act
means the Sarbanes-Oxley Act of 2002, as it may be amended from time to time.
SEC
means
the United States Securities and Exchange Commission.
Securities
Act
means the Securities Act of
1933, as amended.
Subscription
Agreement
has the meaning set forth in the Recitals.
Subsequent
Transaction
means any Acquisition Transaction (with all references to 10% in the definition
of Acquisition Transaction being treated as references to 50% for these purposes).
Subsidiary
means an Entity
of which another Person directly or indirectly owns or purports to own, beneficially or of record, (a) an amount of voting securities of other interests in such Entity that is sufficient to enable such Person to elect at least a majority of the
members of such Entitys board of directors or other governing body, or (b) at least 50% of the outstanding equity, voting, beneficial or financial interests in such Entity.
Superior
Offer
means an unsolicited, bona fide Acquisition Proposal (with all references to 10% in the
definition of Acquisition Transaction being treated as references to 50% for these purposes) made by a third party that (a) was not obtained or made as a direct or indirect result of a breach of (or in violation of) this Agreement; and
(b) is on terms and conditions that the Opexa Board of Directors or the Acer Board of Directors, as applicable, determines, in its reasonable, good faith judgment, after obtaining and taking into account such matters that its Board of Directors
deems relevant following consultation with its outside legal counsel and financial advisor, if any (i) is more favorable, from a financial point of view, to the Opexa Shareholders or the Acer Stockholders, as applicable, than the terms of the
Merger; and (ii) is reasonably capable of being consummated;
provided
,
however
, that any such offer shall not be deemed to be a Superior Offer if (A) any financing required to consummate the transaction
contemplated by such offer is not committed and is not reasonably capable of being obtained by such third party or (B) if the consummation of such transaction is contingent on any such financing being obtained.
Surviving
Corporation
has the meaning set forth in
Section
1.1
.
Tax
means any federal, state, local, foreign or other tax, including any income tax, franchise tax, capital gains
tax, gross receipts tax, value-added tax, surtax, estimated tax, unemployment tax, national health insurance tax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, withholding tax, payroll tax,
customs duty, alternative or
add-on
minimum or other tax of any kind whatsoever, and including any fine, penalty, addition to tax or interest, whether disputed or not.
Tax
Return
means any return (including any information return), report, statement, declaration,
estimate, schedule, notice, notification, form, election, certificate or other document or information, and any amendment or supplement to any of the foregoing, filed with or submitted to, or required to be filed with or submitted to, any
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Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with
any Legal Requirement relating to any Tax.
TBOC
means the Texas Business Organizations Code.
Terminated
Opexa
Associate
Payments
has the meaning set forth in
Section
5.6(a)
.
Treasury
Regulations
means the United States Treasury
regulations promulgated under the Code.
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Annex B
Amendment to Certificate of FormationName Change
CERTIFICATE OF AMENDMENT
TO THE
RESTATED
CERTIFICATE OF FORMATION
OF
OPEXA THERAPEUTICS, INC.
Pursuant to the provisions of Section 3.053 of the Texas Business Organizations Code, Opexa Therapeutics, Inc., a Texas corporation (the
Corporation), hereby adopts the following Certificate of Amendment to its Restated Certificate of Formation (the Restated Certificate).
ARTICLE I.
The name of
the Corporation is Opexa Therapeutics, Inc. The file number issued to the Corporation by the Secretary of State of the State of Texas is 118585600 and the date of formation of the Corporation is March 15, 1991.
ARTICLE II.
The Restated
Certificate is hereby amended by replacing Article I in its entirety as follows:
The name of the Corporation is Acer
Therapeutics Inc.
ARTICLE III.
This Certificate of Amendment to the Restated Certificate has been approved in the manner required by the Texas Business Organizations Code
and by the governing documents of the Corporation.
ARTICLE IV.
This Certificate of Amendment shall become effective on
, 2017 at Central Daylight Time.
The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument
and certifies under penalty of perjury that the undersigned is authorized under the provisions of law governing the entity to execute the filing instrument.
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Dated:
, 2017
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Neil K. Warma
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President and Chief Executive Officer
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B-1
Annex C
Amendment to Certificate of FormationReverse Stock Split
CERTIFICATE OF AMENDMENT
TO THE
RESTATED
CERTIFICATE OF FORMATION
OF
OPEXA THERAPEUTICS, INC.
Pursuant to the provisions of Section 3.053 of the Texas Business Organizations Code, Opexa Therapeutics, Inc., a Texas corporation (the
Corporation), hereby adopts the following Certificate of Amendment to its Restated Certificate of Formation (the Restated Certificate).
ARTICLE I.
The name of
the Corporation is Opexa Therapeutics, Inc. The file number issued to the Corporation by the Secretary of State of the State of Texas is 118585600 and the date of formation of the Corporation is March 15, 1991.
ARTICLE II.
