On May 9, 2022 (the "Closing Date"), OPKO Health, Inc., a Delaware corporation (the "Company"), reported that entered into an Agreement and Plan of Merger (the "Merger Agreement") with Orca Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Merger Sub"), ModeX Therapeutics, Inc., a Delaware corporation ("ModeX"), and Gary J. Nabel, solely in his capacity as sellers’ representative (Filing, 8-K, Opko Health, MAY 9, 2022, View Source [SID1234614516]).
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Pursuant to the Merger Agreement, on the Closing Date, Merger Sub merged with and into ModeX (the "Merger"), with ModeX surviving the Merger as a wholly owned subsidiary of the Company. On the Closing Date, the Company paid consideration for ModeX of $300.0 million, subject to a customary purchase price adjustment mechanism, including that ModeX be free of debt, as well as deduction for certain equity awards issued on the Closing Date, as described below. The Company paid the entirety of the purchase price pursuant to the issuance of an aggregate of 89,907,310 shares (the "Consideration Shares") of the Company’s common stock, par value $0.01 per share ("Common Stock"), to the former stockholders of ModeX (the "Selling Stockholders"), of which 10% of such shares were deposited in a twelve-month escrow for purposes of satisfying the potential indemnity obligations of the Selling Stockholders under the Merger Agreement. Additionally, the Company issued equity awards to ModeX employees in an aggregate amount equal to $12.4 million, which was deducted from the consideration payable on the Closing Date. If any of such awards are forfeited or otherwise remain unvested on the four-year anniversary of the Closing Date, up to $2.6 million of shares of Common Stock (valued at the same price used for determining the number of Consideration Shares issuable upon consummation of the Merger) may be distributed pro rata to ModeX’s former stockholders in respect of such forfeited or unvested awards. Shares of Common Stock with respect to such potential distribution have been escrowed and will remain escrowed for such four-year period.
In accordance with the Merger Agreement, Dr. Phillip Frost, the Company’s Chief Executive Officer and Chairman of the Board of Directors (the "Board"), Dr. Jane Hsiao, the Company’s Chief Technical Officer and a Director, and Frost Gamma Investments Trust ("FGIT"), a trust controlled by Dr. Frost, entered into a lockup and voting agreement, together with the Company (the "Lockup and Voting Agreement"), pursuant to which: (i) FGIT has agreed that, for a period of four years immediately following the Closing Date, it will not sell or otherwise transfer its shares of Common Stock, subject to certain customary exceptions; and (ii) Drs. Frost and Hsiao agreed that, for as long either Dr. Elias A. Zerhouni or Dr. Gary J. Nabel remains an employee of the Company or ModeX, Drs. Frost and Hsiao will vote, or cause to be voted, all of their respective shares of Common Stock in favor of such person’s election to the Board.
Additionally, in accordance with the Merger Agreement, certain recipients of the Consideration Shares, holding in aggregate approximately 88.0% of the Consideration Shares, agreed not to sell or otherwise transfer their respective Consideration Shares for a period of four years immediately following the Closing Date on the same terms as contained in the Lockup and Voting Agreement.
The foregoing description of each of the Merger Agreement and the Lockup and Voting Agreement is only a summary and is qualified in its entirety by reference to the full text of the Merger Agreement and the Lockup and Voting Agreement, which are filed as Exhibit 2.1 and Exhibit 10.1, respectively, to this Current Report on Form 8-K and incorporated by reference herein.
The Merger Agreement is filed with this Current Report on Form 8-K to provide securityholders with information regarding its terms. It is not intended to provide any other factual information about the Company, ModeX or any other party thereto. The representations, warranties and covenants contained in the Merger Agreement were made solely for purposes of such agreement and as of specific dates, are solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties to the Merger Agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to securityholders. Securityholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, ModeX or any other party thereto. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures, except to the extent required by law.