The Restated
Certificate is hereby amended by replacing the last paragraph at the end of Article IV in its entirety as follows:
Upon this Certificate of Amendment to the Restated Certificate of Formation becoming effective pursuant to the Texas
Business Organizations Code of the State of Texas (the Effective Date), each share of Common Stock, par value $0.01 per share (the Old Common Stock), issued and outstanding immediately prior to the Effective Date, shall be,
and hereby is, reclassified as and changed into
[one-
(1/ th)] of a share of Common Stock, par value $0.01 per share (the New Common Stock). Each
outstanding stock certificate which immediately prior to the Effective Date represented one or more shares of Old Common Stock shall thereafter, automatically and without the necessity of surrendering the same for exchange, represent the number of
whole shares of New Common Stock determined by multiplying the number of shares of Old Common Stock represented by such certificate immediately prior to the Effective Date by
[one-
(1/ th)] and rounding such number down to the nearest whole integer, and shares of Old Common Stock held in uncertificated form shall be treated in the same manner. The Corporation shall not be required to issue or deliver any
fractional shares of New Common Stock. Each holder of such New Common Stock shall be entitled to receive for such fractional interest, and at the Effective Date any such fractional interest in such shares of New Common Stock shall be converted into
the right to receive, an amount in cash, without interest, determined by multiplying (i) such fractional share interest to which the holder would otherwise be entitled by (ii) the closing price of the Common Stock (on a post-reverse-split
basis as adjusted for the amendment effected hereby) on the trading day immediately prior to the Effective Date on The NASDAQ Capital Market, or, if such price is not available, the average of the last bid and asked prices of the Common Stock on
such day or other price determined by the Board of Directors. Shares of Common Stock that were outstanding prior to the Effective Date and that are not outstanding after the Effective Date shall resume the status of authorized but unissued shares of
Common Stock.
ARTICLE III.
This Certificate of Amendment to the Restated Certificate has been approved in the manner required by the Texas Business Organizations Code
and by the governing documents of the Corporation.
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ARTICLE IV.
This Certificate of Amendment shall become effective on
, 2017 at Central Daylight Time.
The undersigned signs this document subject to the penalties imposed by law for the submission of a materially false or fraudulent instrument
and certifies under penalty of perjury that the undersigned is authorized under the provisions of law governing the entity to execute the filing instrument.
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Dated:
, 2017
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Neil K. Warma
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President and Chief Executive Officer
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C-2
Annex D
Section 262 of the Delaware General Corporation Law
Appraisal Rights
(a) Any stockholder of a
corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the stockholders shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word stockholder means a
holder of record of stock in a corporation; the words stock and share mean and include what is ordinarily meant by those words; and the words depository receipt mean a receipt or other instrument issued by a
depository representing an interest in 1 or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to § 251 (other than a merger effected pursuant to § 251(g) of this title and, subject to paragraph (b)(3) of this section, § 251(h) of this title), § 252, § 254, § 255, § 256, § 257, §
258, § 263 or § 264 of this title:
(1) Provided, however, that, except as expressly provided in § 363(b) of this title, no
appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of the
meeting of stockholders to act upon the agreement of merger or consolidation, were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall
be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in
respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section;
or
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts
described in the foregoing paragraphs (b)(2)a., b. and c. of this section.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 251(h), § 253 or § 267 of this title is not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(4) In the event of an amendment to a corporations certificate of incorporation contemplated by § 363(a) of this title,
appraisal rights shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as practicable, with the word
amendment substituted for the words merger or consolidation, and the word corporation substituted for the words constituent corporation and/or surviving or resulting corporation.
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(c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section
shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of this section, shall apply as nearly
as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in accordance with §
255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that appraisal rights are available for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholders shares shall deliver
to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of such stockholders shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of this title, then either a
constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy
of this section and, if 1 of the constituent corporations is a nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a merger approved pursuant to § 251(h) of this
title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such
holders shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holders shares. If such notice did not
notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any
class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case of a merger approved pursuant to § 251(h) of this title,
later than the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and
who has demanded appraisal of such holders shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has
been given shall, in the absence of
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fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a
record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the
right to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) of this section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholders written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section
hereof, whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such persons own name,
file a petition or request from the corporation the statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or
certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a
newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne
by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this
section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately before the merger or consolidation
the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange, the Court shall dismiss the proceedings as to all holders of such shares who are
otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the
merger or consolidation for such total number of shares exceeds $1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
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(h) After the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be
conducted in accordance with the rules of the Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value
arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant
factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date of the merger through the date of payment of the judgment shall be compounded
quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before
the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference,
if any, between the amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list
filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholders certificates of stock to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the
payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated
stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Courts decree may be enforced as other decrees in the Court of Chancery may
be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be
determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the
effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or
resulting corporation a written withdrawal of such stockholders demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however that this provision shall not affect the right of any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party to withdraw such stockholders demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger or
consolidation, as set forth in subsection (e) of this section.
(
l
) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
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